China Wan Tong Yuan (Holdings) Limited (Incorporated in the Cayman Islands with limited liability) Stock Code : 8199 First Quarterly Report 2018

Transcription

1 China Wan Tong Yuan (Holdings) Limited (Incorporated in the Cayman Islands with limited liability) Stock Code : 8199 First Quarterly Report 2018

2 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE EXCHANGE ) GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. GEM GEM GEM GEM GEM GEM Hong Kong Exchanges and Clearing Limited and the Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report. 有限公司 報告 報告 This report, for which the directors (the Directors ) of China Wan Tong Yuan (Holdings) Limited 中國萬桐園 ( 控股 ) 有限公司 (the Company ) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Exchange (the GEM Listing Rules ) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this report is accurate and complete in all material respects and no misleading; (2) there are no other matters the omission of which would make any statement in this report misleading or deceptive; and (3) all opinions expressed in this report have been arrived at after due and careful consideration and are founded on the bases and assumptions that are fair and reasonable. 報告 GEM ( GEM ) 有 China Wan Tong Yuan (Holdings) Limited 中國萬桐園 ( 控股 ) 有限公司 ( 公司 ) 公司 () 報告 一 (1) 報告 (2) 報告 報告 (3) 報告 一 公 This report will be available on the Company s website lfwty.com and will remain on the Latest Company Announcements page on GEM website at for least 7 days from the date of its posting. 報告 公司 7 GEM 公司公告 1

3 CORPORATE INFORMATION BOARD OF DIRECTORS Non-executive Director Ms. Zhao Ying (Chairman) ( ) Executive Directors Ms. Li Xingying Mr. Huang Guangming Independent Non-executive Directors Mr. Cheung Ying Kwan Dr. Wong Wing Kuen Albert Mr. Choi Hon Keung Simon COMPLIANCE OFFICER Mr. Huang Guangming AUTHORIZED REPRESENTATIVES Ms. Li Xingying Mr. Lam Koon Fai (CPA, ACCA) ( CPA ACCA) COMPANY SECRETARY Mr. Lam Koon Fai (CPA, ACCA) ( CPA ACCA) AUDIT COMMITTEE Dr. Wong Wing Kuen Albert (Chairman) Mr. Cheung Ying Kwan Mr. Choi Hon Keung Simon ( ) NOMINATION COMMITTEE Ms. Zhao Ying (Chairman) Mr. Cheung Ying Kwan Mr. Choi Hon Keung Simon ( ) 2

4 REMUNERATION COMMITTEE Dr. Wong Wing Kuen Albert (Chairman) Mr. Cheung Ying Kwan Ms. Zhao Ying ( ) REGISTERED OFFICE 2nd Floor The Grand Pavilion Commercial Centre 802 West Road, P.O. Box Grand Cayman KY Cayman Islands 2nd Floor The Grand Pavilion Commercial Centre 802 West Road, P.O. Box Grand Cayman KY Cayman Islands HEADQUARTERS IN CHINA Baganqu North, Economic and Technological Development Area Langfang, Hebei, PRC 中國 八 PRINCIPAL PLACE OF BUSINESS IN HONG KONG 36/F., Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong AUDITORS Deloitte Touche Tohmatsu Certified Public Accountants LEGAL ADVISER TO THE COMPANY Jeffrey Mak Law Firm (as to Hong Kong laws) ( 有 ) 3

5 PRINCIPAL BANKER China Construction Bank 中國 COMPLIANCE ADVISER Innovax Capital Limited 有限公司 COMPANY WEBSITE PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE TMF (Cayman) Ltd. 2nd Floor The Grand Pavilion Commercial Centre 802 West Bay Road, P.O. Box Grand Cayman KY Cayman Islands TMF (Cayman) Ltd. 2nd Floor The Grand Pavilion Commercial Centre 802 West Bay Road, P.O. Box Grand Cayman KY Cayman Islands HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Computershare Hong Kong Investor Services Limited Shops , 17/F, Hopewell Centre 183 Queen s Road East, Wanchai Hong Kong 中 有限公司 183 中 GEM STOCK CODE

