FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
FIYTA Precision Technology Co., Ltd.
2020 Semi-annual Report
July, 2020
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 1 Important Notice, Table of Contents and Definition
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby
individually and collectively accept responsibility for the correctness, accuracy and completeness of the
contents of this report and confirm that there are neither material omissions nor errors which would render any
statement misleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the
accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report
enclosed in this Annual Report.
All the directors attended the board meeting for reviewing the Annual Report.
Any perspective description, such as future plan, development strategy, etc. involved in the Semi-annual Report
shall not constitute the Company’s substantial commitment to the investors and the investors should please pay
attention to their investment risks.
In this report, the Company has described in detail the existing macro-economic risks as well as operation risks.
Investors are advised to refer to the contents concerning risks possibly to be confronted with by the Company
and the countermeasures to be taken in Section 4 Discussion and Analysis of the Operation
The Company intends neither to distribute any cash dividend or bonus shares nor to convert any reserve into
share capital.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Table of Contents
2020 Semi-annual Report
Section 1 Important Notice, Table of Contents and Definition
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Section 4 Discussion and Analysis of the Operation
Section 5 Significant Events
Section 6 Change of Shares and Particulars about Shareholders
Section 7 About the Preferred Shares
Section 8 About the Convertible Bonds
Section 9 Directors, Supervisors and Senior Executives
Section 10 Bond Related Information
Section 11 Financial Report
Chapter 12 Documents Available for Inspection
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Definitions
Terms to be defined Refers to Definition
This Company, the Company or FIYTA Refers to FIYTA Precision Technology Co., Ltd.
AVIC Refers to Aviation Industry Corporation of China, Ltd.
AVIC International Refers to AVIC International Holding Corporation
AVIC International Shenzhen Refers to AVIC International Shenzhen Co., Ltd.
AVIC IHL Refers to AVIC International Holding Limited
The Sales Co. Refers to FIYTA Sales Co., Ltd.
Harmony Refers to Shenzhen Harmony World Watches Center Co., Ltd.
Precision Technology Co. Refers to Shenzhen FIYTA Precision Technology Co., Ltd.
Science & Technology Development Co. Refers to Shenzhen FIYTA Technology Development Co., Ltd.
the Hong Kong Co. Refers to FIYTA (Hong Kong) Limited
CMPO Refers to China Merchants Property Operation & Service Co., Ltd.
Rainbow Ltd. Refers to Rainbow Digital Commercial Co., Ltd.
Shennan Circuit Refers to Shennan Circuit Co., Ltd.
AVIC Property Refers to AVIC Property Management Co., Ltd.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 2 Company Profile and Financial Highlights
I. Company Profile
Short form of the stock: FIYTA and FIYTA B Stock Code 000026 and 200026
Short form of the stock after the change
FIYTA
(if any)
Stock Exchange Listed with Shenzhen Stock Exchange
Company Name in Chinese FIYTA Precision Technology Co., Ltd.
Abbreviation of Registered Company
飞亚达公司
Name in Chinese
Company name in English (if any) FIYTA Precision Technology Co., Ltd.
Abbreviation of the Company name in
FIYTA
English (if any)
Legal Representative Huang Yongfeng
II. Liaison Persons and Communication Information
Secretary of the Board Securities Affairs Representative
Name Pan Bo Zhang Yong
18th Floor, FIYTA Technology Building, Gaoxin S. Road 20th Floor, FIYTA Technology Building, Gaoxin S. Road
Liaison Address
One, Nanshan District, Shenzhen One, Nanshan District, Shenzhen
Tel. 0755-86013669 0755-86013669
Fax 0755-83348369 0755-83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
III. Other Information
1. Way of Communication
There is no change in the registered address, office address and post code, company website and email during the
reporting period. For the detail, refer to 2019 Annual Report.
2. Information Disclosure and Place where the Regular Reports are Prepared
There is no change in the newspapers designated for disclosing the information, the Internet website designated by China
Securities Regulatory Commission for publishing the Semi-annual Report, and the place where the Company’s
Semi-annual Report is prepared and available for inquiry. For the detail, refer to 2019 Annual Report.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
3. Other Relevant Information
The Company has changed its name in Chinese, its name in English and abbreviation of its A-share securities. For the
detail, refer to the Announcement on Change of the Company Name and the Abbreviation of its A-share Securities
2020-006 published on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
IV. Summary of Accounting/Financial Data
Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years
No
Year-on-year increase/decrease in
Reporting period Same period of the previous year
the reporting period
Revenue in CNY 1,581,834,715.03 1,785,036,020.23 -11.38%
Net profit attributable to the Company’s shareholders, in
77,738,906.30 123,495,460.90 -37.05%
CNY
Net profit attributable to the Company’s shareholders less
68,669,477.45 113,627,146.69 -39.57%
the non-recurring items, in CNY
Net cash flows arising from operating activities, in CNY 103,645,235.27 159,014,650.37 -34.82%
Basic earning per share (CNY/share) 0.1775 0.2788 -36.33%
Diluted earning per share (CNY/share) 0.1775 0.2788 -36.33%
Return on equity, weighted average 2.91% 4.69% -1.78%
Increase/decrease at the end of the
End of the reporting period End of the previous year year over the end of the previous
year
Total assets (in CNY) 3,837,627,638.42 3,760,923,285.37 2.04%
Net profit attributable to the Company’s shareholders, in
2,628,145,112.24 2,654,533,766.99 -0.99%
CNY
V. Difference in the Accounting Data based respectively on the Chinese Accounting Standards (CAS) and
International Accounting Standards (IAS)
1. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s
shareholders respectively according to the IAS and the CAS.
Inapplicable
2. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s
shareholders according to both the IAS and the CAS
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
VI. Non-recurring gain/loss items and the amount involved
In CNY
Items Amount Note
Gain/loss from disposal of non-current assets, including the part offset from the
-200,140.17
provision for impairment of assets.
The government subsidies included in the profits and losses of the current period
( (excluding government grants which are closely related to the Company’s business 10,154,015.67
and conform with the national standard amount or quantity)
Reversal of the impairment provision for receivables and contract assets
296,622.87
which have been tested individually for impairment
Other non-operating income and expenses other than the aforesaid items 1,273,213.01
Less: Amount affected by the income tax 2,454,282.53
Total 9,069,428.85 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring
gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it
is necessary to explain the reason.
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 3 Business Summary
I. Main business the Company operated during the reporting period
FIYTA is engaged in principal business of watch brand management and brand watch retails. In respect of the
technological nature, it belongs to precision technology industry. Depending on its accumulated technological and
industrial advantages in the high-end precision technology field, the Company is also actively carrying forward
development of innovation businesses, including precision technology, smart watches, etc.
Affected by the COVID-19 epidemic, the watch industry has been severely impacted. In the face of severe market
challenges, the Company resolutely implements the strategic deployment of the Central Party Committee and the superior,
and comprehensively promotes the epidemic prevention and control and the resumption of work and production. During
the reporting period, there was no significant change in the Company's principal business and operation model, industry
development status and the Company’s status in the industry. For details, please refer to 2019 Annual Report.
II. Significant Movements in Prime Assets
1. Significant Movements in Prime Assets
Inapplicable
2. Major Overseas Assets
Inapplicable
III. Analysis on Core Competitiveness
During the reporting period, there was no significant change in the Company's core competitiveness. For the detail, refer
to 2019 Annual Report.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 4 Discussion and Analysis of the Operation
I. General
At the beginning of 2020, a sudden outbreak of COVID-19 brought about an unprecedented impact on the economy.
Being confronted with the severe challenge of the market situation, the Company resolutely implemented the strategic
deployment of the CPC Central Committee and the superior, started the wartime combat system, comprehensively
promoted the epidemic prevention and control work, and ensured employees to be “zero suspected and zero confirmed”
for the disease. At the same time, the Company actively carried forward the resumption of work and production; through
strict cost control, seized the market opportunity; through WeChat, live broadcast and other ways, actively expanded
community marketing, social marketing and through continuous innovation, adapted to the market situation and
competitive situation after the epidemic. In the first half of the year, in response to the progress of the epidemic, the
Company successively planned and promoted the “epidemic prevention and control war”, “market recovery war” and
“operation counterattack war”, which have demonstrated the Company’s strong market recovery and adjustment and
adaptation ability. Having experienced the test of the epidemic, the Company has continuously improved its team fighting
ability and profitability.
During the first half year, the Company achieved operating revenue amounting to CNY 1,581,834,700, a year-on-year
decrease of 11.38%, and realized net profit attributable to the shareholders of the listed company amounting to CNY
77,738,900, a year-on-year decrease of 37.05%. Where, the operating revenue in the second quarter was CNY 993.4737
million, a year-on-year increase of 11.42%, and the net profit attributable to shareholders of the listed company was CNY
90.7137 million, a year-on-year increase of 53.40%, which set a new record in the single-quarter operating revenue and
net profit attributable to the shareholders of the listed company. During the reporting period, the Company achieved a
deep V-shaped rebound trend in its business. This February was the month in which the Company was affected worst by
the COVID-19 - its revenue dropped by more than 70% year on year and recorded a significant loss in a single month.
Since March, the operating revenue and profit rebounded rapidly, although the recovery of the offline customer volume
was still below that as expected. Since May and June, the Company has achieved a significant growth in its operating
revenue and profit.
In terms of different businesses, the current revenue from the self-owned brands has recovered to more than 90% in the
same period of last year, and the current profit has achieved a sharp year-on-year growth in the second quarter. In terms
of the business of the world brand watches, especially high-end Swiss watch brands, benefited from overseas
consumption backflow and the Company’s continuous optimization of the channels and brands in recent years, the
Company realized a high-speed growth in revenue and profit in the second quarter which have stimulated the Company in
quick improvement of overall income and profitability. The Company has also a good performance in the growth of
precision technology, has achieved an outstanding progress in accumulation of the technology and products of smart
wears. The Company is optimistic about the follow-up business development and performance growth on overall basis.
During the reporting period, the Company carried out the following key work:
A. Having started the "wartime" command system and launched the "epidemic prevention and control war"
During the reporting period, the Company launched a “wartime system” and strictly followed the deployment of the central
government and authorities of higher levels to do its best to prevent and control the epidemic. The Company's current
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
production and operations have returned to normal, and the employees’ operation and production resumption rate was
100%, and there was no suspected or confirmed case. To cope with the impact of the epidemic on its business, the
Company quickly adjusted its business strategy, centered on supporting current sales, strictly controlled all non-essential
expenses, and strengthened cash flow management. In the first half of 2020, the Company's overall expenses fell by 9.07%
on year-on-year basis and a significant result was achieved.
B. Seizing the market opportunities and quickly launching the "market recovery war" and "market counterattack”
Under the personal direction of General Secretary Xi Jinping, China has brought the epidemic under fundamental control.
The Chinese government is trying every means to support the whole people to get through this tough time with various
policies and promote the economy recovery. The Company quickly adjusted its status in various businesses and carried
out the “market recovery war” and “operation counterattack”, and achieved rapid revenue rebound and profit overtaking,
and further enhanced the competitive advantage of the principal businesses. During the reporting period, the new image
of the “FIYTA” brand channel was gradually spread across the country, and the special work of excellent channel
operation and sales excellence continued to be implemented; the Four-leaf Clover and Xtreme Series of new products
were launched as scheduled, and the Company won the 2020 IF Design Award for its “FIYTA” brand dual visual display
customization concept watch; the memorial watch of FIYTA fighting against the “epidemic” to pay tribute to the “heroes in
harm’s way” in the battle against COVID-19; the brand-new image blockbuster of “FIYTA” Brand spokesperson Gao
Yuanyuan was officially released. The free public welfare promotion activities with “we always believe in love and the
power of time" as the promotion theme were launched in all regions of the country. The performance of HARMONY
World Watches exceeded the expectations. Meanwhile, HARMONY World Watches is continuously carrying forward the
improvement of operational efficiency and keeping continuous improvement in gross margin, expense ratio, inventory
turnover and other indicators; and the profit growth is significantly higher than revenue growth.
C. Implementing innovation-driven development, and continuing to enhance the Company's new growth
momentum
During the reporting period, the Company continued to promote business innovation and development, and supported to
constantly strengthen the new driving forces of the Company's future development. While carrying forward recovery and
growth of the offline channel in the Company’s brand cluster and Harmony World Watches business, the Company at the
same time also speeded up investment in the online platform, accelerated the exploration of the new retail formats
including “live webcasting”, “community marketing”, etc. , by using informatization means, continuously innovated new
retail formats and service models. Invited by the Ministry of Commerce, "FIYTA" was elected as the only clock brand as
a “Made-in-China” brand of the Ministry of Commerce to participate in the first live events at Alibaba "Dual-brand Online
Shopping Festival" the Chinese first live events and achieved an extraordinary success; the Company accelerated the
digital transformation and continuously built a customer-oriented digital operation system. The construction of the CRM
system of brand cluster business and the digital retail system of HARMONY watch business has been successfully carried
forward.
During the reporting period, the Company enjoyed a favorable growth trend in its precision technology innovation
business, continued to consolidate the optical communication and laser device market, constantly strengthened the
opportunity recognition of military, medical and other fields, FIYTA Technology Co., participated in LASER World of
PHOTONICS CHINA and exhibited its powerful technology strength in precision parts and components with high
dimensional accuracy and high design standard, and continuously developed new customer areas; the brand “Jeep” has
accurately targeted urban women, and launched smart women's watch with fashionable appearance design and
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
female-exclusive and body temperature monitoring features.
II. Analysis on the Principal Business
Refer to “I. General” of “Discussion and Analysis of Business Conditions”
Movements of the Key Financial Items are summarized as follows:
In CNY
Reporting period Same period of the previous year Year-on-year increase/decrease Cause of the movement
Operating revenue 1,581,834,715.03 1,785,036,020.23 -11.38% Inapplicable
Operating cost 977,435,676.87 1,051,504,075.22 -7.04% Inapplicable
Sales costs 380,928,312.51 415,776,028.95 -8.38% Inapplicable
Administrative expenses 98,240,348.73 116,352,835.42 -15.57% Inapplicable
Financial expenses 16,528,943.36 16,238,965.89 1.79% Inapplicable
mainly due to the decrease in the
Income tax expenses 13,907,911.89 40,615,187.57 -65.76%
total profit in the year.
R&D input 20,704,270.76 19,526,410.93 6.03% Inapplicable
Net cash flows arising from mainly due to the decrease of
103,645,235.27 159,014,650.37 -34.82%
operating activities payments received this year.
Mainly due to year-on-year
decrease of the payment for the
Net cash flows arising from
-53,892,827.56 -89,214,047.63 39.59% construction project of the Watch
investment activities
Building and the rent of counters
this year.
Mainly due to the increase in total
Net cash flow arising from borrowings and the earlier
-19,875,245.29 -8,308,417.60 -139.22%
financing activities: allocation of equity this year over
the previous year.
Mainly due to decrease of net
Net increase of cash and cash
29,813,076.59 61,693,492.45 -51.68% cash flow from operating
equivalents
activities.
Significant change in profit composition or profit sources during the reporting period.
