2023 Annual Report of FIYTA Precision Technology Co., Ltd.
FIYTA Precision Technology Co., Ltd.
2023 Annual Report
March 2024
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
2023 Annual Report
Section 1 Important Tips, Table of Contents, and Interpretations
The Company's Board of Directors, Board of Supervisors, Directors, Supervisors, and
Senior Officers guarantee the authenticity, accuracy, and completeness of the annual report,
without any false records, misleading statements, or significant omissions, and shall bear
individual and joint legal responsibilities.
The Company's person in charge, Zhang Xuhua, the person in charge of accounting
work, Song Yaoming, and the head of the accounting agency (accounting supervisor), Tian
Hui, declare that they guarantee the authenticity, accuracy, and completeness of the
financial reports in this year's report.
All Directors have attended the Meeting of the Board of Directors to review this report.
The forward-looking descriptions of future plans and development strategies involved
in this annual report do not constitute a substantive commitment of the Company to
investors. Investors are advised to pay attention to investment risks.
The Company has provided a detailed description of the existing macroeconomic and
operational risks in this report. Please refer to the discussion and analysis of the
management in the third section regarding the Company's future development prospects.
The Company's profit distribution plan deliberated and approved by the Board of
Directors is as follows: based on the total share capital on the equity registration date when
the profit distribution plan is implemented in the future (excluding the shares in special
repurchase securities account), a cash dividend of RMB 4.00 will be distributed to all
shareholders for every 10 shares. (tax included), 0 bonus shares will be given (tax included),
and the provident fund will not be converted into share capital.
This report is prepared in both Chinese and English versions. If there is any ambiguity
in understanding the report, the Chinese version shall prevail.
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Contents
Section 1 Important Tips, Table of Contents, and Interpretations ...................................................................... 2
Section 2 Profile and Main Financial Indicators ................................................................................................... 6
Section 3 Discussion and Analysis of the Management ......................................................................................... 9
Section 4 Corporate Governance .............................................................................................................................26
Section 5 Environmental and Social Responsibility .............................................................................................. 51
Section 6 Important Matters ....................................................................................................................................53
Section 7 Changes in Shares and Shareholders ..................................................................................................... 60
Section 8 Information Related to Preferred Shares ...............................................................................................71
Section 9 Bond Related Information ....................................................................................................................... 71
Section 10 Financial Reporting ................................................................................................................................72
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Contents of Reference File
I. The financial statements bearing the signatures and seals of the legal representative, chief accountant,
and accounting supervisor.
II. The original audit report containing the seal of the accounting firm, the signature and seal of the
registered accountant.
III. The original copies of all documents and announcements of the Company publicly disclosed during the
reporting period.
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Interpretations
Items Refers to Interpretations
The Company, Company, FIYTA Refers to FIYTA Precision Technology Co., Ltd.
Aviation industry Refers to Aviation Industry Corporation of China, Ltd.
AVIC International Refers to AVIC International Holding Corporation
AVIC INTL Refers to AVIC International Holding Limited
AVIC Finance Refers to AVIC Finance Co., Ltd.
The Company's 2018 A-share restricted share Incentive
Restricted share incentive scheme (Phase I) Refers to
scheme (Phase I)
The Company's 2018 A-share restricted share Incentive
Restricted share incentive scheme (Phase II) Refers to
Scheme (Phase II)
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Section 2 Profile and Main Financial Indicators
I. Profile
Stock abbreviation FIYTA, FIYTA B Stock code 000026、200026
Stock abbreviation before
None
change (if any)
Stock exchanges for stock
Shenzhen Stock Exchange
listing
Chinese name of the
FIYTA Precision Technology Co., Ltd.
Company
Chinese abbreviation of the
FIYTA Company
Company
Foreign name of the
FIYTA Precision Technology Co., Ltd.
Company (if any)
Abbreviations of the
Company's foreign name (if FIYTA
any)
Legal representative of the
Zhang Xuhua
Company
Registered address FIYTA Technology Building, Gaoxin South 1st Road, Nanshan District, Shenzhen
Postal code (registered
518057
address)
On January 30, 1997, the registered address of the Company was changed from Building 6,
Zhonghang Yuan, Shennan Middle Road, Shenzhen to Building 6, Zhonghang Yuan, Shennan
Historical changes in the
Middle Road, Futian District, Shenzhen; On April 5, 2000, the registered address was changed to
registered address of the
"FIYTA Building, No. 163 Zhenhua Road, Futian District, Shenzhen"; On February 20, 2004,
Company
the registered address was changed to "FIYTA Technology Building, Gaoxin South 1st Road,
Nanshan District, Shenzhen".
Office address 20th Floor, FIYTA Technology Building, Gaoxin South 1st Road, Nanshan District, Shenzhen
Postal code (office address) 518057
Website www.fiytagroup.com
Email investor@fiyta.com.cn
II. Contact person and contact information
Secretary of the Board of Directors Securities Affairs Representative
Name Song Yaoming Xiong Yaojia
20th Floor, FIYTA Technology Building, 18th Floor, FIYTA Technology Building,
Address Gaoxin South 1st Road, Nanshan Gaoxin South 1st Road, Nanshan
District, Shenzhen District, Shenzhen
Tel. 0755－86013669 0755－86013669
Fax 0755－83348369 0755－83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
III. Information disclosure and preparation location
The website of the stock exchange where the Company
http://www.szse.cn
discloses its annual report
Name and website of the media in which the Company STCN, Hong Kong Commercial Daily, and CNINF
discloses its annual report (www.cninfo. com. cn)
Location for preparing the Company's annual report The Department of Capital Planning and Operation
IV. Registration changes
Unified Social Credit Code 91440300192189783K
Changes in the main business of the Company since its listing
No changes
(if any)
Previous changes in controlling shareholders (if any) No changes
V. Others
The accounting firm hired by the Company
Name Da Hua CPAs LLP (Special General Partnership)
Room 1101, Building 7, No.16 West Fourth Ring Middle Road,
Address
Haidian District, Beijing
Name (accountants) Long Jiao, Wang Dong
Recommendation agencies hired by the Company to perform continuous supervision responsibilities during the reporting period
Not applicable
Financial advisors hired by the Company to perform continuous supervision duties during the reporting period
Not applicable
VI. Main accounting data and financial indicators
Does the Company need to retrospectively adjust or restate accounting data from previous years
No
Changes compared to
2023 2022 the previous year in 2021
this year
Operating revenue
4,569,690,002.99 4,354,096,880.36 4.95% 5,243,733,540.93
(RMB)
Net profit attributable
to shareholders of the 333,178,102.37 266,681,451.84 24.93% 387,840,282.95
listed company (RMB)
Net profit attributable
to shareholders of the
listed company after
316,806,208.13 249,791,455.73 26.83% 369,418,754.83
deducting non
recurring gains and
losses (RMB)
Net cash flows from
632,401,487.98 476,228,776.52 32.79% 547,249,108.45
operating activities
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
(RMB)
Basic earnings per
0.8082 0.6398 26.32% 0.9036
share (RMB/share)
Diluted earnings per
0.8075 0.6398 26.21% 0.9036
share (RMB/share)
Weighted average ROE 10.28% 8.68% 1.60% 13.39%
Changes at the end of
this year compared to
At the end of 2023 At the end of 2022 At the end of 2021
the end of the previous
year
Total assets (RMB) 4,204,260,897.08 4,117,143,911.99 2.12% 4,110,579,952.49
Net assets attributable
to shareholders of the 3,333,805,752.19 3,136,423,492.15 6.29% 3,013,232,642.53
listed company (RMB)
The lower of the net profits before and after deducting non-recurring gains and losses of the Company in recent three accounting
years are all negative, and the audit report of the recent year shows that the Company's going concern is uncertain.
No
The lower of the net profit before and after deducting non recurring gains and losses is a negative value
No
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences in net profit and net assets disclosed in financial
reports under both international accounting standards and Chinese
accounting standards
Not applicable
2. Differences in net profit and net assets in financial reports
disclosed in accordance with overseas accounting standards and
Chinese accounting standards
Not applicable
VIII. Quarterly main financial indicators
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 1,200,095,568.76 1,164,409,693.80 1,162,738,360.51 1,042,446,379.92
Net profit attributable
to shareholders of the 103,189,489.23 84,205,578.00 78,162,925.58 67,620,109.56
listed company
Net profit attributable
to shareholders of the
listed company after
95,484,229.79 81,868,313.87 75,522,620.72 63,931,043.75
deducting non
recurring gains and
losses
Net cash flows from
80,169,964.00 264,489,879.62 134,414,639.49 153,327,004.87
operating activities
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Is there a significant difference between the above financial indicators or their total amount and the financial indicators related to
the disclosed quarterly and semi annual reports of the Company
No
IX. Non-recurring profit and loss items and amounts
Unit: RMB
Items Amount for 2023 Amount for 2022 Amount for 2021 Note
Non current asset disposal gains and
losses (including the offsetting portion of 685,868.57 91,925.06 730,134.87
the provision for impairment of assets)
Government subsidies included in the
current period's profit and loss (excluding
those that are closely related to the
normal business operations of the
8,665,506.85 18,648,210.06 23,476,186.50
Company, in compliance with national
policy regulations, entitled to established
standards, and have a sustained impact on
the company's profits and losses).
Reversal of impairment provisions for
accounts receivable subject to separate 7,570,975.54 4,389,902.44 2,225,653.32
impairment testing
Other non operating revenue and
3,910,736.70 -1,064,064.23 -3,058,731.52
expenses other than the above items
Less: income tax impact amount 4,461,193.42 5,175,977.22 4,951,715.05
Total 16,371,894.24 16,889,996.11 18,421,528.12 --
Details of other profit and loss items that meet the interpretation of non-recurring gains and losses:
Not applicable
Explanation on defining the non-recurring profit and loss items listed in No. 1 Explanatory Announcement on Information
Disclosure of Companies Issuing Securities to the Public as recurring profit and loss items
Not applicable
Section 3 Discussion and Analysis of the Management
I. Industry conditions of the Company during the reporting period
In 2023, the National Bureau of Statistics announced a YoY GDP growth of 5.2%. Driven by policies such as expanding
domestic demand and promoting consumption, coupled with the growth of household income, the driving force of consumption on
economic growth continues to increase, gradually becoming the main driving force of economic growth.
The domestic watch consumption market is still under overall pressure due to the diversion of Hong Kong and some overseas
regions, as well as the rationalization of consumer preferences. Among them, the middle and high-end watch consumer market is
facing periodic fluctuations. According to the data released by the Swiss Watch Association, the cumulative amount of Swiss
exports to Chinese Mainland increased by about 8% YoY, and Chinese Mainland is still the second largest consumer market of
Swiss watches; The consumer market for mid to low-end watches is still sluggish, with fierce competition in segmented fields. In
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
an uncertain economic environment, the differentiation of watch brands is further highlighted. Brands with high reputation,
differentiated characteristics, and quality services have stronger consumer resilience.
The Company's main watch business covers medium, high, and fashion brands, with multiple types of channels
complementing each other. It continues to attach importance to investment in brand differentiation, channel operation, customer
service, and other aspects. Faced with market fluctuations, the main business maintains a healthy development trend as a whole.
II. Main businesses engaged by the Company during the reporting period
The Company's establishment and development originated from aviation precision technology and material technology.
Adhering to the values of "brand leadership, customer orientation, value creation, cooperation and responsibility, and learning and
innovation", with the mission of "inheriting the spirit of serving the country by aviation and creating a quality life", it focuses on
the watch industry and forms a core business layout where its self-owned watch brand and the retail channel of famous watches
promote each other. In addition, the Company actively explores and cultivates new businesses such as precision technology and
smart wearables, and is in a stage of continuous development.
The Company is deeply committed to professional watchmaking capacity building and brand operation, and has multiple
self-owned brands such as "FIYTA" and "EMILE CHOORIET", covering different dimensions such as mid to high end, mass
professional, and fashion cool. Among them, the core self-owned brand positioning of "FIYTA" is "a high-quality Chinese watch
brand with aviation and aerospace watches as its characteristic", adhering to the concept of "nation" as the core and "trendy" as the
form, continuously creating differentiated characteristics, and upgrading to "youthfulness, high-end, and mainstream"; At the same
time, it continuously increases investment in technological innovation fields such as movement and aviation technology
applications, relying on the advantages of aviation technology and aerospace quality, and continuously provide professional timing
watches for China's aerospace industry, gradually establishing a leading position in the domestic industry and expanding our brand
influence.
In order to seize the opportunities in the domestic watch market and promote the long-term development of its self-own brand,
the Company has established the "Harmony" watch retail channel. "Harmony" is committed to becoming the best comprehensive
service provider for luxury watches, and has long-term and in-depth cooperation with numerous watch groups and brands. It has
honed industry-leading operational management and customer service capabilities, and has become a leading professional
commercial brand in high-end chain for luxury watches in China.
In recent years, the Company has adhered to the development principle of "technology sharing the same origin, industry
sharing the same roots, and value sharing the same direction". With the strength of precision technology and industrial
accumulation, the Company has extended and expanded its precision technology business and smart wearable business, and has
now begun to take shape.
III. Core competitiveness analysis
(I) Brand operation and management capabilities throughout the entire industry chain
The Company has the ability to operate and manage the entire industry chain, integrating research and development, design,
manufacturing, sales and service. Through resource integration and business collaboration, it has continuously strengthened the
differentiation of the core self-owned brand of "FIYTA". During the reporting period, the "FIYTA" brand's aerospace characteristic
products, channels and marketing activities continued to innovate, and the brand's market share gradually increased.
(II) Refined channel operation and management capabilities
The Company has sales channels covering the whole country and some overseas countries and regions. Through its leading
channel operation and management capabilities, the Company has continuously improved the efficiency of channel operation.
During the reporting period, the channel structure continued to be optimized and the unit production of a single store continued to
increase.
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
(III) Digital capabilities to empower business
The Company has digital retail system, CRM system, SAP system, cloud stores, and other digital platforms. Through
deepening digital applications in research and development, design, production, sales and service, it has empowered business
development and efficiency improvement, continuously strengthened private domain operations and integration of online and
offline operations, enhanced customer lifecycle management capabilities, and continuously improved core indicators such as
potential customer transactions and repeat purchases during the reporting period.
(IV) Core technological capabilities in precision technology
As a national enterprise technology center, the Company has R&D and production platforms in Shenzhen and Switzerland.
By continuously promoting breakthroughs in movement technology, aerospace material applications, and the development and
application of aerospace precision timing technology, the Company accelerated the localization of key components such as
movements. During the reporting period, it has achieved commercial launch of its self-developed movements, and the technology
development company has been recognized as a national "specialized, refined, unique, and new small giant" enterprise.
(V) Professional talent team building capabilities
The Company has a professional and stable talent team, and continuously invests in talent team construction based on the
concept of "value creation". It has cultivated multiple outstanding representatives in core fields such as design, R&D,
manufacturing, etc. During the reporting period, Liu Zhonghua, a senior watch technician of the Company, was awarded the
"National May Day Labor Medal" and the honorary title of "National Technical Expert"; The Company has won the Outstanding
Contribution Award in the National Industry Vocational Skills Competition Light Industry Competition issued by the China
National Light Industry Council for its accumulation of innovative talents in technology.
IV. Main business analysis
1. Overview
In 2023, the Company adheres to the principle of high-quality development, adheres to the business strategy of "seeking
progress while maintaining stability" and "defending and counterattacking", strictly controls costs and expenses, prevents asset
risks, deeply explores business counterattacks, and orderly carries out various business management work, achieving steady
growth in overall business performance. During the reporting period, the Company achieved an operating revenue of RMB
4,569.69 million, a year-on-year increase of 4.95%; the total profit was RMB 437 million, a year-on-year increase of 28.86%; the
basic earnings per share were RMB 0.8082, a year-on-year increase of 26.32%; the weighted average ROE was 10.28%, a
year-on-year increase of 1.6 percentage points.
(I) Continuously promoting the upgrading of brand positioning and creating brand differentiation
During the reporting period, based on the positioning of "a high-quality Chinese watch brand with aerospace watch as its
feature", "FIYTA" has made concerted efforts, focused on the core product matrix, concentrated resource investment, strengthened
IP cooperation, reached strategic cooperation with CNNC, etc., and successively launched a number of aerospace-themed watches
such as J-20, Z-20, Y-20, "Spaceman" tourbillon, space yacht, China-Chic "Green Dragon and White Tiger". The aerospace series
has experienced rapid year-on-year growth and has become the second best-selling series of the brand, helping to increase the
average customer price and rejuvenate the brand image; the Company also closely followed hot events to carry out integrated
marketing, combining with movie cooperation of Born to Fly, China Brand Day and celebrity activities, etc., to enhance the
popularity of new products and promote aviation brand culture.
(II) Continuously promoting channel structure optimization and leveraging operational management advantages
During the reporting period, the "FIYTA" brand upgraded its store image with a focus on aerospace-themed stores, Brand
Gallery stores with overall decoration, and fashion collection stores, continued to optimize its channel structure, entered the
mainstream shopping centers in first and second tier cities, and opened more than 20 aerospace-themed stores, which effectively
improved the average customer price and unit production of its stores; seizing the opportunity of tax exemption, the Company has
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
opened new duty-free stores in Hong Kong, Macao (the first oversea aerospace-themed store), Haikou and other places, with good
sales; the Company has also increased investment in new channels such as Douyin, and strengthened online new product
development, self-owned live broadcast matrix building and multi-party cooperation. During the "618" shopping festival,
e-commerce GMV grew by more than 80%. During the "Double 11" shopping festival, it ranked top 1 in Tmall's domestic watch
category, with a year-on-year growth of more than 200% on Douyin.
For "Harmony" Watch Retail, the Company continued to deepen its refined operations, developing mid-to-high-end brands
and core high-quality channels around the four elements of "city, brand, business format and partners", and it has opened and
upgraded a total of 48 new stores; it promoted the integration of online and offline operation to build a "1+N+X" Harmony
marketing matrix on Douyin, and continued to improve the comprehensive service capability of famous watches.
(III) Continuously increasing investment in technological innovation and strengthening the hardcore strength of
precision technology
During the reporting period, the Company increased investment in areas such as movement-related technologies, aerospace
material applications, and precision timing equipment, achieving the localization of movements in some products; it realized
market applications of aerospace aluminum alloys, Z-20 gene steel and other materials; it also provided timing equipment for
astronauts in Shenzhou XVI and XVII missions.
(IV) Continuously promoting digital transformation and deepening platform applications
During the reporting period, the Company continued to focus on digital management and private domain operations, and
carried out multiple digital infrastructure construction and management digitization projects; focusing on customer service and
customer value exploration, it deepened the refinement of member operations and made improvement in core indicators like
potential customer transactions and repeat purchases by existing customers; it promoted the operation of private domain traffic
matrix, using mini programs as the starting point to increase private domain traffic; through online and offline joint marketing,
new retail model of live streaming sales and other models, it achieved store traffic attraction and conversion.
(V) Continuously promoting new business exploration and cultivating new growth drivers
During the reporting period, the Company's precision technology business continued to strengthen its technical strength in
matching complex and high-precision products, promoting expansion into fields such as aerospace and medical devices, and
continuing to push for breakthroughs in new customers; for smart wearable business, the Company continued to enhance its
technological research and development capabilities, continuously improved software and hardware functions for its products, and
focused on new categories, new businesses, and new channels. Its self-owned brand ADASHER has achieved rapid growth.
Year-on-year changes in key financial data
Items in balance sheet
Items Closing balance Opening balance Change ratio Reason for change
Mainly due to an increase in cash flows from operating
Monetary funds 504,629,153.71 313,747,463.64 60.84%
activities.
Notes receivable 18,268,972.37 32,214,912.10 -43.29% Mainly due to the expiration of some commercial bills.
Advances from Mainly due to a decrease in advances from customers
10,267,758.31 16,960,128.83 -39.46%
customers from the property business.
Mainly due to the impact of repurchase of B-shares and
Treasury stock 78,645,532.23 50,759,806.16 54.94%
unlocking of equity incentives.
Other
Mainly due to changes in translation differences of
comprehensive 19,325,335.93 5,739,589.89 236.70%
foreign currency statements.
income
Items in income statement from the beginning of the year to the end of the reporting period
Items Current amountAmount incurred in theChange ratio Reason for change
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
incurred previous period
Mainly due to a decrease in government subsidies
Other income 11,435,373.78 18,648,210.06 -38.68%
received.
Investment Mainly due to the losses incurred by the held companies
-5,819,479.60 3,026,481.59 -292.29%
income this year.
Credit Mainly due to an increase in the amount of offsetting the
6,827,575.82 4,845,379.45 40.91%
impairment loss provision for bad debts.
Mainly due to the impact of the write-back of the
Assets
571,980.37 -37,625,482.96 101.52% inventory depreciation provision for the watch business
impairment loss
in the previous year.
Income tax Mainly due to the increase in income tax expenses
103,826,161.94 72,440,220.01 43.33%
expenses caused by the increase in total profit.
Items in statement of cash flows from the beginning of the year to the end of the reporting period
Current amount Amount incurred in Change
Items Reason for change
incurred the previous period ratio
Mainly due to the large amount of VAT credit
Refunds of taxes 1,937,203.71 7,793,409.24 -75.14%
refunds received in the previous period.
Mainly due to decrease in the amount of
Cash received from
250,000,000.00 845,155,704.29 -70.42% borrowings obtained this year caused by changes
borrowings
in borrowing methods.
Mainly due to decrease in the amount of
Cash paid for debt
290,000,000.00 794,083,975.00 -63.48% repayment of loans this year caused by changes
repayment
in borrowing methods.
2. Revenue and cost
(1) Composition of operating revenue
Unit: RMB
2023 2022
Year-on-year
Proportion in Proportion in changes
Amount Amount
operating revenue operating revenue
Total operating
4,569,690,002.99 100% 4,354,096,880.36 100% 4.95%
revenue
By industry
Watch business 4,267,371,133.82 93.38% 4,044,205,847.74 92.88% 5.52%
Precision
technology 135,950,405.45 2.98% 163,114,009.23 3.75% -16.65%
business
Lease business 150,361,811.22 3.29% 129,266,616.76 2.97% 16.32%
Other 16,006,652.50 0.35% 17,510,406.63 0.40% -8.59%
By product
Watch brand
797,083,010.50 17.44% 725,388,535.22 16.66% 9.88%
business
Watch retail
3,470,288,123.32 75.94% 3,318,817,312.52 76.22% 4.56%
service business
Precision 135,950,405.45 2.98% 163,114,009.23 3.75% -16.65%
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
technology
business
Lease business 150,361,811.22 3.29% 129,266,616.76 2.97% 16.32%
Other 16,006,652.50 0.35% 17,510,406.63 0.40% -8.59%
By region
South China 2,111,088,618.01 46.20% 2,142,082,539.80 49.20% -1.45%
Northwest
704,042,804.95 15.41% 610,765,393.07 14.03% 15.27%
region
North China 217,315,524.00 4.76% 231,541,393.72 5.32% -6.14%
East China 570,830,728.85 12.49% 572,584,950.61 13.15% -0.31%
Northeast
357,656,639.08 7.83% 281,347,840.46 6.46% 27.12%
region
Southwest
608,755,688.10 13.31% 515,774,762.70 11.84% 18.03%
region
By sales model
Direct sales 4,429,357,639.21 96.93% 4,196,696,430.85 96.39% 5.54%
Distribution 140,332,363.78 3.07% 157,400,449.51 3.61% -10.84%
(2) Data of industries, products, regions, and sales models that account for more than 10% of the Company's operating
revenue or profit
Unit: RMB
Changes in Changes in
Changes in
operating gross profit
Gross operating costs
revenue margin
Operating revenue Operating costs profit compared to the
compared to the compared to the
margin same period
same period same period
last year
last year last year
By industry
Watch
4,267,371,133.82 2,745,624,708.72 35.66% 5.52% 7.39% -1.12%
business
Lease
150,361,811.22 44,370,528.09 70.49% 16.32% -3.62% 6.10%
business
By product
Watch
brand 797,083,010.50 263,771,395.75 66.91% 9.88% 23.41% -3.63%
business
Watch
retail
3,470,288,123.32 2,481,853,312.97 28.48% 4.56% 5.93% -0.93%
service
business
Lease
150,361,811.22 44,370,528.09 70.49% 16.32% -3.62% 6.10%
business
By region
South
2,111,088,618.01 1,337,000,230.43 36.67% -1.45% 1.30% -1.72%
China
Northwest
704,042,804.95 447,894,168.60 36.38% 15.27% 14.33% 0.52%
region
North
217,315,524.00 131,696,421.10 39.40% -6.14% -8.37% 1.47%
China
East
570,830,728.85 367,848,607.72 35.56% -0.31% -0.58% 0.18%
China
Northeast
357,656,639.08 240,261,877.28 32.82% 27.12% 25.46% 0.89%
region
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2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Southwest
608,755,688.10 380,762,169.68 37.45% 18.03% 18.18% -0.08%
region
By sales model
Direct
4,429,357,639.21 2,848,424,998.86 35.69% 5.54% 6.85% -0.79%
sales
Distributi
140,332,363.78 57,038,475.95 59.35% -10.84% -22.14% 5.89%
on
The Company's main business data for the past year adjusted based on data of the end of the reporting period (if the statistical data
of the Company's main business is adjusted during the reporting period)
Not applicable
(3) Whether the Company's revenue from physical sales was greater than its revenue from labor services
Yes
Year-on-year
Industry category Items Unit 2023 2022
changes
Sales volume Piece 902,955 771,846 16.99%
Brand watch Production volume Piece 868,480 592,041 46.69%
Inventory Piece 782,514 816,989 -4.22%
Explanation for relevant data with an year-on-year change of more than 30%
The production of brand watches for the year increased by 46.69% year-on-year, mainly due to the growth in production of FIYTA
and Jeep brands.
(4) Performance status of major sales contracts and major procurement contracts signed by the Company as of the
reporting period
Not applicable
(5) Composition of operating costs
Industry and product categories
Unit: RMB
2023 2022
Year-on-y
Industry Proportion
Items Proportion ear
category Amount Amount in operating
in operating changes
costs
costs
Cost of
Watch purchasing 2,481,853,312.97 85.42% 2,342,868,173.39 85.54% 5.93%
business goods
Raw materials 239,031,937.74 8.23% 191,690,987.81 7.00% 24.70%
Unit: RMB
2023 2022
Year-on-y
Product Proportion in Proportion
Items ear
category Amount operating Amount in operating changes
costs costs
Watch brand Raw materials 239,031,937.74 8.23% 191,690,987.81 7.00% 24.70%
15
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
business
Watch retail Cost of
service purchasing 2,481,853,312.97 85.42% 2,342,868,173.39 85.54% 5.93%
business goods
(6) Whether there were any changes in the scope of consolidation during the reporting period
No
(7) Significant changes or adjustments in the Company's business, products or services during the reporting period
Not applicable
(8) Main sales customers and suppliers
Main sales customers of the Company
Total sales of the top five customers (RMB) 838,712,019.86
The proportion of the total sales of the top five customers to the
18.35%
annual total sales
The proportion of related party sales to annual total sales
0.00%
among the top five customers
Information on the Company's top 5 customers
Proportion to annual total
No. Name Sales revenue (RMB)
sales
1 First place 241,354,458.49 5.28%
2 Second place 152,642,841.47 3.34%
3 Third place 150,856,332.33 3.30%
4 Fourth place 147,569,135.47 3.23%
5 Fifth place 146,289,252.10 3.20%
Total -- 838,712,019.86 18.35%
Other information of main customers
Not applicable
Main suppliers of the Company
Total procurement amount of the top five suppliers (RMB) 2,263,893,779.57
The proportion of the total procurement amount of the top five
80.19%
suppliers to the total annual procurement amount
The proportion of related party procurement to the total annual
0.00%
procurement amount among the top five suppliers
Information on the Company's top 5 suppliers
Proportion to annual total
No. Name Procurement amount (RMB)
procurement amount
1 First place 981,561,875.51 34.77%
2 Second place 702,988,090.37 24.90%
3 Third place 220,483,210.73 7.81%
4 Fourth place 182,125,111.63 6.45%
5 Fifth place 176,735,491.33 6.26%
16
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Total -- 2,263,893,779.57 80.19%
3. Costs
Unit: RMB
2023 2022 Year-on-year changes Significant changes
Sales expenses 924,009,179.32 931,832,830.40 -0.84% Not applicable
Management expenses 205,359,277.24 219,014,508.52 -6.23% Not applicable
Financial expenses 21,469,772.77 21,188,742.11 1.33% Not applicable
R&D expenses 57,802,244.08 61,088,585.61 -5.38% Not applicable
4. R&D investment
Expected
impact on the
Name of main R&D
Purpose Progress Intended goals future
projects
development of
the Company
Provide innovative
A series of new
products with Completed the Develop multiple series of products with Provide
products with
aerospace brand current year's FIYTA characteristics with aerospace as the innovative
FIYTA
characteristics for task theme, and launch and sell them as planned products
characteristics
the market
Enhance the Enhance the
New product performance and Completed the Innovate and develop new product performance
innovation structure market current year's structures based on the needs of theme new and market
development competitiveness of task product development competitiveness
new products of new products
Development of Enhance the Enhance the
Develop mechanical watch movements and
mechanical watch performance and Completed the performance
related key components with special
movements with market current year's and market
functions and indication methods based on
brand differentiation competitiveness of task competitiveness
brand differentiation needs
features new products of new products
Provide
Complete the
Provide specialized specialized
Development of a task for the year Develop and deliver specialized equipment
equipment watches equipment
dedicated watch for and deliver watches according to the requirements of
for manned watches for
manned spaceflight multiple batches manned space missions
spaceflight manned
of products
spaceflight
Build a service ecosystem around smart
A smartwatch
wearables, deepen efforts in smart AI,
product with Enhance the Enhance the
mobile payments, transportation, music,
functions such as performance and Completed the performance
and environmental monitoring functions,
shooting, payment, market current year's and market
and build relevant service support platforms
exercise and health, competitiveness of task competitiveness
based on human health, sleep, and other
and monitoring of new products of new products
fields; widely apply research technologies
human signs
to related listed products
R&D personnel in the Company
2023 2022 Change ratio
Number (person) 119 115 3.48%
Proportion 2.81% 2.66% 0.15%
Educational structure
Undergraduate 62 61 1.64%
17
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Master 18 18 0.00%
Doctor 2 2 0.00%
Junior college education or 37 8.82%
34
below
Age composition
Under 30 years old 28 38 -26.32%
30-40 years old 64 51 25.49%
Over 40 years old 27 26 3.85%
R&D investment of the Company
2023 2022 Change ratio
Investment amount (RMB) 57,802,244.08 61,088,585.61 -5.38%
Proportion of R&D investment to
1.26% 1.40% -0.14%
operating revenue
Capitalized amount of R&D investment
0.00 0.00 0.00%
(RMB)
Proportion of capitalized R&D
0.00% 0.00% 0.00%
investment to R&D investment
Reasons and impacts of significant changes in the composition of R&D personnel in the Company
Not applicable
Reasons for the significant change in the proportion of total R&D investment to operating revenue compared to the previous year
Not applicable
Reasons for significant changes in capitalization rate of R&D investment and their rational explanation
Not applicable
5. Cash flow
Unit: RMB
Items 2023 2022 Year-on-year changes
Sub-total of cash inflows from
5,095,999,854.92 4,997,924,003.93 1.96%
operating activities
Sub-total of cash outflows from
4,463,598,366.94 4,521,695,227.41 -1.28%
operating activities
Net cash flows from operating
632,401,487.98 476,228,776.52 32.79%
activities
Sub-total of cash inflows from
1,778,284.57 138,721.29 1,181.91%
investment activities
Sub-total of cash outflows from
91,104,776.03 114,090,573.97 -20.15%
investment activities
Net cash flows from investment
-89,326,491.46 -113,951,852.68 21.61%
activities
Sub-total of cash inflows from
250,000,000.00 845,155,704.29 -70.42%
financing activities
Sub-total of cash outflows from
602,163,687.52 1,106,081,523.22 -45.56%
financing activities
Net cash flows from financing
-352,163,687.52 -260,925,818.93 -34.97%
activities
Net increase in cash and cash 190,890,764.07 103,483,652.50 84.46%
18
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
equivalents
Explanation of the main influencing factors for significant YoY changes in relevant data
Not applicable
Explanation of the significant difference between the net cash flow from the operating activities during the reporting period and
the net profit of the current year
Not applicable
V. Non-main business analysis
Not applicable
VI. Analysis of asset and liabilities
1. Significant changes in asset composition
Unit: RMB
At the end of 2023 At the beginning of 2023
Proportion Changes in Significant
Proportion proportion changes
Amount Amount to total
to total
assets
assets
Monetary funds 504,629,153.71 12.00% 313,747,463.64 7.62% 4.38% Not applicable
Accounts
323,142,761.64 7.69% 305,290,959.68 7.42% 0.27% Not applicable
receivable
Contract assets 0.00 0.00% 0.00 0.00% 0.00% Not applicable
Inventory 2,100,666,175.28 49.97% 2,141,320,373.67 52.01% -2.04% Not applicable
Investment real
360,255,832.14 8.57% 374,979,494.71 9.11% -0.54% Not applicable
estate
Long-term
equity 51,862,607.30 1.23% 58,182,086.90 1.41% -0.18% Not applicable
investment
Fixed assets 355,785,354.68 8.46% 364,628,765.17 8.86% -0.40% Not applicable
Construction in
0.00 0.00% 0.00 0.00% 0.00% Not applicable
progress
Assets of right
109,452,481.64 2.60% 110,330,512.03 2.68% -0.08% Not applicable
of use
Short-term
250,187,763.87 5.95% 290,237,111.11 7.05% -1.10% Not applicable
loans
Contract
12,286,243.62 0.29% 16,844,437.47 0.41% -0.12% Not applicable
liabilities
Long-term
0.00 0.00% 0.00 0.00% 0.00% Not applicable
loans
Lease liabilities 43,526,352.52 1.04% 41,642,561.58 1.01% 0.03% Not applicable
High proportion of overseas assets
Not applicable
2. Assets and liabilities measured at fair value
Not applicable
19
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
3. Restricted asset rights as of the end of the reporting period
Not applicable
VII. Investment analysis
1. Overall situation
Investment amount during the reporting Investment amount for the same period
Variation
period (RMB) last year (RMB)
80,000,000.00 0.00 100.00%
Note: during the reporting period, the Company increased the capital of RMB 80 million for its wholly-owned subsidiary
Shenzhen FIYTA Precision Technology Co., Ltd. Please refer to the relevant announcements disclosed by the Company on August
23, 2023 and December 1, 2023 on CNINF for details.
2. Significant equity investments obtained during the reporting
period
Not applicable
3. Significant non equity investments ongoing during the reporting
period
Not applicable
4. Financial asset investment
(1) Securities investment
Not applicable
(2) Derivative investment
Not applicable
5. Usage of raised funds
Not applicable
VIII. Significant asset and equity sales
1. Sale of significant assets
Not applicable
2. Sale of significant equity
Not applicable
20
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
XI. Analysis of main holding and participating companies
Main subsidiaries and participating companies with a net profit impact of over 10% on the Company
Unit: RMB
Name Type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profit
Purchase and
sales of watches
Shenzhen Harmony
and spare and
World Watch Center Subsidiary 600,000,000 2,076,571,866.37 1,162,132,954.12 3,405,187,991.94 322,421,713.57 242,290,924.83
accessory parts,
Co., Ltd.
and maintenance
services.
Design,
development, and
FIYTA Sales Co., Ltd. Subsidiary sales of watches 450,000,000 450,015,837.37 332,583,223.76 421,566,166.83 3,261,715.88 -2,469,115.15
and spare and
accessory parts.
Manufacturing
Shenzhen FIYTA and production of
Precision Technology Subsidiary watches and spare 180,000,000 368,788,920.21 286,495,846.07 367,913,873.64 44,214,426.68 41,929,647.65
Co., Ltd. and accessory
parts.
Production and
Shenzhen FIYTA processing of
Technology Subsidiary precision spare 50,000,000 199,259,950.58 162,613,018.73 164,445,123.56 12,355,709.45 11,968,906.87
Development Co., Ltd. and accessory
parts.
Trade and
FIYTA (Hong Kong) investment in
Subsidiary 137,737,520 268,028,322.96 252,131,956.46 87,223,517.20 13,195,774.65 10,121,009.50
Co., Ltd. watches and
accessories.
Design,
Emile Chouriet development, and
Horologe (Shenzhen) Subsidiary sales of watches 41,355,200 132,484,518.55 54,153,791.88 79,250,452.61 543,615.96 310,562.68
Co., Ltd. and spare and
accessory parts.
Acquisition and disposal of subsidiaries during the reporting period
21
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Not applicable
Explanation of main companies with holdings and shares
Not applicable
22
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
X. Situation of structured entities controlled by the Company
Not applicable
XI. Outlook for the future development of the Company
(I) Development strategy and outlook
In 2024, the Company will continue to implement the national brand strategy, focus on value creation goals, take
"high-quality development" as the guiding principle, adhere to the principle of seeking progress while maintaining stability,
strengthen and expand the watch industry, and improve core competitiveness; adhere to technological innovation, accelerate
transformation and upgrading, and enhance core functions. Solidly carry out the following tasks:
1. Continue to promote brand positioning upgrade and increase market share
The "FIYTA" brand will firmly establish its brand positioning as a high-quality Chinese watch brand with aerospace watches
as its characteristic, optimize its marketing and communication system, and highlight the characteristics of the aviation brand;
Strengthen product planning and operation, integrate hardcore technology, and use aerospace series to drive brand enhancement.
2. Continue to promote channel structure optimization and strengthen refined operations
The "FIYTA" brand will focus on three key store types, aerospace-themed stores, Brand Gallery stores with overall
decoration, and fashion collection stores, seize opportunities for channel transformation, and promote the entry of shopping centers;
deepen the "dual excellence" operation system of stores and increase the output of single stores.
"Harmony" watch retail will focus on developing mid to high end channels and brands; deeply cultivate excellent operations
and improve service quality; promote the integrated development of online and offline.
3. Continue to increase investment in technological innovation and enhance technological attributes
The Company will accelerate the localization of movements, high-end customized movements such as tourbillons, and the
development of independent key components, continuously promote the application of aerospace materials and technology, and
create a hardcore capability that matches "aerospace quality".
4. Continue to promote transformation and upgrading, and promote the development of new businesses
The Company will adhere to the principle of "technology sharing the same origin, industry sharing the same roots, and value
sharing the same direction", accelerate the cultivation process of strategic emerging industries, and enhance the technological
attributes and scale of precision technology and smart wearable business.
The precision technology business will focus on improving its process technology and precision manufacturing solution
capabilities, striving for breakthroughs in industry expansion and customer development; The smart wearable business will
continue to enhance its physical operation capabilities, achieving scale and efficiency improvement.
(II) Risks and countermeasures
1. Consumer market risk
Currently, the domestic consumer market is in a weak recovery state, and residents have rational and cautious consumption
preferences. The watch consumption industry where the Company is located is still under pressure. On the one hand, the Company
will continue to focus on its main business, strengthen differentiated product development, increase the proportion of aerospace
series, strengthen refined management capabilities, improve channel operation efficiency, and promote the expansion of brand
market share; On the other hand, the Company will accelerate the cultivation of strategic emerging industries and seek
breakthroughs in industrial transformation and upgrading.
2. Consumption outflow risk
With the recovery of travel in Hong Kong and overseas, the domestic consumer market is facing pressure to diversify. The
Company will continue to strengthen digital construction and application, enhance customer lifecycle management and service
capabilities, and enhance customer stickiness; seize market opportunities and continue to explore overseas and duty-free channels.
23
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
XII. Reception, research, communication, interviews and other activities during the
reporting period
Main content of
the discussion Index of basic
Time Address Method Type of object Object and the information of
materials research
provided
Huachuang The Company
Securities Co., communicated
Ltd., Essence and exchanged
Securities Co., ideas with
Ltd., Qianhai investors on
Reinsurance business
Conference
Co., Ltd., operations,
February 8, room of FIYTA
Field research Agency Shenzhen watch brand
2023 Technology
Qianhai management,
Building
Jinhong Capital retail of luxury
Management watches, and
Co., Ltd., Ping development of
An Pension precision
Insurance Co., technology
Ltd. business.
In order to
provide
investors with a
comprehensive
and in-depth
understanding
http://irm.cninf
of the
o.com.cn/ircs/c
Company's
ompany/compa
situation, the
nyDetail?stockc
Company held
ode=000026&o
an online
rgId=gssz00000
The vast performance
26
number of briefing for the
investors year 2022,
participating in where
Communication the 2022 online discussions and
https://eseb.cn/
April 3, 2023 on online Other performance exchanges were
1379ifdveEw
platforms briefing of the held with
Company investors on the
through remote Company's
network business
participation situation,
development
strategy, watch
brand
management
business, watch
retail business,
precision
technology
business, and
smart wearable
business
24
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
development
for the year
2022.
Shenwan
Hongyuan
Securities Co.,
Ltd., New
China Fund
Management
The Company
Co., Ltd., China
communicated
Asset
and exchanged
Management
ideas with
Company
investors
Limited, Guotai
regarding
Junan
Conference business
From May 24 Securities Co.,
room of FIYTA operations,
to May 25, Field research Agency Ltd., China Life
Technology watch brand
2023 Pension
Building management,
Company
retail of luxury
Limited,
watches, and
Kaiyuan
the
Securities Co.,
development of
Ltd., Shenzhen
smart wearable
Qianhai
businesses.
Alliance Asset
Management
Co., Ltd., and
Zhongtai
Securities Co.,
Ltd.
The Company
communicated
and exchanged
ideas with
Cinda investors
Conference Securities Co., regarding
August 31, room of FIYTA Ltd. and business
Field research Agency
2023 Technology Zhongtai operations,
Building Securities Co., watch brand
Ltd. management,
and the
development of
luxury watch
retail business.
The Company
has
communicated
Investors who and exchanged
"Panorama participated in ideas with
Roadshow" Communication this online investors
November 15,
website, on online Other collective regarding the
2023
WeChat official platforms reception day Company's
account, APP event for development
investors. strategy,
business
development
situation, etc.
25
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Section 4 Corporate Governance
I. Basic situation of corporate governance
In 2023, the Company will continue to strictly comply with the requirements of the Company Law, Securities Law, and
normative documents related to listed company governance issued by the China Securities Regulatory Commission, continuously
improve the corporate governance structure, and strive to strengthen the construction of modern enterprise systems, enhance the
level of standardized operation of the Company. The company's governance status is no different from the normative documents
related to listed company governance issued by the China Securities Regulatory Commission.
The Company has strictly followed the provisions of the Company Law, other laws, regulations, normative documents, and
the Articles of Association to establish and improve a relatively standardized corporate governance structure and rules of
procedure. It has formed a decision-making and operational management system with the General Meeting, Board of Directors,
Board of Supervisors, and company management as the main structure, and has fulfilled all responsibilities stipulated in the
Company Law and Articles of Association in accordance with the law.
The General Meeting is the power organ of the Company, which decides the Company's business policies and investment
plans, reviews and approves the annual financial budget plan, final accounts plan, profit distribution plan, plan to make up for
losses, change the use of raised funds, equity incentive plans and other matters, makes resolutions on the increase or reduction of
the Company's registered capital, the issuance of corporate bonds and other financing instruments such as bonds, the merger,
division, dissolution, liquidation or change of the Company's form, formulates or approves the Articles of Association and the plan
for amending the Articles of Association, elects and replaces Directors and Supervisors who are not represented by employees, and
decides on the remuneration matters of the relevant Directors and Supervisors.
The Board of Directors plays the role of "setting strategies, making decisions, and preventing risks", is responsible for
executing the resolutions of the General Meeting, convening the General Meeting, and reporting the Board of Directors' work to
the General Meeting. Within the scope authorized by the General Meeting, the Board of Directors can decide on matters such as
external investment, acquisition and sale of assets, asset mortgage, external guarantees, related transactions, etc., determine the
establishment of the Company's internal management structure and branch offices, and appoint or dismiss the Company's General
Manager, Secretary of the Board of Directors, and other Senior Officers. The Board of Directors of the Company is composed of
nine Directors, including three Independent Directors. The Board of Directors has three specialized committees: Strategy, Audit
and Nomination, and Compensation and Assessment.
The Board of Supervisors is the Supervisory body of the Company, responsible for reviewing the Company's regular reports,
inspecting the Company's finances, supervising the Directors and Senior Officers of the Company to perform their duties in
accordance with the law, and making recommendations for the removal of Directors and Senior Officers who violate laws,
administrative regulations, the Company's Articles of Association, or resolutions of the General Meeting. The Board of
Supervisors of the Company is composed of three Supervisors, including one Employee Representative Supervisor.
The management team is responsible for "seeking business, implementing, and strengthening management". The General
Manager is responsible to the Board of Directors, presiding over the Company's production and operation management under the
leadership of the Board of Directors, organizing the implementation of resolutions of the meetings of the Board of Directors,
reporting to the Board of Directors, organizing the implementation of the Company's annual development plan and business plan,
drafting the Company's investment plan, annual financial budget plan, final account plan, profit distribution plan, and loss
recovery plan, and plan to increase or decrease the registered capital of the Company, etc.
