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** |

Financial Performance - The company reported a total sales revenue of RMB 256.77 million for the first half of 2023, a 53.6% increase from RMB 167.09 million in the same period of 2022[13]. - The gross profit for the first half of 2023 increased by approximately RMB 54.69 million, contributing to an operating profit of RMB 121.51 million, a 71.8% increase from RMB 70.72 million in the previous year[17]. - The group's revenue was approximately RMB 256,773,000, an increase of 53.7% compared to RMB 167,086,000 for the same period in 2022[39]. - The group's gross profit for the same period was approximately RMB 154,885,000, reflecting a gross margin of 60.3%, up from 60.0% in the previous year[48]. - The net profit for the period was approximately RMB 93,948,000, a 70.7% increase compared to RMB 55,047,000 for the same period in 2022[50]. - Basic earnings per share for the period were RMB 37.7, up 70.6% from RMB 22.1 in the previous year[48]. - The net profit before tax for the six months ended June 30, 2023, was RMB 27,286,000, compared to RMB 15,340,000 in 2022, indicating a growth in profitability[86]. - The income tax expense for the six months ended June 30, 2023, was RMB 19,898,000, an increase from RMB 12,074,000 in 2022[86]. - The profit for the six months ended June 30, 2023, was approximately RMB 93,948,000, an increase of about RMB 38,901,000 or 70.7% compared to RMB 55,047,000 for the same period in 2022[179]. Operational Highlights - The logistics center processed approximately 2.62 million products during the reporting period, ensuring timely distribution according to order requirements[6]. - The company launched five new products, including a new handle massage comb designed to enhance user comfort[4]. - The new southern factory has been fully operational, alleviating material processing and drying capacity shortages[24]. - The company has established 29 efficient repair stations, completing 107,043 repairs within the stipulated time frame[128]. - The company launched 21 new products during the reporting period, including 12 functional products, enhancing the product line to meet diverse customer needs[126]. - The automation project for comb tooth polishing has entered the trial production phase, achieving an average output of 44 pieces per hour, aimed at reducing labor intensity[163]. Market and Sales Strategy - The company is actively expanding new channels and resources to ensure raw material reserves and market order supply[34]. - The company has entered two new e-commerce platforms, Kuaishou and Jingxi, to enhance brand exposure and sales channels[130]. - The company plans to enhance online sales strategies, targeting key promotional events such as Qixi Festival and Double Eleven, while maintaining a diversified channel approach[157]. - E-commerce sales reached RMB 122.9 million, achieving 115.4% of the half-year target and a 39% increase compared to the same period last year[154]. - The company conducted 7 marketing events in the first half of 2023, with Mother's Day sales reaching an average of RMB 1.948 million per day, a 39% year-on-year increase[132]. Asset and Liability Management - As of June 30, 2023, the company's non-current assets increased to RMB 102,222,000 from RMB 91,370,000, representing a growth of approximately 11.5%[51]. - Current assets decreased to RMB 220,421,000 from RMB 244,430,000, a decline of about 9.8%[51]. - The company's total assets minus current liabilities rose to RMB 768,101,000, up from RMB 725,573,000, indicating an increase of approximately 5.8%[51]. - The accounts payable increased to RMB 8,492,000 as of June 30, 2023, compared to RMB 4,764,000 as of December 31, 2022, indicating a rise in short-term liabilities[116]. - The accounts receivable decreased to RMB 5,101,000 as of June 30, 2023, down from RMB 5,349,000 as of December 31, 2022[114]. Awards and Recognition - The company received the "International Rehabilitation Century Contribution Award" on May 21, 2023, recognizing its contributions to the rehabilitation sector[6]. - The company continues to enhance its brand image, having been recognized as a leading cultural and tourism brand in Chongqing[193]. Future Plans - The company plans to hold a celebration event in the second half of 2023 to commemorate its 30th anniversary[8]. - The company plans to accelerate the launch of new popular products in the second half of 2023, utilizing various promotional tools to increase product sales gradually[186]. - The company plans to continue launching functional products in the second half of 2023, aiming to improve product value and control costs[136]. Challenges and Risks - The company noted challenges in supply chain management, including material specification limitations and production bottlenecks, but overall performance in the first half of 2023 was deemed satisfactory[101]. - Legal opinions have been obtained regarding a property dispute, with management assessing that the ongoing liquidation process will not significantly impact the group's business operations and financial condition[21].

Sales Performance - As of December 31, 2022, the sales from two stores in Hong Kong and the online platform HKTVMALL totaled HKD 3.701 million, a decrease of 18.9% compared to the previous year[25]. - Overseas offline sales reached approximately RMB 3.3424 million, representing a growth of 123.48% year-on-year[25]. - Cross-border e-commerce platform sales amounted to RMB 601,500, an increase of 69.1% compared to the previous year[25]. - The e-commerce net sales for the year amounted to approximately RMB 189 million, achieving 99.47% of the annual sales target of RMB 190 million, with a year-on-year growth of 15.9%[50]. - Sales on the Tmall platform reached approximately RMB 146 million, accounting for 66.6% of total e-commerce net sales, with a year-on-year increase of 21%[50]. - The revenue from comb sales was approximately RMB 41,150,000, a decrease of approximately RMB 9,979,000 or 19.5% from RMB 51,129,000 in the previous year[78]. - The revenue from gift sets was approximately RMB 302,692,000, an increase of approximately RMB 27,951,000 or 10.2% from RMB 274,741,000 in the previous year[78]. - The offline business's POS sales achieved 75.72% of the target plan for the year, a decline of 11% compared to the same period last year, but a growth of 10.57% compared to 2020[109]. Financial Overview - For the fiscal year ended December 31, 2022, the group's revenue was approximately RMB 348,002,000, an increase of approximately RMB 17,092,000 or 5.2% compared to RMB 330,910,000 for the previous year[76]. - Online business revenue increased to approximately RMB 166,409,000, representing a growth of approximately RMB 20,459,000 or 14.0% from RMB 145,950,000 in the previous year[76]. - The company achieved significant breakthroughs in the Huaren channel, entering multiple new locations including Wuhan, Chongqing, Guangdong, Shandong, and Anhui[85]. - The company has maintained a positive operational attitude despite challenges posed by COVID-19, ensuring that production tasks are effectively completed[41]. - For the fiscal year ending December 31, 2022, the annual profit was approximately RMB 107,258,000, a decrease of about RMB 1,090,000 or 1.0% compared to RMB 108,348,000 for the previous year[138]. - The profit attributable to the company's owners for the fiscal year was approximately RMB 107,250,000, a decrease of about RMB 413,000 or 0.4% from RMB 107,663,000 in the prior year[139]. - Financial expenses rose to approximately RMB 627,000, an increase of about RMB 293,000 or 87.7% compared to the previous year[87]. - Income tax expenses increased to approximately RMB 26,105,000, up by RMB 3,658,000 or 16.3% due to higher withholding tax on dividends[91]. Operational Efficiency - The company plans to enhance offline store expansion by adjusting new store policies and supporting franchisees to accelerate growth in key cities and business districts[19]. - The R&D team focused on optimizing product structure and increasing investment in new features and designs, aiming to enhance product competitiveness[27]. - The automatic tooth insertion technology for hair care combs has been submitted for comprehensive acceptance, with production efficiency reaching 200 sheets per shift[30]. - The mature production process for lacquer products has improved product quality and efficiency, reducing labor costs by 50%[32]. - The company has implemented automated processing for hair care combs, improving overall production efficiency[61]. - The company has introduced automatic milling technology for hair care combs, which has been optimized for batch production[63]. - The company opened 123 new stores during the year, maintaining a stable offline presence despite market challenges[107]. - A total of 178 stores were renovated during the year, with 91 adopting the Morandi style and 87 being third-generation stores[122]. Marketing and Brand Development - Brand awareness among target consumers increased by 208% through emotional marketing and content output strategies[23]. - Brand exposure increased with over 6.57 million impressions and 160,626 clicks from advertising campaigns, resulting in over RMB 7.5 million in sales during Mother's Day[86]. - The marketing strategy emphasized transformation, expansion, and channel diversification, with new group purchase policies introduced in March 2022[112]. - The company upgraded its membership system, adding features that improved order processing efficiency, resulting in 94,168 new members and a total membership exceeding 500,000[88]. Governance and Compliance - The company has adhered to all applicable provisions of the corporate governance code during the review year, except for a deviation from provision C.2.1[184]. - The board of directors held four meetings during the review year to discuss overall strategy and operational and financial performance[186]. - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee, to oversee specific areas of governance[191]. - The company has implemented a board diversity policy to promote sustainable and balanced development[190]. - The company has a clear division of responsibilities between the board and senior management, with the board providing guidance and effective supervision[185]. - The company has committed to providing diverse career development opportunities and training resources for employees to cultivate future board and senior management candidates[190]. Employee and Community Engagement - The group emphasizes the importance of employee expertise and experience for long-term growth, supported by regular training programs[159]. - The company is committed to public welfare activities, aiming to enhance its brand image and reputation[159]. - The company conducted 62 regular training sessions and 19 national online live training sessions during the year[123]. - The company aims to enhance the self-discipline of its franchise system and strictly combat counterfeit sales on major e-commerce platforms[174].