Inapplicable
Composition of Revenues
In CNY
Reporting period Same period of the previous year Year-on-year
Amount Proportion in the revenue Amount Proportion in the revenue increase/decrease
Total operating revenue 1,581,834,715.03 100% 1,785,036,020.23 100% -11.38%
Based on sectors
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Watches 1,463,489,661.92 92.52% 93.29% -12.12%
1,665,295,400.25
Precision technology
59,445,727.65 3.76% 2.41% 38.42%
business 42,946,232.05
Leases 56,149,280.30 3.55% 67,373,825.03 3.77% -16.66%
Others 2,750,045.16 0.17% 9,420,562.90 0.53% -70.81%
Based on products
Watch brand business 378,593,080.99 23.93% 31.16% -31.94%
556,286,718.01
Watch retail and services 1,084,896,580.93 68.58% 62.13% -2.17%
1,109,008,682.24
Precision technology
59,445,727.65 3.76% 2.41% 38.42%
business 42,946,232.05
Leases 56,149,280.30 3.55% 67,373,825.03 3.77% -16.66%
Others 2,750,045.16 0.17% 9,420,562.90 0.53% -70.81%
Based on regions
South China 791,143,597.98 50.01% 816,517,312.49 45.74% -3.11%
Northwest China 244,986,597.57 15.49% 307,450,222.84 17.22% -20.32%
Northeast China 81,410,583.11 5.15% 115,213,698.49 6.45% -29.34%
East China 207,949,022.33 13.15% 241,568,771.25 13.53% -13.92%
Northeast China 81,751,729.88 5.17% 130,823,214.98 7.33% -37.51%
Southwest China 174,593,184.16 11.04% 173,462,800.18 9.72% 0.65%
Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating Profit
In CNY
Year-on-year Year-on-year Year-on-year
increase/decrease of increase/decrease of increase/decrease of
Operating revenue Operating cost Gross profit rate
operating revenue over operating costs over gross profit rate over
the previous year the previous year the previous year
Based on sectors
Watches 1,463,489,661.92 910,076,516.90 37.81% -12.12% -8.93% -2.18%
Precision technology
59,445,727.65 49,288,212.11 17.09% 38.42% 39.59% -0.70%
business
Leases 56,149,280.30 17,756,851.00 68.38% -16.66% 21.67% -9.96%
Others 2,750,045.16 314,096.86 88.58% -70.81% -86.43% 13.15%
Based on products
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Watch brand business 378,593,080.99 106,423,723.72 71.89% -31.94% -34.00% 0.87%
Watch retail and
1,084,896,580.93 803,652,793.18 25.92% -2.17% -4.10% 1.49%
services
Precision technology
59,445,727.65 49,288,212.11 17.09% 38.42% 39.59% -0.70%
business
Leases 56,149,280.30 17,756,851.00 68.38% -16.66% 21.67% -9.96%
Others 2,750,045.16 314,096.86 88.58% -70.81% -86.43% 13.15%
Based on regions
South China 791,143,597.97 477,635,892.51 39.63% -3.11% 1.82% -2.92%
Northwest China 244,986,597.57 160,970,051.46 34.29% -20.32% -11.63% -6.46%
Northeast China 81,410,583.11 47,485,763.54 41.67% -29.34% -27.03% -1.85%
East China 207,949,022.33 127,522,856.76 38.68% -13.92% -6.44% -4.90%
Northeast China 81,751,729.88 56,114,620.18 31.36% -37.51% -38.72% 1.35%
Southwest China 174,593,184.16 107,706,492.42 38.31% 0.65% 0.39% 0.16%
While adjustment of the statistical caliber for the principal business data took place in the reporting period, the principal
business data with the statistical caliber adjusted at the end of the reporting period in the latest year.
Inapplicable
Causes of the change in the relevant data by over 30%
Inapplicable
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Analysis on the Status of Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
End of the same period of the previous
End of the reporting period Proportion
year
increased/de Note to significant changes
Proportion in total Proportion in total
Amount Amount creased
assets assets
Monetary fund 346,481,641.68 9.03% 226,521,552.42 6.19% 2.84% Inapplicable
Accounts receivable 428,154,219.98 11.16% 448,122,115.59 12.24% -1.08% Inapplicable
Inventories 1,798,215,040.24 46.86% 1,727,402,092.53 47.19% -0.33% Inapplicable
Investment-oriented 399,881,983.38 10.42% 370,467,221.69 10.12% 0.30% Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
real estate
Long-term equity
48,584,749.77 1.27% 46,412,373.21 1.27% 0.00% Inapplicable
investment
Fixed assets 354,294,685.37 9.23% 414,522,443.81 11.32% -2.09% Inapplicable
Construction-in-process 0.00% 12,886,665.68 0.35% -0.35% Inapplicable
Short term loans 673,562,359.55 17.55% 550,078,332.26 15.03% 2.52% Inapplicable
Long-term borrowings 4,295,595.00 0.11% 4,409,875.00 0.12% -0.01% Inapplicable
2. Assets and liabilities measured based on fair value
Inapplicable
3. Restriction on rights in the assets ended the reporting period
A property owned by Switzerland based Montres Chouriet SA with net value of CNY 14,201,915.48 was used as a
collateral for the overseas long term loan amounting to CNY 4,295,595.00.
V. Investment
1. General
Inapplicable
2. Significant equity investment acquired in the reporting period
Inapplicable
3. Significant non-equity investment in process in the reporting period
Inapplicable
4. Financial assets measured with fair value
Inapplicable
5. Financial assets investment
(1) Portfolio investment
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
(2) Investment in derivatives
Inapplicable
VI. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
2. Sales of Significant Equity
Inapplicable
VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit
by over 10%.
In CNY
Principal Operating Operation
Company name Company type Registered capital Total assets Net assets Net profit
businesses revenue profit
Purchase & sale
Shenzhen
and repairing
Harmony World
Subsidiaries service of 600,000,000.00 1,605,024,722.18 857,960,826.78 1,105,078,780.80 67,394,014.39 51,134,197.54
Watches Center
watches and
Co., Ltd.
components
Design, R & D
and sales of
FIYTA Sales Co.,
Subsidiaries watches and 450,000,000.00 535,867,904.04 352,761,933.19 323,309,657.57 -70,100,242.77 -52,680,028.68
Ltd.
components &
parts
Shenzhen FIYTA Manufacture and
Precision production of
Subsidiary 10,000,000.00 346,185,443.57 171,720,773.04 192,330,657.84 74,732,876.65 64,813,822.29
Technology Co., watches and
Ltd. components
Production and
Shenzhen FIYTA
machining of
Technology
Subsidiaries sophisticated 10,000,000.00 119,601,765.14 82,350,678.80 69,486,985.85 4,970,078.30 4,951,245.05
Development Co.,
components and
Ltd.
parts
Trading of
FIYTA (Hong
Subsidiaries watches and 137,737,520.00 239,678,292.68 184,558,111.30 24,737,349.83 -3,900,522.29 -3,963,863.00
Kong) Limited
accessories and
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investment
Design, R & D
Shiyuehui
and sales of
Boutique
Subsidiary watches and 5,000,000.00 42,111,501.99 -1,793,433.45 17,564,716.67 2,927,775.59 2,195,312.53
(Shenzhen) Co.,
components &
Ltd.
parts
Liaoning Purchase & sale
Hengdarui of watches and
Subsidiary 51,000,000.00 136,996,949.35 41,665,609.70 4,013,472.76 421,525.77 313,411.39
Commerce & components &
Trade Co., Ltd. parts
Shenzhen Purchase & sale
Harmony of watches and
Subsidiary 500,000.00 3,678,430.63 3,678,317.54 -363.96 1,025.36
E-Commerce Co., components &
Ltd. parts
Design, R & D
Emile Chouriet and sales of
(Shenzhen) Subsidiary watches and 41,355,200.00 118,859,744.35 58,586,641.34 24,907,100.82 -6,802,583.05 -5,107,808.68
Limited components &
parts
Production and
Shanghai Watch Mutual shareholding sales of watches
15,350,000.00 135,086,439.84 113,609,948.16 54,674,292.84 10,310,186.42 8,643,647.69
Industry Co., Ltd. company and components
& parts
Acquisition and disposal of subsidiaries in the reporting period
Inapplicable
Note to the principal mutual shareholding companies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Prediction of the Performances from January to September, 2020
Inapplicable
X. Risks Possibly to be Confronted with
A. The epidemic situation at home and abroad and the international political environment are still facing many
uncertainties, and the watch industry is to be confronted with bigger challenge
Affected by the repetition of COVID-19 epidemic and the complex international political environment, the domestic
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
economy is still facing many challenges and uncertainties. As to the watch industry, the consumption structure and
competition pattern in the market after the epidemic may undergo significant change. In the second half of 2020, the
Company shall maintain its “wartime” command system, seize the opportunity of expanding domestic demand and
recovering consumption while normalizing epidemic prevention and control, strengthen its attention to the market, and
strive to achieve the core work objective of the year.
B. Affected by the lack of consumer confidence and willingness, the brand business shall still be facing greater
market pressure
Against the backdrop of positive momentum in epidemic prevention and control and accelerating recovery of economic
and social development, the government is constantly improving its consumption policy, optimizing the consumption
environment and stabilizing consumption expectations. However, the offline customer counting is still very slow in
recovery and the Company shall still be confronted with the big difficulty and challenge in its own brand business. In the
second half of 2020, the Company shall continue to strengthen the construction of “brand power, product power and
channel power”, and ensure to win the initiative in the market competition.
C. With rapid progress in technologies such as the Internet of Things, artificial intelligence and communications,
innovative businesses are still under pressure to grow
At present, network information technologies represented by the Internet of Things, artificial intelligence, communication,
etc., are rapidly evolving and accelerating their integration with traditional industries. The Company's innovation business
of precision technology and smart wears is still of small size, and its technical strength is still in the process of
improvement. Meanwhile, the Company's digital operation system is still in process of construction, and the deep
integration effect of network information technology and the Company's watch business is still uncertain. In the second
half of 2020, the Company shall continue to refine the development path of precision technology and smart wear business,
and continue to build the core strength of precision technology. At the same time, with customers as the center, the
Company shall accelerate the brand cluster business CRM system and the construction of the Harmony World Watches
Business Digital Retail Phase II system and promote the success of the Company's business digital transformation.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 5 Significant Events
I. General meeting and extraordinary general meetings
1. General meetings
Proportion of attendance of
Sessions Meeting type Meeting date Date of disclosure Disclosure index
the investors
2020 1st Extraordinary Extraordinary General
36.96% April 13, 2020 April 14, 2020 http://www.cninfo.com.cn/
General Meeting Meeting
2019 Annual General
Annual general meeting 38.61% June 04, 2020 June 05, 2020 http://www.cninfo.com.cn/
Meeting
2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting power
recovered.
Inapplicable
II. Profit distribution and conversion of capital reserve into share capital in the reporting period
Inapplicable
III. Commitments finished in implementation by the Company's actual controller, shareholders, related parties,
acquirer, the Company, etc. in the reporting period and commitments unfinished in implementation at the end of
the reporting period
Inapplicable
IV. Engagement/disengagement of CPAs
Has the financial report to the Semi-Annual Report been audited
No
V. Explanation of the Board of Directors and the Supervisory Committee on the Qualified Auditors' Report for the
reporting period issued by the CPAs
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
VI. Explanation of the Board of Directors on the Qualified Auditors' Report for the previous year issued by the
CPAs
Inapplicable
VII. Matters concerning bankruptcy reorganization
Inapplicable
VIII. Lawsuits
Inapplicable
IX. Matters questioned by the media
Inapplicable
X. Penalty and rectification
Inapplicable
XI. Integrity of the Company, its controlling shareholder and actual controller
Inapplicable
XII. Implementation of the Company’s equity incentive plan, employee stock ownership plan or other employee
incentive measures
The 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 decided to start 2018 A-Share Restricted Stock Incentive Program (Phase I), which was later on
reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company
eventually granted 4.224 million restricted A-shares to 128 persons eligible for the incentive. For the detail, refer to the
relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on
January 12, 2019. This part of A-share restricted shares was all granted and registered for listing by January 30, 2019.
As three original incentive objects of the above incentive plan, namely Wu Yue (27,000 shares granted), Yang Shuzhi
(20,000 shares granted), Lin Yichao (20,000 shares granted) have left the Company, according to the 2018 A-Share
Restricted Stock Incentive Plan (Phase I) (Draft Revision), they have no longer met the incentive conditions. The
Company has now completed the repurchase and write-off of 67,000 A-share restricted shares held by the above three
incentive objects and granted but not yet released. For the detail, refer to the relevant announcement disclosed in the
Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 9, 2020.
As one of the original incentive objects of the incentive plan, Kong Mengqi (27,000 shares granted) has left the Company.
According to the 2018 A-Share Restricted Stock Incentive Plan (Phase I) (Draft Revision), he has no longer met
the incentive conditions. Approved at 2019 Annual General Meeting, as the notice to the creditor has expired, the
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Company is now in process of handling the procedures of repurchase and write-off of the 27,000 A-share restricted shares
held by the above incentive object and granted but not yet released. For the detail, refer to the relevant announcement
disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 5, 2020.
As one original incentive object of the above incentive plan, namely Liu Liyuan (20,000 shares granted) has left the
Company, according to the 2018 A-Share Restricted Stock Incentive Plan (Phase I) (Draft Revision), she has no longer
met the incentive conditions. Upon approval by 2020 2nd Extraordinary General Meeting, the Company will repurchase
and write off the 20,000 A-shares restricted shares held by the incentive object granted but not yet released upon
expiration of the notice of the debenturer. For the detail, refer to the relevant announcement disclosed in the Securities
Times, Hong Kong Commercial Daily and www.cninfo.com.cn respectively on July 7, 2020 and July 24, 2019.
