[Corporate Information](index=3&type=section&id=Corporate%20Information) This section details the company's fundamental information, including board composition, key advisors, and significant personnel changes during the reporting period [Corporate Information](index=3&type=section&id=Corporate%20Information) This section details the company's fundamental information, including board composition, key advisors, and significant personnel changes during the reporting period - The company underwent several personnel adjustments on March 29, 2021, including resignations and new appointments of executive directors, authorized representatives, and the company secretary[5](index=5&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2021, the Group's revenue increased year-on-year, but profit attributable to owners of the company decreased, with the Board deciding not to declare an interim dividend [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2021, the Group's revenue increased year-on-year, but profit attributable to owners of the company decreased, with the Board deciding not to declare an interim dividend Key Financial Indicators for H1 2021 | Indicator | Six Months Ended June 30, 2021 (RMB '000) | Six Months Ended June 30, 2020 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | 20,745 | 19,096 | +8.6% | | **Profit Attributable to Owners of the Company** | 7,655 | 8,654 | -11.5% | - The Board does not recommend the payment of an interim dividend for the period[9](index=9&type=chunk)[10](index=10&type=chunk) [Report on Review of Condensed Consolidated Financial Statements](index=6&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) This section presents the auditor's review report on the condensed consolidated financial statements, confirming their compliance with applicable accounting standards [Report on Review of Condensed Consolidated Financial Statements](index=6&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) Deloitte Touche Tohmatsu reviewed the company's condensed consolidated financial statements for the six months ended June 30, 2021, concluding no matters suggesting non-compliance with IAS 34 in all material respects - Auditor Deloitte issued a standard unqualified review conclusion, affirming the financial statements comply in all material respects with International Accounting Standard 34 (Interim Financial Reporting)[18](index=18&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) During the period, revenue increased 8.6% to RMB 20.745 million and gross profit rose to RMB 17.396 million, but profit attributable to owners decreased 11.5% to RMB 7.655 million due to foreign exchange losses and higher finance costs Key Profit or Loss Items (RMB '000) | Item | H1 2021 | H1 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 20,745 | 19,096 | +8.6% | | Gross Profit | 17,396 | 15,919 | +9.3% | | Profit Before Tax | 10,610 | 11,609 | -8.6% | | Profit Attributable to Owners of the Company | 7,655 | 8,654 | -11.5% | | Basic Earnings Per Share (RMB cents) | 0.8 | 0.9 | -11.1% | [Condensed Consolidated Statement of Financial Position](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, total assets increased to RMB 261.033 million, primarily due to higher non-current prepayments, with net assets growing to RMB 177.677 million while total liabilities remained stable Key Financial Position Items (RMB '000) | Item | June 30, 2021 (RMB '000) | December 31, 2020 (RMB '000) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | 261,033 | 253,376 | +3.0% | | Non-current Assets | 65,763 | 35,876 | +83.3% | | Current Assets | 195,270 | 217,500 | -10.2% | | **Total Liabilities** | 83,356 | 83,354 | 0.0% | | **Net Assets** | 177,677 | 170,022 | +4.5% | [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2021, the company reported a net cash outflow of RMB 21.783 million from operating activities, with investing and financing activities also showing outflows, significantly reducing period-end cash and cash equivalents to RMB 110.469 million Key Cash Flow Items (RMB '000) | Item | H1 2021 (RMB '000) | H1 2020 (RMB '000) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (21,783) | 7,037 | | Net Cash from Investing Activities | (10,810) | 485 | | Net Cash Used in Financing Activities | (316) | (225) | | **Net Decrease in Cash and Cash Equivalents** | (32,909) | 7,297 | | **Cash and Cash Equivalents at End of Period** | 110,469 | 197,473 | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section outlines the financial statements' basis and policies, noting revenue from cemetery sales and maintenance, a significant increase in non-current prepayments for a new project, and a post-period loan to an associate - The company primarily engages in the sale of burial plots and columbarium niches, other funeral-related services, and cemetery maintenance services, with all revenue derived from China[31](index=31&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Non-current prepayments and other receivables significantly increased from **RMB 8 million** to **RMB 37.256 million**, mainly due to a **RMB 30 million** prepayment for demolition works for a new cemetery project, which was refunded on August 11, 2021[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Subsequent to the reporting period, on July 2, 2021, the company provided a one-year loan of **RMB 100 million** at an annual interest rate of **12%** to China Hongtai, an entity controlled by the controlling shareholder Ms. Zhao Ying[127](index=127&type=chunk)[129](index=129&type=chunk) [Management Discussion and Analysis](index=31&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's operational and financial performance, strategic outlook, and progress against business objectives [Business and Financial Review](index=31&type=section&id=Business%20and%20Financial%20Review) In H1 2021, revenue grew 8.6% to RMB 20.7 million, and gross profit increased 9.3%, but net profit declined 11.5% to RMB 7.7 million due to foreign exchange