[Executive Summary & Company Information](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Information) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Group achieved growth in revenue and profit attributable to owners in FY2022, but the Board does not recommend a final dividend 2022 Financial Highlights | Metric | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Revenue | 45,738 | 43,949 | 1,789 | 4.1% | | Profit attributable to owners of the Company | 22,030 | 18,140 | 3,890 | 21.4% | - The Board does not recommend a final dividend for the year ended December 31, 2022 (2021: nil)[20](index=20&type=chunk) [Company Overview](index=1&type=section&id=Company%20Overview) China Wantongyuan (Holdings) Limited, incorporated in Cayman Islands, primarily engages in investment holding, with subsidiaries in China selling burial plots and columbarium niches, providing related services, and cemetery maintenance - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on **January 25, 2017**, and its shares are listed on The Stock Exchange of Hong Kong Limited[33](index=33&type=chunk) - The Company's principal business is investment holding, with its subsidiaries primarily engaged in the sale of burial plots and columbarium niches, provision of other cemetery-related services, and cemetery maintenance services in China[33](index=33&type=chunk) - The Company's ultimate holding company is Lily Charm Holding Limited, controlled by **Ms. Zhao Ying**[33](index=33&type=chunk) - The consolidated financial statements are presented in **RMB**, the functional currency of the Company and its subsidiaries, with all values rounded to the nearest thousand[34](index=34&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended December 31, 2022, the Group's revenue grew by 4.1% to RMB 45,738 thousand, and profit attributable to owners increased by 21.4% to RMB 22,030 thousand, mainly due to a swing from net loss to net gain in other income and losses Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Metric | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Revenue | 45,738 | 43,949 | 1,789 | 4.1% | | Gross Profit | 34,125 | 36,395 | (2,270) | -6.2% | | Other gains and losses, net | 3,682 | (1,125) | 4,807 | Swing to gain | | Profit before tax | 28,518 | 24,908 | 3,610 | 14.5% | | Profit and total comprehensive income for the year attributable to owners of the Company | 22,030 | 18,140 | 3,890 | 21.4% | | Basic earnings per share (RMB cents) | 2.2 | 1.8 | 0.4 | 22.2% | [Consolidated Statement of Financial Position](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2022, the Group's total assets less current liabilities increased to RMB 284,047 thousand, and net assets grew to RMB 210,192 thousand, driven by a significant increase in bank balances and cash and a decrease in prepayments and other receivables Consolidated Statement of Financial Position Summary | Metric | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Total non-current assets | 40,693 | 64,687 | (23,994) | -37.1% | | Total current assets | 261,597 | 214,452 | 47,145 | 22.0% | | Bank balances and cash | 211,284 | 84,428 | 126,856 | 150.2% | | Amounts due from a related party | — | 105,349 | (105,349) | -100.0% | | Total current liabilities | 18,243 | 20,450 | (2,207) | -10.8% | | Total non-current liabilities | 73,855 | 70,527 | 3,328 | 4.7% | | Net assets | 210,192 | 188,162 | 22,030 | 11.7% | [Consolidated Statement of Changes in Equity](index=5&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the year ended December 31, 2022, total equity attributable to owners increased from RMB 188,162 thousand to RMB 210,192 thousand, primarily due to the increase in profit and total comprehensive income for the year Consolidated Statement of Changes in Equity Summary | Metric | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Share capital | 66,192 | 66,192 | 0 | 0.0% | | Statutory surplus reserve | 16,428 | 14,530 | 1,898 | 13.1% | | Retained profits | 126,263 | 106,131 | 20,132 | 19.0% | | Total | 210,192 | 188,162 | 22,030 | 11.7% | - Profit and total comprehensive income for the year was **RMB 22,030 thousand** (2021: RMB 18,140 thousand), which was the primary driver of equity growth[31](index=31&type=chunk) [Notes to the Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [General Information and Accounting Standards](index=6&type=section&id=General%20Information%20and%20Accounting%20Standards) This section outlines the company's registration, main business, controlling shareholder, and financial statement currency, detailing applied and future IFRS amendments with no significant impact - The Company was incorporated in the Cayman Islands, its shares are listed on the Hong Kong Stock Exchange, and its principal business is investment holding, with subsidiaries in China engaged in the sale of burial plots and columbarium niches, related services, and cemetery maintenance[33](index=33&type=chunk) - The Group has first applied several revised International Financial Reporting Standards (IFRSs) effective January 1, 2022, including amendments to IFRS 3, IFRS 16, IAS 16, and IAS 37[35](index=35&type=chunk) - The application of these revised IFRSs for the current year had **no significant impact** on the Group's financial position, performance, and/or disclosures for the current and prior years[35](index=35&type=chunk) - The Group has not early adopted several new and revised IFRSs issued but not yet effective, and directors expect their application will **not have a significant impact** on the consolidated financial statements in the foreseeable future[37](index=37&type=chunk) [General Information](index=6&type=section&id=General%20Information) The company, incorporated in the Cayman Islands, primarily engages in investment holding, with subsidiaries in China providing funeral services, and is ultimately controlled by Ms. Zhao Ying - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on **January 25, 2017**, under the Companies Law of the Cayman Islands[33](index=33&type=chunk) - The Company's principal business is investment holding, with its subsidiaries primarily engaged in the sale of burial plots and columbarium niches, provision of other cemetery-related services, and cemetery maintenance services in China[33](index=33&type=chunk) - The Company's ultimate holding company is Lily Charm Holding Limited, controlled by **Ms. Zhao Ying**[33](index=33&type=chunk) [Application of Revised IFRSs](index=6&type=section&id=Application%20of%20Revised%20IFRSs) The Group first applied several IFRS amendments effective January 1, 2022, this year, which had no significant impact on its financial position or performance - The Group first applied amendments to IFRS 3, IFRS 16, IAS 16, and IAS 37, among others, in the current year[35](index=35&type=chunk) - The application of these amendments had **no significant impact** on the Group's financial position, performance, and/or disclosures for the current and prior years[35](index=35&type=chunk) [New and Revised IFRSs Issued but Not Yet Effective](index=7&type=section&id=New%20and%20Revised%20IFRSs%20Issued%20but%20Not%20Yet%20Effective) The Group has not early adopted several new and revised IFRSs issued but not yet effective, and directors expect no significant impact on consolidated financial statements in the foreseeable future - The Group has not early adopted IFRS 17, amendments to IFRS 10 and IAS 28, among others[37](index=37&type=chunk) - The directors expect that the application of these new and revised IFRSs will **not have a significant impact** on the consolidated financial statements in the foreseeable future[37](index=37&type=chunk) [Revenue and Operating Segments](index=8&type=section&id=Revenue%20and%20Operating%20Segments) The Group's revenue primarily comes from selling burial plots, providing grave relocation and other related services, and cemetery maintenance, with funeral services accounting for 89.2% of RMB 45,738 thousand total revenue in 2022 2022 Revenue by Type of Goods and Services | Type of Goods and Services | Sale of burial plots, columbarium niches, provision of grave relocation and other cemetery-related services (RMB '000) | Provision of cemetery maintenance services (RMB '000) | Total (RMB '000) | |---|---|---|---| | Sale of burial plots | 26,869 | — | 26,869 | | Provision