Is there a significant difference between the actual situation of corporate governance and laws, administrative regulations, and the
provisions on corporate governance issued by the China Securities Regulatory Commission for listed companies
No
26
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
II. The independent situation of the Company relative to its controlling shareholders and
actual controllers in ensuring the Company's assets, personnel, finance, institutions,
business, etc.
The Company has strictly separated from its controlling shareholders in terms of business, personnel, assets, institutions,
finance, etc. The Company has independent and complete business and independent operation capabilities.
In terms of business: the Company mainly operates in the clock and watch industry, with independent production, auxiliary
production, supporting facilities, and procurement and sales systems. There is no industry competition between the Company and
its controlling shareholders.
In terms of personnel: the Company has independent institutions and sound systems in labor, personnel, and salary
management. Except for Mr. Xiao Yi, Mr. Li Peiyin, Mr. Deng Jianghu, Mr. Guo Gaohang, the Directors as well as Ms. Hu Min,
Chairman of the Board of Supervisors, and Mr. Yuan Tianbo, the Supervisor, who serve as controlling shareholders, no other
Directors or Senior Officers have held dual positions in shareholder units, and the financial staff has not held any part-time
positions in affiliated companies.
In terms of assets: the Company has clear property rights with its controlling shareholders, and has independent legal person
property rights over the Company's assets. The Company's assets are completely independent of its controlling shareholders, and it
independently owns trademarks such as "FIYTA" and "Harmony".
In terms of institutions: The Company's Board of Directors, Board of Supervisors, and other internal institutions are sound,
operate independently, and there is no subordinate relationship or joint office situation with the functional departments of its
controlling shareholders. The controlling shareholder shall exercise its rights and assume corresponding obligations in accordance
with the law, and shall not directly or indirectly interfere with the Company's operating activities beyond the scope of the General
Meeting.
In terms of finance: the Company has established an independent finance department, a sound and independent financial
accounting system and financial management system, opened an independent bank account, and the controlling shareholder has
not interfered with the Company's financial accounting activities.
III. Peer competition
Not applicable
IV. Relevant information on Annual and Extraordinary General Meetings held during the
reporting period
1. Information on the General Meetings during this reporting period
Investors'
Sessions Type Date Disclosure date Resolution
participation ratio
Announcement on
the Resolutions of
2022 Annual Annual General
42.07% April 26, 2023 April 27, 2023 the 2022 Annual
General Meeting Meeting
General Meeting
2023-024
Announcement on
The 1st the Resolutions of
Extraordinary
Extraordinary the 1st
General 39.13% May 31, 2023 June 1, 2023
General Meeting in Extraordinary
Meeting
2023 General Meeting
in 2023-031
27
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Announcement on
The 2nd the Resolutions of
Extraordinary
Extraordinary the 2nd
General 39.35% September 12, 2023 September 13, 2023
General Meeting in Extraordinary
Meeting
2023 General Meeting
in 2023-051
Announcement on
The 3rd the Resolutions of
Extraordinary
Extraordinary the 3rd
General 39.36% December 28, 2023 December 29, 2023
General Meeting in Extraordinary
Meeting
2023 General Meeting
in 2023-067
II. Preferred shareholders with restored voting rights request to
convene an Extraordinary General Meeting
Not applicable
28
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
V. Situation of Directors, Supervisors, and Senior Officers
1. Basic information
Shares Shares
Emplo Ge Initial Other Final
A added in reduced in
Name Position yment nd From To holdings changes holdings Reasons for changes in shares
ge this period this period
status er (shares) (shares) (shares)
(shares) (shares)
Zhang Curre M
Chairman 47 July 1, 2021 September 8, 2024 0 0 0 0 0
Xuhua nt ale
Curre M
Xiao Yi Director 50 February 24, 2021 September 8, 2024 0 0 0 0 0
nt ale
Li Curre M
Director 38 February 24, 2021 September 8, 2024 0 0 0 0 0
Peiyin nt ale
Deng Curre M
Director 40 September 8, 2021 September 8, 2024 0 0 0 0 0
Jianghu nt ale
Guo
Curre M
Gaohan Director 37 December 28, 2023 September 8, 2024 0 0 0 0
nt ale
g
The Company repurchased and
Director February 24, 2021 September 8, 2024
cancelled a portion of its A-share
restricted shares that did not meet
Curre M
Pan Bo 48 280,000 0 0 -49,950 230,050 the performance conditions for
General nt ale
January 15, 2021 September 8, 2024 lifting restrictions at the company
Manager
level, resulting in a decrease of
49,950 shares.
Wang Independent Curre M
54 September 11, 2018 September 8, 2024 0 0 0 0 0
Jianxin Director nt ale
Zhong
Independent Curre M
Hongmi 49 September 11, 2018 September 8, 2024 0 0 0 0 0
Director nt ale
ng
Tang Independent Curre M
50 September 11, 2018 September 8, 2024 0 0 0 0 0
Xiaofei Director nt ale
Chairman of
the Board of Fe January 4, 2024 September 8, 2024
Curre 0 0 0 0 0
Hu Min Supervisors m 39
nt
ale
Supervisor December 28, 2023 September 8, 2024
29
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Yuan Curre M
Supervisor 44 December 28, 2023 September 8, 2024 0 0 0 0 0
Tianbo nt ale
Fe
Curre
Hu Jing Supervisor m 53 September 7, 2021 September 8, 2024 9,000 0 0 0 9,000
nt
ale
Deputy 1. Reduced 70,000 shares due to
General August 8, 2014 September 8, 2024 personal financial needs;
Manager 2. The Company repurchased and
cancelled a portion of its A-share
Lu Curre M
57 280,000 0 70,000 -49,950 160,050 restricted shares that did not meet
Wanjun nt ale
General the performance conditions for
October 25, 2021 September 8, 2024
Counsel lifting restrictions at the company
level, resulting in a decrease of
49,950 shares.
1. Reduced 70,000 shares due to
personal financial needs;
2. The Company has completed
the repurchase and cancellation of
Liu Deputy
Curre M some A-share restricted shares it
Xiaomin General 53 October 17, 2016 September 8, 2024 280,000 0 70,000 -49,950 160,050
nt ale holds that have not met the
g Manager
performance conditions for lifting
restrictions at the company level,
resulting in a decrease of 49,950
shares.
1. Reduced 70,000 shares due to
personal financial needs;
2. The Company has completed
the repurchase and cancellation of
Deputy
Curre M some A-share restricted shares it
Li Ming General 51 October 17, 2016 September 8, 2024 280,040 0 70,000 -49,950 160,090
nt ale holds that have not met the
Manager
performance conditions for lifting
restrictions at the company level,
resulting in a decrease of 49,950
shares.
Chief
February 6, 2022 September 8, 2024
Song Accountant
Curre M
Yaomin Deputy 57 0 0 0 0 0
nt ale
g General April 21, 2022 September 8, 2024
Manager
30
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
and
Secretary of
the Board of
Directors
1. Reduced 52,500 shares due to
personal financial needs;
2. The Company has completed
the repurchase and cancellation of
Deputy
Tang Curre M some A-share restricted shares it
General 51 September 29, 2019 September 8, 2024 210,000 0 52,500 -49,950 107,550
Haiyuan nt ale holds that have not met the
Manager
performance conditions for lifting
restrictions at the company level,
resulting in a decrease of 49,950
shares.
Xiao
Resig M
Zhangli Director 48 September 20, 2017 December 11, 2023 0 0 0 0 0
ned ale
n
Chairman of
the Board of March 8, 2021 December 28, 2023
Zheng Resig M
Supervisors 61 0 0 0 0 0
Qiyuan ned ale
Supervisor February 24, 2021 December 28, 2023
Fe
Cao Resig
Supervisor m 53 February 24, 2021 December 28, 2023 0 0 0 0 0
Zhen ned
ale
Total -- -- -- -- -- -- 1,339,040 0 262,500 -249,750 826,790 --
31
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Is there any situation where Directors and Supervisors have resigned and Senior Officers have been dismissed during their term of
office during the reporting period
In December 2023, Mr. Xiao Zhanglin, Non-independent Director of the Company, resigned from his position as a
Non-independent Director of the 10th Board of Directors and member of the Special Committee of the Board of Directors due to
work reasons. After resigning, he will not hold any position in the Company; Mr. Zheng Qiyuan, Non-employee Representative
Supervisor and Chairman of the Company's Board of Supervisors, and Ms. Cao Zhen, Non-employee Representative Supervisor,
resigned from the aforementioned positions in the 10th Board of Supervisors due to work reasons. After resigning, they will not
hold any positions in the Company.
During the reporting period, the Company has completed the work of filling the vacancies of Directors and Supervisors in
accordance with relevant laws and regulations.
Changes in Directors, Supervisors, and Senior Officers of the Company
Name Position Type Date Reason
Elected as the Non-independent Director of the 10th Board
Guo
of Directors at the 16th Meeting of the 10th Board of
Gaohan Director Elected December 28, 2023
Directors and the 3rd Extraordinary General Meeting in
g
2023.
Elected as a Non-employee Representative Supervisor of
the 10th Board of Supervisors at the 14th Meeting of the
Hu Min Supervisor Elected December 28, 2023
10th Board of Supervisors and the 3rd Extraordinary
General Meeting in 2023.
Chairman of the
Elected as the Chairman of the 10th Board of Supervisors
Hu Min Board of Elected January 4, 2024
at the 15th Meeting of the 10th Board of Supervisors.
Supervisors
Elected as a Non-employee Representative Supervisor of
Yuan the 10th Board of Supervisors at the 14th Meeting of the
Supervisor Elected December 28, 2023
Tianbo 10th Board of Supervisors and the 3rd Extraordinary
General Meeting in 2023.
Xiao
Resigne Resigned from the position of Non-independent Director of
Zhangli Director December 11, 2023
d the 10th Board of Directors due to work reasons.
n
Chairman of the December 28, 2023
Zheng Board of Resigne Resigned from the position of Supervisor of the 10th Board
Qiyuan Supervisors, d of Supervisors due to work reasons.
Supervisor
Cao Resigne December 28, 2023 Resigned from the position of Supervisor of the 10th Board
Supervisor
Zhen d of Supervisors due to work reasons.
2. Employment situation
Professional backgrounds, main work experiences, and current main responsibilities of the current Directors, Supervisors, and
Senior Officers of the Company.
Mr. Zhang Xuhua, born in March 1977, holds a Master of Business Administration from Xi'an Jiaotong University and an
EMBA from China Europe International Business School. He is currently the Chairman of the Company. He once served as the
Managing Director, Deputy General Manager, Assistant General Manager, General Manager of the Shopping Center Business
Department, General Manager of Chengdu Branch, General Manager of the Commodity Center, General Manager of the
Dreams-on Department Store, Manager of the Procurement Department, Head of the Investment Promotion Department of
Rainbow Digital Commercial Co., Ltd., and employee of the Marketing Department of Vanke Industry Co., Ltd.
Mr. Xiao Yi, born in March 1974, holds an MBA degree from the School of Economics and Management of Beihang University.
He is currently a Director of the Company, Head of the Party Committee Organization Department/Human Resources Department
of AVIC International Holding Corporation, Director of Tianma Microelectronics Co., Ltd., and Director of Shennan Circuit Co.,
32
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Ltd. He once served as the Project Manager of the Technology Transfer Center of BUAA Holdings Co., Ltd., Supervisor Business
Manager of the Manager Department, Assistant Director of the Administrative Management Department, Deputy Head and Head
of the Comprehensive Management Department of AVIC International Holding Corporation.
Mr. Li Peiyin, born in September 1986, is a certified public accountant and senior accountant. He holds a Master's Degree in
Accounting from Xiamen University and an MBA from Missouri State University. He is currently a Director of the Company,
Head of the Finance Management Department of AVIC International Holding Corporation, Director of Rainbow Digital
Commercial Co., Ltd., Director of Shennan Circuit Co., Ltd., and Director of Tianma Microelectronics Co., Ltd. He once served as
the Business Manager, Assistant Head, and Deputy Head of the Finance Management Department of AVIC International Holding
Corporation.
Mr. Deng Jianghu, born in July 1984, holds a Master's Degree in Business Administration from Northeast Normal University. He
is currently a Director of the Company, Head of the Business Management Department of AVIC International Holding
Corporation, Director of AVIC Supply Corporation, Director of AVIC International Holding (Zhuhai) Corporation, Director of
Tianma Microelectronics Co., Ltd., Director of Shennan Circuit Co., Ltd., Director of Rainbow Digital Commercial Co., Ltd., and
Director of AVIC Huadong Optoelectronics Co., Ltd. He once served as the Deputy Head of the Planning and Development
Department and the Business Management Department of AVIC International Holding Corporation (in charge of work), Deputy
Manager and Manager of the Planning and Operations Department of the Company, Head of the Modern Service Industry Office
of AVIC Shenzhen Co., Ltd., Senior Project Manager of the Business Management Department of AVIC International Holding
Corporation, and Senior Strategic Operations and Management Project Manager of the Strategic Development Department of
Shennan Circuit Co., Ltd.
Mr. Guo Gaohang, born in March 1987, holds a Master's Degree in Materials Physics and Chemistry from Harbin Institute of
Technology. He is currently a Director of the Company, Deputy Head of the Planning and Development Department of AVIC
International Holding Corporation (in charge of work), Director of Castic-SMP Machinery Corp., Ltd, Director of AVIC Supply
Corporation,and Director of Tianma Microelectronics Co., Ltd. He once served as the Assistant Head of the Planning and
Development Department and Assistant Head of the Business Management Department of AVIC International Holding
Corporation, Strategic Operations and Management Project Manager of the Planning and Operations Department of AVIC
Shenzhen Co., Ltd., Semiconductor Industry Analyst and Senior Semiconductor Industry Analyst of Trend Force (Shenzhen) Co.,
Ltd., and Sealing and Testing Process Design Engineer at Shenzhen STS Microelectronics Co., Ltd.
Mr. Pan Bo, born in March 1976, is an engineer. He holds a Bachelor's Degree in Mechanical and Electrical Engineering from
Beihang University and an EMBA from China Europe International Business School. He is currently the Managing Director of the
Company. He once served as the Deputy General Manager, Secretary of the Board of Directors, and Assistant General Manager of
the Company, as well as the General Manager, Deputy General Manager, Assistant General Manager, Manager of the Sales
Department, Manager of the Logistics Department, and Manager of the After Sales Department of FIYTA Sales Co., Ltd.
Mr. Wang Jianxin, born in June 1970, is a certified public accountant and holds a Bachelor's Degree in Auditing from Zhongnan
University of Economics and Law. He is currently an Independent Director of the Company, partner of ShineWing CPAs (Special
General Partnership),Independent Director of Shenzhen MeHow Chuangyi Medical Technology Co., Ltd., and Independent
Director of Fortior Technology (Shenzhen) Co., Ltd.
Mr. Zhong Hongming, born in January 1975, holds a Doctorate in Civil and Commercial Law from Renmin University of China
and a Postdoctoral Degree in Civil and Commercial Law from Southwest University of Political Science and Law. He is currently
an Independent Director of the Company, an Associate Researcher at the Law Research Institute of Sichuan Academy of Social
33
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Sciences, an Independent Director of Chengdu Shengbang Seals Co., Ltd., and also serves as a Director of the China Commercial
Law Society, a Director of the Institute of Securities Law of CLS, and the Secretary General of the Commercial Law Society of
Sichuan Law Society.
Mr. Tang Xiaofei, born in May 1974, holds a Doctorate in Management from Southwest Jiaotong University. He is currently an
Independent Director of the Company, Professor and Doctoral Supervisor at the School of Business Administration at Southwest
University of Finance and Economics, Director of the Institute of Urban Brand Strategy at Southwest University of Finance and
Economics, an outstanding talent in the new century recognized by the Ministry of Education, Director of the China Marketing
Association, and Independent Director of Qianhe Condiment and Food Co., Ltd.
Ms. Hu Min, born in May 1985, is an economist and holds a Master's Degree in Civil Procedure Law from Peking University. She
is currently the Chairman of the Board of Supervisors of the Company, Head and Chief Auditor of the Audit and Legal
Department of AVIC International Holding Corporation. She formerly served as the Deputy Head and Chief Auditor of the Audit
and Legal Department of AVIC International Holding Corporation, Deputy Head of the Audit and Legal Department, General
Counsel of China National Aero-technology International Engineering Corporation and General Manager of the Legal Affairs and
Discipline Inspection Audit Department, Deputy General Counsel and General Manager of the Legal Affairs and Contract
Management Department, General Manager of the Legal Affairs and Contract Management and Audit Supervision Department,
and Deputy General Manager of the Legal Affairs and Contract Management Department, Legal Advisor of the Legal Affairs
Department of AVIC International Holding Corporation.
Mr. Yuan Tianbo, born in October 1980, is an economist and holds a Master's Degree in Management Science and Engineering
from Northwestern Polytechnical University. He is currently a Supervisor of the Company, and Deputy Head of the Department of
Discipline Inspection of AVIC International Holding Corporation (in charge of work). He formerly served as the Deputy General
Manager (in charge of work) and Assistant General Manager of Oriental Jade Co., Ltd., General Manager and Deputy General
Manager of Qinghai AVIC, Director of the Administrative and Human Resources Department and Director of the Expansion
Department of Oriental Jade Co., Ltd., Organization and Performance Management of the Human Resources Department of AVIC
International Holding Corporation, and Recruitment Management of the Human Resources Department of AVIC Shenzhen Co.,
Ltd.
Ms. Hu Jing, born in September 1971, is an accountant and holds a Bachelor's Degree in Accounting from Jiangxi University of
Finance and Economics. She is currently an Employee Representative Supervisor of the Company and Senior Tax Manager of the
Finance Department. She formerly served as the Senior Business Manager of the Audit Department, Tax Supervisor of the Finance
Department, and Fund Manager of the Company.
Mr. Lu Wanjun, born in February 1967, is an accountant and holds an EMBA degree from China Europe International Business
School. He is currently a Deputy General Manager and General Counsel of the Company. He formerly served as the Assistant
General Manager of the Company, Executive Deputy General Manager, Deputy General Manager, Assistant General Manager,
and Manager of the Finance Department of Shenzhen Harmony World Watch Center Co., Ltd.
Mr. Liu Xiaoming, born in July 1971, is an engineer and economist, and holds a Bachelor's Degree in Manufacturing Engineering
from Beihang University and an EMBA degree from China Europe International Business School. He is currently a Deputy
General Manager of the Company. He formerly served as the General Manager Assistant of the Company, Deputy General
Manager and Assistant General Manager of Shenzhen Harmony World Watch Center Co., Ltd.
Mr. Li Ming, born in September 1973, holds a Bachelor's Degree in Marketing from Zhongnan University of Economics and Law
and an EMBA degree from China Europe International Business School. He is currently a Deputy General Manager of the
Company. He formerly served as the Assistant General Manager and HR Director of the Company, Deputy General Manager,
Assistant General Manager and Manager of Human Resources Department of Shenzhen Harmony World Watch Center Co., Ltd.;
34
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
HR Director and General Manager of Marketing Center of China Netcom Shenzhen Company; Key Account Manager and
Marketing Planning Manager of China Telecom Shenzhen Company.
Mr. Song Yaoming, born in July 1967, is a senior accountant, and holds a Master's Degree in Economics from Shaanxi Institute
of Finance & Economics and an EMBA degree from China Europe International Business School. He is currently the Chief
Accountant, Deputy General Manager, and Secretary of the Board of Directors of the Company. He formerly served as the Deputy
General Manager and Chief Accountant of Rainbow Digital Commercial Co., Ltd., Director of Shenzhen Aoxuan Investment Co.,
Ltd., Director of Shenzhen Aoer Investment Development Co., Ltd., and Deputy Manager and Accountant of the Finance
Department of Shenyang FAW Jinbei Automobile Co., Ltd.
Mr. Tang Haiyuan, born in February 1973, is a senior engineer, and holds a Bachelor's Degree in Plastic Molding Technology
and Equipment from Hefei University of Technology and an EMBA degree from China Europe International Business School. He
is currently a Deputy General Manager of the Company. He formerly served as the General Manager, Deputy General Manager,
Assistant General Manager, Manager of the Quality Department, Manager and Deputy Manager of the Engineering Technology
Department of Shenzhen FIYTA Precision Timing Manufacturing Co., Ltd., as well as the Assistant Technical General Manager
and Manager of Technical Department of Shenzhen FIYTA Technology Development Co., Ltd.
Employment in shareholder units
Whether or not
remuneration
Name of Position held in
Name of employee From To allowance is
shareholder units shareholder units
received from
shareholder units
Head of Party
Committee
AVIC International
Organization
Xiao Yi Holding January 18, 2021 Yes
Department/Huma
Corporation
n Resources
Department
Head of the
AVIC International
Finance
Li Peiyin Holding February 28, 2022 Yes
Management
Corporation
Department
Head of the
AVIC International
Business
Deng Jianghu Holding August 28, 2023 Yes
Management
Corporation
Department
Deputy Head of
AVIC International the Planning and
Guo Gaohang Holding Development October 9, 2023 Yes
Corporation Department (in
charge of work)
AVIC International Head of the Audit
Hu Min Holding and Legal August 28, 2023
Corporation Department
Yes
AVIC International
Hu Min Holding Chief Auditor June 26, 2023
Corporation
Deputy Head of
AVIC International the Discipline
Yuan Tianbo Holding Inspection May 29, 2023 Yes
Corporation Department (in
charge of work)
Explanation of
Not applicable
employment in
35
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
shareholder units
Employment in other units
Whether or
not
remuneratio
Name of Position held
Name of other units From To n allowance
employee in other units
is received
from other
units
Tianma Microelectronics Co., Ltd. Director February 26, 2021 No
Xiao Yi
Shennan Circuit Co., Ltd. Director April 6, 2021 No
Rainbow Digital Commercial Co., Ltd. Director February 24, 2021 No
Li Peiyin Shennan Circuit Co., Ltd. Director April 6, 2021 No
Tianma Microelectronics Co., Ltd. Director July 8, 2022 No
AVIC Supply Corporation Director July 19,2021 No
AVIC International Holding (Zhuhai)
Director December 27,2021 No
Corporation
Deng Tianma Microelectronics Co., Ltd. Director November 29, 2021 No
Jianghu
Shennan Circuit Co., Ltd. Director April 7, 2022 No
Rainbow Digital Commercial Co., Ltd. Director September 9, 2022 No
AVIC Huadong Optoelectronics Co., Ltd. Director November 27, 2023 No
Castic-SMP Machinery Corp., Ltd Director June 28,2021 No
Guo
AVIC Supply Corporation Director November 27, 2023 No
Gaohang
Tianma Microelectronics Co., Ltd. Director March 6, 2024 No
ShineWing CPAs (Special General
Partner December 1, 2006 Yes
Partnership)
Wang Shenzhen MeHow Chuangyi Medical Independent
February 23, 2023 Yes
Jianxin Technology Co., Ltd. Director
Independent
Fortior Technology (Shenzhen) Co., Ltd. June 16, 2020 Yes
Director
Law Research Institute of Sichuan Academy Associate
November 24, 2017 Yes
Zhong of Social Sciences Researcher
Hongming Independent
Chengdu Shengbang Seals Co., Ltd. November 17, 2022 Yes
Director
School of Business Administration at Professor and
Southwest University of Finance and Doctoral September 1, 2008 Yes
Tang
Economics Supervisor
Xiaofei
Independent
Qianhe Condiment and Food Co., Ltd. November 30, 2022 Yes
Director
Explanati
on of
employme Not applicable
nt in other
units
36
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Penalties imposed by securities regulatory authorities in the past three years on the Company's current and departing Directors,
Supervisors, and Senior Officers during the reporting period
Not applicable
3. Remuneration of Directors, Supervisors, and Senior Officers
Decision-making process, determination basis, and actual payment of remuneration for Directors, Supervisors, and Senior Officers
The remuneration of internal Directors and Senior Officers of the Company is based on an annual salary system, with an
annual salary structure of basic annual salary and performance-based annual salary. The remuneration of internal Directors is
implemented after approval by the General Meeting, and the remuneration of Senior Officers is implemented after approval by the
Board of Directors. The assessment of Senior Officers is carried out in accordance with the Management Measures for
Performance Assessment of Management Members and the Management Measures for Remuneration of Management Members of
the Company.
Except for Independent Directors who receive allowances in the Company, other external Directors and Non-employee
Representative Supervisors do not receive remuneration in the Company. The remuneration of Employee Representative
Supervisors shall be implemented in accordance with the Company's employee remuneration management measures.
Remuneration of Directors, Supervisors, and Senior Officers during the reporting period
Unit: RMB ten thousand
Total pre-tax
Whether to receive
Employment remuneration
Name Position Gender Age remuneration from related
status received from the
parties of the Company
Company
Zhang Xuhua Chairman Male 47 Current 198.35 No
Xiao Yi Director Male 50 Current Yes
Li Peiyin Director Male 38 Current Yes
Deng Jianghu Director Male 40 Current Yes
Guo Gaohang Director Male 37 Current Yes
Pan Bo Managing Director Male 48 Current 187.49 No
Independent
Wang Jianxin Male 54 Current 9 No
Director
Zhong Independent
Male 49 Current 9 No
Hongming Director
Independent
Tang Xiaofei Male 50 Current 9 No
Director
Chairman of the
Hu Min Board of Female 39 Current Yes
Supervisors
Yuan Tianbo Supervisor Male 44 Current Yes
Hu Jing Supervisor Female 53 Current 37.46 No
Deputy General
Lu Wanjun Manager and Male 57 Current 185.79 No
General Counsel
Deputy General
Liu Xiaoming Male 53 Current 229.61 No
Manager
Deputy General
Li Ming Male 51 Current 180.31 No
Manager
Chief Accountant,
Deputy General
Song Yaoming Manager and Male 57 Current 185.82 No
Secretary of the
Board of Directors
Tang Haiyuan Deputy General Male 51 Current 191.42 No
37
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Manager
Xiao Zhanglin Director Male 48 Resigned Yes
Chairman of the
Zheng Qiyuan Board of Male 61 Resigned Yes
Supervisors
Cao Zhen Supervisor Female 53 Resigned Yes
Total -- -- -- -- 1,423.25 --
VI. Performance of duties by Directors during the reporting period
1. Situation of the Board of Directors during this reporting period
Sessions Date Disclosure date Resolution
Please refer to the Announcement on the
The 11th Meeting of the 10th Resolutions of the 11th Meeting of the 10th
March 16, 2023 March 18, 2023
Board of Directors Board of Directors 2023-007 disclosed by the
Company on CNINF.
The 12th Meeting of the 10th The meeting considered and approved the
April 21, 2023 April 25, 2023
Board of Directors Company's 2023 Q1 Report.
Please refer to the Announcement on the 13th
The 13th Meeting of the 10th
May 15, 2023 May 16, 2023 Meeting of the 10th Board of Directors 2023-025
Board of Directors
disclosed by the Company on CNINF.
Please refer to the Announcement on the 14th
The 14th Meeting of the 10th
August 21, 2023 August 23, 2023 Meeting of the 10th Board of Directors 2023-044
Board of Directors
disclosed by the Company on CNINF.
The 15th Meeting of the 10th The meeting considered and approved the
October 19, 2023 October 21, 2023
Board of Directors Company's 2023 Q3 Report.
Please refer to the Announcement on the
The 16th Meeting of the 10th Resolutions of the 16th Meeting of the 10th
December 11, 2023 December 13, 2023
Board of Directors Board of Directors 2023-062 disclosed by the
Company on JCNINF.
2. Attendance of Directors at the meetings of the Board of Directors
and the General Meetings
Attendance of Directors at the meetings of the Board of Directors and the General Meetings
Number of Number of Have you not
attendances Number of attendances Number of personally
Number of
required at on-site at the entrusted attended the Number of
absences
the meetings attendances meetings of attendances meetings of attendances
Name of from the
of the Board at the the Board of at the the Board of at the
Director meetings of
of Directors meetings of Directors meetings of Directors for General
the Board of
during this the Board of through the Board of two Meetings
Directors
reporting Directors communicati Directors consecutive
period on times
Zhang Xuhua 6 2 4 0 0 No 4
Xiao Yi 6 1 5 0 0 No 0
Li Peiyin 6 1 5 0 0 No 0
Deng
6 0 6 0 0 No 0
Jianghu
Guo
0 0 0 0 0 No 0
Gaohang
Pan Bo 6 2 4 0 0 No 1
Wang Jianxin 6 2 4 0 0 No 4
Zhong 6 1 5 0 0 No 0
38
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Hongming
Tang Xiaofei 6 1 5 0 0 No 0
Xiao
Zhanglin 5 0 5 0 0 No 0
(Resigned)
Explanation of not attending the meetings of the Board of Directors for two consecutive times
Not applicable
3. Objections raised by Directors regarding matters related to the
Company
Whether the Directors have raised any objections regarding matters related to the Company
No
4. Other explanations on the performance of duties by Directors
Whether the Director's suggestions to the Company have been adopted
Yes
Explanation on whether the Director's suggestions to the Company have been adopted or not
During the reporting period, the Board of Directors fully played the role of "setting strategies, making decisions, and
preventing risks", and the Company's Directors strictly followed the provisions of laws and regulations such as the Company Law
and the Code of Governance for Listed Companies, as well as the Articles of Association, attended meetings of the Board of
Directors on time, diligently and responsibly performed their duties and exercised rights as Directors, and thoroughly considered,
provided suggestions on, and voted on resolutions of the Board of Directors. The Company fully considered and adopts the
constructive opinions proposed by the Directors on the development strategy, business decision-making, internal control
management, and other aspects.
VII. The situation of special committees under the Board of Directors during the reporting
period
Specific
Important
Number of Other situation of
Meeting opinions and
Name Members meetings Date performance objection
content suggestions
held of duties matters (if
put forward
any)
All members
strictly
followed
relevant laws
Chairman: and
Zhang Xuhua regulations in
It considered
Members: their work,
and approved
Deng diligently
Strategic March 16, the 2022
Jianghu, Pan 1 and
Committee 2023 Work Report
Bo, Tang responsibly
of the Board
Xiaofei, Xiao communicate
of Directors.
Zhanglin d and
(resigned) discussed the
content of
the
proposals,
and
39
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
unanimously
passed the
relevant
proposals.
It considered
and approved
the
Company's
2022 annual
report, 2022
profit
distribution,
2022 internal
control and
self-assessme
March 16, nt report,
All members
2023 2022 internal
of the
audit work
committee
report, the
strictly
plan to
followed
repurchase
relevant laws
some
and
domestically
regulations in
listed foreign
their work,
shares
diligently
(B-shares)
and
Chairman: and other
responsibly
Wang Jianxin proposals.
communicate
Members: Li Deliberated
d and
Peiyin, and approved
discussed the
Audit Zhong the
4 contents of
Committee Hongming, Company's
the
Tang Xiaofei, 2023 Q1
Company's
Xiao Report and
internal and
Zhanglin April 21, the 2023 Q1
external audit
(resigned) 2023 Audit Work
work,
Report of the
internal
Discipline
control
Inspection,
management,
Audit, and
and share
Legal
repurchase
Department.
plan, and
Deliberated
unanimously
and approved
approved the
the
relevant
Company's
proposals.
2023
Semi-annual
Report and
August 21, abstract,
2023 capital
increase to
wholly-owne
d
subsidiaries,
and the 2023
Q2 Audit
Work Report
40
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
of the
Discipline
Inspection,
Audit, and
Legal
Department.
Deliberated
and approved
the
October 19, Company's
2023 Q3 Report
and the 2023
Q3 Audit
Work Report.
Deliberated All members
and approved of the
the proposal committee
on the strictly
remuneration followed
of Directors relevant laws
and Senior and
March 16, Officers for regulations in
2023 2022, as well their work,
as the diligently
repurchase and
and responsibly
cancellation reviewed and
Chairman: of some approved the
Zhong restricted remuneration
Hongming shares plan for
Members: Deliberated Directors and
Xiao Yi, and approved Senior
Wang the proposal Officers, the
Jianxin, Tang on implementati
Nomination,
Xiaofei, Xiao May 15, repurchasing on of the
Compensatio
Zhanglin 2023 and Company's
n and 4
(resigned) canceling restricted
Assessment
some share
Committee
restricted incentive
shares scheme, and
Deliberated the
and approved qualifications
the proposal of candidates
on for
August 21, repurchasing Non-indepen
2023 and dent
canceling Directors.
some They fully
restricted communicate
shares d and
Chairman: discussed the
Deliberated
Zhong content of
and approved
Hongming the proposal,
the proposal
Members: December and
on change in
Xiao Yi, 11, 2023 unanimously
non-indepen
Wang passed the
dent
Jianxin, Tang relevant
Directors
Xiaofei proposals.
41
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
VIII. Work of the Board of Supervisors
During the reporting period, the Board of Supervisors discovered any risks in the Company's supervisory activities
No
IX. Employees
1. Number, professional composition and education background
Number of current employees of the parent company at the end
200
of the reporting period (person)
Number of employees in major subsidiaries at the end of the
4,038
reporting period (person)
Total number of in-service employees at the end of the
4,238
reporting period (person)
Total number of employees receiving salary in the current
4,238
period (person)
Number of retired employees whose expenses need to be borne
0
by the parent company and major subsidiaries (person)
Professional composition
Professional composition category Number of professional members (person)
Production personnel 338
Sales personnel 2,964
Technical personnel 333
Financial personnel 114
Administrative personnel 489
Total 4,238
Education background
Education background Quantity (person)
Master's degree or above 77
Undergraduate 791
Junior college 1,309
Below junior college 2,061
Total 4,238
2. Remuneration
Based on business development planning and management practices, the Company adheres to the core concept of value
creation, follows the principles of hierarchical management, budget regulation, performance orientation, efficiency priority,
fairness, positive incentives and long-term focus to formulate remuneration policies. Continuously establish and improve a salary
system based on annual salary assessment for middle and senior management personnel, performance-based salary system for
employee positions, and a joint production and efficiency remuneration system for production and operation personnel, and
implement the following management measures:
Management of total salary: Based on the annual business plan, conduct an annual remuneration budget, comprehensively
consider factors such as market salary level, organizational efficiency improvement, and talent team adjustment to regulate the
total salary, and achieve management goals of benefit orientation, positive incentives, classified management and adjustment of
distribution;
42
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Classified and hierarchical management: Establish a differentiated job rank system based on job characteristics, and establish
a standardized remuneration framework that matches market conditions on this basis;
Value orientation, co-creation and sharing: The Company designs an incentive system based on a closed-loop value chain of
value creation, evaluation, and distribution. By establishing a value evaluation system and real-time incentive system that is
consistent with strategic development goals, it has formed an incentive mechanism where remuneration follows the Company's
benefits and individual performance, with incremental remuneration tilted towards core key positions and outstanding talents.
3. Training plan
Talents are the primary productive force for the development of a company. The Company attaches great importance to the
development and training of talents. In order to cultivate a high-quality talent team, support the implementation of the company's
strategy, and create an organizational learning atmosphere, the Company has formulated the Employee Training Management
System, established a comprehensive and systematic employee training system and training management system, and built an
online learning platform+offline training center to provide continuous growth space for employees. For details, please refer to
Chapter V Training Development on Employee in the Company's Environmental, Social, and Governance (ESG) Report 2023
disclosed on CNINF on March 14, 2024.
4. Labor outsourcing
Not applicable
X. The Company's profit distribution and conversion of capital reserves into share capital
The development, implementation, or adjustment of profit distribution policies, especially for cash dividend policies, during the
reporting period
The 2022 profit distribution plan of the Company has been deliberated and approved at the 11th Meeting of the 10th Board of
Directors held on March 16, 2023, and the 2022 Annual General Meeting held on April 26, 2023. The resolution is to distribute a
cash dividend of RMB 2.50 (including tax) to all shareholders for every 10 shares, based on the total number of shares on the
equity registration date of the profit distribution plan, after deducting the number of shares in the special repurchase securities
account. A total of cash dividends of no more than RMB 104,406,990.00 will be distributed, with 0 bonus shares to be issued and
without capital increase through conversion of provident fund.
During the period from disclosure to implementation of this equity distribution plan, the Company repurchased a total of
996,872 B-shares through a special repurchase securities account. The Company distributes cash dividends of RMB 2.50
(including tax) to all shareholders for every 10 shares based on 416,631,088 shares of distributable share capital (total share capital
of 417,627,960 shares on the equity registration date, excluding 996,872 repurchased B-shares). The actual total amount of cash
dividends to be distributed is RMB 104,157,772.00.
The profit distribution plan was implemented on June 19, 2023. Please refer to the 2022 Equity Distribution Implementation
Announcement 2023-035 disclosed by the Company on CNINF.
Special Explanation on Cash Dividend Policy
Whether it complies with the Articles of Association or the resolutions of the General Meeting: Yes
Are the dividend standards and ratios clear and explicit: Yes
Are the relevant decision-making processes and mechanisms complete Yes
Whether Independent Directors have fulfilled their duties and played their due role: Yes
If the Company does not distribute cash dividends, specific reasons, as well as the measures to be taken to
Not applicable
enhance investor returns should be disclosed:
Whether small and medium-sized shareholders have sufficient opportunities to express their opinions and
Yes
demands, and have their legitimate rights and interests been fully protected:
43
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Whether the conditions and procedures for adjusting or changing cash dividend policies are compliant and
Not applicable
transparent:
During the reporting period, the Company was profitable and the parent company had a positive profit available for shareholder
distribution, but no cash dividend distribution plan was proposed
Not applicable
Profit distribution and conversion of capital reserve to share capital during this reporting period
Number of dividend shares per 10 shares (shares) 0
Dividend payout per 10 shares (RMB) (including tax) 4.00
The total number of share capital on the equity registration date
Distribution plan's share capital base (shares) when the profit distribution plan is implemented in the future
(excluding shares in the special repurchase securities account)
Cash dividend amount (RMB) (including tax) 166,087,988.00
Cash dividend amount in other ways (such as repurchase of
64,340,669.42
shares) (RMB)
Total cash dividends (including other methods) (RMB) 230,428,657.42
Distributable profit (RMB) 1,063,629,83.35
The proportion of total cash dividends (including other
100%
methods) to total profit distribution
Current cash dividend
Other
Detailed explanation of profit distribution or capital-reserve conversion plan
The 2023 profit distribution plan of the Company has been deliberated and approved at the 18th Meeting of the 10th Board of
Directors held on March 12, 2024. It is proposed to distribute a cash dividend of RMB 4.00 (including tax) to all shareholders for
every 10 shares based on the total number of registered share capital on the future implementation of the profit distribution plan
(excluding shares in the special repurchase securities account), with 0 bonus shares to be issued and without capital increase
through conversion of provident fund.
If there is a change in the total share capital of the Company from the disclosure of this profit distribution plan to its
implementation, the Company plans to adjust the total distribution amount according to the principle of fixed distribution ratio.
The profit distribution plan for this time needs to be deliberated and approved by the General Meeting before
implementation.
XI. Implementation of the Company's equity incentive plans, employee stock ownership
plans, or other employee incentive measures
1. Equity incentives
(1) Restricted share incentive scheme (Phase I)
The Company decided to launch the restricted share incentive scheme (Phase I) at the 3rd Meeting of the 9th Board of
Directors held on November 12, 2018 and the 1st Extraordinary General Meeting held on January 11, 2019. After deliberation and
approval at the 5th Meeting of the 9th Board of Directors held on January 11, 2019, the Company ultimately granted 4.224 million
A-share restricted shares to 128 incentive objects, with a grant price of RMB 4.40/share, which were granted and registered for
listing on January 30, 2019. For details, please refer to the relevant announcement disclosed on the CNINF on January 12, 2019.
The specific implementation during the reporting period is as follows:
After deliberation and approval by the 10th Meeting of the 10th Board of Directors of the Company, the Company's restricted
share incentive scheme (Phase I) has met the third condition for lifting restrictions of the period. The 1,162,320 A-share restricted
shares involved in lifting the restrictions have been listed and circulated on January 31, 2023. Please refer to the relevant
announcement disclosed by the Company on CNINF on January 19, 2023.
44
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
As of the end of the reporting period, the Company's restricted share incentive scheme (Phase I) has met three conditions for
lifting restrictions of the period. The three batches of A-share restricted shares involved in lifting restrictions have been lifted from
restrictions and listed for circulation.
(2) Restricted share incentive scheme (Phase II)
The Company decided to launch the restricted share incentive scheme (Phase II) at the 23rd Meeting of the 9th Board of
Directors held on December 4, 2020 and the 1st Extraordinary General Meeting held on January 6, 2021. After being reviewed and
approved at the 25th Meeting of the 9th Board of Directors held on January 15, 2021, the Company finally granted 7.66 million
A-shares of restricted stock to 135 incentive objects, with a grant price of RMB 7.60/share, which were granted and registered for
listing on January 29, 2021. For specific details, please refer to the relevant announcement disclosed on CNINF on January 16,
2021. The specific implementation during the reporting period is as follows:
After deliberation and approval at the 10th Meeting of the 10th Board of Directors of the Company, the Company has met the
first condition for lifting the restriction for the Company's restricted share incentive scheme (Phase II) . The 2,274,390 A-share
restricted shares involved in lifting the restriction have been listed and circulated on January 31, 2023. Please refer to the relevant
announcement disclosed by the Company on CNINF on January 19, 2023.
After deliberation and approval by the 11th Meeting of the 10th Board of Directors and the 2022 Annual General Meeting,
the Company has decided to repurchase and cancel the 146,740 A-share restricted shares held by the four former incentive objects
who have resigned, which have been granted but have not yet lifted the restrictions; Considering that the Company has not met the
second company-level performance condition for lifting restrictions during the restricted share incentive scheme (Phase II), the
Company has decided to repurchase and cancel 2,201,130 A-share restricted stocks that have not met the conditions for lifting
restrictions. The above-mentioned shares have all been deregistered. Please refer to the relevant announcements disclosed by the
Company on CNINF on March 18, 2023, April 27, 2023, and July 8, 2023.
After deliberation and approval by the 13th Meeting of the 10th Board of Directors and the 1st Extraordinary General
Meeting in 2023, the Company has decided to repurchase and cancel 13,360 restricted A-share restricted shares held by one
former incentive object who has resigned and has been granted but not yet lifted the restrictions. Please refer to the relevant
announcements disclosed by the Company on CNINF on May 16, 2023, June 1, 2023, and August 2, 2023.
After deliberation and approval by the 14th Meeting of the 10th Board of Directors and the 2nd Extraordinary General
Meeting in 2023, the Company has decided to repurchase and cancel the 46,760 restricted A-shares collectively held by the two
former incentive recipients who have resigned. The said A-shares have been granted but the restrictions have not yet been lifted.
Please refer to the relevant announcements disclosed by the Company on August 23, 2023, September 13, 2023, and November 8,
2023, on CNINF.
45
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Equity incentives received by the Directors and Senior Officers
Unit: shares
Number Number Number
Number Number Exercise Number
of newly Number of of newly
of stock Number of of prices of Number of
granted of stock Market price restricted granted Price for
options exercisable exercised exercised of restricted
stock options at the end of stocks restricted granting
held at shares shares shares unlocked stocks
Name Position options held at the reporting held at stocks restricted
the during the during during the shares in held at
during the end of period the during shares
beginning reporting the reporting this the end of
the the (RMB/share) beginning the (RMB/share)
of the period reporting period period the
reporting period of the reporting
year period (RMB/share) period
period period period
Zhang
Chairman 0 0 0 0 0 0 0 0 0 0 0
Xuhua
Xiao Yi Director 0 0 0 0 0 0 0 0 0 0 0
Li Peiyin Director 0 0 0 0 0 0 0 0 0 0 0
Deng
Director 0 0 0 0 0 0 0 0 0 0 0
Jianghu
Guo
Director 0 0 0 0 0 0 0 0 0 0 0
Gaohang
Managing
Pan Bo 0 0 0 0 0 0 0 176,720 76,670 0 50,100
Director
Wang Independent
0 0 0 0 0 0 0 0 0 0 0
Jianxin Director
Zhong Independent
0 0 0 0 0 0 0 0 0 0 0
Hongming Director
Tang Independent
0 0 0 0 0 0 0 0 0 0 0
Xiaofei Director
Deputy
General
Lu
Manager 0 0 0 0 0 0 0 176,720 76,670 0 50,100
Wanjun
and General
Counsel
Deputy
Liu
General 0 0 0 0 0 0 0 176,720 76,670 0 50,100
Xiaoming
Manager
46
2023 Annual Report of FIYTA Precision Technology Co., Ltd.
Deputy
Li Ming General 0 0 0 0 0 0 0 176,720 76,670 0 50,100
Manager
Chief
Accountant,
Deputy
General
Song
Manager 0 0 0 0 0 0 0 0 0 0 0
Yaoming
and
Secretary of
the Board of
Directors
Deputy
Tang
General 0 0 0 0 0 0 0 170,040 69,990 0 50,100
Haiyuan
Manager
Xiao Director
0 0 0 0 0 0 0 0 0 0 0
Zhanglin (resigned)
Total -- 0 0 0 0 -- 0 -- 876,920 376,670 0 -- 250,500
Given the failure to lift the selling restrictions at the Company level during the second lifting restriction period of the Restricted Share Incentive Scheme Phase II,
Notes (if any) the Company has completed the repurchase and cancellation of restricted A-shares that have not reached the lifting restriction conditions, and the number of the
said restricted A-shares has been deducted from the quantity of restricted stocks held by the relevant Directors and Senior Officers at the end of the period.