6 The board of directors (the Board ) of the Company hereby presents the unaudited consolidated financial results of the Company and its subsidiaries (collectively referred to as the Group ) for the three months ended 31 March 2018 (the Period ), together with the unaudited comparative figures for the corresponding period in 2017 (the Previous Period ) as follows: 公司 ( ) 公司 公司 ( ) 2018 年 3 31 ( ) 2017 年 ( 年 ) FINANCIAL HIGHLIGHTS The unaudited revenue of the Group amounted to approximately RMB14,892,000 (three months ended 31 March 2017: RMB12,918,000) for the Period which represented an increase of RMB1,974,000 or 15.3% as compared with the Previous Period. 14,892,000 ( 2017 年 ,918,000 ) 年 1,974, % The profit attributable to owners of the Company was RMB11,548,000 (three months ended 31 March 2017: RMB6,713,000) for the Period, which represented an increase of RMB4,835,000 or 72.0% as compared with the Previous Period. 公司 有 11,548,000 ( 2017 年 ,713,000 ) 年 4,835, % The Board does not recommend the payment of an interim dividend for the Period. 中 股 5

7 CONDENSED CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (UNAUDITED) For the three months ended 31 March 2018 二零一八年 一 Three months ended 31 March (Unaudited) 年 Notes RMB 000 RMB 000 Revenue 3 14,892 12,918 Cost of sales and services (1,911) (2,252) Gross profit 12,981 10,666 Other income 6,134 3,697 Other losses (2,156) Distribution and selling expenses (1,487) (1,011) Administrative expenses (1,190) (1,045) Initial public offering expenses 公 (4,054) Profit before taxation 14,282 8,253 Income tax expense 4 (2,734) (1,540) Profit and total comprehensive income for the period attributable to owners of the Company 11,548 6,713 Earnings per share Basic (RMB) ( )

8 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) For the three months ended 31 March 2018 二零一八年 一 Share capital Attributable to owners of the Company Share Statutory Other premium reserve reserve Retained earnings Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January 年 ,000 2,315 20,833 55,148 Profit and total comprehensive income for the period 6,713 6,713 Transfer to reserves 738 (738) Issue of share capital of the 公司股 Company 1 1 Deemed distribution ( a ) (Note a) (32,000) (23,500) (55,500) At 31 March 年 ,053 (23,500) 26,808 6,362 At 1 January 年 ,192 4,043 1,309 16,883 88,427 Fair value gain on equity securities upon initial application of IFRS 9 (Note b) At 1 January 2018 (after adjustment) 國 報告 第 9 公 ( b ) 12,256 12, 年 1 1 ( ) 66,192 4,043 1,309 29, ,683 Profit and total comprehensive income for the period 11,548 11,548 Transfer to reserves 1,429 (1,429) At 31 March 年 ,192 5,472 1,309 39, ,231 7

9 Notes: (a) During the three months ended 31 March 2017, as part of the reorganization, Langfang Wantongyuan Corporate Management Co., Ltd. (a subsidiary of the Company) entered into an acquisition agreement to acquire the entire equity interest in Langfang Wantong Cemetery Co., Ltd. ( Langfang Wantong ) from the original shareholders of Langfang Wantong for a cash consideration of RMB55,500,000 which was accounted for as a deemed distribution. (a) 2017 年 3 31 一 萬桐園 有限公司 ( 公司 公司 ) 55,500,000 () 萬桐公 有限公司 ( 萬桐 ) 股 萬桐 股 (b) Upon initial application of IFRS 9, fair value gains related to equity securities, representing the differences between cost less impairment and fair value would be adjusted to retained earnings as at 1 January 2018 and deferred tax liabilities at 1 January 2018 would be increased with a corresponding deferred tax charged to retained earnings as at 1 January (b) 國 報告 第 9 公 公 2018 年 年 年 1 1 8

10 NOTES: 1. CORPORATE INFORMATION The Company is a public limited company incorporated in the Cayman Islands and its shares are listed on GEM of The Exchange. The registered office of the Company is 2nd Floor, The Grand Pavilion Commercial Centre, 802 West Bay Road, P.O. Box 10338, Grand Cayman KY1-1003, Cayman Islands. The Company s principal place of business in Hong Kong is 36/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong. 1. 公司 一 公司 股 公司 2nd Floor, The Grand Pavilion Commercial Centre, 802 West Bay Road, P.O. Box 10338, Grand Cayman KY1-1003, Cayman Islands 公司 The Company is an investment holding company and the principal activities of the Group are engaged in the sale of burial plots, provision of other burial-related services and provision of cemetery maintenance services. 公司 控股公司 園 The unaudited condensed consolidated financial statements are presented in Renminbi ( RMB ) and all values are rounded to the nearest thousands except when otherwise indicated. The condensed consolidated financial statements for the three months ended 31 March 2018 (the First Quarterly Financial Statements ) are unaudited but were reviewed by the Audit Committee of the Company (the Audit Committee ) and approved for issue by the Board on 9 May 報 ( ) 有 有 2018 年 3 31 報 ( 第一季度 報 ) 公司 ( ) 2018 年 5 9 9