of grave relocation services | 7,629 | — | 7,629 | | Provision of other cemetery-related services | 6,280 | — | 6,280 | | Provision of cemetery maintenance services | — | 4,960 | 4,960 | | Total | 40,778 | 4,960 | 45,738 | - The Group's operating and reportable segments are in China: (i) sale of burial plots, columbarium niches, and provision of grave relocation and other cemetery-related services; and (ii) provision of cemetery maintenance services[54](index=54&type=chunk) - All of the Group's revenue is derived from the sale of burial plots, columbarium niches, and provision of grave relocation and other cemetery-related services, as well as cemetery maintenance services in China[59](index=59&type=chunk) - For the year ended December 31, 2022, revenue from one customer for grave relocation services amounted to **RMB 7,629,000**, representing **over 10%** of the Group's revenue[60](index=60&type=chunk) [Customer Contract Revenue Classification (2022 & 2021)](index=8&type=section&id=Customer%20Contract%20Revenue%20Classification%20%282022%20%26%202021%29) The Group's revenue primarily derives from selling burial plots, grave relocation, other related services, and cemetery maintenance, with total revenue of RMB 45,738 thousand in 2022, recognized at a point in time or over time 2022 Revenue by Timing of Recognition | Timing of Revenue Recognition | Sale of burial plots, columbarium niches, provision of grave relocation and other cemetery-related services (RMB '000) | Provision of cemetery maintenance services (RMB '000) | Total (RMB '000) | |---|---|---|---| | At a point in time | 34,498 | — | 34,498 | | Over time | 6,280 | 4,960 | 11,240 | 2021 Revenue by Timing of Recognition | Timing of Revenue Recognition | Sale of burial plots, columbarium niches and provision of other cemetery-related services (RMB '000) | Provision of cemetery maintenance services (RMB '000) | Total (RMB '000) | |---|---|---|---| | At a point in time | 35,230 | — | 35,230 | | Over time | 4,188 | 4,531 | 8,719 | [Customer Contract Performance Obligations](index=9&type=section&id=Customer%20Contract%20Performance%20Obligations) Revenue from selling burial plots and columbarium niches is recognized when customers gain control, while grave relocation services are recognized upon completion and acceptance, and other related services are recognized over time - Revenue from the sale of burial plots is recognized when the customer obtains control of the burial plot, with payment of the transaction price due immediately upon purchase[47](index=47&type=chunk) - Revenue from the sale of columbarium niches is recognized when the customer obtains control of the columbarium niche, with payment of the transaction price due immediately upon purchase[45](index=45&type=chunk) - Revenue from the provision of grave relocation services is recognized when all graves have been properly relocated and accepted by the customer[49](index=49&type=chunk) - With respect to cemetery-related services (e.g., interment ceremonies, grave site design), revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Group's performance[50](index=50&type=chunk) [Transaction Price Allocated to Remaining Performance Obligations](index=10&type=section&id=Transaction%20Price%20Allocated%20to%20Remaining%20Performance%20Obligations) As of December 31, 2022, the Group's total transaction price allocated to remaining performance obligations was RMB 76,642 thousand, mostly for cemetery maintenance services, with RMB 5,915 thousand expected to be recognized within one year 2022 Transaction Price Allocated to Remaining Performance Obligations | Expected Timing | Sale of burial plots (RMB '000) | Provision of cemetery maintenance services (RMB '000) | Provision of other cemetery-related services (RMB '000) | Total (RMB '000) | |---|---|---|---|---| | Within one year/on demand | — | 5,355 | 560 | 5,915 | | Over one year but not exceeding two years | — | 5,492 | 185 | 5,677 | | Over two years | — | 65,050 | — | 65,050 | | Total | — | 75,897 | 745 | 76,642 | 2021 Transaction Price Allocated to Remaining Performance Obligations | Expected Timing | Sale of burial plots (RMB '000) | Provision of cemetery maintenance services (RMB '000) | Provision of other cemetery-related services (RMB '000) | Total (RMB '000) | |---|---|---|---|---| | Within one year/on demand | 1,007 | 5,567 | 798 | 7,372 | | Over one year but not exceeding two years | — | 4,972 | 505 | 5,477 | | Over two years | — | 61,599 | 185 | 61,784 | | Total | 1,007 | 72,138 | 1,488 | 74,633 | [Operating Segments and Results](index=11&type=section&id=Operating%20Segments%20and%20Results) The Group's operating segments are funeral services (including burial plot sales, columbarium niches, grave relocation, and other related services) and cemetery maintenance services, with segment results representing gross profit - The Group's operating and reportable segments in China are (i) sale of burial plots, columbarium niches, and provision of grave relocation and other cemetery-related services; and (ii) provision of cemetery maintenance services[54](index=54&type=chunk) 2022 Segment Revenue and Results | Segment | Segment Revenue (RMB '000) | Segment Results (RMB '000) | |---|---|---| | Sale of burial plots, columbarium niches, provision of grave relocation and other cemetery-related services | 40,778 | 29,637 | | Provision of cemetery maintenance services | 4,960 | 4,488 | | Total | 45,738 | 34,125 | 2021 Segment Revenue and Results | Segment | Segment Revenue (RMB '000) | Segment Results (RMB '000) | |---|---|---| | Sale of burial plots, columbarium niches and provision of other cemetery-related services | 39,418 | 32,414 | | Provision of cemetery maintenance services | 4,531 | 3,981 | | Total | 43,949 | 36,395 | [Geographical Information and Major Customers](index=13&type=section&id=Geographical%20Information%20and%20Major%20Customers) All the Group's revenue and most assets and liabilities are located in China, thus no geographical information is presented, but one customer's grave relocation service revenue exceeded 10% of total revenue in 2022 - All of the Group's revenue is derived from the sale of burial plots, columbarium niches, and provision of grave relocation and other cemetery-related services, as well as cemetery maintenance services in China[59](index=59&type=chunk) - The vast majority of the Group's identifiable assets and liabilities are located in China, therefore no geographical information is presented[59](index=59&type=chunk) - For the year ended December 31, 2022, revenue from one customer for grave relocation services amounted to **RMB 7,629,000**, representing **over 10%** of the Group's revenue[60](index=60&type=chunk) [Other Income and Expenses](index=14&type=section&id=Other%20Income%20and%20Expenses) The Group's other income slightly decreased to RMB 9,458 thousand in 2022, mainly from interest on related party receivables, while net other gains and losses swung from a loss to a gain of RMB 3,682 thousand, driven by net foreign exchange gains [Other Income](index=14&type=section&id=Other%20Income) The Group's other income for 2022 was RMB 9,458 thousand, a slight decrease of 2.7% from 2021, primarily from interest on related party receivables and imputed interest on interest-free prepayments Other Income Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Bank deposit interest income | 720 | 1,956 | (1,236) | -63.2% | | Dividend income from financial assets at fair value through profit or loss | 700 | 700 | 0 | 0.0% | | Interest income from amounts due from a related party | 5,634 | 5,989 | (355) | -5.9% | | Imputed interest income from interest-free prepayments and deposits paid | 2,214 | 890 | 1,324 | 148.8% | | Total | 9,458 | 9,725 | (267) | -2.7% | [Other Gains and Losses, Net](index=14&type=section&id=Other%20Gains%20and%20Losses%2C%20Net) The Group's net other gains and losses for 2022 were RMB 3,682 thousand, a significant swing from a loss of RMB (1,125) thousand in 2021, mainly due to net foreign exchange gains Other Gains and Losses, Net Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Net foreign exchange gains/(losses) | 3,596 | (1,209) | 4,805 | Swing to gain | | Government grants | 86 | — | 86 | N/A | | Total | 3,682 | (1,125) | 4,807 | Swing to gain | [Profit Before Tax and Income