中国万桐园(06966) - 2022 - 年度业绩

Executive Summary & Company Information Financial Highlights 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] Company Overview 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] - 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] - The Company's ultimate holding company is Lily Charm Holding Limited, controlled by Ms. Zhao Ying[33] - 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] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income 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 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 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] Notes to the Consolidated Financial Statements General Information and Accounting Standards 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] - 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] - 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] - 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] General Information 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] - 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] - The Company's ultimate holding company is Lily Charm Holding Limited, controlled by Ms. Zhao Ying[33] Application of Revised IFRSs 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] - 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] New and Revised IFRSs Issued but Not Yet Effective 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] - 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] Revenue and Operating Segments 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] - 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] - 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] Customer Contract Revenue Classification (2022 & 2021) 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 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] - 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] - Revenue from the provision of grave relocation services is recognized when all graves have been properly relocated and accepted by the customer[49] - 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] Transaction Price Allocated to Remaining Performance Obligations 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 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] 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 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] - The vast majority of the Group's identifiable assets and liabilities are located in China, therefore no geographical information is presented[59] - 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] Other Income and Expenses 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 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 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 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 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 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] Earnings Per Share 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] - 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] Dividends (Financial Notes) 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] - No dividends have been proposed since the end of the reporting period (2021: nil)[78] Key Assets and Liabilities 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 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] - Landscape facilities are depreciated on a straight-line basis over their estimated useful life of 20 years[73] - 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] Prepayments and Other Receivables 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] - 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] Trade and Other Payables 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] 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 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] - The increase in non-current contract liabilities was mainly due to an increase in advance payments received from customers during the year[11] Management Discussion and Analysis Business Review 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] - 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] - For the year ended December 31, 2022, our revenue from cemetery maintenance services was RMB 5.0 million (2021: RMB 4.5 million)[97] 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] - The Company is optimistic about the continuous development and expansion of this business[96] Cemetery Sales and Related Services 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] - The Group believes it can effectively compete in Langfang by leveraging its reputation, service quality, well-maintained, and conveniently located facilities[96] Cemetery Maintenance Services 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] - Customers prepay maintenance fees when signing sales contracts for burial plots[97] Cemetery Maintenance Services Revenue | Year | Revenue (RMB million) | |---|---| | 2022 | 5.0 | | 2021 | 4.5 | Business Outlook and Recent Developments 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] - 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] - The Group will expand and enhance its service scope from solely providing funeral services to offering comprehensive funeral and interment services[104] - 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] - The Company will continue to actively seek more suitable strategic alliances and acquisition opportunities in the future[106] Focus on Cemetery Joint Venture Project 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] - 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] - 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] Consolidate Market Position in Langfang 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] - 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] - 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] Expand Business Scope to Funeral Services 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] - 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] - 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] Explore Beijing-Tianjin-Hebei Metropolitan Area Funeral Market 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] - The Group plans to invest more marketing resources to serve surrounding cities and further collaborate with local funeral service providers[105] - 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] Seek Strategic Alliances and Acquisition Opportunities 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] - 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] - 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] Major and Connected Transactions 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] - On May 16, 2022, the Company entered into an extension deed with China Grand Prosperity, extending the original repayment date by 24 months[116] - 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] - The principal and interest of the loan were fully repaid by China Grand Prosperity in July 2022[116] Financial Review 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 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 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] - 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] Gross Profit and Gross Margin 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] - 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] Other Income 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 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] Administrative Expenses 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 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 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 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 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 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] Pledged Assets 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] 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] Prepayments and Other Receivables 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] Trade and Other Payables 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] Contract Liabilities 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] - The increase in non-current contract liabilities was mainly due to an increase in advance payments received from customers during the year[11] Capital Structure 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] 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] - The directors review the capital structure annually, considering the cost of capital and risks associated with different classes of shares[14] Liquidity and Financial Resources 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] 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 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] Foreign Exchange Risk 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] - The Group is exposed to foreign exchange risk due to certain bank deposits denominated in HKD[2] - 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] Employee Remuneration and Relations 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] - The Group also offers various training programs to enhance employees' skills and capabilities in all aspects[15] Operating Leases 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 Corporate Governance 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] - 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] - 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] Standard Code for Securities Transactions 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] - 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] Audit Committee 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] - 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] - The Audit Committee recommended approval to the Board[147] Scope of Work by Deloitte Touche Tohmatsu 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] - 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] Purchase, Sale or Redemption of Listed Securities 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] Events After Reporting Period 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] Dividends (Corporate Decision) 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] Annual General Meeting 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] - Notice of the Annual General Meeting will be published and dispatched to the Company's shareholders in due course[149] Suspension of Share Transfer Registration 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] - 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] Board of Directors 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] Announcement Date The date of this announcement is March 29, 2023 - Hong Kong, March 29, 2023[145]