Financial Performance - Revenue increased by 5.2% to approximately RMB 348,002,000 (2021: RMB 330,910,000) [8] - Gross profit increased by 2.7% to approximately RMB 205,248,000 (2021: RMB 199,790,000) [8] - Net profit decreased by 1.0% to approximately RMB 107,258,000 (2021: RMB 108,348,000) [8] - Earnings per share decreased by 0.4% to approximately RMB 43.12 (2021: RMB 43.29) [8] - Total comprehensive income for the year was RMB 102,155 thousand in 2022, down from RMB 108,575 thousand in 2021, indicating a decrease of 5.5% [45] - The annual profit for 2022 was RMB 107,258 thousand, a slight decrease from RMB 108,348 thousand in 2021, representing a decline of 1% [45] - The pre-tax profit for the year was RMB 26,105,000, up from RMB 22,447,000 in 2021, indicating a growth of 12% [64] - The total income tax expense for the year was RMB 26,603,000, an increase from RMB 21,792,000 in 2021, which is a rise of 22% [64] Dividends - The proposed final dividend is HKD 25.03 per share (2021: HKD 27.15), subject to shareholder approval [8] - The company announced an interim dividend of 12.96 Hong Kong cents per share, equivalent to RMB 11.06 million, compared to zero in the previous year [70] - The proposed final dividend is 25.03 Hong Kong cents per share, amounting to RMB 54.99 million, slightly down from RMB 55.22 million in the previous year [70] Assets and Liabilities - Total assets decreased to RMB 525,190,000 (2021: RMB 564,795,000) [24] - Inventory increased by 23.3% to RMB 244,430,000 (2021: RMB 198,103,000) [24] - Trade payables increased to RMB 4,764,000 (2021: RMB 2,441,000) [24] - The company maintained a trade receivables balance of RMB 5,349,000, an increase from RMB 4,902,000 in the previous year [113] - The company’s total equity increased to RMB 691,879 thousand in 2022 from RMB 672,447 thousand in 2021, reflecting a growth of 2.9% [47] Operational Highlights - The company established 484 online brand activity groups with 3,352 participants during the year [16] - The company opened 123 new offline stores during the review year, maintaining a stable total number of specialty stores despite market challenges [101] - The company has established a testing laboratory, gaining authorization for five testing capabilities related to comb products [144] - The company has implemented a new store policy to encourage franchisees to accelerate expansion in key cities and commercial areas [130] Sales Performance - Online business sales reached RMB 166,409 thousand in 2022, up from RMB 145,950 thousand in 2021, representing a growth of 13.5% [41] - Offline business sales totaled RMB 178,242 thousand in 2022, slightly down from RMB 181,082 thousand in 2021, indicating a decrease of 1.5% [41] - E-commerce net sales for the year ended December 31, 2022, were approximately RMB 189 million, achieving 99.47% of the annual sales target of RMB 190 million, with a year-on-year growth of 15.9% [131] - The total sales on Tmall were approximately RMB 146 million, accounting for 66.6% of total e-commerce net sales, with a year-on-year growth of 21% [131] Marketing and Customer Engagement - The company achieved a brand exposure of over 6.57 million and a click-through rate of 160,626 during promotional activities, resulting in sales exceeding RMB 7.5 million during Mother's Day [106] - Customer satisfaction reached 98.81% based on 2,441 valid survey responses, exceeding the ISO quality standard target of 90% [157] - The company launched a series of marketing campaigns, including a "Wish Pool" event during the Spring Festival, which garnered over 9,000 views [106] Product Development - The company launched 15 new products during the review year, including 3 limited edition combs and 7 traditional style combs, with 19 customized products added [107] - The company plans to enhance product design and marketing integration, focusing on developing new health-related products and improving market competitiveness [167] - The company aims to reduce and eventually eliminate the use of leftover materials in production, thereby increasing material utilization rates [167] Cost Management - The cost of sold inventory for the year was RMB 137,961,000, compared to RMB 129,402,000 in the previous year, reflecting an increase of 6.4% [62] - The group's cost of sales was approximately RMB 142,754,000, an increase of about RMB 11,634,000 or 8.9% compared to RMB 131,120,000 for the year ended December 31, 2021 [184] - Employee costs, including director remuneration, amounted to RMB 81,456 thousand in 2022, down from RMB 83,117 thousand in 2021, a reduction of 2% [44] Technology and Innovation - The company has implemented automated processing for hair comb shapes, improving overall production efficiency by reducing manual processing steps [190] - The company has achieved trial production verification for automated polishing of comb teeth, producing over 10,000 units [191] - The automatic insertion technology for hair comb rubber has been submitted for comprehensive acceptance, with production efficiency reaching 200 sheets per shift [141] Challenges and Adjustments - The company’s online visitor numbers increased, but the conversion rate declined, prompting adjustments to optimize internal channels and enhance customer retention [160] - The company recorded a 69% sales growth during the Double Eleven shopping festival, despite a high sales base from the previous year [159] - The company implemented strict penalties for non-compliant stores, resulting in the closure of 9 stores due to various violations [105]

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 167,086 thousand, a decrease of 1.5% compared to RMB 169,565 thousand in the same period of 2021[12]. - Gross profit for the same period was RMB 100,196 thousand, down 4.2% from RMB 104,617 thousand year-on-year[12]. - The net profit attributable to the owners of the company was RMB 55,028 thousand, representing a decrease of 3.2% from RMB 56,867 thousand in the previous year[12]. - The basic earnings per share for the period was RMB 22.1, down 3.2% from RMB 22.9 in the same period last year[12]. - Operating profit for the six months ended June 30, 2022, was approximately RMB 70,715,000, a decrease of about RMB 2,492,000 or 3.4% from RMB 73,207,000 in the same period of 2021[90]. - Profit before tax for the six months ended June 30, 2022, was approximately RMB 70,387,000, a decrease of about RMB 2,656,000 or 3.6% from RMB 73,043,000 in the same period of 2021[92]. - Net profit for the six months ended June 30, 2022, was approximately RMB 55,047,000, a decrease of about RMB 2,565,000 or 4.5% from RMB 57,612,000 in the same period of 2021[96]. - The group's gross profit for the six months ended June 30, 2022, was approximately RMB 100,196,000, a decrease of about RMB 4,421,000 or 4.2% compared to RMB 104,617,000 for the same period in 2021, with a gross margin decline from 61.7% to 60.0%[83]. Operational Challenges - The company faced challenges due to COVID-19 restrictions in major markets like Shanghai and Beijing, impacting regional market expansion and store operations[24]. - The management remains committed to addressing operational challenges and improving performance amidst ongoing market uncertainties[24]. - Despite the challenges, the company maintained a positive outlook and continued to progress in areas such as raw material reserves, production, new product development, and brand building[24]. Store and Sales Performance - As of June 30, 2022, the offline business achieved 40.2% of its POS sales target, a year-on-year decline of 8.4%, but a growth of 51.4% compared to the same period in 2020[29]. - The total number of stores as of June 30, 2022, was 1,096, a decrease of 1 store from December 31, 2021[30]. - The number of franchise stores in mainland China was 1,088, with shopping center stores accounting for 59.8% of the total[33]. - E-commerce sales reached RMB 88.39 million, achieving 93.5% of the semi-annual target, with a year-on-year growth of 8.06%[48]. - Group purchasing sales increased by 188% year-on-year, with significant contributions during the International Women's Day in March[36]. Product Development and Marketing - The company launched 12 new types of combs and upgraded packaging for existing products during the reporting period[39]. - New product development focused on optimizing product structure and design, with 7 new product projects completed and 4 new packaging designs introduced[59]. - The company is exploring new marketing strategies, including emotional marketing and leveraging social media platforms like Douyin for brand promotion[52]. Financial Position and Cash Flow - The group had cash and bank balances of RMB 41,322,000 as of June 30, 2022, compared to RMB 35,795,000 as of December 31, 2021, primarily sourced from operating income[97]. - For the six months ended June 30, 2022, the operating cash flow was RMB 48,578,000, an increase of 47.8% compared to RMB 32,893,000 in the same period of 2021[183]. - The net cash generated from operating activities was RMB 38,572,000, up from RMB 18,585,000 in the previous year, reflecting a growth of 107.5%[183]. Human Resources and Governance - The total employee compensation paid by the group for the six months ended June 30, 2022, was approximately RMB 34,622,000, with a workforce of 986 employees across various regions[119]. - The company maintains a strong commitment to providing employment opportunities for people with disabilities and emphasizes employee self-improvement through various training programs[119]. - The management has implemented measures to optimize human resources and prevent complacency, including appointing younger employees to key positions[70]. Shareholder and Dividend Information - The company declared a final dividend of HKD 0.2715 per share, totaling approximately HKD 67,526,000 (equivalent to about RMB 55,215,000) for the year ended December 31, 2021[159]. - The interim dividend for the six months ended June 30, 2022, is set at HKD 0.1296 per share, amounting to approximately HKD 32,233,000 (equivalent to about RMB 27,508,000) to be paid on or before October 31, 2022[159]. Compliance and Corporate Governance - The company has maintained compliance with the corporate governance code, except for a deviation regarding the separation of the roles of Chairman and CEO, which is currently held by Mr. Tan[149]. - The Audit Committee, consisting of three independent non-executive directors, has reviewed the unaudited interim financial information for the six months ended June 30, 2022[153].

Financial Performance - Revenue for the year ended December 31, 2021, was RMB 330,910,000, representing a 19.3% increase from RMB 277,261,000 in 2020[14] - Gross profit increased by 26.7% to RMB 199,790,000 from RMB 157,627,000 in the previous year[14] - Profit attributable to owners of the company rose by 36.2% to RMB 107,663,000 compared to RMB 79,060,000 in 2020[14] - Basic earnings per share increased by 36.2% to RMB 43.29 from RMB 31.79 in the prior year[14] - Annual profit for the year was approximately RMB 108,348,000, an increase of 33.7% from RMB 81,008,000 in 2020[142] - The company's attributable profit for the year was approximately RMB 107,663,000, reflecting a 36.2% increase from RMB 79,060,000 in the previous year[143] - Total revenue for the year ended December 31, 2021, was approximately RMB 330,910,000, an increase of 19.4% from RMB 277,261,000 in 2020[129] - Gross profit for the year was approximately RMB 199,790,000, representing a 26.7% increase from RMB 157,627,000 in the previous year, with a gross margin improvement from 56.9% to 60.4%[131] Store Operations and Expansion - The company opened 115 new franchise stores in 2021, with average monthly sales exceeding the same period in 2019[28] - Shopping mall stores accounted for 59.0% of total stores, with new store expansion reaching 71.9% of annual target[29] - Monthly average sales for new stores exceeded RMB 70,200, with significant sales increases noted in several locations[37] - A total of 174 stores were renovated in 2021, including 120 new stores and 37 relocations, improving store image and sales performance[46] - The group had 1,094 franchised stores and 3 directly operated stores as of December 31, 2021, compared to 1,155 franchised stores and 4 directly operated stores as of December 31, 2020[127] Financial Ratios and Cash Flow - The current ratio improved to 7.42 from 6.16, reflecting a 20.5% increase[13] - The quick ratio also increased by 11.3% to 4.82 from 4.33[13] - The group's cash and cash equivalents decreased by approximately RMB 59,982,000 during the year, with net cash inflow from operating activities of approximately RMB 66,149,000 and net cash outflow from investing activities of approximately RMB 66,778,000[153] - The group had cash and bank balances of approximately RMB 35,795,000 as of December 31, 2021, down from approximately RMB 95,777,000 as of December 31, 2020[159] Marketing and Sales Performance - The marketing team implemented various promotional activities, resulting in annual online sales of approximately RMB 10.6 million, with 5.5 million views and 450,000 visitors[42] - E-commerce net sales for the year ended December 31, 2021, reached approximately RMB 169.3 million, exceeding the sales target of RMB 165 million by 2.6%, with a year-on-year growth of 17.3%[55] - Tmall platform sales amounted to approximately RMB 107.1 million, accounting for 63.3% of total e-commerce net sales, with a year-on-year increase of 14.9%[55] - Offline POS sales achieved 93.2% of target, growing 19.3% year-on-year, but down 16.7% compared to 2019[29] Product Development and Innovation - The company launched 22 new customized products in 2021, continuing to expand its product line and enhance product offerings[43] - A total of 69 new products were launched across 16 series, with significant packaging upgrades completed, including 29 new packaging boxes and 12 new fabric bags[70] - The company aims to enhance its product innovation, focusing on craftsmanship, design, and materials, with a goal to achieve product iteration within three years[79] - The company is actively working on the production technology for its Chinese red lacquer comb series, achieving preliminary progress but requiring further development for mass production[83] Customer Satisfaction and Service Quality - Customer satisfaction rate reached 99.1% based on 5,459 valid survey responses, surpassing the group's ISO quality standard target of no less than 90%[52] - The company has committed to providing lifetime repair services, successfully fulfilling this promise during the review year[94] - A total of 96,821 repair cases were handled across 28 repair stations, with continuous upgrades to the repair system to enhance service quality[52] Corporate Governance and Compliance - The company has maintained compliance with corporate governance standards, ensuring transparency and accountability in its operations[184] - The board consists of six directors, including three executive directors and three independent non-executive directors, ensuring a diverse range of expertise[191] - The audit committee is responsible for reviewing the independence of external auditors and the effectiveness of audit procedures[197] - The audit committee held two meetings during the review year, focusing on the effectiveness of financial reporting and internal controls[200] Challenges and Market Conditions - The company faced increased operational pressures from rising rental and labor costs, alongside reduced foot traffic in tourist areas due to sporadic COVID-19 outbreaks[28] - The overall market conditions showed signs of recovery, with retail orders stabilizing and improving compared to the previous year[26] - The company plans to adjust its strategies based on consumer feedback regarding product development, market expansion, and specialized store services in 2022[52]

[Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section details the company's fundamental registration, board composition, key operational locations, and professional advisory services - Comprehensive details regarding the company's registration, board and committee members, principal business locations, legal counsel, auditors, and share registrars are provided[5](index=5&type=chunk)[8](index=8&type=chunk) [Financial Highlights](index=7&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The group achieved strong financial recovery for the six months ended June 30, 2021, with significant growth in revenue, profit, and improved liquidity - For the six months ended June 30, 2021, the group achieved strong performance recovery, with **revenue increasing by 56.9%**, **gross profit by 70.4%**, **profit for the period by 106.7%**, and **basic earnings per share by 112.0%** year-on-year[13](index=13&type=chunk) Financial Highlights for H1 2021 (Compared to H1 2020) | Indicator | For the six months ended June 30 (RMB '000) | | Percentage Change | | :--- | :--- | :--- | :--- | | | **2021 (Unaudited)** | **2020 (Unaudited)** | **Increase / (Decrease)** | | **Revenue** | 169,565 | 108,069 | 56.9% | | **Gross Profit** | 104,617 | 61,405 | 70.4% | | **Profit Before Tax** | 73,043 | 35,760 | 104.3% | | **Profit for the Period** | 57,612 | 27,878 | 106.7% | | **Profit Attributable to Owners of the Company** | 56,867 | 26,808 | 112.1% | | **Basic EPS (RMB cents)** | 22.9 | 10.8 | 112.0% | - The group's liquidity improved, with the **current ratio increasing from 6.16 to 7.10**, and no interest-bearing bank borrowings at period-end, rendering the gearing ratio inapplicable[13](index=13&type=chunk)[16](index=16&type=chunk) [Chairman's Statement](index=9&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%E6%9B%B8) The Chairman's statement highlights the group's proactive brand promotion and market expansion in H1 2021, focusing on strengthening fundamentals amidst ongoing market challenges - Chairman Mr. Tan Chuan Hua noted that despite market recovery in H1 2021, COVID-19 impacts persist, presenting both challenges and opportunities, leading the group to actively engage in brand promotion and market expansion, including offline pop-up events and university design collaborations[21](index=21&type=chunk) - The group emphasizes strengthening its core capabilities, seizing opportunities, and responding to market changes with optimism and confidence[22](index=22&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Management Review](index=11&type=section&id=%E7%AE%A1%E7%90%86%E5%9B%9E%E9%A1%A7) In H1 2021, with effective COVID-19 control in China, the group maintained stable operations and market conditions, with specialty store orders and retail sales entering a positive development trajectory - With effective COVID-19 control in China, market conditions significantly recovered and stabilized compared to last year, with company operations largely meeting planned objectives[26](index=26&type=chunk) [Business Review](index=12&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The group's business review covers offline store optimization and sales growth, significant online business expansion, and progress in R&D, production, and human resources, while addressing cost and talent challenges [Offline Business](index=12&type=section&id=%E7%B7%9A%E4%B8%8B%E6%A5%AD%E5%8B%99) As of June 30, 2021, total stores decreased to 1,146, with domestic sales growing through store upgrades and marketing, though still below 2019 levels, while international operations largely paused due to the pandemic Store Count Changes | Region | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Mainland China** | 1,139 | 1,149 | | **Hong Kong** | 2 | 2 | | **Other Countries and Regions** | 5 | 6 | | **Total** | 1,146 | 1,159 | - Offline sales significantly increased compared to H1 2020, but the sales growth rate was **negative 12.8%** compared to pre-pandemic H1 2019[38](index=38&type=chunk) - Overseas offline business was severely impacted by the pandemic, with outbound sales of **RMB 690,000**, a **1.3% year-on-year decrease**[44](index=44&type=chunk)[47](index=47&type=chunk) [Online Business](index=16&type=section&id=%E7%B7%9A%E4%B8%8A%E6%A5%AD%E5%8B%99) Online business showed strong performance, with domestic e-commerce sales reaching **RMB 81.8 million** in H1, growing **32.0%** year-on-year, while international online sales increased **11.0%** through self-operated Amazon platforms H1 2021 Domestic Online Monthly Sales (RMB '000) | Month | 2021 Actual Sales | 2020 Actual Sales | YoY 2020 Growth Rate | 2019 Actual Sales | YoY 2019 Growth Rate | | :--- | :--- | :--- | :--- | :--- | :--- | | **January** | 12,527 | 7,318 | 71.2% | 10,121 | 23.8% | | **February** | 12,627 | 8,043 | 57.0% | 9,868 | 28.0% | | **March** | 15,558 | 11,597 | 34.2% | 12,192 | 27.6% | | **April** | 12,166 | 8,923 | 36.3% | 8,416 | 44.6% | | **May** | 18,643 | 17,362 | 7.4% | 14,682 | 27.0% | | **June** | 10,277 | 8,719 | 17.9% | 8,662 | 18.6% | | **Total** | **81,798** | **61,962** | **32.0%** | **63,941** | **27.9%** | - Total sales from overseas online platforms (primarily US and Japan Amazon) amounted to **RMB 162,893**, representing an **11.0% year-on-year increase**[60](index=60&type=chunk) [Creative R&D](index=18&type=section&id=%E5%89%B5%E6%84%8F%E7%A0%94%E7%99%BC) The Creative Design Center continuously innovated products, launching **7 series and 37 new products** in the reporting period, including high-end hairbrushes and infant combs, to expand product lines and consumer reach - During the reporting period, **7 series and 37 new products** were launched, including high-end hairbrushes and infant combs, expanding product categories and consumer demographics[61](index=61&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) [Production Technology](index=20&type=section&id=%E7%94%A2%E7%94%9F%E6%8A%80%E8%A1%93) The Wanzhou factory produced **2.38 million products** in H1, a **62.3% year-on-year increase**, while advancing processing technologies, prioritizing pandemic control, and implementing environmental upgrades - In H1, **2,381,927 products** were manufactured, representing a **62.3% year-on-year increase**[73](index=73&type=chunk) [Logistics and Distribution](index=20&type=section&id=%E7%89%A9%E6%B5%81%E9%85%8D%E9%80%81) The logistics center dispatched over **2.1 million products** in H1, meeting order demands, enhancing quality control, resolving metal comb pin oxidation, and implementing strict pandemic prevention measures - Over **2.1 million products** were dispatched in H1, and the quality issue of metal comb pin oxidation was effectively resolved[74](index=74&type=chunk) [Corporate Culture](index=21&type=section&id=%E4%BC%81%E6%A5%AD%E6%96%87%E5%8C%96) Centered on the 'Crafting Oriental Beauty' brand strategy, the group promoted comb culture and brand philosophy through collaborations with universities, publications, and heritage exhibitions - The group continuously built and disseminated its 'Crafting Oriental Beauty' brand culture through collaborations with universities, publications, and exhibitions[78](index=78&type=chunk) [Human Resources and Comprehensive Governance](index=21&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E5%8F%8A%E7%B6%9C%E5%90%88%E6%B2%BB%E7%90%86) The group maintained compliance with labor, safety, and environmental regulations, focusing HR efforts on marketing, product design, and R&D, filing **9 new patents** and managing operational risks, while addressing challenges like rising costs and talent shortages - In H1, **9 patents** were filed, bringing the total number of effective patents to **61**, an increase of **12** year-on-year[83](index=83&type=chunk) - The group enhanced operational risk control by strengthening identification and tracking of counterfeit products and non-compliant online sales, and revising relevant internal control systems[87](index=87&type=chunk) - Key challenges include the conflict between rising costs and market positioning, difficulties in training new craftspeople, and the aging of existing management personnel[88](index=88&type=chunk) [Financial Review](index=24&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) In H1 2021, the group reported strong financial performance, with **revenue up 56.9% to RMB 170 million**, **gross margin improving to 61.7%**, and **profit for the period increasing 106.7% to RMB 57.61 million**, maintaining a healthy cash flow with no bank loans H1 2021 Key Financial Indicators (RMB '000) | Indicator | 2021 H1 | 2020 H1 | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 169,565 | 108,069 | +61,496 | +56.9% | | **Cost of Sales** | 64,948 | 46,664 | +18,284 | +39.2% | | **Gross Profit** | 104,617 | 61,405 | +43,212 | +70.4% | | **Gross Margin** | 61.7% | 56.8% | +4.9pp | - | | **Operating Profit** | 73,207 | 36,001 | +37,206 | +103.3% | | **Profit Before Tax** | 73,043 | 35,760 | +37,283 | +104.3% | | **Profit for the Period** | 57,612 | 27,878 | +29,734 | +106.7% | - Revenue growth was primarily driven by market demand recovery as the pandemic came under control, while the increase in gross margin was due to a higher proportion of revenue from products with better margins[91](index=91&type=chunk)[95](index=95&type=chunk) - At the end of the reporting period, the group had **no bank loans**, with cash and bank balances totaling **RMB 60.28 million**[109](index=109&type=chunk)[111](index=111&type=chunk) [Future Outlook](index=27&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B) Looking ahead, the group will focus on six key areas: continuous pandemic control, strategic raw material reserves, intensified anti-counterfeiting efforts, strengthened cost management, production technology innovation, and comprehensive governance to enhance brand value - The group's future focus areas include pandemic control, raw material reserves, combating counterfeits, cost management, technological innovation, and comprehensive governance[122](index=122&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk) [Human Resources and Training](index=28&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E5%8F%8A%E5%9F%B9%E8%A8%93) As of June 30, 2021, the group employed **965 staff**, emphasizing employee development through diverse training programs covering teamwork, professional etiquette, and production management to foster corporate culture - As of June 30, 2021, the group employed **965 staff** and provided diverse on-the-job training[127](index=127&type=chunk) [Other Information](index=29&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Principal Activities](index=29&type=section&id=%E4%B8%BB%E8%A6%81%E6%A5%AD%E5%8B%99) The group, an investment holding company, primarily designs, manufactures, and distributes small wooden ornaments under the 'Tan Mujiang' brand, including combs, mirrors, and gift sets, operating through franchised and self-operated retail stores in China and Hong Kong - The group's core business involves designing, manufacturing, and distributing small wooden ornaments under the 'Tan Mujiang' brand, primarily combs, mirrors, accessories, and gift sets[131](index=131&type=chunk) [Directors' and Chief Executives' Interests in Securities](index=29&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E4%B9%8B%E8%AD%89%E5%88%B8%E6%AC%8A%E7%9B%8A) This section discloses the shareholdings of directors and major shareholders, with Chairman Mr. Tan Chuan Hua holding **67.43%** through Linker Investment Limited as the controlling shareholder, and Executive Director Mr. Tan Lizi beneficially owning **300,000 shares** - Chairman Mr. Tan Chuan Hua holds **167,700,000 shares**, representing **67.43%** of the total share capital, through his controlled entity, Linker Investment Limited[133](index=133&type=chunk)[138](index=138&type=chunk) [Share Option Scheme](index=30&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) This section details the 2009 Share Option Scheme, including its terms, eligible participants, share limits, and exercise price rules, noting **700,000 outstanding options** at period-end, granted to three executives including Executive Director Mr. Tan Lizi, with an exercise price of **HKD 4.896** Outstanding Share Options as of June 30, 2021 | Grantee | Position | Grant Date | Exercise Price (HKD) | Number of Outstanding Options | | :--- | :--- | :--- | :--- | :--- | | **Mr. Tan Lizi** | Executive Director | August 31, 2018 | 4.896 | 300,000 | | **Ms. Liu Kejia** | Marketing Director | August 31, 2018 | 4.896 | 200,000 | | **Mr. Luo Hongping** | Administrative Director | August 31, 2018 | 4.896 | 200,000 | | **Total** | | | | **700,000** | [Dividends](index=33&type=section&id=%E8%82%A1%E6%81%AF) The company paid a final dividend of **HKD 19.58 cents per share** for FY2020, totaling approximately **HKD 48.7 million**, but the Board resolved not to declare any interim dividend for the six months ended June 30, 2021 - A final dividend of **HKD 19.58 cents per share** for 2020, totaling approximately **HKD 48.7 million**, was paid[159](index=159&type=chunk) - The Board resolved not to declare an interim