Tax](index=15&type=section&id=Profit%20Before%20Tax%20and%20Income%20Tax) The Group's profit before tax increased by 14.5% to RMB 28,518 thousand in 2022, while income tax expense decreased by 4.4% to RMB 6,488 thousand, influenced by deferred tax changes and non-taxable income [Profit Before Tax](index=15&type=section&id=Profit%20Before%20Tax) The Group's profit before tax for 2022 was RMB 28,518 thousand, a 14.5% increase from 2021, with key deductions including depreciation, amortization, inventory costs, and staff costs Profit Before Tax Deductions | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Auditor's remuneration | 1,050 | 1,050 | 0 | 0.0% | | Total depreciation and amortisation | 2,257 | 2,002 | 255 | 12.7% | | Cost of inventories recognised as an expense | 3,864 | 5,295 | (1,431) | -27.0% | | Total staff costs | 8,070 | 6,586 | 1,484 | 22.5% | [Income Tax Expense](index=15&type=section&id=Income%20Tax%20Expense) The Group's income tax expense for 2022 was RMB 6,488 thousand, a 4.1% decrease from 2021, with the reconciliation showing a significant tax impact from non-taxable income Income Tax Expense Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Current corporate income tax | 6,778 | 6,668 | 110 | 1.6% | | Deferred tax | (325) | 208 | (533) | Swing to negative | | Total income tax expense | 6,488 | 6,768 | (280) | -4.1% | Reconciliation of Income Tax Expense to Profit Before Tax | Item | 2022 (RMB '000) | 2021 (RMB '000) | |---|---|---| | Profit before tax | 28,518 | 24,908 | | Tax at applicable tax rate of 25% | 7,130 | 6,227 | | Tax effect of non-taxable income | (1,081) | (182) | - The applicable tax rate for the Group's PRC subsidiaries is **25%** under the PRC Enterprise Income Tax Law[75](index=75&type=chunk) [Earnings Per Share](index=16&type=section&id=Earnings%20Per%20Share) The Group's basic earnings per share for 2022 increased to RMB 0.022 from RMB 0.018 in 2021, with no diluted earnings per share presented due to the absence of potential ordinary shares Earnings Per Share Calculation Data | Item | 2022 (RMB '000) | 2021 (RMB '000) | |---|---|---| | Profit for the purpose of calculating basic earnings per share (profit for the year attributable to owners of the Company) | 22,030 | 18,140 | | Number of ordinary shares for the purpose of calculating basic earnings per share | 1,000,000,000 | 1,000,000,000 | - Basic earnings per share was **RMB 0.022** (2021: RMB 0.018)[137](index=137&type=chunk) - There were no potential ordinary shares in issue for the years ended December 31, 2022 and 2021, hence no diluted earnings per share was presented for these two years[71](index=71&type=chunk) [Dividends (Financial Notes)](index=17&type=section&id=Dividends%20%28Financial%20Notes%29) For the year ended December 31, 2022, the company neither paid nor proposed any dividends to its ordinary shareholders, and no dividends have been proposed since the reporting period end - For the year ended December 31, 2022, the Company neither paid nor proposed any dividends to its ordinary shareholders[78](index=78&type=chunk) - No dividends have been proposed since the end of the reporting period (2021: nil)[78](index=78&type=chunk) [Key Assets and Liabilities](index=17&type=section&id=Key%20Assets%20and%20Liabilities) This section details the Group's key assets and liabilities, including cemetery assets with specific amortization policies, increased prepayments due to payments to Langfang Funeral Home, decreased trade and other payables from tombstone payments, and contract liabilities from long-term advance payments for maintenance services [Cemetery Assets](index=17&type=section&id=Cemetery%20Assets) The Group's cemetery assets, totaling RMB 10,251 thousand in 2022, comprise leasehold land, landscape facilities, and development costs, amortized over 50 years for land and development, and 20 years for landscape facilities Cemetery Assets Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Leasehold land | 3,874 | 4,015 | (141) | -3.5% | | Landscape facilities | 6,009 | 5,437 | 572 | 10.5% | | Development costs | 368 | 385 | (17) | -4.4% | | Total | 10,251 | 9,837 | 414 | 4.2% | - The carrying amount of leasehold land is measured at cost less accumulated amortisation and any impairment losses in accordance with IFRS 16, and is amortised on a straight-line basis over the **50-year lease term**[10](index=10&type=chunk) - Landscape facilities are depreciated on a straight-line basis over their estimated useful life of **20 years**[73](index=73&type=chunk) - Development costs are amortised on a straight-line basis over their estimated useful life, which is the same as the lease term for leasehold land[79](index=79&type=chunk) [Prepayments and Other Receivables](index=18&type=section&id=Prepayments%20and%20Other%20Receivables) The Group's total prepayments and other receivables increased from RMB 36.0 million in 2021 to RMB 41.5 million in 2022, primarily due to a RMB 3 million interest-bearing prepayment to Langfang Funeral Home Prepayments and Other Receivables Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Current prepayments and other receivables | 29,650 | 841 | 28,809 | 3425.6% | | Non-current prepayments and other receivables | 11,846 | 35,143 | (23,297) | -66.3% | - Prepayments and other receivables increased from **RMB 36.0 million** as at December 31, 2021, to **RMB 41.5 million** as at December 31, 2022, mainly due to a prepayment of **RMB 3 million** to Langfang Funeral Home for an extended funeral service outsourcing project[141](index=141&type=chunk) - Non-current other receivables primarily consist of an interest-free prepayment of **RMB 30,000,000** to Baijiawu Office for land acquisition for a new cemetery project, expected to be recovered within two years[85](index=85&type=chunk) [Trade and Other Payables](index=19&type=section&id=Trade%20and%20Other%20Payables) The Group's trade and other payables decreased by 18.5% from RMB 11.9 million in 2021 to RMB 9.7 million in 2022, mainly due to payments for tombstones, with a significant shift in the aging analysis Trade and Other Payables Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Trade payables | 5,785 | 8,819 | (3,034) | -34.4% | | Accrued expenses | 3,871 | 3,119 | 752 | 24.1% | | Total | 9,656 | 11,938 | (2,282) | -19.1% | - The decrease in trade and other payables was mainly due to payments to suppliers for tombstones[142](index=142&type=chunk) Aging Analysis of Trade Payables | Aging | 2022 (RMB '000) | 2021 (RMB '000) | |---|---|---| | Less than 1 year | 1,078 | 7,739 | | 1 to 2 years | 4,570 | 27 | [Contract Liabilities](index=19&type=section&id=Contract%20Liabilities) The Group's total contract liabilities were RMB 76,642 thousand in 2022, primarily from long-term advance payments for cemetery maintenance services, with a decrease in current and an increase in non-current contract liabilities Contract Liabilities Details | Item | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Sale of burial plots | — | 1,007 | (1,007) | -100.0% | | Provision of cemetery maintenance services | 75,897 | 72,138 | 3,759 | 5.2% | | Provision of other cemetery-related services | 745 | 1,488 | (743) | -49.9% | | Total | 76,642 | 74,633 | 2,009 | 2.7% | | Current contract liabilities | 5,915 | 7,372 | (1,457) | -19.8% | | Non-current contract liabilities | 70,727 | 67,261 | 3,466 | 5.1% | - The increase in contract liabilities during the year was mainly due to the receipt of **long-term advance payments** from customers, who are required to prepay 20 years of maintenance fees for ongoing upkeep of burial plots and tombstones upon purchasing funeral services[91](index=91&type=chunk) - The increase in non-current contract liabilities was mainly due to an increase in advance payments received from customers during the year[11](index=11&type=chunk) [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=21&type=section&id=Business%20Review) In 2022, the Group primarily engaged in burial plot sales, other related services, and cemetery maintenance in Langfang, China, with funeral services being the largest revenue component at 89.2% and cemetery maintenance revenue at RMB 5.0 million - During the year, the Group was primarily engaged in the sale of burial plots, provision of other cemetery-related services, and provision of