47
The evaluation mechanism and incentives for Senior Officers
To establish a sound incentive and constraint mechanism for Senior Officers, fully leverage and mobilize the work enthusiasm of
the Company's Senior Executives, improve the Company's operational ability and economic benefits, and ensure the achievement of
the Company's strategic goals, the Company continuously improves the term system and contractual management of Senior Executives,
conducts annual/term-based performance assessments, and continuously promotes the implementation of rigid rewards and
punishments based on assessment results, use additional income as the strong incentives and hard constraints, adhere to performance
orientation, and strengthen effective incentives through precise assessment.
2. Implementation status of employee stock ownership plan
Not applicable
3. Other employee incentive measures
Not applicable
XII. Construction and implementation of the internal control system during the reporting
period
1. Construction and implementation of the internal control system
To strengthen the internal control, promote standardized operation and healthy development of the Company, and protect the
legitimate rights and interests of shareholders, the Company has established, improved, and effectively implemented its internal
control system by laws and regulations of the Company Law and the Securities Law.
During the reporting period, the Company continued to promote the integration and optimization of internal control, risk
management, and compliance management supervision, and there were no major or significant deficiencies in internal control.
2. Specific conditions of major internal control deficiencies discovered
during the reporting period
No
XIII. Management and control of subsidiaries by the Company during the reporting period
Not applicable
XIV. Internal control evaluation report or internal control audit report
1. Internal control evaluation report
Disclosure date of the full text of
the internal control evaluation March 14, 2024
report
Disclosure index of the full text of
the internal control evaluation www.cninfo.com.cn
report
The proportion of total assets of 100.00%
48
units included in the evaluation
scope to the total assets in the
Company's consolidated financial
statements
The proportion of operating
revenue of units included in the
evaluation scope to the operating 100.00%
revenue in the Company's
consolidated financial statements
Defect identification criteria
Category Financial reports Non-financial reporting
(1) Serious violations of national laws,
administrative regulations, and normative
documents;
(2) The following matters, namely, the
"decision-making on major matters,
appointment and removal of important
(1) This defect involves fraud by Directors,
cadres, decisions on investing major
Supervisors, and Senior Officers;
projects, and the use of large amounts of
(2) Correcting disclosed financial
funds" have not gone through the collective
statements;
decision-making process;
(3) Certified public accountants have
(3) The serious loss of management and
discovered significant misstatements in the
technical personnel in key positions;
Qualitative criteria current financial statements, which were
(4) System control lacks in important
not detected while conducting internal
business related to the Company's
control;
production and operation or the system
(4) The supervision of internal control by
fails;
the Company's Audit Committee and the
(5) The failure of internal control over
Discipline Inspection, Audit, and Legal
information disclosure has led to the
Department is ineffective.
Company being publicly condemned by
regulatory authorities;
(6) The results of internal control
evaluation, especially significant defects or
significant deficiencies have not been
rectified.
(1) Major defect: misreporting ≥ 5% of (1) Major defect: misreporting ≥ 5% of
pre-tax profit pre-tax profit
(2) Important deficiency: 1% of pre-tax (2) Important deficiency: 1% of pre-tax
Quantitative standards profit ≤ misreporting ＜ 5% of pre-tax profit ≤ misreporting ＜ 5% of pre-tax
profit profit
(3) General defect: misreporting<1% of (3) General defect: misreporting<1% of
pre-tax profit pre-tax profit
Number of major defects in
0
financial reports (entries)
Number of major defects in
0
non-financial reports (entries)
Number of significant defects in
0
financial reports (entries)
Number of significant defects in
0
non-financial reports (entries)
2. Internal control audit report
Column of deliberations in the internal control audit report
We believe that FIYTA Company has maintained effective internal control over financial reporting in all material aspects as of
49
December 31, 2023, following the Basic Standards for Enterprise Internal Control and relevant regulations.
Disclosure of internal control audit report Disclosure
Disclosure date of the full text of the internal control audit
March 14, 2024
report
Disclosure index of the full text of the internal control audit
www.cninfo.com.cn
report
Types of opinions on internal control audit reports Standard unqualified opinions
Whether there were significant deficiencies in non-financial
No
reports
Did the accounting firm issue an internal control audit report with non-standard opinions
No
Was the internal control audit report issued by the accounting firm consistent with the self-evaluation report of the board of Directors
Yes
XV. Rectification of self-inspection issues in the special action on corporate governance of
Listed Companies
The Company has fully completed the self-inspection work following the requirements of the Announcement on Carrying out the
Special Action on Corporate Governance of Listed Companies issued by the China Securities Regulatory Commission and has
rectified the problems found during the self-inspection. The corporate governance complies with the requirements of laws and
regulations of the Company Law, Securities Law, and Code of Conduct for Listed Companies. The governance structure is relatively
complete and the operation is standardized.
50
Section 5 Environmental and Social Responsibility
I. Major environmental issues
Are the listed company and its subsidiaries included in the key polluting units announced by the Environmental Protection Department
No
Administrative penalties imposed due to environmental issues during the reporting period
Not applicable
Refer to other environmental information disclosed by key polluting units
The Company strictly complies with the laws and regulations of the Law of the People's Republic of China on the Prevention and
Control of Atmospheric Pollution, the Law of the People's Republic of China on the Prevention and Control of Environmental
Pollution by Solid Waste, and the Law of the People's Republic of China on Prevention and Control of Water Pollution, and carries out
pollutant management work. Its subsidiaries are not classified as key polluting units. The Company has established the Wastewater,
Exhaust Gas, Dust, and Noise Control Procedure, Waste Management and Control Procedure, and Chemical Management and Control
Procedure internally, and entrusts external qualified institutions to monitor the emission of exhaust gas, slag, wastewater, and noise
every year to ensure that the discharge of exhaust gas, slag and wastewater meets emission standards.
On December 31, 2022, Shanghai Watch Co., Ltd., a joint venture of the Company, shut down businesses related to pollution
discharge and completed the cancellation of the Sewage Discharge Permission on April 24, 2023. It has been downgraded from a key
polluting unit to a general management unit.
Measures taken to reduce its carbon emissions during the reporting period and effects
The Company actively responds to the call of "achieving carbon peak by 2030 and carbon neutrality by 2060", and has developed
a Resource and Energy Conservation Control Procedure to conduct daily inspections and controls on resource and energy consumption,
explore space for energy conservation and water conservation, encourage all employees to explore the selection and application of
energy-saving technologies, and prioritize energy-saving and consumption reducing products when purchasing equipment, such as
water-saving faucets, high-energy efficiency household appliances, etc. In terms of the use of raw materials, production auxiliary
materials, and office supplies, the Company evaluates the usage before procurement to determine the appropriate purchase quantity
and avoid expiration and waste of materials.
Reasons for not disclosing other environmental information
Not applicable
II. Social responsibility situation
For details, please refer to the Company's Environmental, Social, and Governance (ESG) Report 2023 disclosed on
CNINF(www.cninfo.com.cn)on March 14, 2024.
51
III. Consolidate and expand the achievements in poverty alleviation and rural revitalization
During the reporting period, the Company actively responded to the policies of the Central Committee of the Communist Party of
China and the State Council on comprehensively promoting rural revitalization, fully leveraged the joint efforts of state-owned
enterprises in poverty alleviation by consuming products and services from poor areas, alleviating the problem of unsold farm products
in poverty-stricken areas, formulated the Aviation Industry's Rural Revitalization Work Plan 2023, and organized participation in the
"State-owned Enterprises' Efforts to Alleviate Poverty through Consumption of Farm Products to Greet the Spring Festival". On the
e-commerce platform and the Courtesy Aviation platform of state-owned enterprises for poverty alleviation through consumption,
state-owned enterprises provide targeted assistance through centralized procurement and sales assistance, and pairing assistance to sell
county farm products.
52
Section 6 Important Matters
I. Fulfillment of commitments
1. Commitments that have been fulfilled during the reporting period
and commitments that have not been fulfilled as of the end of the
reporting period by the actual controller, shareholders, related parties,
acquirers of the Company, the Company, and other interested parties
Not applicable
2. If there is a profit forecast on the Company's assets or projects, and
the reporting period is still in the profit forecast period, the Company
shall explain the reasons for the assets or projects living up to the
original profit forecast
Not applicable
II. Non-operating capital occupation by controlling shareholders and other related parties of
the listed company
Not applicable
III. Provision of external guarantees in violation of regulations
Not applicable
Ⅳ. Explanation by the Board of Directors on the latest Non-standard Audit Report
Not applicable
V. Explanation by the Board of Directors, Board of Supervisors, and Independent Directors
(if any) on the Non-standard Audit Report of the accounting firm for the current reporting
period
Not applicable
VI. Explanation of changes in accounting policies, estimates, or significant accounting errors
compared to the previous year's financial report
Not applicable
VII. Explanation of changes in the scope of consolidated financial statements compared to
the previous year's financial report
Not applicable
53
VIII. Appointment and dismissal of the accounting firm
The accounting firm currently employed
Name Da Hua CPAs LLP (Special General Partnership)
Remuneration for domestic accounting firms (RMB ten
120
thousand)
Continuous years of audit services provided by the domestic
3
accounting firm
Name of CPAs Long Jiao, Wang Dong
Continuous years of audit services provided by CPAs of the
3
domestic accounting firms
Whether to hire a new accounting firm in the current accounting period
No
Employment of internal control audit and accounting firms, financial advisors, or sponsors
Deliberated and approved by the 2022 Annual General Meeting, the Company appointed Da Hua CPAs LLP (Special General
Partnership) as the auditing body for the Company's financial statements and internal control for the year 2023.
Ⅸ. Facing delisting after the disclosure of the annual report
Not applicable
X. Related matters about bankruptcy reorganization
Not applicable
XI. Major litigation and arbitration matters
Not applicable
XII. Punishment and rectification situation
Not applicable
XIII. Integrity status of the Company, its controlling shareholders, and actual controllers
Not applicable
XIV. Significant related transactions
1. Related transactions related to daily operations
Not applicable
2. Related transactions arising from the acquisition or sale of assets or
equity
Not applicable
54
3. Related transactions for joint outward investment
Not applicable
4. Related debt and credit transactions
Not applicable
5. Transactions with related finance companies
Deposit business
Current amount incurred
Daily
maximum Opening Total Closing
Related Range of Total deposit
deposit balance withdrawal balance
Related parties relationship deposit interest amount for
limit (RMB (RMB ten amount for (RMB ten
s rates this period
ten thousand) this period thousand)
(RMB ten
thousand) (RMB ten
thousand)
thousand)
Finance
company
AVIC Finance with related 80,000 1.15%-1.25% 27,133 462,596 442,955 46,774
relationship
s
Loan business
Current amount incurred
Maximum Total
Opening Total loan Closing
Related loan repayment
Loan interest balance amount for balance
Related parties relationship amount amount for
rate range (RMB ten the period (RMB ten
s (RMB ten the period
thousand) (RMB ten thousand)
thousand) (RMB ten
thousand)
thousand)
Finance
company
AVIC Finance with related 80,000 2.7% 0 0 0 0
relationship
s
Credit or other financial services
During the reporting period, the maximum daily amount of related deposits and loan balances incurred by the Company with
AVIC Finance did not exceed the limit specified in the financial service agreement, and there have been no credit or other financial
transactions. At the same time, the Company issued the Risk Assessment Report on Related Deposits and Loans with AVIC Finance
Co., Ltd. every six months in respect of the aforementioned matters.
6. Transactions between finance companies controlled by the Company
and related parties
Not applicable
7. Other significant related transactions
At the 11th Meeting of the 10th Board of Directors held on March 16, 2023 and the 2022 Annual General Meeting held on April
26, 2023,the Company reviewed and approved the Proposal on the Estimation of Daily Related Transactions for 2023. During the
55
reporting period, the cumulative transaction amounts of various related transactions related to the Company's daily operations were
within the expected annual range.
Related queries on the website for disclosure of interim reports on major related transactions
Interim announcement Name of website for disclosure of
Interim announcement name
disclosure date interim announcements
Announcement on the Resolutions of the 11th Meeting of
March 18, 2023 http://www.cninfo.com.cn/
the 10th Board of Directors 2023-007
Announcement on the Estimation of Daily Related
March 18, 2023 http://www.cninfo.com.cn/
Transactions in 2023 2023-010
Announcement on the Resolutions of the 2022 Annual
April 27, 2023 http://www.cninfo.com.cn/
General Meeting 2023-031
XV. Major contracts and their performance
1. Custody, contracting, and lease matters
(1) Custody
Not applicable
(2) Contracting
Not applicable
(3) Lease
Not applicable
2. Significant guarantee
Unit: RMB ten thousand
External guarantees provided by the Company and its subsidiaries (excluding guarantees for subsidiaries)
Disclosu
re date of Whether
Guarant announc Actual it's a
Actual Counter
ee ements Guarante guarante Guarante Collatera Guarante Complet related-p
occurren guarante
compan relating e limit e e type l (if any) e period ed or not arty
ce date e (if any)
y to amount guarante
guarante e
e limit
Not
applicab
le
Total amount of Total actual amount
external guarantee of external
limit approved 0 guarantees incurred 0
during the reporting during the reporting
period (A1) period (A2)
Total amount of Total actual balance
0 0
external guarantee of external
56
limit approved at the guarantees at the end
end of the reporting of the reporting
period (A3) period (A4)
Guarantee to its subsidiaries by the Company
Disclosu
re date of Whether
Guarant announc Actual it's a
Actual Counter
ee ements Guarante guarante Guarante Collatera Guarante Complet related-p
occurren guarante
compan relating e limit e e type l (if any) e period ed or not arty
ce date e (if any)
y to amount guarante
guarante e
e limit
Shenzhe
n
Joint and
Harmon
Decemb several
y World March
30,000 er 30, 12,000 liability One year No No
Watch 18, 2023
2023 guarante
Center
e
Co.,
Ltd.
Total amount of Total actual amount
guarantee limit for of guarantees
subsidiaries provided to
30,000 12,000
approved during the subsidiaries during
reporting period the reporting period
(B1) (B2)
Total amount of
Total balance of
guarantee limit to
actual guarantees to
subsidiaries
30,000 subsidiaries at the 12,000
approved at the end
end of the reporting
of the reporting
period (B4)
period (B3)
Guarantee to subsidiaries by other subsidiaries
Disclosu
re date of Whether
Guarant announc Actual it's a
Actual Counter
ee ements Guarante guarante Guarante Collatera Guarante Complet related-p
occurren guarante
compan relating e limit e e type l (if any) e period ed or not arty
ce date e (if any)
y to amount guarante
guarante e
e limit
Not
applicab
le
Total amount of Total actual amount
guarantee limit for of guarantees
subsidiaries provided to
0 0
approved during the subsidiaries during
reporting period the reporting period
(C1) (C2)
Total amount of Total actual
guarantee limit to guarantee balance
subsidiaries 0 for subsidiaries at 0
approved at the end the end of the
of the reporting reporting period
57
period (C3) (C4)
Total amount of the Company's guarantees (i.e. the total of the above three main items)
Total amount of Total actual amount
guarantee limit of guarantees
approved during the 30,000 incurred during the 12,000
reporting period reporting period
(A1+B1+C1) (A2+B2+C2)
Total amount of Total actual
guarantee limit guarantee balance at
approved at the end 30,000 the end of the 12,000
of the reporting reporting period
period (A3+B3+C3) (A4+B4+C4)
The proportion of actual total guarantee
amount (i.e. A4+B4+C4) to the Company's 3.60%
net assets
Among them:
Balance of guarantees provided to
shareholders, actual controllers and their 0
affiliates (D)
Balance of debt guarantees provided directly
or indirectly to the guaranteed object with an 0
asset liability ratio exceeding 70% (E)
The amount of guarantee exceeding 50% of
0
net assets (F)
The total amount of the three guarantees
0
mentioned above (D+E+F)
Situations where there is guarantee liability
or evidence indicating the possibility of joint
and several repayment liability for unexpired Not applicable
guarantee contracts during the reporting
period (if any)
External guarantees provided in violation of
Not applicable
prescribed procedures (if any)
Specific situation of the use of composite guarantees
Not applicable
3. Cash asset management entrusted to others
(1) Entrusted financial management
Not applicable
(2) Entrusted loan
Not applicable
4. Other major contracts
Not applicable
58
XVI. Other significant matters
1. Repurchase some domestically listed foreign shares (B Shares)
At the 11th Meeting of the 10th Board of Directors and the 2022 Annual General Meeting, the Company approved the Program
on the Repurchase of Some Domestically Listed Foreign Shares (B Shares), and subsequently disclosed the repurchase report and a
series of progress announcements in accordance with relevant regulations. As of December 31, 2023, the Company has cumulatively
repurchased 9,355,763 shares of B shares through a special repurchase securities account through centralized bidding, with a total
amount paid of HKD 70,401,771.17 (excluding transaction fees). For details, please refer to the relevant progress announcements
disclosed by the Company on CNINF.
2. Change of business scope and revision of the Articles of Association
After deliberation and approval by the 13th Meeting of the 10th Board of Directors and the 1st Extraordinary General Meeting in
2023, the Company has decided to expand its business scope, adjust the standardized expression of the existing business scope, and
revise the corresponding provisions of the Articles of Association based on the changed business scope. For details, please refer to the
Announcement on the Resolutions of the 13th Meeting of the 10th Board of Directors 2023-025, Announcement on Changing the
Business Scope and Amending the Articles of Association 2023-027, and Announcement on Resolutions of the 1st Extraordinary
General Meeting 2023-031, which were disclosed by the Company on May 16, 2023 and June 1, 2023 on CNINF.
3. Capital increase to wholly-owned subsidiaries
At the 14th Meeting of the 10th Board of Directors, the Company approved the Proposal on Capital Increase to Wholly-owned
Subsidiary Shenzhen FIYTA Precision Technology Co., Ltd., and decided to increase the capital of its wholly-owned subsidiary
Shenzhen FIYTA Precision Technology Co., Ltd. by RMB 80 million. For details, please refer to the Announcement on Capital
Increase to Wholly-owned Subsidiary Shenzhen FIYTA Precision Technology Co., Ltd. 2023-047 and Announcement on Completion
of Industrial and Commercial Change Registration for Capital Increase of Wholly-owned Subsidiary 2023-059 disclosed by the
Company on August 23, 2023 and December 1, 2023 on CNINF.
4. Revision of the Company's internal system matters
The 16th Meeting of the 10th Board of Directors and the 3rd Extraordinary General Meeting in 2023 reviewed and approved the
Proposal on Amending the Articles of Association, Proposal on Amending the Rules of Procedure of the General Meeting, Proposal on
Amending the Rules of Procedure of the Board of Directors, Proposal on Amending the Working System of Independent Directors,
and Proposal on Amending the Related Transaction Management System. For details, please refer to the relevant announcements
disclosed by the Company on December 13, 2023 and December 29, 2023 on CNINF.
XVII. Material matters of the Company's subsidiaries
Not applicable
59
Section 7 Changes in Shares and Shareholders
I. Changes in shares
1. Changes in shares
Unit: shares
Before this change Increase/decrease in this change (+, -) After this change
Conve
Bon
rsion
Proporti New us Proporti
Quantity from Other Subtotal Quantity
on issue issu on
reserv
e
es
I. Shares
with selling 8,227,310 1.97% 0 0 0 -5,497,450 -5,497,450 2,729,860 0.66%
restrictions
1. State
shareholdin 0 0.00% 0 0 0 0 0 0 0.00%
g
2.
State-owned
legal person 0 0.00% 0 0 0 0 0 0 0.00%
shareholdin
g
3. Other
domestic
8,227,310 1.97% 0 0 0 -5,497,450 -5,497,450 2,729,860 0.66%
shareholdin
g
Includi
ng: shares
held by
0 0.00% 0 0 0 0 0 0 0.00%
domestic
legal
persons
Domes
tic natural
person 8,227,310 1.97% 0 0 0 -5,497,450 -5,497,450 2,729,860 0.66%
shareholdin
g
4.
Foreign
0 0.00% 0 0 0 0 0 0 0.00%
shareholdin
g
Includi
ng: shares
held by
0 0.00% 0 0 0 0 0 0 0.00%
overseas
legal
persons
Overse
0 0.00% 0 0 0 0 0 0 0.00%
as natural
60
person
shareholdin
g
II. Shares
without
409,400,650 98.03% 0 0 0 3,089,460 3,089,460 412,490,110 99.34%
selling
restrictions
1.
RMB-deno
minated 359,463,953 86.07% 0 0 0 3,089,460 3,089,460 362,553,413 87.31%
ordinary
shares
2.
Domesticall
y listed 49,936,697 11.96% 0 0 0 0 0 49,936,697 12.03%
foreign
shares
3.
Foreign
0 0.00% 0 0 0 0 0 0 0.00%
shares listed
overseas
4. Other 0 0.00% 0 0 0 0 0 0 0.00%
III. Total
100.00 100.00
number of 417,627,960 0 0 0 -2,407,990 -2,407,990 415,219,970
% %
shares
Reasons for changes in shares
1. During the reporting period, the unlocking conditions for the third unlocking period of the Company's restricted share incentive
scheme (Phase I) and the first unlocking period of the restricted share incentive scheme (Phase II) have been satisfied, and the
corresponding unlocked shares have been listed and circulated, resulting in a decrease of 3,436,710 shares with selling restrictions
(with a corresponding increase in shares without selling restrictions);
2. During the reporting period, due to the Company's failure to meet the company-level performance conditions for unlocking of
restricted shares during the second unlocking period of the restricted share incentive scheme (Phase II), the Company repurchased and
cancelled 2,201,130 restricted A share that did not meet the unlocking conditions in accordance with regulations; Due to the
resignation of 7 former incentive recipients, the Company repurchased and cancelled 206,860 A-share restricted shares held by them in
aggregate in accordance with regulations, resulting in a total reduction of 2,407,990 shares with selling restrictions (with a
corresponding decrease in the total share capital of the Company);
3. During the reporting period, due to the adjustment of the transfer limit for Senior Executives, 347,250 shares with selling
restrictions were added (a corresponding decrease in shares without selling restrictions).
Due to the above reasons, at the end of the reporting period, the total number of shares with selling restrictions of the Company
decreased by 5,497,450; the total number of shares without selling restrictions increased by 3,089,460; and the total number of shares
decreased by 2,407,990.
Approval status of share changes
61
Approved by the 10th Meeting of the 10th Board of Directors of the Company, the Board of Directors, in accordance with the
authorization of the 1st Extraordinary General Meeting in 2019 and the 1st Extraordinary General Meeting in 2021, has processed the
lifting of restrictions on 3,436,710 A shares that meet the conditions for lifting restrictions.
Approved by the 2022 Annual General Meeting, the 1st Extraordinary General Meeting in 2023, and the 2nd Extraordinary
General Meeting in 2023, the Company has processed the repurchase and cancellation of 2,407,990 restricted A-shares.
Transfer situation of share changes
During the reporting period, the transfer of changes in the Company's shares, as audited and confirmed by the Shenzhen Branch
of China Securities Depository and Clearing Corporation Limited, were as follows:
on July 6, 2023, the repurchase and cancellation of 2,347,870 restricted A shares were completed;
on July 31, 2023, the repurchase and cancellation of 13,360 restricted A shares were completed;
on November 3, 2023, the repurchase and cancellation of 46,760 restricted A shares were completed.
Impact of share changes on financial indicators such as basic earnings per share, diluted earnings per share, and net assets per share
attributable to common shareholders of the Company for the most recent year and period
Earnings per share
Weighted average ROE (%)
Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share)
2023 2022 2023 2022 2023 2022
10.28% 8.68% 0.8082 0.6398 0.8075 0.6398
Other disclosures deemed necessary by the Company or required by securities regulatory authorities
Not applicable
2. Changes in restricted shares
Unit: shares
Increase in
Number of Number of
Number of restricted
Name of restricted restricted Reason for
restricted shares
Sharehold shares lifted shares at the restricted Date of lifting sales restrictions
shares at the during the
ers during the end of the sales
beginning of period
period period
the period (note)
Locked
1. On January 31, 2023, 76,670
shares held
restricted shares under the incentive
by Senior
scheme were unlocked;
Executives
2. The remaining restricted shares
and
Li Ming 214,250 22,500 76,670 160,080 will be unlocked in accordance with
restricted
the conditions for locked shares held
shares that
by Senior Executives and the
have not yet
Company's equity incentive
been
management measures.
unlocked
Locked 1. On January 31, 2023, 76,670
Pan Bo 214,220 22,500 76,670 160,050
shares held restricted shares under the incentive
62
by Senior scheme were unlocked;
Executives 2. The remaining restricted shares
and will be unlocked in accordance with
restricted the conditions for locked shares held
shares that by Senior Executives and the
have not yet Company's equity incentive
been management measures.
unlocked
Locked
1. On January 31, 2023, 76,670
shares held
restricted shares under the incentive
by Senior
scheme were unlocked;
Executives
2. The remaining restricted shares
Lu and
214,220 22,500 76,670 160,050 will be unlocked in accordance with
Wanjun restricted
the conditions for locked shares held
shares that
by Senior Executives and the
have not yet
Company's equity incentive
been
management measures.
unlocked
Locked
1. On January 31, 2023, 76,670
shares held
restricted shares under the incentive
by Senior
scheme were unlocked;
Executives
2. The remaining restricted shares
Liu and
214,220 22,500 76,670 160,050 will be unlocked in accordance with
Xiaoming restricted
the conditions for locked shares held
shares that
by Senior Executives and the
have not yet
Company's equity incentive
been
management measures.
unlocked
Locked
1. On January 31, 2023, 69,990
shares held
restricted shares under the incentive
by Senior
scheme were unlocked;
Executives
2. The remaining restricted shares
Tang and
170,040 7,500 69,990 107,550 will be unlocked in accordance with
Haiyuan restricted
the conditions for locked shares held
shares that
by Senior Executives and the
have not yet
Company's equity incentive
been
management measures.
unlocked
1. On January 31, 2023, 93,340
restricted shares under the incentive
Unlocked scheme were unlocked;
Chen
213,400 -59,940 93,340 60,120 restricted 2. The remaining restricted shares
Libin
shares shall be unlocked in accordance with
the Company's equity incentive
management measures.
1. On January 31, 2023, 60,000
restricted shares under the incentive
Unlocked scheme were unlocked;
Bao
140,040 -39,960 60,000 40,080 restricted 2. The remaining restricted shares
Xianyong
shares shall be unlocked in accordance with
the Company's equity incentive
management measures.
1. On January 31, 2023, 60,000
restricted shares under the incentive
Unlocked
scheme were unlocked;
Sun Lei 140,040 -39,960 60,000 40,080 restricted
2. The remaining restricted shares
shares
shall be unlocked in accordance with
the Company's equity incentive
63
management measures.
1. On January 31, 2023, 60,000
restricted shares under the incentive
Unlocked scheme were unlocked;
Sheng Li 140,040 -39,960 60,000 40,080 restricted 2. The remaining restricted shares
shares shall be unlocked in accordance with
the Company's equity incentive
management measures.
Locked
shares held 1. On January 31, 2023, 2,786,700
by outgoing restricted shares under the incentive
Senior scheme were unlocked;
Other Executives 2. The remaining restricted shares
sharehold 6,566,840 -1,978,420 2,786,700 1,801,720 and shall be unlocked in accordance with
ers restricted the conditions for locked shares held
shares that by outgoing Senior Executives and
have not yet the Company's equity incentive
been management measures.
unlocked
Total 8,227,310 -2,060,740 3,436,710 2,729,860 -- --
Note: the increase in the number of restricted shares in the period has deducted the restricted A share that were repurchased and
cancelled due to the failure to meet the unlocking conditions during the second unlocking period of the Company's restricted share
incentive scheme (Phase II).
II. Securities issuance and listing
1. Securities issuance (excluding preferred shares) during the reporting
period
Not applicable
2. Changes in the total number of shares and shareholder structure of
the Company, as well as changes in the Company's asset and liability
structure
As described in the "Reasons for changes in shares" section.
3. Existing internal employee shares
Not applicable
III. Shareholders and actual controllers
1. Number of shareholders and their holdings
Unit: shares
Total Total number of
Total number of preferred
Total number number of preferred
shareholders with restored
of common common shareholders with
voting rights at the end of
shareholders sharehold restored voting
28,145 28,183 0 the previous month prior 0
at the end of ers at the rights at the end
to the disclosure date of
the reporting end of the of the reporting
the annual report (if any)
period previous period (if any)
(see Note 8)
month (see Note 8)
64
prior to
the
disclosure
date of the
annual
report
Shareholdings of shareholders holding more than 5% or the top 10 shareholders (excluding shares lent through refinancing)
Number Situations of
of pledge, marking
Number of shares Number of or freezing
shares held at Changes during held shares held
Name of Nature of Holding
the end of the the reporting with with unlimited
Shareholders shareholders ratio
reporting period limited sales Quanti
period sales conditions Share
ty
conditio status
ns
AVIC
Not
International State-owned
39.25% 162,977,327 0 0 162,977,327 applicab 0
Holding legal person
le
Limited
Domestic Not
#Wu Jilin natural 4.35% 18,043,627 98,013 0 18,043,627 applicab 0
persons le
Domestic Not
#Xu Guoliang natural 1.74% 7,242,768 1,978,000 0 7,242,768 applicab 0
persons le
Domestic Not
Qiu Hong natural 0.59% 2,470,000 100,000 0 2,470,000 applicab 0
persons le
Domestic Not
#Zhu Rui natural 0.34% 1,407,100 -295,500 0 1,407,100 applicab 0
persons le
CITIC
Not
Securities State-owned
0.33% 1,368,078 1,248,109 0 1,368,078 applicab 0
Company legal person
le
Limited
Domestic Not
#Qu Yongjie natural 0.31% 1,286,800 20,000 0 1,286,800 applicab 0
persons le
Industrial and
Commercial
Bank of China
Not
Ltd. - GF CSI
Other 0.29% 1,212,700 1,212,700 0 1,212,700 applicab 0
Guoxin
le
Central-SOEs
Shareholder
Return ETF
Domestic Not
Chen Hao natural 0.27% 1,101,643 12,700 0 1,101,643 applicab 0
persons le
China
Construction
Bank Not
Corporation - Other 0.26% 1,071,900 1,071,900 0 1,071,900 applicab 0
China le
Universal CSI
Guoxin
65
Central-SOEs
Shareholder
Return ETF
Situation where strategic
investors or general legal
persons become the top 10
Not applicable
shareholders due to the
placement of new shares (if
any) (see Note 3)
Explanation of related
relationships or concerted The Company is unaware of whether the 10 shareholders mentioned above have any related
actions of the above relationships or are concerted actors.
shareholders
Explanation of the
The shareholder AVIC International Holding Limited had authorized representatives to exercise
above-mentioned
voting rights on behalf of the company at the 2022 Annual General Meeting, the 1st Extraordinary
shareholders' involvement in
General Meeting of 2023, the 2nd Extraordinary General Meeting of 2023, and the 3rd Extraordinary
the delegation/entrustment of
General Meeting of 2023. The number of representative shares was 162,977,327, and the voting
voting rights or the waiver of
results were detailed in the relevant announcements disclosed by the Company on CNINF.
voting rights
Special explanation for the The number of common shares held by the Company's B-share special repurchase account, "FIYTA
existence of special Precision Technology Co., Ltd. Special Repurchase Securities Account", at the end of the reporting
repurchase accounts among period, is 9,355,763 shares, and the holding ratio is 2.25%, mainly due to the Company's
the top 10 shareholders (if implementation of B-share repurchase. According to regulations, the special repurchase account is
any) (see Note 10) not included in the list of the top 10 shareholders.
Holdings of the top 10 shareholders without selling restrictions
Number of shares held without selling Types of shares
Name of Shareholders restrictions at the end of the reporting
period Types of shares Quantity
Renminbi
AVIC International Holding Limited 162,977,327 162,977,327
common shares
Renminbi
#Wu Jilin 18,043,627 18,043,627
common shares
Renminbi
#Xu Guoliang 7,242,768 7,242,768
common shares
Renminbi
Qiu Hong 2,470,000 2,470,000
common shares
Renminbi
#Zhu Rui 1,407,100 1,407,100
common shares
Renminbi
CITIC Securities Company Limited 1,368,078 1,368,078
common shares
Renminbi
#Qu Yongjie 1,286,800 1,286,800
common shares
Industrial and Commercial Bank of China Ltd. - GF Renminbi
1,212,700 1,212,700
CSI Guoxin Central-SOEs Shareholder Return ETF common shares
Renminbi
Chen Hao 1,101,643 1,101,643
common shares
China Construction Bank Corporation - China
Renminbi
Universal CSI Guoxin Central-SOEs Shareholder 1,071,900 1,071,900
common shares
Return ETF
Explanation of the related relationships or
concerted actions among the top 10 shareholders of
The Company is unaware of whether the 10 shareholders mentioned above
unrestricted shares, as well as between the top 10
have any related relationships or are concerted actors.
shareholders of unrestricted shares and the top 10
shareholders
Explanation of the participation of the top 10 1. In addition to holding 10,597,777 shares through the ordinary securities
66
common shareholders in the margin trading and account, shareholder Wu Jilin also holds 7,445,850 shares through the
securities lending business (if any) (see Note 4) customer credit trading guarantee securities account of China CICC Wealth
Management Securities Company Limited, totaling 18,043,627 shares;
2. In addition to holding 6,640,868 shares through the ordinary securities
account, shareholder Xu Guoliang also holds 601,900 shares through the
customer credit trading guarantee securities account of Guosen Securities Co.,
Ltd., totaling 7,242,768 shares;
3. In addition to holding 62,000 shares through the ordinary securities account,
shareholder Zhu Rui also holds 1,345,100 shares through the customer credit
trading guarantee securities account of First Capital Securities Co., Ltd.,
totaling 1,407,100 shares;
4. In addition to holding 42,800 shares through the ordinary securities account,
shareholder Qu Yongjie also holds 1,244,000 shares through the customer
credit trading guarantee securities account of Shanxi Securities Company
Limited, totaling 1,286,800 shares.
Top 10 shareholders participating in the lending of shares through refinancing business
Not applicable
Changes in the top 10 shareholders compared to the previous period
Unit: shares
Changes in the top 10 shareholders compared to the end of the previous period
Number of shares held in the
New Number of shares lent through ordinary account and credit account
additions/exits refinancing and not yet repaid of shareholders, as well as the shares
Name of Shareholders (Full Name) during this at the end of the period lent through refinancing and not yet
reporting repaid at the end of the period
period Total Proportion to the Proportion to the
Total quantity
quantity total share capital total share capital
CITIC Securities Company Limited New addition 0 0.00% 1,368,078 0.33%
Industrial and Commercial Bank of China
Ltd. - GF CSI Guoxin Central-SOEs New addition 0 0.00% 1,212,700 0.29%
Shareholder Return ETF
China Construction Bank Corporation -
China Universal CSI Guoxin New addition 0 0.00% 1,071,900 0.26%
Central-SOEs Shareholder Return ETF
Li Shuyuan Exit 0 0.00% 811,500 0.20%
Zhang Mingrong Exit 0 0.00% 0 0.00%
Lv Shaowen Exit 0 0.00% 0 0.00%
Whether the top 10 common shareholders and the top 10 common shareholders without selling restrictions engaged in agreed
repurchase transactions during the reporting period
No
2. Information about the controlling shareholder
Nature: central state-owned holding
Type: legal person
Legal
Name representative/Person in Establishment date Organization code Main businesses
charge of the unit
Investment in industrial
AVIC International development (specific
Li Bin June 20, 1997 91440300279351229A
Holding Limited projects to be declared
separately); Domestic
67
commercial and
material supply and
marketing industries
(excluding exclusive,
controlled, and sold
goods); Engaging in
import and export
business (excluding
projects prohibited by
laws, administrative
regulations, and
decisions of the State
Council, and restricted
projects shall obtain
permission before
operation).
Equity situation of other
domestic and foreign
listed companies
controlled and AVIC INTL holds 11.86% of the equity in Tianma Microelectronics Co., Ltd. (STM 000050) and 63.97%
participated in by the of the equity in Shennan Circuit Co., Ltd. (SNDL 002916).
controlling shareholder
during the reporting
period
Changes in the controlling shareholder during the reporting period
Not applicable
3. Actual controller and its concerted actor
Nature: central state-owned asset management agency
Legal
Name representative/Person in Establishment date Organization code Main businesses
charge of the unit
Operating state-owned assets within
the scope authorized by the State
Council; Research, design,
development, testing, production,
sales, maintenance, support, and
service of military aircraft and
engines, guided weapons, military
gas turbines, weapon equipment
supporting systems and products;
Aviation
Investment and management in
Industry
industries such as finance, leasing,
Corporation Tan Ruisong November 6, 2008 91110000710935732K
general aviation services,
of China,
transportation, healthcare,
Ltd.
engineering survey and design,
engineering contracting and
construction, and real estate
development; Design, R&D, testing,
production, sales, and maintenance
services for civil aircraft and
engines, onboard equipment and
systems, gas turbines, automobiles
and motorcycles and engines
68
(including components),
refrigeration equipment, electronic
products, environmental protection
equipment, and new energy
equipment; Equipment leasing;
Engineering survey and design;
Engineering contracting and
construction; Real estate
development and operation;
Technology transfer and technical
services related to the above
businesses; Import and export
business; Technological
development and sales of ships;
Development of engineering
equipment technology;
Technological development of new
energy products. (Enterprises shall
independently choose their business
projects and carry out business
activities in accordance with the
law. For projects that require
approval according to the law, they
shall carry out business activities in
accordance with the approved
content after obtaining approval
from relevant departments. They
shall not engage in business
activities prohibited or restricted by
the industrial policies of this city.)
In addition to holding equity in the Company, AVIC directly or indirectly holds and controls the shares of domestic and
foreign listed companies, including:
1. Tianma Microelectronics Co., Ltd. (SZ. 00050), with a holding ratio of 28%;
2. AVIC Xi'an Aircraft Industry Group Company Ltd. (SZ. 000768), with a holding ratio of 55%;
3. AVIC Jonhon Optronic Technology Co., Ltd. (SZ.002179), with a holding ratio of 40%;
4. Chengfei Integration Technology Co., Ltd. (SZ.002190), with a holding ratio of 51%;
5. Rainbow Digital Commercial Co., Ltd. (SZ.002419), with a holding ratio of 45%;
Equity
6. AVIC Zhonghang Electronic Measuring Instruments Co., Ltd. (SZ.300114), with a holding ratio of 54%;
situation of
7. AVICOPTER PLC (SH.600038), with a holding ratio of 50%;
other
8. Jiangxi Hongdu Aviation Industry Co., Ltd. (SH.600316), with a holding ratio of 48%;
domestic
9. AVIC Airborne Systems Co., Ltd. (SH.600372), with a holding ratio of 56%;
and foreign
10. Guizhou Guihang Automotive Components Co., Ltd. (SH.600523), with a holding ratio of 46%;
listed
11. AVIC Industry-Finance Holdings Co., Ltd. (SH.600705), with a holding ratio of 51%;
companies
12. AVIC Shenyang Aircraft Company Limited (SH.600760), with a holding ratio of 69%;
controlled
13. AVIC Heavy Machinery Co., Ltd. (SH.600765), with a holding ratio of 37%;
by the actual
14. Baosheng Science & Technology Innovation Co., Ltd. (SH.600973), with a holding ratio of 40%;
controller
15. AVIC Aviation High-Technology Co., Ltd. (SH.600862), with a holding ratio of 45%;
during the
16. Shennan Circuit Co., Ltd. (002916), with a holding ratio of 64%;
reporting
17. Hefei Jianghang Aircraft Equipment Co., Ltd. (SH.688586), with a holding ratio of 56%;
period
18. AVIC (Chengdu) UAS Co., Ltd. (688297. SH), with a holding ratio of 54%;
19. AVIC Forstar S&T Co., Ltd. (BJ.835640), with a holding ratio of 47%;
20. Nexteer Automotive Group Ltd. (HK.1316), with a holding ratio of 44%;
21. AVIChina Industry and Technology Co., Ltd. (HK. 2357), with a holding ratio of 60%;
22. Continental Aerospace Technologies Holding Limited (HK. 0232), with a holding ratio of 46%;
23. KHD Humboldt Wedag International AG (KWG: GR), with a holding ratio of 89%;
24. FACC AG (AT00000 FACC), with a holding ratio of 55%.
Type: legal person
69
Changes in actual controller during the reporting period
Not applicable
Block diagram of property rights and control relationship between the Company and the actual controller
The actual controller controls the Company through trust or other asset management methods
Not applicable
4. The cumulative number of pledged shares held by the controlling
shareholder or the largest shareholder of the Company and their
concerted actors accounts for 80% of the shares they hold in the
Company
Not applicable
5. Other corporate shareholders holding more than 10% of the shares
Not applicable
6. Restricted reduction of shares held by the controlling shareholder,
actual controller, restructuring parties, and other committed entities
Not applicable
IV. Specific implementation of share repurchase during the reporting period
Progress in the implementation of share repurchase
Proposed Proportion of
Number of
Disclosure Proportion to repurchase Proposed Repurchased repurchased
shares to be Purpose of
date of the the total share amount repurchase quantity shares to the
repurchased repurchase
plan capital (RMB ten period (shares) underlying
(shares)
thousand) shares
70
involved in
the equity
incentive plan
(if any)
No less than Cancellation
RMB 50 and reduction
6.66 million April 27,
March 18, 1.59% to million and of registered
to 13.32 2023 to April 9,355,763
2023 3.19% no more than capital in
million shares 26, 2024
RMB 100 accordance
million with the law
Progress in the implementation of reducing and repurchasing shares through centralized bidding trading
Not applicable
Section 8 Information Related to Preferred Shares
Not applicable
Section 9 Bond Related Information
Not applicable
71
FIYTA Precision Technology Co., Ltd.
Independent Auditor’s Report
D.H.S.Z. [2024]0011000766
Da Hua Certified Public Accountants（Special General Partnership）
72
FIYTA Precision Technology Co., Ltd.
Independent Auditor’s Report and Financial Statements
(1 January 2023 to 31 December 2023)
Content Page
I. Independent Auditor’s Report 1-7
II. Audited Financial Statements
Consolidated Balance Sheet 1-2
Consolidated Statement of Comprehensive 3
Income
Consolidated Cash Flow Statement 4
Consolidated Statement of Changes in Equity 5-6
Parent Company’s Balance Sheet 7-8
Parent Company’s Statement of Comprehensive 9
Income
Parent Company’s Cash Flow Statement 10
Parent Company’s Statement of Changes in 11-12
Equity
Notes to Financial Statements 13-121
Da Hua Certified Public Accountants (Special General Partnership)
12th Floor, Building 7, No. 16, Xisihuan Middle Road, Haidian District, Beijing [100039]
Tel: 86 (10) 5835 0011 Fax: 86 (10) 5835 0006
www.dahua-cpa.com
Independent Auditor ’s Report
D.H.S.Z.[2024] 0011000766
To the Shareholders of FIYTA Precision Technology Co., Ltd.:
I.Audit Opinion
We have audited the accompanying financial statements of FIYTA Precision
Technology Co., Ltd. (herein after “FIYTA Ltd.” or the Company) , which comprise
the consolidated and the parent company’s balance sheet as at 31 December 2023, the
consolidated and the parent company’s statement of comprehensive income, the
consolidated and the parent company’s cash flow statements and the consolidated and
the parent company’s statement of changes in equity for the year then ended, and
notes to the financial statements.
In our opinion, the accompanying financial statements present in all material
respects in accordance with the requirements of Accounting Standards for Business
Enterprises, and fairly reflect FIYTA Ltd.’s financial position at 31 December 2023
and the financial performance and cash flows for the year then ended.
II.Basis for Audit Opinion
We conducted our audit in accordance with CICPA Standards on Auditing
(“CSAs”) . In ‘Certified Public Accountant’s Responsibilities for the Audit of
Financial Statements’ of this report, our responsibilities under these standards are
described. Those standards require that we comply with CICPA professional ethical
requirements, that we are independent from FIYTA Ltd. and have fulfilled all other
ethical obligations. We believe that we have obtained sufficient and appropriate audit
evidence as basis of for our opinion.
III.Key Audit Matters
Independent Auditor’s Report - Page 1
D.H.S.Z.[2023]000189
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current period. These
matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
We have determined the following key audit matters that need to be
communicated in audit report.
(I) Existence of inventory and its net realizable value
1. Description
As at 31 December 2023, the book balance, provision for decline in value, and
carrying amount of inventory were RMB2,172.58 million, RMB71.91 million and
RMB2,100.67 million respectively. The carrying amount of inventory accounts for
49.97% of the total assets of the Company.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and other
branded watches, the main inventory of FIYTA Ltd are finished watches and watch
components. The inventories are distributed in stores, regional warehouses, resellers’
warehouses and the Company’s warehouses which caused difficulty in inventory
physical observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net
realizable value (NRV) at balance sheet date. Where the cost of an inventory exceeds
its NRV, the difference is recognized as provision for decline in value. The
determination of NRV involves significant judgment and estimates by the
Management.
Inventory value is significant to the Company’s assets and it requires significant
judgement by the Management, as a result, we identified existence of inventory and
its net realizable value as key audit matters.