11 2. BASIS OF PREPARATION The First Quarterly Financial Statements have been prepared in accordance with the applicable disclosure requirements of Chapter 18 of the GEM Listing Rules. The First Quarterly Financial Statements do not include all the information required in annual financial statements in accordance with International Financial Reporting Standards (the IFRSs ) issued by International Accounting Standard Board (the IASB ), and should be read in conjunction with the annual report for the year ended 31 December 2017 (the 2017 Annual Report ). 2. 第一季度 報 第 八 第一季度 報 有 國 ( 國 ) 國 報告 ( 國 報告 ) 年度 報 有 2017 年 年報 ( 2017 年報 ) 一 The accounting policies and methods of computation adopted in the preparation of the First Quarterly Financial Statements are consistent with those followed in preparing the 2017 Annual Report. In addition, the Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. 第一季度 報 2017 年報 一 The First Quarterly Financial Statements have been prepared on the historical cost basis except for investment properties and certain financial instruments which are measured at fair values. 報告 公 第一季度 報 一 公 The preparation of the First Quarterly Financial Statements in conformity with IFRSs requires the use of certain critical accounting estimates. The significant judgments, estimates and assumptions applied in the preparation of the First Quarterly Financial Statements are consistent with those used in 2017 Annual Report. 國 報告 第一季度 報 第一季度 報 2017 年報 一 10

12 3. REVENUE Revenue represents the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts. 3. 公 中 () Three months ended 31 March (Unaudited) 年 RMB 000 RMB 000 Sales of burial plots and provision of other burial-related services 14,246 12,351 Provision of cemetery maintenance 園 ,892 12,918 11

13 4. INCOME TAX EXPENSES 4. Three months ended 31 March (Unaudited) 年 RMB 000 RMB 000 Current enterprises income tax 2,734 1,540 Deferred tax 2,734 1,540 Under the Law of the PRC on Enterprise Income Tax (the EIT Law ) and Implementation Regulations of the EIT Law, the tax rate of the PRC subsidiaries is 25% (2017: 25%). 中國 ( ) 中國 公司 25%(2017 年 25%) Hong Kong Profits Tax is calculated at 16.5% (2017: 16.5%) of the estimated assessable profits arising in Hong Kong during the Period. No provision for Hong Kong Profits Tax had been made in the First Quarterly Financial Statements as the Group s subsidiaries had no assessable profit subject to Hong Kong Profits Tax. 16.5% ( 2017 年 16.5%) 公司 第一季度 報 中 12

14 5. EARNINGS PER SHARES (a) The calculation of basic earnings per share attributable to owners of the Company is based on the following data: 5. (a) 公司 有 股 Three months ended 31 March (Unaudited) 年 RMB 000 RMB 000 Earnings Earnings for the purpose 股 of calculating basic earnings per share (profit for the period attributable to owners of the Company) ( 公司 有 ) 11,548 6,713 Number of shares Weighted average number of ordinary shares in issue 股 1,000,000, ,000,000 (b) No diluted earnings per share for the three months ended 31 March 2018 and 2017 was presented as there were no potential ordinary shares in issue. (b) 股 2018 年 2017 年 3 31 股 13

15 6. DIVIDEND The Board does not recommend the payment of a dividend for the three months ended 31 March 2018 (three months ended 31 March 2017: Nil) 年 3 31 股 (2017 年 3 31 零 ) 7. EVENTS AFTER REPORTING PERIOD There was no significant event took place subsequent to the end of the reporting period. 7. 報告 14

16 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW During the Period, the Group was principally engaged in the sale of burial plots, provision of other burial-related services and provision of cemetery maintenance services. 園 Sales of burial plots and provision of other burial-related services Our burial service consists primarily of (1) the sale of burial plots, which includes the right to use the burial plots and headstones and ancillary products to be used on burial plots, and (2) ancillary services such as the organizing and conducting of interment rituals, the design, construction and landscaping of the burial plots, and the engraving of inscriptions and ceramic photographs on the headstones. Burial service is the largest component of our revenue, representing 95.7% of our revenue for the three months ended 31 March 2018 (2017: 95.6%). Our revenue from burial service, in particular, the sale of burial plots, for a given period is dependent upon the number and the average selling price of burial plots sold and recognized as revenue during the period. (1) (2) 2018 年 % (2017 年 95.6%) ( ) Providing cemetery maintenance services We provide ongoing cemetery maintenance services as an integral part of our burial service to maintain our beautiful landscaped cemetery. Customers pay for maintenance fees upfront when the sign the sales contracts to purchase the burial plots. Our revenue from cemetery maintenance was RMB646,000 for the three months ended 31 March 2018 (2017: RMB567,000). 園 園 一 2018 年 ,000 ( 2017 年 567,000 ) 15

