谭木匠(00837) - 2023 - 中期财报

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