XIII. Significant related transactions
1. Related transactions related with day-to-day operations
Inapplicable
2. Related transactions concerning acquisition and sales of assets or equity
Inapplicable
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current associated rights of credit and liabilities
Does there exist non-operating current associated rights of credit and liabilities
No
5. Other significant related transactions
Inapplicable
XIV. Non-operational occupancy of the Company’s capital by the controlling shareholder and its related parties
Inapplicable
XV. Important contracts and implementation
1. Custody, contacting and leases
(1) Custody
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
2. Significant guarantees
(1) Guarantees
In CNY 10,000
Outward guarantees Offered by the Company and its Subsidiaries (excluding guarantee to the subsidiaries)
Date of the
Guarantee to
announcement Actual amount of Implementati
Names of Guarantees Guarantee line Date of occurrence Type of guarantee Guarantee period related
on the guarantee on status
party?
guarantee line
Total amount of outward guarantee Total amount of outward guarantee
approved in the report period (A1) actually incurred in the report period (A2)
Total amount of outward guarantee already Total ending balance of outward
approved at the end of the report period guarantee at the end of the report period
(A3) (A4)
Guarantee to the subsidiaries
Date of the
Guarantee to
announcement Actual amount of Implementati
Names of Guarantees Guarantee line Date of occurrence Type of guarantee Guarantee period related
on the guarantee on status
party?
guarantee line
March 15, Guarantee with
Harmony 20,000 December 30, 2019 10,000 1 year No No
2019 joint responsibility
March 20, Guarantee with
Harmony 4,000 April 21, 2020 4,000 1 year No No
2020 joint responsibility
March 20, Guarantee with
The Sales Co. 5,000 April 26, 2020 5,000 1 year No No
2020 joint responsibility
March 20, Guarantee with
Precision Technology Co. 3,000 April 24, 2020 3,000 1 year No No
2020 joint responsibility
Science & Technology March 20, Guarantee with
3,000 April 29, 2020 243 1 year No No
Development Co. 2020 joint responsibility
March 15, Guarantee with
the Hong Kong Co. 3,653.76 August 22, 2019 372 1 year No No
2019 joint responsibility
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
March 15, Guarantee with
the Hong Kong Co. September 23, 2019 372 1 year No No
2019 joint responsibility
March 15, Guarantee with
the Hong Kong Co. October 31, 2019 298 1 year No No
2019 joint responsibility
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
15,000 subsidiaries actually incurred in the 12,243
approved in the reporting period (B1)
reporting period (B2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee to the
approved at the end of the reporting period 38,653.76 subsidiaries at the end of the reporting 23,285
(B3) period (B4)
Guarantee among the subsidiaries
Date of the
Guarantee to
announcement Actual amount of Implementati
Names of Guarantees Guarantee line Date of occurrence Type of guarantee Guarantee period related
on the guarantee on status
party?
guarantee line
Inapplicable 0 0
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
0 subsidiaries actually incurred in the 0
approved in the reporting period (C1)
reporting period (C2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee to the
approved at the end of the reporting period 0 subsidiaries at the end of the reporting 0
(C3) period (C4)
Total amount of guarantees (i.e. Total of the previous three major items)
Total guarantee quota to the subsidiaries Total amount of outward guarantee
15,000 12,243
approved in the reporting period (A1) actually incurred in the report period (A2)
Total amount of guarantees already
Total ending balance of guarantees at
approved at the end of the report period 38,653.76 23,285
the end of the report period (A4)
(A3)
Proportion of the actual guarantees in the Company’s net assets (namely A4+B4 +
8.86%
C4)
where
Amount of guarantees offered to the shareholders, actual controller and its related
0
parties (D)
Amount of guarantee for liabilities directly or indirectly offered to the guarantees
0
with the asset-liability ratio exceeding 70% (E)
Guarantee with total amount exceeding 50% of the net assets (F) 0
Total amount of the aforesaid three guarantees (D+E+F) 0
For the guarantee not yet due, guarantee responsibility incurred in the reporting
Inapplicable
period or description of the possible related discharge duty (if any)
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Note to the outward guarantee against the established procedures (if any) Inapplicable
Description of the guarantee with complex method
Inapplicable
(2) Outward guarantee against regulations
Inapplicable
3. Finance management on commission
Inapplicable
4. Other important contracts
Inapplicable
XVI. Social responsibilities
1. Significant issues concerning environmental protection
Does the Company or any of its subsidiaries belong to a key pollutant discharging unit as announced to the public by the
environmental protection authority?
Yes
Description of
Pollutant
Name of the the major Number of Distribution of
Way of Discharging Discharge Total discharge Total discharge Over-dischargin
Company or its pollutants or discharging the discharging
discharging concentration Standards in volume volume verified g
Subsidiary specific outlets outlets
Force
pollutant
Nickel and At the port of
Shanghai Watch Nickel﹤0.1, Nickel is 0.1
hexavalent Intermittent and effluent
Industry Co., 1 hexavalent and hexavalent 2640 tons/year 3960 tons/year None
chromium waste interruption treatment
Ltd. chromium﹤0.1 chromium is 0.1
water equipment
Construction and operation of the pollution prevention and control facilities
Shanghai Watch Co., Ltd. reconstructed the clean production facility in 2016 and added 2 sets of equipment in 2018 for
the purpose of ensuring discharging of nickel and chromium effluent to comply with the Emission Standard of Pollutants
for Electroplating in 2018. Up to now, the facility has been operating normally and its emission has never exceeded the
limit as specified by the standard. The Company's online monitoring terminal has been docked with the government
monitoring platform for timely testing. It complies with the standard in terms of emission factors.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Environmental impact assessment on construction projects and other environmental protection administrative licensing
In 2018 Yangpu District Environmental Protection Bureau of Shanghai organized and held the Clean Production Auditing
and Assessment Seminar of Shanghai Watch Co., Ltd. where the company's clean production work was assessed,
audited and approved. Shanghai Watch Co., Ltd. passed the pollution discharge verification organized by Yangpu District
Environmental Protection Bureau of Shanghai and received the Pollutant Discharge Permit issued by the said authority
at the end of 2019.
Contingency Plan for Emergent Environmental Incidents
Shanghai Watch Co., Ltd. prepared the Emergency Response Plan against Emergent Environmental Incidents and
regularly organizes training and exercise every year. The aforesaid plan has been approved and filed for record by
Yangpu District Environmental Protection Bureau of Shanghai and has been published on the Environmental Information
Disclosure Platform of Enterprises and Institutions of Shanghai.
Environment Self-Monitoring Program
Yangpu District Environmental Protection Bureau of Shanghai conducts supervision once every quarter. The company
has entrusted Shanghai Textile Energy Conservation & Environmental Protection Center, a competent independent agent
to conduct the monitoring. The company is itself equipped with monitoring instruments and conducts self-monitoring at
least 4 times every month.
Other environment information necessary to be disclosed
The company has disclosed the concerned information on the Environmental Information Disclosure Platform of
Enterprises and Institutions of Shanghai according to the requirements of the local environmental protection authorities.
Website name: http://xxgk.eic.sh.cn.
Other information in connection with the environmental protection
None
2. Implementation of the social responsibility of precise poverty relief
During the reporting period of half a year, the Company had neither precise poverty relief work nor follow-up precise
poverty relief plan to be carried out.
XVII. Notes to Other Significant Events
Amendment of the Articles of Association
The 18th Session of the Ninth Board of Directors held on May 11, 2020 and 2019 Annual General Meeting held on June
04, 2020 reviewed and approved the Proposal on Amendment of the Articles of Association and respectively reviewed and
approved the Proposal for Amendment of the Articles of Association. For the detail, refer to the relevant announcements
disclosed on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
XVIII. Significant Events of the Company's Subsidiaries
During the reporting period, FIYTA Sales Co., Ltd., a wholly-owned subsidiary of the Company, changed its business cope,
and the procedures of application for the change with the authority of industry and commerce were completed on March
13, 2020.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 6 Change of Shares and Particulars about Shareholders
I. Change of Shares
1. Change of Shares
In shares
Before the change Increase / Decrease (+/ -) After the change
Shares
Quantity Proportion New issuing Bonus shares converted Others Sub-total Quantity Proportion
from reserve
I. Restricted shares 4,628,591 1.04% -91,078 -91,078 4,537,513 1.06%
1. Shares held by the state 0 0.00% 0 0 0 0.00%
2. State corporate shares 0 0.00% 0 0 0 0.00%
3. Other domestic shares 4,628,591 1.04% -91,078 -91,078 4,537,513 1.06%
Including: Domestic corporate
0 0.00% 0 0 0 0.00%
shares
Shares held by domestic
4,628,591 1.04% -91,078 -91,078 4,537,513 1.06%
natural persons
4. Foreign invested shares 0 0.00% 0 0 0 0.00%
Including: Foreign corporate shares 0 0.00% 0 0 0 0.00%
Shares held by foreign
0 0.00% 0 0 0 0.00%
natural persons
II. Unrestricted shares 438,340,290 98.96% -14,705,922 -14,705,922 423,634,368 98.94%
1. CNY ordinary shares 356,692,290 80.53% 24,078 24,078 356,716,368 83.31%
2. Foreign invested shares listed in
81,648,000 18.43% -14,730,000 -14,730,000 66,918,000 15.63%
Mainland China
3. Foreign invested shares listed
0 0.00% 0 0 0 0.00%
abroad
4. Others 0 0.00% 0 0 0 0.00%
III. Total shares 442,968,881 100.00% -14,797,000 -14,797,000 428,171,881 100.00%
Cause of the change of shares
As of April 29, 2020, the Company completed the cancellation of some of its domestically listed foreign capital shares (B
shares), with a total of 14,730,000 shares repurchased or cancelled this time. After cancellation of the repurchased shares,
the total capital stock of the Company decreased from 442,968,881 shares to 428,238,881 shares.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
As of June 5, 2020, the Company completed the repurchase and cancellation of partial restricted shares involved in in
2018 A-share Restricted Stock Incentive Plan (Phase I). The total number of shares repurchased and cancelled this time
was 67,000 shares. After cancellation of the repurchased shares, the total capital stock of the Company decreased from
428,238,881 shares to 428,171,881 shares.
Approval of Change of the Shares
The Company held 2019 2nd Extraordinary General Meeting on April 23, 2019, authorized the Company's Board of
Directors to fully handle matters related to the cancellation of the repurchased shares after the repurchase of some
domestically listed foreign shares (B-shares) was completed.
The Company held 2020 1st Extraordinary General Meeting on April 13, 2020, authorized the Company’s Board of
Directors to repurchase and cancel 67,000 shares of restricted A-shares of the Company held by the three original
incentive objects (Wu Yue, Yang Shuzhi and Lin Yichao) as they have left the Company but restriction on sales of these
67,000 shares of restricted A-shares has not been lifted yet.
Transfer of the Shares Changed
Verified by China Securities Depository & Clearing Corporation Limited Shenzhen Branch, as of April 29, 2020, the
Company completed the cancellation of some of its domestically listed foreign capital shares (B shares).
Verified by China Securities Depository & Clearing Corporation Limited Shenzhen Branch, as of June 05, 2020, the
Company completed the cancellation of partial A-share restricted stock.
Progress of implementation of the stock repurchase
The 7th session of the Ninth Board of Directors held on April 4, 2019 and 2019 2nd Extraordinary General Meeting held on
April 23, 2019, reviewed and approved the “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares in
the Company (B-shares)”. The share repurchase period expired on April 22, 2020. The Company has repurchased a total
of 14,730,000 domestically listed foreign shares (B shares) during the validity period of the repurchase which have been
cancelled according to law. In accordance with relevant regulations, the Company disclosed the result of the repurchase
of the shares and published announcement on the completion of the cancellation. For the detail, please refer to the
relevant announcement published on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on April
24, 2020 and April 30, 2020.
Progress of implementation of reduction of the holding size of the shares repurchased by centralized bidding
Inapplicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value
per share attributable to the common stockholders in the past year and the latest period
Net return on equity, weighted average (%) Earnings per share
Basic earnings per share (CNY/share) Diluted earnings per share (CNY/share)
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
2.91% 4.69% 0.1775 0.2788 0.1775 0.2788
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Inapplicable
2. Change of the Restricted Shares
In shares
Number of restricted Number of restricted Number of restricted Number of restricted
Names of the Date of relieving the
shares at the beginning shares relieved in the shares increased in the shares at the end of Cause of restriction
Shareholders restriction
of the reporting period reporting period reporting period the reporting period
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Huang Yongfeng 160,000 0 0 160,000 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Chen Libin 160,000 0 0 160,000 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Lu Wanjun 117,500 0 0 117,500 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Liu Xiaoming 117,500 0 0 117,500 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
Locked shares for to the conditions of the
senior executives and locked shares for senior
Pan Bo 117,500 0 0 117,500
restricted shares as the executives and the
granted locked shares measures for the
Company’s equity
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
incentive management
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Li Ming 117,530 0 0 117,530 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for
locked shares for senior
senior executives and
Chen Zhuo 118,250 0 0 118,250 executives and the
restricted shares as the
measures for the
granted locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions as
Restricted shares as
specified in the
Tang Haiyuan 60,000 0 0 60,000 the granted locked
measures for the
shares
Company’s equity
incentive management
To be unlocked subject
to the conditions as
Restricted shares as
specified in the
Xu Chuangyue 50,000 0 0 50,000 the granted locked
measures for the
shares
Company’s equity
incentive management
To be unlocked subject
Locked shares for to the conditions of the
Lu Bingqiang 96,311 24,078 0 72,233
senior executives locked shares for senior
executives
To be unlocked subject
to the conditions as
Other persons eligible Restricted shares as
specified in the
for the incentive of 3,514,000 67,000 0 3,447,000 the granted locked
measures for the
A-share restricted stock shares
Company’s equity
incentive management
Total 4,628,591 91,078 0 4,537,513 -- --
II. Issuing and Listing
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
III. Number of Shareholders and Shareholding
In shares
Total preference shareholders with the
Total common shareholders at the end of
34,122 voting power recovered at the end of the 0
the reporting period
reporting period (if any) (Refer to Note 8)
Shares held by the common shareholders holding over 5% shares or the top 10 common shareholders
Number of Pledging or freezing
common Number of Number of the
Increase/decrea
Names of the Shareholding shares held the restricted unrestricted
Nature of the shareholder se in the Status of the
Shareholders proportion at the end of common common shares Quantity
reporting period shares
the reporting shares held held
period
AVIC International
State corporate 38.06% 162,977,327 0 0 162,977,327
Holding Limited
#Yang Zugui Domestic natural person 4.47% 19,144,621 2,125,815 0 19,144,621
Yang Sancai Domestic natural person 2.34% 9,999,933 4,797,233 0 9,999,933
Zhang Sufen Domestic natural person 0.80% 3,420,000 3,420,000 0 3,420,000
Zhang Huaming Domestic natural person 0.44% 1,873,800 1,398,800 0 1,873,800
Qiu Hong Domestic natural person 0.35% 1,500,000 1,500,000 0 1,500,000
Na Zhizhong Domestic natural person 0.35% 1,480,163 1,480,163 0 1,480,163
# Li Yue Domestic natural person 0.23% 1,000,000 1,000,000 0 1,000,000
Penghua Fund -
Minsheng Bank - Domestic
Penghua Fund - Huili non-state-owned legal 0.22% 951,700 0 0 951,700
No. 1 Assets person
Management Plan
# Shen Xuewen Domestic natural person 0.21% 883,920 500 0 883,920
About the fact that a strategic investor or
ordinary corporate became one of the top ten
Inapplicable
common shareholders due to placement of new
shares (if any) (Refer to Note 3)
Explanation on associated relationship or
Inapplicable
consistent action of the above shareholders
Shares held by top 10 shareholders of unrestricted shares
Share type
Names of the Shareholders Quantity of unrestricted shares held at the end of the reporting period
Share type Quantity
AVIC International Holding Limited 162,977,327 CNY ordinary shares 162,977,327
29
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
#Yang Zugui 19,144,621 CNY ordinary shares 19,144,621
Yang Sancai 9,999,933 CNY ordinary shares 9,999,933
Zhang Sufen 3,420,000 CNY ordinary shares 3,420,000
Zhang Huaming 1,873,800 CNY ordinary shares 1,873,800
Qiu Hong 1,500,000 CNY ordinary shares 1,500,000
Na Zhizhong 1,480,163 CNY ordinary shares 1,480,163
# Li Yue 1,000,000 CNY ordinary shares 1,000,000
Penghua Fund - Minsheng Bank - Penghua
951,700 CNY ordinary shares 951,700
Fund - Huili No. 1 Assets Management Plan
# Shen Xuewen 883,920 CNY ordinary shares 883,920
Note to the associated relationship or
consistent action among the top 10
shareholders of non-restricted common shares
Inapplicable
and that between the top 10 shareholders of
non-restricted common shares and top 10
common shareholders.