losses, while the company maintained a 31.9% gearing ratio H1 2021 Performance Review | Indicator | H1 2021 (RMB million) | H1 2020 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 20.70 | 19.10 | +8.6% | | Gross Profit | 17.40 | 15.90 | +9.3% | | Gross Margin | 83.9% | 83.4% | +0.5pp | | Net Profit | 7.70 | 8.70 | -11.5% | | Net Profit Margin | 36.9% | 45.3% | -8.4pp | - The primary reason for the decrease in net profit was foreign exchange losses[141](index=141&type=chunk) - As of June 30, 2021, the Group's gearing ratio (total liabilities/total assets) was **31.9%**, indicating a sound liquidity position[141](index=141&type=chunk) [Prospects](index=34&type=section&id=Prospects) The Group plans to consolidate its Langfang market position and expand into the Beijing-Tianjin-Hebei region by extending funeral services, offering collective ash storage, pursuing strategic alliances, and advancing cemetery joint ventures, despite pandemic-related delays - The company plans to consolidate and expand its business through four key strategies: (1) expanding funeral services; (2) deepening penetration into the Beijing-Tianjin-Hebei market; (3) providing collective ash storage services; and (4) seeking strategic alliances and acquisitions[145](index=145&type=chunk) - The cemetery joint venture project is one of the Group's key future development projects, but plans for strategic alliances and acquisitions have been delayed due to the pandemic[154](index=154&type=chunk)[156](index=156&type=chunk) - The company will strengthen its Langfang market position by upgrading 'cloud memorial' online services, diversifying services, and increasing promotional efforts[151](index=151&type=chunk) [Comparison of Business Objectives with Actual Business Progress](index=36&type=section&id=Comparison%20of%20Business%20Objectives%20with%20Actual%20Business%20Progress) This section compares the company's stated business objectives from its prospectus with actual progress, particularly regarding market consolidation, service expansion, and use of proceeds [Business Objectives Progress](index=36&type=section&id=Business%20Objectives%20Progress) This section compares the company's prospectus business objectives with actual progress as of June 30, 2021, showing good progress in Langfang market consolidation but delays in funeral service expansion and Beijing-Tianjin-Hebei market penetration due to the pandemic, with the cemetery joint venture project in planning - **Consolidating Langfang Market Position**: New services like flowerbed burials and tree burials have been designed and offered, and the cemetery entrance and some facilities have been upgraded[161](index=161&type=chunk) - **Expanding Funeral Services**: Promotion plans for services like farewell halls were delayed due to pandemic-related gathering restrictions, but relevant personnel have been recruited and trained, and funeral vehicles purchased[169](index=169&type=chunk)[172](index=172&type=chunk) - **Deepening Beijing-Tianjin-Hebei Market Penetration and M&A**: Collaboration has begun with ten Beijing funeral service providers, but further marketing activities are on hold due to the pandemic; plans to establish a Beijing operating store are not yet complete, and the cemetery joint venture project has commenced planning[174](index=174&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) [Use of Proceeds from the Global Offering](index=43&type=section&id=Use%20of%20Proceeds%20from%20the%20Global%20Offering) The company's net proceeds from its GEM listing were approximately RMB 36.4 million, with RMB 17.5 million unutilized as of June 30, 2021, primarily for 'expanding funeral services' and 'deepening Beijing-Tianjin-Hebei market penetration and M&A', expected to be used in H2 2021 Details of Use of Proceeds (RMB million) | Objective | Intended Use (RMB million) | Utilized as of June 30, 2021 (RMB million) | Unutilized (RMB million) | | :--- | :--- | :--- | :--- | | Consolidating Langfang Market Position | 14.60 | 14.60 | 0 | | Expanding Funeral Services | 9.10 | 2.00 | 7.10 | | Deepening Beijing-Tianjin-Hebei Market Penetration and M&A | 12.70 | 2.30 | 10.40 | | **Total** | **36.40** | **18.90** | **17.50** | - The unutilized **RMB 17.5 million** proceeds are held as short-term deposits in licensed banks in Hong Kong[231](index=231&type=chunk) [Other Information](index=45&type=section&id=Other%20Information) This section provides additional disclosures, including foreign exchange risks, contingent liabilities, director updates, post-reporting period events, and major shareholder information [Key Disclosures and Shareholding](index=45&type=section&id=Key%20Disclosures%20and%20Shareholding) This section details foreign exchange risks, contingent liabilities, director updates, post-reporting period events, and major shareholder holdings, including a post-period RMB 100 million loan to an associate and the controlling shareholder's 70% stake - On May 7, 2021, the company entered into a loan agreement with associate China Hongtai, providing a principal loan of **RMB 100 million** at an annual interest rate of **12%** on July 2, 2021[238](index=238&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) - Ms. Zhao Ying, the company's Chairwoman and Non-executive Director, is deemed to have an interest in **700 million** shares (representing **70%** of the total share capital) indirectly held through The Hope Trust, a discretionary trust established by her[247](index=247&type=chunk)[248](index=248&type=chunk) [Corporate Governance](index=51&type=section&id=Corporate%20Governance) The company complied with the Listing Rules' Corporate Governance Code during the period, and its audit committee, composed of three independent non-executive directors, reviewed and approved the interim financial statements - The company has complied with the Corporate Governance Code, and the audit committee has reviewed this interim financial