2. How our audit addressed the key audit matter
Major audit procedures we have conducted include:
(i) Understanding, evaluating and testing the design and operating effectiveness
of internal controls of procurement and payment, production and storage, and the
provision for decline in value of inventory;
(ii) Using the work of experts to conduct IT audit to information system and
evaluating the authenticity and accuracy of business data which related to financial
Independent Auditor’s Report - Page 2
D.H.S.Z.[2023]000189
statements.
(iii) Understanding and evaluating the appropriateness of the Company’s policy
in provision for decline in value;
(iv) Understanding and inquiring the locations of inventory storage,
measurement method of inventory so as to determining the scope of inventory
physical observation;
(v) Discussing physical inventory count status with the Management and
attending the physical inventory count and conducting observation and test count on
site to check the quantity of the inventories and observe their condition.
(vi) Obtaining the ageing report of inventory and taking into consideration of
inventory condition in order to perform analytical review on the ageing as well as
analyze the reasonableness of provision for decline in value;
(vii) Reviewing and evaluating the appropriateness of significant estimates made
by the Management in determining the NRV of inventory;
(viii) Obtaining the calculation of provision for decline in value of inventory,
reviewing whether the provision was made in compliance with relevant accounting
policies and performing recalculation of provision. Checking the movements of prior
year’s provision and analyzing whether the provision was adequately accrued in prior
period.
(ix) Tracing samples of large purchases in current period to their corresponding
contracts and tax invoices, and inspecting their purchase requisition form and goods
receipt notes.
Based on audit work conducted above, we believe that the inventory exists and
the measurement is reasonable stated according to the Company’s policies.
(II) Revenue recognition
1. Description
In 2023, the Company’s income from main business was RMB4,553.71 million.
The Company’s revenue mainly comes from sales of FIYTA brand watches and
distribution of other branded watches. Except for small amount of sales by direct sales
and consignment sales of FIYTA brand watches, most of the sales of FIYTA brand
watches and other branded watches are sold through shops in department store and
on-line shops. Refer to Note III 32 for accounting policy relating to revenue
recognition.
Independent Auditor’s Report - Page 3
D.H.S.Z.[2023]000189
Operating revenue represents major line item in income statement and is main
source of profit, the accuracy and completeness of revenue recognition have
significant impact to the Company’s profit, as a result, we identified revenue
recognition as a key audit matter.
2. How our audit addressed the key audit matter
Major audit procedures we have conducted include:
(i) Understanding, evaluating and testing the design and operating effectiveness
of internal controls relating to revenue recognition;
(ii) Using the work of experts to conduct IT audit to information system and
evaluating the authenticity and accuracy of business data which related to financial
statements.
(iii) Obtaining and understanding accounting policies relating to revenue
recognition, and reviewing and evaluating whether the point in time of control right
transfer, measurement of transaction price and accounting for special transactions are
complied with the accounting standards;
(iv) Selecting samples from current year’s transaction records, and tracing them
to supporting documents such as contract, tax invoice and goods dispatch note (if
applicable) and courier waybill (if applicable) ;
(v) In connection with audit of accounts receivable, selecting major customers
and confirming corresponding sales in current year and year-end balance, and
procedures were implemented to check for post-dated returns;
(vi) Conducting cut-off test to revenue recognized before and after the balance
sheet date by selecting samples to check supporting documents such as contract, tax
invoice and goods dispatch note (if applicable) and courier waybill (if applicable) to
evaluate whether the revenue was recorded in appropriate accounting period.
Based on audit work conducted above, we believe that the Company’s revenue
recognition is in conformity to its revenue recognition policy.
IV.Other Information
The management of FIYTA Ltd (the “Management”) are responsible for the
Other Information. The Other Information comprises all of the information included
in the Company’s annual report other than the financial statements and our auditors’
report thereon.
Our opinion expressed on the financial statements does not cover the Other
Independent Auditor’s Report - Page 4
D.H.S.Z.[2023]000189
Information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to
read the Other Information and, in doing so, consider whether the Other Information
is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this Other Information, we are required to report that fact. We have
nothing to report in this regard.
V.Responsibilities of the Management and those Charged with
Governance for the Financial Statements
The Management of the Company is responsible for the preparation of the
financial statements that give a fair view in accordance with Accounting Standards for
Business Enterprises and for the design, implementation and maintenance of such
internal controls as the Management determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Management is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless the Management either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Those who charged with governance is responsible for overseeing the
Company’s financial reporting process.
VI.Auditors’ Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with China Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be
Independent Auditor’s Report - Page 5
D.H.S.Z.[2023]000189
expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We
also:
1. Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
2. Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Management.
4. Conclude on the appropriateness of the Management’s use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required, according to China Standards on
Auditing, to draw attention in our auditors’ report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’
report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within FIYTA Ltd to express an
opinion on the financial statements. We are responsible for the direction, supervision
Independent Auditor’s Report - Page 6
D.H.S.Z.[2023]000189
and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Da Hua Certified Public Accountants
CICPA:
(Special General Partnership)
Engagement partner Long Jiao
Beijing, China CICPA:
Wang Dong
12 March 2024
Independent Auditor’s Report - Page 7
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
II. Audited Financial Statements
Consolidated Balance Sheet
As at 31 December 2023
Prepared by: FIYTA Precision Technology (Unless otherwise indicated, the currency is
Co., Ltd. expressed in RMB)
Note Closing
Assets Closing Balance of prior period
V Balance
Current assets:
504,629,153.7
Monetary funds note 1 313,747,463.64
1
Financial assets held for trading
Derivative financial assets
Notes receivable note 2 18,268,972.37 32,214,912.10
323,142,761.6
Accounts receivable note 3 305,290,959.68
4
Accounts receivable financing
Prepayments note 4 6,571,239.98 8,039,794.97
Other receivables note 5 57,725,792.00 56,918,019.48
2,100,666,175.
Inventories note 6 2,141,320,373.67
28
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets note 7 72,249,391.81 66,339,505.32
3,083,253,486.
Total current assets 2,923,871,028.86
79
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments note 8 51,862,607.30 58,182,086.90
Investment in other equity instruments note 9 85,000.00
Other non-current financial assets
note 360,255,832.1
Investment properties 374,979,494.71
10 4
note 355,785,354.6
Fixed assets 364,628,765.17
11 8
Construction in progress
Productive biological assets
Oil and gas assets
note 109,452,481.6
Right-of-use assets 110,330,512.03
12 4
note
Intangible assets 31,664,380.77 33,200,218.63
13
Development expenditure
Goodwill
note 122,324,355.1
Long-term deferred expenses 144,488,452.18
14 3
note
Deferred tax assets 80,227,771.46 95,784,611.94
15
note
Other non-current assets 9,434,627.17 11,593,741.57
16
1,121,007,410.
Total non-current assets 1,193,272,883.13
29
4,204,260,897.
Total assets 4,117,143,911.99
08
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 1
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Consolidated Balance Sheet (Continued)
As at 31 December 2023
Prepared by: FIYTA Precision Technology Co., (Unless otherwise indicated, the currency is
Ltd. expressed in RMB)
Note
Liability and Equity Closing Balance Closing Balance of prior period
V
Current liabilities:
note
Short-term borrowings 250,187,763.87 290,237,111.11
17
Financial liabilities held for trading
Derivative financial liabilities
note
Notes payable 2,000,600.00
18
note
Accounts payable 173,825,907.71 170,589,456.67
19
note
Payments received in advance 10,267,758.31 16,960,128.83
20
note
Contract liabilities 12,286,243.62 16,844,437.47
21
note
Employee benefits payable 120,084,810.60 136,587,939.38
22
note
Tax payables 64,188,161.31 60,770,168.30
23
note
Other payables 121,937,801.07 165,060,122.58
24
Held-for-sale liabilities
note
Current portion of non-current liabilities 66,399,004.20 71,546,316.16
25
note
Other current liabilities 1,589,635.30 1,686,806.01
26
Total current liabilities 820,767,085.99 932,283,086.51
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
Including: Perpetual debt
note
Lease liabilities 43,526,352.52 41,642,561.58
27
Long-term payables
Long-term employee benefits payable
Provisions
note
Deferred income 952,785.69 1,295,926.80
28
note
Deferred tax liabilities 5,208,920.69 5,498,844.95
15
Other non-current liabilities
Total non-current liabilities 49,688,058.90 48,437,333.33
Total liabilities 870,455,144.89 980,720,419.84
Equity:
note
Share capital 415,219,970.00 417,627,960.00
29
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
note
Capital reserves 990,159,033.17 1,007,086,643.48
30
note
Less: Treasury stock 78,645,532.23 50,759,806.16
31
note
Other comprehensive income 19,325,335.93 5,739,589.89
32
note
Special reserves 3,223,158.06 2,012,064.91
33
note
Surplus reserve 275,010,401.50 275,010,401.50
34
note
Retained earnings 1,709,513,385.76 1,479,706,638.53
35
Equity attributable to parent company 3,333,805,752.19 3,136,423,492.15
Non-controlling interests
Total shareholders' equity 3,333,805,752.19 3,136,423,492.15
Total liabilities and shareholders' equity 4,204,260,897.08 4,117,143,911.99
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 2
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Items Note V Current Period Prior Period
1. Operating revenue note 36 4,569,690,002.99 4,354,096,880.36
Less: Operating costs note 36 2,905,463,474.81 2,738,972,791.11
Taxes and surcharges note 37 36,193,846.10 30,800,199.73
Selling expenses note 38 924,009,179.32 931,832,830.40
Administrative expenses note 39 205,359,277.24 219,014,508.52
Research and development expenses note 40 57,802,244.08 61,088,585.61
Finance expenses note 41 21,469,772.77 21,188,742.11
Including: Interest expenses 12,824,222.06 16,846,749.14
Interest income 5,722,586.39 3,923,999.48
Add: Other income note 42 11,435,373.78 18,648,210.06
Income from investments note 43 -5,819,479.60 3,026,481.59
Including: Investment income from associates and joint ventures -5,819,479.60 3,026,481.59
Derecognition of financial assets at amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses note 44 6,827,575.82 4,845,379.45
Impairment losses note 45 571,980.37 -37,625,482.96
Gains or losses from asset disposals note 46 685,868.57 91,925.06
2. Operating profit 433,093,527.61 340,185,736.08
Add: Non-operating income note 47 4,770,506.80 1,287,202.08
Less: Non-operating expenses note 48 859,770.10 2,351,266.31
3. Profit before tax 437,004,264.31 339,121,671.85
Less: Income tax note 49 103,826,161.94 72,440,220.01
4. Net profit 333,178,102.37 266,681,451.84
Including: Net profit realized before business combinations under common control
I. Net profit classified by going concern
Net profit from continuing operations（"-" for net loss) 333,178,102.37 266,681,451.84
Net profit from discontinuing operations（"-" for net loss)
II. Net profit classified by ownership
Net profit attributable to parent company 333,178,102.37 266,681,451.84
Net profit attributable to non-controlling interests
5. Other comprehensive income after tax 13,585,746.04 13,397,936.29
Other comprehensive income after tax attributable to parent company 13,585,746.04 13,397,936.29
I. Items of other comprehensive income that will not be reclassified to profit or loss
i. Changes in remeasurement of defined benefit plans
Other comprehensive income that cannot be transferred to profit or loss under the
ii.
equity method
iii. Changes in fair value of investments in equity instruments
iv. Changes in fair value of the Company's own credit risk
II. Items of other comprehensive income that will be reclassified to profit or loss 13,585,746.04 13,397,936.29
Other comprehensive income that can be transferred to profit or loss under the
i.
equity method
ii. Changes in fair value of other debt investments
iii. Amount of financial assets reclassified into other comprehensive income
iv. Provisions for credit impairment of other debt investments
v. The effective portion of gains or losses arising from cash flow hedging
vi. Translation differences arising from financial statements in foreign currencies 13,585,746.04 13,397,936.29
Other comprehensive income attributable to non-controlling interests after tax
6. Total comprehensive income 346,763,848.41 280,079,388.13
Total comprehensive income attributable to parent company 346,763,848.41 280,079,388.13
Total comprehensive income attributable to non-controlling interests
7. Earnings per share
I. Basic earnings per share 0.8082 0.6398
II. Diluted earnings per share 0.8075 0.6398
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 3
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Consolidated Cash Flows Statement
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Items Note V Current Period Prior Period
1. Cash flows from operating activities
Cash received from sales and services 5,025,883,440.00 4,910,473,741.41
Tax and surcharge refunds 1,937,203.71 7,793,409.24
Other cash receipts related to operating activities note 50 68,179,211.21 79,656,853.28
Total cash inflows from operating activities 5,095,999,854.92 4,997,924,003.93
Cash paid for goods and services 3,155,385,386.12 3,266,497,299.47
Cash paid to and for employees 624,495,756.20 659,058,385.84
Taxes and surcharges paid 296,079,135.93 272,103,882.56
Other cash payments related to operating activities note 50 387,638,088.69 324,035,659.54
Total cash outflows from operating activities 4,463,598,366.94 4,521,695,227.41
Net cash flows from operating activities 632,401,487.98 476,228,776.52
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income 500,000.00
Net proceeds from disposals of fixed assets, intangible assets and other
1,278,284.57 138,721.29
long-term assets
Net proceeds from disposal of subsidiaries and other business units
Other cash receipts related to investing activities
Total cash inflows from investing activities 1,778,284.57 138,721.29
Cash paid for fixed assets, intangible assets and other long-term assets 91,104,776.03 114,090,573.97
Cash paid for investments
Net cash paid for acquiring subsidiaries and other business units
Other cash payments related to investing activities
Total cash outflows from investing activities 91,104,776.03 114,090,573.97
Net cash flows from investing activities -89,326,491.46 -113,951,852.68
3. Cash flows from financing activities
Cash received from investments by others
Including: Cash received by subsidiaries from non-controlling investors
Cash received from borrowings 250,000,000.00 845,155,704.29
Other cash receipts related to other financing activities
Total cash inflows from financing activities 250,000,000.00 845,155,704.29
Cash repayments for debts 290,000,000.00 794,083,975.00
Cash paid for distribution of dividends and profit and for interest expenses 114,106,711.75 134,519,807.76
Including: Dividends or profit paid by subsidiaries to non-controlling
investors
Other cash payments related to financing activities note 50 198,056,975.77 177,477,740.46
Total cash outflows from financing activities 602,163,687.52 1,106,081,523.22
Net cash flows from financing activities -352,163,687.52 -260,925,818.93
4. Effect of changes in foreign exchange rates on cash and cash
-20,544.93 2,132,547.59
equivalents
5. Net increase in cash and cash equivalents 190,890,764.07 103,483,652.50
Add: Opening balance of cash and cash equivalents 313,738,389.64 210,254,737.14
6. Closing balance of cash and cash equivalents note 51 504,629,153.71 313,738,389.64
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 4
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
(Unless otherwise indicated, the currency is expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB)
Items Current Period
Equity attributable to parent company
Other Non-controllin
Less: Treasury Special Surplus Retained Total shareholders' equity
Share capital Capital reserves comprehensiv g interests
stock reserves reserves earnings
e income
417,627,960.0 1,007,086,643.4 2,012,064.9 275,010,401.5 1,479,706,638.5
1. Closing balance of prior year 50,759,806.16 5,739,589.89 3,136,423,492.15
0 8 1 0 3
Add: Increase/decrease due to changes
in accounting policies
Increase/decrease due to
corrections of errors in prior period
Business combination under
common control
Others
417,627,960.0 1,007,086,643.4 2,012,064.9 275,010,401.5 1,479,706,638.5
2. Opening balance of current year 50,759,806.16 5,739,589.89 3,136,423,492.15
0 8 1 0 3
1,211,093.1
3. Increase/decrease for current year -2,407,990.00 -16,927,610.31 27,885,726.07 13,585,746.04 229,806,747.23 197,382,260.04
5
I. Total comprehensive income 13,585,746.04 333,178,102.37 346,763,848.41
II. Owner's contributions to and
-2,407,990.00 -16,927,610.31 27,885,726.07 -47,221,326.38
withdrawals of capital
i. Common stock contributed/paid-in
64,340,669.42 -64,340,669.42
capital by shareholders/owners
ii. Capital contributed by other
equity instruments holders
iii. Share-based payments to -36,454,943.3
-2,407,990.00 -16,915,253.76 17,131,699.59
owners' equity 5
iv. Others -12,356.55 -12,356.55
III. Profits distribution -103,371,355.14 -103,371,355.14
i. Appropriation of surplus reserve
ii. Distribution to owners -103,371,355.14 -103,371,355.14
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to
paid-in capital
ii. Surplus reserve transferred to
paid-in capital
iii. Use of surplus reserve to cover
previous losses
iv. Changes in remeasurement of
defined benefit plans transferred to
retained earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
1,211,093.1
V. Special reserves 1,211,093.15
5
i. Appropriated during current 1,537,825.2
1,537,825.22
year 2
ii. Used during current year -326,732.07 -326,732.07
VI. Others
415,219,970.0 3,223,158.0 275,010,401.5 1,709,513,385.7
4. Closing balance of current year 990,159,033.17 78,645,532.23 19,325,335.93 3,333,805,752.19
0 6 0 6
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 5
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Items Prior Period
Equity attributable to parent company
Total
Less: Other Non-controlling
Special Surplus Retained shareholders'
Share capital Capital reserves Treasury comprehensive interests
reserves reserves earnings equity
stock income
1. Closing balance of prior year 426,051,015.00 1,040,908,194.13 60,585,678.92 -7,658,346.40 1,062,731.13 275,010,401.50 1,338,444,326.09 3,013,232,642.53
Add: Increase/decrease due to changes
in accounting policies
Increase/decrease due to
corrections of errors in prior period
Business combination under
common control
Others
2. Opening balance of current year 426,051,015.00 1,040,908,194.13 60,585,678.92 -7,658,346.40 1,062,731.13 275,010,401.50 1,338,444,326.09 3,013,232,642.53
3. Increase/decrease for current year -8,423,055.00 -33,821,550.65 -9,825,872.76 13,397,936.29 949,333.78 141,262,312.44 123,190,849.62
I. Total comprehensive income 13,397,936.29 266,681,451.84 280,079,388.13
II. Owner's contributions to and
-8,423,055.00 -33,821,550.65 -9,825,872.76 -32,418,732.89
withdrawals of capital
i. Common stock contributed/paid-in
-7,987,217.00 -42,265,614.88 -50,252,831.88
capital by shareholders/owners
ii. Capital contributed by other
equity instruments holders
iii. Share-based payments to
-435,838.00 8,459,107.40 -9,825,872.76 17,849,142.16
owners' equity
iv. Others -15,043.17 -15,043.17
III. Profits distribution -125,419,139.40 -125,419,139.40
i. Appropriation of surplus reserve
ii. Distribution to owners -125,419,139.40 -125,419,139.40
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to
paid-in capital
ii. Surplus reserve transferred to
paid-in capital
iii. Use of surplus reserve to cover
previous losses
iv. Changes in remeasurement of
defined benefit plans transferred to
retained earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
V. Special reserves 949,333.78 949,333.78
i. Appropriated during current year 1,246,390.69 1,246,390.69
ii. Used during current year -297,056.91 -297,056.91
VI. Others
4. Closing balance of current year 417,627,960.00 1,007,086,643.48 50,759,806.16 5,739,589.89 2,012,064.91 275,010,401.50 1,479,706,638.53 3,136,423,492.15
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 6
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Balance Sheet
As at 31 December 2023
Prepared by: FIYTA Precision Technology (Unless otherwise indicated, the currency is
Co., Ltd. expressed in RMB)
Note Closing
Assets Closing Balance of prior period
XVI Balance
Current assets:
308,230,255.3
Monetary funds 274,691,023.16
5
Financial assets held for trading
Derivative financial assets
Notes receivable
Accounts receivable note 1 1,822,916.61 603,216.03
Accounts receivable financing
Prepayments
696,328,419.8
Other receivables note 2 839,782,543.07
5
Inventories
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets 15,886,769.82 14,107,604.63
1,022,268,361
Total current assets 1,129,184,386.89
.63
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
1,633,041,716
Long-term equity investments note 3 1,552,310,486.50
.11
Investment in other equity instruments 85,000.00
Other non-current financial assets
293,695,692.6
Investment properties 305,676,084.09
8
207,209,890.9
Fixed assets 209,495,642.59
4
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 23,460,211.70 23,522,355.93
Development expenditure
Goodwill
Long-term deferred expenses 4,795,846.73 8,240,653.62
Deferred tax assets 640,783.05 1,904,597.73
Other non-current assets 710,807.49 2,051,932.75
2,163,554,948
Total non-current assets 2,103,286,753.21
.70
3,185,823,310
Total assets 3,232,471,140.10
.33
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 7
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Balance Sheet (Continued)
As at 31 December 2023
(Unless otherwise indicated, the currency is expressed
Prepared by: FIYTA Precision Technology Co., Ltd.
in RMB)
Note Closing
Liability and Equity Closing Balance of prior period
XVI Balance
Current liabilities:
250,187,763.8
Short-term borrowings 290,237,111.11
7
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable 2,285,657.88 1,048,201.41
Payments received in advance 10,267,758.31 16,960,128.83
Contract liabilities
Employee benefits payable 25,886,702.67 27,139,007.97
Tax payables 3,322,241.54 778,299.01
224,668,548.7
Other payables 299,198,966.56
7
Held-for-sale liabilities
Current portion of non-current
liabilities
Other current liabilities
516,618,673.0
Total current liabilities 635,361,714.89
4
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 952,785.69 1,295,926.80
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 952,785.69 1,295,926.80
517,571,458.7
Total liabilities 636,657,641.69
3
Equity:
415,219,970.0
Share capital 417,627,960.00
0
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
993,037,528.9
Capital reserves 1,010,917,776.19
8
Less: Treasury stock 78,645,532.23 50,759,806.16
Other comprehensive income
Special reserves
275,010,401.5
Surplus reserve 275,010,401.50
0
1,063,629,483.
Retained earnings 943,017,166.88
35
2,668,251,851.
Total owners' equity 2,595,813,498.41
60
3,185,823,310.
Total liabilities and owners' equity 3,232,471,140.10
33
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 8
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Statement of Comprehensive Income
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Note
Items Current Period Prior Period
XVI
1. Operating revenue note 4 180,874,926.74 155,284,801.05
Less: Operating costs note 4 49,729,440.87 41,765,441.70
Taxes and surcharges 7,815,174.54 5,984,017.16
Selling expenses 16,395,826.35 4,340,253.59
Administrative expenses 53,755,060.51 64,698,540.45
Research and development expenses 12,959,491.24 16,464,924.76
Finance expenses -947,061.34 -1,030,335.57
Including: Interest expenses 2,405,575.67 3,264,769.63
Interest income 4,460,371.04 3,699,364.22
Add: Other income 1,097,603.80 1,221,085.39
Income from investments note 5 192,180,520.40 243,622,178.29
Including: Investment income from associates
-5,819,479.60 3,026,481.59
and joint ventures
Derecognition of financial assets
at amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses -104,859.73 108,040.61
Impairment losses
Gains or losses from asset disposals 635,033.80 -14,615.44
2. Operating profit 234,975,292.84 267,998,647.81
Add: Non-operating income 8,037.20 191,981.02
Less: Non-operating expenses 312,375.33 21,262.34
3. Profit before tax 234,670,954.71 268,169,366.49
Less: Income tax 10,687,283.10 6,174,714.67
4. Net profit 223,983,671.61 261,994,651.82
Net profit from continuing operations（"-" for net loss) 223,983,671.61 261,994,651.82
Net profit from discontinuing operations（"-" for net loss)
5. Other comprehensive income after tax
I. Items of other comprehensive income that will not
be reclassified to profit or loss
Changes in remeasurement of defined benefit
i.
plans
Other comprehensive income that cannot be
ii
transferred to profit or loss under the equity
.
method
ii Changes in fair value of investments in equity
i. instruments
i
Changes in fair value of the Company's own credit
v
risk
.
II. Items of other comprehensive income that will be
reclassified to profit or loss
Other comprehensive income that can be
i. transferred to profit or loss under the equity
method
ii
Changes in fair value of other debt investments
.
ii Amount of financial assets reclassified into other
i. comprehensive income
i
Provisions for credit impairment of other debt
v
investments
.
v The effective portion of gains or losses arising
. from cash flow hedging
v Translation differences arising from financial
i. statements in foreign currencies
6. Total comprehensive income 223,983,671.61 261,994,651.82
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 9
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Cash Flows Statement
For the year ended 31 December 2023
(Unless otherwise indicated, the currency is expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB)
Not
e
Items Current Period Prior Period
XV
I
1. Cash flows from operating activities
Cash received from sales and services 189,464,980.58 166,402,067.64
Tax and surcharge refunds 7,647.56
Other cash receipts related to operating activities 4,225,525,553.06 4,309,971,160.78
Total cash inflows from operating activities 4,414,990,533.64 4,476,380,875.98
Cash paid for goods and services 9,573,850.00
Cash paid to and for employees 61,402,333.15 59,513,788.17
Taxes and surcharges paid 20,428,198.75 20,686,403.89
Other cash payments related to operating activities 4,154,707,540.94 4,383,872,472.45
Total cash outflows from operating activities 4,246,111,922.84 4,464,072,664.51
Net cash flows from operating activities 168,878,610.80 12,308,211.47
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income 198,500,000.00 240,595,696.70
Net proceeds from disposals of fixed assets, intangible assets and other
1,146,737.46 3,973,887.69
long-term assets
Net proceeds from disposal of subsidiaries and other
business units
Other cash receipts related to investing activities
Total cash inflows from investing activities 199,646,737.46 244,569,584.39
Cash paid for fixed assets, intangible assets and other
7,686,801.71 5,810,205.37
long-term assets
Cash paid for investments 90,000,000.00
Net cash paid for acquiring subsidiaries and other business
units
Other cash payments related to investing activities
Total cash outflows from investing activities 97,686,801.71 5,810,205.37
Net cash flows from investing activities 101,959,935.75 238,759,379.02
3. Cash flows from financing activities
Cash received from investments by others
Cash received from borrowings 250,000,000.00 830,000,000.00
Other cash receipts related to other financing activities
Total cash inflows from financing activities 250,000,000.00 830,000,000.00
Cash repayments for debts 290,000,000.00 790,000,000.00
Cash paid for distribution of dividends and profit and for
114,106,711.75 134,389,016.01
interest expenses
Other cash payments related to financing activities 83,148,230.83 53,390,338.09
Total cash outflows from financing activities 487,254,942.58 977,779,354.10
Net cash flows from financing activities -237,254,942.58 -147,779,354.10
4. Effect of changes in foreign exchange rates on cash and cash
-44,371.78 380,393.85
equivalents
5. Net increase in cash and cash equivalents 33,539,232.19 103,668,630.24
Add: Opening balance of cash and cash equivalents 274,691,023.16 171,022,392.92
6. Closing balance of cash and cash equivalents 308,230,255.35 274,691,023.16
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 10
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Statement of Changes in Equity
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Items Current Period
Other
Less: Treasury Special Surplus Retained Total shareholders'
Share capital Capital reserves comprehensive
stock reserves reserves earnings equity
income
1. Closing balance of last year 417,627,960.00 1,010,917,776.19 50,759,806.16 275,010,401.50 943,017,166.88 2,595,813,498.41
Add: Increase/decrease due to changes in accounting
policies
Increase/decrease due to corrections of
errors in prior period
Others
2. Opening balance of current year 417,627,960.00 1,010,917,776.19 50,759,806.16 275,010,401.50 943,017,166.88 2,595,813,498.41
3. Increase/decrease for current year -2,407,990.00 -17,880,247.21 27,885,726.07 120,612,316.47 72,438,353.19
I. Total comprehensive income 223,983,671.61 223,983,671.61
II. Owner's contributions to and withdrawals of capital -2,407,990.00 -17,880,247.21 27,885,726.07 -48,173,963.28
i. Common stock contributed/paid-in capital by
64,340,669.42 -64,340,669.42
shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' equity -2,407,990.00 -17,867,890.66 -36,454,943.35 16,179,062.69
iv. Others -12,356.55 -12,356.55
III. Profits distribution -103,371,355.14 -103,371,355.14
i. Appropriation of surplus reserve
ii. Distribution to owners -103,371,355.14 -103,371,355.14
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in capital
ii. Surplus reserve transferred to paid-in capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income transferred to
retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
4. Closing balance of current year 415,219,970.00 993,037,528.98 78,645,532.23 275,010,401.50 1,063,629,483.35 2,668,251,851.60
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 11
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Parent Company's Statement of Changes in Equity
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Items Prior Period
Spe
Other
Less: Treasury cial
Share capital Capital reserves comprehen Surplus reserves Retained earnings Total shareholders' equity
stock rese
sive income
rves
1. Closing balance of last year 426,051,015.00 1,045,449,410.67 60,585,678.92 275,010,401.50 806,441,654.46 2,492,366,802.71
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to
corrections of errors in prior period
Others
2. Opening balance of current year 426,051,015.00 1,045,449,410.67 60,585,678.92 275,010,401.50 806,441,654.46 2,492,366,802.71
3. Increase/decrease for current year -8,423,055.00 -34,531,634.48 -9,825,872.76 136,575,512.42 103,446,695.70
I. Total comprehensive income 261,994,651.82 261,994,651.82
II. Owner's contributions to and withdrawals of
-8,423,055.00 -34,531,634.48 -9,825,872.76 -33,128,816.72
capital
i. Common stock contributed/paid-in
-7,987,217.00 -42,265,614.88 -50,252,831.88
capital by shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners'
-435,838.00 7,749,023.57 -9,825,872.76 17,139,058.33
equity
iv. Others -15,043.17 -15,043.17
III. Profits distribution -125,419,139.40 -125,419,139.40
i. Appropriation of surplus reserve
ii. Distribution to owners -125,419,139.40 -125,419,139.40
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in
capital
ii. Surplus reserve transferred to paid-in
capital
iii. Use of surplus reserve to cover
previous losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
4. Closing balance of current year 417,627,960.00 1,010,917,776.19 50,759,806.16 275,010,401.50 943,017,166.88 2,595,813,498.41
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
Page 12
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
I.Company status
1. Registered place, organization and address of headquarters
FIYTA Precision Technology Co., Ltd. (the “Company”) was founded, under the approval
of Shen Fu Ban Fu (1992) 1259 issued by the General Office of Shenzhen Municipal
Government, through the restructuring of former Shenzhen FIYTA Time Industrial Company by
the promoter of China National Aero-Technology Import and Export Shenzhen Industry & Trade
Center (name changed to “China National Aero-Technology Shenzhen Co., Ltd” lately) on 25
December 1992. On 3 June 1993, both the Company was listed on Shenzhen Stock Exchange.
The Company holds business license with the Unified Social Credit Code of
91440300192189783K.
As at 31 December 2023, the outstanding shares issued by the Company was 415.22 million
shares and the registered capital was RMB415.22 million after a series of share dividend, right
offering, share capital conversion from retained earnings, and issuing of new shares. The
Company’s registered address is FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan
District, Shenzhen, Guangdong Province, where the Company’s headquarters locates. The parent
company of the Company is CATIC Shenzhen Holdings Limited (CATIC Shenzhen) and the
ultimate controlling party of the Company is Aviation Industry Corporation of China, Ltd.
(AVIC) .
2. Nature of the Company’s business and main operating activities
The business nature and main operating activities of the Company and its subsidiaries
mainly include: Watch and Clock Sales; Watch and Timing Instrument Manufacturing; Watch
and Timing Instrument Sales; Jewelry Wholesale; Jewelry Retail; Wearable Intelligent Devices
Manufacturing; Wearable Intelligent Devices Sales; Property Management; Non-residential Real
Estate Leasing; Professional Design Services; Import and Export of Goods; Sales of Household
Electrical Appliances; Sales of Satellite Mobile Communication Terminals; Import and Export
Business (according to Shen Mao Jin Zhun Zi No.2001-2204) .
3. Scope of consolidation
There were 12 subsidiaries that are included in the Company’s scope of consolidation for
year 2023, see Note VI for details. The scope of consolidation was the same as last year.
4. Authorization for issue
The financial statements have been approved and authorized for issue by the Board of
Page 13
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Directors on 12 March 2024.
II.Basis of preparation
1. Basis of preparation
The financial statement is prepared in accordance with the requirements of Accounting
Standards for Business Enterprises and associated application guidance, illustrations to the
standards and related pronouncements (collectively known as “Accounting Standards for
Business Enterprises” or “CAS”) . These financial statements also comply with the disclosure
requirements of “Regulation on the Preparation of Information Disclosure of Companies Issuing
Public Shares, No. 15: General Requirements for Financial Reports” (revised in 2023) issued by
China Securities Regulatory Commission (CSRC) .
2. Going concern
The Company assesses the going concern ability to the extent of 12 month after the balance
sheet date. No issues that would result in significant doubt about the Company’s going concern
is noted. As a result, the financial statements of the Company have been prepared on going
concern basis.
3. Basis and principles of accounting
Accrual basis is adopted for the Group’s accounting activity. Except for some financial
instruments, the financial statements are measured using historical cost. In case of impairment
occurred on assets, provisions for impairment are provided for in accordance with related
regulations.
III.Significant accounting policies and accounting estimates
1. Highlight to specific accounting policies and estimates
(1) The Company make specific accounting policies and estimates according to its nature of
business. Accounting policies and estimates mainly includes: method of estimated credit loss
accrual (Note III. 13, Note III. 14 and Note III. 15) , measurement of inventory (Note III. 16) ,
depreciation of investment property and fixed asset and amortization of intangible asset (Note III.
19, Note III. 20 and Note III. 24) , revenue (Note III, 32) etc.
(2) Based on historical experience and other factors including reasonable estimation to future
events, the Company continues to evaluate significant accounting estimates and key assumptions.
If material changes to following accounting estimate and key assumption incurred, material impact
would happened to the carrying value of the Company’s assets and liabilities in coming
accounting year.
1) Measurement of Expected Credit Loss of accounts receivable and other receivables
The management estimates impairment loss provision to accounts receivable and other
Page 14
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
receivables based on the judgments to estimated credit loss of accounts receivable and other
receivables. If any events occurred that indicated the Company may not be able to recover the
balance amount, estimation is needed in provision accrual. If the expected number is different
with the estimated figure, the difference will affect the carrying value of accounts receivable and
other receivables and the impairment loss expenses in corresponding accounting period.
2) Impairment to inventory. The Company recognizes provision for obsolete inventories
based on the excess of the cost of inventory over its net realizable value. In determining the net
realizable value of inventories, the management uses significant judgments to estimate the selling
price, cost to finish manufacturing, and selling expenses and associated taxes. If the management
revises estimated selling price and cost to finish manufacturing and selling expenses, the NAV
estimation would be affected and the difference would have an effect to the inventory provision.
3) Estimation of long-term asset impairment. When evaluating whether there is impairment to
long-term asset, the management mainly considers the following: (a) whether the events affect the
asset impairment have already incurred; (b) whether the discounted cash flow from continue usage
of the asset or disposal is lower than its carrying amount; and (c) whether major assumption used
in estimating the future cash flow is appropriate.
Changes to related assumption adopted in determining impairment such as profitability,
discounting rate and growth rate may have material impact to the present value used in impairment
test and result in impairment to above mentioned long-term assets.
(a) Depreciation and amortization. The estimated residual value and useful life of investment
property, fixed asset and intangible asset that used by the Company are based on historical actual
useful life and actual residual value of assets with similar nature or functions. In the process of
using such assets, estimated useful life and residual value may vary depending on the economic
environment, technological environment and other environment that the assets located. If there is
difference between the expectation and previous estimation, proper adjustments will be made by
the management.
(b) Share-based payments. The management makes best estimation based on up-to-date
number of employees who have exercisable shares and adjusting the number of exercisable equity
instrument on each balance sheet date in the vesting period. If there is difference between current
year exercisable employee and previous estimation, proper adjustments will be made by the
management.
(c) Deferred tax asset. Deferred tax asset of taxable losses shall be recognized to the extent
that there will have sufficient taxable income to offset. This involves significant judgments to
estimate the timing and amount of future taxable profit and taking into consideration of tax
planning so as to determine the amount of deferred tax asset.
(d) Corporate income tax. The final tax treatment of many transaction and events are with
Page 15
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
uncertainty in the normal course of operation. Significant judgments involves in accrual of
corporate income tax. If there is difference between the final discretion and the amount recorded in
books, the difference will affect the amount of tax in the period of final discretion.
2. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company have been prepared in accordance with the
requirements of Accounting Standards for Business Enterprises. These financial statements
present truly and completely the financial position as at 31 December 2023, the results of
operations and the cash flows for the year then ended of the Company.
3. Accounting period
The accounting period of the Company is the calendar year, i.e. from 1 January to 31
December of each year.
4. Operating cycle
The operating cycle refer to the period from purchasing assets for process to realizing cash or
cash equivalent. The Company’s operating cycle is 12 months which is also used as standard to
determine the liquidity of asset and liabilities.
5. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording
currency. FIYTA (Hong Kong) Limited (“FIYTA Hong Kong”) , a subsidiary of the Company
outside mainland China, and Station 68 Limited (“Station 68”) , a subsidiary of FIYTA Hong
Kong, use Hong Kong Dollar (“HKD”) as the recording currency according to the main economic
environment where the companies operated in. Montres Chouriet SA, a subsidiary of FIYTA Hong
Kong (“Swiss Company”) , uses Swiss Franc as the recording currency according to the main
economic environment where the Swiss Company operated in. The recording currencies
mentioned above will be translated to Renminbi when preparing financial statements. The
currency used in preparing the Group’s financial statements is Renminbi.
6. Methodology for determining materiality criteria and basis for selection
Item Materiality criteria
Accounts receivable with significant amount of bad Individual closing balance of 0.50
debt provision reversed or recovered during the period million or more
Individual closing balance of 1.00
Significant other accounts payable aged over one year
million or more
7. Accounting treatment for business combinations involving entities under common
control and not under common control
(1) If a business combination is achieved through multiple steps, of which the terms,
condition and economical effect is in line with one or more criteria as followed, the
multiple transactions shall be dealt with as one-basket transaction.
1) the transactions were entered into at the same time or by considering each other’s
Page 16
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
influence;
2) a complete business result can only be achieved by combining all these transactions
together;
3) the performing of one transaction is depended on at least one other transaction;
4) a transaction is not economical if it is considered stand along but it will become
economical if it is considered in combination with other transactions.
(2) Business combination involving entities under common control
For a business combination involving enterprises under common control, the assets acquired
and liabilities assumed are measured based on their carrying amounts in the consolidated financial
statements of the ultimate controlling party at the combination date, except for adjustments due to
different accounting policies. The difference between the carrying amount of the net assets
acquired and the consideration paid for the combination (or the total par value of shares issued) is
adjusted against share premium in the capital reserve, with any excess adjusted against retained
earnings.
If there is contingent consideration and provision or assets are required to be recognized, the
difference between the provision or assets and the contingent consideration shall adjust the capital
reserve, with any excess adjusted against retained earnings.
If business combinations involving entities under common control achieved in stages that
involves multiple transactions belongs to one-basket transaction, all transactions shall be dealt
with as one transaction. If not, the accounting treatment is as follows: Initial investment cost is the
acquirer’s share of the carrying amount of the net assets of the acquiree in the consolidated
financial statements of the ultimate controlling party at the combination date. The difference
between the initial investment cost and the sum of carrying amount of investment prior to
combination date and carrying amount of new considerations paid for the combination at the
combination date is adjusted to capital reserve (share premium) . If the capital reserve is not
sufficient to absorb the difference, any excess is adjusted against retained earnings. he difference
between the carrying amount of the net assets acquired and the sum of carrying amount of
investment prior to combination date and carrying amount of new considerations paid for the
combination at the combination date is adjusted to capital reserve (share premium) . If the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
The profit or loss, other comprehensive income and changes in other owner’s equity recognized by
the acquirer during the period from the later of initial investment date and the date that the
acquirer and acquiree both under common ultimate control to the combination date are offset the
opening retained earnings or profit for loss for the current period in the comparative statements.
(3) Business combinations involving entities not under common control
The purchase date refers to the date that the Company actually acquired control over the
acquire i.e. the date when the control over the acquiree’s net assets or decision of business
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
operation has been transferred to the Company. If the Company fulfills the following conditions at
the same time, it is considered that the control has been transferred:
① the contract or agreement of business combination has been approved by internal power
department;
② related matters has been approved by state supervisory authorities, if needed;
③ procedures of asset transfer has been completed;
④ the Company has been made majority of payments and has the ability and plan to make
the residual payments;
⑤ the Company is in substances acquired the business and operating policies and enjoyed
corresponding interests and undertaking risks of the acquire.
On the purchase date, assets transferred, liabilities incurred or assumed as the consideration
paid shall be measured at fair value. The difference between the fair value and carrying amount
shall be charged to current period profit or loss.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference is recognized as goodwill, and subsequently measured on
the basis of its cost less accumulated impairment provisions. Where the combination cost is less
than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference
is recognized in profit or loss for the current period after reassessment.
If business combinations involving entities not under common control achieved in stages
that involves multiple transactions belong to one-basket transaction, all the transactions shall be
treated as one. Otherwise, it shall be treated as follows: In the separate financial statements, the
initial investment cost is the sum of the carrying amount of equity investment of the acquiree
held prior to the acquisition date and additional investment cost at the acquisition date. When the
previously-held equity investment which was accounted for under the e Accounting treatment for
business combinations involving entities under common control and not under common control
equity method before the acquisition date, any other comprehensive income previously
recognized is not adjusted on acquisition date. When the investment is disposed of in later date,
the amount that was recognized in other comprehensive income is recognized on the same basis
as would be required if the investee had disposed directly of the related assets or liabilities. The
owners’ equity recognized as the changes of the investee’s other owners’ equity except for net
profit or loss, other comprehensive income and profit distribution, are transferred to profit or loss
for the current period when disposing the investment. When the previously-held equity
investment which was measured at fair value before the acquisition date, the accumulated
changes in fair value included in other comprehensive income is transferred to profit or loss for
the current period upon commencement of the cost method.
(4) Transaction costs for business combination
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
The overhead for the business combination, including the expenses for audit, legal services,
valuation advisory, and other administrative expenses, are recorded in profit or loss for the current
period when incurred. The transaction costs of equity or debt securities issued as the
considerations of business combination are included in the initial recognition amount of the equity
or debt securities.
8. Criteria for judging control and the preparation of consolidated financial
statements
(1) Criteria for determining control
Control means that the investor has power over the investee, enjoys variable returns through
participation in the investee's relevant activities, and has the ability to use its power over the
investee to influence the amount of its returns.
The Company makes a judgment on whether or not to control an investee based on a
comprehensive consideration of all relevant facts and circumstances. The Company re-evaluates
its judgment once changes in relevant facts and circumstances result in a change in the relevant
elements involved in the definition of control. Relevant facts and circumstances mainly include：
① the purpose for which the investee was established;
② relevant activities of the investee and how decisions are made about relevant activities;
③ whether the investor enjoys rights that currently give it the ability to dominate the
investee's relevant activities;
④ whether the investor enjoys a variable return through participation in the investee's
relevant activities;
⑤ the ability of the investor to use its power over the investee to influence the amount of its
return;
⑥ relationships between investors and other parties.
(2)
The scope of consolidated financial statements is based on control. All subsidiaries (including
standalone entity that controlled by the Company) are all included in the scope of consolidation.
(3) Procedures of consolidation
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and other relevant information. The whole
enterprise is considered as one accounting body when preparing consolidated financial statement
and reflect the whole group’s financial position, performance and cash flow according to unified
accounting policies based on accounting standards.
All subsidiaries that are included in the scope of consolidation adopt same accounting
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
policies, and accounting period. If there are differences, the subsidiaries shall adjust its policies
and accounting period accordingly.
When preparing consolidated financial statements, the accounting policies and accounting
periods of the subsidiaries should be consistent with those established by the Company, and all
significant intra-group balances and transactions are eliminated. If the treatment based on
enterprise group angle is different with the angle from subsidiaries’, it shall be treated based on
enterprise group angle.
The portion of a subsidiary’s equity that is not attributable to the parent is treated as
non-controlling interests and presented separately in the consolidated balance sheet within
shareholders’ equity. The portion of net profit or loss of subsidiaries for the period attributable to
non-controlling interests is presented separately in the consolidated income statement below the
“net profit” line item. When the amount of loss for the current period attributable to the
non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders’ share of
the opening owners’ equity of the subsidiary, the excess is still allocated against the
non-controlling interests.
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the subsidiary or business is deemed
to be included in the consolidated financial statements from the date they are controlled by the
ultimate controlling party. Their operating results and cash flows are included in the consolidated
income statement and consolidated cash flow statement respectively from the date they are
controlled by the ultimate controlling party.
Where a subsidiary or business has been acquired through a business combination not
involving enterprises under common control in the reporting period, the financial statements of
subsidiaries shall be adjusted on the basis of fair value of identifiable net assets on purchase date.
1) Addition of subsidiaries or business operation
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the subsidiary or business is deemed to
be included in the consolidated financial statements from the date they are controlled by the
ultimate controlling party. Their operating results and cash flows are included in the consolidated
income statement and consolidated cash flow statement respectively from the date they are
controlled by the ultimate controlling party.