Note to the top 10 common shareholders
involved in margin financing & securities lending Inapplicable
(if any) (Refer to Note 4)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
repurchase during the reporting period?
No
IV. Change of the Controlling Shareholder or Actual Controller
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 7 About the Preferred Shares
Inapplicable
Section 8 About the Convertible Bonds
Inapplicable
Section 9 Directors, Supervisors and Senior Executives
I. Change in shares held by directors, supervisors and senior executives
Inapplicable
No change has taken place in the shares held by directors, supervisors and senior executives of the Company during the
reporting period. For the detail, refer to 2019 Annual Report.
II. Personnel Change in Directors, Supervisors and Senior Executives
Inapplicable
No change has taken place in directors, supervisors and senior executives of the Company during the reporting period.
For the detail, refer to 2019 Annual Report.
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 10 Bond Related Information
Did there exist any company bonds which were issued to the public and listed with the stock exchange for trading and was
due by the date when the Semi-annual Report was approved for issuing or failed to be fully cashed by the end of the
reporting period?
No
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Section 11 Financial Report
I. Auditors’ Report
Has the semi-annual report been audited
No
II. Financial Statements
The currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA Precision Technology Co., Ltd.
June 30, 2020
In CNY
Items June 30, 2020 December 31, 2019
Current assets:
Monetary fund 346,481,641.68 316,668,565.09
Settlement reserve
Inter-bank lending
Transactional financial assets
Derivative financial assets
Notes receivable 21,231,543.36 10,596,431.31
Accounts receivable 428,154,219.98 397,471,106.98
Financing with accounts receivable
Advance payment 18,403,768.63 10,847,962.28
Receivable premium
Reinsurance accounts receivable
Reserve for reinsurance contract receivable
Other receivables 106,768,399.40 47,239,844.58
Including: Interest receivable
Dividends receivable
Redemptory monetary capital for sale
Inventories 1,798,215,040.24 1,808,820,089.92
Contract assets
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Held-for-sale assets
Non-current assets due within a year
Other current assets 44,538,051.17 68,858,096.74
Total current assets 2,763,792,664.46 2,660,502,096.90
Non-current assets:
Loan issuing and advance in cash
Equity investment
Other equity investment
Long term accounts receivable
Long-term equity investment 48,584,749.77 46,423,837.85
Investment in other equity instruments 85,000.00 85,000.00
Other non-current financial assets
Investment-oriented real estate 399,881,983.38 407,503,307.24
Fixed assets 354,294,685.37 363,997,098.94
Construction-in-process
Productive biological asset
Oil and gas assets
Use right assets
Intangible assets 37,857,017.44 38,711,821.26
Development expenses
Goodwill
Long-term expenses to be apportioned 126,571,325.96 152,587,491.33
Deferred income tax asset 96,067,247.70 83,739,383.37
Other non-current assets 10,492,964.34 7,373,248.48
Total non-current assets 1,073,834,973.96 1,100,421,188.47
Total assets 3,837,627,638.42 3,760,923,285.37
Current liabilities:
Short term borrowings 673,562,359.55 567,908,833.21
Borrowings from central bank
Loans from other banks
Transactional financial liabilities
Derivative financial liabilities
Notes payable 1,400,000.00
Accounts payable 191,041,428.35 279,772,787.37
34
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Advance Receipts 7,251,488.79 23,433,463.57
Contract liabilities 21,475,843.30
Income from sale of the repurchased financial
assets
Deposits taking and interbank placement
Acting trading securities
Income from securities underwriting on
commission
Payroll payable to the employees 62,233,409.51 82,602,845.67
Taxes payable 53,088,654.29 24,064,803.00
Other payables 190,515,397.99 119,616,721.63
Including: interest payable
Dividends payable 53,887,144.07 848,233.27
Service charge and commission payable
Payable reinsurance
Held-for-sale liabilities
Non-current liabilities due within a year 373,530.00 360,140.00
Other current liabilities
Total current liabilities 1,200,942,111.78 1,097,759,594.45
Non-current liabilities:
Reserve for insurance contract
Long-term borrowings 4,295,595.00 4,321,680.00
Bonds payable
Including: preferred shares
Perpetual bond
Lease liabilities
Long-term accounts payable
Long term payroll payable to the employees
Estimated liabilities
Deferred income 3,046,090.60 3,046,090.60
Deferred income tax liability 1,192,721.71 1,256,242.49
Other non-current liabilities
Total non-current liabilities 8,534,407.31 8,624,013.09
Total liabilities 1,209,476,519.09 1,106,383,607.54
Owner’s equity:
35
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Capital stock 428,171,881.00 442,968,881.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital Reserve 1,019,385,022.79 1,081,230,215.32
Less: shares in stock 17,447,988.68 71,267,118.78
Other comprehensive income 3,389,668.49 -940,209.09
Special reserve
Surplus Reserve 235,701,180.14 235,701,180.14
Provision for general risks
Retained earnings 958,945,348.50 966,840,818.40
Total owners’ equity attributable to the parent
2,628,145,112.24 2,654,533,766.99
company
Minority shareholders’ equity 6,007.09 5,910.84
Total owner’s equity 2,628,151,119.33 2,654,539,677.83
Total liabilities and owners’ equity 3,837,627,638.42 3,760,923,285.37
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
2. Balance Sheet, Parent Company
In CNY
Items June 30, 2020 December 31, 2019
Current assets:
Monetary fund 296,412,869.24 270,673,346.02
Transactional financial assets
Derivative financial assets
Notes receivable
Accounts receivable 4,468,617.83 2,848,025.39
Financing with accounts receivable
Advance payment
Other receivables 697,541,260.60 783,647,732.22
Including: Interest receivable
Dividends receivable
Inventories
36
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Contract assets
Held-for-sale assets
Non-current assets due within a year
Other current assets 14,411,160.44 12,380,243.67
Total current assets 1,012,833,908.11 1,069,549,347.30
Non-current assets:
Equity investment
Other equity investment
Long term accounts receivable
Long-term equity investment 1,385,319,621.50 1,380,895,239.27
Investment in other equity instruments 85,000.00 85,000.00
Other non-current financial assets
Investment-oriented real estate 323,720,394.86 329,970,083.18
Fixed assets 232,525,547.05 238,594,698.50
Construction-in-process
Productive biological asset
Oil and gas assets
Use right assets
Intangible assets 28,849,765.24 30,925,974.54
Development expenses
Goodwill
Long-term expenses to be apportioned 11,407,352.44 12,106,759.98
Deferred income tax asset 1,376,549.26 1,125,840.75
Other non-current assets 4,798,820.13 4,707,236.86
Total non-current assets 1,988,083,050.48 1,998,410,833.08
Total assets 3,000,916,958.59 3,067,960,180.38
Current liabilities:
Short term borrowings 540,581,988.89 540,650,622.50
Transactional financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 1,484,563.53 12,952,934.93
Advance Receipts 7,251,488.79 3,434,407.04
Contract liabilities
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Payroll payable to the employees 16,173,553.17 19,019,554.57
Taxes payable 2,695,509.97 1,713,130.68
Other payables 132,347,479.64 82,631,590.46
Including: interest payable
Dividends payable 53,887,144.07 848,233.27
Held-for-sale liabilities
Non-current liabilities due within a year
Other current liabilities
Total current liabilities 700,534,583.99 660,402,240.18
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: preferred shares
Perpetual bond
Lease liabilities
Long-term accounts payable
Long term payroll payable to the employees
Estimated liabilities
Deferred income 3,046,090.60 3,046,090.60
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities 3,046,090.60 3,046,090.60
Total liabilities 703,580,674.59 663,448,330.78
Owner’s equity:
Capital stock 428,171,881.00 442,968,881.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital Reserve 1,025,040,563.89 1,086,885,756.42
Less: shares in stock 17,447,988.68 71,267,118.78
Other comprehensive income
Special reserve
Surplus Reserve 235,701,180.14 235,701,180.14
Retained earnings 625,870,647.65 710,223,150.82
38
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Total owner’s equity 2,297,336,284.00 2,404,511,849.60
Total liabilities and owners’ equity 3,000,916,958.59 3,067,960,180.38
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
3. Consolidated Profit Statement
In CNY
Items The first half year of 2020 The first half year of 2019
I. Turnover 1,581,834,715.03 1,785,036,020.23
Including: operating income 1,581,834,715.03 1,785,036,020.23
Interest income
Earned insurance premium
Service charge and commission income
II. Total operating costs 1,501,108,535.92 1,634,493,191.74
Including: Operating costs 977,435,676.87 1,051,504,075.22
Interest payment
Service charge and commission payment
Surrender Value
Compensation expenses, net
Appropriation of deposit for duty, net
Payment of policy dividend
Reinsurance expenses
Taxes and surcharges 7,270,983.69 15,094,875.33
Sales costs 380,928,312.51 415,776,028.95
Administrative expenses 98,240,348.73 116,352,835.42
R & D expenditures 20,704,270.76 19,526,410.93
Financial expenses 16,528,943.36 16,238,965.89
Where: Interest cost 13,485,670.67 12,023,843.93
Interest income -2,482,721.82 -908,850.92
Plus: Other income 10,154,015.67 13,045,742.36
Investment income (loss is stated with “-”) 2,160,911.92 1,531,310.06
Including: return on investment in associate
2,160,911.92 1,531,310.06
and joint venture
Income from the derecognition of the
39
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
financial assets measured at amortised cost
Exchange income (loss stated with “-“)
Net exposure hedge income (loss stated
with “-“)
Income from change of fair value (loss is
stated with “-”)
Loss from impairment of credit (loss is
-2,467,361.35 -3,081,768.89
stated with “-”)
Loss from impairment of assets (loss is
2,514,740.86
stated with “-”)
Income from disposal of assets (loss is
-200,140.17 -212,010.13
stated with “-“)
III. Operating Profit (loss is stated with “-“) 90,373,605.18 164,340,842.75
Plus: Non-operating income 1,391,859.42 294,311.70
Less: non-operating expenditures 118,646.41 524,505.98
IV. Total profit (total loss is stated with “-”) 91,646,818.19 164,110,648.47
Less: Income tax expense 13,907,911.89 40,615,187.57
V. Net Profit (net loss is stated with “-“) 77,738,906.30 123,495,460.90
(I) Classification based on operation sustainability
1. Net Profit from sustainable operation (net loss
77,738,906.30 123,495,460.90
is stated with “-”)
2. Net Profit from termination of operation (net
loss is stated with “-”)
(II) Classification by ownership
1. Net profit attributable to the parent company’s
77,738,906.30 123,495,460.90
owner
2. Minority shareholders’ gain/loss
VI. Net of other comprehensive income after tax 4,329,973.83 1,749,420.87
Net of other comprehensive income after tax
4,329,877.58 1,749,407.20
attributable to the parent company’s owner
(I) Other comprehensive income which cannot be
re-classified into gain and loss
1. Movement of the net liabilities and net
assets re-measured for setting the beneficial plan
2. Other comprehensive income which
cannot be converted into gain and loss based on the
equity method
40
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
3. Movement of the fair value of the
investment in other equity instruments
4. Movement of the fair value of the
Company’s own credit risk
5. Others
(II) Other comprehensive income which shall be
4,329,877.58 1,749,407.20
re-classified into gain and loss
1. Other comprehensive income which
can be converted into gain and loss based on the
equity method
2. Movement of the fair value of the
investment in other debt instruments
3. Amount of the reclassified financial
assets counted to the other comprehensive income
4. Provision for impairment of the credit
of the other debt investment
5. Reserve for cash flow hedge
6. Conversion difference in foreign
4,329,877.58 1,749,407.20
currency statements
7. Others
Net amount of other comprehensive income after tax
96.25 13.67
attributable to minority shareholders
VII. Total comprehensive income 82,068,880.13 125,244,881.77
Total comprehensive income attributable to the
82,068,783.88 125,244,868.10
parent company’s owner
Total comprehensive income attributable to
96.25 13.67
minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.1775 0.2788
(II) Diluted earnings per share 0.1775 0.2788
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
4. Profit Statement, Parent Company
In CNY
Items The first half year of 2020 The first half year of 2019
41
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
I. Operating revenue 57,313,218.41 64,124,939.95
Less: Operating cost 17,626,390.24 11,807,925.90
Taxes and surcharges 1,616,108.15 2,257,018.92
Sales costs 597,618.02 582,036.03
Administrative expenses 31,406,670.97 39,783,149.16
R & D expenditures 7,989,092.54 9,146,589.64
Financial expenses 3,458,375.39 3,247,689.32
Where: Interest cost 5,364,370.20 4,007,526.54
Interest income -2,363,907.44 -776,046.44
Plus: Other income 4,334,756.32 7,743,695.89
Investment income (loss is stated with “-”) 2,160,911.92 1,531,310.06
Including: return on investment in
2,160,911.92 1,531,310.06
associate and joint venture
Gain from the derecognition of the
financial assets measured at amortised cost (loss
is stated with “-”)
Net exposure hedge income (loss stated
with “-“)
Income from change of fair value (loss is
stated with “-”)
Loss from impairment of credit (loss is
-100,902.52 -64,803.91
stated with “-”)
Loss from impairment of assets (loss is
stated with “-”)
Income from disposal of assets (loss is
-15,641.58 -2,074.20
stated with “-“)
II. Operating Profit (loss is stated with “-“) 998,087.24 6,508,658.82
Plus: Non-operating income 33,077.28 18,000.00
Less: non-operating expenditures 200,000.00
III. Total profit (total loss is stated with “-“) 1,031,164.52 6,326,658.82
Less: Income tax expense -250,708.51 1,174,172.39
IV. Net Profit (net loss is stated with “-“) 1,281,873.03 5,152,486.43
(I) Net Profit from sustainable operation (net
1,281,873.03 5,152,486.43
loss is stated with “-”)
(II) Net Profit from termination of operation (net
loss is stated with “-”)
42
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
V. Net of other comprehensive income after tax
(I) Other comprehensive income which cannot
be re-classified into gain and loss
1. Movement of the net liabilities and
net assets re-measured for setting the beneficial plan
2. Other comprehensive income which
cannot be converted into gain and loss based on the
equity method
3. Movement of the fair value of the
investment in other equity instruments
4. Movement of the fair value of the
Company’s own credit risk
5. Others
(II) Other comprehensive income which shall be
re-classified into gain and loss
1. Other comprehensive income which
can be converted into gain and loss based on the
equity method
2. Movement of the fair value of the
investment in other debt instruments
3. Amount of the reclassified financial
assets counted to the other comprehensive income
4. Provision for impairment of the credit
of the other debt investment
5. Reserve for cash flow hedge
6. Conversion difference in foreign
currency statements
7. Others
VI. Total comprehensive income 1,281,873.03 5,152,486.43
VII. Earnings per share:
(I) Basic earnings per share 0.0030 0.0116
(II) Diluted earnings per share 0.0030 0.0116
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
5. Consolidated Cash Flow Statement
In CNY
43
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Items The first half year of 2020 The first half year of 2019
I. Cash flows arising from operating activities:
Cash received from sales of goods and supply
1,704,132,389.05 1,913,555,960.34
of labor service
Net increase of customers’ deposit and due
from banks
Net increase of borrowings from the central
bank
Net increase of borrowings from other financial
institutions
Cash received from the premium of the original
insurance contract