report[276](index=276&type=chunk)[278](index=278&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides core corporate and management information, including board composition, key appointments, and significant executive changes in March 2021 [Corporate Information](index=3&type=section&id=Corporate%20Information) This section outlines the company's core corporate and management information, including board composition, key appointments, and significant executive changes in March 2021 - The company's Board of Directors comprises one non-executive director, three executive directors, and three independent non-executive directors, with established Audit, Nomination, and Remuneration Committees[4](index=4&type=chunk) - Subsequent to the reporting period, the company underwent several personnel changes on March 29, 2021, including Mr. Huang Guangming's resignation as Executive Director, the appointment of Ms. Wang Wei and Mr. Huang Peikun as Executive Directors, and Ms. Li Minghui succeeding Mr. Deng Junwen as Authorized Representative and Company Secretary[4](index=4&type=chunk) [Financial Summary](index=5&type=section&id=Financial%20Summary) This section presents a five-year summary of core financial performance, balance sheet, and key ratios, highlighting 2020's revenue and profit decline alongside improved financial stability [Five-Year Financial Data Summary](index=5&type=section&id=Financial%20Summary) This section provides a five-year summary of core financial performance, balance sheet, and key ratios, highlighting 2020's revenue and profit decline alongside improved financial stability Five-Year Performance Overview (As of December 31) | Metric | 2020 (RMB'000) | 2019 (RMB'000) | 2018 (RMB'000) | 2017 (RMB'000) | 2016 (RMB'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 38,891 | 63,377 | 43,385 | 38,617 | 31,179 | | **Profit Before Tax** | 25,215 | 33,316 | 35,300 | 13,895 | 20,716 | | **Profit for the Year Attributable to Owners of the Company** | 17,541 | 23,551 | 28,247 | 7,123 | 16,193 | Five-Year Assets and Liabilities Overview (As of December 31) | Metric | 2020 (RMB'000) | 2019 (RMB'000) | 2018 (RMB'000) | 2017 (RMB'000) | 2016 (RMB'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | 253,376 | 235,344 | 220,963 | 176,060 | 135,808 | | **Total Liabilities** | 83,354 | 82,863 | 92,033 | 87,633 | 80,660 | | **Total Equity Attributable to Owners of the Company** | 170,022 | 152,481 | 128,930 | 88,427 | 55,148 | Five-Year Key Financial Ratios and Indicators | Metric | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Current Ratio** | 12.1 | 9.3 | 5.2 | 2.4 | 1.7 | | **Gearing Ratio (%)** | 32.9 | 35.2 | 41.7 | 49.8 | 59.4 | | **Return on Total Assets (%)** | 6.9 | 10.0 | 12.8 | 4.1 | 11.9 | | **Net Profit Margin (%)** | 45.1 | 37.2 | 65.1 | 18.5 | 51.9 | | **Earnings Per Share (RMB)** | 0.018 | 0.024 | 0.028 | 0.009 | 0.022 | | **Net Asset Value Per Share (RMB)** | 0.170 | 0.152 | 0.129 | 0.108 | 0.074 | [Chairman's Statement](index=7&type=section&id=Chairman%27s%20Statement) Chairwoman Zhao Ying reviews 2020's stable operations despite the pandemic, highlighting innovative services and a key cemetery project win, while outlining future M&A-driven expansion in the Jing-Jin-Ji region and Asia [Chairman's Address](index=7&type=section&id=Chairman%27s%20Statement) Chairwoman Zhao Ying reviews 2020's stable operations despite the pandemic, highlighting innovative services and a key cemetery project win, while outlining future M&A-driven expansion in the Jing-Jin-Ji region and Asia 2020 Operating Performance | Metric | Amount | | :--- | :--- | | **Revenue** | RMB 38.9 million | | **Profit Attributable to Shareholders** | RMB 17.5 million | - To address the pandemic, the company focused on optimizing and upgrading **'Cloud Memorial Services'**, introducing online and proxy memorial services, achieving innovative service model enhancements[30](index=30&type=chunk)[33](index=33&type=chunk) - In June 2020, the company successfully won the bid for the Beijing New Airport (Langfang Area) Resettlement Zone Cemetery project, establishing a joint venture in July to advance its construction and operation, further solidifying its market position in Langfang and the Jing-Jin-Ji region[31](index=31&type=chunk)[33](index=33&type=chunk) - Future strategy will focus on **M&A opportunities** in the Jing-Jin-Ji region and Asia, increasing asset allocation in the core funeral and interment business to drive more stable profit growth[36](index=36&type=chunk)[38](index=38&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's 2020 core business in Langfang, dominated by funeral and interment services, highlights competitive advantages, and outlines strategic plans for market consolidation and expansion [Business Review](index=10&type=section&id=Business%20Review) This section reviews the Group's 2020 core business in Langfang, dominated by funeral and interment services (89.4% of revenue), highlighting competitive advantages and optimism despite pandemic challenges - The company's core business is funeral and interment services (including sales of burial plots and columbarium niches), accounting for **89.4% of total revenue** in 2020, with cemetery maintenance services contributing **10.6%**[41](index=41&type=chunk)[43](index=43&type=chunk)[84](index=84&type=chunk) - The company's core competitive advantages include: - **Strategic Location**: Deep roots in Langfang, familiarity with the local market, and geographical advantage within the Jing-Jin-Ji metropolitan area - **Comprehensive Services**: Offering diverse, customizable funeral and interment services to meet varied customer needs, including innovative 'Cloud Memorial Services' - **Brand Reputation**: Operating under the 'Wantongyuan' brand, emphasizing professionalism and social responsibility - **Management Team**: Possessing an experienced and stable management team[44](index=44&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk)[55](index=55&type=chunk) [Outlook and