dividend for 2021[160](index=160&type=chunk) [Use of Net Proceeds from Initial Public Offering](index=33&type=section&id=%E9%A6%96%E6%AC%A1%E5%85%AC%E9%96%8B%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%8D%E6%B7%A8%E9%A1%8D%E7%9A%84%E7%94%A8%E9%80%94) Of the approximately **RMB 117 million** net proceeds from the 2009 IPO, about **RMB 64.09 million** had been utilized by June 30, 2021, primarily for enhancing design, sales network, logistics, and working capital, with remaining funds held in banks for future business development - As of June 30, 2021, approximately **RMB 64.09 million** of the approximately **RMB 117 million** net IPO proceeds had been utilized[162](index=162&type=chunk) [Corporate Governance Practices](index=33&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The Board is committed to corporate governance, implementing measures to strengthen internal controls, and confirming compliance with all applicable code provisions during the reporting period, with the Audit Committee reviewing the interim financial report - During the reporting period, the company consistently complied with all applicable code provisions of the Corporate Governance Code[164](index=164&type=chunk) - The Audit Committee reviewed this interim financial report and concurred with the accounting policies adopted by the company[168](index=168&type=chunk) [Condensed Consolidated Financial Statements](index=36&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Condensed Consolidated Statement of Profit or Loss](index=36&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) This statement presents the income, costs, expenses, and profit for the six months ended June 30, 2021, with profit for the period at **RMB 57.612 million** and profit attributable to owners of the company at **RMB 56.867 million** Condensed Consolidated Statement of Profit or Loss Summary (For the six months ended June 30) | Item (RMB '000) | 2021 (Unaudited) | 2020 (Unaudited) | | :--- | :--- | :--- | | **Revenue** | 169,565 | 108,069 | | **Gross Profit** | 104,617 | 61,405 | | **Operating Profit** | 73,207 | 36,001 | | **Profit Before Tax** | 73,043 | 35,760 | | **Profit for the Period** | 57,612 | 27,878 | | **Profit Attributable to Owners of the Company** | 56,867 | 26,808 | | **Basic and Diluted EPS** | RMB 22.9 cents | RMB 10.8 cents | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=37&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) This statement includes other comprehensive income items, such as exchange differences, in addition to profit for the period, resulting in a total comprehensive income of **RMB 57.875 million** for the period - After accounting for exchange differences, total comprehensive income for the six months ended June 30, 2021, was **RMB 57.875 million**, with **RMB 57.130 million** attributable to owners of the company[185](index=185&type=chunk) [Condensed Consolidated Statement of Financial Position](index=38&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This statement presents the assets, liabilities, and equity as of June 30, 2021, with total assets at **RMB 724 million** and net assets at **RMB 621 million** at period-end Condensed Consolidated Statement of Financial Position Summary | Item (RMB '000) | As of June 30, 2021 (Unaudited) | As of December 31, 2020 (Audited) | | :--- | :--- | :--- | | **Non-current Assets** | 202,695 | 198,947 | | **Current Assets** | 521,046 | 535,468 | | **Current Liabilities** | (73,361) | (86,914) | | **Non-current Liabilities** | (29,779) | (28,362) | | **Net Assets** | 620,601 | 619,139 | | **Total Equity** | 620,601 | 619,139 | [Condensed Consolidated Statement of Changes in Equity](index=39&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) This statement illustrates changes in equity items, including share capital, reserves, and retained profits, during the reporting period, encompassing profit for the period, dividends paid, and equity transactions with non-controlling interests - As of June 30, 2021, total equity increased from **RMB 619 million** at the beginning of the year to **RMB 621 million**, primarily due to a **RMB 57.61 million** increase in profit for the period, a **RMB 40.54 million** decrease from dividends paid, and equity transactions with non-controlling interests[194](index=194&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=40&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) This statement reflects cash inflows and outflows from operating, investing, and financing activities during the reporting period, showing a net decrease in cash and cash equivalents of **RMB 35.75 million** Condensed Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Item (RMB '000) | 2021 (Unaudited) | 2020 (Unaudited) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 18,585 | (11,822) | | **Net Cash from Investing Activities** | 3,836 | 215,300 | | **Net Cash Used in Financing Activities** | (58,171) | (213,411) | | **Net Decrease in Cash and Cash Equivalents** | (35,750) | (9,933) | | **Cash and Cash Equivalents at Period-End** | 60,280 | 24,429 | [Notes to the Unaudited Interim Financial Report](index=41&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E9%99%84%E8%A8%BB) [Segment Reporting](index=42&type=section&id=4.%20%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) Management views the business as a single operating segment—manufacturing and distribution of wooden crafts and ornaments—contributing over **90%** of the group's revenue, results, and assets, with no segment or geographical information provided as operations are primarily in China - The group considers its business as a single operating segment, the manufacturing and distribution of wooden crafts and ornaments, with primary assets and activities in China, thus no segment information is presented[211](index=211&type=chunk) [Revenue and Other Income](index=43&type=section&id=6.%20%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) This note details the composition of revenue and other income, with total revenue of **RMB 169.6 million** primarily from goods sales, and other income of **RMB 18.49 million**, including **RMB 12.23 million** in VAT refunds and **RMB 3.15 million** in investment property rental income Revenue and Other Income Details (For the six months ended June 30, RMB '000) | Item | 2021 | 2020 | | :--- | :--- | :--- | | **Revenue** | **169,565** | **108,069** | | Of which: Sales of goods | 169,518 | 107,975 | | **Other Income** | **18,489** | **25,672** | | Of which: China VAT refund for preferential policies | 12,230 | 5,085 | | Of which: Rental income from investment properties | 3,147 | 2,716 | | Of which: Fair value changes of financial assets | 1,646 | 11,838 | [Income Tax](index=45&type=section&id=8.%20%E6%89%80%E5%BE%97%E7%A8%85) This note explains income tax expense calculation, totaling **RMB 15.43 million** for the period at an effective tax rate of **21.1%**, primarily comprising China corporate income tax and withholding tax on dividends, with the group benefiting from VAT refunds for employing disabled staff - Income tax expense for the reporting period was **RMB 15.431 million**, with an effective tax rate of **21.1%**, a decrease from **22.0%** in the prior period[105](index=105&type=chunk)[227](index=227&type=chunk) - The group benefits from social welfare enterprise tax incentives for employing disabled staff, including income tax deductions and VAT refunds[233](index=233&type=chunk) [Earnings Per Share](index=46&type=section&id=9.%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) This note details the calculation of basic earnings per share, which is **RMB 22.9 cents**, based on **RMB 56.867 million** profit attributable to owners and **248.7 million** weighted average ordinary shares, with no dilutive effect from share options - Basic earnings per share is **RMB 22.9 cents**, calculated based on **RMB 56.867 million** profit and **248,714 thousand** weighted average shares[235](index=235&type=chunk) - Diluted earnings per share is the same as basic earnings per share, as share options have no dilutive effect[236](index=236&type=chunk) [Dividends](index=49&type=section&id=15.%20%E8%82%A1%E6%81%AF) This note reiterates dividend distribution, confirming the Board's decision not to declare a 2021 interim dividend, and the payment of a 2020 final dividend of **HKD 19.58 cents per share**, totaling approximately **RMB 40.54 million** Dividend Payments for Past Financial Years (For the six months ended June 30) | Dividend Type | 2021 Paid (RMB '000) | 2020 Paid (RMB '000) | | :--- | :--- | :--- | | **Final Dividend** | 40,540 | 62,502 | | **Special Dividend** | – | 148,006 | [Equity Transactions with Non-Controlling Shareholders](index=52&type=section&id=19.%20%E8%88%87%E9%9D%9E%E6%8E%A7%E8%82%A1%E8%82%A1%E6%9D%B1%E7%9A%84%E6%AC%8A%E7%9B%8A%E4%BA%A4%E6%98%93) In January 2021, the group acquired the remaining **9.09%** equity in Jiangsu Tan Mujiang for **RMB 15.873 million**, making it a wholly-owned subsidiary, which reduced non-controlling interests by **RMB 10.557 million** and equity attributable to owners by **RMB 5.316 million** - The group acquired a **9.09%** equity interest in Jiangsu Tan Mujiang for **RMB 15.873 million**, achieving full ownership of the subsidiary[272](index=272&type=chunk) [Events After the Reporting Period](index=52&type=section&id=20.%20%E6%9C%AC%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) This note indicates that the ongoing COVID-19 pandemic creates uncertainties for the group's operating environment, which is being closely monitored, and directors confirm no significant adverse changes to the group's financial or trading position as of the report date - As of the report date, despite ongoing COVID-19 uncertainties, there have been no significant adverse changes to the group's financial or trading position[273](index=273&type=chunk)

譚 木 匠 控 股 有 限 公 司 CARPENTER TAN HOLDINGS LIMITED (於開曼群島註冊成立的有限公司) 股份代號: 837 A ( u -C A - C B (C A 日 B 米 ( T K "值供識別 D and the production and and Dames of hogoomoogoo (CC 目錄 B c 1 目錄 2 公司資料 4 財務摘要 5 主席報告書 7 管理層討論與分析 29 董事及高級管理人員簡介 32 企業管治報告 44 董事會報告 59 獨立核數師報告 65 67 63 綜合損益表 64 綜合損益及其他全面收益表 綜合財務狀況表 綜合權益變動表 68 綜合現金流量表 70 財務報表附註 139 持作投資用途之主要物業 140 財務概要 公司資料 | --- | --- | |-----------------------|--------------------------| | | | | | | | 執行董事 | 提名委員會成員 | | 譚傳華先生 （主席） | 周錦榮先生 （主席） | | 譚棣夫先生 | 楊揚先生 | | 譚力子先生 | 劉 ...

[Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Company Information Overview](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99%E6%A6%82%E8%A6%BD) This section provides basic corporate information for Tan Mujiang Holdings Limited, including board members, committee compositions, company secretary, authorized representatives, registered office, headquarters and Hong Kong office addresses, principal share registrar, legal counsel, stock code, company website, and principal bankers - The Board of Directors comprises executive, non-executive, and independent non-executive directors, with Audit, Remuneration, and Nomination Committees[6](index=6&type=chunk) - The company is registered in the Cayman Islands, headquartered in Jurong City, Jiangsu Province, China, with a Hong Kong office[6](index=6&type=chunk)[10](index=10&type=chunk) - The stock code is **837**, and the company website is www.ctans.com[10](index=10&type=chunk) [Financial Highlights](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Overview of Financial Performance and Liquidity](index=7&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE%E8%88%87%E6%B5%81%E5%8B%95%E6%80%A7%E6%A6%82%E8%A6%BD) This section summarizes key financial indicators for the six months ended June 30, 2020, showing significant declines in revenue and profit due to the pandemic, but marked improvements in liquidity and no interest-bearing bank borrowings 2020 H1 Key Financial Data (Unaudited) | Indicator | 2020 H1 (RMB thousand) | 2019 H1 (RMB thousand) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Revenue | 108,069 | 170,355 | (36.6)% | | Cost of Sales | (46,664) | (63,923) | (27.0)% | | Gross Profit | 61,405 | 106,432 | (42.3)% | | Gross Profit Margin | 56.8% | 62.5% | (5.7) percentage points | | Profit Before Tax | 35,760 | 87,392 | (59.1)% | | Profit for the Period | 27,878 | 73,046 | (61.8)% | | Profit Attributable to Owners of the Company | 26,808 | 73,046 | (63.3)% | | Basic Earnings Per Share (RMB cents) | 10.8 | 29.4 | (63.3)% | Liquidity and Gearing (Unaudited) | Indicator | June 30, 2020 | December 31, 2019 | Percentage Change | | :--- | :--- | :--- | :--- | | Current Ratio | 6.80 | 2.78 | 144.6% | | Quick Ratio | 4.32 | 2.14 | 101.9% | | Gearing Ratio | Not Applicable (4) | Not Applicable (4) | Not Applicable (4) | - The Group had no interest-bearing bank borrowings as of June 30, 2020, and December 31, 2019, hence the gearing ratio is not applicable[18](index=18&type=chunk) [Chairman's Report](index=8&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%E6%9B%B8) [Challenges and Response Strategies Amidst the Pandemic](index=9&type=section&id=%E7%96%AB%E6%83%85%E4%B8%8B%E7%9A%84%E6%8C%91%E6%88%B0%E8%88%87%E6%87%89%E5%B0%8D%E7%AD%96%E7%95%A5) The Chairman's Report highlights the severe challenges posed by the COVID-19 pandemic, disrupting market and production order, but the company actively responded by supporting franchisees, launching incentive programs, and exploring new channels like IP collaborations and live streaming to expand market reach and brand influence, while remaining committed to core values and seeking breakthroughs in the second half - The COVID-19 pandemic posed severe challenges to the company, disrupting market and production order[23](index=23&type=chunk) - The company maintained close contact with franchisees, launched an incentive program for franchised stores, and actively explored new channels such as IP collaborations and live streaming to expand the market and enhance brand influence[23](index=23&type=chunk) - The company will continue to strive for breakthroughs and innovations in stable development in the second half of the year, ensuring the brand remains relevant and forward-looking, while thanking shareholders and investors for their understanding and support[24](index=24&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Management Review](index=11&type=section&id=%E7%AE%A1%E7%90%86%E5%9B%9E%E9%A1%A7) During the pandemic, the Group prioritized employee safety, provided protective supplies to staff and stores, and committed to no salary reductions and timely payments, gradually