17 FINANCIAL REVIEW Revenue Our revenue was increased by 15.3% from RMB12.9 million for the three months ended 31 March 2017 to RMB14.9 million for the three months ended 31 March 2018, primarily driven by an increase in revenue from burial service. Our revenue from burial service increased by 15.3% from RMB12.4 million for the three months ended 31 March 2017 to RMB14.2 million for the three months ended 31 March 2018, primarily due to a sale of columbarium niches hall 年 萬 15.3% 2018 年 萬 2017 年 萬 15.3% 2018 年 萬 一 Cost of sales and services and Gross Profit Our cost of sales and services decreased by 15.1% from RMB2.3 million for the three months ended 31 March 2017 to RMB1.9 million for the sales and services for burial service. Our cost of sales and services for burial service decreased by 10.8% from RMB2.1 million for the three months ended 31 March 2017 to RMB1.9 million for the three months ended 31 March 2018, primarily due to an enhancement of service process standardization 年 萬 15.1%1.9 萬 2017 年 萬 10.8% 2018 年 萬 Our cost of sales and services for cemetery maintenance decreased significantly by 72.8% from RMB0.2 million for the three months ended 31 March 2017 to RMB0.04 million for the three months ended 31 March 2018, which is considered fairly stable in terms of absolute amount. 園 2017 年 萬 72.8% 2018 年 萬 16

18 The Gross profit and gross profit margin As a result of the foregoing, our gross profit increased by 21.7% from RMB10.7 million for the three months ended 31 March 2017 to RMB13.0 million for the three months ended 31 March Our overall gross profit margin increased from 82.6% for the three months ended 31 March 2017 to 87.2% for the three months ended 31 March Our gross profit for burial service increased by 20.7% from RMB10.3 million for the three months ended 31 March 2017 to RMB12.4 million for the three months ended 31 March The gross profit margin for burial service increased from 83.0% for the three months ended 31 March 2017 to 86.9% for the three months ended 31 March 2018, primarily due to a sale of columbarium niches hall. The gross profit for cemetery maintenance was RMB0.4 million and RMB0.6 million for the three months ended 31 March 2017 and 2018, respectively. The gross profit margin for cemetery maintenance increased from 72.1% for the three months ended 31 March 2017 to 93.3% for the three months ended 31 March 2018, which is considered fairly stable in terms of absolute amount 年 萬 21.7% 2018 年 萬 2017 年 % 2018 年 % 2017 年 萬 20.7% 2018 年 萬 2017 年 % 2018 年 % 一 2017 年 2018 年 3 31 園 0.4 萬 0.6 萬 園 2017 年 % 2018 年 % Other income Our other income increased by 65.9% from RMB3.7 million for the three months ended 31 March 2017 to RMB6.1 million for the three months ended 31 March This increase was primarily due to an increase in dividends received from equity securities in the three months ended 31 March 年 萬 65.9% 2018 年 萬 2018 年 3 31 股 17

19 Distribution and selling expenses Our distribution and selling expenses increased by 47.1% from RMB1.0 million for the three months ended 31 March 2017 to RMB1.5 million for the three months ended 31 March This increment was primarily due to increase in (1) commission paid to partnered funeral service providers and (2) salary and staff costs 年 萬 47.1% 2018 年 萬 (1) (2) Administrative expenses Our administrative expenses increased by 13.9% from RMB1.0 million for the three months ended 31 March 2017 to RMB1.2 million for the three months ended 31 March This increment was primarily due to (1) our business expansion and (2) increase in salary and staff costs 年 萬 13.9% 2018 年 萬 (1) (2) Initial public offering expenses Our initial public offering expenses decreased from RMB4.1 million for the three months ended 31 March 2017 to nil for the three months ended 31 March 2018, primarily due to fees and expenses for involving the professional advisers in preparing for the listing in 公 2017 年 萬 2018 年 3 31 零 2017 年 Income tax expenses Our income tax expense increased by 77.5% from RMB1.5 million for the three months ended 31 March 2017 to RMB2.7 million for the three months ended 31 March 2018, primarily due to decrease in assessable profit resulting from the increase of initial public offering expenses in the Previous Period 年 萬 77.5% 2018 年 萬 年 公 18