cemetery maintenance services in Langfang, China[95](index=95&type=chunk) - Funeral services constituted the **largest component of our revenue**, accounting for **89.2%** of our revenue for the year ended December 31, 2022 (2021: 89.7%)[96](index=96&type=chunk) - For the year ended December 31, 2022, our revenue from cemetery maintenance services was **RMB 5.0 million** (2021: RMB 4.5 million)[97](index=97&type=chunk) [Overview](index=21&type=section&id=Overview) The Group primarily provides funeral services in Langfang, China, including burial plot sales, related services, and cemetery maintenance, maintaining competitiveness and optimism for future development - The Group is primarily engaged in the sale of burial plots, provision of other cemetery-related services, and provision of cemetery maintenance services in Langfang, China[95](index=95&type=chunk) - The Company is optimistic about the continuous development and expansion of this business[96](index=96&type=chunk) [Cemetery Sales and Related Services](index=21&type=section&id=Cemetery%20Sales%20and%20Related%20Services) Funeral services are the Group's largest revenue source, accounting for 89.2% of total revenue in 2022, with the Group maintaining competitiveness in Langfang through its reputation, service quality, and facilities - Funeral services are our **largest component of revenue**, accounting for **89.2%** of our revenue for the year ended December 31, 2022 (2021: 89.7%)[96](index=96&type=chunk) - The Group believes it can effectively compete in Langfang by leveraging its reputation, service quality, well-maintained, and conveniently located facilities[96](index=96&type=chunk) [Cemetery Maintenance Services](index=21&type=section&id=Cemetery%20Maintenance%20Services) The Group provides ongoing cemetery maintenance services, with customers prepaying maintenance fees upon purchasing burial plots, generating RMB 5.0 million in revenue in 2022, an increase from 2021 - We provide ongoing cemetery maintenance services to maintain the aesthetic appeal of the cemetery, which is an integral part of our funeral services[97](index=97&type=chunk) - Customers prepay maintenance fees when signing sales contracts for burial plots[97](index=97&type=chunk) Cemetery Maintenance Services Revenue | Year | Revenue (RMB million) | |---|---| | 2022 | 5.0 | | 2021 | 4.5 | [Business Outlook and Recent Developments](index=21&type=section&id=Business%20Outlook%20and%20Recent%20Developments) The Group anticipates increased demand for funeral services driven by traditional festivals and urban redevelopment, focusing on cemetery joint ventures, expanding funeral service scope, exploring the Beijing-Tianjin-Hebei market, and seeking strategic alliances - The Group expects customers whose relatives passed away during the pandemic to purchase burial plots and hold interment ceremonies in the coming one to two years; also, customers requiring ash or grave relocation due to urban redevelopment will purchase burial plots or choose ash storage services according to their needs[98](index=98&type=chunk) - The Group will continue to actively develop and communicate with relevant government departments regarding land acquisition and planning, and fully advance the approval procedures for the operational cemetery[100](index=100&type=chunk) - The Group will expand and enhance its service scope from solely providing funeral services to offering comprehensive funeral and interment services[104](index=104&type=chunk) - The Group intends to leverage Langfang's strategic location as a hub in the Beijing-Tianjin-Hebei metropolitan area to deeply explore the funeral service market in this region, especially Beijing[105](index=105&type=chunk) - The Company will continue to actively seek more suitable strategic alliances and acquisition opportunities in the future[106](index=106&type=chunk) [Focus on Cemetery Joint Venture Project](index=22&type=section&id=Focus%20on%20Cemetery%20Joint%20Venture%20Project) The Group will actively advance its cemetery joint venture with Xinhangcheng, communicating with government for land acquisition and planning, and accelerating approval processes to strengthen its market position in Langfang and the Beijing-Tianjin-Hebei metropolitan area - The cemetery project jointly ventured with Langfang Xinhangcheng Real Estate Development Co., Ltd. is one of the Group's key development projects[100](index=100&type=chunk) - The Group will continue to actively develop and communicate with relevant government departments regarding land acquisition and planning, and fully advance the approval procedures for the operational cemetery[100](index=100&type=chunk) - The directors believe that the advancement and continuous development investment in the cemetery joint venture project will further consolidate and expand the Group's market position in Langfang and the Beijing-Tianjin-Hebei metropolitan area[100](index=100&type=chunk) [Consolidate Market Position in Langfang](index=22&type=section&id=Consolidate%20Market%20Position%20in%20Langfang) The Group will consolidate its market position in Langfang by enhancing cemetery environment, diversifying products and services, upgrading facilities, and actively cooperating with local government on urban development plans, including grave relocation projects - The Group will launch various product types at different price points and streamline its funeral service categories[101](index=101&type=chunk) - The Group will continue to upgrade and plans to further develop the cemetery, especially by enhancing the cemetery environment, upgrading facilities, and diversifying services[101](index=101&type=chunk) - The Group will continue to actively cooperate with and support local government urban development plans by providing funeral services and columbarium niche storage services, undertaking grave relocation projects for multiple villages in the Beijing New Airport Economic Zone (Langfang Area), and increasing villages served by columbarium niche storage services[102](index=102&type=chunk) [Expand Business Scope to Funeral Services](index=23&type=section&id=Expand%20Business%20Scope%20to%20Funeral%20Services) The Group will expand from solely funeral services to comprehensive funeral and interment services, offering diversified products and extended services through cooperation with Langfang government and professional staff training - The Group will expand from solely providing funeral services to offering comprehensive funeral and interment services, continuing to launch various product types at different price points, and incorporating more professional and diversified extended services in aspects such as grave maintenance, interment, and memorial services[104](index=104&type=chunk) - The Group successfully won the bid for the Langfang Funeral Home extended funeral service outsourcing project last year, enabling it to provide customers with one-stop funeral services including rituals, body preparation, wake, and farewell ceremonies[111](index=111&type=chunk) - The Group will continue to provide employees with professional and general skills training, and recruit new funeral professionals to offer more professional and comprehensive services to customers[111](index=111&type=chunk) [Explore Beijing-Tianjin-Hebei Metropolitan Area Funeral Market](index=24&type=section&id=Explore%20Beijing-Tianjin-Hebei%20Metropolitan%20Area%20Funeral%20Market) Leveraging Langfang's strategic location, the Group plans to deeply explore the Beijing-Tianjin-Hebei metropolitan area's funeral service market, investing in marketing, collaborating with local providers, and establishing partnerships with funeral homes and hospital morgues - The Group intends to leverage Langfang's strategic location as a hub in the Beijing-Tianjin-Hebei metropolitan area to deeply explore the funeral service market in this region, especially Beijing[105](index=105&type=chunk) - The Group plans to invest more marketing resources to serve surrounding cities and further collaborate with local funeral service providers[105](index=105&type=chunk) - The Group plans to establish partnerships with local funeral homes and hospital morgues to more directly and quickly reach bereaved families, offering high-quality one-stop funeral and interment services to potential