resuming full operations by early May, while also formulating plans for market expansion, product upgrades, and brand promotion to seize new opportunities - At the onset of the pandemic, the Group prioritized the safety of employees, their families, and franchised stores, providing medical masks and alcohol, and committed to no salary reductions and timely payments[28](index=28&type=chunk)[29](index=29&type=chunk) - The Group actively responded to government requirements for work resumption, gradually restoring normal production and operations from partial resumption in early March to full resumption by early May[29](index=29&type=chunk) - Future work plans focus on expanding new market channels, upgrading product after-sales service, developing new craft products, quality control, improving production efficiency, brand communication, establishing a social responsibility system, and new factory planning[29](index=29&type=chunk) [Business Review](index=12&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) This section details the performance and response strategies for offline and online businesses during the pandemic, showing severe challenges for offline operations mitigated by franchisee support and service upgrades, while online business achieved growth through new models like live streaming despite logistics issues, alongside active IP collaborations and overseas market expansion - The pandemic caused a severe downturn in offline business, but the marketing team and franchisees jointly responded through aid with protective materials and private domain traffic marketing via WeChat Moments[33](index=33&type=chunk)[37](index=37&type=chunk) - Online e-commerce business initially suffered from logistics disruptions but achieved counter-trend growth through the "online stay-at-home economy" and live streaming (e.g., "Xiao Zhu Pei Qi"), with Mother's Day sales increasing by **22.5% year-on-year** and significantly enhancing new customer acquisition[54](index=54&type=chunk) - The company actively engaged in IP/cross-industry collaborations (e.g., Mulan series, Xiaomi Youpin, Lin Qingxuan) and continuously upgraded brand image and store design[44](index=44&type=chunk)[47](index=47&type=chunk) [Offline Business](index=12&type=section&id=%E7%B7%9A%E4%B8%8B%E6%A5%AD%E5%8B%99) Offline business faced severe challenges due to the pandemic, with a reduction in domestic franchised stores, but the company actively responded through multi-channel promotion, upgraded after-sales services, IP collaborations, and brand image enhancements; performance recovery showed faster recovery for shopping mall and street-front stores, slower for transport hub and scenic area stores, stable growth in group purchases, but severe disruption to overseas business Store Count Comparison (December 31, 2019 vs June 30, 2020) | Region | December 31, 2019 | June 30, 2020 | | :--- | :--- | :--- | | Mainland China Franchised Stores | 1,242 | 1,187 | | Mainland China Directly Operated Stores | 3 | 3 | | Hong Kong Directly Operated Stores | 3 | 3 | | Other Countries & Regions Franchised Stores/Counters | 7 | 7 | | Total | 1,249 (Franchised Stores) + 6 (Directly Operated Stores) | 1,194 (Franchised Stores) + 6 (Directly Operated Stores) | - The company launched a WeChat Moments private domain traffic marketing strategy, with **831 specialty stores** participating in social retail activities from February 10 to March 10, resulting in **21,138 products sold** and a cumulative transaction amount of approximately **RMB 3.99 million**[37](index=37&type=chunk) - The Group firmly implemented "lifetime free repair service," upgraded its repair system, and established **32 authorized repair stations** nationwide (**15 online**), handling **1,954 orders** since its launch on May 18[38](index=38&type=chunk) - As of June 30, 2020, POS sales completed **51.92% of the first-half target**, reaching **53.27% of the same period last year**, with shopping mall and street-front stores recovering faster, while transport hub and scenic area stores recovered slower[45](index=45&type=chunk) - Group purchase business showed stable growth, with group purchase amount increasing by **17.29%** compared to the same period last year[48](index=48&type=chunk) - The global pandemic led to the shelving of new overseas store projects, temporary closure of most overseas stores, and some shifting to online sales[49](index=49&type=chunk) [Online Business](index=16&type=section&id=%E7%B7%9A%E4%B8%8A%E6%A5%AD%E5%8B%99) Online business initially saw sales decline due to logistics disruptions during the pandemic, but successfully stimulated consumption by actively developing the "online stay-at-home economy" and new retail models, such as participating in "Xiao Zhu Pei Qi" live streaming, achieving a **22.5% year-on-year sales increase** during Mother's Day and significantly boosting new customer acquisition, with overseas online business also expanding well, particularly on Amazon Japan - Online e-commerce business lost **1.5 months of sales time** due to the pandemic, with February sales decreasing by **31% year-on-year**[54](index=54&type=chunk) - Through efforts, domestic online platforms completed **48.98% of the annual total target**, with sales only decreasing by **2.84%** compared to the same period in 2019[54](index=54&type=chunk) - Participating in the "Xiao Zhu Pei Qi" live streaming during Mother's Day resulted in a **22.5% year-on-year sales increase**, with **340,000 visitors** and **19,000 orders** placed on the night of the live stream, totaling nearly **RMB 1.4 million** in payments, significantly enhancing new customer acquisition[54](index=54&type=chunk) - Tan Mujiang's online e-commerce has launched on numerous overseas platforms including Amazon US, eBay Australia, and Amazon Japan, with Amazon Japan showing an upward trend in both order volume and average order value (from **JPY 2,000 to JPY 4,000**), indicating market development potential[62](index=62&type=chunk) [Creative R&D](index=18&type=section&id=%E5%89%B5%E6%84%8F%E7%A0%94%E7%99%BC) The Creative Design Center, guided by the "Crafting Oriental Beauty" brand positioning, delves into traditional Chinese culture to create a fashionable and youthful brand image; despite pandemic impacts, the department focused on product use and comb function R&D, successfully developing 8 new products, prototyping 36, launching 9, with Disney IP products accounting for **6.1% of total retail sales**, and securing 3 design patents - Creative R&D focuses on the "Crafting Oriental Beauty" brand positioning, deeply exploring traditional Chinese culture to create a fashionable and youthful brand image[65](index=65&type=chunk) - In the first half, **8 new product development tasks** were undertaken, **36 prototypes** made, and **9 products** launched after review, including flat combs, inlaid tooth combs, hairpins, and gift sets[65](index=65&type=chunk) - Retail sales of launched Disney IP products accounted for **6.1% of total retail sales**[65](index=65&type=chunk) - The Creative Design Center obtained **3 design patent certificates**[65](index=65&type=chunk) [Production Technology](index=19&type=section&id=%E7%94%A2%E5%93%81%E6%8A%80%E8%A1%93) The Wanzhou factory fully resumed operations from March to late April, but product output in the first half decreased by **37.8% year-on-year**; technologically, the inlaid tooth comb milling machine was developed, and innovations in manual profiling, automatic profiling, and fuzzy polishing techniques were achieved to optimize production, enhance efficiency, and save costs, while securing 2 utility model patents and 3 design patents, with multiple new patent applications - The Wanzhou factory resumed work on March 3 and fully resumed by the end of April, producing approximately **1,468,000 units** in the first half, a **37.8% year-on-year decrease**[72](index=72&type=chunk) - Technologically, the inlaid tooth comb milling machine equipment development was completed, and innovations in manual profiling, automatic profiling processes, and fuzzy polishing techniques were developed to optimize production processes, shorten cycles, improve efficiency, and save costs[69](index=69&type=chunk)[74](index=74&type=chunk) - During the reporting period, the company obtained **2 utility model patents** and **3 design patent authorizations**, and applied for **1 invention patent**, **11 utility model patents**, and **3 design patents**[74](index=74&type=chunk) [Logistics and Distribution](index=20&type=section&id=%E7%89%A9%E6%B5%81%E9%85%8D%E9%80%81) Amidst the severe pandemic, the logistics center began processing orders on February 13 and was approved to resume work on February 26, ensuring no employee infections; the Group promptly organized product processing and timely distribution, especially for live streaming events, saving logistics costs through full-truck transportation and monthly express billing, while adjusting quality control to include on-site final inspection and pre-assembly inspection, though the issue of metal comb pin oxidation remains unresolved - The logistics center began processing orders on February 13 during the pandemic and was approved to resume work on February 26, ensuring no employee infections[77](index=77&type=chunk) - The Group promptly organized product processing and timely distribution, especially for the "Xiao Zhu Pei Qi" live streaming event and collaboration with Yizhen[77](index=77&type=chunk) - Logistics costs and workload were saved by arranging full-truck transportation and changing express delivery from cash-on-delivery to monthly billing[77](index=77&type=chunk) - Quality control processes were adjusted to include final inspection of products at the Wanzhou factory and pre-assembly inspection at the logistics center, but the issue of metal comb pin oxidation in hair care combs remains to be resolved[77](index=77&type=chunk) [Brand Promotion](index=20&type=section&id=%E5%93%81%E7%89%8C%E6%8E%A8%E5%BB%A3) During the reporting period, many offline brand promotion plans were postponed, prompting the company to adjust its strategy by strengthening online promotion, delving into brand essence, and emphasizing internal-to-external communication; specific measures included organizing a brand culture knowledge base, multi-dimensional showcasing of "the beauty of combs," and creating "Ode to Labor" posters, with plans for a franchisee story documentary in the second half to boost morale - Brand promotion strategy shifted to strengthening online promotion, delving into brand essence, and emphasizing internal-to-external communication[78](index=78&type=chunk) - Organized Tan Mujiang's brand culture knowledge base, presented in "text + audio" format, and multi-dimensionally showcased "the beauty of combs" covering its history, craftsmanship, stories, and culture[78](index=78&type=chunk) - During the May Day holiday, a series of posters titled "Ode to Labor" were created and disseminated, featuring frontline factory employees to express respect[83](index=83&type=chunk) - Plans for the second half of 2020 include filming a brand promotional video about franchisee stories to showcase their spirit and boost morale[83](index=83&type=chunk) [Social Responsibility](index=22&type=section&id=%E7%A4%BE%E6%9C%83%E8%B2%AC%E4%BB%BB) During the pandemic, the Group strictly adhered to national prevention measures, ensured employee well-being, paid salaries on time and in full, and delivered protective supplies to staff, while also providing support policies to franchised stores and donating medical protective materials to Wuhan Central Hospital, demonstrating social responsibility; despite the challenges of resuming work, the company successfully managed self-rescue in production, committing that "no employee would be left behind" - During the pandemic, the Group ensured employee well-being, paid salaries on time and in full, and delivered protective supplies to employees[87](index=87&type=chunk) - The company provided support policies to franchised stores to overcome the pandemic and organized donations of medical protective materials to Wuhan Central Hospital, fulfilling its social responsibility[87](index=87&type=chunk) - Despite the significant challenges in resuming work at the Wanzhou factory, the Group established a high-standard and strict prevention and control system, successfully managed self-rescue in production, and ensured "no employee was left behind"[87](index=87&type=chunk) [Financial Review](index=23&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides a detailed financial review for the six months ended June 30, 2020, showing significant declines in revenue, gross profit, and operating profit due to the pandemic, with increased selling and distribution expenses but reduced administrative expenses, leading to substantial drops in profit for the period and profit attributable to owners, yet the Group maintains ample liquidity, no bank borrowings, and confirmed going concern ability - For the six months ended June 30, 2020, revenue was approximately **RMB 108.069 million**, a **36.6% decrease** year-on-year, primarily due to the pandemic[91](index=91&type=chunk) - Gross profit was approximately **RMB 61.405 million**, a **42.3% decrease**; gross profit margin declined from **62.5% in 2019 to 56.8% in 2020**, mainly due to changes in sales mix[94](index=94&type=chunk) - Operating profit was approximately **RMB 36.001 million**, a **59.0% decrease**, primarily attributable to reduced gross profit, lower other income, and increased selling and distribution expenses, partially offset by reduced administrative expenses[99](index=99&type=chunk) - Profit for the period was approximately **RMB 27.878 million**, a **61.8% decrease**; profit attributable to owners of the company was approximately **RMB 26.808 million**, a **63.3% decrease**[107](index=107&type=chunk)[108](index=108&type=chunk) - The Group has ample liquidity, no bank borrowings, cash and bank balances of **RMB 24.429 million**, and confirmed sufficient working capital for at least the next twelve months[109](index=109&type=chunk) [Revenue](index=23&type=section&id=%E6%94%B6%E7%9B%8A) For the six months ended June 30, 2020, the Group's revenue was approximately **RMB 108.069 million**, a **36.6% decrease** year-on-year, primarily due to the negative impact of the pandemic on foot traffic, logistics, market demand, and the suspension of production after the Lunar New Year - Revenue decreased by **36.6% year-on-year** to **RMB 108.069 