20 Profit and total comprehensive income for the period As a result of the foregoing, our profit and total comprehensive income for the period increased by 72.0% from RMB6.7 million for the three months ended 31 March 2017 to RMB11.5 million for the three months ended 31 March Our net profit margin increased from 52.0% for the three months ended 31 March 2017 to 77.5% for the three months ended 31 March 2018, primarily due to the fees and expenses incurred from professional advisers in connection with the preparation of Listing in the three months ended 31 March 年 萬 72.0% 2018 年 萬 2017 年 % 2018 年 % 2017 年 3 31 有 PROSPECTS As the Company will apply proceeds raised from the listing and our internal resources to implement our future expansion plan according to our business strategies, with the growth of (1) our newly developed business sector of funeral services and (2) our further developed and expanded burial service sector by pursuing strategic alliance and acquisition opportunities, our Directors believe that our business landscape will be more diversified and of much larger scale, which will enable us to adjust our development plans timely. 公司 (1) (2) 一 有 19

21 COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL BUSINESS PROGRESS An analysis comparing the business objectives as set out in the Prospectus with the Group s actual business progress for the period from the listing date to 31 March 2018 is set out below: 股 2018 年 3 31 Implementation plan up to Actual business progress up to Objects 31 March March Strengthening our market position in Langfang Upgrading the main entrance area and western internal road of our cemetery 園 Upgrading for the greening appearance of main entrance of the cemetery is underway, while that of the main entrance and western internal road is completed 園 中 園 Purchasing and upgrading our current facilities and machineries (such as waste incinerators and lawn mowers) for gardening and interment rituals 園 有 Having purchased the lawn mowers and watering cart; purchased and installed incinerators Commencing the development of the Rose Garden 季園 Not developed yet 20

22 Implementation plan up to Actual business progress up to Objects 31 March March Designing family graves Family graves and other types of graves are designed Maintaining and expanding our cooperation with local funeral services providers and promoting our brand awareness with new advertisement boards 告 Having expanded our cooperation with local funeral services providers with three new advertisement boards in stores 告 Polishing an artificial hill in the northern part of our cemetery 園 Planning in progress 中 Designing tree burial and sea burial services Designing in progress 中 Commencing the construction of family graves in crypt-style and hill-style Having constructed the family graves in crypt-style and small courtyardstyle Promoting our brand by cooperation with various communities Promotion in progress 中 21

23 Implementation plan up to Actual business progress up to Objects 31 March March Expanding our business scope of providing funeral services Locating, leasing, designing and decorating premises for the operation of funeral services Planning to lease premises related to Langfang Funeral Home, cooperates with the funeral home in commencing related funeral services, and at the same time seeking for premises providing full range services for the funeral market in Langfang for the construction of Wantong Funeral Hall 萬桐 Commencing the business of our funeral services Having completed the construction of funeral hall, and is currently improving the interment ritual services 園 Purchasing funeral vehicles Vehicles applications are pending approval 中 Recruiting and training ten funeral services staff Manager of the funeral service centre has taken up the post in March, and we are recruiting for the other staff 中 3 中 22

24 Implementation plan up to Actual business progress up to Objects 31 March March Operating our funeral services center and conducting marketing activities through public media (such as local newspaper) about our funeral services 中 報 有 Conduct in progress 中 Exploring new burial market in the Jing-Jin-Ji megalopolis & pursuing strategic alliance and acquisition opportunities Liaising and cooperating with more Beijing-based funeral services providers and mortuaries The marketing director has taken up the post, and we have recruited a dedicated staff specialized in the market channel of Beijing. Active promotion is in progress to build sales and promotion system. We will recruit three additional staff dedicated to serve the funeral service distributors in the market channel of Beijing 1 3 On-site promotion in Beijing Four shops are confirmed to cooperate, and we are negotiating with various parties 有 中 23

25 Objects Implementation plan up to 31 March 2018 Actual business progress up to 31 March Preliminary site visiting and investigating several potential targets for acquisition, if there would be any suitable ones ( 有 ) Having conducted site visits to projects in various regions like Beijing, Tianjin, Hebei, etc. One to three projects are selected for further investigations 1 3 一 Establishing our first Beijing-based store for marketing purpose Temporarily not set up Conducting due diligence and entering into framework agreement with suitable acquisition target Performed the preliminary site visiting and research for some potential acquisition opportunities and it is in a preliminary stage that no agreement has been entered yet 24