Net cash received from the reinsurance
business
Net increase of the reserve from policy holders
and investment
Cash received from interest, service charge
and commission
Net increase of loan from other banks
Net increase of fund from repurchase business
Net cash received from securities trading on
commission
Rebated taxes received 1,408,520.48 3,160,067.59
Other operation activity related cash receipts 31,287,429.73 40,976,127.91
Subtotal of cash flow in from operating activity 1,736,828,339.26 1,957,692,155.84
Cash paid for purchase of goods and reception
1,124,364,970.39 1,116,738,134.87
of labor services
Net increase of loans and advances to
customers
Net increase of due from central bank and due
from other banks
Cash from payment for settlement of the
original insurance contract
Net increase of the lending capital
Cash paid for interest, service charge and
commission
Cash for payment of policy dividend
44
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Cash paid to and for staff 280,396,366.01 314,068,308.62
Taxes paid 62,495,543.38 130,569,918.63
Other business activity related cash payments 165,926,224.21 237,301,143.35
Subtotal of cash flow out from operating activity 1,633,183,103.99 1,798,677,505.47
Net cash flows arising from operating activities 103,645,235.27 159,014,650.37
II. Net cash flows arising from investment activities
Cash received from recovery of investment
Cash received from investment income
Net cash from disposal of fixed assets,
intangible assets and recovery of other long term 19,552.47 84,258.51
assets
Net cash received from disposal of subsidiaries
and other operating units
Other investment related cash receipts
Subtotal of cash flow in from investment activity 19,552.47 84,258.51
Cash paid for purchase/construction of fixed
53,912,380.03 89,298,306.14
assets, intangible assets and other long term assets
Cash paid for investment
Net increase of the pledged loan
Net cash paid for acquisition of subsidiaries and
other operation units
Other investment related cash payments
Subtotal of cash flow out from investment activity 53,912,380.03 89,298,306.14
Net cash flows arising from investment activities -53,892,827.56 -89,214,047.63
III. Cash flow arising from financing activities:
Cash received from absorbing investment 0.00 18,585,600.00
Incl.: Cash received from the subsidiaries’
absorption of minority shareholders’ investment
Cash received from loans 572,430,000.00 330,176,520.00
Other fund-raising related cash receipts
Subtotal of cash flow in from fund raising activity 572,430,000.00 348,762,120.00
Cash paid for debt repayment 467,250,228.75 327,486,253.30
Cash paid for dividend/profit distribution or
98,229,142.76 12,018,884.30
repayment of interest
Including: Dividend and profit paid by the
subsidiaries to minority shareholders
45
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Cash paid for other financing activities 26,825,873.78 17,565,400.00
Sub-total cash flow paid for financing activities 592,305,245.29 357,070,537.60
Net cash flow arising from financing activities: -19,875,245.29 -8,308,417.60
IV. Influence of the change of exchange rate on the
-64,085.83 201,307.31
cash and cash equivalents
V. Net increase of cash and cash equivalents 29,813,076.59 61,693,492.45
Plus: Opening balance of cash and cash
315,093,565.09 162,623,059.97
equivalents
VI. Ending balance of cash and cash equivalents 344,906,641.68 224,316,552.42
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
6. Cash Flow Statement, Parent Company
In CNY
Items The first half year of 2020 The first half year of 2019
I. Net cash flows arising from operating activities:
Cash received from sales of goods and supply
84,447,213.29 66,872,263.13
of labor service
Rebated taxes received
Other operation activity related cash receipts 1,761,219,003.00 1,733,050,857.61
Subtotal of cash flow in from operating activity 1,845,666,216.29 1,799,923,120.74
Cash paid for purchase of goods and reception
of labor services
Cash paid to and for staff 28,476,180.31 42,848,757.99
Taxes paid 5,608,474.08 5,460,385.81
Other business activity related cash payments 1,646,751,070.92 1,676,610,396.74
Subtotal of cash flow out from operating activity 1,680,835,725.31 1,724,919,540.54
Net cash flows arising from operating activities 164,830,490.98 75,003,580.20
II. Net cash flows arising from investment activities
Cash received from recovery of investment
Cash received from investment income
Net cash from disposal of fixed assets,
intangible assets and recovery of other long term 550.00 23,000.00
assets
Net cash received from disposal of subsidiaries
46
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
and other operating units
Other investment related cash receipts
Subtotal of cash flow in from investment activity 550.00 23,000.00
Cash paid for purchase/construction of fixed
15,073,283.59 31,845,425.44
assets, intangible assets and other long term assets
Cash paid for investment
Net cash paid for acquisition of subsidiaries and
other operation units
Other investment related cash payments
Subtotal of cash flow out from investment activity 15,073,283.59 31,845,425.44
Net cash flow arising from investment activities -15,072,733.59 -31,822,425.44
III. Cash flow arising from financing activities:
Cash received from absorbing investment 18,585,600.00
Cash received from loans 450,000,000.00 310,000,000.00
Other fund-raising related cash receipts
Subtotal of cash flow in from fund raising activity 450,000,000.00 328,585,600.00
Cash paid for debt repayment 450,000,000.00 295,000,000.00
Cash paid for dividend/profit distribution or
97,351,309.71 11,510,341.40
repayment of interest
Cash paid for other financing activities 26,693,235.96 17,565,400.00
Sub-total cash flow paid for financing activities 574,044,545.67 324,075,741.40
Net cash flow arising from financing activities: -124,044,545.67 4,509,858.60
IV. Influence of the change of exchange rate on the
26,311.50 1,378.48
cash and cash equivalents
V. Net increase of cash and cash equivalents 25,739,523.22 47,692,391.84
Plus: Opening balance of cash and cash
269,098,346.02 134,970,466.27
equivalents
VI. Ending balance of cash and cash equivalents 294,837,869.24 182,662,858.11
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
7. Consolidated Statement of Changes in Owner’s Equity
Amount in the reporting period
In CNY
Items The first half year of 2020
47
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Owners’ equity attributable to the parent company
Other equity instruments Other Minority Total
Less: Provision
Capital Capital comprehe Special Surplus Retained shareholde owner’s
Preferre Perpetu shares in for general Others Sub-total
stock Reserve nsive reserve Reserve earnings rs’ equity equity
Others
d shares al bond stock risks
income
I. Ending balance of the 442,968, 1,081,230, 71,267,118 -940,209.0 235,701,1 966,840,8 2,654,533, 2,654,539,
5,910.84
previous year 881.00 215.32 .78 9 80.14 18.40 766.99 677.83
Plus: Change in
accounting policy
Correction of
previous errors
Consolidation
of enterprises under the
same control
Others
II. Opening balance of 442,968, 1,081,230, 71,267,118 -940,209.0 235,701,1 966,840,8 2,654,533, 2,654,539,
5,910.84
the reporting year 881.00 215.32 .78 9 80.14 18.40 766.99 677.83
III. Decrease/increase of
the report year -14,797, -61,845,19 -53,819,13 4,329,877. -7,895,469 -26,388,65 -26,388,55
96.25
(decrease is stated with 000.00 2.53 0.10 58 .90 4.75 8.50
“-“)
(I) Total comprehensive 4,329,877. 77,738,90 82,068,78 82,068,88
96.25
income 58 6.30 3.88 0.13
(II) Owners’ input and -14,797, -61,845,19 -53,819,13 -22,823,06 -22,823,06
decrease of capital 000.00 2.53 0.10 2.43 2.43
1. Common shares -14,797, -64,385,94 -53,819,13 -25,363,81 -25,363,81
contributed by the owner 000.00 8.25 0.10 8.15 8.15
2. Capital contributed by
other equity instruments
holders
3. Amount of payment for
2,784,096. 2,784,096. 2,784,096.
shares counted to
62 62 62
owners’ equity
-243,340.9 -243,340.9 -243,340.9
4. Others
0 0 0
-85,634,37 -85,634,37 -85,634,37
(III) Profit Distribution
6.20 6.20 6.20
1. Provision of surplus
reserve
48
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
2. Provision for general
risks
3. Distributions to the -85,634,37 -85,634,37 -85,634,37
owners (or shareholders) 6.20 6.20 6.20
4. Others
(IV) Internal carry-over of
owners’ equity
1. Conversion of capital
reserve into capital (or
capital stock)
2. Conversion of surplus
reserve into capital (or
capital stock)
3. Loss made up for with
surplus reserve
4. Setting of the amount
involved in the
movement of the
beneficial plan carried
over to the retained
earnings
5. Other comprehensive
income carried-over to
the retained earnings
6. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
IV. Ending balance of the 428,171, 1,019,385, 17,447,98 3,389,668. 235,701,1 958,945,3 2,628,145, 2,628,151,
6,007.09
reporting period 881.00 022.79 8.68 49 80.14 48.50 112.24 119.31
Amount in the previous period
In CNY
The first half year of 2019
Items Owners’ equity attributable to the parent company
Minority Total
Capital Other equity instruments Capital Less: Other Special Surplus Provision Retained Others Sub-total shareholder owner’s
49
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
stock Preferre Reserve shares in comprehe reserve Reserve for general earnings s’ equity equity
Perpetu
d Others stock nsive risks
al bond
shares income
I. Ending balance of the 438,744, 1,062,455, -5,442,139 223,015,7 851,360,6 2,570,134, 2,570,140,5
5,781.64
previous year 881.00 644.22 .78 93.80 03.66 782.90 64.54
Plus: Change in
accounting policy
Correction of
previous errors
Consolidation of
enterprises under the
same control
Others
II. Opening balance of 438,744, 1,062,455, -5,442,139 223,015,7 851,360,6 2,570,134, 2,570,140,5
5,781.64
the reporting year 881.00 644.22 .78 93.80 03.66 782.90 64.54
III. Decrease/increase of
the report year 4,224,00 16,596,19 32,902,19 1,749,407. 123,495,4 113,162,8 113,162,880
13.66
(decrease is stated with 0.00 7.31 8.89 21 60.89 66.52 .18
“-“)
(I) Total comprehensive 1,749,407. 123,495,4 125,244,8 125,244,881
13.66
income 21 60.89 68.10 .76
(II) Owners’ input and 4,224,00 16,596,19 32,902,19 -12,082,00 -12,082,001
decrease of capital 0.00 7.31 8.89 1.58 .58
1. Common shares
4,224,00 16,596,19 18,585,60 2,234,597. 2,234,597.3
contributed by the
0.00 7.31 0.00 31 1
owner
2. Capital contributed by
other equity instruments
holders
3. Amount of payment
for shares counted to
owners’ equity
14,316,59 -14,316,59 -14,316,598
4. Others
8.89 8.89 .89
(III) Profit Distribution
1. Provision of surplus
reserve
2. Provision for general
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
risks
3. Distributions to the
owners (or
shareholders)
4. Others
(IV) Internal carry-over
of owners’ equity
1. Conversion of capital
reserve into capital (or
capital stock)
2. Conversion of surplus
reserve into capital (or
capital stock)
3. Loss made up for
with surplus reserve
4. Setting of the amount
involved in the
movement of the
beneficial plan carried
over to the retained
earnings
5. Other comprehensive
income carried-over to
the retained earnings
6. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
IV. Ending balance of 442,968, 1,079,051, 32,902,19 -3,692,732 223,015,7 974,856,0 2,683,297, 2,683,303,4
5,795.30
the reporting period 881.00 841.53 8.89 .57 93.80 64.55 649.42 44.72
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
8. Statement of Changes in Owner’s Equity, Parent Company
Amount in the reporting period
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In CNY
The first half year of 2020
Other equity instruments Other
Items Capital Capital Less: shares Special Surplus Retained Total owners’
Preferred Perpetual comprehensiv Others
stock Others Reserve in stock reserve Reserve earnings equity
shares bond e income
I. Ending balance of the 442,968,88 1,086,885,75 71,267,118.7 235,701,180. 710,223,15 2,404,511,849.6
previous year 1.00 6.42 8 14 0.82 0
Plus: Change in
accounting policy
Correction of
previous errors
Others
II. Opening balance of the 442,968,88 1,086,885,75 71,267,118.7 235,701,180. 710,223,15 2,404,511,849.6
reporting year 1.00 6.42 8 14 0.82 0
III. Decrease/increase of
-14,797,000 -61,845,192.5 -53,819,130.1 -84,352,50
the report year (decrease -107,175,565.60
.00 3 0 3.17
is stated with “-“)
(I) Total comprehensive 1,281,873.
1,281,873.03
income 03
(II) Owners’ input and -14,797,000 -61,845,192.5 -53,819,130.1
-22,823,062.43
decrease of capital .00 3 0
1. Common shares -14,797,000 -64,385,948.2 -53,819,130.1
-25,363,818.15
contributed by the owner .00 5 0
2. Capital contributed by
other equity instruments
holders
3. Amount of payment for
shares counted to owners’ 2,784,096.62 2,784,096.62
equity
4. Others -243,340.90 -243,340.90
-85,634,37
(III) Profit Distribution -85,634,376.20
6.20
1. Provision of surplus
reserve
2. Distributions to the -85,634,37
-85,634,376.20
owners (or shareholders) 6.20
3. Others
(IV) Internal carry-over of
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
owners’ equity
1. Conversion of capital
reserve into capital (or
capital stock)
2. Conversion of surplus
reserve into capital (or
capital stock)
3. Loss made up for with
surplus reserve
4. Setting of the amount
involved in the movement
of the beneficial plan
carried over to the
retained earnings
5. Other comprehensive
income carried-over to the
retained earnings
6. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the reporting
period
(VI) Others
IV. Ending balance of the 428,171,88 1,025,040,56 17,447,988.6 235,701,180. 625,870,64 2,297,336,284.0
reporting period 1.00 3.89 8 14 7.65 0
Amount in the previous period
In CNY
The first half year of 2019
Other equity instruments Other
Items Capital Capital Less: shares Special Surplus Retained Total owners’
Preferred Perpetual comprehensi Others
stock Others Reserve in stock reserve Reserve earnings equity
shares bond ve income
I. Ending balance of the 438,744,88 1,068,111,18 223,015,793
683,798,086.83 2,413,669,946.95
previous year 1.00 5.32 .80
Plus: Change in
accounting policy
Correction of
previous errors
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
Others
II. Opening balance of 438,744,88 1,068,111,18 223,015,793
683,798,086.83 2,413,669,946.95
the reporting year 1.00 5.32 .80
III. Decrease/increase of
the report year 4,224,000. 16,596,197.3 32,902,198.8
5,152,486.43 -6,929,515.15
(decrease is stated with 00 1 9
“-“)
(I) Total comprehensive
5,152,486.43 5,152,486.43
income
(II) Owners’ input and 4,224,000. 16,596,197.3 32,902,198.8
-12,082,001.58
decrease of capital 00 1 9
1. Common shares 4,224,000. 16,596,197.3 18,585,600.0
2,234,597.31
contributed by the owner 00 1 0
2. Capital contributed by
other equity instruments
holders
3. Amount of payment
for shares counted to
owners’ equity
14,316,598.8
4. Others -14,316,598.89
9
(III) Profit Distribution
1. Provision of surplus
reserve
2. Distributions to the
owners (or
shareholders)
3. Others
(IV) Internal carry-over
of owners’ equity
1. Conversion of capital
reserve into capital (or
capital stock)
2. Conversion of surplus
reserve into capital (or
capital stock)
3. Loss made up for with
surplus reserve
4. Setting of the amount
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
involved in the
movement of the
beneficial plan carried
over to the retained
earnings
5. Other comprehensive
income carried-over to
the retained earnings
6. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
IV. Ending balance of 442,968,88 1,084,707,38 32,902,198.8 223,015,793
688,950,573.26 2,406,740,431.80
the reporting period 1.00 2.63 9 .80
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
III. Company Profile
FIYTA Precision Technology Co., Ltd (hereinafter referred to as the Company) was reorganized, incorporated and
renamed from Shenzhen FIYTA Timer Industry Company on December 25 1992 with approval by the General Office of
Shenzhen Municipal People’s Government with Document SHEN FU BAN FU [1992] No. 1259 and with China National
Aero-Technology Import & Export Corporation Shenzhen Industry & Trade Center (which was renamed as AVIC
International Shenzhen Company Limited) as the sponsor. The Company's head office is located at the 20th Floor, FIYTA
Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen, Guangdong Province.