million**[91](index=91&type=chunk) - Main reasons were the negative impact of the pandemic on foot traffic, logistics, market demand, and production suspension[91](index=91&type=chunk) Revenue Composition (2020 H1) | Sales | 2020 (RMB thousand) | Percentage (%) | | :--- | :--- | :--- | | －Combs | 21,867 | 20.2 | | －Mirrors | 115 | 0.1 | | －Gift Sets | 83,594 | 77.4 | | －Other Accessories | 2,399 | 2.2 | | Franchise Fee Income | 94 | 0.1 | | Total | 108,069 | 100.0 | [Cost of Sales](index=23&type=section&id=%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) For the six months ended June 30, 2020, cost of sales was approximately **RMB 46.664 million**, a **27.0% decrease** year-on-year, primarily due to the reduction in revenue - Cost of sales decreased by **27.0% year-on-year** to **RMB 46.664 million**[93](index=93&type=chunk) - The decrease in cost of sales was primarily attributable to the decline in revenue[93](index=93&type=chunk) [Gross Profit and Gross Profit Margin](index=23&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) For the six months ended June 30, 2020, gross profit was approximately **RMB 61.405 million**, a **42.3% decrease**; gross profit margin declined from **62.5% in 2019 to 56.8% in 2020**, mainly due to a shift in sales mix with a reduced proportion of higher-margin products - Gross profit decreased by **42.3% year-on-year** to **RMB 61.405 million**[94](index=94&type=chunk) - Gross profit margin decreased from **62.5% to 56.8%** (a **5.7 percentage point decrease**)[94](index=94&type=chunk) - The decline in gross profit margin was primarily due to a change in sales mix, with a reduced proportion of higher-margin products[94](index=94&type=chunk) [Other Income](index=24&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) For the six months ended June 30, 2020, net other income was approximately **RMB 25.672 million**, an **11.9% decrease** year-on-year, primarily due to a reduction of approximately **RMB 6.974 million** in China VAT preferential refunds, partially offset by an increase of approximately **RMB 3.987 million** in government subsidies - Net other income decreased by **11.9% year-on-year** to **RMB 25.672 million**[96](index=96&type=chunk) - Primarily due to a **RMB 6.974 million decrease** in China VAT preferential refunds, partially offset by a **RMB 3.987 million increase** in government subsidies[96](index=96&type=chunk) [Selling and Distribution Expenses](index=24&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E9%96%8B%E6%94%AF) For the six months ended June 30, 2020, selling and distribution expenses were approximately **RMB 29.764 million**, a **15.6% increase** year-on-year, primarily due to an increase of approximately **RMB 2.599 million** in advertising and promotion expenses - Selling and distribution expenses increased by **15.6% year-on-year** to **RMB 29.764 million**[97](index=97&type=chunk) - Primarily due to a **RMB 2.599 million increase** in advertising and promotion expenses[97](index=97&type=chunk) [Administrative Expenses](index=24&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) For the six months ended June 30, 2020, administrative expenses were approximately **RMB 12.601 million**, a **22.4% decrease** year-on-year, primarily due to a reduction of approximately **RMB 2.563 million** in depreciation of right-of-use assets - Administrative expenses decreased by **22.4% year-on-year** to **RMB 12.601 million**[98](index=98&type=chunk) - Primarily due to a **RMB 2.563 million decrease** in depreciation of right-of-use assets[98](index=98&type=chunk) [Operating Profit](index=24&type=section&id=%E7%B6%93%E7%87%9F%E6%BA%A2%E5%88%A9) For the six months ended June 30, 2020, operating profit was approximately **RMB 36.001 million**, a **59.0% decrease** year-on-year, primarily attributable to reduced gross profit, lower other income, and increased selling and distribution expenses, partially offset by reduced administrative expenses - Operating profit decreased by **59.0% year-on-year** to **RMB 36.001 million**[99](index=99&type=chunk) - Primarily impacted by a **RMB 45.027 million decrease** in gross profit, a **RMB 3.475 million decrease** in other income, and a **RMB 4.027 million increase** in selling and distribution expenses, partially offset by a **RMB 3.647 million decrease** in administrative expenses[99](index=99&type=chunk) [Finance Costs](index=24&type=section&id=%E8%9E%8D%E8%B3%87%E9%96%8B%E6%94%AF) For the six months ended June 30, 2020, finance costs were approximately **RMB 241,000**, primarily arising from the adoption of HKFRS 16, with no interest expenses on bank borrowings during this period - Finance costs were approximately **RMB 241,000**, primarily arising from the adoption of HKFRS 16[100](index=100&type=chunk) - The Group had no interest expenses on bank borrowings during this period[100](index=100&type=chunk) [Profit Before Tax](index=25&type=section&id=%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) For the six months ended June 30, 2020, profit before tax was approximately **RMB 35.760 million**, a **59.1% decrease** year-on-year, primarily attributable to the reduction in operating profit - Profit before tax decreased by **59.1% year-on-year** to **RMB 35.760 million**[105](index=105&type=chunk) - Primarily attributable to a **RMB 51.719 million decrease** in operating profit[105](index=105&type=chunk) [Income Tax Expense](index=25&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) For the six months ended June 30, 2020, income tax expense was approximately **RMB 7.882 million**, a **45.1% decrease** year-on-year, primarily due to reduced profit before tax; the effective tax rate increased from **16.4% in 2019 to 22.0% in 2020** - Income tax expense decreased by **45.1% year-on-year** to **RMB 7.882 million**[106](index=106&type=chunk) - The effective tax rate increased from **16.4% in 2019 to 22.0% in 2020** (a **5.6 percentage point increase**)[106](index=106&type=chunk) [Profit for the Period](index=25&type=section&id=%E6%9C%9F%E5%85%A7%E6%BA%A2%E5%88%A9) For the six months ended June 30, 2020, profit for the period was approximately **RMB 27.878 million**, a **61.8% decrease** year-on-year, primarily impacted by the aforementioned financial factors - Profit for the period decreased by **61.8% year-on-year** to **RMB 27.878 million**[107](index=107&type=chunk) [Profit Attributable to Owners of the Company](index=25&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%93%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%B5%E6%BA%A2%E5%88%A9) For the six months ended June 30, 2020, profit attributable to owners of the company was approximately **RMB 26.808 million**, a **63.3% decrease** year-on-year, primarily due to the reduction in profit for the period - Profit attributable to owners of the company decreased by **63.3% year-on-year** to **RMB 26.808 million**[108](index=108&type=chunk) - The primary reason was a **RMB 45.168 million decrease** in profit for the period[108](index=108&type=chunk) [Liquidity and Sources of Funds](index=25&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E9%87%91%E4%BE%86%E6%BA%90) The Group primarily relies on cash generated from operations and long-term and short-term bank borrowings to meet its funding needs; there were no bank loans during the reporting period, and the Board believes the Group has sufficient working capital for at least the next twelve months, with cash and bank balances of **RMB 24.429 million** as of June 30, 2020 - The Group primarily relies on cash generated from operations and long-term and short-term bank borrowings to meet its funding needs, with no bank loans during the reporting period[109](index=109&type=chunk) - The Board believes the Group has sufficient working capital to meet its funding needs for at least the next twelve months[109](index=109&type=chunk) - As of June 30, 2020, cash and bank balances were **RMB 24.429 million**[109](index=109&type=chunk) [Cash Flow](index=26&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) During the reporting period, the Group's cash and cash equivalents decreased by approximately **RMB 14.951 million**, with net cash outflow from operating activities, net cash inflow from investing activities, net cash outflow from financing activities, and a negative impact from exchange rate changes - During the reporting period, cash and cash equivalents decreased by approximately **RMB 14.951 million**[113](index=113&type=chunk) - Net cash outflow from operating activities was approximately **RMB 11.822 million**[113](index=113&type=chunk) - Net cash inflow from investing activities was approximately **RMB 215.300 million**[113](index=113&type=chunk) - Net cash outflow from financing activities was approximately **RMB 213.411 million**[113](index=113&type=chunk) - Net negative impact from exchange rate changes was approximately **RMB 5.018 million**[113](index=113&type=chunk) [Capital Structure, Gearing Ratio and Charges on Assets](index=26&type=section&id=%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B%E3%80%81%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E7%8E%87%E5%8F%8A%E8%B3%87%E7%94%A2%E6%8A%BC%E8%A8%98) As of June 30, 2020, the Group had no bank loans, thus the gearing ratio was not applicable, and no assets were pledged - The Group had no bank loans as of June 30, 2020, and December 31, 2019[114](index=114&type=chunk) - Due to the absence of bank borrowings, the gearing ratio is not applicable[114](index=114&type=chunk) - As of June 30, 2020, the Group had no assets pledged to banks[115](index=115&type=chunk) [Capital Expenditure](index=26&type=section&id=%E8%B3%87%E6%9C%AC%E6%94%AF%E5%87%BA) During the reporting period, the Group's capital expenditure was **RMB 2.034 million**, primarily for the purchase of property, plant and equipment, renovation of leased properties, and vehicles - Capital expenditure during the reporting period was **RMB 2.034 million**[116](index=116&type=chunk) - Primarily used for the purchase of property, plant and equipment, renovation of leased properties, and vehicles[116](index=116&type=chunk) [Exchange Rate Risk](index=26&type=section&id=%E5%BD%99%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group's principal operations use RMB and HKD as functional and operating currencies, thus it has no significant risk from other exchange rate fluctuations - The Group's principal operations use RMB and HKD as functional and operating currencies[117](index=117&type=chunk) - There is no significant risk from other exchange rate fluctuations[117](index=117&type=chunk) [Contingent Liabilities, Legal and Potential Proceedings](index=26&type=section&id=%E6%88%96%E6%9C%89%E8%B2%A0%E5%82%B5%E3%80%81%E6%B3%95%E5%BE%8B%E8%A8%B4%E8%A8%9F%E5%8F%8A%E6%BD%9B%E5%9C%A8%E8%A8%B4%E8%A8%9F) As of June 30, 2020, the Group had no significant contingent liabilities, legal proceedings, or potential proceedings - As of June 30, 2020, the Group had no significant contingent liabilities, legal proceedings, or potential proceedings[118](index=118&type=chunk) [Material Acquisitions and Disposals](index=26&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%92%8C%E5%87%BA%E5%94%AE) For the six months ended June 30, 2020, the Group had no material acquisitions or disposals - For the six months ended June 30, 2020, the Group had no material acquisitions or disposals[119](index=119&type=chunk) [Going Concern](index=26&type=section&id=%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F) Based on its current financial position and available financing, the Group has sufficient financial resources to continue operations for the foreseeable future, and thus the financial statements are prepared on a going concern basis - The Group has sufficient financial resources to continue operations for the foreseeable future[120](index=120&type=chunk) - The financial statements have been prepared on a going concern basis[120](index=120&type=chunk) [Future Outlook](index=27&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B) The Group views the pandemic as both a challenge and an opportunity, having demonstrated its resilience; future plans include adjusting marketing and communication strategies, achieving modular interaction in marketing and services, enhancing store marketing capabilities, and promoting digital transformation of specialty stores, while integrating communication and sales channels, planning promotions with a user-centric approach, deeply exploring the beauty of traditional Chinese culture, elucidating the "Oriental Wooden Comb" concept, and implementing online-offline联动 to gain broader consumer recognition - The Group views the pandemic as both a change and an opportunity, having demonstrated its strong risk resistance capability[124](index=124&type=chunk) - Marketing and communication strategies will be adjusted to achieve modular interaction in marketing and services, enhance store marketing capabilities, and promote digital transformation and upgrading of specialty stores[124](index=124&type=chunk) - Communication and sales channels will be integrated, promotions planned with a user-centric approach, the beauty of traditional Chinese culture deeply explored, and the "Oriental Wooden Comb" concept elucidated[124](index=124&type=chunk) - Future plans include implementing online-offline integration to introduce Tan Mujiang to more consumers, emphasizing patriotism and industrial revitalization[124](index=124&type=chunk) [Human Resources and Training](index=27&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E5%8F%8A%E5%9F%B9%E8%A8%93) As of June 30, 2020, the Group employed **958 staff** and is committed to providing employment opportunities for people with disabilities; the company values employee self-improvement, offering various themed exhibitions, workshops, lectures, and on-the-job training to enhance skills in work, marketing, teamwork, professional etiquette, production management, and accounting practices, thereby consolidating and practicing corporate culture - As of June 30, 2020, the Group employed **958 staff** and is committed to providing employment opportunities for people with disabilities[125](index=125&type=chunk) - The Group values employee self-improvement, offering themed exhibitions, workshops, lectures, and on-the-job training to enhance skills in work, marketing strategies, teamwork, professional etiquette, production management, and accounting practices[125](index=125&type=chunk) - Training formats include in-person instruction and examinations, aiming to