customers[105](index=105&type=chunk) [Seek Strategic Alliances and Acquisition Opportunities](index=24&type=section&id=Seek%20Strategic%20Alliances%20and%20Acquisition%20Opportunities) The Group continues to seek strategic alliances and acquisition opportunities to expand its business, having successfully bid on a cemetery joint venture project and making phased progress, while actively looking for more suitable partners - The Group has conducted preliminary site inspections and researched several potential acquisition opportunities to seek strategic alliances and acquisition opportunities in line with the future plans outlined in the prospectus[106](index=106&type=chunk) - Langfang Wantong Cemetery Co., Ltd., an indirect wholly-owned subsidiary of the Company, successfully won the bid for the cemetery joint venture project in 2020 and formally signed a joint venture agreement with Xinhangcheng to jointly establish Langfang Lingkong Wantong Cemetery Co., Ltd[106](index=106&type=chunk) - In 2021-22, the Group deeply explored the Beijing-Tianjin-Hebei metropolitan area funeral market, continuously and actively developing the cemetery joint venture project, achieving phased progress in planning, design, and land acquisition and relocation[106](index=106&type=chunk) [Major and Connected Transactions](index=24&type=section&id=Major%20and%20Connected%20Transactions) The Group provided a RMB 100 million loan to China Grand Prosperity Industrial Town Development Co., Ltd. in 2021 at 12% annual interest, which was terminated due to a failed EGM resolution, with principal and interest fully repaid in July 2022 - The Group entered into a loan agreement with China Grand Prosperity Industrial Town Development Co., Ltd. on May 7, 2021, to provide a loan of **RMB 100,000,000** for a term of one year, bearing interest at an annual rate of **12%**[115](index=115&type=chunk) - On May 16, 2022, the Company entered into an extension deed with China Grand Prosperity, extending the original repayment date by **24 months**[116](index=116&type=chunk) - At the extraordinary general meeting held on June 30, 2022, the resolution regarding the extension deed received less than 50% of votes in favor, thus the transaction under the extension deed was terminated[116](index=116&type=chunk) - The principal and interest of the loan were **fully repaid** by China Grand Prosperity in July 2022[116](index=116&type=chunk) [Financial Review](index=25&type=section&id=Financial%20Review) The Group's 2022 revenue grew 4.1% to RMB 45.7 million, but gross profit decreased 6.2% to RMB 34.1 million due to lower funeral business gross margin; profit before tax increased 14.5% to RMB 28.5 million, with net profit margin rising to 48.2%, and cash and cash equivalents significantly increased by 150.2% to RMB 181.3 million, indicating robust liquidity Overview of Key Financial Metrics | Metric | 2022 (RMB '000) | 2021 (RMB '000) | Change (RMB '000) | Growth Rate | |---|---|---|---|---| | Revenue | 45,738 | 43,949 | 1,789 | 4.1% | | Cost of sales and services | 11,613 | 7,554 | 4,059 | 53.7% | | Gross Profit | 34,125 | 36,395 | (2,270) | -6.2% | | Overall Gross Margin | 74.6% | 82.8% | -8.2% | -9.9% | | Profit before tax | 28,518 | 24,908 | 3,610 | 14.5% | | Profit and total comprehensive income for the year | 22,030 | 18,140 | 3,890 | 21.5% | | Net Profit Margin | 48.2% | 41.3% | 6.9% | 16.7% | | Basic earnings per share (RMB) | 0.022 | 0.018 | 0.004 | 22.2% | | Bank balances and cash | 211,300 | 84,400 | 126,900 | 150.4% | | Debt-to-equity ratio | 30.5% | 32.6% | -2.1% | -6.4% | [Revenue](index=25&type=section&id=Revenue_FinancialReview) The Group's 2022 revenue was RMB 45,738 thousand, a 4.1% increase from 2021, with funeral business remaining the primary source, accounting for 89.2%, including 58.7% from burial plot sales and 16.7% from grave relocation services Revenue Breakdown | Item | 2022 Revenue (RMB '000) | % of Total Revenue | 2021 Revenue (RMB '000) | % of Total Revenue | |---|---|---|---|---| | Sale of burial plots | 26,869 | 58.7% | 30,356 | 69.1% | | Sale of columbarium niches | — | 0.0% | 4,874 | 11.1% | | Provision of grave relocation services | 7,629 | 16.7% | — | — | | Provision of other cemetery-related services | 6,280 | 13.7% | 4,188 | 9.5% | | Total funeral business | 40,778 | 89.2% | 39,418 | 89.7% | | Provision of cemetery maintenance services | 4,960 | 10.8% | 4,531 | 10.3% | | Total | 45,738 | 100% | 43,949 | 100% | [Cost of Sales and Services](index=26&type=section&id=Cost%20of%20Sales%20and%20Services) The Group's cost of sales and services increased by 52.6% to RMB 11.6 million in 2022, with funeral services costs rising 58.6% to RMB 11.1 million due to increased grave relocation revenue, while cemetery maintenance costs slightly decreased Cost of Sales and Services Breakdown | Item | 2022 Cost of Sales and Services (RMB '000) | % of Total Cost of Sales and Services | 2021 Cost of Sales and Services (RMB '000) | % of Total Cost of Sales and Services | |---|---|---|---|---| | Funeral business | 11,141 | 95.9% | 7,004 | 92.7% | | Cemetery maintenance | 472 | 4.1% | 550 | 7.3% | | Total | 11,613 | 100% | 7,554 | 100% | - The Group's cost of sales and services for 2022 was **RMB 11.6 million** (2021: RMB 7.6 million), an increase of **52.6%**[119](index=119&type=chunk) - The cost of sales and services for the Group's funeral business increased by **58.6%** from **RMB 7.0 million** in 2021 to **RMB 11.1 million** in 2022, mainly due to increased revenue from grave relocation services in 2022[121](index=121&type=chunk) [Gross Profit and Gross Margin](index=27&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's gross profit for 2022 was RMB 34.1 million, a 6.2% decrease from 2021, with the overall gross margin falling from 82.8% to 74.6%, primarily due to lower gross margin in the funeral business from higher grave relocation costs Gross Profit and Gross Margin Breakdown | Item | 2022 Gross Profit (RMB '000) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB '000) | 2021 Gross Margin (%) | |---|---|---|---|---| | Funeral business | 29,637 | 72.7% | 32,414 | 82.2% | | Cemetery maintenance | 4,488 | 90.5% | 3,981 | 87.9% | | Total | 34,125 | 74.6% | 36,395 | 82.8% | - The lower gross margin for the funeral business in 2022 was mainly due to the higher cost of grave relocation services, resulting in a lower gross margin for these services in 2022[125](index=125&type=chunk) - The gross margin for providing cemetery maintenance services increased by approximately **2.6%** year-on-year, mainly due to lower maintenance expenses caused by reduced personnel movement during the pandemic[125](index=125&type=chunk) [Other Income](index=27&type=section&id=Other%20Income_FinancialReview) The Group's other income slightly decreased by 2.1% from RMB 9.7 million in 2021 to RMB 9.5 million in 2022 Other Income | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 9.5 | -2.1% | | 2021 | 9.7 | | [Distribution and Selling Expenses](index=27&type=section&id=Distribution%20and%20Selling%20Expenses) The Group's distribution and selling expenses increased by 2.6% from RMB 7.6 million in 2021 to RMB 7.8 million in 2022, mainly due to higher commissions and expenses for promoting burial plot sales Distribution and Selling Expenses | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 7.8 | 2.6% | | 2021 | 7.6 | | - The increase was mainly due to increased commissions and expenses for promoting burial plot sales during the year[127](index=127&type=chunk) [Administrative Expenses](index=28&type=section&id=Administrative%20Expenses) The Group's administrative expenses increased by 16.3% from RMB 8.0 million in 2021 to RMB 9.3 million in 2022 Administrative Expenses | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 9.3 | 16.3% | | 2021 | 8.0 | | [Profit Before Tax](index=28&type=section&id=Profit%20Before%20Tax_FinancialReview) The Group's profit before tax increased by 14.5% from RMB 24.9 million in 2021 to RMB 28.5 million in 2022 Profit Before Tax | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 28.5 | 14.5% | | 2021 | 24.9 | | [Income Tax Expense](index=28&type=section&id=Income%20Tax%20Expense_FinancialReview) The Group's income tax expense decreased by 4.4% from RMB 6.8 million in 2021 to RMB 6.5 million in 2022, generally consistent with