26 USE OF PROCEEDS FROM THE GLOBAL OFFERING The net proceeds raised from the Global Offering of the Company were and will be used in the manner consistent with that set out in the section headed Future Plans and Use of Proceeds of the Prospectus. 公司 股 一 一 An analysis of the utilization of the net proceeds from the listing date up to 31 March 2018 is set out below: 2018 年 3 31 Strengthening our market position in Langfang Expanding our business scope of providing funeral services Exploring new burial market in the Jing-Jin-Ji megalopolis & pursuing strategic alliance and acquisition opportunities Proposed use of net proceeds as stated in the Prospectus up to 31 March RMB 8.1 million 8.1 萬 6.0 million 6.0 萬 1.8 million 1.8 萬 Actual use of net proceeds up to 31 March RMB 3.8 million 3.8 萬 0.07 million 0.07 萬 0.12 million 0.12 萬 25

27 FOREIGN EXCHANGE EXPOSURE The Group s business is principally denominated in RMB. As certain bank deposits denominated in Hong Kong dollars, therefore, the Group is exposed to foreign currency exchange risk. No currency hedging arrangement has been made by the Group during the year. The Directors are actively and regularly monitoring the exposure to foreign exchange so as to minimize the foreign exchange rate risk. 年 CONTINGENT LIABILITIES AND CAPITAL COMMITMENT As at 31 March 2018, the Group did not have any material contingent liabilities or capital commitment 年 3 31 INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION OF THE DIRECTORS AND THE CHIEF EXECUTIVES As at 31 March 2018, the interests and short positions of each of the Directors and the chief executives and their associates in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO ) which 2018 年 3 31 公司 ( ( ) 第 XV ) 股 股 中 有 第 XV 第 7 第 8 26

28 would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they are taken or deemed to have under such provisions of the SFO) or which were required to be recorded in the register maintained by the Company pursuant to section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to rules 5.46 to 5.67 of the GEM Listing Rules, were as follows: 公司 ( 有 ) 第 352 公司 第 5.46 第 5.67 公司 Percentage of Name of the Director Capacity/nature of interests Number and class of Securities Shareholding (Note 3) ( 3) Ms. Zhao Ying (Note 2) ( 2) Founder of a discretionary trust who can influence how the trustee exercises its discretion 750,000,000 (L) (Note 1) 750,000,000 (L) ( 1) 75% (Note 3) 75% ( 3) 27

29 Notes: (1) The letter L refers to the long position of the Shares of the Company. (1) L 公司股 中 (2) Ms. Zhao Ying is the chairman and the nonexecutive director of the Company. She is the settlor, sole member of The Hope Trust s protective committee and a beneficiary of The Hope Trust, which is a discretionary trust and TMF (Cayman) Ltd. is on the trusts of The Hope Trust. TMF (Cayman) Ltd. wholly owns the entire share capital of Lily Charm Holding Limited. Lily Charm Holding Limited wholly owns the entire issued share capital of Tai Shing International Investment Company Limited. Therefore, Ms. Zhao Ying is deemed to be interested in the 750,000,000 Shares directly held by Tai Shing International Investment Company Limited. (2) 公司 The Hope Trust The Hope Trust 一 The Hope Trust TMF (Cayman) Ltd. The Hope TrustTMF (Cayman) Ltd. 有 Lily Charm Holding Limited 股 Lily Charm Holding Limited 有 國 有限公司 股 國 有限公司 有 750,000,000 股股 中 有 (3) The percentage is calculated on the basis of 1,000,000,000 Shares in issue as at 31 March (3) 2018 年 ,000,000,000 股股 28

30 Save as disclosed above, as at 31 March 2018, none of the Directors and chief executive of the Company had any other interests or short positions in any shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they are taken or deemed to have under such provisions of the SFO) or which were required to be recorded in the register maintained by the Company pursuant to section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to rules 5.46 to 5.67 of the GEM Listing Rules 年 3 31 公司 公司 ( 第 XV ) 股 股 中 有 第 XV 第 7 8 公司 ( 有 有 ) 第 352 公司 GEM 第 公司 SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY As at 31 March 2018, so far as was known to the Directors, the following persons/entities (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group: 2018 年 3 31 ( 公司 ) 股 股 中 有 有 第 XV 第 2 3 公司 有 公司 公司 股 股 10% 29