Strategy](index=12&type=section&id=Outlook) The Group plans to consolidate and expand its market position through four key strategies: developing a joint venture cemetery, strengthening the Langfang market, expanding to one-stop funeral services, and exploring the Jing-Jin-Ji region's potential - The company will prioritize the development of its **joint venture cemetery project** with Langfang Xinhangcheng Real Estate Development Co., Ltd., to consolidate and expand its market position in Langfang and the Jing-Jin-Ji region[58](index=58&type=chunk)[62](index=62&type=chunk) - The company plans to consolidate the Langfang market by upgrading cemetery environments, introducing diverse pricing products, utilizing online platforms for promotion, and undertaking government-related relocation and ash storage services for urban development[65](index=65&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) - The Group will expand from single funeral and interment services to **integrated one-stop funeral and interment services**, actively communicating with the government to broaden its service scope[71](index=71&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - Leveraging its strategic location in Langfang, the company will increase marketing investment and channel partnerships in the Jing-Jin-Ji metropolitan area, particularly the Beijing market, to unlock greater market potential[77](index=77&type=chunk)[80](index=80&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) FY2020 saw a 38.6% revenue decline to RMB 38.9 million due to a high 2019 base, yet gross margin improved to 84.6%, administrative expenses fell 49.0%, and net profit margin increased to 45.1%, reflecting a robust financial position with a 32.9% debt-to-asset ratio 2020 vs 2019 Revenue Composition (RMB'000) | Revenue Source | 2020 Revenue | % of Total Revenue | 2019 Revenue | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Sale of Burial Plots | 29,595 | 76.1% | 30,228 | 47.7% | | Sale of Columbarium Niches | 1,682 | 4.3% | 24,886 | 39.3% | | Other Funeral-Related Services | 3,484 | 9.0% | 4,472 | 7.0% | | **Subtotal: Funeral and Interment Services** | **34,761** | **89.4%** | **59,586** | **94.0%** | | Provision of Cemetery Maintenance Services | 4,130 | 10.6% | 3,791 | 6.0% | | **Total** | **38,891** | **100.0%** | **63,377** | **100.0%** | - Total revenue decreased by **38.6%** year-on-year, primarily due to a **93.2% significant reduction** in columbarium niche sales in 2020, as a single client made a concentrated purchase of RMB **24.9 million** worth of columbarium niches in 2019[86](index=86&type=chunk)[87](index=87&type=chunk) 2020 vs 2019 Gross Profit and Gross Profit Margin | Business Segment | 2020 Gross Profit (RMB'000) | 2020 Gross Profit Margin | 2019 Gross Profit (RMB'000) | 2019 Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Funeral and Interment Services | 29,133 | 83.8% | 47,436 | 79.6% | | Cemetery Maintenance | 3,760 | 91.0% | 3,178 | 83.8% | | **Total** | **32,893** | **84.6%** | **50,614** | **79.9%** | - Administrative expenses significantly decreased by **49.0%** year-on-year, from RMB **16.7 million** to RMB **8.5 million**, primarily due to approximately RMB **10 million** in one-off professional fees related to the GEM to Main Board transfer in 2019[105](index=105&type=chunk) - Profit for the year decreased by **25.5%** year-on-year to RMB **17.5 million**, but net profit margin increased from **37.2%** to **45.1%**[105](index=105&type=chunk) - As of the end of 2020, the Group's debt-to-asset ratio was **32.9%** (2019: **35.2%**), indicating a robust liquidity position[117](index=117&type=chunk)[122](index=122&type=chunk) [Corporate Governance Report](index=23&type=section&id=Corporate%20Governance%20Report) This report details the company's 2020 corporate governance framework, confirming compliance with Listing Rules, outlining board structure, committee functions, risk management, and shareholder rights, reflecting a commitment to high standards [Corporate Governance Practices](index=23&type=section&id=Corporate%20Governance%20Report) This report details the company's 2020 corporate governance framework, confirming compliance with Listing Rules, outlining board structure, committee functions, risk management, and shareholder rights, reflecting a commitment to high standards - The company has complied with all code provisions of the **Corporate Governance Code** throughout the year 2020[138](index=138&type=chunk)[144](index=144&type=chunk) - The Board of Directors comprises **seven directors**, including one non-executive director, three executive directors, and three independent non-executive directors, meeting Listing Rules requirements[140](index=140&type=chunk)[145](index=145&type=chunk) 2020 Board Meeting Attendance | Name | Position | Board Meetings | Audit Committee | Remuneration Committee | Nomination Committee | General Meetings | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Zhao Ying | Non-executive Director and Chairwoman | 4/4 | — | 1/1 | 1/1 | 1/1 | | Li Xingying | Executive Director | 3/4 | — | — | — | 1/1 | | Huang Guangming | Executive Director | 3/4 | — | — | — | 1/1 | | Zhang Yingkun | Independent Non-executive Director | 4/4 | 3/3 | 1/1 | 1/1 | 1/1 | | Wang Yongquan | Independent Non-executive Director | 4/4 | 3/3 | 1/1 | — | 1/1 | | Cai Hanqiang | Independent Non-executive Director | 4/4 | 3/3 | — | 1/1 | 1/1 | - The Board has established three committees: Audit, Remuneration, and Nomination, all chaired by or with a majority of independent non-executive directors to ensure their independence and effectiveness[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk)[194](index=194&type=chunk) - The Board has conducted an annual review of the Group's risk management and internal control systems, deeming them effective and adequate[216](index=216&type=chunk)[220](index=220&type=chunk) [Biographies of Directors and Senior Management](index=34&type=section&id=Biographies%20of%20Directors%20and%20Senior%20Management) This