consolidate and practice Tan Mujiang's corporate culture[125](index=125&type=chunk) [Other Information](index=28&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Principal Business](index=28&type=section&id=%E4%B8%BB%E8%A6%81%E6%A5%AD%E5%8B%99) The company is an investment holding company, with its group primarily engaged in designing, manufacturing, and distributing creative small wooden ornaments made from natural wood with traditional Chinese cultural characteristics; its business model includes operating franchised stores and distribution networks in China, and directly selling products through retail stores in Hong Kong and China, with products mainly categorized as wooden/horn combs, pocket wooden mirrors, other wooden ornaments and decorations, and themed gift sets, mostly sold under the "Tan Mujiang" brand - The company is an investment holding company; the Group primarily designs, manufactures, and distributes creative small wooden ornaments made from natural wood with traditional Chinese cultural characteristics[127](index=127&type=chunk) - The business model includes operating franchised stores and distribution networks in China, and directly selling products through retail stores in Hong Kong and China[127](index=127&type=chunk) - Products are mainly categorized as wooden/horn combs, pocket wooden mirrors, other wooden ornaments and decorations, and themed gift sets for gifting purposes, mostly sold under the "Tan Mujiang" brand[127](index=127&type=chunk) [Directors' Interests in Competing Businesses](index=28&type=section&id=%E8%91%A3%E4%BA%8B%E6%96%BC%E7%AB%B6%E7%88%AD%E6%80%A7%E6%A5%AD%E5%8B%99%E7%9A%84%E6%AC%8A%E7%9B%8A) For the six months ended June 30, 2020, none of the company's directors had any interests in businesses that directly or indirectly compete or may compete with the Group's business - For the six months ended June 30, 2020, none of the company's directors had any interests in any business that competes or may compete with the Group's business[128](index=128&type=chunk) [Directors' Securities Interests](index=28&type=section&id=%E8%91%A3%E4%BA%8B%E4%B9%8B%E8%AD%89%E5%88%B8%E6%AC%8A%E7%9B%8A) As of June 30, 2020, the company's directors and chief executive held interests in the shares of the company and its associated corporations, with Mr. Tan Chuanhua holding **67.43%** through a controlled company and Mr. Tan Lizi holding **0.12%** as a beneficial owner Directors' Interests in Company Shares (June 30, 2020) | Director Name | Capacity/Nature of Interest | Number of Securities | Approximate Percentage of Holding | | :--- | :--- | :--- | :--- | | Mr. Tan Chuanhua | Interest in controlled corporation | 167,700,000 | 67.43% | | Mr. Tan Lizi | Beneficial owner | 300,000 | 0.12% | Directors' Interests in Associated Corporation Shares (June 30, 2020) | Director Name | Associated Corporation | Capacity/Nature of Interest | Approximate Percentage of Interest in Associated Corporation | | :--- | :--- | :--- | :--- | | Mr. Tan Chuanhua | Lingchang | Beneficial owner | 51% | [Major Shareholders' Securities Interests](index=29&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E4%B9%8B%E8%AD%89%E5%88%B8%E6%AC%8A%E7%9B%8A) As of June 30, 2020, major shareholders holding **5% or more** of the company's issued share capital included Mr. Tan Chuanhua, Ms. Fan Chengqin, and Lingchang, all holding **167,700,000 shares** through controlled companies, representing **67.43%** of the issued share capital Major Shareholders' Interests in Company Shares (June 30, 2020) | Name | Capacity/Nature of Interest | Number of Shares | Type | Approximate Percentage | | :--- | :--- | :--- | :--- | :--- | | Mr. Tan Chuanhua | Interest in controlled corporation | 167,700,000 | Long Position | 67.43% | | Ms. Fan Chengqin | Interest in controlled corporation | 167,700,000 | Long Position | 67.43% | | Lingchang | Beneficial owner | 167,700,000 | Long Position | 67.43% | - Mr. Tan Chuanhua holds a **51% interest** in Lingchang, Ms. Fan Chengqin holds a **49% interest** in Lingchang, and Lingchang is a controlling shareholder as defined by the Listing Rules[134](index=134&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Share Option Scheme](index=29&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company adopted a share option scheme on November 17, 2009, to recognize and incentivize eligible individuals' contributions, stipulating that the total shares issued upon exercise of options shall not exceed **10% of issued shares**, and for any single eligible person, not more than **1%** in any twelve-month period, with an exercise period of up to ten years; as of June 30, 2020, **700,000 share options** remained unexercised - The share option scheme was adopted on November 17, 2009, to recognize and incentivize eligible individuals' contributions to the Group[139](index=139&type=chunk)[140](index=140&type=chunk) - The total number of shares that may be issued upon exercise of options under this scheme and other share option schemes shall not exceed **10% of the total issued shares** (i.e., **25,000,000 shares**)[143](index=143&type=chunk) - The maximum number of shares issued upon exercise of options by any one eligible person in any twelve-month period shall not exceed **1% of the issued shares**[144](index=144&type=chunk) - The exercise period for share options is determined by the Board, not exceeding ten years from the grant date[145](index=145&type=chunk) Share Option Overview (June 30, 2020) | Grantee | Position | Grant Date | Option Period | Exercise Price Per Share (HKD) | Unexercised as of Jan 1, 2020 | Unexercised as of June 30, 2020 | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Tan Lizi | Executive Director | August 31, 2018 | August 31, 2018 to August 30, 2023 | 4.896 | 300,000 | 300,000 | 0.12% | | Ms. Jian Kejia | Marketing Director | August 31, 2018 | August 31, 2018 to August 30, 2023 | 4.896 | 200,000 | 200,000 | 0.08% | | Mr. An Hongping | Administrative Director | August 31, 2018 | August 31, 2018 to August 30, 2023 | 4.896 | 200,000 | 200,000 | 0.08% | | Total | | | | | 900,000 | 700,000 | 0.28% | [Capital Commitments](index=31&type=section&id=%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) As of June 30, 2020, the Group had capital commitments contracted but not provided for, amounting to approximately **RMB 1.087 million** for the acquisition of property, plant, and equipment - As of June 30, 2020, the Group had capital commitments contracted but not provided for, amounting to approximately **RMB 1.087 million** for the acquisition of property, plant, and equipment[155](index=155&type=chunk) [Public Float](index=31&type=section&id=%E5%85%AC%E7%9C%BE%E6%8C%81%E8%82%A1%E9%87%8F) From the reporting period to the date of this report, at least **25%** of the company's issued share capital was held by public shareholders, complying with Listing Rules requirements - From the reporting period to the date of this report, at least **25% of the company's issued share capital** was held by public shareholders[156](index=156&type=chunk) [Dividends](index=32&type=section&id=%E8%82%A1%E6%81%AF) The company paid a final dividend of **HKD 28.04 cents per share** for the year ended December 31, 2019, totaling approximately **RMB 62.502 million**, on June 29, 2020; the Board resolved not to declare any interim dividend for the six months ended June 30, 2020 - The company declared and paid a final dividend of **HKD 28.04 cents per share** for the year ended December 31, 2019, totaling approximately **RMB 62.502 million** to all shareholders[160](index=160&type=chunk) - The Board resolved not to declare any interim dividend for the six months ended June 30, 2020[161](index=161&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=32&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's 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[162](index=162&type=chunk) [Use of Net Proceeds from the Company's Initial Public Offering](index=32&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E9%A6%96%E6%AC%A1%E5%85%AC%E9%96%8B%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E6%B7%A8%E9%A1%8D%E7%9A%84%E7%94%A8%E9%80%94) The net proceeds from the company's initial public offering were approximately **RMB 116.8 million**; as of June 30, 2020, approximately **RMB 64.09 million** had been utilized, primarily for enhancing design and product development capabilities, improving operational efficiency, sales network and support services, constructing logistics centers and production facilities, and working capital, while business development plans for high-end home furnishing stores and fashion craft stores have been discontinued - The net proceeds from the company's initial public offering were approximately **RMB 116.8 million**[163](index=163&type=chunk) - As of June 30, 2020, approximately **RMB 64.09 million** had been utilized for design and product development, operational efficiency enhancement, sales network, logistics center and production facility construction, and working capital[163](index=163&type=chunk) - Business development plans for high-end home furnishing stores and fashion craft stores have been discontinued[163](index=163&type=chunk) [Corporate Governance Practices](index=32&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The Board is committed to adhering to the Corporate Governance Code outlined in the Listing Rules, adopting measures to strengthen internal control systems, continuous professional training for directors, and other standard practices; the company complied with all applicable code provisions of the Corporate Governance Code throughout the reporting period - The Board is committed to adhering to the Corporate Governance Code outlined in Appendix 14 of the Listing Rules, adopting measures to strengthen internal control systems and continuous professional training for directors[164](index=164&type=chunk) - The company complied with all applicable code provisions of the Corporate Governance Code throughout the reporting period[164](index=164&type=chunk) [Standard Code for Securities Transactions](index=33&type=section&id=%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E4%B9%8B%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules, and also adopted written guidelines for relevant employees no less stringent than the Standard Code; all directors confirmed compliance with the Standard Code during the reporting period, with no instances of employee violations of the written guidelines - The company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules[168](index=168&type=chunk) - Each director confirmed compliance with the Standard Code throughout the reporting period[168](index=168&type=chunk) - The company also adopted written guidelines for relevant employees no less stringent than the Standard Code, with no violations reported during the period[168](index=168&type=chunk) [Audit Committee](index=33&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, established on November 17, 2009, comprises three independent non-executive directors, chaired by Mr. Zhou Jinrong, and is primarily responsible for independently reviewing and overseeing financial reporting, internal control effectiveness, and the independence of external auditors; the committee reviewed the financial information in this interim report and confirmed that the adopted accounting treatments comply with current accounting standards and Listing Rules - The Audit Committee comprises three independent non-executive directors, chaired by Mr. Zhou Jinrong, who possesses recognized accounting professional qualifications[169](index=169&type=chunk) - The committee's primary responsibilities include independently reviewing and overseeing financial reporting, the effectiveness of internal controls, and the independence of external auditors[169](index=169&type=chunk) - The Audit Committee reviewed the company's unaudited condensed consolidated interim financial information for the six months ended June 30, 2020, and agreed with the adopted accounting treatments[169](index=169&type=chunk) [Events After Reporting Period](index=34&type=section&id=%E6%9C%AC%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) The COVID-19 pandemic, which erupted in January 2020, continues to impact the global business environment and has affected the Group; further changes in the Group's economic conditions due to the pandemic's development and spread may impact financial performance, but the extent of such impact remains unquantifiable as of the report date, and the Group will continue to monitor and actively respond - The COVID-19 pandemic, which erupted in January 2020, has impacted the global business environment and the Group[173](index=173&type=chunk) - Further changes in the Group's economic conditions due to the pandemic's development and spread may impact financial performance, but the extent of such impact remains unquantifiable as of the report date[173](index=173&type=chunk) - The Group will continue to monitor the pandemic's development and actively respond to its impact on financial position and operating results[173](index=173&type=chunk) [Information Disclosure](index=34&type=section&id=%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2) The company will dispatch the interim report for the six months ended June 30, 2020, to its shareholders in due course and will publish it on the HKEXnews website and the company's website - This interim report will be dispatched to the company's shareholders and published on the HKEXnews website (http://www.hkexnews.hk) and the company's website (http://www.ctans.com)[175](index=175&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=35&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) [Overview of Condensed Consolidated Statement of Profit or Loss](index=35&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8%E6%A6%82%E8%A6%BD) This condensed consolidated statement of profit or loss presents the unaudited financial performance for the six months ended June 30, 2020, showing significant year-on-year declines in revenue, gross profit, operating profit, and profit for the period, reflecting the substantial impact of the pandemic on the company's profitability Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30, 2020) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 108,069 | 170,355 | | Cost of Sales | (46,664) | (63,923) | | Gross Profit | 61,405 | 106,432 | | Other Income | 25,672 | 29,147 | | Selling and Distribution Expenses | (29,764) | (25,737) | | Administrative