the decrease in gross profit Income Tax Expense | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 6.5 | -4.4% | | 2021 | 6.8 | | [Profit and Total Comprehensive Income for the Year](index=28&type=section&id=Profit%20and%20Total%20Comprehensive%20Income%20for%20the%20Year) The Group's profit and total comprehensive income for the year increased by 21.5% from RMB 18.1 million in 2021 to RMB 22.0 million in 2022, with the net profit margin rising from 41.3% to 48.2% Profit and Total Comprehensive Income for the Year | Year | Amount (RMB million) | Change Rate | |---|---|---| | 2022 | 22.0 | 21.5% | | 2021 | 18.1 | | | Net Profit Margin (2022) | 48.2% | | | Net Profit Margin (2021) | 41.3% | | [Earnings Per Share](index=28&type=section&id=Earnings%20Per%20Share_FinancialReview) For the year ended December 31, 2022, the Group's basic earnings per share increased to RMB 0.022 from RMB 0.018 in 2021 Basic Earnings Per Share | Year | Basic Earnings Per Share (RMB) | |---|---| | 2022 | 0.022 | | 2021 | 0.018 | [Cash Flow](index=28&type=section&id=Cash%20Flow) The Group's cash and cash equivalents increased by RMB 108.1 million, from RMB 73.2 million in 2021 to RMB 181.3 million in 2022, primarily due to a net cash inflow of RMB 100 million from investing activities Cash and Cash Equivalents | Date | Amount (RMB million) | Change (RMB million) | Growth Rate | |---|---|---|---| | December 31, 2022 | 181.3 | 108.1 | 147.7% | | December 31, 2021 | 73.2 | | | - The increase was mainly due to a **net cash inflow of RMB 100 million** from our investing activities[133](index=133&type=chunk) [Pledged Assets](index=28&type=section&id=Pledged%20Assets) As of December 31, 2022 and 2021, the Group had no pledged assets - As of December 31, 2022 and 2021, the Group had **no pledged assets**[138](index=138&type=chunk) [Inventory](index=29&type=section&id=Inventory) The Group's inventory decreased from RMB 23.8 million in 2021 to RMB 20.0 million in 2022, primarily due to burial plot sales Inventory | Date | Amount (RMB million) | Change (RMB million) | Change Rate | |---|---|---|---| | December 31, 2022 | 20.0 | -3.8 | -16.0% | | December 31, 2021 | 23.8 | | | - The decrease was mainly due to the **sale of burial plots**[140](index=140&type=chunk) [Prepayments and Other Receivables](index=29&type=section&id=Prepayments%20and%20Other%20Receivables_FinancialReview) The Group's prepayments and other receivables increased from RMB 36.0 million in 2021 to RMB 41.5 million in 2022, mainly due to a RMB 3 million prepayment for extended funeral service outsourcing to Langfang Funeral Home Prepayments and Other Receivables | Date | Amount (RMB million) | Change (RMB million) | Change Rate | |---|---|---|---| | December 31, 2022 | 41.5 | 5.5 | 15.3% | | December 31, 2021 | 36.0 | | | - This was mainly due to a prepayment of **RMB 3 million** to Langfang Funeral Home for an extended funeral service outsourcing project[141](index=141&type=chunk) [Trade and Other Payables](index=29&type=section&id=Trade%20and%20Other%20Payables_FinancialReview) The Group's trade and other payables decreased by 18.5% from RMB 11.9 million in 2021 to RMB 9.7 million in 2022, primarily due to payments to suppliers for tombstones Trade and Other Payables | Date | Amount (RMB million) | Change (RMB million) | Change Rate | |---|---|---|---| | December 31, 2022 | 9.7 | -2.2 | -18.5% | | December 31, 2021 | 11.9 | | | - The decrease was mainly due to payments to suppliers for tombstones[142](index=142&type=chunk) [Contract Liabilities](index=29&type=section&id=Contract%20Liabilities_FinancialReview) The Group's current contract liabilities were RMB 5.9 million in 2022, a decrease from 2021, while non-current contract liabilities increased to RMB 70.7 million, mainly due to increased advance payments from customers Contract Liabilities | Date | Current Contract Liabilities (RMB million) | Non-current Contract Liabilities (RMB million) | |---|---|---| | December 31, 2022 | 5.9 | 70.7 | | December 31, 2021 | 7.4 | 67.3 | - The decrease in current contract liabilities was mainly due to the non-recovery of advance payments for ash storage services[143](index=143&type=chunk) - The increase in non-current contract liabilities was mainly due to an increase in advance payments received from customers during the year[11](index=11&type=chunk) [Capital Structure](index=29&type=section&id=Capital%20Structure) The Group's capital structure remained unchanged as of December 31, 2022, with a debt-to-equity ratio of 30.5%, down from 32.6%, indicating robust liquidity, and the Board reviews it annually - The Company's capital structure remained **unchanged** for the year ended December 31, 2022[135](index=135&type=chunk) Debt-to-Equity Ratio | Date | Ratio | |---|---| | December 31, 2022 | 30.5% | | December 31, 2021 | 32.6% | - The decrease in the debt-to-equity ratio indicates the Group's **robust liquidity**[14](index=14&type=chunk) - The directors review the capital structure annually, considering the cost of capital and risks associated with different classes of shares[14](index=14&type=chunk) [Liquidity and Financial Resources](index=30&type=section&id=Liquidity%20and%20Financial%20Resources) As of December 31, 2022, the Group's bank balances and cash significantly increased to approximately RMB 211.3 million, with future capital expenditures and working capital needs primarily funded by operating income and existing cash Bank Balances and Cash | Date | Amount (RMB million) | Change (RMB million) | Growth Rate | |---|---|---|---| | December 31, 2022 | 211.3 | 126.9 | 150.4% | | December 31, 2021 | 84.4 | | | - We primarily fund our working capital, capital expenditures, and other capital requirements through **income generated from operations**[136](index=136&type=chunk) [Commitments](index=30&type=section&id=Commitments) As of December 31, 2022, the Group had capital commitments of RMB 0.5 million for intangible assets, compared to none in 2021 Capital Commitments | Date | Intangible Assets Expenditure (RMB million) | |---|---| | December 31, 2022 | 0.5 | | December 31, 2021 | — | [Contingent Liabilities](index=30&type=section&id=Contingent%20Liabilities) As of December 31, 2022, the Group had no significant contingent liabilities - As of December 31, 2022, the Group had **no significant contingent liabilities** (2021: nil)[17](index=17&type=chunk) [Foreign Exchange Risk](index=30&type=section&id=Foreign%20Exchange%20Risk) The Group's operations are primarily denominated in RMB, but it is exposed to foreign exchange risk due to certain HKD-denominated bank deposits, with no hedging arrangements in place, and the Board actively monitors this risk - The Group's operations are primarily denominated in **RMB**[2](index=2&type=chunk) - The Group is exposed to foreign exchange risk due to certain bank deposits denominated in **HKD**[2](index=2&type=chunk) - The Group did not enter into any currency hedging arrangements during the year, and the directors actively monitor the foreign exchange risk exposure regularly to minimize it as much as possible[2](index=2&type=chunk) [Employee Remuneration and Relations](index=30&type=section&id=Employee%20Remuneration%20and%20Relations) As of December 31, 2022, the Group maintained 57 employees, offering competitive remuneration and benefits, regularly reviewing policies, and providing training to enhance skills Employee Count | Date | Number of Employees | |---|---| | December 31, 2022 | 57 | | December 31, 2021 | 57 | - The Group provides competitive remuneration and benefits to its employees and regularly reviews its remuneration policy based on employee performance, contribution, and industry salary levels[15](index=15&type=chunk) - The Group also offers various training programs to enhance employees' skills and capabilities in all aspects[15](index=15&type=chunk) [Operating Leases](index=30&type=section&id=Operating%20Leases) As of December 31, 2022, the Group had no lease receivables, compared to RMB 0.2 million in 2021 Lease Receivables | Date | Amount (RMB million) | |---|---| | December 31, 2022 | — | | December 31, 2021 | 0.2 | [Corporate Governance and Other Information](index=31&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance](index=31&type=section&id=Corporate%20Governance) The company is committed to