On March 10, 1993, the Company, with approval by the People’s Bank of China Shenzhen Special Economic Zone
Branch [SHEN REN YIN FU ZI (1993) No. 070], issued publically domestic CNY based common shares (A-shares) and
CNY based special shares (B-shares). In accordance with the Approval Document of Shenzhen Municipal Securities
Regulatory Office SHEN ZHENG BAN FU [1993] No. 20 and the Approval Document of Shenzhen Stock Exchange SHEN
ZHENG SHI ZI (1993) No. 16, the Company’s A-shares and B-shares were all listed with Shenzhen Stock Exchange for
trading commencing from June 3, 1993.
On January 30, 1997, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company was
renamed as Shenzhen FIYTA Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between China National Aero-Technology Corporation
Shenzhen (CATIC Shenzhen Corporation) and CATIC Shenzhen Holdings Limited ( with original name of Shenzhen
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
CATIC Group Co., Ltd. (hereinafter referred to as CATIC Shenzhen)), CATIC Shenzhen Corporation assigned 72.36
million corporate shares (taking 52.24% of the Company’s total shares) to CATIC Shenzhen. From then on, the
Company’s controlling shareholder turned to be CATIC Shenzhen from CATIC Shenzhen Corporation.
On October 26, 2007, the Company implemented the equity separation reform, according to which the shareholder of the
Company’s non-negotiable shares would pay shares to the whole shareholders of negotiable shares registered on the
equity record day as designated in the equity separation reform plan at the rate of 3.1 shares for every 10 shares held by
them while the Company’s total 249,317,999 shares remained unchanged. So far, after the equity separation reform, the
proportion of the Company’s shares held by CATIC Shenzhen reduced from 52.24% to 44.69%.
On February 29, 2008, due to expansion of the Company’s business scope and with approval by Shenzhen Municipal
Administration for Industry and Commerce, the Company’s enterprise corporate business licence number was changed
from 4403011001583 into 440301103196089.
In 2010, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on Approval of Non-public
Issuing of Shenzhen FIYTA Holdings Ltd., ZHENG JIAN XU KE [2010] No. 1703 and the Official Reply on the Issue of
Non-Public Issuing of Shenzhen FIYTA Holdings Ltd. by State-owned Assets Supervision and Administration Commission
of the State Council [2010] No. 430, the Company was approved to non-publically issue no more than 50 million common
shares (A-shares). After completion of non-public issuing on December 9, 2010, the Company’s registered capital
increased to CNY 280,548,479.00 and CATIC Shenzhen holds 41.49% of the Company’s equity based capital.
On March 3, 2011, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company was
renamed as FIYTA Holdings Ltd. On April 8, 2011, the Company took the total share capital of 280,548,479 shares as at
December 31, 2010 as the base, converted its capital reserve into share capital at the rate of 4 shares for every 10 shares.
After the conversion, the Company’s total share capital became 392,767,870 shares.
On November 11, 2015, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on
Approval of Non-public Issuing of FIYTA Holdings Ltd., ZHENG JIAN XU KE [2015] No. 2588 and the Official Reply on the
Issue of Non-Public Issuing of FIYTA Holdings Ltd. by State-owned Assets Supervision and Administration Commission of
the State Council [2015] No. 415, the Company was approved to non-publically issue no more than 46,911,649 common
shares (A-shares). After completion of non-public issuing on December 22, 2015, the Company’s registered capital
increased to CNY 438,744,881.00 and CATIC Shenzhen holds 37.15% of the Company’s equity based capital.
On December 20, 2018, approved by State-owned Assets Supervision and Administration Commission of the State
Council with the “Official Reply on FIYTA Holdings Ltd. to Implement the Restricted stock Incentive Program”, GUO ZI
KAO FEN [2018] No. 936, the Company awarded A-share restricted stock by less than 4.277 million shares. After
completion of implementation of the A-share Restricted stock Incentive Program (Phase I) by January 30, 2019, the
Company’s registered capital increased to CNY 442,968,881 and AVIC IHL holds 36.79% of the Company’s equity based
capital.
According to the “Proposal on the Intentional Change of the Company Name and the Short Term of A-share Securities
reviewed and approved at 2019 3rd Extraordinary General Meeting of the Company and approved by the Administration
for Industry and Commerce of Shenzhen Municipality, commencing from January 9, 2020, the Company changed its
name from FIYTA Holdings Limited to FIYTA Precision Technology Co., Ltd."
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
On April 30, 2020, the Company wrote off 14,730,000 B-shares repurchased by the Company, and on June 9, 2020, the
number of A-share restricted stock to the original three retired incentive objects which were written-off after being
repurchased was 67,000 in total. After the write-off, the total capital stock of the Company decreased from 428,238,881
shares to 428,171,881 shares. The equity capital of the Company held by AVIC IHL increased to 38.06%.
Ended June 30, 2020, the Company accumulatively issued altogether 428,171,881 shares. For the detail, refer to Note VII.
53 “Share Capital”.
The Company has established the Shareholders’ General Meeting, the Board of Directors, the Supervisory Committee,
the Audit Committee, the Strategy Committee and the Nomination, Remuneration and Assessment Committee as the
governance organs, etc. The Company has also established a number of functional departments, including the
comprehensive management department, the Party construction work department, department of discipline inspection,
audit and law, the financial department, the human resource department, the strategy operation department, the data &
information department, the innovation & design department, the R & D department, the property operation department,
etc.
The principal business activities of the Company and its subsidiaries are: production and sales of various pointer type
mechanical watches, quartz watches and their driving units, spares and parts, various timing apparatus, processing and
wholesale of K gold watches and ornament watches; domestic trade, materials supply and sales (excluding the
commodities for exclusive operation, exclusive control and monopoly); property management and lease; design service;
self-run import & export business (implemented according to the Document SHEN MAO GUAN DENG ZHENG ZI No.
2007-072). The Company's legal representative is Huang Yongfeng.
The financial statements was approved and issued through the resolution of the Board of Directors dated July 28, 2020.
There were 11 subsidiaries consolidated during the reporting period. For the detail, refer to Note IX. "Equity in Other
Entities". The consolidation scope of the reporting year is the same as that of the previous year. For the detail, refer to
Note VIII "Change of the Consolidation Scope".
IV. Basis for preparation of the financial statements
1. Preparation Basis
These financial statements are prepared in accordance with the Accounting Standards for Enterprises promulgated by the
Ministry of Finance and its application guidelines, interpretations and other relevant provisions (collectively referred to as
the "Accounting Standards for Enterprises"). In addition, the Group disclosed the relevant financial information according
to the Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General
Provisions on Financial Reports (2014 Revision) promulgated by China Securities Regulatory Commission.
2. Operation on Going Concern Basis
The financial statements of the Company have been prepared on going concern basis.
The Group follows the accrual basis for bookkeeping. With the exception of some financial instruments, these financial
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
statements are measured based on the historic cost basis. If impaired, the assets shall provide for impairment in
accordance with the relevant regulations.
V. Important accounting policies and accounting estimates
Presentation on specific accounting policies and accounting estimates:
The Group determines the depreciation of fixed assets, amortization of intangible assets and income recognition policies
according to its own production and operation characteristics. For the specific accounting policies, refer to Notes V.24,
V.30 and V. 39.
1. Statement on complying with the accounting standards for business enterprise
The financial statements prepared by the Company in accordance with the requirements of accounting standards for
enterprises truly and fully reflect the financial status of the Company as at June 30, 2020, and the relevant information,
such as the operation result and cash flow for January to June, 2020.
2. Fiscal period
The accounting period adopted by the Company is from January 1 to December 31 of the Gregorian calendar.
3. Business Cycle
The Company's operating cycle is 12 months.
4. Recording Currency
The Company and its domestic subsidiaries use Renminbi (CNY) as the function currency for book keeping. Except
Switzerland based Montres Chouriet SA (hereinafter referred to as the "Swiss Company"), an overseas subsidiary of
FIYTA Hong Kong Co., Ltd. (hereinafter referred to as "FIYTA HK"), has determined Swiss Franc as its recording currency
for accounting in accordance with the currencies available in its major economic environment where it is operated. The
other overseas subsidiaries, including FIYTA HK, Station-68 Limited (hereinafter referred to as “Station-68”), another
subsidiary of FIYTA HK, have determined Hong Kong currency as their recording currency for accounting in accordance
with the currencies available in their major economic environment where they are operated. Hong Kong currency will be
converted into Renminbi while in preparing its financial statements. The currency the Grouptakes in preparation of these
financial statements is Renminbi.
5. The accounting treatment on combination of enterprises under the joint control and not under the joint control
(1) Combination of enterprises under the joint control
For the combination of an enterprise under the joint control, the assets and liabilities of the merged party obtained by the
merging party in process of consolidation are measured according to the book value of the merged party in the
consolidated financial statements of the eventual controlling party on the date of merger, except for adjustment due to
different accounting policies. The difference between the book value of the net assets which the merging party obtains
and the book value of the consideration which it pays (or the total par value of the shares issued) shall adjust the capital
reserve (capital stock premium). If the capital reserve (capital stock premium) is not sufficient to be offset, the retained
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
earnings shall be adjusted.
Combination of enterprises under the joint control realized in steps through repeated transactions
In some financial statements, the share of the book value of the shareholders’ equity in the merged party enjoyable in the
eventual controller's consolidated financial statements as at the consolidation day is taken as the initial investment cost of
the long term equity investment; the difference between the initial investment cost of the long term equity investment and
the sum of the book value of the long term equity investment before the consolidation plus the book value of the
consideration newly paid for further acquiring the shares on the consolidation day is used to adjust the capital reserve
(capital stock premium); if the capital reserve is not sufficient to be offset, the retained earnings should be adjusted.
In the consolidated financial statements, the assets and liabilities of the merged party that the merging party obtains in a
business combination shall be measured on the basis of their book value in the consolidated financial statements of the
eventual controller on the date of combination except the adjustment carried out due to different accounting policies;
difference between the sum of the book value of the investment held before the consolidation plus the book value of the
consideration newly paid on the consolidation day is used to adjust the capital reserve (capital stock premium); if the
capital reserve is not sufficient to be offset, the retained earnings should be adjusted. For the long term equity investment
held before the merging party has acquired the control power over the merged party, the concerned profit and loss are
recognized commencing from the latter of the day when the original equity is acquired and the day when the merging party
and the merged party are under the eventual joint control to the date of combination; the movement of other
comprehensive income and other owner’s equity respectively write down the retained earning or current profit and loss at
the beginning of the period during the comparative statements.
(2) Combination of enterprises not under the joint control
For the combination of enterprises not under the joint control, the combination cost is the fair value of the assets, liabilities
incurred or assumed and equity securities issued on the date of the acquisition for the purpose of acquiring the control
over the acquired party. On the date of acquisition, the assets, liabilities and contingent liabilities of the acquired party are
recognized based on the fair value.
The difference between the combination cost and the fair value share of the identifiable net assets of the acquired party
obtained in the merger is recognized as goodwill, and subsequent measurement is made according to the accumulated
impairment provision deducted from the cost; the difference between the combination cost and the fair value share of the
identifiable net assets of the acquired party obtained in the combination is recorded in the current profit and loss after
review.
Combination of enterprises not under the joint control realized in steps through repeated transactions
In individual financial statements, the sum of the book value of the equity investment held by the acquired party before the
acquisition date and the new investment cost on the purchase date shall be taken as the initial investment cost of the
investment. For the equity investment held before the date of acquisition, other comprehensive income recognized by
means of the equity method does not undergo accounting treatment by using the this part of other comprehensive income
on the date of acquisition; in disposal of the investment, the accounting treatment is carried out on the same basis used by
the invested entity in direct disposal of the relevant assets or liabilities; the owner's equity recognized as a result of
changes in owner's equity other than the net profit and loss of the investee, other comprehensive income and profit
distribution are transferred to the current profit and loss during the disposal of the investment. If the equity investment held
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FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full Text
before the acquisition date is measured at fair value, the accumulated fair value change originally included in other
comprehensive income is transferred to the current profit and loss when it is calculated according to the cost method.
In the consolidated financial statement, the combined cost is the sum of the consideration paid on the acquisition date and
the fair value of the equity held by the acquired party prior to the acquisition date. The equity held by the acquired party
before the acquisition date is re-measured according to the fair value of the equity on the acquisition date, and the
difference between the fair value and the book value is recorded in the current income; the equity held by the acquired
party before the acquisition date involves other comprehensive income, and changes in other owners' equity converted
into current income on the acquisition date, except for other comprehensive income generated by changes in net liabilities
or net assets of the investee due to re-measurement of the defined income plan.
(3) Disposal of the relevant transaction expenses in business combination
Intermediary fees in connection with audit, law service, appraisal and consulting, etc. incurred to the business combination
and other relevant administrative fees are counted to the current profit and loss at the time of incurrence. The transaction
costs of equity securities or debt securities issued as merger consideration are included in the initial confirmation amount
of equity securities or debt securities.
6. Method of preparing consolidated financial statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control refers to
that the Company has he power over the investee, enjoys variable return by participating in the relevant activities of the
investee and is able to impact the amount of return by using the power to the investee. A subsidiary refers to the entity
under control of the Company (including the dividable part, structured entity, etc. in the enterprise and the investee, etc.)
(2) Method of preparing consolidated financial statements
The consolidated financial statements are based on the financial statements of the Company and its subsidiaries, and
prepared by the Company according to other relevant information. In preparing the consolidated financial statements, the
accounting policies and accounting period of the Company and its subsidiaries are required to maintain consistent, and
the significant inter-company transactions and balances are written off.