If the Company can exert control over the investee under common control because of
addition of investment, adjustments shall be made as if all the combining party are at the current
condition in the angle of ultimate controlled party. Equity investment held before acquired control,
profit or loss, other comprehensive income and other net asset changes that have already
recognized between the later of acquiring original equity and the date under common control, and
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
combination date shall offset opening retained earnings or current period profit or loss
respectively.
In the reporting period, if there is subsidiary or business addition involving entities not under
common control, no adjustments shall be made to the consolidated balance sheet. The revenue,
expenses and profit from the purchasing date to period end shall be included in consolidated
income statement. The cash flows from the purchasing date to period end shall be included in
consolidated cash flow statement.
Where a subsidiary or business has been acquired through a business combination not
involving enterprises under common control by means of investment addition in the reporting
period, equity held before the purchase date shall be re-measured at fair value. Difference between
the fair value and the carrying amount shall be charged to current period investment gain. Changes
related to equity method such as other comprehensive income and other equity changes beside net
profit, other comprehensive income and profit distribution shall be transferred to current period
investment gain.
2) Disposal subsidiary or business
a) General principal
In the reporting period, if the Company dispose of subsidiary or business, the subsidiary’s
revenue, expenses, profit and cash flows from the beginning of the period to the disposal date shall
be included in consolidated financial statements.
When the Company loses control over a subsidiary because of disposing part of equity
investment or other reasons, the remaining part of the equity investment is re-measured at fair
value at the date when the control is lost. A gain or loss is recognized in the current period and is
calculated by the aggregate of consideration received in disposal and the fair value of remaining
part of the equity investment deducting the share of net assets in proportion to previous
shareholding percentage in the former subsidiary since acquisition date and the goodwill.
b) Disposal of subsidiary through multiple steps
In the event that the Company losses control over a subsidiary through multiple transactions,
if one or more conditions below are fulfilled, it shall be treated as one-basket transaction:
i) the transactions were entered into at the same time or by considering each other’s
influence;
ii) a complete business result can only be achieved by combining all these transactions
together;
iii) the performing of one transaction is depended on at least one other transaction;
iv) a transaction is not economical if it is considered stand along but it will become
economical if it is considered in combination with other transactions.
If the disposal was categorized as one-basket transaction, the Company dealt with all
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
transactions as one transaction that resulted in lost control over subsidiary. But, before losing
control, the difference between disposal consideration and the portion of net asset of the disposal
part shall be recognized in other comprehensive income each time of disposal and charged to
income statement in whole in the period loss control.
If the disposal does not belong to one-basket transaction, the accounting treatment before lost
control shall be in accordance with policies of disposal equity but not losing control. At the time
control lost, deal with as normal subsidiary disposal.
3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
shareholders, the book value of shareholder’s equity attributed to the Company and to the
non-controlling interest is adjusted to reflect the change in the Company’s interest in the
subsidiaries. The difference between the proportion interests of the subsidiary’s net assets being
acquired or disposed and the amount of the consideration paid or received is adjusted to the capital
reserve in the consolidated balance sheet, with any excess adjusted to retained earnings.
4) Partially disposal subsidiary equity without losing control
The difference between the consideration received from partial disposal of the long-term
equity investment in the subsidiary without losing control and the share of net assets of the
subsidiary that is continuously calculated from the purchase date or the merger date corresponding
to the disposal of the long-term equity investment , to adjust the share premium in the capital
reserve in the consolidated balance sheet, if the share premium in the capital reserve is insufficient
to offset, adjust the retained earnings.
9. Joint arrangement classification and accounting treatment for joint operation
(1) Classification
The Company classifies joint arrangements into joint operations and joint ventures based on
the structure, legal form, terms and conditions in the arrangement, and other related facts.
Joint operations means joint arrangement that does not realized through independent entity.
Joint arrangement that realized through independent entity is normally recognized as joint
venture but it also can be classified as joint operation if clear evidence showed that one of the
following condition is met:
1) The legal form of an joint arrangement showed that the joint parties enjoyed rights over
related assets and undertake liability respectively;
2) The contract showed that the joint parties enjoyed rights over related assets and undertake
liability respectively;
3) Other facts and situation indicated that the joint parties enjoyed rights over related assets
and undertake liability respectively;
(2) Accounting treatment to joint operation
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
The Company recognizes the following items relating to its interest in a joint operation, and
account for them in accordance with relevant accounting standards:
1) its solely-held assets, and its share of any assets held jointly;
2) its solely-assumed liabilities, and its share of any liabilities assumed jointly;
3) its revenue from the sale of its share of the output arising from the joint operation;
4) its share of the revenue from the sale of the output by the joint operation; and
5) its solely-incurred expenses, and its share of any expenses incurred jointly.
The Company contribute or disposal of assets (except that asset constitute business) . Before
these assets are sold to third party, the Company only recognizes the portion of profit or losses
that attributes to the other party. If the assets incurred impairment (meets the requirements of the
"Accounting Standards for Business Enterprises No. 8 - Impairment of Assets"), the Company
recognizes losses in full.
For the assets purchased from joint operation (except that constitutes business) , before it is
sold to third party, only the portion that attributable to the other parties. If assets incurred
impairment (meets the requirements of the "Accounting Standards for Business Enterprises No.
8 - Impairment of Assets"), the Company recognizes losses based on its share.
The Company does not enjoy joint control to joint operation. If the Company enjoys joint
operation’s asset and undertaking related liabilities, the accounting treatment is the same.
Otherwise, it shall be accounted for based on accounting standards.
10. Cash and cash equivalents
When preparing cash flow statement, the Company recognizes cash in hand and bank
deposit that available for payment as cash. Cash equivalents include short-term (generally
expires within three months from the date of purchase),highly liquid investments that are readily
convertible to known amounts of cash and are subject to an insignificant risk of change in value.
11. Foreign currency transactions and translation of foreign currency financial
statements
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company,
using the exchange rates prevailing at the dates of the transactions.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot
exchange rate at the balance sheet date. The resulting exchange differences between the spot
exchange rate on balance sheet date and the spot exchange rate on initial recognition or on the
previous balance sheet date are recognized in profit or loss. Non-monetary items that are
measured at historical cost in foreign currencies are translated to Renminbi using the exchange
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
rate at the transaction date.
Non-monetary items that are measured at fair value in foreign currencies are translated using
the exchange rate at the date the fair value is determined. The resulting exchange differences are
recognized in profit or loss or other comprehensive income.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets
and liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the
balance sheet date. Equity items, excluding “retained earnings”, are translated to Renminbi at the
spot exchange rates at the transaction dates.
When disposing overseas operations, foreign translation difference that related to the
overseas business shall be charged to current period profit or losses from other comprehensive
income. If the disposal resulted in decrease in shareholding but still maintain control, the
translation difference will be included in non-controlling interest. If the disposal related to
associate entity or joint venture entities, the translation difference will be included in current
period profit or loss.
12. Financial instruments
The Company recognizes financial assets or financial liabilities when the Company become a
party of the financial instruments.
Effective interest rate method refer to calculating the amortized cost of financial assets or
liabilities and amortizes interest income or expenses into corresponding accounting period
accordingly.
Effective interest rate refers to the interest that is used to discount the estimated future cash
flows of existing financial assets or financial liabilities to its amortized cost. When determining
the effective interest rate, the cash flow is estimated taking consideration of all contractual terms
of financial assets or financial liabilities but does not including estimated credit loss.
Amortized cost of financial assets or financial liabilities is the initial recognition amount
deduct principal and add or less accumulated amortization to the difference between initial
recognition and the amount at maturity and less accumulated loss provision (for financial assets
only) .
(1) Recognition and derecognition of financial instruments
Financial assets are classified into the following three categories depends on the Company’s
business mode of managing financial assets and cash flow characteristics of financial assets
1) Financial assets measured at amortized cost
2) Financial assets at fair value through other comprehensive income
3) Financial assets at fair value through profit or loss
Financial assets are measured at fair value at initial recognition. But it is recognized using
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
trading price for accounts receivable or notes receivable arose from sale of goods or providing of
service that does not including material financing component or does not consider financing
component within one year.
For financial assets at fair value through profit or loss, the related transaction costs are
directly recognized through profit or loss, and the related transaction costs of other types of
financial assets are included in the initial recognition amounts.
Only when the Company changes its business model of managing financial assets, all the
financial assets affected shall be reclassified on the first day of the first reporting period after the
business model changes.
1) Financial assets measured at amortized cost
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets at fair value through profit or loss as financial assets measured at
amortized cost: The Company’s business model for managing the financial assets is to collect
contractual cash flows; The terms of the financial asset contract stipulate that cash flows generated
on a specific date are only payments of principal and interest based on the amount of outstanding
principal. Financial assets measured at amortized cost of the Company includes cash and bank
balances, notes receivable, accounts receivables and other receivables.
After initial recognition, the effective interest rate method is used to measure the amortized
cost of such financial assets. Profits or losses arising from financial assets measured at amortized
costs and not part of any hedging relationship are included in current profit or loss when the
recognition is terminated, amortized or impaired according to the effective interest rate.
a) for financial assets that already impaired when it is acquired, the Company determines its
interest income using adjusted effective interest rate based on its amortized cost.
b) for financial assets that does not impaired when it is acquired but impaired latterly, the
Company determines its interest income using adjusted effective interest rate based on its
amortized cost. If there is no credit impairment in later period due to changes to risk factors, the
Company uses effective interest rate times of carrying amount of the financial asset to determine
interest income.
2) Financial assets at fair value through other comprehensive income
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets measured at fair value and whose changes are recorded in current
profit or loss as financial assets measured at fair value through other comprehensive income: The
Group’s business model for managing the financial assets is both to collect contractual cash flows
and to sell the financial assets, and the terms of the financial asset contract stipulate that cash
flows generated on a specific date are only payments of principal and interest based on the amount
of outstanding principal.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
After initial recognition, financial assets are subsequently measured at fair value. Interest,
impairment losses or gains and exchange gains calculated by the effective interest rate method are
recognized in profit or loss, while other gains or losses are recognized in other comprehensive
income. When derecognized, the accumulated gains or losses previously recognized in other
comprehensive income are transferred from other comprehensive income and recorded in current
profit or loss.
Notes receivable and accounts receivable measured at fair value through other comprehensive
income are listed as receivables financing, and other such financial assets are listed as other debt
investments, of which: one year from the balance sheet date Other debt investments due within
one year are listed as non-current assets due within one year, and other debt investments with an
original maturity date within one year are listed as other current assets.
3) Financial assets designated as fair value through other comprehensive income
At initial recognition, the Company may designate non-trading equity instrument investments
as financial assets at fair value through other comprehensive income, presented as other equity
instrument investment, and recognize dividend income when the conditions are met (the
designation cannot be revoked once it is made) .
The fair value changes of this kind of financial asset shall be included in other comprehensive
income and no impairment provision is needed. When de-recognizing the financial asset,
accumulated gain or loss in other comprehensive income shall be transferred out of other
comprehensive income and charged to retained earnings. During the investing period when the
Company holds equity instruments, the Company recognizes dividends in current period profit or
loss when the right of receiving dividends is confirmed and the associated economic benefit is
probable to flow into the Company and that the amount can be measured reliably. The Company
treated this kind of financial instrument under other equity investment.
The designated equity instrument investment does not belong to the following: the purpose of
obtaining the financial asset is mainly for the recent sale; it is part of the identifiable financial
asset instrument combination under centralized management at initial recognition, and there is
objective evidence that the short-term gain actually exists in the near future; it is a derivative
(except for derivatives that meet the definition of a financial guarantee contract and are designated
as effective hedging instruments) .
4) Financial assets at fair value through profit or loss
The financial assets other than financial assets measured at amortized cost and financial
assets at fair value through other comprehensive income are classified as financial assets at fair
value through profit or loss.
After initial recognition, the financial assets are subsequently measured at fair value, and the
profits or losses generated from which are recognized in profit or loss.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
The Company present the financial assets as financial asset held for trade, other non-current
financial assets.
5) Financial assets designated at fair value through profit or loss.
At initial recognition, if the accounting mismatch can be eliminated or significantly reduced,
the financial assets can be designated as financial assets at fair value through profit or loss.
If the hybrid contract includes one or more embedded derivatives and the main contract does
not belong to the above financial assets, the Company may designate the whole as a financial
instrument that is measured at fair value through profit or loss, except in the following cases:
a) Embedded derivatives do not materially change the cash flow of a hybrid contract
b) When it is first determined whether a similar hybrid contract requires a spin-off, there is
little need for analysis to make it clear that the embedded derivatives it contains should not be split.
If the prepayment right of the embedded loan allows the holder to repay the loan in advance with
an amount close to the amortized cost, the prepayment right does not need to be split.
After initial recognition, the financial assets are subsequently measured at fair value, and the
profits or losses generated from which are recognized in profit or loss.
The Company present the financial assets as financial asset held for trade, other non-current
financial assets.
(2) Classification and measurement of financial liabilities
The Company categorizes financial liabilities into financial liabilities and equity instrument
based on the contract terms and economical nature rather than solely on its legal form. Financial
liabilities initially recognized as financial liabilities at fair value through profit or loss, other
financial liabilities and derivative instrument designated as effective hedging instrument.
The financial liabilities of the Company are initially measured at fair value. The related
transaction costs of financial liabilities at fair value through profit or loss are directly recognized
in profit or loss. The related transaction costs of other categories of financial liabilities are
included in the initial recognition amount.
Subsequent measurement of financial liabilities depends on its category:
1) Financial liabilities at fair value through profit or loss
This category includes financial liabilities held for trade (including derivatives that are
financial liabilities) and financial liabilities designated at fair value through profit or loss.
At initial recognition, in order to provide more relevant accounting information, the
Company classifies financial liabilities that meet one of the following conditions as financial
liabilities at fair value through profit or loss (the designation cannot be revoked once it is made) :
the aim of undertaking related financial liabilities is to sell or repurchase in the short run; it is part
of identifiable financial instruments and there is objective evidence indicated that the enterprise
adopts short-term profitability mode; belong to derivative instrument except for derivative
instrument designated as effective hedging instrument and financial guarantee contract. Financial
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
liabilities held for trade are measured at fair value subsequently and all fair value changes except
for hedging accounting shall be included in current period profit or loss.
At initial recognition, in order to provide more relevant accounting information, the
Company classifies financial liabilities that meet one of the following conditions as financial
liabilities designated at fair value through profit or loss (the designation cannot be revoked once it
is made) :
a) accounting mismatches can be eliminated or significantly reduced.
b) management and performance evaluation of financial liability portfolios or combinations
of financial assets and financial liabilities based on fair value according to corporate risk
management or investment strategies as stated in formal written documents, and report to key
management personnel on this basis.
When the Company initially recognizes a financial liability and designates it at fair value
through profit or loss according to stipulations of standards, the changes in the fair value of the
financial liability arising from changes in the company’s own credit risk are included in other
comprehensive income, and other changes in fair value are recognized in profit or loss for the
period. However, if the accounting causes or expands the accounting mismatch in profit or loss,
the entire gain or loss of the financial liability (including the affected amount from changes in the
company’s own credit risk) is included in the current profit or loss.
2）Other financial liabilities
Except for the following items, the Company classifies financial liabilities as financial
liabilities measured at amortized cost:
a) Financial liabilities at fair value through profit or loss.
b) The transfer of financial assets does not meet the conditions for derecognition or financial
liabilities arising from the continued involvement in the transferred financial assets.
c) Financial guarantee contracts that are not in the first two categories of this article, and loan
commitments granted at a rate lower than market interest rates and that are not in the first category
of this article
Financial guarantee contracts that are not designated as financial liabilities measured at fair
value through profit or loss are initially recognized at fair value. Subsequent to initial recognition,
the subsequent measurement is determined according to the higher loss allowance of contingent
liabilities under expected credit loss model and the initial recognition amount deducting by the
accumulated amortization.
(3) Derecognition of financial instruments
1）If a financial asset meets one of the following conditions, it shall be derecognized:
a) The contractual right to receive the cash flow of the financial asset is terminated.
b) The financial asset has been transferred, and the transfer meets the requirements of the
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
“Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets” regarding
derecognition of financial assets.
2) Conditions of derecognition of financial liabilities
If the current obligation of a financial liability (or a part thereof) has been discharged, the
financial liability (or such part of financial liability) is derecognized.
When the Company and the lender sign an agreement to replace the original financial liability
with a new financial liability, and the new financial liability is substantially different from the
original financial liability, the original financial liability is derecognized and a new financial
liability is recognized. The difference between the carrying amount and the consideration paid
(including the transferred non-cash assets or liabilities assumed) is recognized in profit or loss
If the Company repurchases part of the financial liabilities, the carrying amount of the
financial liabilities as a whole is allocated based on the proportion of the fair value of the
continuing recognition portion and the derecognition portion on the repurchase date. The
difference between the carrying amount assigned to the derecognition portion and the
consideration paid (including the transferred non-cash assets or liabilities assumed) shall be
included in the current profit or loss.
(4) Recognition basis and measurement for transfer of financial assets
In the event of transfer of financial assets, the Company assesses the extent to which it retains
the risks and rewards of ownership of the financial assets and treats them in the following cases:
1) If almost all risks and rewards of ownership of financial assets are transferred, the
financial assets are derecognized and the rights and obligations arising from or retained in the
transfer are separately recognized as assets or liabilities.
2) If almost all the risks and rewards of ownership of financial assets are retained, the
financial assets shall continue to be recognized
3) If there is neither transfer nor retention of almost all risks and rewards of ownership of
financial assets (i.e., other than (1) and (2) of this article) , then depending on whether or not they
retain control over financial assets
a) If control over the financial asset is not retained, the financial asset shall be derecognized,
and the rights and obligations arising or retained during the transfer shall be separately recognized
as assets or liabilities.
b) If the control over the financial asset is retained, the relevant financial asset shall be
continuously recognized according to the degree of its continuous involvement in the transferred
financial asset, and the relevant liabilities shall be recognized accordingly. The degree of
continued involvement in the transferred financial assets refers to the degree to which the
company bears the risk or reward of the value change of the transferred financial assets
When judging whether the transfer of financial assets satisfies the conditions for
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
derecognition above, the principle of substance over form is adopted. The Company divides the
transfer of financial assets into the overall transfer and partial transfer of financial assets:
1) If the overall transfer of financial assets meets the conditions for derecognition, the
difference between the following is included in the current profit or loss:
a) The carrying amount of the transferred financial assets on the date of derecognition.
b) The sum of the consideration received in respect of the transfer of financial assets and the
amount corresponding to the derecognized portion in the accumulated changes in the fair value
originally and directly recognized in other comprehensive income (the financial assets involved in
the transfer are measured at fair value through other comprehensive income)
If the transfer of a financial asset does not meet the conditions for derecognition, the financial
asset will continue to be recognized and the consideration received is recognized as a financial
liability
(5) Method for determining the fair value of financial assets and financial liabilities
The fair value of financial assets or financial liabilities with active market is determined by
active market quotations; active market quotations include quotations that are readily and
regularly available from exchanges, dealers, brokers, industry groups, pricing agencies or
regulatory authorities for related assets or liabilities, and represent actual and frequently
occurring market transactions on a fair trade basis.
The fair value of financial assets initially acquired or derived or financial liabilities assumed
shall be determined on the basis of the market transaction price.
The fair value of financial assets or financial liabilities without active market is determined
using valuation techniques. In valuation, the Company adopts valuation techniques that are
applicable under current circumstances and that are supported by adequate available data and
other information, selects inputs with consistent asset or liability characteristics considered by
market participants in trading related asset or liability, and uses relevant observable inputs where
possible. Unobservable inputs are used where the relevant observable inputs are not available or
are impracticable.
(6) Provision for impairment of financial assets
Based on the expected credit losses, the Company assesses the expected credit losses of the
financial assets measured at amortized cost and financial assets at fair value through other
comprehensive income, lease receivables, contract assets, loan commitment and financial
liabilities that are not measured at fair value through profit or loss, and financial guarantee
contract etc., and makes impairment accounting and recognizes loss provisions.
The expected credit loss refers to the weighted average of the credit losses of financial
instruments that are weighted by the risk of default. Credit loss refers to the difference between all
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
contractual cash flows discounted at the original effective interest rate and receivable from the
contract and all cash flows expected to be received by the Company, and the present value of all
cash shortages. For financial assets that have been purchased or generated with credit impairment,
loss provision is recognized only for the cumulative changes in lifetime expected credit losses
after the initial recognition on the balance sheet date.
For accounts receivable, contract assets, and lease receivables, the Company shall always
measure the loss allowance for them at an amount equal to the lifetime expected credit losses.
For financial assets that have been purchased or generated with credit impairment, loss
provision is recognized only for the cumulative changes in lifetime expected credit losses after
the initial recognition on the balance sheet date. On each balance sheet date, the amount of
changes in lifetime expected credit losses is included in profit or loss as an impairment loss or
gain. Even if the lifetime expected credit loss determined on the balance sheet date is less than
the expected credit loss reflected in the estimated cash flow at the initial recognition, the positive
change in expected credit loss is also recognized as an impairment gain
Except for the above-mentioned simplified measurement methods and purchased or
originated credit-impaired assets, the Company assesses whether the credit risk of the other
financial assets has increased significantly since the initial recognition on each balance sheet date,
and separately measures its loss provision, recognizes expected credit loss and its changes based
on the following circumstances：
a) If the credit risk of the financial instruments has not increased significantly since the
initial recognition, the loss provision is measured at the amount equivalent to the expected credit
loss of the financial instruments in the next 12 months, regardless of whether the basis the
Company assesses the credit loss is on individual financial instrument or the combination of
financial instruments, and the increase or reversal of the loss provision resulting therefrom shall be
included in the current profit or loss as an impairment loss or gain.
b) If the credit risk of the financial instruments has increased significantly since the initial
recognition but no impairment has occurred, the loss provision is measured at the amount
equivalent to the lifetime expected credit loss of the financial instruments, regardless of whether
the basis the Company assesses the credit losses is on individual financial instrument or a
combination of financial instruments, and the increase or reversal of the loss provision resulting
therefrom should be included in the current profit or loss as an impairment loss or gain.
c) For financial instruments in the third stage which the financial instrument has been
impaired since initial recognition, the Company measures loss provision on the basis of life-time
expected credit loss and calculating interest income according to their book balance minus the
impairment provision and the actual interest rate.
Incremental or reversal of credit loss provision shall be included in current profit or loss as
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
impairment loss or gain. Except for financial asset at fair value through other comprehensive
income, credit loss provision is to offset the carrying amount of financial assets. For financial
assets at fair value through other comprehensive income, the credit loss provision is recognized
in other comprehensive income and will not offset the financial asset’s carrying amount in
balance sheet.
If the Company recognized credit loss provision in prior accounting period in terms of
life-time credit loss, but on current period balance sheet date, the associated financial asset does
not belong to the situation of risk increased after the initial recognition, the Company shall
accrue credit loss provision for this financial asset based on the next 12 month expected credit
loss. Difference arose from above changes shall be included in current period profit or loss as
impairment gain.
1) Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet day with that on
initial recognition day, the Company determines the relative change of default risk of financial
instruments during the expected life of financial instruments, to evaluate whether the credit risk of
financial instruments has increased significantly since the initial recognition.
To determine whether credit risk has increased significantly since the initial recognition,
factors considered by the Company includes:
a) Whether there is serious deterioration of the debtor’s operating results that have occurred
or are expected to occur;
b) Changes in the existing or anticipated technological, market, economic or legal
environment will have a significant negative impact on the debtor’s repayment capacity.
c) Serious deterioration of external or internal credit ratings (if any) of financial instruments
that have occurred or are expected to occur;
d) Whether the expected performance and repayment of debtor changes significantly.
e) Whether the Company changed the way of managing financial assets.
On the balance sheet date, if the Company assesses that the financial instrument only has
lower level of credit risk, the Company assumes that the credit risk associated with the financial
instrument does not increased after the initial recognition. If the default rate of a financial
instrument is low and the debtor’s ability to fulfill its cash flow liability is strong, the financial
instrument will be regarded with lower credit risk even if there will be adverse changed in
economic and operating environment in long-term which may not necessarily decrease the
debtor’s ability of fulfilling its cash flow liabilities.
2) Provision for impairment of financial assets
When one or more events that adversely affect the expected future cash flows of a financial
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
asset occur, the financial asset becomes a financial asset that has suffered credit impairment.
Evidence that credit impairment has occurred in a financial asset includes the following
observable information:
a) significant financial difficulties of the issuer or debtor;
b) the debtor breaches the contract, such as failure to pay or delay in the payment of interest
or principal;
c) the creditor gives the debtor a concession which would not have been made under any
other circumstances for economic or contractual considerations relating to the financial difficulties
of the debtor;
d) the debtor is likely to go bankrupt or carry out other financial restructurings;
e) the financial difficulties of the issuer or the debtor cause the active market of the financial
asset to disappear;
f) purchase or source a financial asset at a substantial discount that reflects the fact that credit
losses have occurred.
The credit impairment of financial assets may be caused by the joint action of multiple events,
and may not be caused by separately identifiable event
3) Determining expected credit loss (ECL)
The Company evaluates ECL based on single or portfolio of financial instrument. When
evaluating ECL, the Company considers past events, current situation and future economic
condition.
The Company categorizes financial instrument into different portfolios based on common
credit risk characteristics. Common credit risk characteristics includes: types of financial
instruments, aging portfolio, settlement period, debtor’s industries etc… Refer to accounting
policies of financial instruments for standard for single evaluation and credit risk characteristics.
The Company uses the following way to determine the ECL of financial instruments:
a) For financial assets, credit loss is the present value of difference between all contractual
cash flows receivable from the contract and all cash flows expected to be received by the
Company.
b) For lease receivable, credit loss is the present value of difference between all contractual
cash flows receivable from the contract and all cash flows expected to be received by the
Company.
c) For financial guarantee contract, credit loss is the present value of expected payment
amount due to credit losses happened to the owner of the contract and less any amount that the
Company expected to receive from the contract owner, debtor or other parties.
d) For financial assets that already impaired on balance sheet date but not impaired when
purchasing, the credit loss is the difference of carrying amount and present value of future cash
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
flows discounted at original effective interest rate.
Factors that the Company measures ECL of financial instrument includes: assessing a series
of possible results and to determine a weighted average amount without bias; time value of money;
information of past event, current situation and future economic condition forecast that can be
obtained without paying extra cost or efforts on balance sheet date.
4) Write off
If the Company no longer reasonably expects that the financial assets contract cash flow can
be recovered fully or partially, the financial assets book balance will be reduced directly. Such
reduction constitutes the derecognition of the financial assets.
(7) Offset of financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are
not offset. However, if all of the following conditions are met, the net amount offset by each
other is presented in the balance sheet:
1) The Company has a statutory right to offset the recognized amount, and such legal right is
currently enforceable;
2) The Company plans to settle in net amount or to realize the financial assets and settle the
financial liabilities at the same time.
13. Bill receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to bill receivable.
If the Company has sufficient evidence to evaluate the ECL of bill receivable on single basis,
it will be assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the bill receivable into different portfolios. The basis for portfolios is determined as
follows:
Portfolio Basis method
Risk-free
The issuer has higher level of credit rating and Referencing historical impairment experience
banker’s
no default in past and has strong ability to and taking into consideration of current
acceptance
fulfil its contractual cash follow obligation situation and estimation of future conditions
note
Business
Bill receivables with same aging have similar
acceptance Based on aging analysis
credit risk characteristics
note
14. Accounts receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to accounts receivable.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
If the Company has sufficient evidence to evaluate the ECL of account receivable on single
basis, it will be assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the account receivable into different portfolios. The basis for portfolios is determined
as follows:
Portfolio Basis method
Referencing historical impairment
Receivables for related Account receivables for related parties in
experience and taking into
parties in scope of scope of consolidation have similar credit
consideration of current situation and
consolidation risk characteristics
estimation of future conditions
Accounts receivables Account receivables with same aging have
Based on aging analysis
from other parties similar credit risk characteristics
15. Other receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to other receivables.
If the Company has sufficient evidence to evaluate the ECL of other receivables on single
basis, it will be assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the other receivable into different portfolios. The basis for portfolios is determined as
follows:
Portfolio Basis method
Receivables of down payment The portfolio has similar
Based on aging and ECL rate
and guarantee credit risk characteristics
The portfolio has similar Referencing historical impairment experience
Petty cash for employees credit risk characteristics and taking into consideration of current situation
and estimation of future conditions
The portfolio has similar Referencing historical impairment experience
Social security payment paid
credit risk characteristics and taking into consideration of current situation
on-behalf of employees
and estimation of future conditions
Receivables from related The portfolio has similar Referencing historical impairment experience
parties within scope of credit risk characteristics and taking into consideration of current situation
consolidation and estimation of future conditions
The portfolio has similar
Others Based on aging and ECL rate
credit risk characteristics
16. Inventory
(1) Inventory categories, issue valuation method, inventory system, amortization
method for low value consumables and packages.
1)Classification
Inventory refers to the finished products or commodities that the Company holds for sale in
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
its daily activities, semi-products in the production process, materials and consumables used in
the production process or the provision of labour services. Inventories include raw materials,
work in progress, and finished goods.
2)Valuation method of inventory
When inventory is acquired, it is initially measured at cost, including procurement costs,
processing costs and other costs. When the inventory is issued, it is measured by the weighted
average method (except for branded watches) and specific identification method (for branded
watches) .
3) Inventory count system
The Company maintains a perpetual inventory system.
4) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are charged to profit or loss when they are
used.
(2) Basis for determining and method for provision for obsolete inventories
After the inventory is thoroughly inspected at the end of the period, the provision shall be
provided or adjusted at the lower of the cost of the inventory and its net realizable value. The net
realizable value of inventory of goods directly used for sale, such as finished goods, stocked goods
and materials for sale in the normal production and operation process, is determined by the
estimated selling price of the inventory minus the estimated selling expenses and related taxes; net
realizable value of inventory of materials that need to be processed is determined based on the
estimated selling price of the finished products produced minus the estimated cost till completion,
estimated selling expenses and related taxes and fees in the normal production and operation
process; the net realizable value of the inventory held for the execution of a sales contract or
labour contract is calculated on the basis of the contract price. If the quantity of the inventory held
exceeds the quantity ordered by the sales contract, the net realizable value of the excess inventory
is calculated based on the general sales price.
The provision is accrued according to the individual inventory project at the end of the period;
but for a large number of inventories with lower unit price, the provision is accrued according to
the category of inventory; for those related to the product series produced and sold in the same
region, have the same or similar end use or purpose and that are difficult to measure separately
from other projects, they are combined for provision for inventory depreciation
If the influencing factors of the write-down of inventory value have disappeared, the amount
of write down will be restored and will be reversed within the amount of the provision for decline
in value of the inventory that has been accrued. The amount of the reversal is included in the
current profit or loss.
Provision for decline in value of inventories by portfolio is as follows:
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Basis for determining net realizable
categories Basis for category determination
value for this category
New products launched in the
Inventory ageing portfolio No provision for decline in value
current year under our own brand
17. Contract assets
The Company has the right to receive the consideration for the transfer of goods to the
customers. If the right depends on factors other than the passage of time, it is recognized as a
contract asset. If the Company has the right (only depends on passage of time) to receive
consideration from client, accounts receivable shall be recognized.
Refer to Note XII 6 for impairment to contract asset.
18. Long-term Equity Investment
(1) Determination of investment cost
1) For the long-term equity investment formed by business combination, the specific
accounting policies are detailed in the accounting treatment of business combination under
common control and not under common control as set out in this Note VII.
2) Long-term equity investment obtained by other means
The initial investment cost of the long-term equity investment obtained by cash payment is
the actual purchase price. The initial investment cost includes expenses directly related to the
acquisition of long-term equity investments, taxes and other necessary expenses
The initial investment cost of the long-term equity investment obtained by issuing equity
securities is the fair value of the issued equity securities; the transaction cost incurred in the
issuance or acquisition of its own equity instruments is deducted from equity if it is directly
attributable to equity transactions.
Under the premise that the non-monetary asset exchange has the commercial substance and
the fair value of the assets received or surrendered can be reliably measured, the initial
investment cost of the long-term equity investment exchanged for non-monetary assets is
determined based on the fair value of the assets exchanged and relevant taxes payable, unless
there is conclusive evidence that the fair value of the assets transferred is more reliable; for the
exchange of non-monetary asset that does not meet the above premise, the initial investment cost
of long-term equity investment is the carrying amount of the assets exchanged and the related
taxes and fees payable.
The initial investment cost of a long-term equity investment obtained through debt
restructuring includes the fair value of the waived debt, taxes that can be directly attributable to
the asset and other costs
(2) Subsequent measurement and profit and loss recognition
1) Cost method
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
The long-term equity investment that the Company can control over the investee is accounted
for using the cost method, and the cost of the long-term equity investment is adjusted by adding
or recovering the investment according to the initial investment cost. Except for the actual
payment or the cash dividends or profits included in the consideration that have been announced
but not yet paid at the time of acquiring the investment, the Company recognizes the current
investment income according to its share of cash dividends or profits declared to be distributed
by the investee.
2) Equity method
The Company’s long-term equity investments in associates and joint ventures are accounted
for using the equity method, and some of the equity investments in associates that are indirectly
held by venture capital institutions, mutual funds, trust companies or similar entities including
investment-linked insurance funds are measured at fair value through profit or loss.
When the initial investment cost of a long-term equity investment is greater than the
investment, the initial investment cost of the long-term equity investment shall not be adjusted by
the difference between the fair value of the identifiable net assets of the investee; if the initial
investment cost is less than the investment, the difference between the fair value of the
identifiable net assets of the investee should be included in the current profit or loss
After obtaining the long-term equity investment, the Company shall recognize the investment
income and other comprehensive income according to the share of net profit and loss and other
comprehensive income realized by the investee that is entitled or should be shared respectively,
and adjust the carrying amount of the long-term equity investment; and reduces the carrying
amount of the long-term equity investment based on portion of the profit or cash dividend
declared to be distributed by the investee; and for other changes in the owners’ equity other than
the net profit or loss, other comprehensive income and profit distribution of the investee, the
carrying amount of the long-term equity investment is adjusted and included in the owners’
equity.
When recognizing the share of the net profit or loss of the investee, the Company shall adjust
and recognize the net profit of the investee based on the fair value of the identifiable assets of the
investee at the time of obtaining the investment. The unrealized internal transaction gains and
losses between the Company and the associates and joint ventures shall be offset against the
portion attributable to the Company in accordance with the proportion to be enjoyed, on the basis
of which the investment gains and losses are recognized.
When the Company recognizes the losses incurred by the investee that it should bear, it shall
deal with it in the following order: Firstly, offset the carrying amount of the long-term equity
investment. Secondly, if the carrying amount of the long-term equity investment is not enough to
be offset, the investment loss will continue to be recognized to the extent of carrying amount of
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
other long-term equity that virtually constitutes a net investment in the investee, and the carrying
amount of the long-term receivables is offset. Finally, after the above-mentioned treatment, if the
enterprise still bears additional obligations in accordance with the investment contract or
agreement, the projected liabilities are recognized according to the estimated obligations and
included in the current investment losses.
If the investee realizes profit in the future period, after deducting the unrecognized loss share,
and the reduction of book balance of the recognized projected liabilities and recovery of other
long-term equity that virtually constitutes a net investment in the investee and carrying amount of
long-term equity investment as opposite to the order above, the Company shall restore the
investment income.
(3) Conversion of accounting methods for long-term equity investment
1) Fair value measurement to equity method accounting
If the equity investment originally held by the Company that does not have control, joint
control or significant influence on the investee, which is accounted for according to the
recognition and measurement criteria of financial instruments, can exert significant influence on
the investee or jointly control but does not constitute control over it due to additional investment
and otherwise, its initial investment cost shall be the sum of the fair value of the equity investment
originally held in accordance with the “Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments” and new investment cost after being
accounted for under the equity method.
If the initial investment cost accounted for under the equity method is less than the fair value
share of the identifiable net assets of the investee on the additional investment date determined by
the new shareholding ratio after the additional investment, the carrying amount of the long-term
equity investment is adjusted and included in the current non-operating income.
2) Fair value measurement or equity method accounting to cost method accounting
If the equity investment originally held by the Company, that does not have control, joint
control or significant influence on the investee and which is accounted for in accordance with the
financial instrument recognition and measurement criteria, or the long-term equity investment
originally held in associates or joint venture, can exercise control over the investee not under
common control due to additional investment or otherwise, in the preparation of individual
financial statements, the sum of the carrying amount of the equity investment originally held plus
the new investment cost shall be regarded as the initial investment cost after being accounted for
under the cost method.
The other comprehensive income recognized by the equity method in respect of the equity
investment originally held before the purchase date is accounted for on the same basis as the
investee directly disposes of the relevant assets or liabilities when the investment is disposed of.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
If the equity investment held before the purchase date is accounted for in accordance with the
relevant provisions of the “Accounting Standards for Business Enterprises No. 22 – Recognition
and Measurement of Financial Instruments”, the cumulative fair value changes originally included
in other comprehensive income are transferred to current profit or loss when the cost method is
adopted.
3) Equity method accounting to fair value measurement
If the Company loses joint control or significant influence on the investee due to the disposal
of part of the equity investment or otherwise, the remaining equity after disposal shall be
accounted for according to the “Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments”. The difference between the fair value
and the carrying amount on the date of losing joint control or significant impact is recognized in
profit or loss.
The other comprehensive income recognized in respect of the original equity investment
using the equity method is accounted for on the same basis as the investee directly disposes of the
relevant asset
4) Cost method to equity method
Where the Company loses control over the investee due to the disposal of part of the equity
investment, etc., in the preparation of individual financial statements, if the remaining equity after
disposal can exercise joint control or significant influence on the investee, the equity method is
adopted for accounting, and the remaining equity is deemed to be adjusted under the equity
method when it is acquired.
5) Cost method to fair value measurement
Where the Company loses control over the investee due to the disposal of part of the equity
investment, etc., in the preparation of individual financial statements, if the remaining equity after
disposal cannot jointly control or exert significant influence on the investee, the relevant
provisions of the “Accounting Standards for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments” are adopted. The difference between the fair value and the
carrying amount on the date of loss of control is recognized in profit or loss for the current period.
(4) Disposal of long-term equity investment
For the disposal of long-term equity investment, the difference between the carrying amount
and the actual purchase price shall be included in the current profit or loss. For the long-term
equity investment accounted for using the equity method, when the investment is disposed of, the
part that is originally included in the other comprehensive income is accounted for in the same
proportion based on the same basis as the investee directly disposes of the relevant assets or
liabilities.
If the terms, conditions and economic impact of each transaction on disposal of the equity
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
investment in a subsidiary satisfy one or more of the following cases, the multiple transactions are
treated as a package transaction:
1) The transactions are made simultaneously or with consideration of each other’s influence;
2) The transactions as a whole can achieve a complete business outcome;
3) The occurrence of a transaction depends on the occurrence of at least one other
transaction;
4) A transaction is uneconomic alone, but it is economic when considered together with other
transactions
Where the loss of control over the original subsidiary due to disposal of part of the equity
investment or otherwise which is not a package transaction, the individual financial statements and
consolidated financial statements shall be classified for relevant accounting treatment:
a) In the individual financial statements, the difference between the carrying amount of the
disposed equity and the actual purchase price is included in the current profit or loss. If the
remaining equity after disposal can exert joint control or significant influence on the investee, it
shall be accounted for under the equity method, and the residual equity shall be deemed to be
adjusted by equity method when it is acquired; if the remaining equity after disposal cannot exert
joint control or significant influence over the investee, it shall be accounted for by the relevant
provisions of the “Accounting Standards for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments”, and the difference between the fair value and the carrying
amount on the date of loss of control is included in the current profit or loss.
b) In the consolidated financial statements, for each transaction before the loss of control over
the subsidiary, capital reserve (share premium) is adjusted for the difference between the disposal
price and the share of the net assets corresponding to the disposed long-term equity investment
that the subsidiary has continuously calculated from the date of purchase or the merger date; if the
capital reserve is insufficient to offset, the retained earnings will be adjusted; when the control of
the subsidiary is lost, the remaining equity shall be re-measured according to its fair value on the
date of loss of control. The sum of the consideration for the disposal of the equity and the fair
value of the remaining equity, less the share of the net assets that that the original subsidiary has
continuously calculated from the date of purchase calculated based on the original shareholding, is
included in the investment income for the period of loss of control, while reducing goodwill. Other
comprehensive income related to the original subsidiary’s equity investment will be converted into
current investment income when control is lost.
If each transaction on disposal of the equity investment in a subsidiary until the loss of
control is a package transaction, each transaction is accounted for as a transaction to dispose of the
equity investment in the subsidiary with loss of control, which is distinguished between individual
financial statements and consolidated financial statements:
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
a) In the individual financial statements, the difference between each disposal price and the
carrying amount of the long-term equity investment corresponding to the disposed equity before
the loss of control is recognized as other comprehensive income, and when the control is lost, it is
transferred to profit or loss for the period of the loss of control.
b) In the consolidated financial statements, the difference between each disposal price and the
disposal investment that has the share of the net assets of the subsidiary before the loss of control
is recognized as other comprehensive income, and transferred to profit or loss for the period of the
loss of control.
(5) Judging criteria for joint control and significant influence
If the Company collectively controls an arrangement with other parties in accordance with
the relevant agreement, and the activity decision that has a significant impact on the return of the
arrangement needs to be unanimously agreed upon by the parties sharing the control, it is
considered that the Company and other parties jointly control an arrangement, which is a joint
arrangement.
If the joint arrangement is reached through a separate entity and it determines that the
Company has rights to the net assets of the separate entity in accordance with the relevant
agreement, the separate entity is regarded as a joint venture and is accounted for using the equity
method. If it is judged according to the relevant agreement that the Company does not have rights
to the net assets of the separate entity, the separate entity acts as a joint operation, and the
Company recognizes the items related to the share of the interests of the joint operation and
conducts accounting treatment in accordance with the relevant ASBEs.
Significant influence refers to the investor’s power to participate in the decision-making of
the financial and operating policies of the investee, but it cannot control or jointly control the
formulation of these policies with other parties. The Company has a significant influence on the
investee under one or more of the following situations and taking into account all facts and
circumstances: (1) it is represented on the board of directors or similar authorities of the investee;
(2) it involves in the formulation of financial and operating policy of the investee; (3) it has
important transactions with the investee; (4) it dispatches management personnel to the investee;
(5) it provides key technical information to the investee.
19. Investment Property
Investment property refers to property held for the purpose of earning rent or capital
appreciation, or both, including leased land use rights, land use rights held and prepared for
transfer after appreciation, and leased buildings. Besides, for empty constructions that the
Company held for rent lately but with the written resolution from the board stated that it will be
used as operating lease and that intention will not be changed in short-term, it can be treated as
investment property.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
The Company’s investment property is recorded at its cost, and the cost of purchased
investment property includes the purchase price, related taxes and other expenses directly
attributable to the asset; the cost of self-built investment property is composed of the necessary
expenses incurred before the asset is ready for expected use.
The Company adopts the cost model for subsequent measurement of investment property, and
depreciates or amortizes buildings and land use rights according to their estimated service life
and net residual value. Expected useful life, residual value and annual depreciation rate are as
follows:
Estimated useful life
Category Residual value rate % Depreciation rate %
(years)
Property 20-35 5.00 2.71-4.85
When the use of investment property is changed to self-use, the Company converts the
investment property into fixed assets or intangible assets from the date of change. When the use
of self-use property changes to rental earning or capital appreciation, the Company converts
fixed assets or intangible assets into investment property from the date of change. When a
conversion occurs, the carrying amount before conversion is used as the converted value
The investment property is derecognized when the investment property is disposed of, or
permanently withdrawn from use and is not expected to obtain economic benefits from its
disposal. The amount of disposal income from the sale, transfer, retirement or damage of the
investment property after deducting its carrying amount and related taxes and expenses is
recognized in profit or loss for the current period.
20. Fixed assets
(1) Recognition conditions of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing goods, providing labour
services, renting or operating management, and having a useful life of more than one fiscal year.
Fixed assets are recognized when they meet all of the following conditions:
1) the economic benefits associated with the fixed assets are likely to flow into the enterprise;
2) the cost of the fixed assets can be reliably measured.
(2) Initial measurement of fixed assets
The fixed assets of the Company are initially measured at cost.
1) The cost of outsourcing fixed assets includes the purchase price, import duties and other
related taxes and fees, as well as other expenses that can be directly attributed to the assets before
they reach their intended usable state.
2) The cost of self-built fixed assets is determined by the necessary expenditures incurred
before the assets reach their expected usable state.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
3) For fixed assets invested by investors, the value agreed in the investment contract or
agreement is regarded as the book value, but the value agreed in the contract or agreement is not
accounted for at fair value.
4) If the payment for the purchase of fixed assets is delayed beyond the normal credit
conditions, and is of a financing nature in essence, the cost of fixed assets is determined on the
basis of the present value of the purchase price. The difference between the actual payment and
the present value of the purchase price is recorded in the current profit or loss during the credit
period, except where it should be capitalized.
(3) Subsequent measurement and disposal of fixed assets
1) Depreciation of fixed assets
Depreciation of fixed assets is accrued over the estimated useful life based on its recorded
value less the estimated net residual value. The fixed assets that have been provided for
impairment losses are depreciated in the future period based on the carrying amount after
deducting the impairment provision and the remaining useful life.