section details the biographies of the company's directors and senior management, including their experience and education, noting significant board changes post-reporting period with new executive director appointments [Biographies of Directors and Senior Management](index=34&type=section&id=Biographies%20of%20Directors%20and%20Senior%20Management) This section details the biographies of the company's directors and senior management, including their experience and education, noting significant board changes post-reporting period with new executive director appointments - **Ms. Zhao Ying**, 50, is the Non-executive Director and Chairwoman, also serving as a Non-executive Director of China Hongtai Industry Town Development Co., Ltd. (6166.HK)[237](index=237&type=chunk)[241](index=241&type=chunk) - **Ms. Li Xingying**, 42, is an Executive Director and Executive Vice President, with **17 years of experience** in the funeral and interment services industry[238](index=238&type=chunk)[242](index=242&type=chunk) - Post-reporting period personnel changes: Mr. Huang Guangming resigned as Executive Director on March 29, 2021. On the same day, Ms. Wang Wei (28, daughter of Chairwoman Zhao Ying) and Mr. Huang Peikun (58) were appointed as Executive Directors[246](index=246&type=chunk)[247](index=247&type=chunk)[252](index=252&type=chunk) - The three Independent Non-executive Directors, Mr. Zhang Yingkun, Dr. Wang Yongquan, and Mr. Cai Hanqiang, all possess extensive experience in finance, accounting, or law, and hold positions in multiple listed companies[253](index=253&type=chunk)[258](index=258&type=chunk)[269](index=269&type=chunk) [Directors' Report](index=41&type=section&id=Directors%27%20Report) This report reviews 2020 operations, confirming funeral services as the core business, with no dividend recommended, identifies key risks, details global offering proceeds utilization, explains project delays, and notes post-period director changes [Directors' Annual Report](index=41&type=section&id=Directors%27%20Report) This report reviews 2020 operations, confirming funeral services as the core business, with no dividend recommended, identifies key risks, details global offering proceeds utilization, explains project delays, and notes post-period director changes - The Board does not recommend the payment of a final dividend for the year ended December 31, 2020[294](index=294&type=chunk)[302](index=302&type=chunk) - Key risks faced by the company include: business concentration in a **single cemetery in Langfang**, making it susceptible to regional economic and policy impacts; and the funeral and interment industry being **strictly regulated**, with licensing and land supply limiting expansion[297](index=297&type=chunk)[306](index=306&type=chunk) - As of the end of 2020, purchases from the **top five suppliers accounted for 85.8%** of total purchases, with the largest supplier accounting for **53.5%**, indicating high supplier concentration. Conversely, no single customer contributed more than **10%** of revenue[324](index=324&type=chunk)[332](index=332&type=chunk) Summary of Use of Proceeds from Global Offering (RMB) | Intended Use | Amount Planned in Prospectus (million) | Actual Utilization as of End of 2020 (million) | Estimated Utilization in 2021 (million) | | :--- | :--- | :--- | :--- | | Consolidate Langfang Market Position | 14.6 | 13.3 | 1.3 | | Expand Funeral Services Business | 9.1 | 1.5 | 7.6 | | Jing-Jin-Ji Market Expansion and M&A | 12.7 | 1.8 | 10.9 | - Subsequent to the reporting period, the company announced several personnel changes on March 29, 2021, including the resignation and appointment of Executive Directors, Chief Financial Officer, and Company Secretary[453](index=453&type=chunk)[454](index=454&type=chunk)[457](index=457&type=chunk) [Independent Auditor's Report](index=64&type=section&id=Independent%20Auditor%27s%20Report) Deloitte Touche Tohmatsu issued an unmodified audit opinion on the 2020 consolidated financial statements, affirming their true and fair presentation in accordance with IFRS, with 'Revenue recognition for burial plot sales' identified as a key audit matter [Audit Opinion](index=64&type=section&id=Independent%20Auditor%27s%20Report) Deloitte Touche Tohmatsu issued an unmodified audit opinion on the 2020 consolidated financial statements, affirming their true and fair presentation in accordance with IFRS, with 'Revenue recognition for burial plot sales' identified as a key audit matter - Auditor Deloitte Touche Tohmatsu issued an **unmodified opinion (Clean Opinion)** on the company's 2020 consolidated financial statements[460](index=460&type=chunk)[463](index=463&type=chunk) - The auditors concluded that the financial statements truly and fairly reflect the Group's financial position and performance in accordance with **International Financial Reporting Standards (IFRSs)**[460](index=460&type=chunk)[463](index=463&type=chunk) - A **Key Audit Matter** highlighted in the report is 'Revenue recognition for burial plot sales,' primarily due to its significant amounts and transaction volumes. Auditors performed procedures including understanding internal controls, examining sales agreements, and verifying transaction amounts and collections[467](index=467&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk) [Consolidated Financial Statements](index=70&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, cash flows, and detailed notes, providing a comprehensive overview of its financial performance and health [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=70&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement shows FY2020 operating results, with total revenue at RMB 38.891 million, a gross profit margin of 84.6%, and profit for the year at RMB 17.541 million, despite a significant revenue decline 2020 vs 2019 Key Profit or Loss Statement Data (RMB'000) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Revenue** | 