The newly increased subsidiary as well as business as a result of a business combination under joint control during the
reporting period, it is deemed that the subsidiaries and business are incorporated into the consolidation scope of the
Company from the controlling date by the ultimate controlling party, and the operating results and cash flows from the date
are included in the consolidated income statement and cash flow statement.
The newly increased subsidiary as well as business as a result of a business combination not under joint control, the
subsidiaries and business from the acquisition date and the income, expenses and profit as at the end of reporting period
are included in the consolidated income statement, and the cash flow is included in the consolidated statement of cash
flows.
The part in the shareholders’ equity of the subsidiaries that did not belong to the Company shall be separately presented
as minority interest under the shareholders’ equity in the consolidated balance sheet. The share attributable to minority
interests of the subsidiaries in current profit and loss, shall be presented as “minority interests” under the net profit in the
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consolidated income statement. When the loss of the subsidiaries shared by minority shareholders exceeded the shares
enjoyed by the minority shareholders in the owners’ equity of the subsidiaries in the beginning period, the balance shall
offset the minority interests.
(3) Acquisition of the minority shareholders’ equity of the subsidiaries
Where the Company acquires a minority interest from a subsidiary’s minority 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 Bank and to the minority interest is adjusted to reflect the change in the Bank’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 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 losing control over the subsidiary. A
gain or loss is recognized in profit or loss for the current period and is calculated by the aggregate of the consideration
received in disposal and the fair value of remaining part of the equity investment deducting the share of carrying value of
net assets in proportion to previous shareholding percentage in former subsidiary since acquisition date and the goodwill.
Other comprehensive income related to the former subsidiary is transferred to profit or loss for the current period 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. Classification of Joint Venture Arrangements and Accounting Treatment of Joint Operations
The joint venture arrangement refers to an arrangement between two or more parties control jointly. The joint venture of
the Group was divided in co-operation and joint venture.
(1) Joint Operation
Joint operation refers to the joint venture arrangement in which the Group enjoys the assets related to the arrangement
and assumes the liabilities related to the arrangement.
The Group recognizes the following items related to the interests of the joint operation, and the accounting treatment is in
accordance with the related accounting standards for enterprises:
A. Confirmed the assets held individually and the common assets held in accordance with the shares;
B. Confirmed the liabilities assumed separately and liabilities shared commonly in accordance with the shares;
C. Confirmed income from the sale of joint operation shares;
D. Confirmed income from the joint operation in accordance with the shares;
E. Recognized expense occurred separately and confirmed the costs of joint operation in accordance with the shares.
(2) Joint Venture
Joint venture refers to the joint venture arrangements that the Group only has the rights of arranged net assets.
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The accounting treatment of the joint venture investment in the Group was in accordance with long-term equity investment
on equity method.
8. Standard for confirming cash and cash equivalent
Cash refers to the cash in stock of the Company and the deposit in hand available for payment at any time. The Company
takes short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value as cash equivalents.
9. Foreign currency transactions and translation of foreign currency statements
(1) Foreign Currency Translation
For the foreign currency businesses incurred in the Group, the amount in a foreign currency shall be translated into
amount in the functional currency at the spot exchange rate of the transaction date.
On the date of balance sheet, foreign currency monetary items should be translated into functional currency using the spot
exchange rate at the balance sheet date. Exchange differences arising from the spot exchange rates at the balance sheet
date being different from those at which the monetary items were translated on initial recognition during the period or
those of previous balance sheet dates should be recognized in current period profit and loss. Non-monetary items that are
measured at historical cost are still using the spot exchange rate at the transaction date. Non-monetary items that are
measured at fair value adopts the spot exchange rates at the date when the fair value was determined, and the exchange
differences thus arising should be recognized in the profit or loss for the period.
(2) Translation of Foreign Currency Financial Statement
On the balance sheet date, when the foreign currency financial statements of overseas subsidiaries are translated, the
spot exchange rate on the balance sheet date shall be used for the translation of the assets and liabilities items, and the
spot exchange rate on the date of incurrence shall be used for the translation of the shareholders' equity items except the
"retained earnings".
The items of incomes and expenses in the profit statement are translated at the current average exchange rate on the
transaction occurring date.
All the items in the cash flow statement are translated based on the spot rate of the day of incurrence of the cash flow. The
amount of influence of exchange rate changes on cash is taken as the adjustment item, and the item of "influence of
exchange rate changes on cash and cash equivalents" is separately listed in the cash flow statement.
The difference resulting from the translation of the financial statements is reflected under the "Other comprehensive
income" under the item of stockholders' equity in the balance sheet.
If overseas operation is disposed and the control right is lost, the translated difference of foreign currency statements as
listed under the item of stockholder's equity in balance sheet and related to overseas operation is transferred fully or at the
ratio of disposing the overseas operation into the current profits and losses from disposal.
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10. Financial instruments
Financial instruments refer to any contract that gives rise to a financial asset of the Bank and a financial liability or equity
instrument of other entities.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognized when the Group becomes a party to a financial instrument contract.
A financial asset is derecognized when one of the following criteria is met:
① the contractual rights to the cash flows from the financial asset expire;
② The Company transfers the financial asset and the transfer qualifies under the criteria for the derecognition of financial
assets prescribed by transfer of financial assets as stated below.
The Company should derecognize a financial liability or part of a financial liability when the present obligation associated
with the financial liability ceases or partly ceases. The Group (debtor) enters into an agreement with a creditor so as to
substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial liability, it shall terminate the
recognition of the existing financial liability, and shall at the same time recognize the new financial liability.
The financial assets purchased or sold in any conventional manner are made accounting confirmation and termination of
confirmation on the date of transaction.
(2) Classification and measurement of financial assets
In the initial recognition, the Group classifies financial assets into the following three categories according to the business
model of financial assets management and the contractual cash flow characteristics of financial assets: financial assets
measured at amortized cost, financial assets measured at fair value and whose movements are included in other
comprehensive income, and financial assets measured at fair value and whose movements are included in current profit
and loss.
Financial assets measured based on the amortized cost
The Group shall also meet the following conditions and is not designated as a financial asset measured at fair value and
its movements recorded in the current profit and loss, classified as a financial asset measured at the amortized cost:
The business model of the Group to manage the financial assets is to collect the contract cash flow as the target;
According to the contractual terms of the financial asset，the cash flow created on the specific date is exclusively for
payment of the principal and the interest based on the outstanding amount of the principal.
After the initial recognition, the effective interest rate method is adopted to measure the financial assets by amortized cost.
Profit or loss of financial assets measured at the amortized cost but not belonging to part of any hedge relationship is
recorded in the current profit and loss upon termination of recognition, amortization or recognition of the impairment in
accordance with the effective interest rate method.
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Financial assets measured at fair value with the movement recorded in the other comprehensive income.
The Group classifies the financial assets that as well meet the following conditions and not designated as fair
value-measured financial assets and whose movement is recorded in the current profit and loss as the financial assets
that are measured at fair value and whose movement is recorded in other comprehensive income:
The Group’s business model for managing the financial asset is aimed at both collecting contractual cash flow and selling
the financial asset according to the contractual terms of the financial asset，the cash flow created on the specific date is
exclusively for payment of the principal and the interest based on the outstanding amount of the principal.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value. Interest, loss
from impairment loss or profit calculated by the effective interest rate method and exchange profit and loss are recorded in
the current profit and loss, while other profit and loss are recorded in other comprehensive income. When the recognition
is terminated, the accumulated profit or loss included in other comprehensive income before is transferred out from other
comprehensive income and included in the current profit and loss.
Financial assets measured at fair value with the movement recorded in the current profit and loss
Except for the above-mentioned financial assets measured at amortized cost and at fair value with movement included in
other comprehensive income, the Group classifies all other financial assets as financial assets at fair value with
movement included in current profits and losses. At the time of initial recognition, in order to eliminate or significantly
reduce accounting mismatches, the Group irrevocably designates some financial assets that should be measured at
amortized cost or at fair value and whose movement is included in other comprehensive income as being measured at fair
value and its movement included in the financial assets of the current profit and loss.
After initial recognition, such financial assets are subsequently measured at fair value, and the resulting profit or loss
(including interest and dividend income) are included in the current profit and loss, unless the financial assets are part of
the hedging relationship.
However, for non-trading equity instrument investments, the Group irrevocably designates them as financial assets
measured at fair value and whose movement is included in other comprehensive income at the time of initial recognition.
The designation is made on the basis of a single investment, and the related investment meets the definition of an equity
instrument from the issuer's perspective.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value. Dividend income
meeting the conditions is included in profit and loss, and other profit or loss and the movement of the fair value are
included in other comprehensive income. When the recognition is terminated, the accumulated profit or loss included in
other comprehensive income before is transferred out from other comprehensive income and included in the retained
earnings.
The business model of managing financial assets refers to how the Group manages financial assets to generate cash flow.
The business model determines whether the source of the cash flow of the financial assets managed by the Group is to
collect contractual cash flows, sell financial assets or a combination of both. The Group determines the business model for
managing financial assets based on objective facts and the specific business objectives of managing financial assets
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determined by key management personnel.
The Group evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual
cash flow generated by the relevant financial assets on a specific date is only the payment of principal and interest based
on the outstanding principal amount. Where the principal refers to the fair value of financial assets at the time of initial
recognition; interest includes consideration for the time value of money, credit risks related to the outstanding principal
amount in a specific period, and other basic borrowing risks, costs and profits. In addition, the Group evaluates contract
terms that may lead to changes in the time distribution or amount of contractual cash flows of financial assets to determine
whether they meet the above-mentioned contractual cash flow characteristics.
Only when the Group changes the business model of managing financial assets, all affected financial assets will be
reclassified on the first day of the first reporting period after the business model is changed; otherwise the financial assets
shall not be reclassified after initial recognition.
Financial assets are measured at fair value at the tune of initial recognition. For the financial assets measured at fair value
with the movement counted to the current profit and loss, the relevant transaction expenses are directly included in the
current profit and loss; the relevant transaction expenses for other categories of financial assets are counted to the
amount of the initial recognition. For accounts receivable arising from the sale of products or the provision of labor
services that do not contain or consider significant financing components, the amount of consideration that the Group is
expected to be entitled to receive is the initial confirmation amount.
(3) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are classified as the financial liabilities measured at the amortized cost and that
measured at fair value with the movement counted to the current profit and loss. For the financial assets which have not
been classified as those measured at fair value with the movement counted to the current profit and loss, the relevant
transaction expenses are directly counted to the amount of the initial recognition.
Financial liabilities measured at fair value with the movement recorded in the current profit and loss
Financial liabilities measured at their fair value with the movement counted to the current profit and loss include
transactional financial liabilities and the financial liabilities measured at fair value with the movement counted to the
current profit and loss directly designated at the initial recognition. For such financial liabilities with the follow-up
measurement carried out at fair value, the profit or loss formed due to the movement of the fair value and dividends and
interest expenses related to these financial liabilities included in the current profit and loss.
Financial liabilities measured based on the amortized cost
The gains or losses generating in case of terminated confirmation, occurrence of devaluation or amortization are included
in the current profits and losses.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① Contractual obligations to deliver cash or other financial assets to other parties.
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②Under a potentially unfavorable condition, the contractual obligation to exchange financial assets or financial liabilities
with other parties.
③ A non-derivative contract that must use or may use the Company’s own equity instruments for settlement in the future,
and the Company shall deliver a variable amount of its own equity instrument according to the contract.
④ A derivative instrument contract that must use or may use the Company’s own equity instruments for settlement in
the future, except for derivative instrument contract that exchanges a fixed amount of cash or other financial assets for a
fixed amount of its own equity instruments.
Equity instrument refers to the contract that can certify possession of the residual equity of the Company in the assets
after deducting all liabilities.
If the Group cannot unconditionally avoid the delivery of cash or other financial assets to perform a contractual obligation,
the contractual obligation meets the definition of a financial liability.
If a financial instrument must use or may use the Group’s own equity instruments for settlement, it is necessary to
consider whether the Group’s own equity instruments are used as a substitute for cash or other financial assets to settle
the instrument, or to enable the holder of the instrument to enjoy the residual equity in the issuer's assets after deducting
all the liabilities. If it is the former, the instrument is a financial liability of the Group; if it is the latter, the instrument is an
equity instrument of the Group.
(4) Fair value of financial instruments
Fair value refers to the price that a market participant can receive from selling an asset or is payable for transferring a
liability in the orderly transactions occurring in the date of measurement.
The Group measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or
transferring liabilities takes place in the main market of related assets or liabilities; if there is no main market, the Group
assumes that the transaction is most beneficial to the market of the related assets or liabilities. The main market (or the
most favorable market) is the trading market that the Group can enter on the measurement date. The Group adopts the
assumptions used by market participants to maximize their economic benefit when pricing the asset or liability.
For financial assets or financial liabilities in an active market, the Group uses quoted prices in the active market to
determine their fair value. If there exists no active market for a financial instrument, the Group uses valuation techniques
to determine its fair value.
When non-financial assets are measured at fair value, the ability of market participants to use the asset for the best use to
generate economic benefits, or the ability to sell the asset to other market participants who can be used for the best use to
generate economic benefits is taken into consideration.
The Group adopts valuation techniques that are applicable under the current circumstances and have sufficient available
data and other information to support, take priority to use the relevant observable input values; use unobservable input
values only if the observable input values are not available or not practicable.
For assets and liabilities that are measured or disclosed at fair value in financial statements, the fair value level to which
they belong is determined based on the lowest level of input value that is important for fair value measurement as a whole:
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the input value of the first level is the unadjusted quotation of the same asset or liability in the active market that can be
obtained on the measurement date; the second-level input value is the directly or indirectly observable input value of
related assets or liabilities other than the first-level input value; the input value of the third level is the unobservable input
value of the related assets or liabilities.
On each balance sheet date, the Group re-evaluates the assets and liabilities recognized in the financial statements that
are continuously measured at fair value to determine whether there is a conversion between the fair value measurement
levels.
(5) Impairment of financial assets
Based on expected credit losses, the Group performs impairment accounting treatments on the following items and
recognizes the provision for loss:
Financial assets measured based on the amortized cost;
Creditor's rights investment measured at fair value with the movement counted in the other comprehensive income;
Measurement of the predicted credit loss
Expected credit loss refers to the weighted average of the credit loss of financial instruments weighted based on the risk of
default. Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cash
flows expected to be received by the Group discounted at the original effective interest rate, that is, the present value of all
cash shortages.
The Group measures the expected credit losses of financial instruments at different stages. If the credit risk has not
increased significantly since the initial recognition, the financial instrument is at the first stage, and the Group measures
the provision for the loss according to the expected credit loss within the next 12 months; if the credit risk has increased
significantly since the initial confirmation but impairment of the credit has not yet occurred, the financial instrument is at
the second stage, the Group measures the provision for the loss according to the expected credit loss of the financial
instrument for the entire duration; if impairment of the credit has taken place after the initial recognition, the financial
instrument is at the third stage, and the Group measures the provision for the loss according to the expected credit loss of
the financial instrument for the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Group assumes that its credit risk has not
increased significantly since the initial recognition, and measures the provision for the loss according to the expected
credit loss within the future 12 months.