Expenses | (12,601) | (16,248) | | Other Operating Expenses | (8,711) | (5,874) | | Operating Profit | 36,001 | 87,720 | | Finance Costs | (241) | (328) | | Profit Before Tax | 35,760 | 87,392 | | Income Tax | (7,882) | (14,346) | | Profit for the Period | 27,878 | 73,046 | | Profit Attributable to Owners of the Company | 26,808 | 73,046 | | Non-controlling Interests | 1,070 | – | | Basic and Diluted Earnings Per Share | RMB 10.8 cents | RMB 29.4 cents | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=36&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) [Overview of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=36&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8%E6%A6%82%E8%A6%BD) This condensed consolidated statement of profit or loss and other comprehensive income shows that for the six months ended June 30, 2020, profit for the period was **RMB 27.878 million**, while other comprehensive income was primarily affected by exchange differences arising from the translation of functional currency to presentation currency, resulting in a total comprehensive income of **RMB 27.844 million** for the period, a significant year-on-year decrease Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2020) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Profit for the Period | 27,878 | 73,046 | | Other comprehensive income for the period: | | | | Exchange differences arising from translation of functional currency to presentation currency | (34) | 3,284 | | Total comprehensive income for the period | 27,844 | 76,330 | | Attributable to owners of the company | 26,774 | 76,330 | | Non-controlling Interests | 1,070 | – | [Condensed Consolidated Statement of Financial Position](index=37&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) [Overview of Condensed Consolidated Statement of Financial Position](index=37&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8%E6%A6%82%E8%A6%BD) This condensed consolidated statement of financial position shows that as of June 30, 2020, the Group's total assets less current liabilities were **RMB 591.213 million**, and net assets were **RMB 561.946 million**; compared to December 31, 2019, financial assets at fair value through profit or loss and cash and bank balances within current assets significantly decreased, leading to a decline in net current assets Condensed Consolidated Statement of Financial Position (As of June 30, 2020) | Indicator | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 60,364 | 60,539 | | Investment properties | 101,240 | 101,240 | | Right-of-use assets | 38,340 | 42,019 | | **Current assets** | | | | Inventories | 167,470 | 153,072 | | Trade receivables | 5,417 | 4,799 | | Financial assets at fair value through profit or loss | 242,145 | 447,584 | | Other receivables, deposits and prepayments | 19,225 | 18,892 | | Cash and bank balances | 24,429 | 39,380 | | **Current liabilities** | | | | Trade payables | 3,009 | 3,098 | | Other payables and accrued expenses | 36,137 | 196,288 | | Lease liabilities | 4,179 | 4,977 | | Income tax payable | 24,092 | 34,428 | | **Net assets** | 561,946 | 596,604 | | Equity attributable to owners of the company | 553,076 | 588,804 | | Non-controlling Interests | 8,870 | 7,800 | - Net current assets decreased from **RMB 424.936 million** as of December 31, 2019, to **RMB 391.269 million** as of June 30, 2020[189](index=189&type=chunk) - Financial assets at fair value through profit or loss significantly decreased from **RMB 447.584 million to RMB 242.145 million**[189](index=189&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=38&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) [Overview of Condensed Consolidated Statement of Changes in Equity](index=38&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8%E6%A6%82%E8%A6%BD) This condensed consolidated statement of changes in equity shows that for the six months ended June 30, 2020, equity attributable to owners of the company decreased from **RMB 588.804 million** at the beginning of the period to **RMB 553.076 million** at the end of the period, primarily reflecting the impact of profit for the period, exchange differences, and dividends paid Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, 2020) | Indicator | Share Capital (RMB thousand) | Share Premium (RMB thousand) | Capital Reserve (RMB thousand) | Other Reserves (RMB thousand) | Revaluation Reserve (RMB thousand) | Share-based Payment Reserve (RMB thousand) | Exchange Fluctuation Reserve (RMB thousand) | Retained Profits (RMB thousand) | Non-controlling Interests (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As of January 1, 2020 (audited) | 2,189 | 110,503 | 10,005 | 57,947 | 17,542 | 12,245 | 192 | (16,788) | 394,969 | 7,800 | 596,604 | | Profit for the Period | - | - | - | - | - | - | - | 26,808 | 1,070 | 27,878 | | Exchange differences arising from translation of functional currency to presentation currency | - | - | - | - | - | - | (34) | - | - | (34) | | Total comprehensive income for the period | - | - | - | - | - | - | (34) | 26,808 | 1,070 | 27,844 | | Dividends | - | - | - | - | - | - | - | (62,502) | - | (62,502) | | As of June 30, 2020 (unaudited) | 2,189 | 110,503 | 10,005 | 57,947 | 17,542 | 12,245 | 192 | (16,822) | 359,275 | 8,870 | 561,946 | - Equity attributable to owners of the company decreased from **RMB 588.804 million** as of January 1, 2020, to **RMB 553.076 million** as of June 30, 2020[191](index=191&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=39&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) [Overview of Condensed Consolidated Statement of Cash Flows](index=39&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8%E6%A6%82%E8%A6%BD) This condensed consolidated statement of cash flows shows that for the six months ended June 30, 2020, the Group's cash and cash equivalents net decreased by **RMB 9.933 million**, with net cash outflow from operating activities, net cash inflow from investing activities, net cash outflow from financing activities, and a negative impact from foreign exchange rate changes Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2020) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Net cash (used in)/generated from operating activities | (11,822) | 39,745 | | Net cash generated from investing activities | 215,300 | 65,268 | | Net cash used in financing activities | (213,411) | (116,412) | | Net decrease in cash and cash equivalents | (9,933) | (11,399) | | Cash and cash equivalents at January 1 | 39,380 | 46,203 | | Net effect of foreign exchange rate changes | (5,018) | 4,655 | | Cash and cash equivalents at June 30 | 24,429 | 39,459 | - Net cash used in operating activities was **RMB (11.822) million**, a significant shift from a net inflow in the same period last year[196](index=196&type=chunk) - Net cash generated from investing activities was **RMB 215.300 million**, primarily from the maturity proceeds of financial assets at fair value through profit or loss[196](index=196&type=chunk) [Notes to the Unaudited Interim Financial Report](index=40&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E9%99%84%E8%A8%BB) [General Information](index=40&type=section&id=%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) This section provides basic information about Tan Mujiang Holdings Limited, including its incorporation as an exempted company in the Cayman Islands, its listing on the Main Board of The Stock Exchange of Hong Kong Limited, and its principal place of business in Jurong City, Jiangsu Province, China - Tan Mujiang Holdings Limited was incorporated as an exempted company in the Cayman Islands on June 20, 2006[197](index=197&type=chunk) - Its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[197](index=197&type=chunk) - The principal place of business is located in Jurong City, Jiangsu Province, People's Republic of China[197](index=197&type=chunk) [Basis of Preparation](index=40&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This unaudited interim financial report is prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants; it involves management's judgments, estimates, and assumptions, and has been reviewed by the company's Audit Committee - This unaudited interim financial report is prepared in accordance with the Listing Rules of The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34[198](index=198&type=chunk) - In preparing the report, management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of financial statements[198](index=198&type=chunk) - The interim financial report is unaudited but has been reviewed by the company's Audit Committee[199](index=199&type=chunk) [Principal Accounting Policies](index=41&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) The condensed consolidated financial statements are prepared on a historical cost basis, except for investment properties and financial assets at fair value through profit or loss, which are stated at fair value; amendments to Hong Kong Financial Reporting Standards were first adopted and applied during this interim period, but they did not have a significant impact on the amounts presented or disclosures in the financial statements - The condensed consolidated financial statements are prepared on a historical cost basis, except for investment properties and financial assets at fair value through profit or loss[203](index=203&type=chunk) - Amendments to HKFRS 3, 9, 39, 7, 1, and 8 were first adopted and applied during this interim period[204](index=204&type=chunk) - The application of these amendments did not have a significant impact on the amounts presented or disclosures in the condensed consolidated financial statements[204](index=204&type=chunk) [Segment Reporting](index=42&type=section&id=%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) The Group's operating segments are identified based on internal reporting, with management assessing business performance from a product perspective; as over **90%** of revenue, results, and assets are derived from a single segment of manufacturing and distribution of wooden crafts and ornaments, and principal business activities are conducted in China, no segment and geographical information is presented, and no single external customer's transactions accounted for **10% or more** of total revenue - Over **90% of the Group's revenue, results, and assets** are derived from a single segment of manufacturing and distribution of wooden crafts and ornaments, thus no segment information is presented[209](index=209&type=chunk) - The Group's revenue and results are primarily derived from business activities conducted in the People's Republic of China, thus no geographical information is provided[209](index=209&type=chunk) - No transactions with a single external customer accounted for **10% or more** of the Group's total revenue[210](index=210&type=chunk) [Operating Seasonal Factors](index=42&type=section&id=%E7%B6%93%E7%87%9F%E5%AD%A3%E7%AF%80%E5%9B%A0%E7%B4%A0) The Group's sales generally fluctuate due to seasonal factors, with higher sales in March to April and September to December, and lower sales in July, primarily because franchised stores increase procurement in preparation for retail peaks during holidays such as Labor Day, National Day, Christmas, New Year, and Lunar New Year - The Group's sales are generally affected by seasonality, with higher sales in March to April and September to December, and lower sales in July[211](index=211&type=chunk) - Seasonal impact is attributed to franchised stores increasing procurement in preparation for retail peaks during holidays (e.g., Labor Day, National Day, Christmas, New Year, and Lunar New Year)[211](index=211&type=chunk) [Revenue and Other Income](index=43&type=section&id=%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) This section provides a detailed analysis of the composition of revenue and other income for the six months ended June 30, 2020; revenue primarily came from goods sales, with a smaller proportion from franchise fees, while other income sources included government subsidies, interest income from financial assets, fair value changes, China VAT preferential refunds, and investment property rental income Revenue and Other Income Analysis (For the six months ended June 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | **Revenue** | | | | Sales of goods | 107,975 | 170,034 | | Franchise fee income | 94 | 321 | | **Other Income** | | | | Government subsidies | 4,582 | 595 | | Interest income from financial assets | 39 | 117 | | Fair value changes of financial assets at fair value through profit or loss | 11,838 | 11,454 | | China VAT preferential refunds | 5,085 | 12,059 | | Rental income from investment properties | 2,716 | 3,849 | | Others | 1,409 | 996 | | **Total** | 133,741 | 199,502 | - Government subsidies significantly increased from **RMB 595 thousand in 2019 to RMB 4,582 thousand in 2020**[214](index=214&type=chunk) - China VAT preferential refunds decreased from **RMB 12,059 thousand in 2019 to RMB 5,085 thousand in 2020**[214](index=214&type=chunk) [Profit Before Tax](index=44&type=section&id=%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) This section lists the components of profit before tax for the six months ended June 30, 2020, including cost of inventories, depreciation, staff costs, reversal of provision for sales returns, and net rental income; cost of inventories and staff costs decreased year-on-year, while depreciation expenses increased Components of Profit Before Tax (For the six months ended June 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories | 46,664 | 63,923 | | Impairment loss on inventories | 1,255 | 1,349 | | Reversal of impairment loss on inventories | (3) | – | | Depreciation－property, plant and equipment | 2,152 | 1,517 | | Depreciation－right-of-use assets | 3,768 | 2,606 | | Loss allowance for trade and other receivables | 323 | 26 | | Staff costs (including directors' emoluments) | 29,334 | 32,487 | | Reversal of provision for sales returns | (1,104) | (829) | | Net rental income | (2,424) | (3,381) | - Cost of inventories (including staff costs and depreciation) of approximately **RMB 16.512 million** has been included in individual totals[217](index=217&type=chunk)[222](index=222&type=chunk) [Income Tax](index=45&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85) This section details the income tax expense for the six months ended June 30, 2020, including China corporate income tax, dividend withholding tax, and deferred tax; the company's subsidiary, Tan