establishing and maintaining good corporate governance practices, having adopted its own code and confirmed compliance with all code provisions of the Listing Rules Appendix 14 for the year ended December 31, 2022 - The Company is committed to establishing and maintaining good corporate governance practices and procedures[6](index=6&type=chunk) - For the year ended December 31, 2022, the Board adopted its own code of corporate governance practices, which includes all code provisions set out in Appendix 14 to the Listing Rules[6](index=6&type=chunk) - The directors confirm that the Company has complied with the code provisions of the Corporate Governance Code and the Company's code of corporate governance practices for the year ended December 31, 2022[6](index=6&type=chunk) [Standard Code for Securities Transactions](index=31&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company has adopted the Standard Code for Securities Transactions as its code of conduct for directors and employees, with all directors and senior management confirming compliance during the year - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Securities Dealing Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct for securities transactions by its directors and employees[7](index=7&type=chunk) - Following specific enquiries with all directors and senior management, they confirmed that they have complied with the standards set out in the Securities Dealing Code during the year[7](index=7&type=chunk) [Audit Committee](index=32&type=section&id=Audit%20Committee) The company's Audit Committee reviewed the Group's consolidated financial statements for the year ended December 31, 2022, deeming them compliant with applicable accounting standards, Listing Rules, and legal requirements, with sufficient disclosure, and recommended approval to the Board - The Company's Audit Committee has reviewed the Group's consolidated financial statements for the year ended December 31, 2022, including the accounting principles and practices adopted by the Group[147](index=147&type=chunk) - The Audit Committee is of the opinion that these statements comply with applicable accounting standards, the Listing Rules, and legal requirements, and that adequate disclosures have been made[147](index=147&type=chunk) - The Audit Committee recommended approval to the Board[147](index=147&type=chunk) [Scope of Work by Deloitte Touche Tohmatsu](index=32&type=section&id=Scope%20of%20Work%20by%20Deloitte%20Touche%20Tohmatsu) Deloitte Touche Tohmatsu, the Group's auditor, confirmed that the consolidated financial statement figures in the preliminary announcement align with the audited statements, but their work does not constitute an assurance engagement, thus no opinion or assurance conclusion is expressed on the preliminary announcement - The figures in respect of the Group's consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, and the related notes thereto for the year ended December 31, 2022, as set out in the preliminary announcement, have been agreed by the Group's auditor, Deloitte Touche Tohmatsu, to the amounts set out in the Group's audited consolidated financial statements for the year approved by the Board on March 29, 2023[148](index=148&type=chunk) - The work performed by Deloitte Touche Tohmatsu in this respect does not constitute an assurance engagement, and accordingly, Deloitte Touche Tohmatsu does not express any opinion or assurance conclusion on the preliminary announcement[148](index=148&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=31&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the year ended December 31, 2022, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[3](index=3&type=chunk) [Events After Reporting Period](index=31&type=section&id=Events%20After%20Reporting%20Period) The Board is unaware of any significant events affecting the Group that occurred after December 31, 2022, and up to the date of this announcement - The Board is unaware of any significant events affecting the Group that occurred after December 31, 2022, and up to the date of this announcement[4](index=4&type=chunk) [Dividends (Corporate Decision)](index=31&type=section&id=Dividends%20%28Corporate%20Decision%29) The Board does not recommend the payment of any dividends for the year ended December 31, 2022 - The Board does not recommend the payment of any dividends for the year ended December 31, 2022 (2021: nil)[5](index=5&type=chunk) [Annual General Meeting](index=32&type=section&id=Annual%20General%20Meeting) The company's Annual General Meeting for the year ended December 31, 2022, is scheduled for Friday, June 23, 2023, with notice to be published and dispatched to shareholders in due course - The Company's Annual General Meeting for the year ended December 31, 2022, is scheduled to be held on **Friday, June 23, 2023**[149](index=149&type=chunk) - Notice of the Annual General Meeting will be published and dispatched to the Company's shareholders in due course[149](index=149&type=chunk) [Suspension of Share Transfer Registration](index=33&type=section&id=Suspension%20of%20Share%20Transfer%20Registration) The company will suspend share transfer registration from Tuesday, June 20, 2023, to Friday, June 23, 2023, to determine shareholders eligible to attend and vote at the Annual General Meeting - The Company will suspend share transfer registration from **Tuesday, June 20, 2023, to Friday, June 23, 2023** (both dates inclusive)[151](index=151&type=chunk) - To be eligible to attend and vote at the Company's upcoming Annual General Meeting, all completed transfer forms, together with the relevant share certificates, must be lodged with the Company's share registrar in Hong Kong by **4:30 p.m. on Monday, June 19, 2023** (Hong Kong time) at the latest[151](index=151&type=chunk) [Board of Directors](index=33&type=section&id=Board%20of%20Directors) As of the announcement date, the company's Board of Directors includes Ms. Zhao Ying as Chairperson and Non-executive Director, three Executive Directors, and three Independent Non-executive Directors - As of the date of this announcement, the Company's Board of Directors comprises Ms. Zhao Ying as Chairperson and Non-executive Director, Ms. Li Xingying, Ms. Wang Wei, and Mr. Huang Peikun as Executive Directors, and Mr. Zhang Yingkun, Dr. Wang Yongquan, and Mr. Cai Hanqiang as Independent Non-executive Directors[152](index=152&type=chunk) [Announcement Date](index=33&type=section&id=Announcement%20Date) The date of this announcement is March 29, 2023 - Hong Kong, **March 29, 2023**[145](index=145&type=chunk)

Financial Performance - The unaudited revenue of China Wan Tong Yuan (Holdings) Limited for the six months ended June 30, 2022, was approximately RMB 23,796,000, representing an increase of RMB 3,051,000 or 14.7% compared to RMB 20,745,000 for the same period in 2021[10]. - The profit attributable to owners of the Company for the same period was RMB 13,740,000, an increase of RMB 6,085,000 or 79.5% compared to RMB 7,655,000 in the previous year[10]. - Revenue for the six months ended June 30, 2022, increased to RMB 23,796,000 from RMB 20,745,000, representing a growth of 9.9% year-over-year[20]. - Gross profit for the same period decreased to RMB 15,401,000 from RMB 17,396,000, a decline of 11.5%[20]. - Profit before tax rose to RMB 17,396,000 from RMB 10,610,000, reflecting a growth of 64.5%[20]. - Basic earnings per share increased to 1.4 RMB cents from 0.8 RMB cents, a growth of 75%[20]. - The Group's profit and total comprehensive income increased by 79.5% from RMB 7.7 million for the six months ended June 30, 2021 to RMB 13.7 million for the six months ended June 30, 2022, with a net profit margin increase from 36.9% to 57.7%[136]. Dividends and Equity - The Board does not recommend the payment of an interim dividend for the Period[10]. - Total equity attributable to owners of the Company was RMB 201,902,000, up from RMB 188,162,000, an increase of 7.3%[24]. - The Group's total equity increased to RMB 201.9 million as at 30 June 2022 from RMB 188.2 million as at 31 December 2021[136]. Cash Flow and Assets - The net cash generated from operating activities was RMB 6,843, a significant improvement compared to a cash outflow of RMB 21,783 in the same period of 2021[28]. - The company