31 Name of Shareholder Tai Shing International Investment Company Limited 國 有限公司 Capacity/nature of interests Number and class of Securities (Note 1) ( 1) Percentage of Shareholding (Note 5) ( 5) Beneficial owner (Note 2) 750,000,000 (L) 75% 有 ( 2) Lily Charm Holding Limited Lily Charm Holding Limited Interest in a controlled Corporation (Notes 2, 3) 控 ( 2 3) 750,000,000 (L) 75% TMF (Cayman) Ltd. Trustee (Notes 2, 3, 4) 750,000,000 (L) 75% TMF (Cayman) Ltd. ( 2 3 4) Notes: (1) The letter L refers to the entity/person s long position in the Shares. (2) Tai Shing International Investment Company Limited directly holds 750,000,000 Shares of the Company. (3) Lily Charm Holding Limited holds the entire of issued share capital of Tai Shing International Investment Company Limited, thus Lily Charm Holding Limited is deemed to be interested in the 750,000,000 Shares of the Company. (4) TMF (Cayman) Ltd. is the trustee of The Hope Trust, which is a discretionary trust set up by Ms. Zhao Ying, the chairman and nonexecutive Director of the Company. TMF (Cayman) Ltd. directly holds the entire issued share capital of Lily Charm Holding Limited. Therefore, TMF is deemed to be interested in 750,000,000 Shares of the Company. (5) The percentage is calculated on the basis of 1,000,000,000 Shares in issue as at 31 March (1) L 股 中 (2) 國 有限公司 有 750,000,000 股 公司股 (3) Lily Charm Holding Limited 有 國 有限公司 股 Lily Charm Holding Limited 750,000,000 股 公司股 中 有 (4) TMF (Cayman) Ltd. The Hope Trust The Hope Trust 公司 TMF (Cayman) Ltd. 有 Lily Charm Holding Limited 股 TMF 750,000,000 股 公司股 中 有 (5) 2018 年 ,000,000,000 股股 30

32 Save as disclosed above, as at 31 March 2018, the Directors were not aware of any other persons, except disclosed below under Other persons interests and short positions in the Shares and underlying Shares of the Company other than the Directors and the chief executive of the Company who had, or was deemed to have, interests or short positions in the Shares, underlying Shares and debenture of the Company and its associated corporations which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO; or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO; or who is directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group 年 3 31 公司股 股 有 ( 公司 ) 公司 股 股 中 有 有 第 XV 第 2 3 公司 第 336 公司 有 有 有 公司 公司 股 股 10% OTHER PERSONS INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY As at 31 March 2018, so far as was known to the Directors, the following persons/entities (not being Directors, chief executive or substantial shareholders of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO: 2018 年 3 31 ( 公司 股 ) 股 股 中 有 有 第 XV 第 2 3 公司 第 336 公司 31

33 Name of shareholders Capacity/nature of interests Number of Shares held (Note 1) Percentage of Shareholding (Note 3) ( 1) ( 3) Fairich Trading Limited Beneficial owner 99,000,000 (L) 9.9% 有限公司 有 Ms. Xing Junying Interest in a controlled corporation (Note 2) 控 ( 2) 99,000,000 (L) 9.9% Notes: (1) The letter L denotes the entity/person s long position in the Shares. (1) L 股 中 (2) Fairich Trading Limited is directly wholly owned by Ms. Xing Junying. (2) 有限公司 有 (3) The percentage is calculated on the basis of 1,000,000,000 Shares in issue as at 31 March (3) 2018 年 ,000,000,000 股股 Save as disclosed above, as at 31 March 2018, the Directors are not aware of any other person or corporation other than the Directors, the chief executive and substantial shareholders of the Company who had, or was deemed to have, interests or short positions in the Shares, underlying Shares and debenture of the Company and its associated corporations which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO; or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO 年 3 31 有 公司 ( 公司 股 ) 公司 股 股 中 有 有 第 XV 第 2 3 公司 第 336 公司 32

34 PURCHASES, SALE OR REDEMPTION OF COMPANY S LISTED SECURITIES The Company s shares were listed on GEM on 27 September Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company s listed securities after the date of Listing and up to the date of this report. 公司股 2017 年 9 27 公司 公司 報告 公司 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTEREST IN COMPETING INTERESTS OR CONFLICT OF INTEREST Ms. Zhao Ying, The Hope Trust, Lily Charm Holding Limited, Tai Shing International Investment Company Limited, individually and collectively as the controlling shareholder(s) (the Controlling Shareholder(s) ) (as defined under GEM Listing Rules) of the Company, has entered into the deed of non-competition dated 7 September 2017 (the Deed of Noncompetition ) in favor of the Company, details of which were set out in the Prospectus. Pursuant to the Deed of Non-competition, the Controlling Shareholders have irrevocably undertaken to the Company that they will not and will procure their respective close associate (except any member of the Group) not to, directly or indirectly (whether in the capacity of principal or agent, whether for its own benefit or jointly with or on behalf of any person, firm or company, whether within or outside China), commence, engage in, participate in or acquire any business which competes or may compete directly or indirectly with the core business of the Group, being burial service business and funeral services that the Group plans to expand into or own any rights or interests in such businesses 年 9 7 The Hope Trust Lily Charm Holding Limited 國 有限公司 ( 公司 控股股 ( 控股股 ) 公司 ( ) 股 控股股 公司 ( 公司 ) ( 公司 中國 ) ( ) 有 33