38,891 | 63,377 | | **Gross Profit** | 32,893 | 50,614 | | **Profit Before Tax** | 25,215 | 33,316 | | **Profit and Total Comprehensive Income for the Year** | 17,541 | 23,551 | | **Basic Earnings Per Share (RMB cents)** | 1.8 | 2.4 | [Consolidated Statement of Financial Position](index=71&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This statement shows the company's financial position as of December 31, 2020, with total assets at RMB 253.376 million, total liabilities at RMB 83.354 million, and total equity at RMB 170.022 million, reflecting a solid financial foundation 2020 vs 2019 Key Statement of Financial Position Data (RMB'000) | Metric | 2020年12月31日 | 2019年12月31日 | | :--- | :--- | :--- | | **Non-current Assets** | 35,876 | 26,053 | | **Current Assets** | 217,500 | 209,291 | | **Total Assets** | 253,376 | 235,344 | | **Current Liabilities** | 17,911 | 22,560 | | **Non-current Liabilities** | 65,443 | 60,303 | | **Total Liabilities** | 83,354 | 82,863 | | **Net Assets/Total Equity** | 170,022 | 152,481 | [Consolidated Statement of Changes in Equity](index=73&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details changes in shareholders' equity for 2020, showing an increase from RMB 152.481 million at the beginning of the year to RMB 170.022 million by year-end, driven by profit and statutory surplus reserve appropriation 2020 Changes in Equity (RMB'000) | Item | Amount | | :--- | :--- | | **Total Equity as at January 1, 2020** | 152,481 | | Profit and Total Comprehensive Income for the Year | 17,541 | | Transfer to Statutory Surplus Reserve | — | | **Total Equity as at December 31, 2020** | 170,022 | [Consolidated Statement of Cash Flows](index=74&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This statement details 2020 cash flows, showing a net cash inflow of RMB 8.985 million from operations, a net outflow of RMB 51.161 million from investing, and year-end cash and cash equivalents of RMB 144 million 2020 vs 2019 Key Cash Flow Statement Data (RMB'000) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Net Cash Generated From Operating Activities** | 8,985 | (5,485) | | **Net Cash (Used In)/Generated From Investing Activities** | (51,161) | 2,321 | | **Net Cash Used In Financing Activities** | (615) | — | | **Net Decrease In Cash And Cash Equivalents** | (42,791) | (3,164) | | **Cash And Cash Equivalents At Beginning Of Year** | 189,280 | 191,412 | | **Cash And Cash Equivalents At End Of Year** | 143,830 | 189,280 | [Notes to the Consolidated Financial Statements](index=76&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes to the financial statements, explaining accounting policies, revenue recognition, asset/liability breakdowns, and related party transactions, highlighting long-term contract liabilities from maintenance prepayments and disclosing director compensation Note 5: Revenue Recognition Over Time (2020, RMB'000) | Revenue Recognition Timing | Sale of Burial Plots, Columbarium Niches and Related Services | Provision of Cemetery Maintenance Services | | :--- | :--- | :--- | | At a point in time | 31,277 | — | | Over time | 3,484 | 4,130 | - Note 22: Contract liabilities are significant, reaching RMB **71.227 million** as of end-2020, with RMB **63.194 million** classified as non-current liabilities, primarily from customer prepayments for long-term cemetery maintenance fees[827](index=827&type=chunk)[828](index=828&type=chunk) Note 9: Total Remuneration of Directors and Chief Executive (RMB'000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Fees | 267 | 264 | | Salaries and other benefits | 596 | 705 | | Discretionary performance-related bonuses | 291 | 421 | | Contributions to retirement benefit schemes | 4 | 51 | | **Total** | **1,158** | **1,441** |

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides fundamental corporate details and administrative information [Financial Highlights](index=5&type=section&id=Financial%20Highlights) [Financial Highlights Summary](index=5&type=section&id=Financial%20Highlights%20Summary) For the six months ended June 30, 2020, the Group's revenue recorded a slight increase, while profit attributable to owners of the Company achieved a significant growth of 70.4%, and the Board decided not to declare an interim dividend Key Financial Indicators for H1 2020 | Indicator | For the six months ended June 30, 2020 (RMB) | For the six months ended June 30, 2019 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | 19,096,000 | 18,803,000 | +1.6% | | **Profit attributable to owners of the Company** | 8,654,000 | 5,078,000 | +70.4% | - The Board does not recommend the payment of an interim dividend for the current half-year period[10](index=10&type=chunk) [Report on Review of Condensed Consolidated Financial Statements](index=6&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) [Auditor's Review Conclusion](index=6&type=section&id=Auditor%27s%20Review%20Conclusion) Deloitte Touche Tohmatsu reviewed the company's condensed consolidated financial statements for H1 2020, noting the scope is less than an audit and no audit opinion is expressed, and found no material non-compliance with IAS 34 - The auditor concluded that nothing has come to their attention that causes them to believe the condensed consolidated financial statements are not prepared in all material respects in accordance with International Accounting Standard 34 'Interim Financial Reporting'[16](index=16&type=chunk) - The review primarily involved inquiries of financial accounting personnel and application of analytical procedures, with a scope substantially less than an audit, thus no audit opinion is expressed[12](index=12&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2020, the company's revenue slightly increased by 1.6% to RMB 19.1 million, with gross profit rising and gross margin improving, while profit before tax increased by 50.3% and profit attributable to owners of the Company grew by 70.4% to RMB 8.65 million due to lower administrative expenses Key Items from Statement of Profit or Loss (For the six months ended June 30) | Item (RMB Thousand) | 2020 (Unaudited) | 2019 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 19,096 | 18,803 | +1.6% | | Gross profit | 15,919 | 15,448 | +3.0% | | Profit before tax | 11,609 | 7,723 | +50.3% | | **Profit attributable to owners of the Company** | **8,654** | **5,078** | **+70.4%** | | Basic earnings per share (RMB cents) | 0.9 | 0.5 | +80.0% | [Condensed Consolidated Statement of Financial Position](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the company's total assets increased to RMB 245 million, net assets rose to RMB 161 million, and a healthy financial position was maintained by increased net current assets and ample bank balances and cash of RMB 197 million Key Items from Statement of Financial Position (RMB Thousand) | Item | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Non-current assets | 26,449 | 26,053 | | Current assets | 218,992 | 209,291 | | **Total assets** | **245,441** | **235,344** | | Current liabilities | 21,070 | 22,560 | | Non-current liabilities | 63,236 | 60,303 | | **Total liabilities** | **84,306** | **82,863** | | **Net assets** | **161,135** | **152,481** | | Bank balances and cash | 197,473 | 189,280 | [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2020, total equity attributable to owners of the Company increased to RMB 161 million, primarily driven by the RMB 8.65 million profit recorded during the period - In the first half of 2020, equity attributable to owners of the Company increased from **RMB 152 million** at the beginning of the period to **RMB 161 million** at the end of the period, primarily driven by the **RMB 8.654 million** profit for the period[22](index=22&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In the first half of 2020, cash flow from operating activities turned positive, recording a net inflow of RMB 7.04 million, reflecting improved operational efficiency, with cash and cash equivalents increasing to RMB 197 million at period-end Key Items from Statement of Cash Flows (For the six months ended June 30, RMB Thousand) | Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 7,037 | (7,509) | | Net cash from investing activities | 485 | 1,850 | | Net cash used in financing activities | (225) | — | | **Net increase/(decrease) in cash and cash equivalents** | **7,297** | **(5,659)** | | Cash and cash equivalents at end of period | 197,473 | 185,753 | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Revenue and Segment Information](index=17&type=section&id=Revenue%20and%20Segment%20Information) The Group's total revenue primarily derives from sales of burial plots, columbarium niches, and other funeral-related services, which is the core revenue source accounting for nearly 90% of total revenue, and provision of cemetery maintenance services, all generated in mainland China Revenue by Business Segment for H1 2020 (RMB Thousand) | Business Segment | Revenue (RMB Thousand) | % of Total Revenue | | :--- | :--- | :--- | | Sales of burial plots, columbarium niches and related services | 17,135 | 89.7% | | Provision of cemetery maintenance services | 1,961 | 10.3% | | **Total** | **19,096** | **100%** | - All of the Group's revenue is derived from contracts with customers and generated in China[55](index=55&type=chunk)[56](index=56&type=chunk) [Event After the End of the Reporting Period](index=32&type=section&id=Event%20After%20the%20End%20of%20the%20Reporting%20Period) A significant transaction occurred after the reporting period: in July 2020, Langfang Wantong, a subsidiary, formed a joint venture with a third party to develop a new cemetery project in the Beijing New Airport (Langfang area), holding a 79% stake and contributing RMB 23.7 million - On July 6, 2020, Langfang Wantong, a subsidiary of the company, entered into an agreement with Langfang New Airport City Real Estate Development Co., Ltd. to establish a new company with a registered capital of **RMB 30 million** for the development of a public cemetery project in the Beijing New Airport (Langfang area)[132](index=132&type=chunk) - Langfang Wantong will hold a **79%** stake in the new company, contributing **RMB 23.7 million**, and will provide a shareholder loan of **RMB 30 million**, making the new company a non-wholly owned subsidiary of the Group[132](index=132&type=chunk) [Management Discussion and Analysis](index=33&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=33&type=section&id=Business%20Review) During the reporting period, the Group primarily engaged in sales of burial plots, columbarium niches, and other funeral-related services, which constituted 89.7% of total revenue, and provision of cemetery maintenance services - Funeral services constituted the largest component of the Group's revenue, accounting for **89.7%** of revenue for the six months ended June 30, 2020[136](index=136&type=chunk)[139](index=139&type=chunk) - Cemetery maintenance services, as part of funeral services, generated revenue of **RMB 1.961 million** during the period[137](index=137&type=chunk)[140](index=140&type=chunk) [Financial Review](index=33&type=section&id=Financial%20Review) In H1 2020, the Group's revenue slightly increased by 1.6% to RMB 19.1 million, gross margin improved from 82.2% to 83.4% due to cost control, and net profit grew by 70.4% to RMB 8.7 million, mainly due to lower administrative expenses compared to 2019 which had non-recurring professional fees Financial Performance Summary (For the six months ended June 30) | Indicator | 2020 (RMB Million) | 2019 (RMB Million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 19.1 | 18.8 | +1.6% | | Gross profit | 15.9 | 15.4 | +3.0% | | Gross profit margin | 83.4% | 82.2% | +1.2 p.p. | | Administrative expenses | 3.9 | 8.3 | -53.8% | | Profit for the period | 8.7 | 5.1 | +70.4% | | Net profit margin | 45.3% | 27.0% | +18.3 p.p. | - Administrative expenses significantly decreased by **53.8%**, primarily due to **RMB 5.3 million** in professional service fees and other expenses incurred in the same period of 2019 for the application to transfer from GEM to the Main Board[145](index=145&type=chunk) - Other income decreased by **42.1%**, mainly due to a **RMB 2 million** reduction in government grants[143](index=143&type=chunk) - As of June 30, 2020, the Group's debt-to-asset ratio (total liabilities/total assets) was **34.3%**, indicating a sound liquidity position[147](index=147&type=chunk) [Prospects](index=37&type=section&id=Prospects) The Group aims to consolidate its market position in Langfang and expand into the Beijing-Tianjin-Hebei metropolitan area, with key strategies including expanding business scope to funeral services, providing collective ash storage, and seeking strategic alliances and acquisitions, notably the recent public cemetery joint venture project - The Group's four key development directions are: (1) expanding business scope to provide funeral services; (2) deepening penetration into the Beijing-Tianjin-Hebei funeral services market; (3) offering collective ash storage services; and (4) seeking strategic alliances and acquisition opportunities[150](index=150&type=chunk)[157](index=157&type=chunk) - The Group will invest in the public cemetery joint venture project signed on July 6, 2020, located in the Beijing Daxing International Airport Economic Zone, which is a significant initiative to expand the Group's funeral and interment services[154](index=154&type=chunk)[158](index=158&type=chunk) [Comparison of Business Objectives with Actual Business Progress](index=38&type=section&id=Comparison%20of%20Business%20Objectives%20with%20Actual%20Business%20Progress) [Business Objectives Progress](index=38&type=section&id=Business%20Objectives%20Progress) The Group made progress in consolidating its Langfang market position by upgrading facilities and developing new burial areas, while funeral service expansion was delayed by pandemic restrictions, and market expansion saw collaborations and a successful bid for a public cemetery joint venture near Beijing Daxing Airport - Regarding the consolidation of the Langfang market, the main entrance and roads of the cemetery have been upgraded, and underground and mound-style family tombs have been designed and constructed, with the construction of Songyuan currently underway[163](index=163&type=chunk)[165](index=165&type=chunk) - Plans to expand funeral service business were delayed due to government restrictions on gatherings caused by the pandemic[169](index=169&type=chunk) - Significant breakthroughs were achieved in strategic acquisitions, with the successful bid for the public cemetery joint venture project on June 30, 2020, and the signing of the joint venture agreement on July 6[174](index=174&type=chunk) [Use of Proceeds from the Global Offering](index=44&type=section&id=Use%20of%20Proceeds%20from%20the%20Global%20Offering) The net proceeds from the GEM listing were approximately RMB 36.4 million, with RMB 12.7 million utilized as of June 30, 2020, and the remaining RMB 23.7 million primarily allocated for business expansion and strategic acquisitions, with most expected to be used in H2 2020 for the new public cemetery joint venture Details of Use of Proceeds (As of June 30, 2020) | Purpose | Planned Use (RMB Million) | Actual Use (RMB Million) | Unutilized (RMB Million) | | :--- | :--- | :--- | :--- | | Consolidating Langfang market position | 14.6 | 9.9 | 4.7 | | Expanding business scope (funeral services) | 9.1 | 1.2 | 7.9 | | Market expansion and strategic acquisitions | 12.7 | 1.6 | 11.1 | | **Total** | **36.4** | **12.7** | **23.7** | - The net proceeds reserved for strategic alliances and acquisition opportunities are expected to be fully utilized for the public cemetery joint venture project in the second half of 2020[181](index=181&type=chunk)[184](index=184&type=chunk) [Other Information](index=45&type=section&id=Other%20Information) [Interests of Directors and Substantial Shareholders](index=46&type=section&id=Interests%20of%20Directors%20and%20Substantial%20Shareholders) As of June 30, 2020, Ms. Zhao Ying, Chairperson, indirectly held 700 million shares (70%) through The Hope Trust, while substantial shareholder Fairich Trading Limited held 87.65 million shares (8.8%) - Ms. Zhao Ying, the Chairperson, is deemed to have an interest in **700,000,000** shares held by Taisheng International Investment Limited, representing **70%** of the total share capital[197](index=197&type=chunk)[198](index=198&type=chunk) - TMF (Cayman) Ltd., as trustee of The Hope Trust, is deemed to hold **700,000,000** shares (**70%**)[205](index=205&type=chunk)[208](index=208&type=chunk) [Corporate Governance](index=52&type=section&id=Corporate%20Governance) The Board believes that from listing to June 30, 2020, the company has complied with all applicable code provisions of the Corporate Governance Code, and the Audit Committee, comprising three independent non-executive directors, has reviewed the financial statements for the period - The company has applied and complied with all applicable code provisions of the Corporate Governance Code[231](index=231&type=chunk)[233](index=233&type=chunk) - The Audit Committee, comprising three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements for the period and considers them to be in compliance with applicable standards and adequately disclosed[232](index=232&type=chunk)[236](index=236&type=chunk)

萬桐園 China Wan Tong Yuan (Holdings) Limited 中國萬桐園(控股)有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) Stock Code 股份代號: 6966 Annual Report 2019 年報 Corporate Information 2 公司資料 Financial Summary 4 財務概要 Chairman's Statement 6 主席報告書 Management Discussion and Analysis 9 管理層討論及分析 Corporate Governance Report 22 企業管治報告 Biographies of Directors and Senior Management 33 董事及高級管理層履歷 Directors' Report 40 董事會報告 Independent Auditor's Report 63 獨立核數師報告 Consolidated Statement of Profit or Los ...