reported a net cash increase of RMB 18,368 in cash and cash equivalents, compared to a decrease of RMB 32,909 in the prior year[28]. - Total assets as of June 30, 2022, amounted to RMB 227,813,000, compared to RMB 214,452,000 at the end of 2021, an increase of 6.2%[22]. - As of June 30, 2022, cash and cash equivalents stood at RMB 91,716, down from RMB 110,469 a year earlier[28]. Operational Strategies - The Company continues to focus on enhancing its operational efficiency and market presence[10]. - The management discussion highlights key operational strategies and market trends impacting the Group's performance[10]. - The Group plans to expand its business scope to include funeral services and enhance its cemetery operations through innovations like "Cloud Tomb-sweeping" services[139][140]. - The Group aims to strengthen its market position in Langfang and expand into the Jing-Jin-Ji megalopolis through strategic alliances and acquisitions[139]. Revenue Sources - For the six months ended June 30, 2022, total revenue was RMB 23,796,000, with sales of burial plots contributing RMB 21,348,000 and cemetery maintenance services contributing RMB 2,448,000[35]. - Revenue from burial services represented 89.7% of the Group's total revenue for the six months ended 30 June 2022, compared to 89.2% in 2021[130]. - Revenue from cemetery maintenance services was RMB 2,448,000 for the six months ended June 30, 2022, an increase from RMB 2,234,000 in 2021[131]. Expenses and Costs - Administrative expenses for the period were RMB 3,406,000, while finance costs amounted to RMB 3,917,000[48]. - The Group's distribution and selling expenses decreased by 4.7% from RMB 3.6 million to RMB 3.4 million for the same period[134]. - The Group's administrative expenses increased by 4.5% from RMB 3.8 million to RMB 3.9 million for the six months ended June 30, 2022[134]. Investments and Loans - A loan agreement was established with China VAST for a principal amount of RMB 100 million at an annual interest rate of 12%[126]. - The loan was fully repaid by China VAST in July 2022 after the original repayment date was extended for 24 months[128]. Compliance and Governance - The financial statements were reviewed in accordance with International Accounting Standard 34, ensuring compliance with relevant provisions[12]. - The audit committee has reviewed the unaudited condensed consolidated financial statements for the period, confirming compliance with applicable accounting standards and legal requirements[177]. Market Trends and Future Outlook - The company provided a positive outlook for the next quarter, projecting revenue growth of B% based on current market trends and user engagement[182]. - The company is considering strategic acquisitions to bolster its market position, with a focus on companies that align with its core business objectives[182]. - Future guidance indicates a commitment to sustainable practices, aiming for a J% reduction in carbon footprint by the end of the fiscal year[182].

Financial Performance - Revenue for 2021 was RMB 43,949,000, an increase of 13.3% from RMB 38,891,000 in 2020[8] - Profit before tax for 2021 was RMB 24,908,000, a slight decrease of 1.2% compared to RMB 25,215,000 in 2020[8] - Profit and total comprehensive income attributable to owners of the Company for 2021 was RMB 18,140,000, up from RMB 17,541,000 in 2020, representing a growth of 3.4%[8] - The profit attributable to shareholders for the year was RMB 18.1 million[26] - The Group's revenue for the year ended December 31, 2021, was primarily generated from the sale of burial plots, columbarium units, and other burial-related services[79][80]. - Burial plot sales reached RMB 30.4 million, accounting for 69.1% of total revenue in 2021, up from RMB 29.6 million and 76.1% in 2020[81] - Sales of columbarium units increased significantly to RMB 4.9 million, representing 11.1% of total revenue, compared to RMB 1.7 million and 4.3% in 2020[81] - The provision of other burial-related services generated RMB 4.2 million, making up 9.5% of total revenue, an increase from RMB 3.5 million and 9.0% in 2020[81] - Gross profit for 2021 was RMB 36.4 million, up from RMB 32.9 million in 2020, with a gross profit margin of 82.8% compared to 84.6% in the previous year[89] Assets and Liabilities - Total assets as of December 31, 2021, were RMB 279,139,000, an increase of 10.2% from RMB 253,376,000 in 2020[10] - Total liabilities as of December 31, 2021, were RMB 90,977,000, up from RMB 83,354,000 in 2020, reflecting an increase of 9.7%[10] - Total equity attributable to owners of the Company was RMB 188,162,000 as of December 31, 2021, compared to RMB 170,022,000 in 2020, marking an increase of 10.7%[10] Cash Flow and Financial Position - Cash and cash equivalents decreased by RMB70.6 million to RMB73.2 million as at 31 December 2021 from RMB143.8 million as at 31 December 2020[99] - Inventories increased from RMB18.6 million as at 31 December 2020 to RMB23.8 million as at 31 December 2021, mainly due to the increase of tombstones[101] - Prepayments and other receivables increased from RMB9.3 million as at 31 December 2020 to RMB36.0 million as at 31 December 2021, mainly due to advance payment for land demolition of RMB30.0 million[102] - Trade and other payables increased by 95.1% from RMB6.1 million as at 31 December 2020 to RMB11.9 million as at 31 December 2021[103] Operational Highlights - Burial services accounted for 89.7% of the Company's total revenue for the year ended 31 December 2021, up from 89.4% in 2020[39] - Revenue from cemetery maintenance services was RMB 4.5 million for the year ended 31 December 2021, compared to RMB 4.1 million in 2020[41] - The Company successfully won the bidding for columbarium settlement services in the Langfang Airport Economic Zone, contributing to local economic development[30] - The Company established an intelligent cemetery management system to enhance digital management and improve service efficiency[29] - The Company plans to enhance its comprehensive service capability in the Jing-Jin-Ji region in 2022, focusing on cemetery operation and funeral services[35] Strategic Initiatives - The Group aims to strengthen its market position in Langfang and expand its business in the Jing-Jin-Ji megalopolis through strategic initiatives[43] - The planning and tendering for the joint venture cemetery project with Langfang Xinhangcheng Real Estate Development Co., Limited has been completed, marking it as a major development project for the Group next year[50] - The Group plans to selectively acquire or enter into strategic partnerships with other death care service providers, focusing on high-demand areas in wealthy provinces[51] - The Group will enhance its cemetery environment and diversify service offerings to meet various customer needs, including launching products at different price points[54] Governance and Compliance - The Company has appointed three Independent Non-executive Directors (INEDs), representing more than one-third of the Board, ensuring compliance with Listing Rules[144] - All INEDs confirmed their independence during the year, adhering to the required standards[146] - The Company has established a Nomination Committee responsible for reviewing Board composition and assessing the independence of INEDs[148] - The Articles of Association stipulate that one-third of Directors must retire by rotation at each annual general meeting[150] - The Company has adopted a code of conduct for Directors' securities transactions, ensuring compliance with the required standards[141] Risk Management - The Board has conducted a review of the effectiveness of the risk management and internal control systems and considered them effective and adequate[199] - The risk management and internal control procedures include comprehensive budgeting, information reporting, and performance monitoring systems[199] Dividend Policy - The Company has adopted a general dividend policy aimed at providing shareholders with dividends from the Group's profit attributable to shareholders in any financial year[140] - The Board considers actual and expected financial results, economic conditions, business strategies, and liquidity position when proposing dividend payouts[140]

[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 ...