The Company determines the service life and estimated net residual value of fixed assets
based on the nature and use of fixed assets. At the end of the year, the service life, the estimated
net residual value and the depreciation method of the fixed assets are reviewed. If there is a
difference from the original estimate, corresponding adjustments will be made.
The depreciation method, depreciation period and annual depreciation rate of various fixed
assets are as follows.
Estimated useful
Residual value Depreciation
Class Method of depreciation life
rate % rate %
(years)
Property and plant Straight-line 20-35 5.00 2.71-4.85
Machinery and Straight-line
10 5.00-10.00 9.00-9.50
equipment
Electronic equipment Straight-line 5 5.00 19.00
Motor vehicles Straight-line 5 5.00 19.00
Others Straight-line 5 5.00 19.00
2) Subsequent expenditures on fixed assets
Subsequent expenditures related to fixed assets that meet the conditions for recognition of
fixed assets are included in the cost of fixed assets; those that do not meet the conditions for
recognition of fixed assets are included in the current profit or loss when they occur.
3) Disposal of fixed assets
When a fixed asset is disposed of or no economic benefit is expected to result from its use or
disposal, the fixed asset is derecognized. The amount of disposal income from sale, transfer,
retirement or damage of the fixed asset after deducting its book value and related taxes is
included into the current profit or loss.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
21. Construction in Progress
(1) Initial measurement of construction in progress
The self-built construction in progress of the Company is measured at the actual cost, which
is determined by the necessary expenses incurred before the construction of the asset reaches the
intended usable condition, including the cost of engineering materials, labour costs and relevant
taxes payable, capitalized borrowing costs and indirect costs that should be apportioned. The
Company’s construction in progress is classified into projects when in accounting
(2) Criteria for and time point of construction in progress to convert into fixed asset
The total expenditure incurred before the construction in progress project is constructed to
reach the intended usable condition shall be recorded as the book value of the fixed assets. For
the construction in progress built which has reached the intended usable condition, but has not
yet completed the final accounts, since the date of reaching expected use condition, according to
the project budget, cost or actual project costs, it shall be converted into fixed assets at the
estimated value, and fixed assets shall be depreciated in accordance with the depreciation policy
of the Company for fixed assets. After the completion of the final accounts, the original estimated
value shall be adjusted according to the actual cost, but the original depreciation amount shall not
be adjusted.
22. Borrowing Costs
(1) Recognition principle for capitalization of borrowing costs
If the borrowing costs of the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall start capitalization and be
included in the cost of relevant assets in the case of eligible for capitalization; other borrowing
costs shall be recognized as expenses at the time of occurrence and shall be included in the
current profit or loss.
Assets that are eligible for capitalization are assets that require a long period of time to
purchase or produce activities to achieve fixed assets, investment property and inventory that are
available for intended use or sale.
Borrowing costs begin to capitalize when all of the following conditions are met:
1) Assets expenditure has occurred, including expenditure incurred in the form of cash
payment, transfer of non-cash assets or assuming of interest-bearing debt for the acquisition and
construction or production of assets eligible for capitalization;
2) Borrowing costs have already occurred;
3) The purchase and construction or production activities necessary for the assets to reach the
intended use or saleable status have started.
(2) Capitalization period of borrowing costs
The period of capitalization refers to the period from the point of time when the borrowing
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
costs are capitalized to the point of time where the capitalization is stopped, excluding the period
during which the borrowing costs are suspended from capitalization.
The borrowing costs shall cease to be capitalized when the assets acquired or produced that
meet the conditions for capitalization are ready for intended use or sale.
When a part of the assets purchased or produced that meet the capitalization conditions are
completed and can be used alone, such part of the assets shall stop capitalization of borrowing
costs.
Where each part of the assets purchased or produced is completed separately, but must wait
until the whole is completed or can be sold externally, the capitalization of the borrowing costs
shall be stopped when the assets are completed as a whole.
(3) Suspension of capitalization period
If the assets that meet the capitalization conditions are interrupted abnormally during the
construction or production process and the interruption time lasts for more than 3 months, the
capitalization of borrowing costs shall be suspended; the borrowing costs shall continue to be
capitalized if the acquisition or production of assets eligible for capitalization is necessary to meet
the required usable status or the availability of sales. The borrowing costs incurred during the
interruption are recognized as profit or loss for the current period and the borrowing costs continue
to be capitalized until the acquisition or production of assets is resumed.
(4) Calculation for capitalization amount of borrowing costs
Interest charges on special borrowings (excluding interest income on unused borrowings
deposited in the bank, or investment income on temporary investment) and their ancillary
expenses shall be capitalized before the assets purchased or produced that meet the capitalization
conditions are ready for intended use or sale.
The amount of capitalized interest on general borrowings is calculated by the weighted
average of the excess portion of the accumulative asset expenditures over the special borrowings
multiplied by the capitalization rate of general borrowings. The capitalization rate is determined
based on the weighted average interest rate of general borrowings.
Where there is a discount or premium in the borrowings, the interest amount shall be adjusted
in accordance with the effective interest rate method to determine the discount or premium amount
that shall be amortized during each accounting period.
23. Right-of-use Assets
The Company initially measures the right-to-use assets at cost, which includes:
(1) initial measurement amount of lease liabilities;
(2) lease payments made before or at the beginning of the lease term, and deduction of the
relevant amount of rental incentives if any;
(3) initial direct expenses incurred by the Company;
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
(4) expected costs to be incurred by the Company for dismantling and removing leased
assets, restoring the site of leased assets or restoring leased assets to the state agreed in the lease
terms (excluding costs incurred for the production of inventory)
After the beginning of the lease term, the Company adopts the cost model for subsequent
measurement of the right-of-use assets
If it is reasonably certain to obtain the ownership of the leased assets at the expiration of the
lease term, the Company shall depreciate the leased assets within the remaining useful life of the
leased assets. If it is not reasonably certain to obtain the ownership of the leased assets at the
expiration of the lease term, the Company shall depreciate the leased assets within the shorter of
the lease term and the remaining useful life of the leased assets. For the right-of-use assets with
impairment provision, depreciation shall be calculated based on the book value after deduction of
impairment provision in according with the above principles in future periods.
24. Intangible Assets and Development Expenditure
Intangible assets refer to the identifiable non-monetary assets owned or controlled by the
Company which have no physical form, including land use rights, software and trademark use
rights.
(1) Initial measurement of intangible assets
The cost of externally purchased intangible assets includes the purchase price, relevant
taxation and other expenses directly attributable to bringing the assets to expected usage. If
payment for the purchase price of intangible assets is delayed beyond normal credit conditions and
is in fact financing in nature, the cost of the intangible assets is determined based on the present
value of the purchase price.
For intangible asset obtained through debt restructuring for offsetting the debt of the debtor,
its initial measurement cost includes the fair value of the waived creditor’s rights and taxes and
other costs directly attributable to bringing the asset to expected usage. The difference between the
fair value of the waived creditor’s rights and the carrying amount shall be recognized in profit or
loss for the period.
The book value of intangible asset received in exchange for non-monetary asset is based on
the fair value of the asset surrendered and relevant taxes payable, provided that the exchange of
nonmonetary asset has a commercial substance and the fair value of both the asset received and
the asset surrendered can be reliably measured, except there is definite evidence that the fair value
of the asset received is more reliable; for exchange of non-monetary asset that cannot satisfy the
above conditions, the cost of the intangible asset received is based on the carrying amount of the
asset surrendered and relevant taxes payable, and no profit or loss is recognized.
For intangible asset obtained through business absorption or combination under common
control, its book value is determined by the carrying amount of the combined party; for intangible
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
asset obtained through business absorption or merger not under common control, its book value is
determined by the fair value of the intangible asset.
The cost of an internally developed intangible asset includes the materials consumed in
developing the intangible asset, labour costs, registration fees, amortization of other patented
rights and licensed rights used during the development process, interest expenses meeting
capitalization conditions, and other direct costs for bringing the intangible asset to expected usage.
(2) Subsequent measurement of intangible assets
The Company determines the useful life of intangible assets on acquisition, which are
classified as intangible assets with limited useful life and indefinite useful life.
1) Intangible assets with a limited useful life
Intangible assets with a limited useful life are depreciated using straight line method over the
term during which they bring economic benefits to the Company. The estimated life and basis for
the intangible assets with a limited useful life are as follows:
Item Estimated useful life Amortization method
Land use right 50 Straight-line
Software systems 5 Straight-line
Right to use the trademark 5-10 Straight-line
The useful life and depreciation method of intangible assets with a limited useful life are
reassessed at the end of each period. If there is a difference from the original estimate,
corresponding adjustments will be made.
Upon re-assessment, there was no difference in the useful life and depreciation method of
intangible assets from the previous estimates at the end of the period.
(3) Specific basis for determining the research stage and development stage of internal
research and development projects of the Company
Research stage: a stage of scheduled innovative investigations and research activities for the
acquisition and understanding of new scientific or technical knowledge.
Development stage: before the commercial production or use, the research results or other
knowledge will be applied to a plan or design to produce new or substantial improvements in
materials, devices, products and other activities.
The expenditure of the research stage of the internal research and development project is
included in the current profit or loss at the time of occurrence
(4) Specific standard for capitalization of expenditure in the development stage
The expenditure of an internal research and development project in the development stage is
recognized as an intangible asset when meeting all of the following conditions:
1) It is technically feasible to complete the intangible asset so that it can be used or sold;
2) With an intention to complete the intangible asset and to use or sell it;
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
3) The way the intangible asset generates economic benefits can prove the existence of a
market for the products produced using the intangible asset or a market for the intangible asset
itself, and if the intangible asset will be used internally, its usefulness can be proven;
4) Having sufficient technical, financial resources and other resource support to complete the
development of the intangible asset, and having the ability to use or sell the intangible asset;
5) Expenditure attributable to the development stage of the intangible asset can be reliably
measured.
Expenditures incurred in the development stage that do not meet the above conditions shall
be included in the current profit or loss at the time of occurrence. The development expenditures
which have been included in the profit or loss in the previous periods will not be recognized as an
asset in the future period. The capitalized expenditures in the development phase are shown in the
balance sheet as development expenditures and are converted into intangible assets from the date
of the project’s intended use.
25. Impairment on Long-term Assets
On the balance sheet date, the Company determines whether there may be a sign of
impairment on long-term assets. If there is a sign of impairment on long-term assets, the
recoverable amount is estimated on the basis of a single asset. If it is difficult to estimate the
recoverable amount of a single asset, then determine the recoverable amount of the asset group on
the basis of the asset group to which the asset belongs.
The estimated recoverable amount of an asset is the higher of its fair value less the cost of
disposal and the present value of the expected future cash flow of the asset.
The measurement results of recoverable amount show that when the recoverable amount of
an long-term asset is lower than its book value, the book value of the long-term asset is reduced to
its recoverable amount. The reduced amount is recognized as an impairment loss on the asset and
included in the current profit or loss, at the same time, asset impairment provision will be made
accordingly. Asset impairment loss shall not be reversed during the subsequent accounting period
once recognized.
After the asset impairment loss is recognized, the depreciation or amortization expenses of
the impaired assets will be adjusted accordingly in the future period, so that the assets’ book value
after adjustment (deducting the estimated net residual value) will be systematically apportioned
over the remaining useful life of the assets.
No matter whether there is any sign of impairment or not, the impairment test is carried out
every year for goodwill and intangible assets with an indefinite useful life arising from an
enterprise merger.
In the impairment test of goodwill, the book value of goodwill would be apportioned to asset
group or portfolio of asset group expected to benefit from the synergy effect of an enterprise
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
merger. When taking an impairment test on the relevant asset group or portfolio of asset group
containing goodwill, if there is a sign of impairment on the asset group or portfolio of asset group
related to the goodwill, the Company first calculates the recoverable amount after testing the asset
group or portfolio of asset group which does not contain the goodwill for impairment, and then
compares it with the related book value to recognize the corresponding impairment loss. Next, the
Company conducts an impairment test on the asset group or portfolio of asset group which
contains the goodwill and compares the book value of the related asset group or portfolio of asset
group (book value includes the share of goodwill) with the recoverable amount. If the recoverable
amount of the related asset group or portfolio of asset group is lower than the book value, the
Company will recognize the impairment loss of goodwill.
26. Long-term Deferred Expenses
(1) Amortization method
Long-term deferred expenses refer to expenses that have already been spent by the Company,
but shall be apportioned in the current period and the future periods and the benefit period is over
1 year. Long-term deferred expenses are amortized in benefit period
(2) Amortization period
Category Amortization period Note
Counter fabrication expenses 2-3
Decoration expenses 3-5
Others 2-3
27. Contract liabilities
The obligation to transfer goods to a customer for which consideration has been received or
receivable is recognized in part as a contract liability
28. Employee Remuneration
Employee remuneration refers to the various forms of remuneration or compensation given
by the Company to obtain the services provided by the employees or to terminate the labour
relationship. Employee remuneration includes short-term remuneration, post-employment benefits,
termination benefits and other long-term employee benefits.
(1) Short-term remuneration
Short-term remuneration refers to the employee compensation other than post-employment
benefits and termination benefits required to be fully paid by the Company within 12 months
after the end of the annual reporting period in which the employees render relevant services.
During the accounting period in which the employees render services, the Company recognizes
the short-term remuneration payable as liabilities and includes the same in related asset costs or
expenses according to the object which benefits from the services rendered by employees.
(2) Post-employment benefits
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Post-employment benefits refer to various forms of remuneration and benefits other than
short-term remuneration and termination benefits provided by the Company after the retirement
of employees or termination of labour relationship with the Company in exchange for the
services rendered by employees.
The Company’s post-employment benefits is defined contribution plan.
Defined contribution plan of the post-employment benefits mainly refers to the social basic
endowment insurance, unemployment insurance, etc. organized and implemented by local labour
and social security institutions; During the accounting period when employees render services to
the Company, amount payable calculated by the defined contribution plan is recognized as a
liability and included in the current profit or loss or related asset costs.
The Company will no longer have any other payment obligations after making the
above-mentioned payments on a regular basis in accordance with the standards and annuity plans
prescribed by the State.
(3) Termination benefits
Termination benefits refer to the compensation paid to an employee when the Company
terminates the employment relationship with the employee before the expiry of the employment
contract or provides compensation as an offer to encourage the employee to accept voluntary
redundancy. The Company recognizes the liabilities arising from the compensation paid to
terminate the employment relationship with employees and includes the same in the current
profit or loss at the earlier date of the following: 1) when the Company cannot reverse the
termination benefits due to the plan of cancelling the labour relationship or the termination
benefits provided by the advice of reducing staff; and 2) the Company recognizes the cost or
expense relative to the payment of termination benefits of restructuring into the current profit or
loss.
The Company provides internal retirement benefits to employees who accept internal
retirement arrangements. The internal retirement benefits refer to the remuneration and the social
insurance premiums paid to the employees who have not reached the retirement age set by the
State, and voluntarily withdrew from the job after approval of the Company’s management. The
Company pays internal retired benefits to an internal retired employee from the day when the
internal retirement arrangement begins till the employee reaches the normal retirement age. For
internal retirement benefits, the Company conducts accounting treatment in contrast to the
termination benefits. When the related recognition conditions of termination benefits are met, the
Company will recognize the remuneration and the social insurance premiums of the internal
retired employee to be paid during the period between the employee’s termination of service and
normal retirement date as liabilities and include the same in the current profit or loss in one time.
Changes in actuarial assumptions of internal retirement benefits and differences arising from the
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
adjustment of welfare standards are included in current profit or loss when incurred.
(4) Other long-term employee benefits
Other long-term employee benefits refer to all employee benefits except for short-term
remuneration, post-employment benefits, and termination benefits. For other long-term employee
benefits that meet the conditions of the defined contribution plan, during the accounting period in
which the employees provide services for the Company, the amount that should be paid is
recognized as a liability and is included in the current profit or loss or related asset costs. In
addition to the above situations, other long-term employee benefits are actuarially calculated by
the independent actuary using the expected cumulative welfare unit method on the balance sheet
date, and the welfare obligations arising from the defined benefit plans are attributed to the
period during which the employees provide services and are included in the current profit or loss
or related asset costs.
29. Projected liabilities
(1) Basis for recognition of projected liabilities
The Company will recognize projected liabilities if the obligation relating to contingent
matters meets all of the following conditions:
This obligation is a present obligation assumed by the Company;
The fulfillment of this obligation will probably cause the outflow of economic benefits from
the Company;
The amount of this obligation can be measured reliably.
(2) Measurement method of projected liabilities
The initial measurement of projected liabilities of the Company is based on the best estimate
of the expenditure required for the performance of the related present obligations.
When determining the best estimate, the Company comprehensively considers the risks,
uncertainties relating to the contingent matters and time value of currency. If the time value of
currency has a great influence, the Company determines the best estimate by discounting the
related future cash outflows.
The best estimate is determined in different situations as follow:
If there is a continuous range (or interval) of the required expenditure and the probability of
the occurrence of all the results in the range is the same, the best estimate is determined according
to the median value of the range, which is the average of the upper and lower limit.
Where there is not a continuous range (or interval) of the required expenditure, or there is a
continuous range, but the probability of the occurrence of all the results in the range is different, if
the contingencies involve a single project, the best estimate is determined by the amount which is
most likely to occur; if the contingencies involve a number of projects, the best estimate is
determined based on various possible results and related probability calculation.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
If all or part of the expenses of the Company required to settle projected liabilities are
expected to be compensated by a third party and it is basically certain to receive the amount of
compensation, it is independently recognized as an asset. The amount of compensation recognized
will not exceed the book value of the projected liabilities.
30. Lease liabilities
The Company initially measures the lease liabilities according to the present value of the
unpaid lease payments at the beginning of the lease term. In calculating the present value of lease
payments, the Company adopts the interest rate implicit in the lease as the discount rate. If it is
impossible to determine the interest rate implicit in the lease, the incremental borrowing rate of
the Company shall be used as the discount rate. Lease payments include:
(1) Fixed payments and substantive fixed payments after deducting the relevant amount of
lease incentives;
(2) Variable lease payments depending on an index or rate;
(3) Where the Company reasonably determines that the option will be exercised, the amount
of the lease payment includes the exercise price of purchase option;
(4) Where the lease term reflects that the Company will exercise the option to terminate the
lease, the amount of the lease payment includes the amount to be paid for the exercise of the
option to terminate the lease;
(5) Expected payments based on the guaranteed residual value provided by the Company.
The Company calculates the interest charges of the lease liabilities for each period of the
lease term at a fixed discount rate and includes the same in the profit or loss of the current period
or the related asset costs.
Variable lease payments not included in the measurement of lease liabilities shall be
included in the current profit or loss or the related asset costs when they actually occur.
31. Share-based payment
(1) Category of share-based payment
The Company’s share-based payments include equity-settled share-based payments and cash
settled share-based payments.
(2) Recognition method of fair value of equity instrument
For options and other equity instruments granted by the Company with an active market, the
fair value is determined at the active market quotations. For options and other equity instruments
granted by the Company with no active market, option pricing model shall be used to estimate the
fair value of the equity instruments. Factors as follows shall be taken into account using option
pricing models: 1) the exercise price of the option, 2) the validity of the option, 3) the current price
of the target share, 4) the expected volatility of the share price, 5) predicted dividend of the share,
6) risk-free rate of the option within the validity period.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
In determining the fair value of the equity instruments at the date of grant, the Company shall
consider the impact of market conditions in the vesting conditions and non-vesting conditions
stated in the share-based payment agreement. If there are no vesting conditions in the share-based
payments, as long as the employees or other parties satisfy the non-market conditions in all of the
vesting conditions (such as term of service) , the Company shall recognize the services rendered as
an expense accordingly.
(3) Recognition basis for the best estimate of exercisable equity instruments
On each balance sheet date within the vesting period, the estimated number of exercisable
equity instruments is amended based on the best estimate made by the Company according to the
latest available subsequent information as to changes in the number of employees with exercisable
rights. As at the exercise date, the final estimated number of exercisable equity instruments should
equal the actual number of exercisable equity instruments.
(4) Accounting treatment
Equity-settled share-based payments are measured at the fair value of the equity instruments
granted to employees. For those exercisable immediately after the grant, they shall be included in
the relevant costs or expenses at the fair value of equity instruments at the grant date with an
increase in capital reserve accordingly. For those exercisable only after provision of services or
satisfaction of prescribed performance conditions within the vesting period, on each balance sheet
date within the vesting period, the Company will recognize the services received in the current
period in related costs or expenses and capital reserves at the fair value of equity instruments on
the grant date based on the best estimate of the number of exercisable equity instruments. After the
vesting period, relevant costs or expenses and total owners’ equity which have been recognized
will not be adjusted.
Cash-settled share-based payments are calculated by the fair value of liabilities assumed in
accordance with the Company’s shares or other equity instruments. For those exercisable
immediately after the grant, they shall be included in the relevant costs or expenses at the fair
value of the liabilities assumed by the Company at the grant date with an increase in liabilities
accordingly. For cash-settled share-based payments exercisable only after provision of services or
satisfaction of prescribed performance conditions within the vesting period, on each balance sheet
date within the vesting period, the Company will recognize the services received in the current
period in costs or expenses and corresponding liabilities at the amount of fair value of the
liabilities assumed by the Company based on the best estimate of the number of exercisable equity
instruments. At each balance sheet date and the settlement date prior to the settlement of relevant
liabilities, the fair value of the liabilities is re-measured through profit or loss.
During the vesting period, if the equity instruments granted are cancelled, the Company will
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
treat the cancelled equity instruments granted as accelerated vesting, and the amount within the
remaining period should be recognized immediately in profit or loss while recognizing the capital
reverse. If employees or other parties can meet non-vesting conditions but do not meet within the
vesting period, the Company will treat it as cancelled equity instruments granted.
32. Revenue
The Company’s revenue mainly come from:
1) Sales of watch
2) Precision manufacturing
3) Property leasing
(1) General principal of revenue recognition
The Group recognizes revenue when the contract performance obligations have been fulfilled
i.e. the customer has gained control over the relevant goods or services.
Performance obligations means the Company’s commitment to transfer identifiable goods or
service to clients.
Obtaining control of the relevant goods means that it is able to dominate the use of the goods
and derive almost all economic benefits therefrom.
The Company assesses contracts at the beginning date of a contract to identify each
performance obligations contained in a contract and to determine whether each performance
obligation is to be finished over a period of time or at a point of time. The Company satisfies a
performance obligation over time if one of the following criteria is met; or otherwise, a
performance obligation is satisfied at a certain point in time: 1) the customer simultaneously
receives and consumes the benefits provided by the Company’s performance as the Company
performs; 2) the customer can control the goods under construction during the Company’s
performance; 3) the Company’s performance does not create goods with an alternative use to it
and the Company has a right to payment for performance completed to date throughout the
contract term. Otherwise, the Company recognizes revenue at the point of time.
For performance obligation satisfied over time, the Company recognizes revenue over time
by measuring the progress towards complete satisfaction of that performance obligation. When
the outcome of that performance obligation cannot be measured reasonably, but the Company
expects to recover the costs incurred in satisfying the performance obligation, the Company
recognizes revenue only to the extent of the amount of costs incurred until it can reasonably
measure the outcome of the performance obligation
(2) Detailed method for revenue recognition
The Company has three main business sectors: sales of watch, precision manufacturing and
property leasing. Based on the Company’s business mode and terms of settlement, the Company
set detailed method of revenue recognition method as follows:
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1) Sales of watch
Sale of watch belongs to fulfilling performance obligations at a point of time.
① Online sales
Revenue shall be recognized at the point that the goods are dispatched and the customer
confirmed received the goods.
② Offline sales
Revenue shall be recognized at the point when the goods are delivered and payment by
customer is collected.
③ Consignment sale
The Company recognizes revenue when the Company receives the detail of the sales list from
distributors and confirms that the control over goods ownership were transferred to the purchaser.
④ Sale of consigned goods from others
Under Sale of consigned goods from others, the Group recognizes revenue in net amount
when it delivered consigned sale goods to customer and confirms that control over the ownership
of goods were transferred to the purchaser.
2) Precision manufacturing
Precision manufacturing business belongs to fulfilling performance obligations at a point of
time. Revenue from domestic sales shall be recognized when the goods are delivered and the
economic benefit associated with the goods is probable to flow into the Company. Revenue from
export shall be recognized when the following criteria is satisfied: The Company declared the
good at custom; obtained bill of lading; the right of collecting payment is obtained and its
probable that the economic benefit associated with the goods flows into the Company.
3) Property leasing
Refer to Note III 36. (4) for details.
(3) Revenue treatment principles for specific transactions
1) Contracts with sales return provisions
When the customer obtains control of the relevant goods, revenue is recognized based on the
amount of consideration expected to be received due to the transfer of goods to the customers
(exclusive of the amount expected to be refunded due to the return of sales) , while liability is
recognized based on the amount expected to be refunded due to the return of sales.
The carrying amount of goods expected to be returned at sales of goods, after deduction of
costs expected to incur for recovery of such goods (including impairment of value of the returned
goods) , will be accounted for under the item of “Right of return assets”.
2) Contracts with quality assurance provisions
The Company assesses whether a separate service is rendered in respect of the quality
assurance besides guaranteeing the sales of goods to customers are in line with the designated
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
standards. When additional service is provided by the Company, it is considered as a single
performance obligation and under accounting treatment according to the standards on revenue;
otherwise, quality assurance obligations will be under accounting treatment according to the
accounting standards on contingent matters
33. Contract costs
(1) Contract performance cost
The Company recognizes the cost of contract performance as an asset for the cost of
performing the contract as meeting all of the following conditions:
1) The cost is directly related to a current or expected contract, including direct labour, direct
materials, manufacturing expenses (or similar expenses) , costs clearly to be borne by the customer,
and other costs incurred solely for the contract;
2) This cost increases the resources that the company will use to fulfill its performance
obligations in the future.
3) The cost is expected to be recovered
The asset will be presented under inventory or other non-current assets based on the length of
its amortization period.
(2) Contract obtainment cost
If the incremental cost of the Company is expected to be recovered, the contract acquisition
cost is recognized as an asset. Incremental cost refers to the cost that the Company will not occur
without obtaining a contract, such as sales commission. For the amortization period not exceeding
one year, it is included in the current profit or loss when it occurs.
(3) Amortization of contract costs
The Company recognizes the contract performance cost and the contract acquisition cost on
the same basis as the commodity income related to the contract cost asset, and amortizes it at the
time when the performance obligation is performed or in accordance with the performance of the
performance obligation, and is included in the current profit or loss.
(4) Contract cost impairment
For assets related to contract costs, if the book value is higher than the difference between the
remaining consideration expected to be received by the Company for transfer of the goods related
to the assets and the estimated cost of transferring the relevant goods, the excess should be
depreciated and confirmed as an asset impairment loss
If the factors caused impairment changed after impairment provision is accrued, impairment
provision shall be reversed and included in current period profit or loss but the carrying amount
of asset after the reversal shall not exceed the carrying amount at the reversal date as if there was
no impair.
34. Government Subsidies
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
(1) Classification
Government subsidies refer to monetary and non-monetary assets received from the
government without compensation, however excluding the capital invested by the government as a
corporate owner. According to the subsidy objects stipulated in the documents of relevant
government, government subsidies are divided into subsidies related to assets and subsidies related
to income.
Government subsidies related to assets are obtained by the Company for the purposes of
acquiring, constructing or otherwise forming long-term assets. Government subsidies related to
income refer to the government subsidies other than those related to assets
(2) Recognition of government subsidies
Where evidence shows that the Company complies with relevant conditions of policies for
financial supports and is expected to receive the financial support funds at the end of the period,
the amount receivable is recognized as government subsidies. Otherwise, the government subsidy
is recognized upon actual receipt.
Government subsidies in the form of monetary assets are stated at the amount received or
receivable. Government subsidies in the form of non-monetary assets are measured at fair value; if
fair value cannot be reliably obtained, a nominal amount (RMB1) is used. Government subsidies
that are measured at nominal amount shall be recognized in the current profit or loss directly.
(3) Accounting treatment
The Company determines whether a government subsidy shall use gross method or net
method based on its economical substance. In general, only one method is used for one category
or similar government subsidy and it shall be used in a consistent way.
Government subsidies related to assets are recognized as deferred income, and are recognized,
under reasonable and systematic approach, in profit and loss in each period over the useful life of
the constructed or purchased assets;
Government subsidies related to income aiming at compensating for relevant expenses or
losses to be incurred by the enterprise in subsequent periods are recognized as deferred income,
and are recognized in current profit or loss when relevant expenses or losses are recognized.
Government subsidies aiming at compensating for relevant expenses or losses of the enterprise
that are already incurred are charged to current profit or loss once received.
Government subsidies related to daily activities of enterprises are included in other income;
government subsidies that are not related to daily activities of enterprises are included in
non-operating income and expense.
Government subsidies related to the discount interest received from policy-related
preferential loans offset the relevant borrowing costs; if the policy-based preferential interest rate
loan provided by the lending bank is obtained, the borrowing amount actually received shall be
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
taken as the recording value of the borrowings, and borrowing cost should be calculated using the
preferential interest rate according to the loan principal and the policy.
When it is required to return recognized government subsidy, if such subsidy is used to write
down the carrying value of relevant assets on initial recognition, the carrying value of the relevant
assets shall be adjusted; if there is balance of relevant deferred income, it shall be written down to
the book balance of relevant deferred income, and the excess is included in the current profit or
loss; where there is no relevant deferred income, it shall be directly included in the current profit
or loss
35. Deferred Income Tax Assets and Deferred Income Tax Liabilities
Deferred income tax assets and deferred income tax liabilities are measured and recognized
based on the difference (temporary difference) between the taxable base of assets and liabilities
and book value. On balance sheet date, the deferred income tax assets and deferred income tax
liabilities are measured at the applicable tax rate during the period when it is expected to recover
such assets or settle such liabilities.
(1) Criteria for recognition of deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporary
difference to the extent it is probably that future taxable amount will be available against which
the deductible temporary difference can be utilized, and deductible losses and taxes can be carried
forward to subsequent years. However, the deferred income tax assets arising from the initial
recognition of assets or liabilities in a transaction with the following features are not recognized: 1)
the transaction is not a business combination; 2) neither the accounting profit or the taxable
income or deductible losses will be affected when the transaction occurs.
For deductible temporary difference in relation to investment in the associates, corresponding
deferred income tax assets are recognized in the following conditions: the temporary difference is
probably reversed in a foreseeable future and it is likely that taxable income is obtained for
deduction of the deductible temporary difference in the future.
(2) Criteria for recognition of deferred income tax liabilities
The Company recognizes deferred income tax liabilities on the temporary difference between
the taxable but not yet paid taxation in the current and previous periods, excluding:
1) temporary difference arising from the initial recognition of goodwill;
2) a transaction or event arising from non-business combination, and neither the accounting
profit or the taxable income (or deductible losses) will be affected when the transaction or event
occurs;
3) for taxable temporary difference in relation to investment in subsidiaries or associates, the
time for reversal of the temporary difference can be controlled and the temporary difference is
probably not reversed in a foreseeable future
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
(3) When all of the following conditions are satisfied, deferred income tax assets and
deferred income tax liabilities shall be presented on a net basis
1) An enterprise has the statutory right to settle the current income tax assets and current
income tax liabilities at their net amounts;
2) The deferred income tax assets and deferred income tax liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities
which intend either to settle current income tax assets and current income tax liabilities on a net
basis, or to realize the assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
36. Lease
On the commencement date of the contract, the Company evaluates whether the contract is
a lease or contains a lease. If one party to a contract gives up the right to control the use of one or
more identifiable assets for a period of time in exchange for consideration, the contract is a lease
or contains a lease.
(1) Splitting a lease contract
When the contract contains a number of separate leases, the Company will split the contract
into separate leases for accounting individually.
When the contract contains both leasing and non-leasing parts, the Company will split the
leasing and non-leasing parts. The leasing part shall be accounted for in accordance with the
lease standards, and the non-leasing part shall be accounted for in accordance with other
applicable accounting standards for business enterprises.
(2) Combination of lease contracts
When two or more lease-containing contracts concluded by the Company with the same
trader or its related parties at the same time or at a similar time meet one of the following
conditions, the Company shall merge them into one contract for accounting:
1) Such two or more contracts are concluded for general commercial purposes and
constitute a package of transactions. If these are not considered as a whole, these overall
commercial purposes cannot be recognized.
2) The amount of consideration for a contract in such two or more contracts depends on the
pricing or performance of other contracts.
3) The right-of-use assets transferred by such two or more contracts together constitute a
separate lease.
(3) Accounting treatment for the Company as a lessee
On the commencement date of lease term, the Company recognizes right-of-use assets and
lease liabilities for leases, in addition to short-term leases and low-value asset leases with
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
simplified treatment.
1) Short-term lease and low value lease
Short-term lease refers to a lease that does not include purchase options and has a lease term
not exceeding 12 months. Low-value asset lease refers to the lease with lower value when a
single leased asset is a new asset.
The Company does not recognize right-of-use assets and lease liabilities for short-term lease
and low value lease. The payment of such leases shall be charged to profit or loss using
straight-line method or other systematic method.
2) Refer to Note III. 23 and Note III. 30 for accounting policies for right-of-use assets and
lease liabilities.
(4) Accounting treatment for the Company as a lessor
1) Classification of leases
The Company divides leases into financial leases and operating leases on the start date of the
lease. Financial lease refers to a lease that essentially transfers almost all of the risks and rewards
related to the ownership of leased assets. Its ownership may or may not be transferred eventually.
Operating leases refer to leases other than financial leases.
If a lease has one or more of the following characteristics, the Company usually classifies it
as a financial lease:
① At the expiry of the lease term, the ownership of the leased assets is transferred to the
lessee.
② The lessee has the option to purchase the leased assets, and the purchase price set by the
lessee is low enough compared with the expected fair value of the leased assets when exercising
the option. Therefore, it can be reasonably determined on the lease start date that the lessee will
exercise the option.
③ Although the ownership of the assets is not transferred, the lease term accounts for the
majority of the life of the leased assets.
④ On the commencement date of the lease, the present value of the lease receipts is almost
equal to the fair value of the leased assets.
⑤ The nature of leased assets is special. If there is no major transformation, only the lessee
can use them.
If one or more of the following conditions exist in a lease, it may also be classified as a
financial lease:
① If the lessee stops the lease, the lessee shall bear the losses caused by the termination of
the lease to the lessor.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
② The profits or losses caused by the fluctuation of the fair value of the balance of assets
belong to the lessee.
③ The lessee can continue to lease far below the market level for the next period.
2) Accounting treatment for financial leases
On the commencement date of lease term, the Company recognizes the financial lease
receivable on the financial leases and derecognizes the financial lease assets.
When the initial measurement of the financial lease receivable is made, the book value of
the financial lease receivable is the sum of the unsecured balance and the present value of lease
receipts that have not yet been received at the beginning of the lease term discounted at the
interest rate implicit in the lease. The lease receipts include:
① Fixed payments and substantive fixed payments after deducting the relevant amount of
lease incentives;
② Variable lease payments depending on an index or rate;
③ In the case of reasonably determining that the lessee will exercise the purchase option,
the lease receipts include the exercise price of purchase option;
④ If the lease term reflects that the lessee will exercise the option to terminate the lease, the
lease receipts include the amount to be paid by the lessee in exercising the option to terminate
the lease;
⑤ Guarantee residual value provided to the lessor by the lessee, the party concerned with
the lessee and an independent third party with financial capacity to fulfill the guarantee
obligation.
The Company calculates and recognizes the interest income for each period of the lease
term based on the fixed interest rate implicit in the lease, and the variable lease payments which
are obtained and not included in the net rental investment amount are included in the profit or
loss of the period when they actually occur.
3) Accounting treatment for operating leases
The Company adopts the straight line method or other systematic and reasonable method to
recognize the lease receipts from operating leases as rental income during each period of the
lease term. Capitalization of the initial direct expenses incurred in connection with operating
leases shall be apportioned on the same basis as the recognition of rental income during the lease
term, and shall be recorded in the profit or loss of the current period. Variable lease payments
obtained in connection with operating leases that are not incorporated in the lease receipts shall
be incorporated in the profit or loss of the period when they actually occur.
37. Termination of business
The Company recognizes components as termination of business components if one of the
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
following condition is met and that the component has already been disposed or classified as
held-for-sale assets and identifiable.
(1) The component represents a stand along major business or a stand along major area in
conducting business.
(2) The component is part of plan connecting to disposal of a stand along major business or
major area of conducting business.
(3) The component is a subsidiary that obtained specifically for resale.
Operating profit or loss such as the impairment loss and the amount of reversal shall be
presented in income statement as profit or loss from terminated business.
38. Re-purchase of shares
Before written-off or transfer, the shares that the Company re-purchased are dealt as treasury
shares. All expenses incurred for the re-purchase are charged in the cost of treasury shares.
Consideration and transaction expenses paid during the share re-purchase shall decrease
shareholder’s equity. No gain or losses shall be recognized during re-purchase, transfer or
written-off of the Company’s shares.
If the treasury shares is transferred, the difference between amount actually received and the
share’s carrying amount shall be charged to capital reserve, if the capital reserve is not sufficient to
offset, surplus reserve and retained earing shall be offset. If the treasury share is to written-off, the
share capital shall be decreased based on the face value of shares and the difference between the
carrying amount and its face value shall offset the capital reserve. If the capital reserve is not
sufficient to offset, deducting surplus reserve and retained earnings.
39. Safety production fee
The safety production fee is accrued by the Company in accordance with national regulations
and is included in the cost of related products or current profit or loss, and is also recorded in the
"specific reserve" item. When using the safety production fee, if it is an expense expenditure, it
shall be directly offset against the special reserve. If the fixed assets are formed, the expenses
incurred through the collection of "construction in progress" will be recognized as fixed assets
when the safety project is completed and reach the intended usable state; at the same time, the cost
of forming fixed assets will be offset against the special reserve, and recognize the accumulated
depreciation of the same amount. The fixed assets will not be depreciated in the subsequent
period.
40. Significant changes in accounting policies and estimates
(1) Changes in accounting policies
There were no significant changes in accounting policies during the year.
(2)Significant changes in accounting estimates
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
There were no significant changes in accounting estimates during the year.
IV.Taxes
1.Main types of taxes and corresponding tax rates
Tax type Basis Tax rate note
Domestic sales, providing manufacturing
13%
and repairing services
VAT Property leasing 9%
Other taxable services 6%
Simplified method 5%
Consumption tax Luxury watches 20%
Urban
maintenance and Turnover tax payable 7%、5%
construction tax
Corporate income
Taxable income See below table
tax
70% or 80% of the original cost of property
Property tax 1.2%、12%
or rental income
Corporate income tax of different entities:
Name of entities CIT rate
Shenzhen HARMONY World Watch Center Co.,
25%
Ltd.(①)
FIYTA Sales Co., Ltd.(①) 25%
Shenzhen FIYTA Precision Technology Co.,
15%
Ltd.(②)
Shenzhen FIYTA Technology Development Co.,
15%
Ltd.(②)
HARMONY World Watch Center(Hainan) Co.,
20%
Ltd.(⑤)
Shenzhen Xunhang Precision Technology Co., Ltd. 25%
Emile Choureit Timing (Shenzhen) Ltd. 25%
Liaoning Hengdarui Commercial & Trade Co., Ltd. 25%
EMPORAL (Shenzhen) Co., Ltd. 25%
Shenzhen Harmony E-commerce Co., Ltd.(⑤) 20%
FIYTA (Hong Kong) Ltd.(③) 16.5%
Montres Chouriet SA(④) 30%
Note ①:According to the regulations stated in “Interim Administration Method for Levy of
Corporate Income Tax to Enterprise that Operates Cross-regionally”, the head office of the
Company and its branch offices, the head office of HARMONY Company and its branch offices,
and the head office of Sales Company and its branch offices adopt tax submission method of
“unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and
Page 64
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
adjustment by finance authorities”. Branch offices mentioned above share 50% of the enterprise
income tax and prepay locally; and 50% will be prepaid by the head offices mentioned above.
Note ② :The Company enjoyed for “Reduction and Exemption in Corporate Income Tax
Rate for High and New Technology Enterprises that Require Key Support from the State”.
Note ③ : These companies are registered in Hong Kong and the income tax rate of Hong
Kong applicable is 16.50% this year.
Note ④ : The comprehensive tax rate of 30% is applicable for Swiss Company as it
registered in Switzerland.
Note ⑤: These companies are small and low-profit enterprises, which enjoy 20% tax rate.
2.Preferential treatment and corresponding approval
According to “Proclamation of Ministry of Finance and State Administration of Taxation in
Preferential Tax Rate to Small and Low Profit Enterprises and Sole-proprietors” (Caishui (2023) No.6),
small low-profit enterprises will be included in taxable income at 25% and to be taxed at a rate of 20%.
According to “Notice of Ministry of Finance and State Administration of Taxation in Extending
Expiration Period of Utilizing Losses for High-Tech Enterprises and Scientific Oriented Medium and
Small Enterprises” (Cai Shui [2018] No. 76) , starting from January 1, 2018. ， unutilized losses
incurred in prior 5 years before obtaining the status of High and New Tech Enterprise can be carried
forward and utilized in future years. The longest period was extended from 5 years to 10 years.
According to the Announcement of the Ministry of Finance and the State Administration of
Taxation on Further Improving the Policy of Pre-tax Deduction of Research and Development
Expenses (Cai Shui [2023] No. 7), the research and development expenses actually incurred by
enterprises in carrying out research and development activities, which have not been formed into
intangible assets and recognized as profit and loss for the current period, shall be deducted on the basis
of actual deduction in accordance with the regulations, and then deducted in accordance with 100% of
the actual amount incurred before tax starting from 1 January 2023; and if they are formed into If the
intangible assets are formed, starting from January 1, 2023, the intangible assets will be amortized at
200% of the cost of the intangible assets before tax.
A two-tier profits tax system will be implemented in Hong Kong from 2019, providing that
the profits tax rate for Hong Kong companies will be reduced to 8.25% for the first
HK2,000,000.00, with profits thereafter continuing to be taxed at 16.5%.
V.Notes to main items of the consolidated financial statements
(Unless otherwise indicated, the currency unit is Renminbi Yuan, the end of the period refers to
December 31,2023,the beginning of the period refers to January 1, 2023, and the end of the last period
refers to December 31, 2022)
Note 1. Monetary funds
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Cash on hand 178,996.87 173,368.68
Cash at bank 35,443,378.12 41,106,861.46
Other monetary funds 1,262,979.96 1,140,201.67
Deposit in finance company 467,743,798.76 271,327,031.83
Total 504,629,153.71 313,747,463.64
Including: Total overseas deposits 1,202,601.86 716,733.44
Deposit in finance company mainly deposited with AVIC Finance Co., Ltd.
As of December 31, 2023, The Company has no amounts pledged, frozen, or at potential risk
of recovery.
Cash with restricted usage is as follows
Item Closing balance Opening balance
Overseas deposit with restrictions remitting
1,202,601.86 716,733.44
back
Note 2. Bill receivable
1．Presented by category
Item Closing balance Opening balance
Bank acceptance bills 10,363,449.00 10,690,221.03
Commercial acceptance bills 7,905,523.37 21,524,691.07
Total 18,268,972.37 32,214,912.10
2．Presented by ECL types
Closing balance
Type Carrying amount Provision
Percentage Percentage Book value
Amount Amount
(%) (%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 18,685,052.55 100.00 416,080.18 2.23 18,268,972.37
losses on single basis
Including: Commercial
8,321,603.55 44.54 416,080.18 5.00 7,905,523.37
acceptance bills
Risk-free Bank
10,363,449.00 55.46 10,363,449.00
acceptance bills
Total 18,685,052.55 100.00 416,080.18 2.23 18,268,972.37
Continued：
Opening balance
Type
Carrying amount Provision Book value
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Percentage Percentage
Amount Amount
(%) (%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 33,347,790.58 100.00 1,132,878.48 3.40 32,214,912.10
losses on single basis
Including: Commercial
22,657,569.55 67.94 1,132,878.48 5.00 21,524,691.07
acceptance bills
Risk-free Bank
10,690,221.03 32.06 10,690,221.03
acceptance bills
Total 33,347,790.58 100.00 1,132,878.48 3.40 32,214,912.10
3．Notes receivable with expected credit loss provided based on credit risk
characteristic portfolio
Closing balance
Portfolio
Carrying amount Provision Percentage (%)
Bank acceptance bills 8,321,603.55 416,080.18 5.00
Commercial acceptance bills 10,363,449.00
Total 18,685,052.55 416,080.18
4．Bad debt movements in current period
Movements
Opening Closing
Types Received or Other
balance Accrual Written-off balance
reversal changes
Notes receivable
that provided
expected credit
losses on single
basis
Notes receivable
that provided
expected credit 1,132,878.48 716,798.30 416,080.18
losses on single
basis
Including:
Commercial 1,132,878.48 716,798.30 416,080.18
acceptance bills
Risk-free
Bank acceptance
bills
Total 1,132,878.48 716,798.30 416,080.18
5．Bills have been endorsed but not yet due at the end of the period.
Item Amount de-recognized Amount not de-recognized
Bank acceptance bills 47,646,674.86
Note 3. Accounts receivable
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1．Presentation by aging
Aging Closing balance Opening balance
Within 1 year 333,204,160.07 311,934,503.90
1-2 years 2,123,874.00 14,972,671.61
2-3 years 4,200,458.08 2,781,542.85
Over 3 years 18,005,255.95 16,064,539.96
Subtotal 357,533,748.10 345,753,258.32
Less: provision for bad debt 34,390,986.46 40,462,298.64
Total 323,142,761.64 305,290,959.68
2．Presentation by method of providing bad debt
Closing balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Accounts receivable that
provided expected credit 24,708,541.73 6.91 23,148,792.25 93.69 1,559,749.48
losses on single basis
Accounts receivable that
provided expected credit 332,825,206.37 93.09 11,242,194.21 3.38 321,583,012.16
losses on portfolio basis
Including: Receivable from
332,825,206.37 93.09 11,242,194.21 3.38 321,583,012.16
other customers
Total 357,533,748.10 100.00 34,390,986.46 323,142,761.64
Continued：
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Accounts receivable that
provided expected credit 34,982,967.68 10.12 29,705,797.13 84.92 5,277,170.55
losses on single basis
Accounts receivable that
provided expected credit 310,770,290.64 89.88 10,756,501.51 3.46 300,013,789.13
losses on portfolio basis`
Including: Receivable from
310,770,290.64 89.88 10,756,501.51 3.46 300,013,789.13
other customers
Total 345,753,258.32 100.00 40,462,298.64 11.70 305,290,959.68
3．Accounts receivable that provided expected credit losses on single basis included in
the closing balance
Closing balance
Name Bad debt ECL rate
Carrying amount Reasons
provision (%)
Receivable from other Existence of disputes,
24,708,541.73 23,148,792.25 93.69
customers customer
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance
Name Bad debt ECL rate
Carrying amount Reasons
provision (%)
mismanagement, etc.
4．In the portfolio, accounts receivable with expected credit loss provided based on
credit risk characteristic portfolio
Portfolio of receivable from other customers
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 330,569,799.62 9,694,581.78 2.93
1-2 years 786,438.13 78,643.81 10.00
2-3 years
Over 3 years 1,468,968.62 1,468,968.62 100.00
Total 332,825,206.37 11,242,194.21
5．Movements of provision during the period
Movements during the period
Opening Closing
Types Recovered or Other
balance Accrual Written-off balance
reversed movements
Accounts
receivable that
provided expected 29,705,797.13 1,013,478.97 7,508,493.54 85,000.00 -23,009.69 23,148,792.25
credit losses on
single basis
Accounts
receivable that
provided expected 10,756,501.51 1,052,151.99 751,246.27 -184,786.98 11,242,194.21
credit losses on
portfolio basis`
Including:
Receivable from 10,756,501.51 1,052,151.99 751,246.27 -184,786.98 11,242,194.21
other customers
Total 40,462,298.64 2,065,630.96 8,259,739.81 85,000.00 -207,796.67 34,390,986.46
Including：main recovery of bad debt provision in current period:
Name Amount Way of recovery Note
Fuzhou Cangshan Suning e-buy Plaza
4,547,371.89 Bank transfer
Co., Ltd.
Shanghai Pudong Suning e-buy Business
791,000.00 Bank transfer
Management Co., Ltd.
Fuzhou Suning e-buy Plaza Co., Ltd. 706,157.30 Bank transfer
6．Accounts receivable actually written off during the period
Item Amount written off
Accounts receivable actually written off 85,000.00
Page 69
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Including：main accounts receivable write-offs:
Whether
arising
Write-off from
Name Nature Amount Reasons for write-offs procedures connecte
performed d
transacti
ons
General
Xi’an Tangcheng Payment for
85,000.00 Too old to take back manager's Clogged
Limited goods
office
Total 85,000.00
7．Top 5 receivable accounts
Proportion in total
closing balance of
Name Closing balance Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in total 76,589,281.00 21.42 3,829,464.05
Note 4. Prepayments
1．Presentation of prepayments by aging
Closing balance Opening balance
Aging Percentage Percentage
Amount Amount
(%) (%)
Within one year 6,564,760.64 99.90 8,039,794.97 100.00
1-2 years 6,479.34 0.10
2-3 years
Total 6,571,239.98 100.00 8,039,794.97 100.00
2．Top 5 prepayments
Proportion in total closing
Name Closing balance
balance of prepayments (%)
Top 5 prepayments in total 2,884,693.00 43.90
Note 5. Other receivable
1．Presentation of other receivables by aging
Aging Closing balance Opening balance
Within one year 22,481,619.93 59,711,314.91
1 - 2 years 38,313,327.26 216,120.00
2- 3 years 119,250.00 649,029.90
Over 3 years 1,159,704.90 606,105.00
Subtotal 62,073,902.09 61,182,569.81
Less: bad debt provision 4,348,110.09 4,264,550.33
Page 70
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Aging Closing balance Opening balance
Total 57,725,792.00 56,918,019.48
2．Presented by nature
Nature Closing balance Opening balance
Security deposit 51,775,226.86 49,430,408.24
Petty cash 1,549,821.50 2,841,915.70
Others 8,748,853.73 8,910,245.87
Subtotal 62,073,902.09 61,182,569.81
Less: bad debt provision 4,348,110.09 4,264,550.33
Total 57,725,792.00 56,918,019.48
3．Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Carrying Bad debt
Book value Book value
amount provision amount provision
First stage 60,655,587.19 2,980,723.19 57,674,864.00 59,703,389.91 2,850,206.43 56,853,183.48
Second stage
Third stage 1,418,314.90 1,367,386.90 50,928.00 1,479,179.90 1,414,343.90 64,836.00
Total 62,073,902.09 4,348,110.09 57,725,792.00 61,182,569.81 4,264,550.33 56,918,019.48
4．Presented by bad debt provision method
Closing balance
category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Other receivables that provided
expected credit losses on single 1,418,314.90 2.28 1,367,386.90 96.41 50,928.00
basis
Other receivables that provided
expected credit losses on 60,655,587.19 97.72 2,980,723.19 4.91 57,674,864.00
portfolio basis
Including: Security deposit
51,304,601.86 82.65 2,603,277.66 5.07 48,701,324.20
portfolio
Petty cash portfolio 1,549,821.50 2.50 1,549,821.50
Social security payment
284,862.55 0.46 284,862.55
on-behalf portfolio
Portfolio of others 7,516,301.28 12.11 377,445.53 5.02 7,138,855.75
Total 62,073,902.09 100.00 4,348,110.09 57,725,792.00
Continued
Category Opening balance
Page 71
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Other receivables that provided
expected credit losses on single 1,479,179.90 2.42 1,414,343.90 95.62 64,836.00
basis
Other receivables that provided
expected credit losses on 59,703,389.91 97.58 2,850,206.43 4.77 56,853,183.48
portfolio basis
Including: Security deposit
48,600,258.24 79.43 2,476,810.04 5.10 46,123,448.20
portfolio
Petty cash portfolio 2,841,915.70 4.64 2,841,915.70
Social security payment
279,769.98 0.46 279,769.98
on-behalf portfolio
Portfolio of others 7,981,445.99 13.05 373,396.39 4.68 7,608,049.60
Total 61,182,569.81 100.00 4,264,550.33 6.97 56,918,019.48
5．Other receivables that provided expected credit losses on single basis included in the
closing balance
Closing balance
Name Bad debt ECL rate
Carrying amount Reason
provision (%)
Receivable from others 1,418,314.90 1,367,386.90 96.41 Commercial disputes
6．In the portfolio, other receivables with expected credit loss provided based on credit
risk characteristic portfolio
（1）Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 28,136,399.98 1,406,820.01 5.00
1 - 2 years 23,028,151.88 1,151,407.65 5.00
2- 3 years 100,000.00 5,000.00 5.00
Over 3 years 40,050.00 40,050.00 100.00
Total 51,304,601.86 2,603,277.66
（2）Petty cash portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 1,511,048.50
1 - 2 years 19,523.00
2- 3 years 19,250.00
Total 1,549,821.50
Page 72
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
（3）Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 284,862.55
（4）Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 7,516,301.28 377,445.53 5.02
7．Provision for bad debts of other receivables
First stage Second stage Third stage
Lifetime expected Lifetime expected
Bad debt provision Expected credit Total
credit losses (no credit losses (credit
losses over the next
credit impairment impairment
12 months
occurred) occurred)
Opening balance 2,850,206.43 1,414,343.90 4,264,550.33
Opening balance
movements in current
period
—Transfer into the
second stage
—Transfer into the
third stage
—Reverse back to
the second stage
—Reverse back to
the first stage
Accrual during the
188,362.28 15,525.00 203,887.28
period
Reversed during the
-58,073.95 -62,482.00 -120,555.95
period
Recovered during the
period
Written-off during the
period
Other movements 228.43 228.43
Closing balance 2,980,723.19 1,367,386.90 4,348,110.09
8．No other receivables were written-off during the period.
9．Top 5 other receivable accounts
Proportion to
Closing balance
closing balance of
Name Closing balance of bad debts
other receivables
provision
(%)
Top 5 other receivables in total 7,763,649.48 12.51 388,182.48
Note 6. Inventory
Page 73
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1．Classification
Closing balance Opening balance
Item Carrying
Provision Book value Carrying amount Provision Book value
amount
Raw
167,281,491.84 5,290,855.71 161,990,636.13 162,338,704.65 17,241,512.65 145,097,192.00
material
WIP 12,060,525.88 12,060,525.88 7,204,699.11 7,204,699.11
Stored
1,993,236,975.36 66,621,962.09 1,926,615,013.27 2,085,640,712.37 96,622,229.81 1,989,018,482.56
goods
Total 2,172,578,993.08 71,912,817.80 2,100,666,175.28 2,255,184,116.13 113,863,742.46 2,141,320,373.67
2．Provision for inventory
Opening Increase in current period Decrease in current period Closing
Item
balance Accrual Other Reversed Realized Others balance
Raw
17,241,512.65 1,767,804.67 198,541.68 13,917,003.29 5,290,855.71
material
Stored
96,622,229.81 11,782,189.77 16,398.16 14,121,974.81 27,676,880.84 66,621,962.09
goods
Total 113,863,742.46 13,549,994.44 214,939.84 14,121,974.81 41,593,884.13 71,912,817.80
Notes to provision for inventory
Item Evidence of determine NRV and future selling cost Reason for reversal or realized
Estimated selling price less estimated cost to Factors that caused impairment has been
Raw
complete and selling and distribution expenses and disappeared and the NAV is higher than its
material
associated taxes carrying amount
Estimated selling price less estimated selling and Inventory that already provided for was sold or
Stored goods
distributing expenses and associated taxes used in current period.
3．The provision is accrued by portfolio of assets
Closing balance
Portfolio Carrying Provision for inventory Criteria for accrued
Book value
amount Amount Percentage (%) benefits
New products of own
Inventory
brands launched in the
ageing 42,498,540.45 42,498,540.45
year are not subject to
portfolio
write-downs.
Total 42,498,540.45 42,498,540.45
Continued：
Portfolio Opening balance
Page 74
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Provision for inventory
Carrying Criteria for accrued
Amount Percentage Book value
amount benefits
(%)
New products of own
Inventory
brands launched in the
ageing 40,147,783.30 40,147,783.30
year are not subject to
portfolio
write-downs.
Total 40,147,783.30 40,147,783.30
Note 7. Other current assets
Item Closing balance Opening balance
Input VAT 21,032,239.30 12,967,188.47
Input VAT not yet certified 31,717,607.91 39,454,283.19
Prepaid corporate income tax 1,364,632.40 3,419,026.38
Others 18,134,912.20 10,499,007.28
Total 72,249,391.81 66,339,505.32
Note 8. Long-term equity investment
Movements during the period
Opening Investment gains Adjustment of
Investee Addition/new
balance and losses other
investment Withdrawn
recognized by comprehensive
equity method income
Associate
Shanghai Watch Co., Ltd.
58,182,086.90 -5,819,479.60
(Shanghai Watch)
Continued
Movements during the period Closing
Cash balance of
Investee Changes in Impairmen Closing balance
dividend Others impairmen
other equity t provision t provision
declared
Associate
Shanghai Watch -500,000.00 51,862,607.30
Note 9. Other equity instrument investments
Item Closing balance Opening balance
Xi’an Tangcheng Limited 85,000.00
Note 10. Investment property
1. Details of investment property
Item Property
I. Original cost
Page 75
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Property
1．Opening balance 619,762,618.36
2．Addition 572,405.53
Purchase
Transferred from fixed assets 572,405.53
Other reasons
3．Decrease
Disposal
Other reasons
4．Closing balance 620,335,023.89
II. Accumulated depreciation
1．Opening balance 244,783,123.65
2．Increased in current period 15,296,068.10
Accrual 15,044,992.22
Transferred from fixed assets 251,075.88
Other reasons
3．Decreased in current period
Disposal
Other reasons
4．Closing balance 260,079,191.75
III. Impairment provision
1．Opening balance
2．Increased in current period
Accrual
Transferred from fixed assets
Other reasons
3．Decreased in current period
Disposal
Other reasons
4．Closing balance
IV. Book value
1．Carrying amount at end of the period 360,255,832.14
2．Carrying amount at opening of the period 374,979,494.71
2. Notes to investment property
During the reporting period, certain self-use property of the Company were changed to lease
out and they were transferred from fixed assets to investment properties measured at cost model.
Page 76
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 11. Fixed assets
1. Status of fixed assets
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipment
I.Original cost
1. Opening
436,320,947.20 117,552,809.38 14,472,510.38 47,600,350.65 45,458,802.97 661,405,420.58
balance
2. Increased in
6,274,155.66 13,247,259.25 22,133.50 5,638,594.91 1,095,999.30 26,278,142.62
current period
Re-classification
Purchased 914,818.16 9,069,828.71 22,133.50 5,638,411.80 1,095,999.30 16,741,191.47
Translation
5,359,337.50 4,177,430.54 183.11 9,536,951.15
difference
Other
increase
3. Decrease in
1,005,470.23 132,279.42 1,217,550.05 2,581,726.49 2,460,547.92 7,397,574.11
current period
Disposal or
433,064.70 132,279.42 1,217,550.05 2,260,776.40 1,552,373.54 5,596,044.11
retired
Transferred to
investment 572,405.53 572,405.53
property
Translation
309,957.34 908,174.38 1,218,131.72
difference
Other
10,992.75 10,992.75
decrease
4. Closing
441,589,632.63 130,667,789.21 13,277,093.83 50,657,219.07 44,094,254.35 680,285,989.09
balance
II. Accumulated
depreciation
1. Opening
135,388,740.98 71,466,324.74 12,901,120.89 37,167,150.60 39,853,318.20 296,776,655.41
balance
2. Increased in
17,371,592.78 11,708,223.48 334,169.25 2,754,128.08 1,490,096.27 33,658,209.86
current period
Re-classification
Accrual 13,829,319.29 8,286,484.22 334,169.25 2,673,316.21 1,490,096.27 26,613,385.24
Translation
3,542,273.49 3,421,739.26 80,811.87 7,044,824.62
difference
Other
increase
3. Decrease in
553,306.35 40,954.90 1,156,620.74 1,964,736.59 2,218,612.28 5,934,230.86
current period
Disposal or
302,230.47 40,954.90 1,156,620.74 1,964,736.59 1,281,465.83 4,746,008.53
retired
Transferred to
investment 251,075.88 251,075.88
property
Translation
937,146.45 937,146.45
difference
Other
decrease
4. Closing
152,207,027.41 83,133,593.32 12,078,669.40 37,956,542.09 39,124,802.19 324,500,634.41
balance
III. Impairment
provision
1. Opening
balance
Page 77
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipment
2. Increase in
current period
Re-classification
Accrual
Translation
difference
Other
increase
3. Decrease in
current period
Disposal or
retired
Transferred
into
investment
property
Translation
difference
Other
decrease
4. Closing
balance
IV. Book value
1. Carrying
amount at end of 289,382,605.22 47,534,195.89 1,198,424.43 12,700,676.98 4,969,452.16 355,785,354.68
period
2. Carrying
amount at
300,932,206.22 46,086,484.64 1,571,389.49 10,433,200.05 5,605,484.77 364,628,765.17
beginning of
period
2. Fixed assets that do not have certificate for property right
Item Book value Reason for not having certificate for property rights
Property 190,716.25 Issues relating to property right
Note 12. Right-of-use assets
Item Property
I. Original cost
1．Opening balance 362,417,078.85
2．Increase in current period 103,612,246.80
Re-classification
Lease 100,802,964.10
Translation difference 3,116.50
Other increase 2,806,166.20
3．Decrease in current period 312,819,427.84
Maturity of lease term 304,816,556.54
Translation difference
Page 78
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Property
Other decrease 8,002,871.30
4．Closing balance 153,209,897.81
II. Accumulated depreciation
1．Opening balance 252,086,566.82
2．Increase in the period 103,960,161.59
Reclassification
Accrual 103,958,386.94
Translation difference 1,774.65
Other increase
3．Decrease in the period 312,289,312.24
Maturity of lease term 304,816,556.54
Translation difference
Other decrease 7,472,755.70
4．Closing balance 43,757,416.17
III. Impairment provision
1．Opening balance
2．Increase in the period
Reclassification
Accrual
Translation difference
Other increase
3．Decrease in the period
Maturity of lease term
Translation difference
Other decrease
4．Closing balance
IV. Book value
1．Carrying amount at end of period 109,452,481.64
2．Carrying amount at beginning of period 110,330,512.03
Note 13. Intangible asset
1．Status
Right to use
Item Land-use right Software system Total
trademarks
I. Original cost
1．Opening
34,933,822.40 33,197,692.51 16,518,590.29 84,650,105.20
balance
2．Increase in the
2,072,450.42 80,894.93 2,153,345.35
period
Page 79
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Right to use
Item Land-use right Software system Total
trademarks
Purchase 2,072,450.42 80,894.93 2,153,345.35
Internal R&D
Other source
3．Decrease in the
27,470.38 27,470.38
period
Disposal 27,470.38 27,470.38
Other reasons
4．Closing balance 34,933,822.40 35,242,672.55 16,599,485.22 86,775,980.17
II. Accumulated
amortization
1．Opening
16,515,922.01 25,903,908.15 9,030,056.41 51,449,886.57
balance
2．Increase in the
733,553.29 1,717,415.91 1,238,214.01 3,689,183.21
period
Accrual 733,553.29 1,717,415.91 1,238,214.01 3,689,183.21
Other reasons
3．Decrease in the
27,470.38 27,470.38
period
Disposal 27,470.38 27,470.38
Other reasons
4．Closing balance 17,249,475.30 27,593,853.68 10,268,270.42 55,111,599.40
III. Impairment
provision
1．Opening
balance
2．Increase in the
period
Accrual
Other reasons
3．Decrease in the
period
Transfer
Other reasons
Other transfer
4．Closing balance
IV. Book value
1．Book value at
17,684,347.10 7,648,818.87 6,331,214.80 31,664,380.77
end of the period
2．Book value at
beginning of the 18,417,900.39 7,293,784.36 7,488,533.88 33,200,218.63
period
Note 14. Long-term deferred expenses
Item Opening balance Increase Amortized Other decrease Closing balance
Counter fabrication
22,247,070.17 22,066,842.07 23,175,000.62 2,130,567.78 19,008,343.84
expenses
Page 80
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Opening balance Increase Amortized Other decrease Closing balance
Renovation expenses 116,030,323.61 39,047,795.69 58,272,039.86 509,069.24 96,297,010.20
Others 6,211,058.40 7,760,754.71 6,952,812.02 7,019,001.09
Total 144,488,452.18 68,875,392.47 88,399,852.50 2,639,637.02 122,324,355.13
Note 15. Deferred tax assets and deferred tax liabilities
1．Detail of deferred tax assets before offsetting
Closing balance Opening balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Impairment provision 107,672,653.16 24,371,732.35 143,503,292.94 30,225,885.07
Unrealized profit for related
83,620,908.60 20,855,280.62 75,781,866.09 18,681,772.44
party transactions
Deductible losses 126,562,143.51 31,197,892.87 157,860,317.75 37,779,977.71
Restricted shares 6,263,007.85 1,449,733.06 23,141,270.85 5,411,762.47
Advertisement expenses that
515,068.99 128,767.25
allowed to deduct in future years
Lease liabilities 109,682,960.95 27,420,740.27 113,136,916.00 28,284,229.00
Others 5,168,527.80 1,292,131.95 7,295,926.80 1,823,981.80
Total 438,970,201.87 106,587,511.12 521,234,659.42 122,336,375.74
2．Detail of deferred tax liabilities before offsetting
Closing balance Opening balance
Item taxable temporary Deferred tax Taxable temporary Deferred tax
difference liabilities difference liabilities
One-off deduction of fixed asset
28,437,227.07 4,265,584.06 29,872,344.91 4,480,851.74
before Corporate income tax
Right-of-use asset 109,212,305.15 27,303,076.29 110,279,028.02 27,569,757.01
Total 137,649,532.22 31,568,660.35 140,151,372.93 32,050,608.75
3．Net-off of deferred tax asset or liabilities
Closing balance of Opening balance of
Amount off-set at Amount off-set at
Item deferred tax asset or deferred tax asset or
current period prior period
liability after off-set liability after off-set
deferred tax asset 26,359,739.66 80,227,771.46 26,551,763.80 95,784,611.94
deferred tax liabilities 26,359,739.66 5,208,920.69 26,551,763.80 5,498,844.95
4．Details of deductible temporary difference and deductible losses that does not recognize
as deferred income tax asset
Item Closing balance Opening balance
Impairment provision 3,395,341.37 16,220,176.97
Deductible losses 52,523,345.89 50,761,915.00
Page 81
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Total 55,918,687.26 66,982,091.97
Deductible losses of Montres Chouriet SA, which are sub-subsidiary of the Company, is not
recognized as deferred income tax asset as it’s uncertain that the companies can get sufficient taxable
income in future. FIYTA（Hong Kong）Ltd, a subsidiary of the Company, does not need to recognize
the deferred income tax assets for impairment provision according to the local tax policy.
5．Deductible losses that are not recognized as deferred tax asset will due in the following
years：
Year Closing balance Opening balance Note
2023 8,456,818.95
2024 23,049,503.37 18,449,678.50
2025 29,473,842.52 23,855,417.55
Total 52,523,345.89 50,761,915.00
Note 16. Other non-current assets
Closing balance Opening balance
Item Carrying
Provision Book value Carrying amount Provision Book value
amount
Prepayment for
construction and 9,434,627.17 9,434,627.17 11,593,741.57 11,593,741.57
equipment
Total 9,434,627.17 9,434,627.17 11,593,741.57 11,593,741.57
Note 17. Short-term loan
Item Closing balance Opening balance
Credit loans 250,000,000.00 290,000,000.00
Accrued interest payable 187,763.87 237,111.11
Total 250,187,763.87 290,237,111.11
Note 18. Notes payable
Types Closing balance Opening balance
Commercial bills payable 2,000,600.00
Note 19. Account payables
Item Closing balance Opening balance
Trade payables 148,281,377.41 149,811,781.06
Payables for material purchased 23,371,455.42 19,729,474.20
Payables for project 2,173,074.88 1,048,201.41
Total 173,825,907.71 170,589,456.67
Page 82
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 20. Advances from customer
Item Closing balance Opening balance
Rental received in advance 10,267,758.31 16,960,128.83
Total 10,267,758.31 16,960,128.83
Note 21. Contract liabilities
Item Closing balance Opening balance
Advances for goods received 12,286,243.62 16,844,437.47
Total 12,286,243.62 16,844,437.47
Note 22. Employee remuneration payable
1．Status
Item Opening balance Increase Decrease Closing balance
Short-term employee benefits 122,389,603.47 573,249,889.40 581,435,441.84 114,204,051.03
Post-employment benefits -
9,282,692.00 45,699,776.34 49,401,016.98 5,581,451.36
defined contribution plans
Termination benefits 4,915,643.91 3,561,468.21 8,177,803.91 299,308.21
Total 136,587,939.38 622,511,133.95 639,014,262.73 120,084,810.60
2．Short-term employee benefits
Item Opening balance Increase Decrease Closing balance
Salaries, bonus, allowances 121,169,046.53 514,306,267.70 522,193,272.18 113,282,042.05
Staff welfare 10,643.28 9,991,313.96 9,839,862.22 162,095.02
Social insurances 404,028.29 22,623,655.78 23,027,605.75 78.32
Including:1.Medical
404,028.29 20,961,272.11 21,365,300.40
insurance
2. Supplementary
medical insurance
3.Work-related injury
894,581.96 894,503.64 78.32
insurance
4.Maternity insurance 767,801.71 767,801.71
Housing Fund 169,121.00 19,257,855.90 19,413,425.90 13,551.00
Labor union fees and
636,764.37 7,070,796.06 6,961,275.79 746,284.64
education fee
Total 122,389,603.47 573,249,889.40 581,435,441.84 114,204,051.03
3．Defined contribution plans
Item Opening balance Increase Decrease Closing balance
Basic pension insurance 290,781.95 40,649,553.03 40,732,129.01 208,205.97
Unemployment insurance 581.68 1,203,467.38 1,203,669.18 379.88
Annuity 8,991,328.37 3,846,755.93 7,465,218.79 5,372,865.51
Total 9,282,692.00 45,699,776.34 49,401,016.98 5,581,451.36
Page 83
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 23. Taxes payable
Item Closing balance Opening balance
VAT 38,997,243.97 39,086,878.23
Corporate income tax 21,276,050.77 16,751,872.66
Individual income tax 1,101,633.76 1,070,872.15
Urban maintenance and
1,047,680.77 1,353,097.21
construction tax
Educational surcharges 748,598.11 966,809.02
Others 1,016,953.93 1,540,639.03
Total 64,188,161.31 60,770,168.30
Note 24. Other payables
Item Closing balance Opening balance
Dividends payable 2,058,352.24 6,324,013.97
Other payables 119,879,448.83 158,736,108.61
Total 121,937,801.07 165,060,122.58
Note: Other payables in above table refers to other payables excluding interest payable and
dividends payable.
1. Dividends payable
Reasons for not being
Item Closing balance Opening balance
paid
Dividends for ordinary shares 2,058,352.24 6,324,013.97 unlock
Total 2,058,352.24 6,324,013.97
2. Other payables
(1) Other payables by nature
Nature Closing balance Opening balance
Security deposit 34,075,198.63 38,319,837.05
Shop activity fund 17,335,559.49 16,105,216.84
Decoration expenses 10,214,019.04 12,827,532.03
Repurchase liability for restricted shares 14,304,862.81 50,759,806.16
Other 43,949,808.86 40,723,716.53
Total 119,879,448.83 158,736,108.61
(2) Material other receivables with aging over 1 year
Name Closing balance Reasons for not being paid
Company A 4,614,077.01 Undue
Page 84
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Name Closing balance Reasons for not being paid
Company B 2,032,676.76 Undue
Company C 2,020,950.20 Undue
Company D 1,807,296.80 Undue
Company E 1,442,275.27 Undue
Company F 1,060,132.00 Undue
Total 12,977,408.04
Note 25. Non-current liabilities due within one year
Item Closing balance Opening balance
Lease liabilities due in one year 66,399,004.20 71,546,316.16
Total 66,399,004.20 71,546,316.16
Note 26. Other current liabilities
Item Closing balance Opening balance
Output VAT not yet realized 1,589,635.30 1,686,806.01
Total 1,589,635.30 1,686,806.01
Note 27. Lease liabilities
Item Closing balance Opening balance
Buildings and Structures 113,786,386.87 113,365,689.55
Less: unrecognised finance costs 3,861,030.15 176,811.81
Subtotal present value of lease
109,925,356.72 113,188,877.74
receipts
Less: lease liabilities due in one year 66,399,004.20 71,546,316.16
Total 43,526,352.52 41,642,561.58
Interest expenses for lease liabilities recognized in current period was RMB4,583,361.68.
Note 28. Deferred income
Opening Closing
Item Increase Decrease Reason
balance balance
Asset related
1,295,926.80 343,141.11 952,785.69
government subsidy
Revenue related
government subsidy
Total 1,295,926.80 343,141.11 952,785.69
Deferred income related to government subsidy
The Company's government subsidy are detailed in Note VIII Government subsidy.1 for
liability items involving government grants.
Page 85
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 29. Share capital
Movements: increase(+) , decrease(－)
Capitalizati
Item Opening balance Newly Bonus on of Closing balance
Others Subtotal
issued share capital
reserves
Total shares 417,627,960.00 -2,407,990.00 -2,407,990.00 415,219,970.00
Total 417,627,960.00 -2,407,990.00 -2,407,990.00 415,219,970.00
Notes to movements：
1. Pursuant to the "Proposal on the Repurchase and Cancellation of Certain Restricted
Shares under the 2018 A-share Restricted Share Incentive Plan (Phase II)" considered and
approved by the Board of Directors and the general meeting of the Company, 206,860 A-share
restricted shares held by seven departing former incentive recipients, which had been granted but
not yet released from restriction on sale, were repurchased and cancelled.
2. Pursuant to the ''Proposal on the Failure to Achieve the Conditions for Release of
Restricted Shares during the Second Release Period of the 2018 A-share Restricted Share
Incentive Plan (Phase II) and the Repurchase and Cancellation of Certain Restricted Shares''
considered and approved by the Board of Directors and the General Meeting of Shareholders of
the Company, 2,201,130 restricted shares of A-shares held by 120 incentive recipients for whom
the conditions for release of restricted shares have not been fulfilled are to be repurchased and
cancelled.
Note 30. Capital reserve
Opening
Item Item Increase Decrease
balance
Share premium 969,665,728.36 12,799,265.10 14,207,807.55 968,257,185.91
Other capital reserve 37,420,915.12 3,184,288.69 18,703,356.55 21,901,847.26
Total 1,007,086,643.48 15,983,553.79 32,911,164.10 990,159,033.17
Notes to capital reserve:
1. Pursuant to the ''Resolution on the fulfillment of the conditions for the release of restricted
shares during the first release period of the 2018 A-share Restricted Stock Incentive Plan (Phase
II)'' and the ''Resolution on the fulfillment of the conditions for the release of restricted shares
during the third release period of the 2018 A-share Restricted Stock Incentive Plan (Phase I)''
considered and approved by the Board of Directors and the General Meeting of Shareholders of
the Company, in the year of 2023, RMB3,436,710,000 A-share restricted shares which met the
conditions for release from restricted sale were released from restricted sale, and the capital
surplus of RMB12,799,265.10 corresponding to the restricted shares of the above incentive
recipients was transferred from "Other capital surplus" to "Share premium".
Page 86
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
2. As described in Note V. 29, the Company repurchased restricted shares, and the equity
premium was reduced by RMB14,195,451.00 accordingly.
3. Pursuant to the "Program on the Repurchase of Certain Domestically Listed Foreign
Shares (B Shares)" considered and approved at the Eleventh Meeting of the Tenth Session of the
Board of Directors and the General Meeting of Shareholders of the Company, in 2023, the
transaction costs incurred by the Company for the repurchase of the Company's shares through
the repurchase of the special securities account amounted to RMB12,356.55, which was offset
against the equity premium of RMB12,356.55.
4. Pursuant to the Proposal on the Grant of Restricted Shares to the Incentive Recipients
under the Company's 2018 A-Share Restricted Stock Incentive Plan (Phase II), which was
considered and approved by the Board of Directors and the General Meeting of Shareholders of
the Company. In 2023, the services obtained by the Company from the above incentive recipients
were included in the relevant costs or expenses and increased the other capital surplus by
RMB1,825,092.95 accordingly.
5. Pursuant to the ''Proposal on the Failure to Achieve the Conditions for Release of
Restricted Shares during the Second Release Period of the 2018 A-Share Restricted Stock
Incentive Plan (Phase II) and the Repurchase and Cancellation of Certain Restricted Shares''
considered and approved by the Board of Directors and the General Meeting of Shareholders of
the Company, in the year 2023, 2,201,130 A-share restricted shares held by 120 incentive
recipients for whom the conditions for release of restricted shares have not been reached were
repurchased and cancelled. Eliminate the services of the above incentive recipients charged to the
relevant costs or expenses and reduce the other capital surplus by RMB5,904,091.45 accordingly.
6. The amount of income tax effect of the difference between the amount deducted before
income tax for the current year and the amount of related costs and expenses recognized during
the waiting period resulting from the difference between the fair price at the time of unlocking of
restricted shares and the grant price at the time of grant was adjusted to other capital surplus by
RMB1,359,195.74 accordingly.
Note 31. Treasury shares
Item Opening balance Increase Decrease Closing balance
Share repurchase 64,340,669.42 64,340,669.42
Share based payment 50,759,806.16 36,454,943.35 14,304,862.81
Total 50,759,806.16 64,340,669.42 36,454,943.35 78,645,532.23
Notes to treasury shares:
1. In 2023, the Company repurchased an aggregate of 9,355,763 B shares of the Company
through the Shenzhen Stock Exchange by way of centralized bidding, and paid a repurchase
amount of HK70,401,771.17 (excluding transaction costs), equivalent to RMB64,340,669.42,
Page 87
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
thus increasing "Reduction of registered capital repurchase" by RMB64,340,669.42.
2. As described in Note V. 29. 2, the Company repurchased and canceled the A-share
restricted shares for which the conditions for release from restriction on sale had not been met,
thereby reducing the "Restricted share-based payments" by RMB15,187,797.00.
3. As described in Note V. 29. 1, the Company repurchased and canceled the A-share
restricted shares that had been granted but not yet released from restriction, thereby reducing
"Restricted share-based payments" by RMB1,415,644.00; and reduced "Restricted share-based
payments" by RMB588,620.00 in respect of the corresponding cash dividends.
4. As described in Note V. 30. 1, for those shares that meet the unlocking conditions for
restricted shares and do not need to be repurchased, the corresponding repurchase obligations
were derecognized, thus reducing "Restricted share-based payments" by RMB19,262,882.35.
Page 88
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 32. Other Comprehensive income
Amount in current period
Less: Less:
Less:
record record
record
ed in Less: ed in
ed in
OCI in reserv OCI in
OCI in
prior e of prior
prior Attribute Less:
period hedgin period
period to move
Opening and g Les Attribute and Closing
Item and non-contr ments
balance Pre-tax transfe transfe s: to parent transfe balance
transfe olling of
amount rred to rred to CI company rred to
rred to sharehold defied
financi related T after tax retaine
profit ers after benefit
al assets d
or loss tax plan
assets or earnin
in
at liabilit gs in
curren
amorti ies curren
t
zed t
period
cost period
I. Other
comprehens
ive income
items which
will not be
reclassified
subsequentl
y to profit or
loss
II. Other
comprehens
ive income
items which
5,739,5 13,585, 13,585, 19,325,
may be
89.89 746.04 746.04 335.93
reclassified
subsequentl
y to profit or
loss
Including:t
5,739,5 13,585, 13,585, 19,325,
ranslation
89.89 746.04 746.04 335.93
difference
5,739,5 13,585, 13,585, 19,325,
Total
89.89 746.04 746.04 335.93
Page 89
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 33. Specific reserve
Item Opening balance Increase Decrease Closing balance
Safety production fee 2,012,064.91 1,537,825.22 326,732.07 3,223,158.06
Total 2,012,064.91 1,537,825.22 326,732.07 3,223,158.06
Note 34. Surplus reserve
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserve 213,025,507.50 213,025,507.50
Discretionary surplus
61,984,894.00 61,984,894.00
reserve
Total 275,010,401.50 275,010,401.50
Notes to surplus reserve:
Note: According to the Company Law and Articles of Association, the Company draws
statutory surplus reserve at 10% of net profit. If the statutory surplus reserve is over 50% of the
Company’s registered capital, drawing of statutory surplus reserve will be stopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve.
If approved, discretionary surplus reserve can be used to make up for losses in previous years or
increase share capital.
Note 35. Undistributed profit
Item Current period Prior period
Undistributed profit at the end of prior year before
1,479,706,638.53 1,338,444,326.09
adjustments
Adjustments to undistributed profit at the
beginning of year (“+” for increase and “-“ for
decrease)
Undistributed profit at the beginning of year after
1,479,706,638.53 1,338,444,326.09
adjustment
Plus: Net profit attributable to the owner of the
333,178,102.37 266,681,451.84
parent company for the year
Less: statutory surplus reserve drawn
Dividends payable to ordinary shares 103,371,355.14 125,419,139.40
Undistributed profit at the end of year 1,709,513,385.76 1,479,706,638.53
Note 36. Operating income and operating cost
1．Operating income and operating cost
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Main business 4,553,706,250.49 2,904,751,241.51 4,336,586,473.74 2,738,100,529.23
Other business 15,983,752.50 712,233.30 17,510,406.62 872,261.88
Page 90
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Total 4,569,690,002.99 2,905,463,474.81 4,354,096,880.36 2,738,972,791.11
2．Revenue generated by contract
Types of contract Amount in current period Amount in prior period
I. Types of goods
Watch
4,270,245,173.86 4,044,205,847.75
business
Precision
133,103,042.03 163,114,009.23
manufacturing
Other business 15,916,680.92 17,510,406.62
II. Categorized
based on timing
of goods transfer
At a point of
4,410,670,831.14 4,212,548,175.21
time
During a
8,594,065.67 12,282,088.39
period of time
Note: revenue generated by contract does not include lease income of RMB150,425,106.18
which is regulated under “CAS No.21 – Lease”.
Note 37. Tax and surcharges
Item Amount in current period Amount in prior period
Consumption tax 12,205,585.22 10,509,059.81
Urban maintenance and
5,188,370.21 4,483,205.18
construction tax
Educational surcharge 3,452,657.63 2,988,250.62
Property tax 7,512,564.92 5,824,577.36
Stamp duty 3,040,109.98 3,814,124.17
Others 4,794,558.14 3,180,982.59
Total 36,193,846.10 30,800,199.73
Note 38. Selling and distribution expenses
Item Amount in current period Amount in prior period
Salary 364,493,305.57 390,723,066.47
Department store expense and rental 159,738,493.87 154,977,256.13
Market promotion expenses 146,787,677.11 114,559,488.13
Depreciation and amortization 187,456,893.25 210,324,656.21
Packaging expenses 10,367,129.63 8,210,424.75
Utilities and property management expenses 22,673,870.27 22,115,070.79
Shipping fees 5,921,929.02 5,928,120.89
Office expenses 6,285,406.47 5,617,713.76
Page 91
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Travel expenses 8,415,884.60 4,533,814.79
Entertainment expenses 4,581,476.42 3,081,324.66
Others 7,287,113.11 11,761,893.82
Total 924,009,179.32 931,832,830.40
Note 39. Administrative expenses
Item Amount in current period Amount in prior period
Salary 159,074,391.51 169,831,180.19
Depreciation and amortization 23,462,090.05 23,584,581.61
Travel expenses 4,773,457.90 1,651,207.39
Office expenses 3,174,249.82 3,967,189.58
Agents fees 1,917,258.68 1,764,355.96
Rental and utilities 1,359,636.27 941,300.03
Entertainment expenses 1,368,967.18 764,414.05
Vehicle and transportation expenses 1,884,805.22 1,528,304.66
Telecommunication expenses 368,370.99 825,712.63
Others 7,976,049.62 14,156,262.42
Total 205,359,277.24 219,014,508.52
Note 40. R&D expenses
Item Amount in current period Amount in prior period
Salary 43,658,293.35 47,534,889.46
Sample and material expenses 2,219,443.20 1,964,204.63
Molding expenses 2,263.43 853,056.11
Depreciation and amortization 4,300,190.56 4,852,325.18
Technical cooperation fee 2,758,347.16 217,203.80
Others 4,863,706.38 5,666,906.43
Total 57,802,244.08 61,088,585.61
Note 41. Financial expenses
Item Amount in current period Amount in prior period
Interest expenses 12,824,222.06 16,846,749.14
Less: Interest income 5,722,586.39 3,923,999.48
Exchange gain or losses 1,879,443.15 -3,053,760.78
Bank charges 12,488,693.95 11,319,753.23
Total 21,469,772.77 21,188,742.11
Note 42. Other income
Page 92
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1．Details
Sources of other income Amount in current period Amount in prior period
Government subsidy 9,105,016.49 18,648,210.06
Commission on IIT payment 494,598.35
VAT plus credit 1,835,758.94
Total 11,435,373.78 18,648,210.06
2．Government subsidy included in other income
The Company's government subsidy are detailed in Note VIII Government subsidy.2 for
government subsidy recognized in profit or loss.
Note 43. Investment gain
Item Amount in current period Amount in prior period
Gain from long-term equity investments
-5,819,479.60 3,026,481.59
accounted for using equity method
Total -5,819,479.60 3,026,481.59
Note 44. Credit impairment loss
Item Amount in current period Amount in prior period
Bad debt loss 6,827,575.82 4,845,379.45
Total 6,827,575.82 4,845,379.45
Note 45. Asset impairment loss
Item Amount in current period Amount in prior period
Inventory decline in value 571,980.37 -37,625,482.96
Total 571,980.37 -37,625,482.96
Note 46. Gains from assets disposal
Item Amount in current period Amount in prior period
Gains (losses) from assets disposal 527,753.57 -203,932.45
Gains (losses) from right-of-use
158,115.00 295,857.51
assets disposal
Total 685,868.57 91,925.06
Note 47. Non-operating income
Amount included in
Amount in current
Item Amount in prior period non-recurring gains or
period
losses in current period
Payables cannot be paid 1,346,926.73 305,066.79 1,346,926.73
Compensation 2,215,389.10 860,904.01 2,215,389.10
Revenues from rights-based
938,486.50 938,486.50
compensation
Page 93
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Others 269,704.47 121,231.28 269,704.47
Total 4,770,506.80 1,287,202.08 4,770,506.80
Note 48. Non-operating expense
Amount included in
Amount in current Amount in prior non-recurring gains or
Item
period period losses in current
period
Donation 311,464.98 78,860.00 311,464.98
Fine and penalty for late payment 6,014.28 403,084.07 6,014.28
Payment for breach of agreement 37,725.30 1,412,548.66 37,725.30
Others 504,565.54 456,773.58 504,565.54
Total 859,770.10 2,351,266.31 859,770.10
Note 49. CIT expenses
1．Details
Item Amount in current period Amount in prior period
Current tax expense for the year
88,559,245.72 86,356,685.06
based on tax law and regulations
Changes in deferred tax
15,266,916.22 -13,916,465.05
assets/liabilities
Total 103,826,161.94 72,440,220.01
2．Reconciliation between income tax expenses and accounting profit is as follows:
Item Amount in current period
Profits before tax 437,004,264.31
Income tax calculated based on statutory tax rate 109,251,066.08
Effect of different tax rates applied by subsidiaries -10,206,789.27
Adjustment to income tax of previous years 6,187,582.94
Effect of non-taxable income 1,454,869.90
Effect of non-deductible costs, expenses and losses 781,125.37
Effect of using the deductible temporary differences or deductible losses
-337,571.86
for which no deferred tax asset was recognized in prior period
Effect of deductible temporary differences or deductible losses for which
no deferred tax asset was recognized this year
Effect of research and development expenses super deduction -4,769,518.22
Others 1,465,397.00
Income tax expenses 103,826,161.94
Note 50. Notes to cash flow statement
1. Cash received from other operating activities
Item Amount in current period Amount in prior period
Security deposit 7,550,296.24 15,956,047.24
Page 94
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Government subsidy 8,796,670.12 18,151,302.96
Promotion expenses 12,561,700.18 12,201,925.26
Interest income 5,722,586.39 3,923,999.48
Return of petty cash 7,787,782.02 8,030,966.63
Others 25,760,176.26 21,392,611.71
Total 68,179,211.21 79,656,853.28
2. Cash paid for other operating activities
Item Amount in current period Amount in prior period
Security deposit 11,191,285.76 24,008,323.15
Petty cash advanced to employee 22,048,433.11 11,049,894.11
Current period expenses 293,728,229.26 288,360,173.00
Others 60,670,140.56 617,269.28
Total 387,638,088.69 324,035,659.54
3. Cash paid for other financing activities
Item Amount in current period Amount in prior period
Lease payment 114,908,744.94 124,087,402.37
Cash paid for re-purchase of shares 83,148,230.83 53,390,338.09
Total 198,056,975.77 177,477,740.46
Note 51. Supplement information to cash flow statement
1. Supplement to cash flow statement
Amount in current
Item Amount in prior period
period
1. Reconciliation of net profit/loss to cash flows from
operating activities：
Net profit 333,178,102.37 266,681,451.84
Add: Credit impairment loss -6,827,575.82 -4,845,379.45
Impairment for assets -571,980.37 37,625,482.96
Depreciation of fixed assets、oil and gas assets and
41,658,377.46 40,524,642.37
productive biological assets
Depreciation of right-of-use assets 103,958,386.94 110,464,700.15
Intangible asset amortization 3,689,183.21 5,009,348.81
Amortization of long-term deferred expenses 91,039,489.52 110,435,014.09
Loss on disposal of fixed assets, intangible assets, and
-685,868.57 -91,925.06
other long-term assets (“-“ for gain)
Loss on scrap of fixed assets (“-“ for gain)
Loss on changes of fair value (“-“ for gain)
Page 95
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Amount in current
Item Amount in prior period
period
Financial expenses (“-“ for income) 10,346,099.61 16,846,749.14
Investment loss (“-“ for gain) 5,819,479.60 -3,026,481.59
Decrease in deferred tax assets (“-“ for increase) 15,556,840.48 -14,551,337.29
Increase in deferred tax liabilities (“-“ for decrease) -289,924.26 262,330.92
Decrease in inventories (“-“ for increase) 82,605,123.05 -92,627,165.17
Decrease in operating receivables (“-“ for increase) 34,507,754.85 121,164,749.65
Increase in operating payables (“-“ for decrease) -77,781,831.49 -117,643,404.85
Others -3,800,168.60
Net cash flows from operating activities 632,401,487.98 476,228,776.52
2. Significant investment or financing activities not
involving cash:
Debts converted to capital
Convertible debts mature within one year
Added right-of-use assets in the current period
3．Net changes in cash and cash equivalents:
Cash at end of year 504,629,153.71 313,738,389.64
Less: cash at beginning of year 313,738,389.64 210,254,737.14
Plus: cash equivalents at end of year
Less: cash equivalents at beginning of year
Net increase in cash and cash equivalents 190,890,764.07 103,483,652.50
2. Total cash outflows related to lease
Total cash outflows related to lease amounted to RMB114,908,744.94. （ Prior period ：
RMB124,087,402.37）
3. Cash and cash equivalents
Item Closing balance Opening balance
I. Cash 504,629,153.71 313,738,389.64
Incl. Cash on hand 178,996.87 173,368.68
Bank deposit available for immediate payment 503,187,176.88 312,433,893.29
Other monetary funds available for immediate
1,262,979.96 1,131,127.67
payment
II. Cash equivalents
Including Bond investment due in three months
III. Cash and cash equivalents at the end of year 504,629,153.71 313,738,389.64
Including Restricted cash and cash equivalents for the 1,202,601.86 716,733.44
Page 96
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Company and its subsidiaries
4. Restricted use but still presented as cash and cash equivalents
Item Amount for the period rationale
Funds in the accounts of the Company's subsidiary,FIYTA（Hong
Kong）Ltd, and its grandson, Montres Chouriet SA, which are kept
Cash at bank 1,202,601.86
outside the country and are subject to restrictions on repatriation of
funds, but do not affect their daily use.
Note 52. Monetary items denominated in foreign currency
1．Monetary items denominated in foreign currency
Balance denominated in
Balance translated in
Item foreign currency as at 31 Exchange rate
RMB as at 31 Dec 2023
Dec 2023
Monetary fund 4,912,660.52
USD 197,793.98 7.0827 1,400,915.42
EUR 109,603.02 7.8592 861,392.06
HKD 1,594,744.82 0.9062 1,445,189.46
CHF 143,158.27 8.4184 1,205,163.58
Accounts receivable 7,180,426.44
USD 496,860.67 7.0827 3,519,115.06
HKD 3,737,843.78 0.9062 3,387,308.79
EUR 4,824.46 7.8592 37,916.39
CHF 28,044.07 8.4184 236,086.20
Other receivables 243,119.93
HKD 119,645.92 0.9062 108,425.53
CHF 16,000.00 8.4184 134,694.40
Accounts payable 8,936,497.51
HKD 552,191.52 0.9062 500,407.00
CHF 1,002,101.41 8.4184 8,436,090.51
Other payables 810,006.84
HKD 585,023.91 0.9062 530,160.37
CHF 33,242.24 8.4184 279,846.47
2．Overseas operational entity
For main business location and recording currency of important overseas operating entities, refer
to Note III. 5.
Page 97
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Note 53. Tenancy
The Company as a lessor:
The Company's right-of-use assets, lease liabilities and total cash outflows related to leases are
detailed in Note 12, Note 27 and Note 51.The Company, as a lessee, is recognized in profit or loss as
follows:
Item Amount in current period Amount in prior period
Interest on lease liabilities 4,583,361.68 8,442,125.35
Short-term rental costs 784,401.29 407,454.71
Lease costs for low-value assets
Variable lease payments not included in the
85,741,239.56 85,618,040.29
measurement of the lease liability
Income from sublease of right-to-use assets
Sale and leaseback transactions
Additional information on the Company as lessee is set forth below:
1. Lease activities
All lease of the Company is property lease, including short-term lease and other leased that
recognized right-of-use asset and lease liabilities.
2. Short-term lease
Short-term leases are treated using simplified method. Short-term leases include lease term
that is shorter than 12 month and no renew options attached, and leases that will be matured in
12 month after first adoption of CAS 21 – Lease. Short-term lease expenses charged to profit or
loss was RMB 784,401.29.
3.Future potential cash outflows that does not included in lease liabilities
(1) Variable lease payment
The lessee leased a lot of retail shops which contains variable lease payment terms in
connection with sales.
Many of the Company’s property lease contain variable lease payment terms in connection
with sales. In most circumstances, the Company uses these terms to matches lease payment to
shops that can generate more cash flows lease payment. For standalone shops, variable can reach
100% of all lease payment at most and that the scope of percentage of sales used is quite large. In
some circumstances, variable payment terms include annual bottom payment and upper limit.
In 2023, the variable lease payment included in the current profit and loss is RMB
85,741,239.56.
(2) Option to renew
Page 98
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Many lease contracts entered by the Company has option to renew. The Company has
already estimated the option to renew reasonably when determining lease terms in measuring
lease liabilities.
(1) Option to discontinue lease
Some of the lease contract entered by the Company has option to discontinue. The
Company has already estimated the option to discontinue reasonably when determining lease
terms in measuring lease liabilities.
(2) Residual value guarantee
The Company’s lease does not involve residual value guarantee.
(3) Lease that the lessee has already made commitment but not yet started
The Company does not have lease that has already made commitment but not yet started.
Disclosure as a lessor:
1. Information relating to operating leases
Gains related to operating leases are shown below:
Including: not recognized
in lease receipts Income
Item Rental income
relating to variable lease
payments
Property 150,425,106.18
Total 150,425,106.18
2. Risk management strategy of retaining rights over lease assets
To reduce risks of lease, the Company normally asks lessee to pay rental in advance and
collects 1-3 months rental as deposit.
VI.Research and development expenditures
1.Presentation by nature of costs
Item Amount in current period Amount in prior period
Salary 43,658,293.35 47,534,889.46
Sample and material expenses 2,219,443.20 1,964,204.63
Molding expenses 2,263.43 853,056.11
Depreciation and amortization 4,300,190.56 4,852,325.18
Technical cooperation fee 2,758,347.16 217,203.80
Others 4,863,706.38 5,666,906.43
Total 57,802,244.08 61,088,585.61
Page 99
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
2.Development expenditure on R&D projects eligible for capitalization
Nil.
VII.Interests in other entities
1.Equity in subsidiary
(1) Composition of enterprise group
Place of Shareholding ratio
Place of Nature of (%)
Name registratio Ways acquired
operation business
n Direct Indirect
Shenzhen Harmony World incorporated or
Shenzhen Shenzhen Commerce 100.00
Watch Center Co., Ltd. investment
incorporated or
FIYTA Sales Co., Ltd. Shenzhen Shenzhen Commerce 100.00
investment
Shenzhen FIYTA Precision incorporated or
Shenzhen Shenzhen Manufacturing 99.00 1.00
Technology Co., Ltd. investment
Shenzhen FIYTA
incorporated or
Technology Development Shenzhen Shenzhen Manufacturing 100.00
investment
Co., Ltd.
Harmony World Watch incorporated or
Sanya Sanya Commerce 100.00
Center (Hainan) Co., Ltd. investment
Shenzhen Xunhang
incorporated or
Precision Technology Co., Shenzhen Shenzhen Manufacturing 100.00
investment
Ltd.
Emile Choureit Timing incorporated or
Shenzhen Shenzhen Commerce 100.00
(Shenzhen) Ltd. investment
Business
Liaoning Hengdarui
combination
Commercial & Trade Co., Shenyang Shenyang Commerce 100.00
under common
Ltd.
control
TEMPORAL (Shenzhen) incorporated or
Shenzhen Shenzhen Commerce 100.00
Co., Ltd. investment
Shenzhen Harmony incorporated or
Shenzhen Shenzhen Commerce 100.00
E-commerce Co., Ltd. investment
Hong Hong incorporated or
FIYTA (Hong Kong) Ltd. Commerce 100.00
Kong Kong investment
Business
combination
Montres Chouriet SA Swiss Swiss Manufacturing 100.00 not under
common
control
2. Equity in joint arrangement or associates
(1) Significant associates
Place of Shareholding ratio
Place of Nature of (%) Accounting
Name registrati
operation business treatment
on Direct Indirect
Commer
Shanghai Watch Co., Ltd. Shanghai Shanghai 25% Equity method
cial
(2) Principal financial information of significant associate company
Page 100
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance/Amount in Opening balance/Amount in
Item
current period prior period
Current assets 165,796,119.65 175,890,077.66
Non-current assets 16,753,785.07 21,637,323.67
Total assets 182,549,904.72 197,527,401.33
Current liabilities 60,781,571.60 44,595,566.75
Non-current liabilities 5,885,583.05
Total liabilities 60,781,571.60 50,481,149.80
Non-controlling interest
Equity attributable to parent company 121,768,333.12 147,046,251.53
Portion of net asset calculated based on
30,442,083.28 36,761,562.88
shareholding
Adjustment matters 21,420,524.02 21,420,524.02
- Goodwill 21,420,524.02 21,420,524.02
- Unrealized profit or losses from
internal transaction
- Others
Carrying value of investment to associates 51,862,607.30 58,182,086.90
Fair value of equity investment that has
public quotation
Operating income 110,947,629.04 141,379,376.32
Net profit -23,277,918.41 12,105,926.36
Net profit from discontinued operation
Other comprehensive income
Total comprehensive income -23,277,918.41 12,105,926.36
Dividends received from associated
500,000.00
company during the year
VIII.Government subsidy
1．Liability items involving government grants
Include in
non-operat Include in Offsettin Related to
Opening Additi ing other gains g Closing
Item asset
balance on income in in current expense balance
current period or cost /income
period
Special fund for
Shenzhen
Asset related
industrial design 314,539.36 4,882.52 309,656.84
industry
development
Funding project
for construction
of National
338,833.33 293,147.06 45,686.27 Asset related
Enterprise
Technology
Center
Page 101
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Provincial
Specialized Fund
642,554.11 45,111.53 597,442.58 Asset related
for Industrial and
Information
Total 1,295,926.80 343,141.11 952,785.69
2．Government subsidy recognized in profit or loss
Amount in current Amount in prior Asset or
Item
period period income related
Subsidy to promote consumption 7,920,500.00 Income related
Trade and Distribution Industry Funding Projects 2,579,700.00 Income related
Quality and Branding Promotion Multiplication
1,180,000.00 Income related
Subsidy
Relief Policy Subsidy 1,058,150.00 Income related
Shenzhen Special Fund for Technology Research 1,000,000.00 1,000,000.00 Income related
Training subsidy 4,900.00 953,220.00 Income related
Subsidy for stabilizing job position 824,116.60 819,833.38 Income related
Subsidy to Foster High and New Technology
220,000.00 700,000.00 Income related
Enterprise
Commission on IIT payment 730,811.84 Income related
Other subsidies 104,887.83 624,893.74 Income related
Shenzhen Standard Special Fund 660,468.00 550,694.00 Income related
Shenzhen E-commerce Innovation and
330,000.00 Income related
Development Support Program Subsidy
Professional, Specialize,Unique and New" SME
200,000.00 Income related
Development Subsidy
State certified R&D center 293,147.06 293,147.06 Asset related
Provincial industry and information special
45,111.53 128,176.25 Asset related
subsidy
Special fund for Shenzhen industrial designing 4,882.52 75,583.79 Asset related
2019 Headquarters Economic Contribution
-496,500.00 Income related
Award
2022 Second Half of Nanshan District
Industry and Information Technology
1,251,400.00 Income related
Bureau Business Stable Growth Special
Funding Project Grant
Industrial Insurance Fund 17,566.00 Income related
2023 Technology Innovation Project
Support Program and Manufacturing 1,000,000.00 Income related
Individual Champion Incentive
Subsidy to assist high quality development
900,188.00 Income related
of fashion industry
Special Funds for Civil-Military
Integration and Funds for the Fifth Project 200,000.00 Income related
Grant Scheme
Specialized Economic Development
100,000.00 Income related
Funding Grants
High-tech Enterprise Recognition Reward
100,000.00 Income related
Subsidy
Page 102
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Subsidies for Production Expansion and
Efficiency Incentives in the Third Quarter
70,000.00 Income related
of Bureau of Industry and Information
Technology
Epidemic subsidies 12,000.00 Income related
Employment subsidies 5,382.00 Income related
Incentive subsidy for employers of
14,920.77 Income related
persons with disabilities
Specialized funding in the field of
130,468.00 Income related
Shenzhen standards
Ventilator and key components research
868,178.18 Income related
and application project
VAT relief for key groups 179,400.00 Income related
Funding for technological improvements 350,000.00 Income related
Key projects for technology development 250,000.00 Income related
Ministry of Industry and Information
300,000.00 Income related
Technology-Joint security projects
Incentive payments from the Bureau of
Science, Technology and Industry to
encourage the standardization and 200,000.00 Income related
upgrading of micro and small enterprises
to above-scale enterprises
Government subsidies for《E-Commerce
-2,000.00 Income related
Masters》
Total 9,105,016.49 18,648,210.06
3．Subsidy returned
Amount in Amount in prior
Item Type Reasons for return
current period period
Refund of government subsidies for
Income related 2,000.00 Not qualified
《E-Commerce Masters》
Total 2,000.00
IX.Risk disclosure related to financial instrument
The major financial instruments of the Company primarily include cash at bank and on hand,
equity investments, borrowings, accounts receivable, accounts payables and bond payables. The
Company is exposed to risks from various financial instruments in day-to-day operation, mainly
including credit risk, liquidity risk and market risk. The risks in connection with such financial
instruments and the risk management policies adopted by the Company to mitigate such risks are
summarized as follows:
The board of directors is responsible for planning and establishing the risk management
structure for the Company, developing risk management policies and the related guidelines across
the Company, and supervising the performance of risk management measures. The Company has
developed risk management policies to identify and analyse risks exposed by the Company. These
Page 103
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
risk management policies have clear regulations over specific risks, covering various aspects of
market risk, credit risk and liquidity risk management. The Company will evaluate the market
environment and changes of the Company’s operating activities on a regular basis to decide
whether to update the risk management policies and systems. Risk management of the Company is
carried out by the Risk Management Committee based on the policies as approved by the board of
directors. Risk Management Committee identifies, evaluates and mitigates related risks by
working closely with other business divisions of the Company. Internal Audit Department of the
Company will review the risk management control and process regularly, and submit the review
results to Audit Committee of the Company. The Company spreads the risks of financial
instruments through appropriate diversified investment and business portfolio, and mitigates the
risk of focusing on any single industry, specific regions or counterparties by way of formulating
the corresponding policies for risk management.
1. Credit risk
Credit risk refers to the risk of financial losses to the Company as a result of the failure of
performance of contractual obligations by the counterparties. The management has developed
proper credit policies and continuously monitors credit risk exposures.
The Company has adopted the policy of transacting with creditworthy counterparties only. In
addition, the Company evaluates the credit qualification of customers and sets up corresponding
credit term based on the financial status of customers, the possibility of obtaining guarantees from
third parties, credit records and other factors such as current market conditions. The Company
monitors the balances and recovery of bills and accounts receivable, and contract assets on a
continual basis. As for bad credit customers, the Company will use the written reminders, shorten
the credit term or cancel the credit term to ensure that the Company is free from material credit
losses. In addition, the Company reviews the recovery of financial assets on each balance sheet
date to ensure adequate expected credit loss provision is made for relevant financial assets.
The Company’s other financial assets include currency funds and other receivables. The
credit risk relating to these financial assets arises from the default of counterparties, but the
maximum exposure to credit risk is the carrying amount of each financial asset in the balance
sheet. The Company does not provide any other guarantee that may expose the Company to credit
risk.
The monetary funds held by the Company are mainly deposited with financial institutions
such as state-owned banks and other large and medium-sized commercial banks. The management
believes that these commercial banks have a higher reputation and assets, so there is no major
credit risk and the Company would not have any significant losses caused by the default by these
institutions. The Company’s policy is to control the amount deposited with these famous financial
institutions based on their market reputation, operating size and financial background, to limit the
Page 104
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
credit risk amount of any single financial institution.
As a part of its credit risk asset management, the Company assesses the credit loss of
receivables using aging. The Company’s receivable and other receivables involve large amount of
customers. Aging information can reflect the ability to repay and risk of bad debt of these
customers. The Company determined expected loss rate by calculating historical bad debt rate for
receivables with different aging based on historical data and also taking forecast of future
economic condition into consideration such as GDP growth rate, state currency policy etc... For
long-term receivables, the Company assesses expected credit loss reasonably by considering
settlement period, contracted payment terms, debtor’s financial situation and the economic
situation of the debtor’s industry.
As at 31 December 2023, the carrying amount of related assets and corresponding ECL is as
follows:
Aging Carrying amount Provision
Bill receivable 18,685,052.55 416,080.18
Accounts receivable 357,533,748.10 34,390,986.46
Other receivable 62,073,902.09 4,348,110.09
Total 438,292,702.74 39,155,176.73
As the Company’s customer base is large, no material credit concentration risk.
As at 31 December 2023, the balance of top 5 receivable accounts accounted for 21.42% of
total accounts receivables (2022: 32.76%) .
2. Liquidity risk
Liquidity risk refers to the risk of short of funds when the company performs its obligation of
cash payment or settlement by other financial assets. The Company’s subordinate member
companies are responsible for their respective cash flow projections. Based on the results thereof,
the subordinate financial management department continually monitors its short-term and
long-term capital needs at the company level to ensure adequate cash reserves; in the meantime,
continually monitors the compliance with loan agreements and secures undertakings for sufficient
reserve funds from major financial institutions, to address its short-term and long-term capital
needs. Besides, the Company mainly signs financing agreements with banks that have business
transactions to provide support to fulfill commercial bill obligation. As at 31 December 2023, the
Company has financing facilities from several banks amounting to RMB2,375.95 million.
Amongst, RMB375.95 million has already been used.
As at 31 December 2023, the discounted contractual cash flows for financial liabilities and
off-balance sheet guarantee that presented in maturity are as follows:
Closing balance in ten thousands yuan
Item
Within 1 year 1 - 2 years 2 - 3 years Over 3 years Total
Page 105
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance in ten thousands yuan
Item
Within 1 year 1 - 2 years 2 - 3 years Over 3 years Total
Short term loan 25,018.78
Bills payable
Accounts payable 17,382.59
Other payables 12,193.78
Total 54,595.15
3. Market risk
(1) Exchange rate risk
Except that the Company’s subsidiary in Hong Kong uses HKD as settlement currency and
sub-subsidiary in Swiss used CHF as settlement currency, the principal places of operations of the
Company are located in China and the major businesses are settled in RMB. However, the
Company’s recognized foreign currency assets and liabilities as well as the foreign currency
transactions in the future (the functional currencies of foreign assets and liabilities as well as the
transactions are mainly HKD and CHF) remain exposed to exchange rate risk
As at 31 December 2023, the RMB equivalent of financial assets and financial liabilities
denominated in foreign currencies are as follows:
Closing balance
Item
HKD USD EUR CHF Total
Financial asset
denominated in 0.9062 7.0827 7.8592 8.4184
foreign currency:
Monetary fund 1,445,189.46 1,400,915.42 861,392.06 1,205,163.58 4,912,660.52
Accounts receivable 3,387,308.79 3,519,115.06 37,916.39 236,086.20 7,180,426.44
Other receivables 108,425.53 134,694.40 243,119.93
Subtotal 4,940,923.78 4,920,030.48 899,308.45 1,575,944.18 12,336,206.89
Financial liabilities
denominated in
foreign currency:
Accounts payables 500,407.00 8,436,090.51 8,936,497.51
Other payables 530,160.37 279,846.47 810,006.84
Total 1,030,567.37 8,715,936.98 9,746,504.35
Sensitivity analysis
As at 31 December 2023, for financial assets and financial liabilities that denominated in foreign
currency, if Renminbi appreciate or depreciate of 5% to foreign currency and other factors remain
Page 106
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
unchanged, the net profit will decrease or increase about RMB0.130 million(31 Dec 2022:RMB1.419
million) .
(2) Interest rate risk
The interest rate risk of the Company mainly associates with bank borrowings, bonds payable,
etc. Floating rate financial liabilities expose the Company to cash-flow interest rate risk, while
fixed rate financial liabilities expose the Company to fair-value interest rate risk. The Company
determines the comparative proportion of fixed rate contracts and floating rate contracts based on
the then market conditions.
The interest rate risk of the Company mainly associates with bank borrowings, bonds payable,
etc. Floating rate financial liabilities expose the Company to cash-flow interest rate risk, while
fixed rate financial liabilities expose the Company to fair-value interest rate risk. The Company
determines the comparative proportion of fixed rate contracts and floating rate contracts based on
the latest market conditions.
Sensitivity analysis:
As at 31 December 2023, it is estimated that a general increase or decrease 50 basis points in
the borrowings with floating interest rates, with all other variables held constant, the Company’s
net profit and shareholder’s equity for the year will decrease or increase by approximately
RMB307,300.00 (2022: RMB1,200,000.00) .
The above sensitivity analysis assumes that interest rate changed on the balance sheet date
and applicable to all loans with floating interest rate terms.
X.Fair value
1. Financial instruments measured at fair value
As at 31 December 2023, the Company does not have financial instruments measured at fair
value.
2. Status of financial assets and financial liabilities not measured at fair value
Financial assets and financial liabilities not measured at fair value include: accounts
receivable, short-term loans, accounts payable, long-term loans due within one year, and equity
instrument investment that does not have public quotation in an active market and its fair value
cannot be measured reliably.
The difference between fair value and carrying amount of the above financial assets and
liabilities that not measured at fair value is insignificant.
XI.Related party and related transaction
1. The parent company of the Company
Page 107
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Shareholdin Ratio of vote
Registered
g ratio of right of
capital
Registration (in ten parent parent
Name Type of business
place thousand company to company to
RMB) the the
Company % Company%
CATIC Shenzhen Shenzhen Commercial 116,616.20 39.25 39.25
(4) Notes to the parent company
CATIC Shenzhen is a subsidiary that 100.00% held, indirectly, by AVIC International, and AVIC
directly holds 100.00% of the equity of AVIC International.
(5) The ultimate controlling party of the Company is AVIC.
2. Refer to Note VI. 1 for information about the Company’s subsidiaries
3. Refer to Note VI. 2 for information about the Company’s material associates
4. Other related parties
Name of other related parties Relationship
Associate company of the
Shenzhen CATIC Property Management Limited (CATIC Property Management)
controlling shareholder
Rainbow Digital Science Co., Ltd. and its associated companies (Rainbow Company Controlled by the same party
Shennan Circuits Co., Ltd. and its associated companies (Shennan Circuits) Controlled by the same party
AVIC Huadong Photoelectric Co., Ltd.(AVIC Huadong Photoelectric) Controlled by the same party
AVIC Xi’an Flight Automatic Control Research Institute(AVIC Xi’an Flight Institute) Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd (Grand Skylight Hotel
Controlled by the same party
Management Company)
AVIC Securities Co., Ltd. (AVIC Securities Company) Controlled by the same party
AVIC Training Center Controlled by the same party
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co., Ltd (Gongqingcheng CATIC
Controlled by the same party
Culture Investment Company)
Avic Jonhon Optronic Technology Co., Ltd.(AVIC Jonhon) Controlled by the same party
AVIC International Holdings (Zhuhai) Co., Ltd. (AVIC Zhuhai) Controlled by the same party
Guizhou HUAYANG Electronics Co., Ltd. Controlled by the same party
Zhuhai Pilot Composite Material Technology Co., Ltd. Controlled by the same party
Guangdong International Mansion Industrial Co., Ltd. (Guangdong International
Controlled by the same party
Mansion)
Shenzhen Zhonghang Technology Checking & Measuring Institute (Shenzhen
Controlled by the same party
ZHTCMI)
Shenyang Xinghua Aviation Electric Co., Ltd.（Shenyang Xinghua） Controlled by the same party
Shenzhen AVIC Changtai Investment Development Co., Ltd.（Avic Changtai） Controlled by the same party
AVIC China Aviation Futures Co., Ltd.（AVIC Futures） Controlled by the same party
Anhui AVIC Display Technology Co., Ltd（Anhui AVIC） Controlled by the same party
Shenzhen Lingzhi Digital Technology Co., Ltd.（Shenzhen Lingzhi Digital Controlled by the same party
Page 108
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Name of other related parties Relationship
Technology）
Shenzhen Aero-Fasteners MFG Co., Ltd.（Shenzhen Aero-Fasteners） Controlled by the same party
Castic-SMP Machinery Corp., Ltd.（Castic-SMP Machinery） Controlled by the same party
Company directors, managers, CFO, and secretary of the board Key management member
5. Related party transactions
(1) Related transaction between subsidiaries and between parent company and
subsidiaries which are in the scope of consolidation have already been offset.
(2) Purchase good and receiving service
Related parties Related transaction Amount in current Amount in prior
content period period
CATIC Property Management Property management 11,593,446.00 11,834,156.05
Department store
Rainbow Company expenses/ Commodity 13,276,756.38 4,184,883.88
purchase
AVIC Jonhon Purchase of goods 242,771.36 238,755.07
Gongqingcheng CATIC Culture Departmental store
28,667.09 25,733.73
Investment Company expense
Grand Skylight Hotel
Purchase of goods 3,855.65
Management Company
Guangdong International
Property management 18,157.71
Mansion
Shenzhen ZHTCM Accept labour 6,590.00
AVIC Xi’an Flight Automatic
Control Research Institute(AVIC Accept labour 179,245.28
Xi’an Flight Institute)
Total 25,141,640.83 16,491,377.37
Notes: All amount listed above exclude tax
(3) Sale of goods and providing services
Nature of Amount in current Amount in prior
Related party
transaction period period
Gongqingcheng CATIC Culture
Investment Company
Sale of product 293,786.47 310,404.70
Sale of material and
Shennan Circuit 460.80 335,070.20
providing service
AVIC Training Center Others 2,725.66 2,453.10
Rainbow Company Product and service 58,044,173.59 53,197,052.19
AVIC International Sale of product 7,710.59
AVIC Jonhon Sale of product 500,559.59 1,252,054.56
AVIC Zhuhai Sale of product 8,800.00
Share of Utilities
CATIC Property Management 3,363,663.82 3,298,502.35
and management fee
Guizhou HUAYANG Electronics Sale of product 18,814.16 87,263.71
Page 109
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Co., Ltd.
AVIC Huadong
PHOTOELECTRIC
Sale of product 21,238.94
Zhuhai Pilot Composite Material
Technology Co., Ltd.
Sale of product 865,256.63 1,805,929.20
Shenzhen Aero-Fasteners Sale of product 227,747.79
Castic-SMP Machinery Sale of product 3,960.18
Shenyang Xinghua Sale of product 464,331.51
Anhui AVIC Sale of product 75,504.42
Total 63,868,695.21 60,318,768.95
Notes: All amount listed above exclude tax
(4) Related party lease
1) The Company as lessor
Recognized rental Recognized rental income
Lessee Type of leased assets
income in current year in prior year
CATIC Property Management Property 1,811,657.16 4,947,314.30
AVIC Securities Company Property 1,411,885.68 1,411,885.68
Rainbow Company Property 606,792.94 437,897.82
Total 3,830,335.78 6,797,097.80
2) The Company as lessee
Variable lease payments that
Interest payment of lease
are not included in lease Rental payment Addition of right-of-use asset
liabilities
Lessor Type liabilities
Current Current Current
Prior period Prior period Current period Prior period Prior period
period period period
Guangdong
International
Mansion Property 40,527.84 3,572.58 51,030.81
Industrial Co.,
Ltd.
CATIC Property
Property 59,899.04 60,513.53 501,788.87 811,476.76 6,776.94 29,337.67 489,781.90 138,708.90
Management
Rainbow
Property 323,382.81 417,268.91 9,642.03 14,378.80 247,505.55
Company
Total 59,899.04 60,513.53 825,171.68 1,269,273.51 16,418.97 47,289.05 489,781.90 437,245.26
(5) Related party fund lending and borrowing
Nil.
(6) Remuneration to key management
Item Amount in current period Amount in prior period
Remuneration to key management 14,232,500.00 15,148,600.00
Total 14,232,500.00 15,148,600.00
(7) Other related transactions
The year-end balance of the Company’s cash that is deposited with AVIC Finance Company
is RMB467,743,798.76. Interests received from the deposit during the year were RMB342,896.12.
Page 110
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
(8) Receivables from and payables to related parties
1) Receivables from related parties
Closing balance Opening balance
Item Related party Carrying Bad debt Carrying Bad debt
amount provision amount provision
Monetary
fund
AVIC Finance Company 467,743,798.76 271,327,031.83
Accounts
receivable
Gongqingcheng CATIC
Culture Investment 22,684.75 832.29 27,297.28 1,364.88
Company
Shennan Circuit 7,255.14 544.14
Rainbow Company 5,973,322.25 248,095.43 3,808,470.31 219,873.20
AVIC Jonhon 202,712.86 12,162.77 649,797.16 48,734.79
CATIC Property
183,123.05 9,156.15 101,672.00 5,083.60
Management
Guizhou HUAYANG
21,260.00 1,275.60 59,528.00 4,464.60
Electronics Co., Ltd.
Zhuhai Pilot Composite
Material Technology Co., 1,412,045.00 105,903.38
Ltd.
AVIC Training Center 2,772.00 207.90
Shenyang Xinghua 292,370.58 17,542.23
Anhui AVIC 15,800.00 790.00
Bill
receivable
AVIC Jonhon 262,429.22
Zhuhai Pilot Composite
Material Technology Co., 892,185.99 44,609.30
Ltd.
Anhui AVIC 192,339.42
Other
receivables
Gongqingcheng CATIC
Culture Investment 6,500.00 325.00 6,500.00 325.00
Company
Rainbow Company 143,990.00 7,199.50 123,000.00 5,300.00
AVIC 834,903.00 43,170.15 1,055,557.43 52,777.87
Page 111
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
2）Payables to related parties
Item Related party Closing balance Opening balance
Accounts
payable
CATIC Property Management 32,992.35 32,992.35
AVIC Jonhon 391.96 19,411.27
Other
payables:
Rainbow Company 1,935,611.93 108,186.52
CATIC Property Management 1,023,487.21 2,590,116.05
AVIC Securities Company 247,080.00 247,080.00
Avic Changtai 4,064.81
Advance
received
Rainbow Company 162,324.03
AVIC Securities Company 123,540.00
AVIC Futures 9,435.48
XII.Share-based payments
1.General information about share-based payments
(1) Equity instrument
Category
Granted during Exercised during Voided in current
of grant Unlocked in current period
current period current period period
recipients
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Some of
the
company's
directors, 3,436,710.00 3,436,710.00
supervisors
and core
cadres
合计 3,436,710.00 3,436,710.00
(2) Stock options or other equity instruments issued and outstanding at the end of the
period
Nil.
2.Equity settled share-based payment
Method of determining fair value of equity
Close price of share on grant date
instrument on grant date
Evidence to determine the number of Term of employee service, status of target completion,
exercisable equity instrument and personal performance assessment
Page 112
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Reasons for significant difference between
current period estimation and prior period Nil
estimation
Accumulated amount charged to capital reserve
27,909,283.55
for equity settled share-based payment
Total expenses for equity settled share-based
-4,078,998.50
payment recognized in current period
3. Expenses for share-based payment recognized in current period
Expenses for equity
Expenses for cash settled share-based
Category of grant recipients settled share-based
payment
payment
Some of the company's
directors, supervisors and core -4,078,998.50
cadres
XIII. Commitment and contingencies
1. Significant commitments
(1) Lease contract that already signed or prepared to fulfil and its financial effect
Refer to Note V.53 for details.
2. Contingencies on balance sheet date
The Company does not have material contingent events that need to be disclosed
XIV. Post balance sheet date events
1. Profit distribution
Cash dividend of RMB4.00 (tax inclusive) for
Profit distributions or dividends proposed
every 10 shares held
2.Other events after the balance sheet date
(1) Financing and guarantee after the balance sheet date
1) On 12 March 2024, pursuant to approval by the 18th meeting of the 10th Board of directors, the
Company proposed to apply for financing facility of no more than RMB1,200 million by means of
credit, pledge and mortgage in 2024. The resolution is pending for approval by the shareholder’s
meeting.
2) On 12 March 2024, pursuant to approval by the 18th meeting of the 10th Board of directors, the
Company proposed to provide guarantee for the Company’s wholly-owned subsidiary to borrow from
banks of no more than RMB600 million in 2024. The credit line is included in the actual usage limit of
RMB1,200 million mentioned above. The resolution is waiting approval from the shareholder’s
meeting.
Page 113
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
(2) Others
As at 14 March 2024, the Company does not have other post-balance sheet events that need
to be disclosed.
XV. Other material information
1. Segments
Operating segments of the Company are identified on the basis of internal organization
structure, management requirements and internal reporting system. An operating segment
represents a component of the Company that satisfied the following criteria simultaneously:
(1) Its business activities are engaged to earn revenue and incur expenses;
(2) Its operating results are regularly reviewed by the Company’s management to make
decisions on resources allocation and performance assessment;
(3) Its financial conditions, operating results, cash flow and related accounting information
are available to the Company.
The Company determines the reporting segment based on the operating segment, and the
operating segment that meets any of the following conditions is determined as the reporting
segment:
(1) The segment income of the operating segment accounts for 10.00% or more of total
income of all segments;
(2) The absolute amount of profits (losses) of the segment account for 10.00% or more of
the higher of the absolute amount of total profits of the profiting segment and the absolute
amount of total losses of the unprofitable segment.
The Company’s business is simple. The business mainly involves manufacturing and sales of
watch. The management considers the business as a whole in implementing management and
assessing its performance. As a result, no segment information is disclosed in this financial
statement.
2. Other material events
As at 31 December 2023, the Company does not have other significant matters that require to
disclose.
XVI. Notes to the parent company’s financial statement
Note 1. Accounts receivables
1. Presented by aging
Aging Closing balance Opening balance
Within 1 year 1,875,782.07 635,132.16
Over 1 year 23,346.03
Subtotal 1,899,128.10 635,132.16
Page 114
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Aging Closing balance Opening balance
Less: bad debt provision 76,211.49 31,916.13
Total 1,822,916.61 603,216.03
2. Presentation by method of providing bad debt
Closing balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 1,899,128.10 100.00 76,211.49 4.01 1,822,916.61
losses on portfolio basis`
Including: Receivable from
1,898,159.02 99.95 76,211.49 4.02 1,821,947.53
other customers
Including: Related party in
969.08 0.05 969.08
scope of consolidation
Total 1,899,128.10 100.00 76,211.49 1,822,916.61
Continued
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 635,132.16 100.00 31,916.13 5.03 603,216.03
losses on portfolio basis`
Including: Receivable from
635,132.16 100.00 31,916.13 5.03 603,216.03
other customers
Including: Related party in
scope of consolidation
Total 635,132.16 100.00 31,916.13 603,216.03
3. In the portfolio, accounts receivable with expected credit loss provided based on
credit risk characteristic portfolio
(1) Portfolio of receivable from other customer
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 1,874,812.99 73,876.89 3.94
1 - 2 years 23,346.03 2,334.60 10.00
Total 1,898,159.02 76,211.49 4.02
4. Movements of provision during the period
Category Opening Movements during the period Closing
balance balance
Page 115
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Recovered or Other
Accrual Written-off
reversed movements
Accounts receivable
that provided
expected credit 85,000.00 85,000.00
losses on single
basis
Accounts receivable
that provided
expected credit 31,916.13 44,295.36 76,211.49
losses on portfolio
basis`
Including:
Receivable from 31,916.13 44,295.36 76,211.49
other customers
Total 31,916.13 129,295.36 85,000.00 76,211.49
5. No actual write-off of accounts receivable during the current period.
6. Top 5 receivable accounts
Proportion in
total closing
Name Closing balance balance of Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in total 1,301,233.17 68.52 66,197.12
Total 1,301,233.17 68.52 66,197.12
Note 2. Other receivables
1．Presentation of other receivables by aging
Aging Closing balance Opening balance
Within 1 year 614,472,373.93 839,808,164.17
1 - 2 years 81,857,231.39
2- 3 years
Over 3 years 40,050.00 40,050.00
Subtotal 696,369,655.32 839,848,214.17
Less: bad debt provision 41,235.47 65,671.10
Total 696,328,419.85 839,782,543.07
2．Presented by nature
Nature Closing balance Opening balance
Related party in scope of
696,041,965.52 839,174,096.87
consolidation
Security deposit 49,581.90 537,615.90
Petty cash 24,542.88
Others 278,107.90 111,958.52
Page 116
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Nature Closing balance Opening balance
Total 696,369,655.32 839,848,214.17
Less: bad debt provision 41,235.47 65,671.10
Total 696,328,419.85 839,782,543.07
3．Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Bad debt
Book value Carrying amount Book value
amount provision provision
First stage 696,369,655.32 41,235.47 696,328,419.85 839,848,214.17 65,671.10 839,782,543.07
Second stage
Third stage
Total 696,369,655.32 41,235.47 696,328,419.85 839,848,214.17 65,671.10 839,782,543.07
4．Presented by bad debt provision method
Closing balance
Category Carrying amount Bad debt provision Book value
Percentage ECL rate
Amount Amount
(%) (%)
Other receivables that provided expected
credit losses on single basis
Other receivables that provided expected
696,369,655.32 100.00 41,235.47 0.01 696,328,419.85
credit losses on portfolio basis
Including: Security deposit portfolio 49,581.90 0.01 40,526.60 81.74 9,055.30
Petty cash portfolio
Social security payment on-behalf
263,930.39 0.04 263,930.39
portfolio
Receivables from related parties
696,041,965.52 99.95 696,041,965.52
within scope of consolidation
Portfolio of others 14,177.51 708.87 5.00 13,468.64
Total 696,369,655.32 100.00 41,235.47 696,328,419.85
Continued
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Other receivables that provided expected
credit losses on single basis
Other receivables that provided expected
839,848,214.17 100.00 65,671.10 0.01 839,782,543.07
credit losses on portfolio basis
Including: Security deposit portfolio 537,615.90 0.06 64,928.30 12.08 472,687.60
Petty cash portfolio 24,542.88 0.01 24,542.88
Social security payment on-behalf
97,102.57 0.01 97,102.57
portfolio
Page 117
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Receivables from related parties
839,174,096.87 99.92 839,174,096.87
within scope of consolidation
Portfolio of others 14,855.95 0.00 742.80 5.00 14,113.15
Total 839,848,214.17 100.00 65,671.10 0.01 839,782,543.07
5．In the portfolio, other receivables with expected credit loss provided based on credit
risk characteristic portfolio
(1) Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year
1 - 2 years 9,531.90 476.60 5.00
2- 3 years
Over 3 years 40,050.00 40,050.00 100.00
Total 49,581.90 40,526.60
(2) Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 263,930.39
Total 263,930.39
(3) Receivables from related parties within scope of consolidation
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 696,041,965.52
Total 696,041,965.52
(4) Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 14,177.51 708.87 5.00
Total 14,177.51 708.87 5.00
6．Bad debt provision status
Page 118
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
First stage Second stage Third stage
Lifetime expected Lifetime expected
Bad debt provision Expected credit Total
credit losses (no credit losses (credit
losses over the next
credit impairment impairment
12 months
occurred) occurred)
Opening balance 65,671.10 65,671.10
Opening balance
movements in current
period
—Transfer into the
second stage
—Transfer into the
third stage
—Reverse back to
the second stage
—Reverse back to
the first stage
Accrual during the
period
Reversed during the
-24,435.63 -24,435.63
period
Recovered during the
period
Written-off during the
period
Other movements
Closing balance 41,235.47 41,235.47
7．No other receivables were written-off during the period.
8．Top 5 other receivable accounts
Proportion to
closing balance of Bad debt provision
Name Closing balance
other receivables Closing balance
(%)
Top 5 other receivables in total 696,041,965.52 99.95
Total 696,041,965.52 99.95
Note 3. Long-term equity investment
Closing balance Opening balance
Nature
Carrying amount Provision Book value Carrying amount Provision Book value
Investment in
1,581,179,108.81 1,581,179,108.81 1,494,128,399.60 1,494,128,399.60
subsidiaries
Investment in
51,862,607.30 51,862,607.30 58,182,086.90 58,182,086.90
associates
Total 1,633,041,716.11 1,633,041,716.11 1,552,310,486.50 1,552,310,486.50
1．Investment in subsidiaries
Page 119
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Provisio
Closing
n
Addition/new balance
Opening Closing accrued
Investee investment Withdrawn of
balance balance in
provisio
current
n
period
Shenzhen Harmony World
610,354,397.34 1,058,906.51 609,295,490.83
Watch Center Co.,
Shenzhen Harmony
11,684,484.39 11,684,484.39
E-commerce Co., Ltd.
Shenzhen FIYTA Precision
102,482,069.76 80,000,000.00 437,608.56 182,044,461.20
Technology Co., Ltd.
Shenzhen FIYTA Technology
51,224,974.98 162,083.31 51,062,891.67
Development Co., Ltd.
FIYTA (Hong Kong) Ltd. 137,737,520.00 137,737,520.00
TEMPORAL (Shenzhen) Co.,
5,000,000.00 5,000,000.00
Ltd.
FIYTA Sales Co., Ltd. 458,083,251.89 1,090,795.72 456,992,456.17
Liaoning Hengdarui
Commercial & Trade Co., 36,867,843.96 36,867,843.96
Ltd.
Emile Choureit Timing
80,693,857.28 199,896.69 80,493,960.59
(Shenzhen) Ltd.
HARMONY World Watch
10,000,000.00 10,000,000.00
Center(Hainan) Co., Ltd.
Total 1,494,128,399.60 90,000,000.00 2,949,290.79 1,581,179,108.81
2．Investment in associates
Movements in current period
Investment gain
Investee Opening balance Addition/new
recognized Adjustment to
investment Withdrawn
under equity OCI
method
Associates
Shanghai Watch 58,182,086.90 -5,819,479.60
Continued
Movements in current period
Cash dividends Closing
Investee Impairment Closing balance balance of
Other equity declared or
provision Others provision
movements distribution of
accrual
profit
Associates
Shanghai Watch -500,000.00 51,862,607.30
Note 4. Operating income and operating cost
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Main business 177,350,230.18 49,729,440.87 148,557,095.50 41,765,441.70
Other business 3,524,696.56 6,727,705.55
Page 120
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Total 180,874,926.74 49,729,440.87 155,284,801.05 41,765,441.70
Note 5. Investment gain
Amount in current
Item Amount in prior period
period
Gain from long-term equity investments accounted for
-5,819,479.60 3,026,481.59
using equity method
Gain from long-term equity investments accounted for
198,000,000.00 240,595,696.70
using cost method
Total 192,180,520.40 243,622,178.29
XVII. Supplementary information
1. Details of non-recurring gain or loss for the year
Item Amount Note
Disposal gain or loss of non-current assets，including elimination of
685,868.57
provision for impairment of assets
Government grants included in current profit or loss (except for the fixed
or quantitative government grants, enjoyed in a consecutive way, which
8,665,506.85
closely related to the enterprise businesses and according to nation
policies)
Except for effective hedging business related to normal operating
business, profit and loss from changes in fair value incurred in financial
assets and financial liabilities, and the investment gain from disposal of
financial assets, financial liabilities and available-for-sale financial assets
Charges for the possessions of funds collected from non-monetary
enterprises
Profit and loss from entrusting others to invest or manage assets
Asset impairment provision accrued due to force majeure such as natural
disasters
Impairment provision reversal of accounts receivable under standalone
7,570,975.54
impairment test
Gain from investment in subsidiaries, joint venture and cooperative
enterprises when cost of investment is less than the profit incurred in
identifiable net asset fair value of invested unit when investment
Current net profit and loss of subsidiaries from business combination
under common control from the opening period to combination date
Profit and loss of non-monetary assets exchange
Profit and loss of debt restructuring
Enterprise restructuring expenses, such as expenses for arranging
employees, integrating cost
One-time effect on current period's profit or loss due to adjustments in
tax, accounting and other laws and regulations
Overridden approval, or without official approval document, or incidental
tax return or exemption
For cash-settled share-based payments, gains and losses arising from
changes in the fair value of employee compensation payable after the date
of exercise of options
Profit and loss incurred in fair value change of investment property
subsequently measured in fair value mode
Profit and loss over fair value part accrued in transactions of unreasonable
transaction price
Profit and loss incurred contingent matters unrelated to normal operating
business
Income from trustee fee obtained by trusting operation
Page 121
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount Note
Other non-operating income and expenses other than the above items 3,910,736.70
Profit and loss items pursuant to the definition of non-recurring profit and
loss
Less：Effect of income tax of non-recurring profit or loss 4,461,193.42
Effect of non-recurring profit or losses attributable to minority
shareholders (after tax)
Total 16,371,894.24
2. Return on Equity (ROE) and Earnings per share (EPS)
EPS
Profit of the reporting period Weighted average ROE %
Basic EPS Diluted EPS
Net profit attributable to ordinary
10.28 0.8082 0.8075
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after 9.77 0.7685 0.7678
deducting non-recurring profit or loss
FIYTA Precision Technology Co., Ltd.
Board of Directors
14 March 2024
Page 122
