中国万桐园(06966) - 2020 - 中期财报

Corporate Information This section provides fundamental corporate details and administrative information Financial Highlights Financial Highlights Summary 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] Report on Review of Condensed Consolidated Financial Statements Auditor's Review Conclusion 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] - 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] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 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 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 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] Condensed Consolidated Statement of Cash Flows 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 Revenue and Segment Information 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][56] Event After the End of the Reporting Period 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] - 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] Management Discussion and Analysis Business Review 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][139] - Cemetery maintenance services, as part of funeral services, generated revenue of RMB 1.961 million during the period[137][140] Financial Review 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] - Other income decreased by 42.1%, mainly due to a RMB 2 million reduction in government grants[143] - 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] 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][157] - 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][158] Comparison of Business Objectives with Actual Business Progress Business Objectives Progress 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][165] - Plans to expand funeral service business were delayed due to government restrictions on gatherings caused by the pandemic[169] - 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] Use of Proceeds from the Global Offering 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][184] Other Information Interests of Directors and Substantial Shareholders 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][198] - TMF (Cayman) Ltd., as trustee of The Hope Trust, is deemed to hold 700,000,000 shares (70%)[205][208] Corporate Governance 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][233] - 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][236]