35 Since the date of Listing and up to the date of this report, the Directors are not aware of any business or interest of the Directors, the Substantial Shareholders and their respective associates (as defined in the GEM Listing Rules) that competes or is likely to compete, either directly or indirectly, with the business of the Group and any other conflicts of interests which any such person has or may have with the Group. 報告 股 ( ) 中 有 有 The Controlling Shareholders have confirmed to the Company that from the effective date of the Deed of the Non-competition and up to the date of this report, Ms. Zhao Ying, The Hope Trust, Lily Charm Holding Limited, Tai Shing International Investment Company Limited and their respective close associates (as defined under the GEM Listing Rules) have complied with the undertakings contained in the Deed of Non-competition. 控股股 公司 報告 The Hope Trust Lily Charm Holding Limited 國 有限公司 ( ) COMPLIANCE ADVISER S INTERESTS In accordance with Rule 6A.19 of the GEM Listing Rules, the Company has appointed Innovax Capital Limited ( Innovax Capital ) as the compliance adviser of the Company. As informed by Innovax Capital, as at 31 March 2018, neither Innovax Capital, nor any of its directors, employees or close associates (as defined in the GEM Listing Rules) has or may have, any interests in the securities of the Company or any other companies of the Group pursuant to Rule 6A.32 of the GEM Listing Rules, except for the compliance adviser agreement entered into between the Company and Innovax Capital dated 28 March 公司 第 6A.19 有限公司 () 公司 告 2018 年 3 31 公司 2017 年 3 28 第 6A.32 ( ) 公司 公司 中 有 34

36 DIRECTORS SECURITIES TRANSACTIONS The Company has adopted a code of conduct for dealing in securities of the Company by the Directors in accordance with Rules 5.48 to 5.67 of the GEM Listing Rules. Having made specific enquiries of the Directors, all Directors confirmed that they have complied with the required standard of dealings and the code of conduct regarding securities transactions by Directors adopted by the Company during the period from the date of listing up to the date of this report. 公司 第 公司 一 報告 公司 有 CORPORATE GOVERNANCE PRACTICES The Board recognizes the importance of incorporating elements of good corporate governance in the management structures and internal control procedures of the Group so as to achieve accountability. In the opinion of the Board, the Company has applied the principles and complied with all the applicable code provisions as set out in the Corporate Governance Code in Appendix 15 to the GEM Listing Rules during the period from the date of Listing to 31 March AUDIT COMMITTEE The Company established the audit committee (the Audit Committee ) with written terms of reference with Rules 5.28 to 5.29 of the GEM Listing Rules and paragraphs C.3.3 and C.3.7 of the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules. The primary duties of the Audit Committee are to assist the Board by providing an independent view of the effectiveness of the financial 控 有 公司 2018 年 3 31 一 有 公司 ( ) 第 C.3.3 C.3.7 有 報告 控 度有 有 35

37 reporting process, internal control and risk management system of the Group, making recommendations to the Board on the appointment and removal of external auditors, reviewing the financial information and disclosures, to oversee the audit process, to develop and review the policies and to perform other duties and responsibilities as assigned by the Board. The Audit Committee consists of three independent non-executive Directors, namely Dr. Wong Wing Kuen Albert, Mr. Cheung Ying Kwan and Mr. Choi Hon Keung Simon. Dr. Wong Wing Kuen Albert is the chairman of the Audit Committee. The Audit Committee has reviewed the unaudited condensed consolidated financial statements of the Group for the Period, which is of the opinion that such statements comply with the applicable accounting standards, the Stock Exchange and legal requirements, and that adequate disclosures have been made. By order of the Board China Wan Tong Yuan (Holdings) Limited Zhao Ying Chairman Hong Kong, 9 May 2018 As at the date of this report, the Board of the Company comprises the chairman and nonexecutive Director of the Company, namely Ms. Zhao Ying, two executive Directors of the Company, namely Ms. Li Xingying and Mr. Huang Guangming, and three independent non-executive Directors of the Company, namely Mr. Cheung Ying Kwan, Dr. Wong Wing Kuen Albert and Mr. Choi Hon Keung Simon. 報 報 2018 年 5 9 報告 公司 公司 公司 36

38 Baganqu North, Economic and Technological Development Area Langfang, Hebei, PRC 36/F., Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong