Auditor’s Report
FIYTA Precision Technology Co., Ltd.
For the year ended 31 December 2019
致同会计师事务所（特殊普通合伙）
Grant Thornton
CONTENTS
Auditor’s report 1-7
Consolidated and Company Balance Sheets 8-9
Consolidated and Company Income Statements 10
Consolidated and Company Cash Flow Statements 11
Consolidated and Company Statements of Changes in
12-15
Equity
Notes to the Financial Statements 16-114
致同会计师事务所（特殊普通合伙）
中国北京朝阳区建国门外大街 22 号
赛特广场 5 层邮编 100004
电话 +86 10 8566 5588
传真 +86 10 8566 5120
www.grantthornton.cn
(English Translation for Reference Only)
Auditor’s Report
GTCNSZ(2020)NO.110ZA3105
To the Shareholders of FIYTA Precision Technology Co., Ltd.:
Opinion
We have audited the financial statements of FIYTA Precision Technology Co.,
Ltd. (“FIYTA Ltd.” or the “Company”), which comprise the consolidated and
Company balance sheets as at 31 December 2019, and the consolidated and
Company income statements, consolidated and Company cash flow statements
and consolidated and Company statements of changes in shareholders’ equity
for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the consolidated and Company financial positions of FIYTA
Ltd. as at 31 December 2019, and their financial performance and its their cash
flows for the year then ended in accordance with Accounting Standards for
Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the FIYTA Ltd. and have fulfilled our other ethical
responsibilities in accordance with the Code of Ethics for Chinese Certified
Public Accountants. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
1
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.
1. Existence of inventory and its net realizable value
Refer to Note III 12 and Note V 6 for detailed information.
(1) Description
As at 31 December 2019, the book balance, provision for decline in value, and
carrying amount of inventory were RMB1,892.03 million, RMB83.21 million and
RMB1,808.82 million respectively.
(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
(i) Understanding, evaluating and testing the design and operating
effectiveness of internal controls of procument and payment, production
and storage, and the provision for decline in value of inventory;
(ii) Understanding and evaluating the appropriateness of the Company’s
policy in provision for decline in value;
(iii) Understanding and inquiring the locations of inventory storage,
2
measurement method of inventory so as to determining the scope of
inventory physical observation;
(iv) 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. Circulating confirmations and inspecting contracts, goods
delivery notes and account statements for those inventories not in the
scope of physical observation and stored in reseller's warehouses;
(v) Obtaining the ageing report of inventory and taking into consideration of
inventory condition in order to perform analytical review on the ageing,
and analyze the reasonableness of provision for decline in value together
with ;
(vi) Reviewing and evaluating the appropriateness of significant estimates
made by the Management in determining the NRV of inventory;
(vii) 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.
(viii) 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 presentation and
disclosure of inventory and the judgment on NRV made by the management is
supportable.
2. Revenue recognition
Refer to Note III 25 and Note V 33 for detailed information.
(1) Description
In 2019, the Company’s income from main business was RMB3,686.96 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
3
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 25 for accounting policy
relating to revenue recognition.
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
(i) Understanding, evaluating and testing the design and operating
effectiveness of internal controls relating to revenue recognition;
(ii) Obtaining and understanding accounting policies relating to revenue
recognition, and reviewing whether the policies are complied with the
accounting standards and are consistently adopted.
(iii) Selecting samples from current year’s transaction record, and tracing
them to supporting documents such as contract, tax invoice and goods
dispatch note;
(iv) In connection with audit of accounts receivable, selecting major
customers and confirming corresponding sales in current year and year
end balance;
(v) Conducting cut-off test to revenue recognized before and after the
balance sheet date 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.
Other Information
The management of FIYTA Ltd are responsible for the Other Information. The
Other Information comprises all of the information included in the Company’s
2019 annual report other than the financial statements and our auditors’ report
thereon.
Our opinion expressed on the financial statements does not cover the Other
Information and we do not express any form of assurance conclusion thereon.
4
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.
Responsibilities of the Management and those Charged with Governance
for the Financial Statements
The management of the FIYTA Ltd (the “Management”) 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.
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,
5
they could reasonably be 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
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 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.
Grant Thornton Auditor's signature and stamp
China Beijing (Engagement partner)
Auditor's signature and stamp
18 March 2020
7
Consolidated and Company Balance Sheet
as at 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
As at 31/12/2019 As at 31/12/2018
Item Note
Consolidated Company Consolidated Company
Current assets:
Cash at bank and on hand V. 1 316,668,565.09 270,673,346.02 164,828,059.97 137,175,466.27
Bills receivable V. 2 10,596,431.31 - 7,051,846.85 -
Accounts receivable V. 3 397,471,106.98 2,848,025.39 370,545,656.61 737,636.38
Prepayments V. 4 10,847,962.28 - 13,666,816.33 -
Other receivables V. 5 47,239,844.58 783,647,732.22 45,870,582.26 870,739,378.37
including: interests receivables - - - -
dividend receivables - - - -
Inventories V.6 1,808,820,089.92 - 1,782,306,301.70 -
Assets held for sale - - - -
Non-current assets due within one year - - - -
Other current assets V. 7 68,858,096.74 12,380,243.67 73,703,312.24 10,081,272.94
Total current assets 2,660,502,096.90 1,069,549,347.30 2,457,972,575.96 1,018,733,753.96
Non-current assets:
Available-for-sale financial assets V. 8 85,000.00 85,000.00
Long-term equity investments V. 9 46,423,837.85 1,380,895,239.27 44,881,063.15 1,376,129,654.08
Other equity instrument investments V. 10 85,000.00 85,000.00
Investment properties V. 11 407,503,307.24 329,970,083.18 377,319,433.03 297,042,937.87
Fixed assets V. 12 363,997,098.94 238,594,698.50 425,649,562.85 297,517,472.81
Construction in progress V. 13 - - 12,041,126.00 12,041,126.00
Intangible assets V. 14 38,711,821.26 30,925,974.54 43,545,477.61 35,337,052.82
Development costs - - - -
Goodwill - - - -
Long-term deferred expenses V. 15 152,587,491.33 12,106,759.98 128,572,545.15 4,500,638.97
Deferred tax assets V. 16 83,739,383.37 1,125,840.75 100,675,706.09 952,857.33
Other non-current assets V. 17 7,373,248.48 4,707,236.86 8,949,160.42 4,493,971.35
Total non-current assets 1,100,421,188.47 1,998,410,833.08 1,141,719,074.30 2,028,100,711.23
Total assets 3,760,923,285.37 3,067,960,180.38 3,599,691,650.26 3,046,834,465.19
8
Consolidated and Company Balance Sheet (continued)
as at 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
As at 31/12/2019 As at 31/12/2018
Item Note
Consolidated Company Consolidated Company
Current liabilities:
Short-term loans V. 18 567,908,833.21 540,650,622.50 547,118,452.97 505,000,000.00
Bills payable - - - -
Accounts payable V. 19 279,772,787.37 12,952,934.93 259,913,612.34 52,324,191.98
Advances from customers V. 20 23,433,463.57 3,434,407.04 16,459,445.00 1,636,520.02
Employee benefits payable V. 21 82,602,845.67 19,019,554.57 69,779,037.83 11,589,634.34
Taxes payable V. 22 24,064,803.00 1,713,130.68 55,923,171.92 943,919.26
Other payables V. 23 119,616,721.63 82,631,590.46 71,819,930.30 57,997,397.28
including: interests payables - - 772,351.26 685,419.80
dividend payables 848,233.27 848,233.27 - -
Liabilities held for sale - - - -
Non-current liabilities due within one
V. 24 360,140.00 - 347,470.00 -
year
Other current liabilities - - - -
Total current liabilities 1,097,759,594.45 660,402,240.18 1,021,361,120.36 629,491,662.88
Non-current liabilities:
Long-term loans V. 25 4,321,680.00 - 4,517,110.00 -
Provisions - - - -
Deferred income V. 26 3,046,090.60 3,046,090.60 3,672,855.36 3,672,855.36
Deferred tax liabilities V. 16 1,256,242.49 - - -
Other non-current liabilities - - - -
Total non-current liabilities 8,624,013.09 3,046,090.60 8,189,965.36 3,672,855.36
Total liabilities 1,106,383,607.54 663,448,330.78 1,029,551,085.72 633,164,518.24
Shareholder's equity:
Share capital V. 27 442,968,881.00 442,968,881.00 438,744,881.00 438,744,881.00
Capital reserve V. 28 1,081,230,215.32 1,086,885,756.42 1,062,455,644.22 1,068,111,185.32
Less: treasury shares V. 29 71,267,118.78 71,267,118.78 - -
Other comprehensive income V.30 -940,209.09 - -5,442,139.78 -
Specific reserve - - - -
Surplus reserve V. 31 235,701,180.14 235,701,180.14 223,015,793.80 223,015,793.80
Retained earnings V. 32 966,840,818.40 710,223,150.82 851,360,603.66 683,798,086.83
Total equity attributable to shareholders
2,654,533,766.99 2,404,511,849.60 2,570,134,782.90 2,413,669,946.95
of the Company
Non-controlling interests 5,910.84 - 5,781.64 -
Total shareholders' equity 2,654,539,677.83 2,404,511,849.60 2,570,140,564.54 2,413,669,946.95
Total liabilities and shareholders'
3,760,923,285.37 3,067,960,180.38 3,599,691,650.26 3,046,834,465.19
equity
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
9
Consolidated and Company Income Statement
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019 Year ended 31/12/2018
Item Note
Consolidated Company Consolidated Company
I.Operating income V.33 3,704,210,734.90 140,511,246.61 3,400,450,599.90 130,901,823.99
Less:operating costs V.33 2,217,207,732.04 21,776,539.35 1,993,809,774.20 19,010,293.07
Taxes and surcharges V.34 28,192,789.55 4,623,611.23 33,769,344.40 4,340,938.33
Selling and distribution expenses V.35 865,792,078.61 1,130,383.07 856,970,173.10 -
General and administrative expenses V.36 240,619,989.04 84,134,946.30 219,162,525.85 62,841,044.26
Research and development expenses V.37 45,057,740.25 17,580,327.66 47,350,342.82 24,155,557.54
Financial expenses V.38 32,815,277.57 7,037,707.90 35,916,240.16 9,231,733.69
Including: Interest expenses 23,975,351.93 8,393,727.80 27,552,558.81 10,189,512.00
Interest income 1,956,316.52 1,696,829.44 2,269,447.05 1,756,834.88
Add: Other income V.39 18,428,906.18 9,066,722.30 19,375,618.48 7,689,684.27
Investment income ("-" for losses) V.40 1,787,907.10 114,542,774.70 1,001,545.06 144,001,545.06
Including: Income from investment in associates and joint ventures
1,787,907.10 1,542,774.70 1,001,545.06 1,001,545.06
("-" for losses)
Gain from de-recognition of financial assets measured at amortized
- -
costs ("-" for losses)
Gain from net exposure hedging ("-" for losses) - -
Gain from fair value changes ("-" for losses) - - - -
Credit impairment losses ("-" for losses) V.41 -16,640,961.07 -100,882.96
Asset impairment losses ("-" for losses) V.42 -4,295,134.48 - -3,264,956.18 -46,068.70
Gains from assets disposal ("-" for losses) V.43 -926,118.60 -537,935.27 -181,302.24 -51,942.13
II.Operating profit ("-" for losses) 272,879,726.97 127,198,409.87 230,403,104.49 162,915,475.60
Add: Non-operating income V.44 4,754,105.30 88,886.65 1,446,357.53 38,080.00
Less: Non-operating expenses V.45 1,400,188.87 210,174.24 652,514.97 446,782.97
III.Profit before income tax ("-" for losses) 276,233,643.40 127,077,122.28 231,196,947.05 162,506,772.63
Less: Income tax expenses V.46 60,324,629.25 223,258.88 47,361,851.76 405,968.14
IV.Net profit for the year ("-" for net losses) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
(1) Classification according to operation continuity
Including: Net profit from continuing operations ("-" for net loss) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
Net profit from discontinued operations ("-" for net loss) - - - -
(2) Classification according to attibute
Including: Shareholders of the company ("-" for net loss) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
Non-controlling interests ("-" for net loss)
V.Other comprehensive income, net of tax 4,502,059.89 - 6,081,568.47 -
Other comprehensive income (net of tax) attributable to shareholders of
4,501,930.69 - 6,081,302.61 -
the company
A.Items that will not be reclassified to profit or loss - - - -
B. Items that may be reclassified to profit or loss 4,501,930.69 - 6,081,302.61 -
a.Share of other comprehensive income of the equity method
- - - -
investments
b. Gains or losses arising from changes in fair value of other debt
- -
instrument investments
c. Gains or losses arising from changes in fair value of available-for-
- -
sale financial assets
d. Amount included in other comprehensive due to reclassification of
- -
financial assets
e. Gain or losses arising from reclassification of held-to-maturiey
- -
investments to available-for-sale financial assets
f.Translation differences arising from translation of foreign currency
4,501,930.69 - 6,081,302.61 -
financial statements
g. Others - - - -
Other comprehensive income (net of tax) attributable to non-controlling
129.20 - 265.86 -
interests
VI.Total comprehensive income for the year 220,411,074.04 126,853,863.40 189,916,663.76 162,100,804.49
Attributable to: Shareholders of the company 220,410,944.84 126,853,863.40 189,916,397.90 162,100,804.49
Non-controlling interests 129.20 - 265.86 -
VII.Earnings per share:
(1) Basic earnings per share 0.4943 0.4190
(2)Diluted earnings per share 0.4943 0.4190
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
10
Consolidated and Company Cash Flow Statement
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019 Year ended 31/12/2018
Item Note
Consolidated Company Consolidated Company
I.Cash flows from operating activities
Cash received from sales of goods and rendering of services 4,058,167,395.57 129,299,543.07 3,810,404,536.16 116,016,128.07
Cash received from refund of taxes 5,510,592.39 301,416.23 4,793,245.20 -
Cash received from other operating activities V.47 93,832,379.85 3,935,449,332.96 49,628,593.69 3,085,141,911.13
Subtotal of cash inflows from operating activities 4,157,510,367.81 4,065,050,292.26 3,864,826,375.05 3,201,158,039.20
Cash paid for purchasing goods and services 2,398,294,588.87 - 2,189,921,981.01 300,000.00
Cash paid to and for employees 584,435,566.86 74,123,969.83 583,417,253.40 58,785,131.65
Cash paid for tax and surcharges 241,905,980.66 12,227,836.75 305,622,391.83 10,909,143.22
Cash paid for other operating activities V.47 488,053,462.81 3,807,983,200.74 454,236,959.19 3,050,352,344.19
Subtotal of cash outflows in operating activities 3,712,689,599.20 3,894,335,007.32 3,533,198,585.43 3,120,346,619.06
Net cash flows from operating activities 444,820,768.61 170,715,284.94 331,627,789.62 80,811,420.14
II. Cash flows from investing activities
Cash received from disposal of investments - - - -
Cash received from returns on investments - 113,000,000.00 - 143,000,000.00
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets
626,107.64 134,060.00 53,280.03 1,430.00
Net cash received from disposal of subsidiaries and other business units - - - -
Cash received from other investing activities - - - -
Subtotal of cash inflows from investing activities 626,107.64 113,134,060.00 53,280.03 143,001,430.00
Cash paid to acquire fixed assets, intangible assets and other long-term
assets
166,689,454.32 40,173,154.98 146,877,130.29 27,763,546.06
Cash paid to acquire investments - - - -
Net cash paid to acquire subsidiaries and other business units - - - -
Cash paid for other investing activities - - - -
Subtotal of cash outflows in investing activities 166,689,454.32 40,173,154.98 146,877,130.29 27,763,546.06
Net cash flows from investing activities -166,063,346.68 72,960,905.02 -146,823,850.26 115,237,883.94
III. Cash flows from financing activities：
Cash received from capital contributions 18,585,600.00 18,585,600.00 - -
Including: Cash received from capital contributions by non-controlling
intetests of subsidiaries
- - - -
Cash received from loans 700,262,726.76 670,000,000.00 741,192,340.23 700,000,000.00
Cash received from other financing activities - - - -
Sub-total of cash inflows from financing activities 718,848,326.76 688,585,600.00 741,192,340.23 700,000,000.00
Cash repayments of borrowings 681,461,355.87 635,000,000.00 832,333,208.63 774,861,928.00
Cash paid for dividends and profits distribution and interests 111,024,929.61 110,048,303.96 116,690,155.91 115,249,277.23
Including: Cash payments for dividends or profit to non-controlling intetests
of subsidiaries
- - - -
Cash paid for other financing activities V.47 53,117,325.02 53,117,325.02 - -
Sub-total of cash outflows in financing activities 845,603,610.50 798,165,628.98 949,023,364.54 890,111,205.23
Net cash flows from financing activities -126,755,283.74 -109,580,028.98 -207,831,024.31 -190,111,205.23
IV. Effect of foreign exchange rate changes on cash and cash equivalents 468,366.93 31,718.77 702,253.60 73,422.99
V. Net increase in cash and cash equivalents 152,470,505.12 134,127,879.75 -22,324,831.35 6,011,521.84
Add: cash and cash equivalents at beginning of year 162,623,059.97 134,970,466.27 184,947,891.32 128,958,944.43
VI.Cash and cash equivalent at end of year V.48 315,093,565.09 269,098,346.02 162,623,059.97 134,970,466.27
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
11
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Total shareholders’ equity attributable to shareholders of the parent company
Item Non-
Other
Less: treasury Specific controlling Total
Share capital Capital reserve comprehensive Surplus reserve Retained earnings
shares reserve interests
income
I. Balance at the end of prior year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
Add：Changes in accounting policies - - - - - - - - -
Correction of prior period errors - - - - - - - - -
Business combination involving enterprises under common control - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
III.Changes in equity during the year( "- "for decrease) 4,224,000.00 18,774,571.10 71,267,118.78 4,501,930.69 - 12,685,386.34 115,480,214.74 129.20 84,399,113.29
(I)Total comprehensive income - - - 4,501,930.69 - - 215,909,014.15 129.20 220,411,074.04
(II)Shareholders' contributions and decrease of capital 4,224,000.00 18,774,571.10 71,267,118.78 - - - - - -48,268,547.68
1.Contribution by ordinary shareholders 4,224,000.00 14,361,600.00 71,267,118.78 - - - - - -52,681,518.78
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - 4,440,625.91 - - - - - - 4,440,625.91
4. Others - -27,654.81 - - - - - - -27,654.81
(III) Appropriation of profits - - - - - 12,685,386.34 -100,428,799.41 - -87,743,413.07
1. Appropriation for surplus reserves - - - - - 12,685,386.34 -12,685,386.34 - -
2. Accrual of general risk reserve - - - - - - - - -
3. Distributions to shareholders - - - - - - -87,743,413.07 - -87,743,413.07
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - - -
6. Others - - - - - - - - -
(V)Specific Reserve - - - - - - - - -
1. Appropriation during the year - - - - - - - - -
2.Utilisation during the year - - - - - - - - -
(VI)Others - - - - - - - - -
IV.Balance at end of current year 442,968,881.00 1,081,230,215.32 71,267,118.78 -940,209.09 - 235,701,180.14 966,840,818.40 5,910.84 2,654,539,677.83
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
12
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2018
Total shareholders’ equity attributable to shareholders of the parent company
Item Non-
Other
Less: treasury Specific controlling Total
Share capital Capital reserve comprehensive Surplus reserve Retained earnings
shares reserve interests
income
I. Balance at the end of prior year 438,744,881.00 1,062,455,644.22 - -11,523,442.39 - 206,805,713.35 771,484,565.02 5,515.78 2,467,972,876.98
Add：Changes in accounting policies - - - - - - - - -
Correction of prior period errors - - - - - - - - -
Business combination involving enterprises under common control - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,062,455,644.22 - -11,523,442.39 - 206,805,713.35 771,484,565.02 5,515.78 2,467,972,876.98
III.Changes in equity during the year( "- "for decrease) - - - 6,081,302.61 - 16,210,080.45 79,876,038.64 265.86 102,167,687.56
(I)Total comprehensive income - - - 6,081,302.61 - - 183,835,095.29 265.86 189,916,663.76
(II)Shareholders' contributions and decrease of capital - - - - - - - - -
1.Contribution by ordinary shareholders - - - - - - - - -
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - - -
4. Others - - - - - - - - -
(III) Appropriation of profits - - - - - 16,210,080.45 -103,959,056.65 - -87,748,976.20
1. Appropriation for surplus reserves - - - - - 16,210,080.45 -16,210,080.45 - -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,748,976.20 - -87,748,976.20
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - - -
6. Others - - - - - - - - -
(V)Specific Reserve - - - - - - - - -
1. Appropriation during the year - - - - - - - - -
2.Utilisation during the year - - - - - - - - -
(VI)Others - - - - - - - - -
IV.Balance at end of current year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
13
Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Other
Item Less: treasury Specific
Share capital Capital reserve comprehensive Surplus reserve Retained earnings Total
shares reserve
income
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
Add：Changes in accounting policies - - - - - - - -
Correction of prior period errors - - - - - - - -
Others - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
III.Changes in equity during the year( "- "for decrease) 4,224,000.00 18,774,571.10 71,267,118.78 - - 12,685,386.34 26,425,063.99 -9,158,097.35
(I)Total comprehensive income - - - - - - 126,853,863.40 126,853,863.40
(II)Shareholders' contributions and decrease of capital 4,224,000.00 18,774,571.10 71,267,118.78 - - - - -48,268,547.68
1.Contribution by ordinary shareholders 4,224,000.00 14,361,600.00 71,267,118.78 - - - - -52,681,518.78
2. Other equity holders’ contribution - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - 4,440,625.91 - - - - - 4,440,625.91
4. Others - -27,654.81 - - - - - -27,654.81
(III) Appropriation of profits - - - - - 12,685,386.34 -100,428,799.41 -87,743,413.07
1. Appropriation for surplus reserves - - - - - 12,685,386.34 -12,685,386.34 -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,743,413.07 -87,743,413.07
4. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - -
6. Others - - - - - - - -
(V)Specific Reserve - - - - - - - -
1. Appropriation during the year - - - - - - - -
2.Utilisation during the year - - - - - - - -
(VI)Others - - - - - - - -
IV.Balance at end of current year 442,968,881.00 1,086,885,756.42 71,267,118.78 - - 235,701,180.14 710,223,150.82 2,404,511,849.60
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
14
Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2018
Less: Other
Item Specific Retained
Share capital Capital reserve treasury comprehensive Surplus reserve Total
reserve earnings
shares income
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 - - - 206,805,713.35 625,656,338.99 2,339,318,118.66
Add：Changes in accounting policies - - - - - - - -
Correction of prior period errors - - - - - - - -
Others - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,068,111,185.32 - - - 206,805,713.35 625,656,338.99 2,339,318,118.66
III.Changes in equity during the year( "- "for decrease) - - - - - 16,210,080.45 58,141,747.84 74,351,828.29
(I)Total comprehensive income - - - - - - 162,100,804.49 162,100,804.49
(II)Shareholders' contributions and decrease of capital - - - - - - - -
1.Contribution by ordinary shareholders - - - - - - - -
2. Other equity holders’ contribution - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - -
4. Others - - - - - - - -
(III) Appropriation of profits - - - - - 16,210,080.45 -103,959,056.65 -87,748,976.20
1. Appropriation for surplus reserves - - - - - 16,210,080.45 -16,210,080.45 -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,748,976.20 -87,748,976.20
4. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - -
6. Others - - - - - - - -
(V)Specific Reserve - - - - - - - -
1. Appropriation during the year - - - - - - - -
2.Utilisation during the year - - - - - - - -
(VI)Others - - - - - - - -
IV.Balance at end of current year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
15
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Notes to the Financial Statements
I. Company status
1. Company’s profile
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, and the name
changed to “Shenzhen FIYTA Holdings Limited”. The headquarters is located at FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao,
Nanshan District, Shenzhen, Guangdong Province.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen Special
Economic Zone Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special shares (B shares)
publicly on 10 March 1993. On 3 June 1993, both the Company’s A shares and B shares were listed and traded on
Shenzhen Stock Exchange pursuant to the approval of Shen Zheng Ban Fu[1993]20 issued by Shenzhen Securities
Regulatory Office and Shen Zheng Shi Zi (1993)16 issued by Shenzhen Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of Shenzhen
Municipal Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company") transferred 72,360,000
corporate shares (accounting for 52.24% of the Company's total share capital) to Shenzhen China Aviation Group Company
Limited (previously known as "Shenzhen China Aviation Industry Company Limited", hereinafter referred to as "China
National Aviation Group") according to share transfer agreement signed by both parties. As a result, the Company’s
controlling shareholder changed from CATIC Shenzhen Company to China National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the prerequisite of maintaining the Company's
total of 249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1 shares per 10 tradable
shares to all the tradable share shareholders registered on registration date designated by the split-share reform program. At
that point, after the reform, the shares held by China National Aviation Group reduced to 44.69% from 52.24%.
On 29 February 2008, due to expanding the scope of business, the Company’s corporate business license was altered from
Shen Si Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen Municipal Administration for
Industry and Commerce.
With the approval of “Reply of China Securities Regulatory Commission (CSRC) to the Approval of Private Placement of
Shenzhen FIYTA Holdings Limited” (Zheng Jian Xu Ke [2010]1703) and “Reply of State-owned Assets Supervision and
Administration Commission of the State Council (SASAC) on Issues in Private Placement of Shenzhen FIYTA Holdings
Limited” (SASAC (2010)430) in 2010, the Company is approved to issue not more than 50,000,000 ordinary shares (A
shares) by private placement. After the completion of the placement on 9 December 2010, the Company’s registered capital
increased to RMB280,548,479.00 and the equity capital of the Company held by China National Aviation Group reduced to
16
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
41.49%.
On 3 March 2011, the company name changed to FIYTA Holdings Limited with the approval of Shenzhen Municipal
Administration for Industry and Commerce. On 8 April 2011, the Company increased its share capital by 4 shares for every
10 shares by capitalizing the capital reserve on the basis of total shares of 280,548,479 as at 31 December 2010. Total
shares of the Company changed to 392,767,870 shares after the increase.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of non-public offering
of stocks of Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the approval of State-owned Assets
Supervision and Administration Commission of the State Council (SASAC) “Reply of non-public offering of stocks of
Shenzhen FIYTA Holdings Limited” (SASAC(2015)415), the Company was approved to issue not more than 46,911,649
ordinary shares (A shares) through non-public offering. After the completion of the non-public offering of shares on 22
December 2015, the Company’s registered capital was increased to RMB438,744,881.00 and the equity capital of the
Company held by China National Aviation Group reduced to 37.15%.
On 4 January 2019, pursuant to the approval by “Reply to approval of Implementation of First Phase of Restricted Share
Incentive plan of FIYTA (Group) Holding Ltd.” (GuoZi KaoFen [2018] No. 936) issued by SASAC, and approved by the board
of directors and shareholder’s general meeting, the Company implemented the incentive plan. On 11 January 2019, the
restricted share incentive plan (first phase) granted a total of 4,224,000 restricted A-shares to 128 incentive individuals. As a
result, the Company’s registered capital increased to RMB442,968,881.00 and the equity capital held by China National
Aviation Group decreased to 36.79%.
As of 31 December 2019, total outstanding shares issued by the Company was 442,968,881 shares. Refer to Note V. 27
“Share capital” for details.
According to the “Proposal of Change the Company’s name and initials for A share stock” approved by the 3rd extraordinary
shareholder’s meeting in 2019, and upon examination and approval by Shenzhen Administration for Industry and Commerce,
the Company’s name was changed from “FIYTA (Group) Co., Ltd. to “FIYTA Precision Technology Co., Ltd.” since 9 January
2020.
Corporate governance established by the Company includes General Meeting of Shareholders, Board of Directors, Board of
Supervisors, Strategy Committee, Audit Committee, and Nomination, Remuneration and Evaluation Committee. The
Company’s functional departments include Administration, Party Affairs, Inspection and Audit, Finance, Human Resources,
Strategy and Operating, Data and Information, and Property Management departments.
The business scope of the Company and its subsidiaries (collectively as “the Group”) mainly includes: producing and selling
of analogue indication mechanical watches, quartz watches and its movements, components, various timing devices,
processing and wholesaling karat gold jewellery watches, intelligent watches; domestic commercial and material supply and
distributing business (excluding goods under exclusive operational rights, special control and exclusive sales); property
management and leasing; providing design service; research, design, production, sales and technical support for precise
watches and components; import and export business (according to Shen Mao Guan Deng Zheng Zi No.2007-072). The
legal representative of the Company is Huang Yongfeng.
17
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The financial statements have been approved and authorised for issue by the 16th meeting of the 9th Board of Directors on 18
March 2020.
2. Scope of consolidation
There are 11 subsidiaries that are included in the Company’s scope of consolidation for year 2019, see Note VII “Interests in
other entities” for detail. No changes in scope of consolidation in 2019.
II. 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 Disclosures of Companies Issuing Public Shares, No. 15:
General Requirements for Financial Reports” (revised in 2014) issued by China Securities Regulatory Commission (CSRC).
The financial statements of the Company have been prepared on going concern basis.
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
Based on actual business characteristics, the Group determined fixed asset depreciation, intangible assets amortization and
revenue recognition policies. Refer to Note III 15, Note III 18 and Note III 25 for specific accounting policies.
1. Statement of compliance with corporate accounting standards
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
2019, the results of operations and the cash flows for the year then ended of the Company.
2. Accounting period
The accounting period of the Company is the calendar year, i.e. from 1 January to 31 December of each year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording currency.
Except for the Swiss-based subsidiary Montres Chouriet SA (the “Swiss Company”) , which is a subsidiary of FIYTA (Hong
Kong) Limited (FIYTA Hong Kong), uses Swiss Franc as the recording currency according to the main economic environment
where the Swiss Company operated, all other subsidiaries outside the mainland China, including FIYTA Hong Kong and its
subsidiary Station 68 Limited (Station 68) use Hong Kong Dollar (“HKD”) as the recording currency and translate to Renminbi
18
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
when preparing financial statements. The currency used in preparing the Group’s financial statements is Renminbi.
5. Accounting treatment for business combinations involving entities under common control and not under common control
(1) 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.
Business combinations involving entities under common control achieved in stages that involves multiple transactions
In the separate financial statements, 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.
In the consolidated financial statements, assets acquired and liabilities assumed by acquirer in a business combination are
measured at their carrying amount as recorded 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 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.
(2) Business combinations involving entities not under common control
For business combinations involving enterprises not under common control, the consideration costs include acquisition-date
fair value of assets transferred, liabilities incurred or assumed and equity securities issued by the acquirer in exchange for
control of the acquiree. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are
measured at their fair value. The acquiree’s identifiable asset, liabilities and contingent liabilities, are recognised at their
acquisition-date fair value.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is recognised 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
19
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
assets, the difference is recognised in profit or loss for the current period after reassessment.
Business combinations involving entities not under common control achieved in stages that involves multiple transactions
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 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.
In the consolidated financial statements, the combination cost is the sum of the consideration paid at the acquisition date and
the fair value of equity investment of the acquiree held prior to the acquisition date. The cost of equity investment of the
acquiree held prior to the acquisition date is re-measured at the fair value at the acquisition date, the difference between the
fair value and carrying value is recognized as profit or loss for the current period. Other comprehensive income and changes
of other owners’ equity from the equity interest held in the acquiree prior to the acquisition date are transferred to profit or
loss for the current period, except for other comprehensive income resulted in the change of net liabilities or assets in the
investee’s re-measurement of defined benefit plan.
(3) Transaction costs for business combination
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.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
The scope of consolidated financial statements is based on control. Control exists when the Company has power over the
investee; exposure, or rights to variable returns from its involvement with the investee and has the ability to affect its returns
through its power over the investee. A subsidiary is an entity that is controlled by the Company (including enterprise, a
portion of an investee as a deemed separate component, and structured entity controlled by the enterprise).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and
its subsidiaries and other relevant information. When preparing consolidated financial statements, the accounting policies
20
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
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.
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 operating results and cash flow of the subsidiary or business after the acquisition date are
included in the consolidated income statement and consolidated cash flow statement respectively.
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.
(3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a
portion of an interest in a subsidiary without a change in control, the transaction is treated as equity transaction, and 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) Losing control over the subsidiary
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
recognised 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.
Other comprehensive income related to the former subsidiary is transferred to profit or loss when the control is lost, except
for the comprehensive income arising from the movement of net liabilities or assets in the former subsidiary’s re-
measurement of defined benefit plan.
7. Joint arrangement classification and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies joint
21
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
arrangements into joint operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities,
relating to the arrangement.
The Company recognizes the following items relating to its interest in a joint operation, and account for them in accordance
with relevant accounting standards:
A、its solely-held assets, and its share of any assets held jointly;
B、its solely-assumed liabilities, and its share of any liabilities assumed jointly;
C、its revenue from the sale of its share of the output arising from the joint operation;
D、its share of the revenue from the sale of the output by the joint operation; and
E、its solely-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the joint investors have rights to the net assets of the arrangement.
The Company adopts equity method under long-term equity investment in accounting for its investment in joint venture.
8. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term,
highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of
change in value.
9. 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 recognised in profit or loss. Non-monetary items that are
measured at historical cost in foreign currencies are translated to Renminbi using the exchange 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 recognised in profit or loss.
(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.
Income and expenses of foreign operation are translated to Renminbi at the spot exchange rates.
22
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Cash flow statement of foreign operation is translated to Renminbi at the spot exchange rates [the rates determined under a
systematic and rational method that approximate the spot exchange rates] at the cash flow occurrence dates. Effect of
foreign exchange rate changes on cash and cash equivalents is presented separately as “Effect of foreign exchange rate
changes on cash and cash equivalents” in the cash flow statement.
The resulting translation differences are recognised in other comprehensive income in shareholders’ equity of balance sheet.
The translation differences accumulated in shareholders’ equity with respect to a foreign operation are transferred to profit or
loss in the period when the foreign operation is disposed.
10. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or an equity
instrument of other parties.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognised when the Group becomes one party of financial instrument contracts.
If one of the following conditions is met, the financial assets are terminated:
① The right of the contract to receive the cash flows of financial assets terminates
② The financial asset has been transferred, and is in accordance with the following conditions for derecognition.
If the obligations of financial liability have been discharged in total or in part, derecognize all or part of it. If the Group (debtor)
makes an agreement with the creditor to replace the current financial liability of assuming new financial liability which
contract provisions are different in substance, derecognize the current financial liability and meanwhile recognize as the new
financial liability.
If the financial assets are traded in regular ways, they are recognised and derecognised at the transaction date.
(2) Classification and measurement of financial assets
Financial assets are classified into the following three categories depends on the Group’s business mode of managing
financial assets and cash flow characteristics of financial assets: financial assets measured at amortized cost, financial
assets at fair value through other comprehensive income and financial assets at fair value through profit or loss.
Financial assets measured at amortised cost
The Group 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 Group’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.
After initial recognition, the real 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 profits and losses when the recognition is terminated, amortized or impaired according to the real interest rate.
23
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Financial assets at fair value through other comprehensive income
The Group 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 profits and losses 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;
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.
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 recognised in profit or loss, while other gains or losses
are recognised in other comprehensive gains. When derecognized, the accumulated gains or losses previously recognised in
other comprehensive gains are transferred from other comprehensive gains and recorded in current profits and losses.
Financial assets at fair value through profit or loss
In addition to the above financial assets which are measured at amortized cost or at fair value through other comprehensive
income, the Group classifies all other financial assets as financial assets at fair value through profit or loss. When initial
recognition, in order to eliminate or significantly reduce accounting mismatches, the Group irrevocably designates some
financial assets that should have been measured at amortized cost or at fair value through other comprehensive gains 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 (including
interest and dividend income) generated from which are recognised in profit or loss, unless the financial assets are part of
the hedging relationship.
However, for non-tradable equity instrument investment, when initially recognized, the Group irrevocably designates them as
financial assets at fair value through other comprehensive gains. The designation is made on the basis of individual
investment, and the relevant investment conforms to the definition of equity instruments from the issuer’s point of view.
After initial recognition, financial assets are subsequently measured at fair value. Dividend income that meets the
requirements is recognised in profit and loss, and other gains or losses and changes in fair value are recognised in other
comprehensive gains. When derecognized, the accumulated gains or losses previously recognised in other comprehensive
gains are transferred from other comprehensive gains to retained earnings.
The business model of managing financial assets refers to how the group manages financial assets to generate cash flow.
The business model decides whether the source of cash flow of financial assets managed by the Group is to collect contract
cash flow, sell financial assets or both of them. Based on objective facts and the specific business objectives of financial
assets management decided by key managers, the Group determines the business model of financial assets management.
The Group evaluates the characteristics of the contract cash flow of financial assets to determine whether the contract cash
flow generated by the relevant financial assets on a specific date is only to pay principal and interest based on the amount of
unpaid principal. Among them, principal refers to the fair value of financial assets at the time of initial confirmation; interest
24
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
includes the consideration of time value of money, credit risk related to the amount of unpaid principal in a specific period,
and other basic borrowing risks, costs and profits. In addition, the Group evaluates the terms and conditions of the contracts
that may lead to changes in the time distribution or amount of cash flow in financial asset contracts to determine whether
they meet the requirements of the above contract cash flow characteristics.
Only when the Group 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, otherwise, financial assets shall not
be reclassified after initial confirmation.
Financial assets are measured at fair value at initial recognition. For financial assets at fair value through profits and losses,
the related transaction costs are directly recognized through profits and losses, and the related transaction costs of other
types of financial assets are included in the initial recognition amounts.
(3) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair value through profit or loss (FVTPL), and
financial liabilities measured at amortized cost. For financial liabilities not classified as at fair value through profit or loss, the
transaction costs are recognised in the initially recognised amount.
Financial liabilities at fair value through profits and losses
Financial liabilities at FVTPL include transaction financial liabilities and financial liabilities designated as at fair value through
profit or loss in the initial recognition. Such financial liabilities are subsequently measured at fair value, all gains and losses
arising from changes in fair value and dividend and interest expense relative to the financial liabilities are recognised in profit
or loss for the current period.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost using the effective interest method; gains and losses
arising from derecognition or amortization is recognised in profit or loss for the current period.
Distinction between financial liabilities and equity instruments
The financial liability is the liability that meets one of following criteria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets or financial liabilities with other
parties.
③ A contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or
may be obliged to deliver a variable number of the entity’s own equity instruments.
④ A derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for
a fixed number of the entity’s own equity instruments.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.
If the group cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or other financial assets, the
25
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
contractual obligation meets the definition of financial liability.
If a financial instrument must or are able to be settled by the group’s own equity instrument, the group should consider
whether the group’s equity instrument as the settlement instrument is a substitute of cash or other financial assets or the
residual interest in the assets of an entity after deducting all of its liabilities. If the former, the tool is the group’s financial
liability; if the latter, the tool is the equity instrument of the group.
(4) Fair value of financial instruments
Refer to Note III. 11 for determining the fair value of financial assets and financial liabilities.
(5) Impairment of financial assets
On the basis of expected credit losses, the Group performs impairment assessment on the following items and confirms the
loss provision.
financial assets measured at amortized cost;
debt investments at fair value through other comprehensive income;
Measurement of expected credit losses
The expected credit losses refer 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 contractual cash flows receivable from the contract and all cash
flows expected to be received by the Group at the original effective interest rate, that is, the present value of all cash
shortages.
The Group separately measures the expected credit losses of financial instruments at different stages. The credit risk on a
financial instrument has not increased significantly since initial recognition, which is in the first stage. The Group shall
measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If the credit
risk of financial instruments has increased significantly since the initial recognition, but no credit impairment has occurred,
which is in the second stage. The Group shall measure the loss allowance for a financial instrument at an amount equal to
the lifetime expected credit losses. If the financial instrument has occurred credit impairment since initial recognition, which is
in the third stage, and the Group shall measure the loss allowance for a financial instrument at an amount equal to the
lifetime expected credit losses.
For financial instruments with lower credit risk at the balance sheet date, the Group assumes that their credit risk has not
increased significantly since the initial recognition, and shall measure the loss allowance for that financial instrument at an
amount equal to 12-month expected credit losses.
The lifetime expected credit losses, refer to the expected credit losses caused by all possible defaults during the whole
expected lifetime. The 12-month expected credit losses, refer to the expected credit losses caused by all possible defaults
during the 12-month after balance sheet date (if the expected duration of financial instrument is less than 12 months, then for
the expected duration), which is part of the lifetime expected credit losses.
When measure the expected credit loss, the longest contract period (including the option of renewal) that the group needs to
consider is the longest contract period the enterprise facing credit risk.
26
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
For financial instruments in the first stages, second stages and with lower credit risk, the Group calculates interest income on
the basis of their book balances without deduction of impairment provisions and actual interest rates. For financial
instruments in the third stage, the Group calculates interest income according to their book balance minus the impairment
provision and the actual interest rate.
For bills receivable, accounts receivable and contract assets, whether or not there are significant financing elements, the
Group shall always measure the loss allowance for them at an amount equal to the lifetime expected credit losses.
According to the characteristics of credit risk, the group divides and combines bills receivable and accounts receivable,
contract assets and leased receivables. On the basis of the combination, the group calculates the expected credit losses.
The basis of determining the combination is as follows:
A﹑ Bills receivable
Bill receivable group 1: Bank acceptance bills
Bill receivable group 2: Trade acceptance bills
B﹑ Accounts receivable
Accounts receivable group 1: Amount receivables of related parties
Accounts receivable group 2: Amount receivables of other customers
For the accounts receivable and bills receivable divided into groups, the group, taking into consideration of historical credit
losses, current situation and forecast of future economic situation, prepares a comparison table between the ageing of
accounts receivable and the lifetime expected credit losses rate to calculate the expected credit losses.
Other receivables
According to the characteristics of credit risk, the group divides other receivables into group. On the basis of the combination,
the group calculates the expected credit losses. The basis of determining the combination is as follows:
Other receivables group 1: Receivables of down payment and guarantee
Other receivables group 2: Petty cash for employees
Other receivables group 3: Social security payment paid on-behalf of employees
Other receivables group 4: Receivables from related parties in scope of consolidation
Other receivables group 5: Others
For other receivables that divided into groups, the Group calculates the expected credit losses through the exposure on risk
of default and expected credit losses rate in the next 12 months or the lifetime of receivables.
Debt investments and other debt investments
For debt investments and other debt investments, the Group calculates the expected credit losses through risk of default and
expected credit losses rate in the next 12 months or the lifetime. according to the nature of the investment, the types of
counterparty and risk exposure.
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 Group
27
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
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., the Group considers reasonable and
valid information, including forward-looking information, that can be obtained without unnecessary additional costs or efforts.
Information considered by the Group includes:
The debtor can’t pay principal and interest on the expiration date of the contract;
Serious deterioration of external or internal credit ratings (if any) of financial instruments that have occurred or are expected
to occur;
Serious deterioration of the debtor’s operating results that have occurred or are expected to occur;
Changes in the existing or anticipated technological, market, economic or legal environment will have a significant negative
impact on the debtor’s repayment capacity.
According to the nature of financial instruments, the Group evaluates whether credit risk has increased significantly on the
basis of a single financial instrument or a combination of financial instruments. When assessing on the basis of the
combination of financial instruments, the Group can classify financial instruments based on common credit risk
characteristics, such as overdue information and credit risk rating.
Financial assets that have occurred credit impairment
On the balance sheet date, the Group assesses whether credit impairment has occurred in financial assets measured at
amortized cost and debt investments measured at fair value through other comprehensive income. When one or more
events adversely affect the expected future cash flow of a financial asset occur, the financial asset becomes a financial asset
with credit impairment. Evidence of credit impairment of financial assets includes the following observable information:
Significant financial difficulties occur to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the
principal, etc.;
For economic or contractual considerations related to the financial difficulties of the debtor, the Group grants concessions to
the debtor that will not be made under any other circumstances.
The debtor is probable to go bankrupt or undergo other financial restructuring.
Financial difficulties of issuer or debtor lead to the disappearance of financial assets active market.
Presentation of expected credit losses allowance
In order to reflect the changes happened to the credit risk of financial instruments since the initial recognition, the Group
recalculates the expected credit losses on each balance sheet day. The increase or reversal of the loss provision resulting
therefrom is recognised as an impairment loss or gain in the current profit or loss. For financial assets measured at
amortized cost, loss provision offsets the carrying amount of the financial assets shown on the balance sheet; for debt
investments measured at fair value through other comprehensive income, the Group recognizes its loss provision through
other comprehensive income and does not offset the financial assets’ carrying amount.
28
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Write off
If the Group 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.
What usually occurs when the Group determines that the debtor has no assets or sources of income to generate sufficient
cash flows to pay the amount to be reduced. However, in accordance with the Group’s procedures for recovering due
payment, the financial assets reduced may still be affected by enforcement activities.
If the reduced financial assets are recovered later, the returns as impairment losses shall be included in the profits and
losses of the recovery period.
(6) Transfer of financial assets
Transfer of financial assets refers to the transference or deliverance of financial assets to the other party (the transferee)
other than the issuer of financial assets.
The Group derecognizes a financial asset only if it transfers substantially all the risks and rewards of ownership of the
financial asset to the transferee; the Group should not derecognize a financial asset if it retains substantially all the risks and
rewards of ownership of the financial asset.
The Group neither transfers nor retains substantially all the risks and rewards of ownership, shows as the following
circumstances: if the Group has forgone control over the financial assets, derecognize the financial assets and verify the
assets and liabilities; if the Group retains its control of the financial asset, the financial asset is recognized to the extent of its
continuing involvement in the transferred financial asset and recognize an associated liability is recognized.
(7) Offsetting financial assets and financial liabilities
When the Group has the legal rights to offset the recognized financial assets and financial liabilities and is capable to carry it
out, the Group plans to settlement or realize the financial assets and pay off the financial liabilities in net amount, the
financial assets and financial liabilities shall be presented in the balance sheet at net amount. Except this, financial assets
and financial liabilities shall be listed separately in balance sheet and are not allowed to offset.
(8) Financial instruments that subject to foreign exchange rate volatility risks
Foreign exchange rate risk refers to risk of the fair value or future cash flows varies because of changes in foreign exchange.
Foreign exchange rate risk arises from financial instruments that denominated in foreign currencies other than the recording
currency. The overseas subsidiary of the Company mainly uses Hong Kong Dollar and Swiss Franc for settlement. The
Company’s monetary assets and liabilities that are denominated in foreign currencies are all subject to the impact of foreign
exchange rate volatility.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The Company measures related assets or liabilities at fair value assuming the assets or liabilities are exchanged in an
29
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
orderly transaction in the principal market; in the absence of a principal market, assuming the assets or liabilities are
exchanged in an orderly transaction in the most advantageous market. Principal market (or the most advantageous market)
is the market that the Company can normally enter into a transaction on measurement date. The Company adopts the
presumptions that would be used by market participants in achieving the maximized economic value of the assets or
liabilities.
For financial assets or financial liabilities with active markets, the Company uses the quoted prices in active markets as their
fair value. Otherwise, the Company uses valuation technique to determine their fair value.
Fair value measurement of a non-financial asset takes into account market participants’ ability to generate economic benefits
using the asset in its best way or by selling it to another market participant that would best use the asset.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximizing the use of relevant observable inputs, and using unobservable inputs only if the
observable inputs aren’t available or impractical.
Fair value level for assets and liabilities measured or disclosed at fair value in the financial statements are determined
according to the significant lowest level input to the entire measurement: Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that the Company can access at the measurement date; Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or
indirectly; Level 3 inputs are unobservable inputs for the assets or liabilities.
At the balance sheet date, the Company re-values assets and liabilities being measured at fair value continuously in the
financial statements to determine whether to change the levels of fair value measurement.
12. Inventories
(1) Classification
Inventories include raw materials, work in progress, and finished goods.
(2) Measurement method of cost of inventories
Inventories are initially measured at cost. Raw materials and finished goods are calculated using weighted average method
(except for branded watches) and specific identification method (for branded watches).
(3) Basis for determining the net realisable value and method for provision for obsolete inventories
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale and relevant taxes. The net realisable value is measured based on the
verified evidences and considerations for the purpose of holding inventories and the effect of post balance sheet events.
Any excess of the cost over the net realisable value of inventories is recognised as a provision for obsolete inventories, and
is recognised in profit or loss. The Company usually recognises provision for decline in value of inventories by a single (type,
group) inventory item. If the factors caused the value of inventory previously written-down have disappeared, the provision
for decline in value of inventories previously made is reversed.
30
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(4) Inventory count system
The Company maintains a perpetual inventory system.
(5) 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.
13. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equity investments in joint ventures and
associates. An associate is an enterprise over which the Company has significant influence.
(1) Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combination involving enterprises under
common control is the Company’s share of the carrying amount of the subsidiary’s equity in the consolidated financial
statements of the ultimate controlling party at the combination date. For a long-term equity investment obtained through a
business combination not involving enterprises under common control, the initial cost is the combination cost.
A long-term equity investment acquired other than through a business combination: A long-term equity investment acquired
other than through a business combination is initially recognised at the amount of cash paid if the Company acquires the
investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.
(2) Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method. An investment in a joint venture or an
associate is accounted for using the equity method for subsequent measurement.
For a long-term equity investment which is accounted for using the cost method, Except for cash dividends or profit
distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the
investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
investment income for the current period.
For a long-term equity investment which is accounted for using the equity method, where the initial cost of a long-term equity
investment exceeds the Company’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition,
the investment is initially recognised at cost. Where the initial investment cost is less than the Company’s interest in the fair
value of the investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at the investor’s
share of the fair value of the investee’s identifiable net assets, and the difference is recognised in profit or loss.
Under the equity method, the Company recognises its share of the investee’s profit or loss and other comprehensive income
as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the
investment accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the
investment is reduced by the amount attributable to the Company. Changes in the Company’s share of the investee’s owners’
equity, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution
(referred to as “other changes in owners’ equity”), is recognised directly in the Company’s equity, and the carrying amount of
the investment is adjusted accordingly. In calculating its share of the investee’s net profits or losses, other comprehensive
31
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
income and other changes in owners’ equity, the Group recognises investment income and other comprehensive income
after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on
the fair value of the investee’s identifiable net assets at the date of acquisition.
When the Company becomes capable of exercising joint control or significant influence (but not control) over an investee due
to additional investment or other reasons, the Company uses the fair value of the previously-held equity investment, together
with additional investment cost, as the initial investment cost under the equity method. The difference between the fair value
and carrying amount of the previously-held equity investment, and the accumulated changes in fair value included in other
comprehensive income, shall be transferred to profit or loss for the current period upon commencement of the equity method.
When the Company can no longer exercise joint control of or significant influence over an investee due to partial disposal of
the equity investment or other reasons, the remaining equity investment shall be accounting for using Accounting Standard
for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and the difference between the
fair value and the carrying amount of the remaining equity investment shall be charged to profit or loss for the current period
at the date of the loss of joint control or significant influence. Any other comprehensive income previously recognised under
the equity method shall be accounted for on the same basis as would have been required if the Company had directly
disposed of the related assets or liabilities for the current period upon discontinuation of the equity method. Other movement
of owner’s equity related to original equity investment is transferred to profit or loss for the current period.
When the Company can no longer exercise control over an investee due to partial disposal of the equity investment or other
reasons, and the remaining equity after disposal can exercise joint control of or significant influence over an investee, the
remaining equity is adjusted as using equity method from acquisition. When the remaining equity can no longer exercise joint
control of or significant influence over an investee, the remaining equity investment shall be accounted for using Accounting
Standard for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments, and the difference
between the fair value and the carrying amount of the remaining equity investment shall be charged to profit or loss for the
current period at the date of loss of control.
When the Company can no longer exercise control over an investee due to new capital injection by other investors, and the
Company can exercise joint control of or significant influence over an investee, the Company recognizes its share of the
investee’s new added net assets using new shareholding percentage. The difference between its new share of the investee’s
new added net assets and its decreased shareholding percentage of the original investment is recognized in profit or loss.
And the Company adjusts to the equity method using the new shareholding percentage as if it uses the equity method since
it obtains the investment.
Unrealised profits and losses resulting from transactions between the Company and its associates or joint ventures are
eliminated to the extent of the Company’s interest in the associates or joint ventures. Unrealised losses resulting from
transactions between the Company and its associates or joint ventures are eliminated in the same way as unrealised gains
but only to the extent that there is no impairment.
(3) Criteria for determining the existence of joint control or significant influence over an investee
32
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties sharing control. When assessing whether the Company can
exercise joint control over an investee, the Company first considers whether no single participant party is in a position to
control the investee’s related activities unilaterally, and then considers whether strategic decisions relating to the investee’s
related activities require the unanimous consent of all participant parties that sharing of control. All the parties, or a group of
the parties, control the arrangement collectively when they must act together to direct the relevant activities. When more than
one combination of the parties can control an arrangement collectively, joint control does not exist. A party that holds only
protective rights does not have joint control of the arrangement.
Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not
have control or joint control over those policies. When determining whether the Company can exercise significant influence
over an investee, the effect of potential voting rights (for example, warrants, share options and convertible bonds) held by the
Company or other parties that are currently exercisable or convertible shall be considered.
When the Company, directly or indirectly through subsidiaries, owns 20% of the investee (including 20%) or more but less
than 50% of the voting shares, it has significant influence over the investee unless there is clear evidence to show that in this
case the Company cannot participate in the production and business decisions of the investee, and cannot form a significant
influence. When the Company owns less than 20% of the voting shares, generally it does not have significant influence over
the investee, unless there is clear evidence to show that in this case the Company can participate in the production and
business decisions of the investee so as to form a significant influence.
(4) Method of impairment testing and impairment provision
For investments in subsidiaries, associates and joint ventures, refer to Note III. 20 for the Company’s method of asset
impairment.
14. Investment property
Investment properties are properties held either to earn rental income or for capital appreciation or for both. The Company’s
investment properties include leased land use rights, land use right held and provided for to transfer after appreciation and
leased building and construction.
Investment properties are initially measured at acquisition cost, and depreciated or amortized using the same policy as that
for fixed assets or intangible assets.
For the impairment of the investment properties accounted for using the cost model, refer to Note III.20.
Gains or losses arising from the sale, transfer, retirement or disposal of an item of investment property are determined as the
difference among the net disposal proceeds, the carrying amount of the item, related taxes and surcharges, and are
recognised in profit or loss for current period.
Depreciation method of investment property is the same as fixed assets. Refer to Note III. 15 for details.
15. Fixed assets
33
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Company for use in production of goods, use in supply of services,
rental or for administrative purposes with useful lives over one accounting year.
Fixed assets are only recognised when its related economic benefits are likely to flow to the Company and its cost can be
reliably measured.
Fixed asset is initially measured at cost.
(2) Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state of intended use, unless the fixed asset
is classified as held for sale. Not considering impairment provision, the estimated useful lives, residual value rates and
depreciation rates of each class of fixed assets are as follows:
Estimated useful life
Class Residual value rate % Depreciation rate %
(years)
Property and plant 20-35 5.00 4.80-2.70
Machinery and equipment 10 5.00-10.00 9.50-9.00
Electronic equipment 5 5.00 19.00
Motor vehicles 5 5.00 19.00
Others 5 5.00 19.00
For impaired fixed assets, cumulative amount of impairment provision is deducted in determining the depreciation rate.
(3) For the impairment of the fixed assets, please refer to Note III. 20.
(4) Useful lives, estimated residual values and depreciation methods are reviewed at least at each year-end.
The Company adjusts the useful lives of fixed assets if their expected useful lives are different with the original estimates and
adjusts the estimated net residual values if they are different from the original estimates.
(5) Overhaul costs
Overhaul costs occurred in regular inspection are recognized in the cost if there is undoubted evidence to confirm that this
part meets the recognition criteria of fixed assets, otherwise, the overhaul costs are recognized in profit or loss for the current
period. Depreciation is provided during the period of regular overhaul.
16. Construction in progress
Construction in progress is recognized based on the actual construction cost, including all expenditures incurred for
construction projects, capitalised borrowing costs and any other costs directly attributable to bringing the asset to working
condition for its intended use.
Construction in progress is transferred to fixed asset when it is ready for its intended use.
For the impairment of construction in progress, please refer to Note III. 20.
17. Borrowing costs
(1) Capitalisation criteria
34
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be
capitalised as part of the cost of that asset. Other borrowing costs are expensed in profit or loss as incurred. The
capitalisation of borrowing costs shall commence only when the following criteria are met:
① capital expenditures have been incurred, including expenditures that have resulted in payment of cash, transfer of other
assets or the assumption of interest-bearing liabilities;
② borrowing costs have been incurred;
③ the activities that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalisation period
The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended
use, the borrowing costs incurred thereafter are recognised in profit or loss for the current period.
Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is
interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
(3) Capitalisation rate of borrowing costs and calculation basis of capitalised amount
For interest expense actually incurred on specific borrowings, the eligible capitalised amount is the net amount of the
borrowing costs after deducting any investment income earned before some or all of the funds are used for expenditures on
the qualifying asset. To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a
qualifying asset, the Company shall determine the amount of borrowing costs eligible for capitalisation by applying a
capitalisation rate to the expenditures on that asset, the capitalisation rate shall be the weighted average of the borrowing
costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings specifically
for the purpose of obtaining a qualifying asset.
In the capitalisation period, exchange differences of specific borrowings in foreign currency shall be capitalised; exchange
differences of general borrowings in foreign currency is recognised in profit or loss for the current period.
18. Intangible assets
Intangible assets include software patent rights etc.
Intangible assets are stated at actual cost upon acquisition and the useful economic lives are determined at the point of
acquisition. When the useful life is finite, amortisation method shall reflect the pattern in which the asset’s economic benefits
are expected to be realised. If the pattern cannot be determined reliably, the straight-line method shall be used. An
intangible asset with an indefinite useful life shall not be amortised.
Amortisation method for intangible assets with finite useful lives is as follows:
Categories Useful life (years) Amortisation methods Remarks
Land use right 50 Straight-line method
Software system 5 Straight-line method
Brand usage right 5-10 Straight-line method
The Company shall review the useful life and amortisation method of an intangible asset with a finite useful life at least at
35
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
each year end. Changes of useful life and amortisation method shall be accounted for as a change in accounting estimate.
An intangible asset shall be derecognised in profit or loss when it is not expected to generate future economic benefits.
For the impairment of intangible assets, please refer to Note III. 20.
19. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure incurred during the research
phase and expenditure incurred during the development phase.
Expenditure during the research phase is expensed when incurred.
Expenditure during the development phase is capitalised if the product or process is technically and commercially feasible;
the Company intends to complete the development; the intangible asset can generate economic benefits, including there is
evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the
intangible asset is for internal use, there is evidence that there is usage for the intangible asset; there is sufficient support in
terms of technology, financial resources and other resources in order to complete the development and use or sell the
intangible asset; and development costs can be measured reliably. Other development expenditure is recognised as an
expense in the period in which it is incurred.
Research and development projects of the Company will enter into the development phase when they meet the above
conditions, technical and economic feasibility research is finished and necessary approval of the project is obtained.
Capitalised expenditure on the development phase is presented as “development costs” in the balance sheet, and is
transferred to intangible assets when the project is completed to its intended use.
20. Impairment of assets
The impairment of long-term equity investments in subsidiaries, associates and joint ventures, investment properties
measured using a cost model, fixed assets, construction in progress, and intangible assets (excluding inventories,
investment property measured using a fair value model, deferred tax assets and financial assets) is determined as follows:
At each balance sheet date, the Company determines whether there is any indication of impairment. If any indication exists,
the recoverable amount of the asset is estimated. In addition, the Company estimates the recoverable amounts of goodwill,
intangible assets with indefinite useful lives and intangible assets not ready for use at each year-end, irrespective of whether
there is any indication of impairment.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its present value of expected future
cash flows. The recoverable amount is estimated for each individual asset. If it is not possible to estimate the recoverable
amount of each individual asset, the Company determines the recoverable amount for the asset group to which the asset
belongs. An asset group is the smallest identifiable group of assets that generates cash inflows that are largely independent
of the cash inflows from other assets or asset groups.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount. A
provision for impairment of the asset is recognised accordingly.
For goodwill impairment test, the carrying amount of goodwill arising from a business combination is allocated reasonably to
36
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
the relevant asset group since the acquisition date. If the carrying amount of goodwill is unable to be allocated to asset group,
the carrying amount of goodwill will be allocated to asset portfolio. Asset group or portfolio of asset group is asset group or
portfolio of asset group which can be benefit from synergies of a business combination and is not greater than the reportable
segment of the Company.
In impairment testing, if impairment indication exists in asset group or portfolio of asset group containing allocated goodwill,
impairment test is first conducted for asset group or portfolio of asset group that does not contain goodwill, and
corresponding recoverable amount is estimated and any impairment loss is recognized. Then impairment test is conducted
for asset group or portfolio of asset group containing goodwill by comparing its carrying amount and its recoverable amount.
If the recoverable amount is less than the carrying amount, impairment loss of goodwill is recognized.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized using a straight-line method within the benefit
period. For long-term deferred expense that cannot bring benefit in future period, the Company recognized its amortised cost
in profit or loss for the current period.
22. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service
rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee
benefits, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided to the
Company’s spouse, children, dependents, family members of deceased employees or other beneficiaries are also part of the
employee benefits.
According to liquidity, employee benefits are presented as “employee benefits payable” and “long-term employee benefits
payable” on the balance sheet.
(2) Short-term employee benefits
In the current period, the Company has accrued for the actual wages, bonuses, medical insurance for employees based on
standard rate, work injury insurance and maternity insurance and other social insurance and housing fund incurred and these
are recognised as liabilities and corresponding costs in the profit or loss. If these liabilities are not expected to be fully paid
12 months after the end of the reporting period in which employee renders the service to the Company, and if the financial
impact is significant, these liabilities shall be discounted using the net present value method.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Defined contribution plans are
post-employment benefit plans under which an enterprise pays fixed contributions into a separate fund and will have no
future obligations to pay the contributions. Defined benefit plans are post-employment benefit plans other than defined
contribution plans.
37
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Defined contribution plans
Defined contribution plans include primary endowment insurance, unemployment insurance and enterprise annuity plan.
Besides basic pension insurance, the Company establishes corporate annuity plans in accordance with the related policies
of corporate pension regulations. Employees can join the pension plan voluntarily. The Company has no other significant
commitment of employees’ social security.
The Company shall recognise, in the accounting period in which an employee provides service, the contribution payable to a
defined contribution plan as a liability, with a corresponding charge to the profit or loss for the current period or the cost of a
relevant asset.
Defined benefit plan
At each balance sheet date, actuarial calculation and valuation shall be carried out by independent actuary for defined
benefit plan to determine the cost of welfare using estimated cumulative welfare unit method. Employee benefit cost resulted
from the Group’s defined benefit plan including the followings:
① Service cost, which includes service cost for current period, prior period and gain or losses on settlement. Service
cost for current period refers to the increase in amount of present value of liability of defined benefit plan resulted
from service provided by employees in current period. Service cost for prior period refers to changes in amount of
present value of liability of defined benefit plan related to prior period due to alteration of the plan.
② Net interest of defined benefit plan net liability or net asset include interest gain of plan asset, interest expenses of
defined benefit plan liability and interest affected by the upper limit of asset.
③ Changes due to re-measurement of defined benefit plan net liability or net asset
Unless other accounting standards allow or permit the employee welfare cost to be charged into asset cost, the Company
shall charge the item ① and ② above into current period profit or loss. Item ③ shall be included in other comprehensive
income and will cannot be recycled into profit or loss in later accounting periods and when the plan is terminated, the portion
that previously recorded in other comprehensive shall be transferred into retained earnings in all.
(4) Termination benefits
The Company provides for termination benefits to the employees and shall recognise an employee benefits liability for
termination benefits, with a corresponding charge to the profit or loss for the current period, at the earlier of the following
dates: When the Company cannot unilaterally withdraw the offer of the termination benefits because of an employment
termination plan or a redundancy proposal; or when the Company recognises the costs or expenses relating to a
restructuring that involves the payment of the termination benefits.
When adopting employee internal retirement plan, the economic compensation before the official retirement date shall be
included in as termination benefits. The salary for internal retired employee and social security payments from the date when
the employee ceases service to the date of officially retired shall be charged to current profit or loss one-off. Economic
compensation after official retirement shall be dealt as post-employment benefits.
(5) Other long-term employee benefits
38
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Other long-term employee benefits provided by the Company to the employees satisfied the conditions for classifying as a
defined contribution plan; those benefits shall be accounted for in accordance with the above requirements relating to
defined contribution plan. When the benefits satisfied a defined benefit plan, it shall be accounted for in accordance with the
above requirements relating to defined benefit plan, but the movement of net liabilities or assets in re-measurement of
defined benefit plan shall be recorded in profit or loss for the current period or cost of relevant assets.
23. Provisions
A provision is recognised for an obligation related to a contingency if all the following conditions are satisfied:
(1) the Company has a present obligation;
(2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be estimated reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation.
Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a
whole in reaching the best estimate. Where the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows. The Company reviews the carrying amount of a provision at the balance sheet
date and adjusts the carrying amount to the current best estimate.
If all or part of the expenditure necessary for settling the provision is expected to be compensated by a third party, the
amount of compensation is separately recognized as an asset when it is basically certain to be received. The recognized
compensation amount shall not exceed the carrying amount of the provision.
24. Share-based payment
(1) Types of share-based payment
Share-based payments are divided into equity-settled share-based payments and cash-settled share-based payments.
(2) Method of determining share-based payment
The Company determining the fair value of equity instruments such as share options granted which has active markets using
public quotation. If no active markets exist, option pricing model shall be used to determine its fair value. The following
factors shall be considered when selecting option pricing models: A. Exercising price of option, B. Valid period of option, C.
Current price of the target share, D. Share’s estimated volatility rate, E. estimated share dividend and F. risk-free interest rate
during the valid period.
(3) Evidence of determining the best estimate of exercisable equity instruments
On each balance sheet date during the vesting period, the Company makes the best estimate based on the latest
information on the changes in the number of employees with vesting rights, and corrects the number of equity instruments
that are expected to be exercised. On the exercise date, the number of final estimated exercisable equity instrument shall be
the same as actual exercisable equity instrument.
(4) Accounting treatment for implementation, modifying and terminating of the share-based payment plan
39
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Equity settled share-based payment is measured using fair value of equity instruments granted to employees. If the option
can be exercised immediately after the grant, the relevant costs or expenses are included in the grant date, and the capital
reserve are increased accordingly. If the option can only be exercised after completing the service within the vesting period
or meeting the required performance conditions, the amount of the fair value shall be charged to cost or expenses and
capital reserve based on straight-line method during the vesting period using the best estimate of the amount of exercisable
equity instrument. No changes to related cost or expenses and equity after the exercisable date.
The cash-settled share-based payment is measured at the fair value of the liabilities determined by the Company based on
shares or other equity instruments. If the right can be exercise immediately after the grant, the relevant costs or expenses
are included in the grant date, and the liabilities are increased accordingly. If the option can only be exercised after
completing the service within the vesting period or meeting the required performance conditions, the service obtained by the
Company in current period shall be charged to profit or loss based on fair value of the liabilities undertake by the Company,
calculated on the basis of the best estimation of the exercisable option on each balance sheet date of the vesting period. The
liabilities shall be increased accordingly. The fair value of the liability is re-measured at each balance sheet date and
settlement date before the settlement of related liabilities, the changes are included in the current profit and loss.
When the Group changes the share-based payment plan, if the modification increases the fair value of the granted equity
instruments, the increase in the fair value of the equity instruments is recognized accordingly. The increase in the fair value
of equity instruments refers to the difference between the fair value, measured on the modification date, of the equity
instruments before and after the modification. If the modification reduces the total fair value of the share-based payment or
adopts other methods that are not in favour of employees, the accounting treatment of it will not be changed, as if the
modification never happened unless the Group cancelled part or all of the granted equity instruments.
During the vesting period, if the granted equity instrument is cancelled, the Company shall treat the cancelled equity
instrument as accelerated exercise, and shall immediately charge the amount that should be recognized in the remaining
vesting period into the current profit and loss and adjusting the capital reserves at the same time. If the employee or other
party can choose to meet the non-vesting conditions but fails during the vesting period, the Group will treat it as a
cancellation of the equity instrument.
25. Revenue
(1) General principle
①Sale of goods
Revenue is recognised when all the following conditions are satisfied: significant risks and rewards of ownership of goods
have been transferred to the buyer; the Company retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold; it is probable that the economic benefits will flow to the
Company; and the revenue and costs can be measured reliably.
②Rendering of services
40
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Where the outcome of a transaction involving the rendering of services can be estimated reliably, revenue is recognised by
reference to the stage of completion.
The stage of completion is based on the proportion of costs incurred to date to the estimated total progress of work
performed to the total services to be performed.
Rendering of services can be estimated reliably when all the following conditions are satisfied:
A. The revenue can be measured reliably;
B. It is probable that the economic benefits will flow to the Company;
C. The stage of completion can be measured reliably;
D. The costs incurred and to be incurred in the transaction can be measured reliably.
Where the outcome cannot be estimated reliably, revenues are recognised to the extent of the costs incurred that are
expected to be recoverable, and an equivalent amount is charged to profit or loss as service cost; otherwise, the costs
incurred are recognised in profit or loss and no service revenue is recognised.
③Revenue from rendering usage rights
The revenue is recognized when the economic benefits related to transfer of the right to use assets can flow in and the
amount of revenue can be measured reliably.
(2) Specific revenue recognition method
The watches sold by the Company includes two types, one is the self-manufactured FIYTA watch, the sales of which is
managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a subsidiary of the
Company. The other is brand watches, the sales of which are controlled by Shenzhen HARMONY World Watch Center Co.,
Ltd., a subsidiary of the Company, and the Company act as agent. Regarding to sales modes, a portion of the sales of self-
manufactured FIYTA watches is sold through direct sales to customer and consignment sales while most of the self-
manufactured FIYTA watches and brand watches are sold under two sales modes, namely exclusive shop 、shop-in-shop
and On-line shop. Detailed method of revenue recognition as follows:
① Direct sales to the customer
Under direct sales to the customer mode, the Company delivers products to customers and recognizes revenue after
customer inspection and acceptance.
② Exclusive shop
Under exclusive shop mode, the Company delivers products to customers and recognizes revenue after customer inspection,
acceptance and pay.
③ Shop-in-shop
Under shop-in-shop mode, the Company delivers products to customers, sales staff issues sales memo to retail customers
and recognizes sales revenue after customer inspection and acceptance and the department store collects the payment from
the customer.
④On-line shop
41
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Under on-line shop mode, the Company recognizes revenue when it delivers products to customer and the customer
confirmed receiving and the Company receives payment.
⑤Consignment sales
Under consignment sales mode, the Company receives the detail of the sales list from distributors and recognizes revenue
while issuing invoice to distributors.
26. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will
comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If
a government grant is in the form of a transfer of a non-monetary asset, it is measured at fair value. If fair value cannot be
reliably determined, it is measured at a nominal amount of RMB 1.
Government grants related to assets are grants whose primary condition is that the Group qualifying for them should
purchase, construct or otherwise acquire long-term assets. Government grants related to income are grants other than those
related to assets.
For government grants with unspecified purpose, the amount of grants used to form a long-term asset is regarded as
government grants related to an asset, the remaining amount of grants is regarded as government grants related to income.
If it is not possible to distinguish, the amount of grants is treated as government grants related to income. A government
grant related to an asset is offset against the carrying amount of the related asset, or recognised as deferred income and
amortised to profit or loss over the useful life of the related asset on a reasonable and systematic manner. A grant that
compensates the Group for expenses or losses already incurred is recognised in profit or loss or offset against related
expenses directly. A grant that compensates the Group for expenses or losses to be incurred in the future is recognised as
deferred income, and included in profit or loss or offset against related expenses in the periods in which the expenses or
losses are recognised.
A grant related to ordinary activities is recognised as other income or offset against related expenses based on the economic
substance. A grant not related to ordinary activities is recognised as non-operating income.
When a recognised government grant is reversed, carrying amount of the related asset is adjusted if the grant was initially
recognized as offset against the carrying amount of the related asset. If there is balance of relevant deferred income, it is
offset against the carrying amount of relevant deferred income. Any excess of the reversal to the carrying amount of deferred
income is recognised in profit or loss for the current period. For other circumstances, reversal is directly recognized in profit
or loss for the current period.
27. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss except to
the extent that they relate to transactions or items recognised directly in equity and goodwill arising from a business
combination.
42
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differences respectively, being
the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in the following
transactions:
(1) initial recognition of goodwill, or assets or liabilities in a transaction that is not a business combination and that affects
neither accounting profit nor taxable profit (or deductible loss);
(2) taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and the
Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The Company recognises a deferred tax asset for deductible temporary differences, deductible losses and tax credits carried
forward to subsequent periods, to the extent that it is probable that future taxable profits will be available against which
deductible temporary differences, deductible losses and tax credits can be utilised, except for those incurred in the following
transactions:
(1) a transaction that is not a business combination and that affects neither accounting profit nor taxable profit (or
deductible loss);
(2) deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, the
corresponding deferred tax asset is recognized when both of the following conditions are satisfied: it is probable that the
temporary difference will reverse in the foreseeable future; and it is probable that taxable profits will be available in the
future against which the temporary difference can be utilized.
At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from the expected
manner of recovery or settlement of the carrying amount of the assets and liabilities, using tax rates enacted at the reporting
date that are expected to be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced to the extent that it is no
longer probable that the related tax benefits will be utilised. Such reduction is reversed to the extent that it becomes probable
that sufficient taxable profits will be available.
28. Operating leases
The Company’s lease is operating lease
(1) As a lessor
Income derived from operating leases is recognized in profit or loss using the straight-line method over the lease term. Initial
direct costs are charged to profit or loss immediately.
(2) As a lessee
Rental payments under operating leases are recognized as part of the cost of another related asset or as expenses on a
straight-line basis over the lease term. Initial direct costs are charged to profit or loss immediately.
43
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
29. 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.
30. Restricted share
Under the share option incentive plan, the Company grants restricted shares to the incentive individuals who will subscribe
the shares first. If the unlocking condition is not reached subsequently, the Company will re-purchase the shares according to
the price previously agreed. If the shares issued under the incentive plan has gone through capital increase filing procedures,
the Company recognizes share capital and capital reserve (share premium) based on consideration received from the
employees and, at the same time, recognizes treasury shares and other payables for the re-purchase obligation.
31. Significant accounting estimates and judgments
The Group gives continuous assessment of the reasonable expectations of future events and the critical accounting
estimates and key assumptions based on its historical experience and other factors. The critical accounting estimates and
key assumptions that are likely to lead to significant adjusted risks of the carrying amount of assets and liabilities for the next
financial year are listed as follows:
Classification of financial assets
The Group’s major judgments in determining the classification of financial assets include the analysis of business models
and the characteristics of contract cash flows.
At the level of financial asset groups, the Group determines the business model for managing financial assets, taking into
account factors such as the way to evaluate and report financial assets performance to key managers, the risks affecting
financial assets performance and their management methods, and the way in which relevant business managers are paid.
In assessing whether the contract cash flow of financial assets is consistent with the basic lending arrangements, the Group
has the following judgments: whether the principal’s time distribution or amount may change during the lifetime for early
repayment and other reasons; whether the interest only includes the time value of money, credit risk, other basic lending
risks and the consideration of cost and profit. For example, does the amount of advance payment only reflect the unpaid
principal and interest based on the unpaid principal, and reasonable compensation paid for the early termination of the
contract.
Measurement of Expected Credit Loss of Receivables
44
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The Group calculates the expected credit losses of accounts receivable by default risk exposure and expected credit losses
rate of accounts receivable, and determines the expected credit losses rate based on default probability and default loss rate.
In determining the expected credit losses rate, the Group uses internal historical credit loss and other data, and adjusts the
historical data with current situation and forward-looking information. In considering forward-looking information, the
indicators used by the Group include the risks of economic downturn, external market environment, technological
environment and changes in customer conditions. The Group regularly monitors and reviews assumptions related to the
calculation of expected credit losses.
Accrual of provision for obsolete inventories
The Group recognises provision for obsolete inventories based on the lower of cost of inventory and its net realisable value.
In determining the net realisable value of inventories, the management uses judgments to estimate the selling price, cost to
complete production, selling expenses and associated taxes.
Deferred income tax assets
Deferred tax assets relating to certain temporary differences and tax losses are recognised as management considers it is
probable that future taxable profit will be available against which the temporary differences or tax losses can be utilised. The
management needs significant judgment to estimate the time and extent of the future taxable profits and tax planning
strategy to recognise the appropriate amount of deferred income tax assets. Where the expectation is different from the
original estimate of the future taxable profits, such differences will impact the recognition of deferred tax assets and taxation
in the years when the estimates are changed.
32. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
① New financial instrument standards
In 2017, the Ministry of Finance have issued “Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (Revised)”,“Accounting Standards for Business Enterprises No. 23 - Finance Asset
Transfer (Revised)”, “Accounting Standards for Business Enterprises No.24 - Hedge Accounting(Revised)”, “Accounting
Standards for Business Enterprises No.37 - Financial Instruments Presentation (Revised)”(hereinafter referred to as the
“New Financial Instruments Standards”). The Group has implemented the New Financial Instruments Standards since 1
January 2019 after the approval of the board of directors, and adjusted the relevant accounting policies. Refer to Note III. 10
for accounting policies after the adjustment.
According to the new financial instruments standards, financial assets are classified into the following three categories
depends on the Group’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, and (3)
financial assets at fair value through profit or loss. For hybrid contract, if the main contract belongs to financial assets, the
embedded derivative should not be separated from the hybrid contract, and should be applied to the relevant standards in
the corresponding classification of financial assets to as a whole.
45
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Except for financial guarantee contract liabilities, the adoption of new financial instrument standards has no significant impact
on the accounting policy of the Group’s financial liabilities.
On 1 January 2019, the Group neither designated any financial assets or liabilities as financial assets or liabilities measured
at fair value through profits and losses, nor revoked its previous designation.
The New Financial Instruments Standards replaces the method of recognizing impairment provision according to actual
impairment loss stipulated in the original financial instrument standard with the method of “expected credit losses method”.
The “expected credit losses method” model requires continuous assessment of the credit risk of financial assets. Therefore,
under the New Financial Instruments Standards, the Group’s credit loss is recognised earlier than the original financial
instrument standards.
On the basis of expected credit losses, the Group performs impairment assessment on the following items and recognises
the loss allowance.
Financial assets measured at amortized cost;
Debt investments at fair value through other comprehensive income;
In accordance with the provisions of the New Financial Instruments Standards, except in certain specific cases, the Group
retrospectively adjusts the classification and measurement of financial instruments (including impairment), and calculates the
difference between the original carrying value of financial instruments and the new carrying value on the date of
implementation of the New Financial Instruments Standards (i.e. 1 January 2019) into the retained earnings or other
comprehensive earnings at the beginning of 2019. At the same time, the Group did not adjust the comparative financial
statements data.
46
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
On 1 January, 2019, the results of classification and measurement of financial assets in accordance with the previous financial instrument standards and the New Financial Instruments
Standards are as follows:
Previous financial instrument standards New financial instrument standards
Item Categories Carrying value Item Categories Carrying value
Available-for-sale financial Other equity instrument Fair value through other
Measured at cost (equity instrument) 85,000.00 85,000.00
assets investment comprehensive income
Bill receivable Amortized cost 7,051,846.85
Bill receivable Amortized cost 7,051,846.85 Fair value through other
Receivables financing -
comprehensive income
Accounts receivable Amortized cost 370,545,656.61
Accounts receivable Amortized cost 370,545,656.61 Fair value through other
Receivables financing -
comprehensive income
Other current assets Amortized cost -
Other receivables Amortized cost 45,870,582.26
Other receivables Amortized cost 45,870,582.26
47
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
On 1 January 2019, the adjustment table of the financial instruments classification and carrying value, at the implementation
of the New Financial Instruments Standards, were as follows:
Pre-adjustment carrying Remeasure Adjusted carrying value
Item Reclassification
value (31 December 2018 ment (January 1, 2019)
Assets:
Bill receivables 7,051,846.85 -- -- 7,051,846.85
Accounts receivables 370,545,656.61 -- -- 370,545,656.61
Other receivables 45,870,582.26 -- -- 45,870,582.26
Available-for-sale
85,000.00 -85,000.00 - -
financial assets
Other equity instrument
-- 85,000.00 - 85,000.00
investments
Shareholder’s equity
Capital reserve 1,062,455,644.22 -- -- 1,062,455,644.22
Other comprehensive
-5,442,139.78 -- -- -5,442,139.78
income
Surplus reserve 223,015,793.80 -- -- 223,015,793.80
Undistributed profit 851,360,603.66 -- -- 851,360,603.66
Minority interests 5,781.64 -- -- 5,781.64
The reconciliation of bad debt provision accrued by the Group at the end of 2018 based on previous financial instrument
standards and credit losses recognized at the beginning of 2019 based on New Financial Instruments Standards are
presented as follows:
Pre-adjustment carrying Adjusted carrying
Remeasurem
Category value (31 December Reclassification value (January 1,
ent
2018 2019)
Bad debt provision for
12,688,807.19 -- -- 12,688,807.19
accounts receivable
Bad debt provision for other
10,037,542.11 -- -- 10,037,542.11
receivables
② Financial statements format
According to “the Announcement of the revision of general enterprise financial statements format for 2018” (Accounting
[2018] No. 15) issued by MOF, the Group revised the financial statement format as follows:
A﹑Balance sheet
48
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Added line item of “financial assets held for sale”, “debt investment”, “other debt investment”, “other equity instrument
investment”, “other non-current financial asset” and “financial liability held for sale”. Deleted line item of “financial assets at
fair value through profit or loss”, “available-for-sale” financial assets, “held-to-maturity” financial assets and “financial
liabilities at fair value through profit or loss”;
Divided “bills and accounts receivable” into “bills receivable” and “accounts receivable”;
Divided “bills and accounts payable” into “bills payable” and “accounts payable”;
Added “receivables financing” item.
B. Income statement
Added sub-item of “Gain from de-recognition of financial assets measured at amortized cost” under “investment gain” item.
Added “Gain from net exposure hedging” item.
Added “credit impairment loss” item. “Changes of re-measurement in net liabilities or net assets of defined benefit plans” is
replaced by “The amount of changes of re-measurement in defined benefit plans”. “Share of other comprehensive income to
in the investee cannot be reclassified into profit or loss under equity method” is changed to “other comprehensive income
that cannot be transferred to profit or loss under the equity method”. Added “Fair value changes in the entity’s own credit risk”.
“Share of other comprehensive income in the investee shall be reclassified into profit or loss under equity method” is
changed to “Transfer of other comprehensive income into profits or losses under equity method”. Added “fair value changes
of other debt investment”, “Re other comprehensive income due to reclassification of financial assets” and “credit impairment
allowance of other debt investments”. Deleted “gain or losses from fair value changes of available-for-sale financial assets
and “gains from reclassification of held-to-maturity investment to available-for-sale financial asset”. “The effective portion of
gain or losses of cash flows hedge” is changed to “reserve of cash flows hedge”.
C. Statement of changes in shareholder’s equity
Under the “internal transfer of shareholders’ equity” line item, the original “Changes of re-measurement in net liabilities or net
assets of defined benefit plans” was changed to “Change in amount of defined benefit plans transfer to retained earnings”.
Added “transfer of other comprehensive income into retained earnings”.
The Group adjusted comparative figures for comparable periods in accordance with CaiKuai [2019] No. 6.
The revision of the financial statement format has no impact on the Group’s total assets, total liabilities, net profit and other
comprehensive income.
(2) Changes in accounting estimates
The Group has no significant changes in accounting estimates in current reporting period.
(3) Adjustement of beginning balance of financial statements on the first year adoption of the New Financial Instruments
Standards
Because of the implementation of New Financial Instruments Standards, the Company reclassified the presentation of
“available-for-sale” line item to “other equity instrument investment” and the amount is RMB85,000. No changes to other
financial statement line items.
49
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
IV. Taxation
1. Main types of taxes and corresponding tax rates
Tax type Tax basis Tax rate %
VAT (note (1)) Taxable revenue 16、13、10、9、6、5
Consumption tax Taxable income 20
Urban maintenance and construction
Turnover tax payable 5、7
tax
Original cost of property or rental
Property tax (note (2)) 1.2、12
income
Corporate income tax Taxable income Refer to Note (3) for details
Note (1): Value-added tax
Value-added tax rate originally applied to 16%, 10% when the Company have VAT taxable sales or import goods. According
to “Announcement of the Ministry of Finance and the State Administration of Taxation and General Administration of Customs
Regarding Policies of Deepening Reform of Value-added Tax” ((2019) No. 39), applicable tax rate adjusted to 13% and 9%
respectively since 1 April 2019.
Other taxable income arising from the Company is calculated on the basis of the applicable tax rate.
Note (2): Property Tax
In accordance with Article 5 of “Notice to Publish “Reply to Issues Related to Property Tax and Vehicle and Vessel Usage
Tax””, Shen Di Shui Fa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased out by manufacturing or
business entity are taxed at 1.2% on the bases of 70% of the original cost of the property.
Properties of the Company that situated in Shenzhen are taxed according to this notice. Properties situated in other cities are
taxed according to local regulations.
Note (3): Corporate income tax
Name of entity subject to corporate income tax Applicable tax rate
The Company(Note ①②⑤) 25.00
Shenzhen HARMONY World Watch Center Co., Ltd. (HARMONY Company) (Note ① 25.00
⑤)
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company) 15.00
(Note ②③)
FIYTA Hong Kong(Note ④) 16.50
Station 68(Note ④) 16.50
Shenzhen FIYTA Technology Development Co., Ltd (Technology Company) (Note ② 15.00
③)
TEMPORAL (Shenzhen) Co., Ltd. (TEMPORAL Company) (Note ⑤) 25.00
Harbin Harmony World Watches Distribution Co., Ltd. (Harbin Company) (Note ⑤) 20.00
Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit Shenzhen Company) (Note 25.00
⑤)
FIYTA Sales Co., Ltd (Sales Company) (Note ①⑤) 25.00
Liaoning Hengdarui Commercial & Trade Co., Ltd (Hengdarui Company) (Note ⑤) 25.00
50
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Swiss Company(Note ⑥) 30.00
Note ①:According to the regulations stated in Guo Shui Fa (2008) No. 28, “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 adjustment by finance authorities” starting from 1 January 2008. 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: According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of Science on
Improving the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui (2018) No. 99), if the
research and development costs, which were incurred for developing new technologies, new products, and new processes
by the Company, the Manufacturing Company and the Technology Company, are not capitalized as intangible assets but
charged to current profits and losses, all of these entities can enjoy a 75% super deduction on top of the R&D expenses that
allowed to deduct before income tax during the period from 1 January 2018 to 31 December 2020.
Note ③: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 ④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is 16.50% this
year.
Note ⑤: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25% for residential
enterprises since 1 January 2008.
Note ⑥: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
Note ⑦ According to “Notice of Ministry of Finance and State Administration of Taxation on implementation of the Inclusive
Income Tax Deduction and Exemption Policies for Small Low-Profit Enterprises” (Cai Shui (2019) No.13), the portion of
annual taxable income of small low-profit enterprise that is below RMB1,000,000.00, it is not taxed at 25% and will be taxed
at a rate of 20%.
2. Preferential treatment and corresponding approval
(1) According to clause 2 in Shen Dishui Fa (2003) No. 676 “Notice of Forwarding State Administration of Taxation on
Policies Related to Property Tax and Urban Lan Usage Tax”, for newly constructed or purchased property by tax payer,
property tax is exempted for 3 years from the next month it is constructed or purchased. The property tax for FIYTA
Watch Building owned by the Company located in Shenzhen Guangming New District is exempted for 3 years from the
next month when construction is completed.
(2) 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), 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.
V. Notes to the consolidated financial statements
51
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
1. Cash at bank and on hand
As at 31/12/2019 As at 31/12/2018
Item Foreign RMB Foreign
Exchange Exchange
currency currency RMB equivalent
rate rate
amount equivalent amount
Cash on hand： -- -- 229,258.38 -- -- 420,783.85
RMB -- -- 179,848.59 -- -- 393,789.09
HKD 2,018.63 0.8958 1,808.24 2,018.63 0.8762 1,768.72
USD 605.00 6.9762 4,220.60 105.00 6.8632 720.64
EUR 1,453.19 7.8749 11,443.74 1,041.45 7.8473 8,172.57
CHF 4,434.00 7.2028 31,937.21 2,350.25 6.9494 16,332.83
Cash at bank: -- -- 285,306,297.62 -- -- 160,135,454.62
RMB -- -- 255,981,925.11 -- -- 148,287,154.41
HKD 9,732,871.02 0.8887 8,649,900.97 3,644,178.41 0.8762 3,193,027.05
USD 2,558,762.50 6.9287 17,728,876.60 634,426.28 6.8632 4,354,194.44
EUR 59,904.49 7.9290 474,983.98 902.13 7.8473 7,079.28
CHF 343,007.02 7.2028 2,470,610.96 617,894.99 6.9494 4,293,999.44
Including: deposit in
-- -- 237,118,456.45 -- -- 128,255,699.54
finance company
RMB -- -- 237,118,456.45 -- -- 128,255,699.54
Other monetary funds: -- -- 31,133,009.09 -- -- 4,271,821.50
RMB -- -- 31,133,009.09 -- -- 4,271,821.50
Total -- -- 316,668,565.09 -- -- 164,828,059.97
Including: Total
-- -- 3,641,389.51 -- -- 9,192,653.31
overseas deposits
Details of other monetary funds:
Item 2019.12.31 2018.12.31
Security deposit for letter of guarantee 1,575,000.00 1,575,000.00
Balance in investment account 26,448,679.71 -
Others 3,109,329.38 2,696,821.50
Total 31,133,009.09 4,271,821.50
At the end of year, the Group does not have balance of cash or other monetary funds that are restricted because being
pledged as security, guaranteed or blocked frozen or overseas balances that have restriction on remittance back to the home
country except for security deposit for letter of guarantee mentioned above.
2. Bill receivables
52
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
2019.12.31 2018.12.31
Type Carrying
Book value Provision Carrying amount Book value Provision
amount
Bank
acceptance 6,187,353.98 - 6,187,353.98 - - -
bills
Commercial
acceptance 4,626,260.06 217,182.73 4,409,077.33 7,051,846.85 - 7,051,846.85
bills
Total 10,813,614.04 217,182.73 10,596,431.31 7,051,846.85 - 7,051,846.85
Note:
(1) There is no pledge of notes at the end of the period.
(2) The is no endorsed bills that is not yet due at the end of the period.
(3) Bill receivable that transferred to receivables due to issuer’s default at the end of the period.
Type Amount transferred to accounts receivable
Commercial acceptance bills 300,000.00
(4) Classification based on method of accrual of bad debt provision.
2019.12.31 2019.01.01
Carrying
Book value Provision Book value Provision
amount
Type Carrying
ECL
Percenta ECL rate amount Percent Amou
Amount Amount Amount rate
ge (%) (%) age (%) nt
(%)
Standalone
- - - - - - - - - -
accrual
Accrued based
10,813,614.04 100.00 217,182.73 2.01 10,596,431.31 7,051,846.85 100.00 - - 7,051,846.85
on group
including
Commercial
acceptance 4,626,260.06 42.78 217,182.73 4.69 4,409,077.33 7,051,846.85 100.00 - - 7,051,846.85
bills
Bank
acceptance 6,187,353.98 57.22 - - 6,187,353.98 - - - - -
bills
Total 10,813,614.04 100.00 217,182.73 2.01 10,596,431.31 7,051,846.85 100.00 - - 7,051,846.85
Bad debt provision accrued based on groups:
Item: Commercial acceptance bills
2019.12.31
Name
Bill receivables Bad debt provision ECL rate (%)
Within 1 year 4,626,260.06 217,182.73 4.69
(5) Status of accrual, retrieved or reversal of bad deb
Amount of bed debt provision
2018.12.31 -
53
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Adjustment for first implementation of new financial instrument
standards -
2019.01.01 -
Accrual 217,182.73
Reversal -
Written-off -
2019.12.31 217,182.73
3. Accounts receivable
(1) Presentation by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 412,028,202.94 368,270,203.02
1-2 years 9,278,600.90 10,632,348.03
2-3 years 1,196,515.64 3,091,413.67
Over 3 years 4,013,110.09 1,240,499.08
Subtotal 426,516,429.57 383,234,463.80
Less: provision for bad debt 29,045,322.59 12,688,807.19
Total 397,471,106.98 370,545,656.61
(2) Presentation by method of providing bad debt
2019.12.31
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant
and assessed for 24,140,377.57 5.66 17,562,041.15 72.75 6,578,336.42
impairment individually
Collectively assessed for
impairment based on 402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
credit risk characteristics
Receivables from other
402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
customers
Total 426,516,429.57 100.00 29,045,322.59 6.81 397,471,106.98
(continued)
2019.01.01
Category Book value Bad debt provision
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant
and assessed for 1,799,519.78 0.47 1,799,519.78 100.00 -
impairment individually
Collectively assessed for
impairment based on 381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
credit risk characteristics
54
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Receivables from other
381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
customers
Total 383,234,463.80 100.00 12,688,807.19 3.31 370,545,656.61
Specific bad debt provision provided
2019.12.31
Category
Book value Bad debt provision ECL rate (%) Reason
Receivables from other
24,140,377.57 17,562,041.15 72.75 Unable to recover
customers
Bad debt provision based on groups
Group: Receivables from other customers
2019.12.31
Category
Accounts receivable Bad debt provision ECL rate (%)
Within 1 year 398,474,804.41 11,042,487.31 2.77
1-2 years 3,639,298.75 269,502.55 7.41
2-3 years 122,592.64 31,935.38 26.05
Over 3 years 139,356.20 139,356.20 100.00
Total 402,376,052.00 11,483,281.44 2.85
Bad debt provision as of 31 December 2018:
2018.12.31
Category Percentage Bad debt Percentage of Carrying
Book value
(%) provision providing (%) amount
Individually significant and
assessed for impairment 1,702,371.94 0.44 1,702,371.94 100.00 -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Including: ageing group 189,655,491.08 49.49 10,889,287.41 5.74 178,766,203.67
Specific receivables
191,779,452.94 50.04 - - 191,779,452.94
group
Subtotal of groups 381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
Individually insignificant but
assessed for impairment 97,147.84 0.03 97,147.84 100.00 -
individually
Total 383,234,463.80 100.00 12,688,807.19 3.31 370,545,656.61
(3) Addition, recovery or reversals of provision during the year:
55
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Bad debt provision
2018.12.31 12,688,807.19
Adjustment amount for the first implementation of the new financial instrument standards -
2019.01.01 12,688,807.19
Addition 16,613,020.51
Reversal 266,383.33
Written-off -
Others 9,878.22
2019.12.31 29,045,322.59
(4) There were no receivables that are written-off during the period.
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB108,313,007.08, accounted for 25.39% of total
balance of accounts receivable as of the period end. Corresponding bad debt provision accrued is RMB2,040,175.21.
4. Prepayments
(1) Presented by ageing
2019.12.31 2018.12.31
Ageing
Amount Percentage (%) Amount Percentage (%)
Within 1 year 10,221,061.48 94.23 12,886,273.93 94.29
1-2 years 284,733.40 2.62 - -
Over 2 years 342,167.40 3.15 780,542.40 5.71
Total 10,847,962.28 100.00 13,666,816.33 100.00
(2) Top 5 prepayment accounts as of period end
Total amount of prepayments to top five accounts amounts to RMB7,084,498.24, accounted for 65.31% of total balance of
prepayments as of the period end.
5. Other receivable
Item 2019.12.31 2018.12.31
Interest receivable - -
Dividends receivable - -
Other receivables 47,239,844.58 45,870,582.26
Total 47,239,844.58 45,870,582.26
(1) Other receivables
① Presented by ageing
56
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Ageing 2019.12.31 2018.12.31
Within 1 year 49,453,416.07 46,770,037.27
1-2 years 11,101.80 1,438,499.45
2-3 years 186,180.00 1,365,400.00
Over 3 years 7,933,538.12 6,334,187.65
Subtotal 57,584,235.99 55,908,124.37
Less: bad debt provision 10,344,391.41 10,037,542.11
Total 47,239,844.58 45,870,582.26
② Presented by nature
2019.12.31 2018.12.31
Item Carrying Carrying
Book value Provision Book value Provision
amount amount
Petty cash 2,147,617.27 - 2,147,617.27 2,478,447.48 - 2,478,447.48
Security
45,014,657.70 3,093,646.11 41,921,011.59 38,091,767.87 3,201,718.39 34,890,049.48
deposit
Promotion
2,518,891.09 579,905.66 1,938,985.43 7,827,524.03 391,376.20 7,436,147.83
expense
Others 7,903,069.93 6,670,839.64 1,232,230.29 7,510,384.99 6,444,447.52 1,065,937.47
Total 57,584,235.99 10,344,391.41 47,239,844.58 55,908,124.37 10,037,542.11 45,870,582.26
③ Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in
Bad debt
Category Book value next 12 month Carrying amount Reason
Provision
(%)
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk 49,690,747.87 4.93 2,450,903.29 47,239,844.58
characteristics
Petty cash 2,147,617.27 - - 2,147,617.27
Security deposit 44,214,657.70 5.19 2,293,646.11 41,921,011.59
Social security payment on-
526,453.88 - - 526,453.88
behalf
Others 2,802,019.02 5.61 157,257.18 2,644,761.84
Total 49,690,747.87 4.93 2,450,903.29 47,239,844.58
As of the period end, the Company does not have other receivables at the second stage.
Bad debt provision at the third stage as of the period end:
ECL rate of
the life time Carrying
Category Book value Provision reason
receivables amount
(%)
57
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Individually significant and
assessed for impairment
individually
Chances of recovery is
Beat Blattman Marketing 4,189,004.42 100.00 4,189,004.42 -
remote
Chances of recovery is
Liberty Time Center GmbH 2,333,707.20 100.00 2,333,707.20 -
remote
China Resources (Chong Qing) Chances of recovery is
800,000.00 100.00 800,000.00 -
Industrial Co., Ltd. remote
Huaming Hang Co., Ltd. 480,000.00 100.00 480,000.00 - Unable to recover
Others 90,776.50 100.00 90,776.50 - Unable to recover
Total 7,893,488.12 100.00 7,893,488.12 - ——
Bad debt provision as of 31 December 2018:
2018.12.31
Category Percentage Bad debt Percentage
Book value of providing Carrying amount
(%) provision
(%)
Individually significant and
assessed for impairment 7,093,237.65 12.69 7,093,237.65 100.00 -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Including: ageing group 45,771,039.24 81.87 2,378,904.46 5.20 43,392,134.78
Specific receivables group 2,478,447.48 4.43 - - 2,478,447.48
Subtotal of groups 48,249,486.72 86.30 2,378,904.46 4.93 45,870,582.26
Individually insignificant but
assessed for impairment 565,400.00 1.01 565,400.00 100.00 -
individually
Total 55,908,124.37 100.00 10,037,542.11 17.95 45,870,582.26
④ Addition, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
ECL for the life ECL for the life
Bad debt provision ECL in next 12 time of receivables time of Total
month (no impairment receivables
yet) (impaired)
2018.12.31
2,378,904.46 - 7,658,637.65 10,037,542.11
Adjustment amount for the first
implementation of the new financial - - - -
instrument standards
2019.01.01 2,378,904.46 - 7,658,637.65 10,037,542.11
Current period
--transferred to 2nd stage - - - -
-- transferred to 3rd stage -5,376.50 - 5,376.50 -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
58
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Accrued 132,893.73 - - 132,893.73
Reversed 55,752.57 - - 55,752.57
Realized - - - -
Written-off - - - -
Other changes 234.17 - 229,473.97 229,708.14
Balance as of 2019.12.31 2,450,903.29 - 7,893,488.12 10,344,391.41
⑤ There was no other receivables that are written-off during the period.
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB23,576,874.51, accounted for 40.94% of total
balance of other receivable as of the period end. Corresponding bad debt provision accrued is RMB8,127,554.59.
6. Inventory
(1) Category
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Raw
195,644,341.20 21,197,269.90 174,447,071.30 183,679,226.95 28,296,729.51 155,382,497.44
material
WIP 11,707,382.99 - 11,707,382.99 10,787,777.81 - 10,787,777.81
Stored
1,684,674,585.69 62,008,950.06 1,622,665,635.63 1,675,548,898.56 59,412,872.11 1,616,136,026.45
goods
Total 1,892,026,309.88 83,206,219.96 1,808,820,089.92 1,870,015,903.32 87,709,601.62 1,782,306,301.70
(2) Provision for inventory
Increase Decrease
Item 2019.01.01 2019.12.31
Accrual Others Reverse or realized Others
Raw material 28,296,729.51 1,727,018.41 321,750.41 9,148,228.43 - 21,197,269.90
Stored goods 59,412,872.11 2,568,116.07 27,961.88 - - 62,008,950.06
Total 87,709,601.62 4,295,134.48 349,712.29 9,148,228.43 - 83,206,219.96
Provision for inventory (continued)
Item Evidence of determine NRV and future selling cost Reason for reversal or realized
Estimated selling price less estimated cost to complete
Raw material and selling and distribution expenses and associated Disposed
taxes
59
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Estimated selling price less estimated selling and
Stored goods sold
distributing expenses and associated taxes
7. Other current assets
Item 2019.12.31 2018.12.31
VAT prepaid 4,255,892.19 7,272,789.77
Input VAT 47,626,820.11 45,171,658.90
Prepaid corporate income tax 1,313,954.49 7,846,471.11
Others 15,661,429.95 13,412,392.46
Total 68,858,096.74 73,703,312.24
8. Available-for-sale financial assets
2019.12.31 2018.12.31
Item Carrying Carrying
Book value Provision Book value Provision
amount amount
Available-for-sale financial
—— —— —— 385,000.00 300,000.00 85,000.00
asset
Measured at cost —— —— —— 385,000.00 300,000.00 85,000.00
60
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
9. Long-term equity investment
Changes during the period Balance of
impairment
Investment gains Adjustment of
Investee 2019.01.01 Changes Cash 2019.12.31 provision as
and losses other Impairment of period
Addition/new Withdrawn in other dividend Others
recognised by comprehensive provision
equity declared end
equity method income
① Associate
Shanghai Watch Co., Ltd.
44,881,063.15 - - 1,542,774.70 - - - - - 46,423,837.85 -
(Shanghai Watch)
61
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
10. Other equity instrument investment
Item 2019.12.31 2018.12.31
Shenzhen Zhonghang Culture Co. Ltd - ——
Xi’an Tangcheng Limited 85,000.00 ——
Total 85,000.00 ——
Because the equity investment to Shenzhen Zhonghang Culture Co. Ltd and Xi’an Tangcheng Limited is based on long term
holding for strategic purpose, the Group designated them as fair value through other comprehensive income.
11. Investment properties
Item Property and plant
I. Original cost
1.2018.12.31 546,695,433.81
2.addition 57,191,213.54
(1) purchase -
(2) transferred from inventory/CIP 57,191,213.54
(3) increased due to business combination -
3.Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 603,886,647.35
II.Accumulated depreciation
1.2018.12.31 169,376,000.78
2.Addition 27,007,339.33
(1) accrual 13,704,422.70
(2) business combination -
(3) Others 13,302,916.63
3.Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 196,383,340.11
三、Impairment provision
1.2018.12.31 -
2.Increase -
(1) Accrual -
(2) Others -
62
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
3、Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 -
IV.Carrying amount
1.2019.12.31 407,503,307.24
2.2018.12.31 377,319,433.03
Note:
(1)Reason of the investment properties without the certificate for property right:
As of 31 December 2019, there was no investment property without the certificate for property right.
(2) Changes of purpose of property
During the reporting period, certain self-use property of the Group were changed to lease out and they were transferred from
fixed assets to investment properties measured at cost model.
12. Fixed assets
Item 2019.12.31 2018.12.31
Fixed asset 363,997,098.94 425,649,562.85
Fixed asset disposal - -
Total 363,997,098.94 425,649,562.85
(1) Fixed asset
①Status
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipment
I. Total cost
1.2018.12.31 458,621,315.96 80,799,655.00 15,572,717.72 44,137,536.41 58,422,164.62 657,553,389.71
2. Additions 11,735,172.54 9,191,908.86 763,979.65 2,859,430.11 4,194,666.50 28,745,157.66
(1) Purchasing 244,585.68 7,337,542.92 763,979.65 2,494,316.65 2,209,983.31 13,050,408.21
(2) Transfer from
9,887,489.97 1,023,760.56 - 347,820.61 1,860,829.46 13,119,900.60
construction in progress
(3) Increase due to
- - - - - -
business combination
(4) Others 1,603,096.89 830,605.38 - 17,292.85 123,853.73 2,574,848.85
3. Decrease 70,472,306.13 1,414,588.09 978,818.00 1,512,268.86 16,354,078.93 90,732,060.01
(1) Disposal or retired 13,281,092.59 1,414,588.09 978,818.00 1,512,268.86 16,354,078.93 33,540,846.47
63
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(2) transferred into
57,191,213.54 - - - - 57,191,213.54
investment property
4.2019.12.31 399,884,182.37 88,576,975.77 15,357,879.37 45,484,697.66 46,262,752.19 595,566,487.36
II. Accumulated depreciation
1.2018.12.31 97,899,718.69 43,012,974.47 13,664,912.06 28,707,685.36 48,618,536.28 231,903,826.86
2.increase 14,553,080.62 7,430,970.23 747,205.85 4,846,289.12 4,122,796.00 31,700,341.82
(1) accrual 13,881,041.32 7,016,135.34 747,205.85 4,834,941.77 4,022,372.19 30,501,696.47
(2) others 672,039.30 414,834.89 - 11,347.35 100,423.81 1,198,645.35
3.Decrease 13,318,042.52 1,118,076.16 919,427.10 1,369,639.50 15,309,594.98 32,034,780.26
(1) disposal or retirement 15,125.89 1,118,076.16 919,427.10 1,369,639.50 15,309,594.98 18,731,863.63
(2) transferred into
13,302,916.63 - - - - 13,302,916.63
investment properties
4.2019.12.31 99,134,756.79 49,325,868.54 13,492,690.81 32,184,334.98 37,431,737.30 231,569,388.42
III. Impairment provision
1.2018.12.31 - - - - - -
2.Increase - - - - - -
(1) accrual - - - - - -
(2) others - - - - - -
3.Decrease - - - - - -
(1) disposal or retirement - - - - - -
(2) Others - - - - - -
4.2019.12.31 - - - - - -
IV.Carrying amount
1.2019.12.31 300,749,425.58 39,251,107.23 1,865,188.56 13,300,362.68 8,831,014.89 363,997,098.94
2.2018.12.31 360,721,597.27 37,786,680.53 1,907,805.66 15,429,851.05 9,803,628.34 425,649,562.85
Note:
①As of the period, fixed assets used to pledge for the Group’s loan amounted to RMB14,303,281.92.
②Fixed assets that do not have certificate for property right
Reason for not having certificate for
Item Book value
property rights
Office rooms of Harbin Branch 255,135.96 Issues relating to property right
13. Construction in progress
Item 2019.12.31 2018.12.31
64
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Construction in progress - 12,041,126.00
Construction materials - -
Total - 12,041,126.00
(1) Construction in progress
①Details
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Clock & Watch
base in
Guangming New - - - 12,041,126.00 - 12,041,126.00
District auxiliary
projects
② Changes to major construction in progress projects
Rate of
Including:
Capitaliz capitaliz
Transferred to Other capitalized
Name 2019.01.01 Addition ation of ation in 2019.12.31
fixed asset decrease in current
interest current
year
year (%)
Clock & Watch
base in
Guangming New 12,041,126.00 1,232,979.46 13,119,900.60 154,204.86 - - - -
District auxiliary
projects
Changes to major construction in progress projects(continued)：
Percentage of
Name budget investment to Progress Source of funding
budget (%)
Clock & Watch base in Guangming New
34,050,900.00 38.98% 100.00% Self-raised
District auxiliary projects
14. Intangible assets
Right to use
Item Land-use right Software system Total
trademarks
I. Total original cost
1.2018.12.31 34,933,822.40 23,887,215.08 10,093,308.61 68,914,346.09
2. Additions - 226,911.28 1,837,222.77 2,064,134.05
(1) Purchase - 226,911.28 1,837,222.77 2,064,134.05
(2) Internal R&D - - - -
(3) Increased due to business
- - - -
combination
(4) Others - - - -
65
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
3. Decreases - - - -
(1) Disposal - - - -
(2) Others - - - -
4.2019.12.31 34,933,822.40 24,114,126.36 11,930,531.38 70,978,480.14
II. Total accumulated
amortization
1.2018.12.31 13,581,708.89 8,076,111.69 3,711,047.90 25,368,868.48
2. Additions 733,553.28 4,372,411.78 1,791,825.34 6,897,790.40
(1) Accrual 733,553.28 4,372,411.78 1,791,825.34 6,897,790.40
(2) others - - - -
3. Decreases - - - -
(1) Disposal - - - -
(2) other - - - -
4. 2019.12.31 14,315,262.17 12,448,523.47 5,502,873.24 32,266,658.88
III. Total impairment provision
1.2018.12.31 - - - -
2. Additions - - - -
(1) Accrual - - - -
(2) other - - - -
3.decrease - - - -
(1) disposal - - - -
(2) others - - - -
4.2019.12.31 - - - -
IV. Total carrying amount
1.2019.12.31 20,618,560.23 11,665,602.89 6,427,658.14 38,711,821.26
2.2018.12.31 21,352,113.51 15,811,103.39 6,382,260.71 43,545,477.61
15. Long-term deferred expenses
Decrease
Item 2018.12.31 Addition 2019.12.31
Amortized Others
Counter fabrication
49,305,000.11 42,163,751.28 49,506,803.50 - 41,961,947.89
expenses
Renovation
74,651,287.13 66,284,944.54 45,670,030.81 - 95,266,200.86
expenses
Others 4,616,257.91 18,447,813.57 7,704,728.90 - 15,359,342.58
Total 128,572,545.15 126,896,509.39 102,881,563.21 - 152,587,491.33
16. Deferred income tax assets/Deferred income tax liabilities
(1) Detail of deferred income tax before offsetting
2019.12.31 2018.12.31
Item Deductible Deferred income Deductible Deferred income
temporary tax asset temporary tax asset
differences differences
66
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Deferred tax asset:
Impairment provision 100,912,679.00 22,188,996.64 79,775,704.17 17,676,690.28
Unrealized profit for related party
179,676,673.34 44,654,504.04 272,840,911.63 67,717,517.83
transactions
Deferred income 3,046,090.60 761,522.65 3,672,855.36 918,213.84
Deductible losses 50,678,682.32 12,074,057.61 61,529,125.81 14,363,284.14
Restricted shares 4,440,625.91 1,062,967.67 - -
Advertisement expenses that
14,988,443.65 2,997,334.76 - -
allowed to deduct in future years
Subtotal 353,743,194.82 83,739,383.37 417,818,596.97 100,675,706.09
Deferred tax liability
One-off deduction of fixed asset
8,374,949.93 1,256,242.49 - -
before Corporate income tax
Subtotal 8,374,949.93 1,256,242.49 - -
(2) Details of deductible temporary difference and deductible losses that does not recognize as deferred income tax asset
Item 2019.12.31 2018.12.31
Impairment provision 22,200,437.70 30,660,246.75
Deductible losses 64,205,351.75 65,181,936.05
Total 86,405,789.45 95,842,182.80
Note: Deductible losses of Swiss Company, which are subsidiaries 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. Hong Kong Company, a subsidiary of the
Company, does not need to recognize the deferred income tax assets for impairment provision according to the local tax policy.
(3) Deductible losses that are not recognized as deferred tax asset will due in the following years:
Year 2019.12.31 2018.12.31 Note
2019 —— -
2020 - -
2021 - -
2022 - 3,393,863.46
2023 2,417,279.16 7,798,677.32
2024 7,798,677.32 11,684,299.22
2025 11,684,299.22 18,449,678.50
2026 18,449,678.50 23,855,417.55
2027 23,855,417.55 -
2028 - -
2029 - -
67
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
2030 - ——
Total 64,205,351.75 65,181,936.05
17. Other non-current assets
Item 2019.12.31 2018.12.31
Prepayment for construction and equipment 7,373,248.48 8,949,160.42
18. Short-term loans
Item 2019.12.31 2018.12.31
Guaranteed loans 37,271,502.38 187,118,452.97
Credit loans 530,637,330.83 360,000,000.00
Total 567,908,833.21 547,118,452.97
Refer to Note XII. 2 for details of guaranteed loans between parent companies and subsidiaries.
19. Accounts payable
Item 2019.12.31 2018.12.31
Trade payables 254,887,129.91 188,957,240.00
Payables for material purchased 11,932,722.53 18,632,180.36
Payables for project 12,952,934.93 52,324,191.98
Total 279,772,787.37 259,913,612.34
20. Advances from customer
Item 2019.12.31 2018.12.31
Advances received for trade 19,999,056.53 14,822,924.98
Rental received 3,434,407.04 1,636,520.02
Total 23,433,463.57 16,459,445.00
21. Employee benefit payable
Item 2018.12.31 Accrued Decrease 2019.12.31
Short-term employee benefits 63,805,261.48 549,103,500.51 537,474,216.99 75,434,545.00
Post-employment benefits - defined
5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
contribution plans
Termination benefits - 3,627,507.77 3,526,718.62 100,789.15
(1) Other benefits due within one year - - - -
Total 69,779,037.83 597,259,374.70 584,435,566.86 82,602,845.67
(1) Short-term employee benefits
Item 2018.12.31 Accrued Decrease 2019.12.31
Salaries, bonus, allowances 63,306,958.06 493,200,688.43 481,587,869.68 74,919,776.81
Staff welfare - 10,123,091.04 10,123,091.04 -
68
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Social insurances - 20,177,698.15 20,177,698.15 -
Including:1.Medical insurance - 17,960,886.79 17,960,886.79 -
2.Work-related injury insurance - 674,579.45 674,579.45 -
3.Maternity insurance - 1,542,231.91 1,542,231.91 -
Housing Fund - 17,858,952.38 17,858,952.38 -
Labor union fees and education fee 498,303.42 7,743,070.51 7,726,605.74 514,768.19
Short-term paid absences - - - -
Short-term profit –sharing plan - - - -
Non-monetary benefits - - - -
Other short-term employee benefits - - - -
Total 63,805,261.48 549,103,500.51 537,474,216.99 75,434,545.00
(2) Defined contribution plans
Item 2018.12.31 Accrued Decrease 2019.12.31
Post-employment benefits 5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
Including: 1.Basic pension insurance 473,306.78 40,186,669.43 40,404,404.74 255,571.47
2.Unemployment insurance - 1,117,187.90 1,117,187.90 -
3.Annuity 5,500,469.57 3,224,509.09 1,913,038.61 6,811,940.05
4.Others - - - -
Total 5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
22. Taxes payable
Taxes 2019.12.31 2018.12.31
VAT 6,929,833.12 32,344,121.18
Corporate income tax 15,512,840.60 21,599,264.54
Individual income tax 1,227,923.78 998,190.73
Urban maintenance and construction tax 91,612.52 321,914.01
Educational surcharges 65,887.11 229,955.09
Others 236,705.87 429,726.37
Total 24,064,803.00 55,923,171.92
23. Other payables
Item 2019.12.31 2018.12.31
Interests payable - 772,351.26
Dividends payable 848,233.27 -
Other payables 118,768,488.36 71,047,579.04
69
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total 119,616,721.63 71,819,930.30
(1) Interests payable
Item 2019.12.31 2018.12.31
Interests for short-term loan - 772,351.26
(2) Dividends payable
Item 2019.12.31 2018.12.31
Dividends for ordinary shares 848,233.27 -
(3) Other payables
Item 2019.12.31 2018.12.31
Security deposit 45,114,205.97 22,954,307.95
Shop activity fund 16,636,771.40 17,461,589.65
Personal accounts payable 1,321,518.82 3,058,122.71
Decoration expenses 4,556,469.41 6,096,460.99
Repurchase liability for restricted shares 17,737,366.73 -
Other 33,402,156.03 21,477,097.74
Total 118,768,488.36 71,047,579.04
24. Non-current liabilities due within one year
Item 2019.12.31 2018.12.31
Long-term loan due within one year 360,140.00 347,470.00
(1) Long-term loan due within one year
Item 2019.12.31 2018.12.31
Long-term loan due within one year 360,140.00 347,470.00
See Note V.25 for type and amount of mortgaged assets.
25. Long-term loan
Item 2019.12.31 Interests rate 2018.12.31 Interests rate
Mortgage loans 4,681,820.00 3.00% 4,864,580.00 3.00%
Total 4,681,820.00 4,864,580.00
Less: Long-term loan due within one year 360,140.00 347,470.00
Total 4,321,680.00 4,517,110.00
As of 31 December 2019, the carrying amount of fixed assets used in mortgage for the Group’s loan amounted to
RMB14,303,281.92.
70
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
26. Deferred income
Item 2018.12.31 Addition Decrease 2019.12.31 Reason
Criteria of recognizing
Government grant 3,672,855.36 - 626,764.76 3,046,090.60
gain is not reached
See Note XIV. 1 Government grant for details of government grants that are included in deferred income.
27. Share capital
Movements (+、-)
Item 2018.12.31 Bonus Capitalization of 2019.12.31
Newly issued Others subtotal
share capital reserves
Total shares 438,744,881 4,224,000 - - - 4,224,000 442,968,881
On 11 January 2019, the restricted share incentive plan (first phase) had granted a total of 4,224,000 restricted A-shares to
128 incentive individuals. As a result, the Company’s registered capital increased by RMB4,224,000.00 and capital reserve
increased by RMB14,361,600.00. See Note V. 28 Capital reserve for detail.
28. Capital reserve
Item 2018.12.31 Increase Decrease 2019.12.31
Share premium 1,047,963,195.57 14,361,600.00 27,654.81 1,062,297,140.76
Other capital reserve 14,492,448.65 4,440,625.91 - 18,933,074.56
Total 1,062,455,644.22 18,802,225.91 27,654.81 1,081,230,215.32
Note:
(1) On 4 January 2019, pursuant to the examination and approval given by SASAC under “Reply to Examination and
approval of Implementation of First Phase of Restricted Share Incentive plan of FIYTA (Group) Holding Ltd.” (GuoZi KaoFen
[2018] No. 936), and approved by the board of directors and shareholder’s general meeting, the Company implemented the
incentive plan. On 11 January 2019, the restricted share incentive plan (first phase) had granted a total of 4,224,000
restricted A-shares to 128 incentive individuals. Total consideration received from subscription of restricted shares was
RMB18,585,600.00, of which RMB4,224,000.0 increased share capital of the Company and RMB14,361,600.00 increased
the capital reserve of the Company. At the same time the Company recognized restricted share re-purchase liability as other
payables of RMB18,585,600.00 and increased treasury shares of RMB18,585,600.00 accordingly. In 2019, the Group
increased RMB4,440,625.91 in capital reserve and charged the amount to related cost or expenses in exchange of the
incentive individuals’ service.
(2) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board
of Directors and the 2nd extraordinary shareholder’s meeting of 2019, the Company repurchased B Shares of 10,010,000 in
total as of 31 December 2019. Total consideration paid was RMB 53,524,330.10. Trading fee paid was RMB 27,654.81,
which was deducted from capital reserve.
29. Treasury shares
71
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Item 2018.12.31 Increase Decrease 2019.12.31
Treasury shares - 71,267,118.78 - 71,267,118.78
Note:
(1) The Company repurchased B Shares of 10,010,000 in total as of 31 December 2019. Total consideration paid was RMB
53,524,330.10, which increased the amount of treasury shares.
(2) As described in Note V. 28 Capital reserve (1), the Group recognized restricted shares re-purchase obligation and the
treasury share increased by RMB18,585,600.00 accordingly.
(3) According to 2018 profit distribution proposal that had been passed on 2018 shareholder’s meeting on 19 June 2019, the
Company distributed cash dividend of RMB2.008128 (tax inclusive) for every 10 shares held by shareholders based on the
total 436,968,881 shares. A-share registration date was 9 August 2019. The Company granted total 4,224,000 A shares to
employee on 11 January 2019. After deducting 27,000 shares that cannot be exercised in future, the cash dividend of the
rest of 4,197,000.00 shares deducted treasury shares accordingly.
30. Other comprehensive income
Movements in 2019
L
e
s
s:
Less: recorded
t
in other
a
2018.12.31 comprehensive Attribute to Attribute to 2019.12.31
Item x
income in prior parent minority
Before tax e
period and company shareholders
x
transferred to after tax after tax
p
profit or loss in
e
current period
n
s
e
s
I. Other
comprehensive
income items which
will not be - - - - - - -
reclassified
subsequently to
profit or loss
II. Other
comprehensive
income items which
may be reclassified
subsequently to
profit or loss
Including: translation
difference of foreign - -
4,502,059.89 - - 4,501,930.69 129.20
currency financial 5,442,139.78 940,209.09
statements
Total other
- -
comprehensive 4,502,059.89 - - 4,501,930.69 129.20
5,442,139.78 940,209.09
income
72
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Note: Net-of-tax amount of other comprehensive income during the year 2019 is RMB4,502,059.89, in which net-of-tax
amount of other comprehensive income attributable to shareholders of the Company is RMB4,501,930.69, and net-of-tax
amount of other comprehensive income attributable to non-controlling interests is RMB129.20.
31. Surplus reserve
Item 2018.12.31 Increase Decrease 2019.12.31
Statutory surplus
161,030,899.80 12,685,386.34 - 173,716,286.14
reserve
Discretionary surplus
61,984,894.00 - - 61,984,894.00
reserve
Total 223,015,793.80 12,685,386.34 - 235,701,180.14
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.
32. Undistributed profit
Item 2019 2018
Undistributed profit at the end of prior year before adjustments 851,360,603.66 771,484,565.02
Adjustments to undistributed profit at the beginning of year - -
Undistributed profit at the beginning of year after adjustment 851,360,603.66 771,484,565.02
Plus: Net profit attributable to the owner of the parent company
215,909,014.15 183,835,095.29
for the year
Less: statutory surplus reserve drawn 12,685,386.34 16,210,080.45
Dividends payable to ordinary shares 87,743,413.07 87,748,976.20
Undistributed profit at the end of year 966,840,818.40 851,360,603.66
Including: appropriation to surplus reserves made by the
10,229,847.23 9,410,363.47
Company’s subsidiaries attributable to the Company
33. Operating income and operating cost
2019 2018
Item
Operating income Operating cost Operating income Operating cost
Main business 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
Other business 17,254,790.04 5,333,158.72 18,103,869.71 903,932.64
Total 3,704,210,734.90 2,217,207,732.04 3,400,450,599.90 1,993,809,774.20
(1) Main business presented by industry
Industry 2019 2018
73
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Operating income Operating cost Operating income Operating cost
Watch 3,463,608,966.45 2,109,978,800.45 3,193,280,311.30 1,910,998,452.65
Precision
91,341,945.34 73,717,603.23 70,742,449.85 59,432,940.99
manufacturing
Lease 132,005,033.07 28,178,169.64 118,323,969.04 22,474,447.92
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
(2) Main business presented by product
2019 2018
Product
Operating income Operating cost Operating income Operating cost
Watch retail and
2,352,930,477.41 1,779,026,456.80 2,090,970,707.50 1,576,862,763.43
service
Branded watch retail 1,110,678,489.04 330,952,343.65 1,102,309,603.80 334,135,689.22
Precision
91,341,945.34 73,717,603.23 70,742,449.85 59,432,940.99
manufacturing
Lease 132,005,033.07 28,178,169.64 118,323,969.04 22,474,447.92
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
(3) Main business presented by geographical area
2019 2018
Area
Operating income Operating cost Operating income Operating cost
Southern China 1,806,673,205.47 1,091,723,846.59 1,518,807,270.87 874,695,822.56
Northwest China 586,521,631.97 340,309,728.35 588,628,213.03 353,457,194.81
Northern China 204,386,707.45 118,165,568.05 249,884,958.89 137,166,812.45
Eastern China 502,541,659.80 280,319,276.42 439,292,101.70 262,001,509.80
North-east China 230,662,172.16 163,383,316.18 269,671,243.83 187,589,738.67
Southwest China 356,170,568.01 217,972,837.73 316,062,941.87 177,994,763.27
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
34. Taxes and surcharges
Item 2019 2018
Urban maintenance and construction tax 11,435,460.45 14,746,181.35
Educational surcharge 4,891,150.79 6,338,803.59
Local educational surcharge 3,216,962.37 4,221,251.51
Property tax 4,037,914.43 3,858,983.33
Land use tax 391,201.52 387,741.44
Stamp duty 2,384,290.09 2,216,200.85
Others 1,835,809.90 2,000,182.33
74
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total 28,192,789.55 33,769,344.40
Note: The criteria of business taxes and surcharges accrued and paid refer to Note IV. Taxation.
35. Selling and distribution expenses
Item 2019 2018
Salary 359,640,526.77 351,918,381.60
Department store expense and rental 181,211,260.52 137,788,340.17
Market promotion expenses 155,102,618.44 186,814,362.00
Depreciation and amortization 92,468,987.37 91,887,577.80
Packaging expenses 11,125,541.27 17,013,895.11
Utilities and property management
19,283,177.10 18,464,692.62
expenses
Shipping fees 14,689,427.89 12,444,864.89
Office expenses 5,827,092.35 10,934,189.89
Travel expenses 10,479,738.66 12,076,624.12
Entertainment expenses 4,549,777.07 5,035,117.75
Others 11,413,931.17 12,592,127.15
Total 865,792,078.61 856,970,173.10
36. Administration expenses
Item 2019 2018
Salary 170,242,331.00 160,762,765.81
Depreciation and amortization 30,001,693.96 23,465,976.86
Travel expenses 7,543,194.55 7,436,745.07
Office expenses 3,966,450.49 4,411,920.54
Agents fees 5,146,625.69 7,322,437.54
Rental and utilities 6,140,097.22 3,943,256.92
Others 17,579,596.13 11,819,423.11
Total 240,619,989.04 219,162,525.85
37. R&D expenses
Item 2019 2018
Salary 25,225,831.95 27,781,676.08
Material and mould 1,654,367.12 3,872,770.91
Sample fee 1,874,392.46 2,042,439.14
Depreciation and amortization 5,120,979.03 4,869,828.83
Technical cooperation fee 5,488,880.26 1,254,524.99
Others 5,693,289.43 7,529,102.87
75
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total 45,057,740.25 47,350,342.82
38. Financial expense
Item 2019 2018
Total interest expenses 23,975,351.93 27,552,558.81
Less: Interest capitalization - -
Interest income 1,956,316.52 2,269,447.05
Exchange gain -2,920.03 713,080.72
Bank charges 10,799,162.19 9,920,047.68
Total 32,815,277.57 35,916,240.16
39. Other income
Asset or income
Item 2019 2018
related
Headquarters enterprise award 4,843,500.00 - income related
Corporate Research and Development Funding 3,156,000.00 1,890,000.00 income related
Special subsidy to promoting consuming 1,655,200.00 - income related
Economic development special fund of Guangming
District to support intellectual property right, 1,033,000.00 - income related
standardization certification project
Subsidy to support major enterprise to expanding
1,000,000.00 - income related
production and improving efficiency
Subsidy to support innovation development for business
712,664.00 - income related
and trading
Subsidy to support investment in R&D and domestic
669,545.00 1,268,000.00 income related
economic and trading exhibition
Special fund of Nanshan district to support self-
718,600.00 2,246,200.00 income related
innovation industry development
Examine intellectual property right using big data 500,000.00 - income related
Commission on IIT payment 469,005.01 - income related
Shenzhen Standard Special Fund 543,000.00 496,000.00 income related
Subsidy for SME to expanding market 387,940.49 - income related
Shenzhen Science and Technology Award 300,000.00 - income related
Expanding production and improving efficiency 300,000.00 - income related
State certified R&D center 293,147.06 488,578.43 income related
Subsidy to projects of economic development special
286,000.00 - income related
fund
Subsidy for stabilizing job position 209,468.63 229,106.17 income related
Special fund for Shenzhen industrial designing 203,066.21 1,066,988.78 income related
Self-innovative industry development subsidy 200,000.00 - income related
76
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The 20th Guangdong Provincial China Patent Award 150,000.00 - income related
Associated award to the 20th Guangdong Provincial
150,000.00 - income related
China Patent Award
Provincial industry and information special subsidy 130,551.49 137,615.17 income related
Basel watch fair subsidy 114,333.32 - income related
Maternity insurance 100,789.68 - income related
Nanshan Economic Promoting Bureau subsidy for SME 100,000.00 - income related
Promotion of human resource quality 100,000.00 100,000.00 income related
Subsidy to promoting international operating ability 31,163.00 60,000.00 income related
State level high and new technology certificate subsidy 30,000.00 - income related
Short term export credit insurance 20,200.00 57,605.00 income related
Expanding domestic marketing from Shenzhen SME
14,670.00 - income related
Affairs Department
Subsidy for Disabled person 7,062.29 8,882.30 income related
Watch fair subsidy from Guangming District - 50,000.00 income related
Shenzhen Patent Award - 2,000.00 income related
Special fund for industry transformation and upgrading - 500,000.00 income related
Special fund for application of industry transformation
- 4,480,000.00 income related
and upgrading
Merging of industrialization and information - 400,000.00 income related
Domestic marketing expanding for example enterprise
- 128,920.00 income related
practicing innovation
Foreign trade subsidy for Basel watch fair - 779,907.74 income related
High and new tech enterprise in Baoan District - 30,000.00 income related
2nd International Brand Week Guangming Branch - 28,301.89 income related
18th China Appearance Designing Excellence award - 250,000.00 income related
Domestic innovation patent annual subscription fee
- 2,000.00 income related
subsidy
Import exhibition participating - 6,154.00 income related
Economic and trade commission service industry special
- 1,000,000.00 income related
development fund
Crystal Products Exhibition Special Funding - 103,267.00 income related
Corporate R&D Funding by Science and Technology
- 1,155,000.00 income related
Commission
Creating excellence and rating funding project by
- 200,000.00 income related
Economic Promotion Bureau, Nanshan District
Funding for Informatization and Industrialization
Integration project by Economic Promotion Bureau, - 100,000.00 income related
Nanshan District
77
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Project funded by Commerce Circulation Industry - 360,800.00 income related
Patent subsidy by Shenzhen Municipal Market and
- 10,000.00 income related
Quality Supervision and Administration Committee, 2017
The 19th China Patent Award of the Market and Quality
- 330,000.00 income related
Committee
Funds on Enterprise Intellectual Property Management
- 200,000.00 income related
Standards Certification by Market Supervision Committee
Demonstration special fund, financial aid project in
exhibition industry, for small and micro enterprise - 159,810.00 income related
entrepreneurship innovation base
Watch exhibition subsidy of small and micro enterprises - 128,008.00 income related
Government exhibition industry special fund - 128,008.00 income related
China Light Industry Federation's international standards
- 16,000.00 income related
funding
16-26 batch special subsidy for Central Foreign Trade
- 60,000.00 income related
and Economic
Government special subsidy fund for central foreign
- 114,466.00 income related
economic and trade projects
Key technology research and development project of
- 480,000.00 income related
DF101 aircraft benchmark timing system
Development Special Fund for Independent Innovation
- 124,000.00 income related
Industry, Nanshan District
Total 18,428,906.18 19,375,618.48 ——
Note: Refer to Note XIV. 1 Government grant for detailed information.
40. Investment gain
Item 2019 2018
Gain from long-term equity investments accounted for using the
1,787,907.10 1,001,545.06
equity method
41. Credit impairment loss (“- “for loss)
Item 2019 2018
Bad debt for bill receivable -217,182.73 ——
Bad debt for accounts receivable -16,346,637.18 ——
Bad debt for other receivables -77,141.16 ——
Total -16,640,961.07 ——
42. Asset impairment loss (“-“ for loss)
Item 2019 2018
Bad debt loss —— 5,488,944.07
Inventory impairment loss -4,295,134.48 -8,753,900.25
Total -4,295,134.48 -3,264,956.18
43. Gains from assets disposal
78
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Item 2019 2018
Gains from assets disposal (“-“ for loss) -926,118.60 -181,302.24
44. Non-operating income
Amount included in non-
recurring gains or losses
Item 2019 2018
for the year ended
31/12/2019
Gain from non-current asset scrap - 1,000.00 -
Compensation 2,700,000.00 - 2,700,000.00
Payables cannot be paid 275,162.46 2,810.50 275,162.46
Others 1,778,942.84 1,442,547.03 1,778,942.84
Total 4,754,105.30 1,446,357.53 4,754,105.30
45. Non-operating expenses
Amount included in non-
recurring gains or losses
Item 2019 2018
for the year ended
31/12/2019
Fine 44,727.07 154,626.88 44,727.07
Donation 200,000.00 380,000.00 200,000.00
Others 1,155,461.80 117,888.09 1,155,461.80
Total 1,400,188.87 652,514.97 1,400,188.87
46. Income expenses
(1) Details of income expenses
Item 2019 2018
Current tax expense for the year based on tax law and
42,132,064.04 42,131,613.05
regulations
Changes in deferred tax assets/liabilities 18,192,565.21 5,230,238.71
Total 60,324,629.25 47,361,851.76
(2) Reconciliation between income tax expenses and accounting profit is as follows:
Item 2019 2018
Profits before tax 276,233,643.40 231,196,947.05
Income tax calculated based on statutory tax rate 69,058,410.86 57,799,236.76
Effect of different tax rates applied by subsidiaries -4,251,519.66 -12,360,815.15
Adjustment to income tax of previous years 965,521.61 413,122.52
Effect of gains or losses from joint ventures and associates
-385,693.68 -250,386.27
accounted for using the equity method
Effect of non-taxable income (use “- “for presentation) - -
79
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Effect of non-deductible costs, expenses and losses 1,178,297.49 1,286,216.68
Effect on opening balance of deferred tax due to changes
- -
in tax rate
Effect of using the deductible temporary differences or
deductible losses for which no deferred tax asset was - -250,920.28
recognized in previous (use “-“ for presentation)
Effect of deductible temporary differences or deductible
losses for which no deferred tax asset was recognized this 174,634.92 7,158,514.85
year
Effect of research and development expenses super
-6,415,022.29 -6,433,117.35
deduction (use “-“ for presentation)
Others - -
Income tax expenses 60,324,629.25 47,361,851.76
47. Notes to cash flow statement
(1) Cash received from other operating activities
Item 2019 2018
Government grant 17,802,141.42 17,144,473.84
Promotion expenses 14,023,190.48 7,388,696.14
Security deposit 31,127,235.94 9,977,697.98
Interest income 1,956,316.52 2,269,447.05
Return of petty cash 3,817,075.69 4,066,408.69
Penalty 4,298,036.35 -
Legal action security 8,958,057.64 -
Others 11,850,325.81 8,781,869.99
Total 93,832,379.85 49,628,593.69
(2) Cash paid for other operating activities
Item 2019 2018
Current period expenses 478,806,783.39 415,838,192.35
Security deposit 4,393,654.88 19,915,997.96
Petty cash advanced to employee 734,763.81 5,131,463.98
Others 4,118,260.73 13,351,304.90
Total 488,053,462.81 454,236,959.19
(3) Cash paid for other financing activities
Item 2019 2018
Cash paid for re-purchase of shares 53,117,325.02 -
80
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
48. Supplement to cash flow statement
(1) Supplement to cash flow statement
Item 2019 2018
1、Reconciliation of net profit/loss to cash flows from operating
activities：
Net profit 215,909,014.15 183,835,095.29
Add: Impairment for assets 4,295,134.48 3,264,956.18
Credit impairment loss 16,640,961.07 ——
Depreciation of fixed assets, and investment property 44,206,119.17 44,860,943.06
Intangible asset amortization 6,897,790.40 5,285,858.86
Amortization of long-term deferred expenses 102,881,563.21 88,256,496.82
Loss on disposal of fixed assets, intangible assets, and
926,118.60 181,302.24
other long-term assets (“-“ for gain)
Loss on scrap of fixed assets (“-“ for gain) - -1,000.00
Loss on changes of fair value (“-“ for gain) - -
Financial expenses (“-“ for income) 23,975,351.93 27,552,558.81
Investment loss (“-“ for gain) -1,787,907.10 -1,001,545.06
Decrease in deferred tax assets (“-“ for increase) 16,936,322.72 5,230,238.71
Increase in deferred tax liabilities (“-“ for decrease) 1,256,242.49 -
Decrease in inventories (“-“ for increase) -30,808,922.70 30,900,223.04
Decrease in operating receivables (“-“ for increase) -41,745,826.01 -36,309,812.09
Increase in operating payables (“-“ for decrease) 85,238,806.20 -20,427,526.24
Others - -
Net cash flows from operating activities 444,820,768.61 331,627,789.62
2. Significant investment or financing activities not involving
cash:
Debts converted to capital -
Convertible debts mature within one year -
Fixed assets acquired under finance leases -
3. Net changes in cash and cash equivalents:
Cash at end of year 315,093,565.09 162,623,059.97
Less: cash at beginning of year 162,623,059.97 184,947,891.32
Plus: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
81
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Net increase in cash and cash equivalents 152,470,505.12 -22,324,831.35
(2) Cash and cash equivalents
Item 31/12/2019 31/12/2018
I. Cash 315,093,565.09 162,623,059.97
Incl. Cash on hand 229,258.38 420,783.85
Bank deposit available for immediate payment 285,306,297.62 160,135,454.62
Other monetary funds available for immediate payment 29,558,009.09 2,066,821.50
II. Cash equivalents - -
Including Bond investment due in three months - -
III. Cash and cash equivalents at the end of year 315,093,565.09 162,623,059.97
Including Restricted cash and cash equivalents for the Company
3,641,389.51 9,192,653.31
and its subsidiaries
49. Assets of restricted ownership or use rights
Item Carrying amount as at 31 Dec 2019 Reason
Cash in banks 1,575,000.00 Security deposit for letter of guarantee
Fixed assets 14,303,281.92 Pledged
Total 15,878,281.92 ——
50. Monetary item denominated in foreign currency
(1) Monetary item denominated in foreign currency
Balance denominated in
Balance translated in RMB as
Item foreign currency as at 31 Dec Exchange rate
at 31 Dec 2019
2019
Cash and bank balances
Including: HKD 9,734,889.65 0.8887 8,651,709.21
USD 2,559,367.50 6.9287 17,733,097.20
EUR 61,357.68 7.9277 486,427.72
CHF 347,441.02 7.2028 2,502,548.17
Accounts receivable
Including: HKD 2,178,760.46 0.89578 1,951,690.04
USD 4,054,616.59 6.9762 28,285,816.26
EUR 393,890.14 7.8155 3,078,448.39
CHF 3,602,942.07 7.2028 25,951,271.14
Other receivables
Including: HKD 138,711.23 0.89578 124,254.75
82
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
EUR 4,250.00 7.8155 33,215.88
CHF 905,580.00 7.2028 6,522,711.62
Short-term loan
Including: HKD 19,123,916.44 0.89578 17,130,821.87
CHF 1,406,035.62 7.2028 10,127,393.36
Accounts payable
Including: HKD 2,527,248.49 0.89578 2,263,858.65
CHF 305,396.81 7.2028 2,199,712.14
Non-current liability that due in one
year
Including: CHF 50,000.00 7.2028 360,140.00
Long-term loan
Including: CHF 600,000.00 7.2028 4,321,680.00
(2) Overseas operational entity
For main business location and recording currency of important overseas operational entity, refer to Note III. 4.
VI. Changes to the scope of consolidation
In 2019, there was no changes to the scope of consolidation.
VII. Interests in other entities
1. Equity in subsidiary
Main Shareholding ratio%
Place of Nature of
Name of subsidiary business Ways acquired
registration business Direct Indirect
location
HARMONY Establishment
Shenzhen Shenzhen Commerce 100.00 -
Company or investment
Manufacturing Establishment
Shenzhen Shenzhen Commerce 90.00 10.00
Company or investment
Establishment
FIYTA Hong Kong Hong Kong Hong Kong Commerce 100.00 -
or investment
Establishment
Station 68 Hong Kong Hong Kong Manufacture - 60.00
or investment
Establishment
Harbin Company Harbin Harbin Commerce 100.00 -
or investment
Technology Establishment
Shenzhen Shenzhen Commerce 100.00 -
Company or investment
TEMPORAL Establishment
Shenzhen Shenzhen Commerce 100.00 -
Company or investment
Business
Emile Choureit combination
Shenzhen Shenzhen Commerce 100.00 -
Shenzhen Company under common
control
Business
combination
FIYTA Sales
Shenzhen Shenzhen Commerce 100.00 - not under
Company
common
control
83
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Establishment
Hengdarui Company Shenyang Shenyang Commerce 100.00 -
or investment
Establishment
Swiss Company Switzerland Switzerland Commerce - 100.00
or investment
2. Equity in joint arrangement or associates
(1) Significant associates
Principal Shareholding ratio (%) Accounting
Registration Business
Name place of treatment for
place nature Direct Indirect
business associates
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method
(2) Principal financial information of significant associate company:
Item 2019.12.31 2018.12.31
Current assets 117,096,911.21 99,901,286.09
Non-current assets 13,556,720.58 15,459,207.08
Total assets 130,653,631.79 115,360,493.17
Current liabilities 22,661,506.61 10,833,917.48
Non-current liabilities 7,978,869.84 10,684,419.15
Total liabilities 30,640,376.45 21,518,336.63
Net assets 100,013,255.34 93,842,156.54
Including: minority shareholder’s interest - -
Owners’ equity attributable to parent 100,013,255.34 93,842,156.54
company
Owners’ equity attributable to parent
25,003,313.84 23,460,539.14
company
Adjustment matters
- Goodwill - -
- Unrealized profit or losses from internal - -
transaction
- impairment provisions - -
- Others - -
Carrying value of investment to
46,423,837.85 44,881,063.15
associates
Fair value of equity investment that has
- -
public quotation
Continued:
Item 2019 2018
Operating income 101,660,357.29 97,282,978.95
Net profit 6,171,098.80 4,006,180.22
84
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Net profit from discontinued
- -
operation
Other comprehensive income - -
Total comprehensive income 6,171,098.80 4,006,180.22
Dividends received from
associated company during the - -
year
VIII. Risk management to financial instrument
Main financial instruments of the Company include cash at bank and in hand, bills receivable, accounts receivable, other
receivables, other equity instruments investment, accounts payable, other payables, short-term loans, non-current liabilities
due within one year and long-term loans. Details of financial instruments refer to related notes. The risks associated with
these financial instruments and the risk management policies adopted by the Company to mitigate these risks are described
below. The management of the Company manages and monitors these exposures to ensure that the above risks are
controlled in a limited extent.
1. Risk management goals and policies
The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence of financial risk
to financial performance of the Company to the minimum and maximize the benefit of shareholders and other equity
investors. Based on the goal, the fundamental risk management policies of the Company are to identify and analyse risks the
Company faces, set proper acceptable risk level to manage risk, supervise various risk reliably and timely and control risk
within limited range.
Risks associated with the financial instrument mainly include credit risk, liquidity risk, market risk (including exchange rate
risk, interest rate risk and commodity price risk).
The board of director is responsible to plan and establish the Group’s risk management structure, make risk management
policies and related guidelines, and supervise the implementation of risk management. The Group has already made risk
management risks to identify and analyse risks that the Group face. These policies mentioned specific risks, covering market,
credit risk and liquidity risk etc. The Group regularly assesses market environment and the operation changes to determine if
to make alteration to risk management policy and systems. The Group’s risk management is implemented by Risk
Management Committee according to the approval of the board of directors. Risk Management Committee work closely with
other business department of the Group to identify, evaluating and avoiding certain risks. The Group’s internal audit
department will audit the risk management control and procedures regularly and report the result to audit committee of the
Group.
The Group spreads risks through diverse investment and business lines, and through making risk management policy to
reduce risks of single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.
The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable, accounts
85
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
receivable, and other receivables.
The Group’s bank deposit mainly deposits in banks with good reputation and with higher credit rating. The Group anticipated
that the bank deposit does not have significant credit risk.
For bill receivable, accounts receivables and other receivables, the Group set related policies to control exposure of credit
risks. The Group evaluate client’s credit quality and set related credit period based on the client’s financial status, credit
records and other factors such as current market situation etc. The Group keep monitor the client’s credit record and for
client with deteriorate credit records, the Group will ensure the credit risk is under control in whole by means of written notice
of payment collection, shorten or cancel credit period.
The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation to
receivables and purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Group is the carrying amount of each financial assets in the balance sheet. The
Group also faces credit risks because of providing financial guarantee. Refer to Note XII. 2 for details.
The amount of top 5 accounts receivable of the Group accounted for 25.39% (2018: 21.95%) of the Group’s total accounts
receivables. The amount of top 5 other receivable of the Group accounted for 40.94% (2018: 22.73%) of the Group’s total
other receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financial liabilities
that are settled by delivering cash or other financial assets.
Regarding to the management of liquidity risk, the subsidiaries of the Group are responsible for cash flow forecast. The
Group’s finance center monitors cash and cash equivalents to meet operational needs at group level based on subsidiaries’
cash forecast. The Group set up cash pool with major banks to arrange the Group’s cash and ensure that each subsidiary
has sufficient cash reserve to fulfil payment liability. Besides, the Group also signed facility agreement with banks to support
the Group to fulfil liabilities fall due.
Operating cash were generated from daily operation and bank loan. As of 31 December 2019, the Group’s unused bank loan
credit is RMB1,970.39 million (2018: 1,981.03 million)
As at the period end, the financial liabilities of the Group at the reporting date are analysed by their maturity date as below at
their undiscounted contractual cash flows (in ten thousand RMB):
2019.12.31
Item Within 1
1-2 years 2-3 years Over 3 years Total
year
Financial liabilities:
Short-term loans 57,945.57 - - - 57,945.57
Accounts payable 27,977.28 - - - 27,977.28
Other payables 11,961.66 - - 84.82 12,046.48
Non-current liabilities due in one
37.09 - - - 37.09
year
86
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Long-term loans 12.97 11.89 441.62 - 466.48
Total financial liabilities 97,934.57 11.89 441.62 84.82 98,472.90
As at the beginning of the period, the financial liabilities of the Group at the reporting date are analysed by their maturity date
as below at their undiscounted contractual cash flows (in ten thousand RMB):
2018.12.31
Item
Within 1 year 1-2 years 2-3 years Over 3 years Total
Financial liabilities:
Short-term loans 56,116.70 - - - 56,116.70
Accounts payable 25,991.36 - - - 25,991.36
Other payables 7,181.99 - - - 7,181.99
Non-current liabilities due in one
35.79 - - - 35.79
year
Long-term loans 13.55 47.26 46.22 391.01 498.04
Total financial liabilities 89,339.39 47.26 46.22 391.01 89,823.88
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the carrying
amount of the line items.
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of a financial
instrument will be fluctuated due to the changes in market price.
Interest risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated due to the
floating rate. Interest rate risk arises from recognised interest-bearing financial instrument and unrecognised financial
instrument (e.g. loan commitments).
The Group’s interest rate risk arises from cash and cash equivalents, borrowings and interest-bearing liabilities. Financial
liabilities issued at floating rate expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rate
expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating
rate contracts depending on the prevailing market conditions and to maintain an appropriate combination of financial
instruments at fixed rate and floating rate through regular reviews and monitors.
The Group’s finance department continuously monitors the interest rate position of the Group. The Group did not enter into
any interest rate hedging arrangements. But the management is responsible to monitor the risks of interest rate and consider
to hedge significant interest risk if necessary. Increase in interest rates will increase the cost of new borrowing and the
interest expenses with respect to the Group’s outstanding floating rate interest-bearing borrowings, and therefore could have
a material adverse effect on the Group’s financial result. The management will make adjustments with reference to the latest
market conditions. These adjustments may include enter into interest swap agreement to mitigate its exposure to the interest
87
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
rate risk.
Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Item 2019 2018
Fixed interest rate
Financial liability
Including: short term loans 48,710.37 54,711.85
Long term loans 468.18 486.46
Subtotal 49,178.55 55,198.31
Floating interest rate:
Financial liabilities
Including: short term loans 8,000.00 -
Total 57,178.55 55,198.31
As at 31 December 2019, 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 Group’s net profit and shareholder’s equity for the year will decrease
or increase by approximately RMB400 thousand (2018: no floating interest rate loan).
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk. This
sensitivity analysis as above has been determined assuming that the change in interest rates had occurred at the reporting
date and arisen from the recalculation of the above financial instrument issued at new interest rates. The non-derivative tools
issued at floating interest rate held by the Group at the reporting date expose the Group to cash flow interest rate risk. The
effect to the net profit and shareholder’s equity illustrated in the sensitivity analysis as above is arisen from the effect to the
annual estimate amount of interest expenses or revenue at the floating interest rate. The analysis is performed on the same
basis for last year.
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated due to the
changes in foreign currency rates. Foreign currency risk arises on financial instruments that are denominated in a currency
other than the functional currency in which they are measured.
The Group’s exchange risk mainly are financial position and cash flow that are affected by foreign exchange fluctuation. The
Group’s major operational activities are carried out in the PRC except for Swiss company which held currency of CHF and
Hong Kong company which uses HKD for settlement. But risks also exist for the Group’s asset and liability denominated in
foreign currency and future foreign exchange transaction.
The following table details the financial assets and liabilities held by the Group which denominated in foreign currencies and
amounted to RMB as at 31 December 2019 are as follows (in RMB ten thousands):
Liabilities denominated in foreign currency Asset denominated in foreign currency
Item
31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018
88
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
USD - - 4,601.89 907.81
HKD 1,939.47 3,160.74 1,072.77 872.08
CHF 1,700.89 1,852.08 3,497.65 1,189.40
EUR - - 359.81 31.75
Total 3,640.36 5,012.82 9,532.12 3,001.04
The Company closely monitors the impact of exchange rate changes on the Company's foreign exchange risk. The
Company has not taken any measures to avoid foreign exchange risks.
As at 31 December 2019, for cash balances, bank loans and other financial instruments that denominated in foreign currency,
if Renminbi appreciate or depreciate of 5% to foreign currency (mainly USD, HKD and CHF) and other factors remain
unchanged, the shareholder’s equity and net profit will increase or decrease about RMB 2.9459 million (31 Dec 2018:1.0059
million.
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders,
return capital to shareholders, issue new shares or disposes assets to reduce its liabilities.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by total capital.
As at 31 December 2019, the Group’s gearing ratio is 29.42% (31 December 2018: 28.60%).
IX. Fair value
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest
level input that is significant to the entire fair value measurement. The levels are defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date for identical
assets or liabilities.
Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for underlying assets or
liabilities.
Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
(1) Fair value of assets and liabilities measured at fair value
As at 31/12/2019, assets and liabilities measured at fair value are shown as follows:
Level 1 fair value Level 2 fair value Level 3 fair value
Item Total
measurement measurement measurement
I.Recurring fair value measurement
(I) other equity instrument investment - - 85,000.00 85,000.00
There have been no transfers between level 1 and level 2 and no transfer into or out of Level 3 during the year ended 31
89
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
December 2019.
(2) Fair values of assets and liabilities not measured at fair value
Financial assets and financial liabilities measured at amortized cost include: cash at bank and on hand, notes receivable,
accounts receivable, other receivables, short-term loans, accounts payable, other payables, long-term loans due within one
year, and long-term loans.
The difference between fair value and carrying amount of the above financial assets and liabilities that measured at cost is
insignificant.
X. Related party and related transaction
1. The parent company of the Company
Shareholding ratio Ratio of vote right of
Registration
Name Type of business Registered capital of parent company parent company to
place
to the Company % the Company%
Investment in
China National
Shenzhen industries, domestic 1,166,161,996 36.79 36.79
Aviation Group
trade, material supply
and distribution
Note: CATIC Shenzhen Company holds 36.85% shareholding of China National Aviation Group. CATIC Shenzhen Company
is a wholly owned subsidiary of China Aero Space International Holdings Limited (CASI), and China Aviation Industry
Corporation (AVIC) directly holds 91.13% (ultimate beneficiary shares 91.897%) of the equity of CASI. Therefore, the
ultimate controlling party of the Company is AVIC.
2. Subsidiaries
Details of subsidiaries refer to Note VII.1.
3. Joint venture and association
Details of joint ventures and associates refer to NoteVII.2.
4. Other related parties
Name Relationship with the Company
Associate company of the
Shenzhen CATIC Property Management Limited (CATIC Property Management)
controlling shareholder
Associate company of the
Shenzhen CATIC Building Equipment Co., Ltd. (CATIC Building Company)
controlling shareholder
Associate company of the
China Merchants Property Operation & Service Co., Ltd (China Merchants Property OS)
controlling shareholder
Associate company of the
CATIC Guanlan Property Development Co., Ltd. （CATIC Guanlan Property）
controlling shareholder
Shenzhen CATIC Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Associate company of the
Company) controlling shareholder
Associate company of the
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment)
controlling shareholder
Ganzhou CATIC 9 Square Trading Co, Ltd (Ganzhou 9 Square Company) Associate company of the
controlling shareholder
90
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Associate company of the
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company)
controlling shareholder
Associate company of the
Shenzhen AVIC Security Service Co., Ltd (AVIC Security Service)
controlling shareholder
Shenzhen AVIC Property Asset Management Co., Ltd. (AVIC Property Asset Associate company of the
Management) controlling shareholder
Associate company of the
Jiujiang 9 Square Business Management Co., Ltd (Jiufang Business Management)
controlling shareholder
Associate company of the
Shenzhen CATIC Property Development Co., Ltd (CATIC Property)
controlling shareholder
Rainbow Department Store Co., Ltd. and its associated companies (Rainbow Department
Controlled by the same party
Store)
Shennan Circuits Co., Ltd. and its associated companies (Shennan Circuits) Controlled by the same party
Shenzhen CATIC City Real Estate Development Co., Ltd. (CATIC City Real Estate
Controlled by the same party
Company)
Shenzhen CATIC Huacheng Real Estate Development Co, Ltd (CATIC Huacheng
Controlled by the same party
Company)
Shenzhen CATIC City Parking Management Co, Ltd (CATIC City Parking Management
Controlled by the same party
Company)
Shenzhen CATIC Technical Testing Institute (CATIC Technical Testing Institute) Controlled by the same party
Tianma Micro-electronics Co., Ltd. (Tianma) Controlled by the same party
AVIC Securities Co., Ltd. (AVIC Securities Company) Controlled by the same party
Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) Controlled by the same party
CATIC Changtai Investment Development Co., Ltd. (CATIC Changtai Company) Controlled by the same party
AVIC Training Center Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd (Grand Skylight Hotel
Controlled by the same party
Management Company)
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Shenzhen CATIC Grand Skylight Hotel Co., Ltd (Grand Skylight Hotel) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co., Ltd (Gongqingcheng CATIC Culture
Controlled by the same party
Investment Company)
AVIC-INTL Project Engineering Co., Ltd (AVIC-INTL Project Engineering Company) Controlled by the same party
Huang Yongfeng Key management member
Wang Mingchuan Key management member
Fu Debin Key management member
Xiao Zhanglin Key management member
Wang Bo Key management member
Chen Libin Key management member
Wang Jianxin Key management member
91
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Zhong Hongming Key management member
Tang Xiaofei Key management member
Wang Baoying Key management member
Sheng Qing Key management member
Fang Jiasheng Key management member
Lu Wanjun Key management member
Liu Xiaoming Key management member
Pan Bo Key management member
Li Ming Key management member
Chen Zhuo Key management member
Tang Haiyuan Key management member
Xu Chuangyue Key management member
Zou Zhixiang Key management member
Lu Bingqiang Key management member
5. Related party transactions
(1) Related purchase and sales
①Purchase good and receiving service
Related party Nature of transaction 2019 2018
CATIC Property
Property management 11,480,515.57 8,208,102.96
Management
Department store
Rainbow Department
expenses/ Commodity 5,646,879.21 5,865,816.91
Store
purchase
AVIC Training Center Training fee 159,408.67 273,596.25
Shennan Circuits Material purchase - 29,914.50
Ganzhou 9 Square Department store
185,711.09 177,372.93
Company expense
CATIC City Estate Department store
39,921.62 76,674.66
(Kunshan) Company expense
Jiufang Business Department store
54,731.80 58,322.11
Management expense
AVIC Purchase of goods 415,077.98 -
AVIC Information Center Training expenses 1,603.77 -
Shanghai Watch Purchase of goods 6,048.24 -
Tianma Purchase of goods 969,091.14 -
CATIC Building Company Renovation 17,390.67 -
Maintenance and
Skytel Hotel 28,886.00 -
management fee
CATIC City Real Estate Department store
76,275.91 -
Company expense
92
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The pricing strategy for Group’s related transaction are based on market price.
② Sale of goods and providing services
Related party Nature of transaction 2019 2018
Rainbow Department
Product and service 73,641,080.14 71,764,856.50
Store
Grand Skylight Hotel
Sale of product - 5,982.91
Management Company
Ganzhou 9 Square
Product and service 93,750.40 960,563.85
Company
Sale of material and
Shennan Circuit 10,573,861.17 5,883,132.72
providing service
Gongqingcheng CATIC
Culture Investment Sale of product - 655,161.45
Company
CASI Sale of product - 10,215.52
CATIC City Real Estate
Sale of product - 4,051.28
Company
AVIC-INTL Project
Sale of product - 15,351.72
Engineering Company
CATIC Property Share of Utilities and
12,506,097.43 3,670,113.63
Management management fee
Grand Skylight Hotel Sale of product 140,867.25 -
Shanghai Watch Sale of product 4,821,299.97 -
AVIC Training Center Others 3,270.80 -
The pricing strategy for Group’s related transaction are based on market price.
(2) Related party lease
①The Company as a lessor
Recognized rental income in Recognized rental income in
Lessee Type of leased assets
current year prior year
Property
CATIC Property
3,972,425.13 3,327,785.46
Management
China Merchants Property OS Property 1,887,345.86 1,813,948.87
Skytel Hotel Property 2,793,650.79 4,190,476.18
CATIC City Investment) Property 271,560.56 364,293.91
AVIC Securities Company Property 1,280,028.55 1,231,342.83
Property
CATIC City Real Estate
304,781.46 342,330.05
Company
Rainbow Department Store Property 684,393.11 529,166.26
CATIC Huacheng Company Property 239,471.14 257,234.48
CATIC 9 Square Asset Mgmt Property
2,023,126.13 1,560,410.13
Company
93
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
AVIC Security Service Property 1,438,139.41 1,160,868.75
CATIC Guanlan Property Property 135,780.28 119,748.00
AVIC Property Asset Property
- 57,154.70
Management
Property
CATIC Property
272,692.07 165,612.56
Management
CATIC City Parking Property
- 9,916.44
Management Company
The pricing strategy for Group’s related transaction are based on market price.
② The Company as lessee
Rental expenses charged in Rental expenses charged
Lessor Type of leased assets
current year in prior year
Ganzhou 9 Square Company Property 894,582.84 894,582.84
Kunshan Company Property 132,960.04 156,942.79
Jiufang Business Management Property 320,208.22 337,541.02
CATIC City Real Estate Property
285,668.33 -
Company
The pricing strategy for Group’s related transaction are based on market price.
(3) Related party funds lending
Related Party Amount starting date Expiring date Note
Borrowing:
AVIC Finance
150,000,000.00 2018-5-14 2019-5-14
Company
AVIC Finance
50,000,000.00 2019-3-26 2020-3-26
Company
AVIC Finance
100,000,000.00 2019-4-2 2020-4-2
Company
AVIC Finance
60,000,000.00 2019-8-1 2019-10-25
Company
AVIC Finance
60,000,000.00 2019-10-25 2020-10-25
Company
Note: The Company paid interest to AVIC Finance Company up to RMB 6,980,130.55 during the year.
(4) Remuneration to key management
The Company has 21 (including resigned) key management personnel in 2019, and 22 (including resigned) key
management personnel in 2018. Information about remuneration is as follows:
Item 2019 2018
Remuneration to key
17,845,000.00 13,123,100.00
management
(5) Other related party transactions
94
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The year-end balance of the Company’s cash was RMB237,118,456.45, which was deposited with AVIC Finance Company.
Interests received from the deposit during the year were RMB362,818.00.
6. Receivables from and payables to related parties
(1) Receivables
2019.12.31 2018.12.31
Item Related party Carrying amount Bad debt Carrying amount Bad debt
provision provision
Bill receivable
Shennan Circuit 2,263,719.32 - - -
Accounts
receivable
Rainbow
6,387,871.47 318,754.79 2,305,867.79 115,293.39
Department Store
Shennan Circuit 1,704,634.58 85,061.27 1,659,077.38 82,953.87
Ganzhou 9
- - 4,000.00 200.00
Square Company
Gongqingcheng
CATIC Culture
- - 28,269.36 1,413.47
Investment
Company
Jiufang Business
- - 4,288.00 214.40
Management
AVIC Securities
- - 101,428.57 5,071.43
Company
CATIC City Real
- - 3.00 0.15
Estate Company
CATIC 9 Square
Asset Mgmt - - 33,331.01 1,666.55
Company
CATIC Guanlan
- - 8,315.43 415.77
Property
CATIC Property - - 148,915.46 7,445.77
CATIC Property
- - 0.52 0.03
Management
Shanghai Watch 140,000.00 6,986.00 - -
Other receivables
Rainbow
975,867.00 50,647.50 761,860.00 38,093.00
Department Store
CATIC Property
- - 10,100.00 505.00
Management
95
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Ganzhou 9
122,665.60 6,366.34 122,665.60 6,133.28
Square Company
Kunshan
32,000.00 1,660.80 50,400.00 2,520.00
Company
Skytel Hotel - - 32,000.00 1,600.00
Gongqingcheng
CATIC Culture
- - 5,500.00 275.00
Investment
Company
Jiufang Business
50,000.00 2,595.00 50,000.00 2,500.00
Management
CATIC City Real
59,923.00 3,110.00 54,923.00 2,746.15
Estate Company
China National
11,101.80 576.18 11,101.80 555.09
Aviation Group
Prepayment:
Tianma 31,309.90 - - -
(2) Payables to related parties
Item Related party 2019.12.31 2018.12.31
Accounts payables:
CATIC Building Company 23,300.97 24,000.00
CATIC Property
- 40,821.05
Management
Tianma 3,415.84 -
Other payables: CATIC Property 1,237,403.65 1,131,164.13
Management
CATIC Property 442,407.92 442,407.92
CATIC City Investment 309,732.00 309,732.00
AVIC Securities Company) 213,000.00 213,000.00
CATIC Building Company 54,691.44 116,960.23
CATIC City Real Estate
99,052.32 99,052.32
Company
CATIC Huacheng Company 73,819.68 73,819.68
CATIC Jiufang Asset Mgmt
378,483.84 378,483.84
Company
Rainbow Department Store 155,672.90 60,000.00
CATIC Changtai Company - 4,064.81
CATIC Property 51,014.88 51,014.88
CATIC Guanlan Property 25,401.60 25,401.60
96
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
AVIC Security Service 226,603.44 10,533.44
Ganzhou 9 Square
- 3,446.22
Company
Shennan Circuits - 150,000.00
Skytel Hotel 28,886.00 -
XI. Share-based payments
1. General information about share-based payments
Total equity instruments granted by the Company in current period 4,224,000
Total equity instruments exercised by the Company in current period 4,224,000
Total equity instruments voided in current period -
Scope of outstanding share option exercise price and remaining contract First phase restricted share exercise price:
term RMB4.4/share, remaining term 48 months.
Scope of outstanding other equity instrument exercise price and
Not applicable
remaining contract term.
2. Equity settled share-based payment
Method of determining fair value of equity instrument on grant date Close price of share on grant date
Term of employee service, status of target
Evidence to determine the number of exercisable equity instrument completion, and personal performance
assessment
Reasons for significant difference between current period estimation and
NIL
prior period estimation.
Accumulated amount charged to capital reserve for equity settled share-
18,802,225.91
based payment
Total expenses for equity settled share-based payment recognized in
4,440,625.91
current period
XII. Commitment and contingency
1. Significant commitments
(1) Operating lease commitments
As at the balance sheet date, the total future minimum lease payments under non-cancellable operating leases were payable
as follows:
The total future minimum lease payments under non-
2019.12.31 2018.12.31
cancellable operating leases
Within 1 year 69,420,770.36 54,382,100.37
1-2 years 40,749,688.35 28,501,337.58
2-3 years 15,620,420.28 12,406,400.37
After 3 years 11,333,148.34 9,533,027.43
97
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total 137,124,027.33 104,822,865.75
(2) Other commitments
As at 31 December 2019, the Group does not have other commitments that required to disclose.
2. Contingencies
(1) Contingent liabilities arising from guarantee provided to other entities and related financial effects.
As at 31 December 2019, the intra-Group guarantees is as followings (in RMB Ten thousands):
Guaranteed
Guarantee Guarantor Credit line granted Credit line used Period
matter
2018-7-1 to 2020-
FIYTA Hong Kong The Company Loan 3,583.12 2,710.37
5-31
Loan 2018-12-17 to
FIYTA Hong Kong The Company 7,166.24 -
2020-11-12
HARMONY Loan 2018-12-4 to
The Company 30,000.00 1,000.00
Company 2020-3-8
HARMONY Guarantee 2019-12-30 to
The Company 10,000.00 10,000.00
Company letter 2020-12-29
Total —— —— 50,749.36 13,710.37 ——
(2) Other contingent liabilities
As at 31 December 2019, the Group does not have other contingent liabilities that required to disclose.
XIII. Post balance sheet date events
1. Profit appropriations after the balance sheet date
Cash dividend of RMB2.00 (tax inclusive) for every 10 shar
Profit distributions or dividends proposed
es held
2. Other events after the balance sheet date
(1) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board
of Directors on 4 April 2019 and the 2nd extraordinary shareholder’s meeting of 2019 on 23 April 2019, the Company
repurchased B Shares of 13,470,000 in total as of 18 March 2020, accounted for 3.04% of the Company’s total shares. The
highest deal price was HKD6.56 and the lowest was HKD5.71. Total consideration paid was HKD 81,883,172.32 (excluding
stamp duty and commission).
(2) Since the outbreak of Novel Coronavirus Pneumonia in the beginning of 2020, the Company has actively responded and
strictly implemented various regulation and requirements pronounced by the China Communist Party and national
government authorities at all level for virus epidemic prevention and control in order achieve operation production while
preventing the epidemic. In responding to the outbreak of epidemic, the Company has quickly adjusted the operating
strategies, promoted full marketing and increased investment in e-commerce to minimize market impact.
The epidemic would have certain impact on the business operations and overall ecomonic operartion of the entire country
and consequently have impact to the Company’s merchandise retail and manufacturing businesses to a certain extent. The
degree of impact is uncertain as of now and is subjected to the development of epidemic prevention, duration of the epidemic
98
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
and implementation of all kinds of control measures. The Company will closely monitor, evaluate and actively address the
impact of the epidemic to the Group’s financial position, as well as the operating performance.
(3) Financing and guarantee after the balance sheet date
① On 18 March 2020, pursuant to approval by the 16th meeting the 9th 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. The resolution is pending
for approval by the shareholder’s meeting.
②On 18 March 2020, pursuant to approval by the 16th meeting the 9th Board of directors, the Company proposed to
provide guarantee for the Company’s wholly-owned subsidiary to borrow from banks of no more than RMB1,000 million. 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.
(4) As at 18 March 2020, the Group does not have other post-balance sheet events that requires to disclose.
XIV. Other Significant matters
1. Government grant
(1) Government grants recognized in deferred income, and subsequently measured using the gross presentation method
Presentation
Additions Recognition
As at Other As at item Related to
Item Type during the in profit and
31/12/2018 changes 31/12/2019 recognized in asset/income
year loss
profit and loss
Special fund
for Shenzhen
industrial State
933,011.22 - 203,066.21 - 729,945.01 Other income Asset related
design industry treasury
development
(A)
Funding
project for
construction of
State
National 1,511,421.57 - 293,147.06 - 1,218,274.51 Other income Asset related
treasury
Enterprise
Technology
Center (B)
2017
Provincial
Specialized
State Income
Fund for 1,162,384.83 - 130,551.49 - 1,031,833.34 Other income
treasury related
Industrial and
Information
Technology (C)
Special funds
for consumer
goods State Income
66,037.74 - - - 66,037.74 ——
standards and treasury related
quality
improvement
Total —— 3,672,855.36 - 626,764.76 - 3,046,090.60 —— ——
99
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Note:
A. Special fund for Shenzhen industrial design industry development was obtained according to the Shen Jingmao Xinxi
Jishu Zi (2013) No. 227 - Operating Specification for Affirmation and Fund Plan of Shenzhen Industrial Design Center
(Trial) which is jointly issued by Economy, Trade and Information Commission of Shenzhen Municipality and Finance
Commission of Shenzhen Municipality.
B. Funding project for construction of Shenzhen Enterprise Technology Center was obtained according to the Notice for
the 1st Supportive Project in 2015 of Funding Project for Construction of Shenzhen Enterprise Technology Center
which was issued by Shenzhen Development and Reform Commission (Shen Jing Mao Xin Xi Yu[2015] No. 129).
C. According to the Notice of Guangdong Provincial Economic and Information Technology Commission on Doing a Good
Job of Applying for Provincial Special Projects in Production and Service Industry in 2017 (the Circular of the Ministry of
Economic Affairs and Information Technology of Guangdong Province and Guangdong Provincial Department of
Finance) Guangdong Letter of Manufacture [2016] No. 53) obtained provincial 2017 special funds for industrial and
informatization.
(2) Government grants recognized in profit and loss using gross method
Recognised in Recognised in
Presentation item
profit and loss for profit and loss for Related to
Item Type recognized in profit
the year ended the year ended asset/income
and loss
31/12/2018 31/12/2019
Headquarters
State treasury - 4,843,500.00 Other income Income related
enterprise award (A)
Corporate Research
and Development State treasury 1,890,000.00 3,156,000.00 Other income Income related
Funding (B)
Special subsidy to
promoting consuming State treasury - 1,655,200.00 Other income Income related
(C)
Economic
development special
fund of Guangming
District to support
State treasury - 1,033,000.00 Other income Income related
intellectual property
right, standardization
certification project
(D)
Subsidy to support
major enterprise to
expanding production State treasury - 1,000,000.00 Other income Income related
and improving
efficiency (E)
Subsidy to support
innovation
development for State treasury - 712,664.00 Other income Income related
business and trading
(F)
Subsidy to support State treasury 1,268,000.00 669,545.00 Other income Income related
investment in R&D
100
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
and domestic
economic and trading
exhibition (G)
Special fund of
Nanshan district to
support self- State treasury 2,246,200.00 718,600.00 Other income Income related
innovation industry
development (H)
Examine intellectual
property right using State treasury - 500,000.00 Other income Income related
big data (I)
Commission on IIT
State treasury - 469,005.01 Other income Income related
payment
Shenzhen Standard
State treasury 496,000.00 543,000.00 Other income Income related
Special Fund (J)
Subsidy for SME to
State treasury - 387,940.49 Other income Income related
expanding market (K)
Shenzhen Science
and Technology State treasury - 300,000.00 Other income Income related
Award (L)
Expanding production
and improving State treasury - 300,000.00 Other income Income related
efficiency (M)
Subsidy to projects of
economic
State treasury - 286,000.00 Other income Income related
development special
fund (N)
Subsidy for stabilizing
State treasury 229,106.17 209,468.63 Other income Income related
job position
Self-innovative
industry development State treasury - 200,000.00 Other income Income related
subsidy (O)
The 20th Guangdong
Provincial China State treasury - 150,000.00 Other income Income related
Patent Award (P)
Associated award to
The 20th Guangdong
State treasury - 150,000.00 Other income Income related
Provincial China
Patent Award (Q)
Basel watch fair
State treasury - 114,333.32 Other income Income related
subsidy
Maternity insurance State treasury - 100,789.68 Other income Income related
Nanshan Economic
Promoting Bureau State treasury - 100,000.00 Other income Income related
subsidy for SME (R)
Promotion of human
State treasury 100,000.00 100,000.00 Other income Income related
resource quality
Subsidy to promoting
international State treasury 60,000.00 31,163.00 Other income Income related
operating ability (S)
101
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
State level high and
new technology State treasury - 30,000.00 Other income Income related
certificate subsidy (T)
Short term export
State treasury 57,605.00 20,200.00 Other income Income related
credit insurance
Expanding domestic
marketing from
Shenzhen SME State treasury - 14,670.00 Other income Income related
Affairs Department
(V)
Subsidy for Disabled
State treasury 8,882.30 7,062.29 Other income Income related
person (W)
Watch fair subsidy
from Guangming State treasury 50,000.00 - Other income Income related
District
Shenzhen Patent
State treasury 2,000.00 - Other income Income related
Award
Special fund for
industry
State treasury 500,000.00 - Other income Income related
transformation and
upgrading
Special fund for
application of industry
State treasury 4,480,000.00 - Other income Income related
transformation and
upgrading
Merging of
industrialization and State treasury 400,000.00 - Other income Income related
information
Domestic marketing
expanding for
State treasury 128,920.00 - Other income Income related
example enterprise
practicing innovation
Foreign trade subsidy
State treasury 779,907.74 - Other income Income related
for Basel watch fair
High and new tech
enterprise in Baoan State treasury 30,000.00 - Other income Income related
District
2nd International
Brand Week State treasury 28,301.89 - Other income Income related
Guangming Branch
18th China
Appearance
State treasury 250,000.00 - Other income Income related
Designing Excellence
award
Domestic innovation
patent annual
State treasury 2,000.00 - Other income Income related
subscription fee
subsidy
Import exhibition
State treasury 6,154.00 - Other income Income related
participating
Economic and trade State treasury 1,000,000.00 - Other income Income related
commission service
102
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
industry special
development fund
Crystal Products
Exhibition Special State treasury 103,267.00 - Other income Income related
Funding
Corporate R&D
Funding by Science
State treasury 1,155,000.00 - Other income Income related
and Technology
Commission
Creating excellence
and rating funding
project by Economic State treasury 200,000.00 - Other income Income related
Promotion Bureau,
Nanshan District
Funding for
Informatization and
Industrialization
Integration project by State treasury 100,000.00 - Other income Income related
Economic Promotion
Bureau, Nanshan
District
Project funded by
Commerce State treasury 360,800.00 - Other income Income related
Circulation Industry
Patent subsidy by
Shenzhen Municipal
Market and Quality
State treasury 10,000.00 - Other income Income related
Supervision and
Administration
Committee, 2017
The 19th China
Patent Award of the
State treasury 330,000.00 - Other income Income related
Market and Quality
Committee
Funds on Enterprise
Intellectual Property
Management
Standards State treasury 200,000.00 - Other income Income related
Certification by
Market Supervision
Committee
Demonstration
special fund, financial
aid project in
exhibition industry, for
State treasury 159,810.00 - Other income Income related
small and micro
enterprise
entrepreneurship
innovation base
Watch exhibition
subsidy of small and State treasury 128,008.00 - Other income Income related
micro enterprises
Government State treasury 128,008.00 - Other income Income related
exhibition industry
103
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
special fund
China Light Industry
Federation's
State treasury 16,000.00 - Other income Income related
international
standards funding
16-26 batch special
subsidy for Central
State treasury 60,000.00 - Other income Income related
Foreign Trade and
Economic
Government special
subsidy fund for
central foreign State treasury 114,466.00 - Other income Income related
economic and trade
projects
Key technology
research and
development project
State treasury 480,000.00 - Other income Income related
of DF101 aircraft
benchmark timing
system
Development Special
Fund for Independent
State treasury 124,000.00 - Other income Income related
Innovation Industry,
Nanshan District
Total —— 17,682,436.10 17,802,141.42 —— ——
Note:
A. It is the award granted by Development and Reform Commission of Shenzhen Municipality according to “Encourage
Headquarters Enterprise Development” (Shen Fu Gui (2017) No. 7).
B. It is obtained according to “Measures to Promoting Science Innovation” (Shen fa (2016) No.7) and “Management
Measures of Shenzhen Science and Technology Research and Development Fund” issued by Shenzhen Finance
Committee and Shenzhen Science and Technology Innovation Committee.
C. It is received according to “Notice of Circulating Application Guidance of 2019 Promoting Consuming Supporting Plan”
issued by Shenzhen Bureau of Commerce (Shen Shangwu Shichang Zi (2019) NO. 202).
D. It is received according to “Notice of Circulating “Guangming Market Supervision and Management Bureau Regarding
2019 Economic Development Specific Fund to Support Intellectual, standardization Certificate Project” (Shen Shijian
Guang (2019) No. 160)
E. It is subsidy received for 2019 enterprise expanding capacity and increase efficiency based on “Notice of Publicity
Plans to Subsidy 2019 Enterprise Expanding Capacity and Increasing Efficiency” (Shen Gongxin Dianzi Zi (2019) No.
75) issued by Shenzhen Industrial and Information Bureau.
F. It is received based on “Notice of Publicity of 2019 Support Projects of Commerce and Trading Innovation
Development” issued by Shenzhen Bureau of Commerce.
G. It is 2018 Guangming New District Economic Development Special Fund for R&D Investment and activity support for
104
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Domestic Trade Exhibition obtained according to "Shenzhen Guangming New District Economic Development Special
Fund Management Measures and Supporting Implementation Rules" (Shen Guang Gui [2017] No. 16) issued by
Shenzhen Guangming New District Management Committee.
H. It is received according to “Management Rules of Nanshan District Self-innovation Industrial Development Specific
Fund (Trial)” and “Nanshan District Details of Application of Human Resource Specific Fund under Self Innovation
Industrial Development” (Shennan Fubangui 92019) No.3).
I. It is received based on the following notices: “Notice of Circulating “Several Measures to Increase Enterprise
Competitive Strength” issued by Shenzhen Municipal Government (Shen Fa (2019) No. 8), “Notice of Circulating
“Application Guideline of Supporting Enterprise to Improve Competitive Strength”” (Shen Jingmao Xinxi Zi (2017) No.
37.
J. The 2017 Shenzhen Standard special funds obtained according to “The Publicity for the 2018 Construction of the
Shenzhen Standard Special Fund Standards Project” issued by Shenzhen Municipal Market and Quality Supervision
and Management Committee.
K. It is received according to “Notice of Publicity 2018 Supporting SME to Expanding Market Projects” issued by
Shenzhen Bureau of Commerce.
L. It is received based on “Shenzhen Science and Technology Award Management Method” (Shen Fu (2016) No. 87 and
associated application guidelines.
M. It is received in accordance with “Shenzhen Guangming New District Economic Development Specific Fund
Management Method and Associated Application Guidelines”.
N. It is received in accordance with “Notice of Receiving Application of 2019 Guangming District Economic Development
Specific Fund to Support Enterprise to Get Bigger and Stronger”.
O. It is received in accordance “Notice of Receiving Application the 3rd Batch 0f 2019 Human Resource Sub-fund Subsidy”
issued by Nanshan District Bureau of Human Resources.
P. Associated Patent award obtained from Shenzhen Market Supervision and Administration Bureau according to the
“Decision on the Award of the 20th China Patent Award” issued by the State Intellectual Property Office (Guo Zhi Fa
Guan Zi [2018] No. 36).
Q. Patent award obtained in accordance with “Decision on the Award of the 20th China Patent Award” issued by the State
Intellectual Property Office (Guo Zhi Fa Guan Zi [2018] No. 36).
R. It is received from Nanshan District Government about enterprise that reached certain scale. For SME that first time
reaches certain scale, an award of 100 thousand to 500 thousand will granted. It is based on “Nanshan District 2018
Plan to Encourage SME to Rapidly Grow”.
S. It is received based on “Notice on Application Guideline of Organizing and Implementing 2017 Central Foreign
Economy and Trade Development Fund”.
105
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
T. It is received based on “Notice of Subsidy to 2018 Enterprise Get State High and New Technology Certificate” (Shen
Keji Chuagnxin (2019) No. 160.
U. It is short-term export credit insurance subsidy received by “Application Guideline of Shenzhen Nanshan Self-
innovation Industrial Development Specific Fund Economic Development Sub-fund”.
V. 2018 Small and Medium Enterprises Development Special Fund (Under “Innovation and Entrepreneurship” Strategy),
Enterprise Domestic Market Development Project Funding, obtained according to the "Interim Measures for the
Administration of Special Funds for the Development of Private and SMEs in Shenzhen" issued by Shenzhen
Municipal Commission of Economy, Trade and Information and Shenzhen Municipal Finance Committee (Shen
Jingmao Xinxi Gui [2017] No. 8), and “The Detailed Rules for the Implementation of the Special Demonstration Fund
for the Small and Medium Enterprise Entrepreneurship Innovation Base in Shenzhen” issued by Shenzhen Economic
and Trade and Information Commission (Shen Jingmao Xinxi Zhongxiao Zi [2016] No. 217).
W. It is received based on “Administration Measures for Disabled People Job Position Security Fund”.
2. De-registration of subsidiary
Station 68 is in process of de-registration. As of 31 December 2019, the cancellation is still in process.
3. Others
(1) The proposal about acquiring wholly-owned sub-subsidiary Montres Chouriet SA has been passed in the 16th Board
Meeting of the eighth Board of Directors on 2 June 2017. The Company is going to acquire 100% share of Swiss Company,
owned by the subsidiary of the Company, FIYTA Hong Kong. The consideration of CHF12 million was made on the basis of
audited net asset as at 31 December 2016. The acquisition has not been finalized as of 31 December 2019.
(2) On 2 October 2019, CASI signed merger agreement with CATIC Shenzhen and China National Aviation Group. According
to the agreement, CASI will absorb CATIC Shenzhen and China National Aviation Group and undertakes all their assets and
liabilities. CATIC Shenzhen and China National Aviation Group will be cancelled. After the merger, CASI will become the
controlling shareholder of the Company. As of 31 December 2019, the deal has not yet been completed.
(3) According to the “Proposal of Change the Company’s name and initials for A share stock” approved by the 3rd
extraordinary shareholder’s meeting in 2019, and upon examination and approval by Shenzhen Administration for Industry
and Commerce, the Company’s name has been changed from “FIYTA (Group) Co., Ltd. to “FIYTA Precision Technology Co.,
Ltd.” since 9 January 2020.
XV. Notes to the Company’s financial statements
1. Accounts receivable
(1) Presented by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 2,997,921.46 776,459.35
Subtotal 2,997,921.46 776,459.35
106
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Less: bad debt provision 149,896.07 38,822.97
Total 2,848,025.39 737,636.38
(2) Presentation by method of providing bad debt
2019.12.31
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant
and assessed for - - - - -
impairment individually
Collectively assessed for
impairment based on
credit risk characteristics
Receivables from
related parties within - - - - -
scope of consolidation
Receivables from
2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
other customers
Total 2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
(continued)
2019.01.01
Category Book value Bad debt provision
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant
and assessed for - - - - -
impairment individually
Collectively assessed for
impairment based on
credit risk characteristics
Receivables from
related parties within - - - - -
scope of consolidation
Receivables from other
776,459.35 100.00 38,822.97 5.00 737,636.38
customers
Total 776,459.35 100.00 38,822.97 5.00 737,636.38
Bad debt provision based on groups
Group: Receivables from other customers
2019.12.31
Category
Accounts receivable Bad debt provision ECL rate (%)
Within 1 year 2,997,921.46 149,896.07 5.00
Bad debt provision as of 31 December 2018:
2018.12.31
Category Percentage Bad debt Percentage of Carrying
Book value
(%) provision provision (%) amount
Individually significant and
assessed for impairment - - - - -
individually
107
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Collectively assessed for
impairment based on credit risk
characteristics
Including: ageing group 776,459.35 100.00 38,822.97 5.00 737,636.38
Specific receivables
- - - - -
group
Subtotal of groups 776,459.35 100.00 38,822.97 5.00 737,636.38
Individually insignificant but
assessed for impairment - - - - -
individually
Total 776,459.35 100.00 38,822.97 5.00 737,636.38
(3) Addition, recovery or reversals of provision during the year:
Bad debt provision
2018.12.31 38,822.97
Adjustment amount for the first implementation of the new financial instrument standards -
2019.01.01 38,822.97
Addition 111,073.10
Reversal -
Written-off -
2019.12.31 149,896.07
(4) There were no receivables that are written-off during the period.
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB2,983,039.56, accounted for 99.50% of total balance
of accounts receivable as of the period end. Corresponding bad debt provision accrued is RMB149,151.98.
2. Other receivables
Item 2019.12.31 2018.12.31
Interest receivable - -
Dividends receivable - -
Other receivables 783,647,732.22 870,739,378.37
Total 783,647,732.22 870,739,378.37
(1) Other receivables
①Presented by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 673,518,552.61 870,591,025.37
1-2 years 109,992,510.47 208,054.00
108
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
2-3 years 186,180.00 -
Over 3 years 40,050.00 40,050.00
Subtotal 783,737,293.08 870,839,129.37
Less: bad debt provision 89,560.86 99,751.00
Total 783,647,732.22 870,739,378.37
②Presented by nature
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Related party
783,005,800.85 - 783,005,800.85 868,980,990.06 - 868,980,990.06
balance
Security deposit 235,761.90 76,355.60 159,406.30 248,104.00 40,830.40 207,273.60
Petty cash - - - 431,623.24 - 431,623.24
Others 495,730.33 13,205.26 482,525.07 1,178,412.07 58,920.60 1,119,491.47
Total 783,737,293.08 89,560.86 783,647,732.22 870,839,129.37 99,751.00 870,739,378.37
③Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in
Bad debt
Category Book value next 12 month Carrying amount Note
Provision
(%)
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Petty cash - - - -
Security deposit 235,761.90 32.39 76,355.60 159,406.30
Social security payment on-
242,726.90 - - 242,726.90
behalf
Receivables from related party
783,005,800.85 - - 783,005,800.85
that within consolidation scope
Other receivables 253,003.43 5.22 13,205.26 239,798.17
Total 783,737,293.08 0.01 89,560.86 783,647,732.22
As of the period end, the Company does not have other receivables at the second stage.
As of the period end, the Company does not have other receivables at the third stage.
Bad debt provision as of 31 Dec2018:
2018.12.31
Category Percentage
Percentage Bad debt
Book value of providing Carrying amount
(%) provision
(%)
109
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Individually significant and
assessed for impairment - - - - -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Including: ageing group 1,426,516.07 0.16 99,751.00 6.99 1,326,765.07
Specific receivables group 869,412,613.30 99.84 - - 869,412,613.30
Subtotal of groups 870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
Individually insignificant but
assessed for impairment - - - - -
individually
Total 870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
④ Addition, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
ECL for the life ECL for the life
Bad debt provision ECL in next 12 time of receivables time of Total
month (no impairment receivables
yet) (impaired)
2018.12.31
99,751.00 - - 99,751.00
Adjustment amount for the first
implementation of the new financial - - - -
instrument standards
2019.01.01 99,751.00 - - 99,751.00
Current period
--transferred to 2nd stage - - - -
-- transferred to 3rd stage - - - -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
Accrued - - - -
Reversed 10,190.14 - - 10,190.14
Realized - - - -
Written-off - - - -
Other changes - - - -
Balance as of 31 Dec 2019 89,560.86 - - 89,560.86
⑤There was no other receivables that are written-off during the period.
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB783,005,800.85, accounted for99.91% of total
balance of other receivable as of the period end.
3. Long-term equity investment
110
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
2019.12.31 2018.12.31
Item Impairm
Impairment
Book value ent prov Carrying amount Book value Carrying amount
provision
ision
Investment to
1,334,471,401.42 - 1,334,471,401.42 1,331,248,590.93 - 1,331,248,590.93
subsidiaries
Investment to
46,423,837.85 - 46,423,837.85 44,881,063.15 - 44,881,063.15
associates
Total 1,380,895,239.27 - 1,380,895,239.27 1,376,129,654.08 - 1,376,129,654.08
(1) Investment in subsidiaries
Balance of
Investee 2018.12.31 Increase Decrease 2019.12.31 Provision
provision
HARMONY
601,307,200.00 1,231,561.04 - 602,538,761.04 - -
Company
Haerbin Company 2,184,484.39 - - 2,184,484.39 - -
Manufacturing
9,000,000.00 344,923.49 - 9,344,923.49 - -
Company
Technology Company 10,000,000.00 126,964.71 - 10,126,964.71 - -
FIYTA Hong Kong 137,737,520.00 - - 137,737,520.00 - -
TEMPORAL
5,000,000.00 - - 5,000,000.00 - -
Company
FIYTA Sales
450,000,000.00 1,377,582.46 - 451,377,582.46 - -
Company
Hengdarui Company 36,867,843.96 - - 36,867,843.96 - -
Emile Choureit
79,151,542.58 141,778.79 - 79,293,321.37 - -
Shenzhen Company
Total 1,331,248,590.93 3,222,810.49 - 1,334,471,401.42 - -
111
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(2) Investment in associates
Changes during the period Balance of
impairment
Investment gains Adjustment of
Investee 2019.01.01 Changes Cash 2019.12.31 provision as
and losses other Impairment of period
Addition/new Withdrawn in other dividend Others
confirmed by the comprehensive provision
equity declared end
equity method income
① Associate
Shanghai Watch Co., Ltd.
44,881,063.15 - - 1,542,774.70 - - - - - 46,423,837.85 -
(Shanghai Watch)
112
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
4. Operating income and operating cost
2019 2018
Item
Operating income Operating cost Operating income Operating cost
Main business 140,511,246.61 21,776,539.35 130,886,023.99 19,010,293.07
Other business - - 15,800.00 -
Total 140,511,246.61 21,776,539.35 130,901,823.99 19,010,293.07
5. Investment gain
Item 2019 2018
Gain from long-term equity investments accounted for using the
113,000,000.00 143,000,000.00
cost method
Gain from long-term equity investments accounted for using the
1,542,774.70 1,001,545.06
equity method
Total 114,542,774.70 144,001,545.06
XVI. Supplimentary information
1、Details of non-recurring gain or loss for the year
Item 2019 Note
Disposal gain or loss of non-current assets -926,118.60
Overridden approval, or without official approval
-
document, or incidental tax return or exemption
Government grants included in current profit or loss
(except for the fixed or quantitative government grants,
enjoyed in a consecutive way, which closely related to 18,428,906.18
the enterprise businesses and according to nation
policies)
Charges for the possessions of funds collected from
-
non-monetary enterprises
Investment cost of subsidiaries, joint venture and
cooperative enterprises less than the profit incurred in
-
identifiable net asset fair value of invested unit when
investment
Profit and loss of non-monetary assets exchange -
Profit and loss from entrusting others to invest or
-
manage assets
Asset impairment provision accrued due to force
-
majeure such as natural disasters
Profit and loss of debt restructuring -
Enterprise restructuring expenses, such as expenses for
-
arranging employees, integrating cost
Profit and loss over fair value part accrued in
-
transactions of unreasonable transaction price
Current net profit and loss of subsidiaries from business -
combination under common control from the opening period
113
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
to combination date
Profit and loss incurred contingent matters unrelated to
-
normal operating business
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
Gain from disposal of tradable financial asset financial
-
liabilities and debt investment
Impairment provision reversal of accounts receivable
-
under standalone impairment test
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of
investment property subsequently measured in fair -
value mode
Influence on current profit and loss caused by one-off
adjustment according to requirements of laws and -
regulations about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than
3,353,916.43
the above items
Profit and loss items pursuant to the definition of non-
-
recurring profit and loss
Subtotal 20,856,704.01
Effect of income tax of non-recurring profit or loss 4,626,350.95
Net amount of non0recurring profit or loss 16,230,353.06
Less: Effect of non-recurring profit or losses attributable
-
to minority shareholders (after tax)
attributable to shareholders of the parent company 16,230,353.06
2. Return on Equity (ROE) and Earnings per share (EPS)
Weighted average EPS
Profit of the reporting period
ROE % Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders
8.21 0.4943 0.4943
of the Company
Net profit attributable to ordinary shareholders
of the Company after deducting non-recurring 7.60 0.4570 0.4570
profit or loss
FIYTA Precision Technology Co., Ltd.
18 March 2020
114