The expected credit loss for the entire duration refers to the expected credit loss caused by all possible default events that
may occur during the entire expected lifetime of a financial instrument. Expected credit loss in the next 12 months refers to
the expected credit loss caused by the event of a financial instrument default that may occur within 12 months after the
balance sheet date (if the expected duration of the financial instrument is less than 12 months, then the expected
duration). It is part of the expected credit loss in the entire duration.
When measuring expected credit losses, the longest period that the Group needs to consider is the longest contract
period for which the Group faces credit risk (including the consideration of the option of renewal).
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For the financial instrument at the first stage or the second stage or with lower credit risk, the Group calculates the interest
income according to the book balance without deduction of the provision for impairment and the effective interest rate. For
the financial instrument at the third stage, the Group calculates the interest income according to the book balance less the
amortized cost after provision for the impairment and effective interest rate
Regarding notes and accounts receivable, regardless of whether there is a significant financing component, the Group
always measures its provision for loss at an amount equivalent to expected credit losses during the entire duration.
The Group divides the portfolio of notes receivable and accounts receivable based on credit risk characteristics, and
calculates the expected credit losses on the basis of the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: Bank acceptance
Notes receivable portfolio 2: Trade acceptance
B. Accounts receivable
Accounts receivable portfolio 1: Receivables from related parties within the scope of consolidation
Accounts receivable portfolio 2: Accounts receivable from other customers
For notes receivable and accounts receivable divided into portfolios, the Group refers to historical credit loss experience
with combination of the current conditions and forecasts of future economic conditions, and compiles a comparison table
of accounts receivable aging and the entire duration of expected credit loss rate, and calculate the expected credit loss.
Other receivables
The Group divides the portfolio of other receivables based on credit risk characteristics, and calculates the expected credit
losses on the basis of the portfolio. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Deposit and margin receivable
Other receivables portfolio 2: Reserve receivable from employees
Other receivables portfolio 3: Advance for another to the social insurance premium receivable
Accounts receivable portfolio 4: Receivables from related parties within the scope of consolidation
Other receivables portfolio 5: Other receivables
For other receivables classified into portfolios, the Group calculates expected credit losses based on the default risk
exposure and the expected credit loss rate within the next 12 months or the entire duration.
Creditor’s rights investment and other creditor’s right investment
For creditor’s right investments and other creditor’s right investments, the Group calculates the expected credit loss with
reference to the nature of the investment according to various types of counterparties and risk exposures, through the
default risk exposure and the expected credit loss rate within the next 12 months or the entire duration loss.
Assessment of a significant increase in credit risk
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The Group compares the default risk of financial instruments on the balance sheet date and the risk of default on the initial
recognition day to determine the relative change in the default risk of the financial instrument during the expected life of
the financial instrument to assess whether the credit risk of the financial instrument has increased significantly since the
initial recognition.
When determining whether the credit risk has increased significantly since the initial recognition, the Group considers
reasonable and evidence-based information that can be obtained without unnecessary additional costs or efforts,
including forward-looking information. The information the Group concerns includes:
A debtor has failed to pay the principal and interest on the due date of the contract;
A serious deterioration in the external or internal credit rating (if any) of the financial instrument that has occurred or is
expected;
A serious deterioration in the debtor’s operating results that has occurred or is expected;
The existing or anticipated changes in technology, market, economic or legal environment will have a significant adverse
impact on the debtor's ability to repay the Group.
According to the nature of financial instruments, the Group assesses whether the credit risk has increased significantly on
the basis of individual financial instruments or a combination of financial instruments. When evaluating financial
instruments based on a portfolio of financial instruments, the Group may classify financial instruments based on common
credit risk characteristics, such as overdue information and credit risk ratings.
Financial assets which have experienced credit impairment
On the balance sheet date, the Group assesses whether financial assets measured at amortized cost and debt
investments measured at fair value with the movement included in other comprehensive income have experienced credit
impairment. When one or more events that have an adverse effect on 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:
The issuer or debtor has experienced serious financial difficulty;
The debtor has violated the contract, such as the payment of the interest or the principal in default or overdue, etc.;
Due to economic or contractual considerations related to the debtor’s financial difficulty, the Group gives the debtor
concession that the debtor may not make under any other circumstances;
The debtor is likely to go into liquidation or carry out other financial restructuring;
The issuer or debtor’s financial difficulty caused the disappearance of the active market for the financial asset.
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Presentation of the provision for the predicted credit loss
In order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Group re-measures
expected credit losses on each balance sheet date, and the resulting increase in loss provision or the amount of reversal
shall be counted as impairment loss or profit in the current profit and loss. For financial assets measured at amortized cost,
the reserve for loss is deducted from the book value of the financial asset listed in the balance sheet; for creditor’s right
investments which is measured at fair value and whose movement is included in other comprehensive income, the Group
recognizes the provision for the loss in other comprehensive income, and the book value of the financial asset is not
offset.
Writing-off
If the Group no longer reasonably expects that the contractual cash flow of a financial asset can be recovered in full or in
part, it will directly write down the book value of the financial asset. Termination of recognition of the relevant financial
assets formed from such writing-down This situation usually occurs when the Group determines that the debtor has no
assets or sources of income that can generate sufficient cash flow to repay the amount to be written down. However, in
accordance with the Group's procedures for recovering due payments, the financial assets that have been written down
may still be affected by execution activities.
If the written-down financial assets are later recovered, they shall be included in the current profit and loss as the reversal
of the impairment loss.
(6) Transfer of financial assets
Transfer of financial assets refers to when the Group(the transferor) transfers or delivers a financial asset to a party (the
transferee) other than the issuer of the financial asset.
The Group derecognizes a financial asset when it transfers substantially all the risks and rewards of ownership of the
asset to the transferee, and the Group does not derecognize a financial asset when it retains substantially all the risks and
rewards of ownership of the asset.
If the Group has neither transferred nor kept substantially all of risks and remunerations on the ownership of the financial
asset, treatment is made respectively based on the following conditions: in case control over the financial asset has been
given up, recognition of that financial asset as well and the assets and liabilities generated are terminated; in case control
over the financial asset has not been given up, relevant financial assets are recognized based on the extent continually
involved with the transferred financial asset, and relevant liabilities are recognized accordingly.
(7) Setoff of financial assets and financial liabilities
When the Group has the legal rights of setting off the recognized financial assets and financial liabilities and can currently
these legal rights now, and if the Group has the plan to settle with net amount or synchronously realize these financial
assets and discharge these financial liabilities, the financial assets and financial liabilities are listed in the balance sheet
with the amount after mutual set-off. Except that, financial assets and financial liabilities are listed respectively in the
balance sheet and are not set off mutually.
(8) Financial instruments that bear the risk of exchange rate fluctuation
Exchange rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to
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movement in foreign exchange rates. Exchange rate risk may be derived from financial instruments denominated in
foreign currencies other than the functional currency. The Company's overseas subsidiaries are mainly settled in Hong
Kong dollars and Swiss francs. The Company's monetary assets and liabilities denominated in foreign currencies are all
affected by the risk of foreign currency exchange rate fluctuations.
11. Notes receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
12. Accounts receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
13. Financing with accounts receivable
Inapplicable
14. Other receivables
Determination and accounting treatment of the predicted credit loss of other receivables
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
15. Inventories
(1) Classification of Inventories
The Group’s inventories are classified into raw materials,products-in-process and commodity in stock,etc.
(2) Valuation of Inventories Delivered
The Group's inventories are priced according to the actual cost. Raw materials, commodity in stock, etc. are priced
respectively according to the weighted average (with brand world watch stocks exclusive), specific identification (for
famous brand watch stocks) at the time of delivery.
(3) Basis for determining net realizable value of inventories and method for providing reserve for price falling of inventories
The net realizable value of the inventories refers to the amount of the estimated sales price of the inventory less the
estimated sales costs to incur at the time of completion, estimated sales expenses and relevant taxes. In determining the
net realizable value of inventory, with the obtained valid evidence as the base, the purpose of holding the inventory and
the influence from the events after the balance sheet date is taken into consideration at the same time..
On the balance sheet date, if the cost of inventories is higher than its net realizable value, provision for falling prices of
inventories is made. The Group makes provision for inventory depreciation for self-produced FIYTA watch inventory
according to model classification, and makes provision for inventory depreciation for brand watches sold in accordance
with individual inventory items. On the balance sheet date, if the factors affecting the previous write-down of the inventory
value have disappeared, the provision for price falling of inventory shall be reversed within the amount originally provided.
(4) Inventory system
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The Company adopts the perpetual inventory system in inventory accounting.
(5) Amortization of low value consumables and packing materials
Low value consumables and packing materials are amortized in lump sum at the time of reception.
16. Contract assets
1. Method and criteria for confirmation of contract assets
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship between
performance obligations and customer payments. The Company is entitled to receive consideration for the transfer of
goods or services to customers (while such right depends on other factors other than the passage of time) listed as
contract assets. Contract assets and liabilities under the same contract are presented in net. The Company's right to
unconditionally (only depending on the passage of time) collect consideration from the customers are separately stated as
accounts receivable.
2. Recognition and accounting treatment of the predicted credit loss of contract assets
For details on the recognition and accounting treatment method of the predicted credit losses of contract assets, please
refer to the accounting treatment of accounts receivable under the new financial instrument standards in Note V. 10
Testing Methods of Financial Asset Impairment and Accounting Treatment Method.
17. Contract cost
The contract costs include the incremental cost incurred in obtaining the contract and the cost for performance of the
contract.
The incremental cost incurred in obtaining the contract refers to the cost which will not incur as long as the Group does not
obtain the contract (such as sales commission, etc.) If the cost is expected to be recoverable, the Group recognizes it as a
contract acquisition cost as an asset. The Group's expenses incurred in obtaining the contract other than the incremental
cost expected to be recovered are included in the current profit and loss when incurred.
If the cost incurred in implementing the contract does not fall within the scope of other accounting standards and
regulations such as inventory and meets the following conditions at the same time, the Group shall recognize it as an
asset as the contract performance cost:
① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing
expenses (or similar expenses), clearly borne by the customer, and other costs incurred solely due to the contract;
② This cost increases the Group's resources for future performance obligations;
③ This cost is expected to be recoverable.
Assets recognized for contract acquisition costs and assets recognized for contract performance costs (hereinafter
referred to as "assets related to contract costs") are amortized on the same basis as the revenue recognition of goods or
services related to the asset and included in the current profit and loss. (If the amortization period does not exceed one
year, it shall be included in the current profit and loss when it incurs.)
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When the book value of the asset related to the contract cost is higher than the difference between the following two items,
the Group makes provision for impairment of the excess part and recognizes it as an asset impairment loss:
①The residual consideration that the Group expects to obtain due to the transfer of the goods or services related to the
asset;
② The costs that shall incur for transferring the related goods or services as estimated. The contract performance cost
recognized as an asset is presented in the item of “inventories” with the amortization period not exceeding one year or one
normal business cycle at the initial recognition, while it is presented in the item of "other non-current assets" with the
amortization period not exceeding one year or one normal operation cycle.
The contract acquisition cost recognized as an asset is presented in the item of “other current assets” with the
amortization period not exceeding one year or one normal business cycle at the initial recognition, while it is presented in
the item of "other non-current assets" with the amortization period not exceeding one year or one normal operation cycle
at the initial recognition.
18. Classified as assets held for sale
Inapplicable
19. Equity investment
Inapplicable
20. Other equity investment
Inapplicable
21. Long term accounts receivable
Inapplicable
22. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associates. Those that the
Group may exert significant influence on the investees are associates of the Group.
(1) Recognition of initial investment cost
Long-term equity investment that forms a business combination: For a long-term equity investment acquired through a
business combination involving enterprises under joint control, the initial investment cost of the long-term equity
investment is the absorbing party’s share of the book value of the owners’ equity of the party being absorbed at the date of
combination; for a long-term equity investment acquired through a business combination involving enterprises not under
joint control, the initial investment cost of the long-term equity investment is the merge cost.
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For a long-term equity investment acquired through other ways rather than a business combination: long-term equity
acquired by cash paid, the initial investment cost is the actual payment; long-term equity acquired by the issuing of equity
securities, the initial investment cost is the fair value of the equity securities.
(2) Subsequent Measurement of Long-term Equity Investment
Where the Bank can exercise joint control over the investee, a long-term equity investment is accounted for using the cost
method and a long-term equity investment is accounted for using the equity method for associated enterprises and joint
ventures.
For long-term equity investments accounted for in the cost method, except for payments made actually from the
investments or cash dividends or profits contained in the consideration which have been declared but not yet paid, the
cash dividends or profits which have been declared distribution by investees are recognized and recorded in the current
profit and loss as investment gains.
For long term equity investment calculated by the equity method, if the initial cost of a long-term equity investment is
greater than the investor’s attributable share of the fair values of the net identifiable assets of the investee enterprise at
the acquisition date, no adjustment is made to the initial investment cost. If the initial cost of a long-term equity investment
is less than the investor’s attributable share of the fair value of the net identifiable assets of the investee enterprise at the
acquisition date, the difference is charged to profit or loss for the current period, and the cost of the long-term equity
investment is adjusted accordingly.
When the equity method is used for calculation, the net gains and losses realized by the investee and the share of the
other comprehensive income enjoyable or sharable shall be respectively used to recognize the return on investment and
other comprehensive income and at the same time the book value of the long term equity investment is adjusted;
according to the profit announced for distribution by the investee or the part of the cash dividend enjoyable upon
calculation, the book value of the long term equity investment is reduced correspondingly. For other change in the net
profit and loss, other comprehensive income and owner's equity other than the profit distribution, the book value of the
long term equity investment is adjusted and counted to the capital reserve (other capital reserve). In recognizing the share
of the net profit or loss of an investee enjoyable by the Company, the Company takes the fair value of the distinguishable
net assets of the investee at the time of investment as the base and recognizes it after the net profit of the investee has
been recognized after adjustment.
If due to additional investment or other reasons, it is possible to exert significant influence on the investee or implement
joint control but does not constitute control, on the conversion date, the total of the fair value of the original equity plus the
new investment cost shall be used as the initial investment cost calculated according to the equity method. The difference
between the fair value and the book value of the original equity on the conversion date, and the accumulated fair value
changes originally included in other comprehensive income are transferred to the current profit and loss accounted for by
the equity method.
If the joint control over or significant influence on the investee is lost due to the disposal of part of the equity investment,
the remaining equity after the disposal shall undergo the accounting treatment according to the "Accounting Standards for
Enterprises No. 22-Recognition and Measurement of Financial Instruments instead on the day when joint control or
significant influence is lost. The difference between the fair value and the book value is counted in the current profit and
loss. The other comprehensive income from the original equity investment calculated and recognized by means of the
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equity method undergoes accounting treatment by using the same base as the investee directly disposes the relevant
assets or liabilities when the calculation based on the equity method is terminated; the movement of the other owner's
equity in connection with the original equity investment is transferred into the current profit and loss.
If the control over an investee is lost due to the disposal of part of the equity investment and other reasons, the residual
equity after disposal may implement joint control or exert significant influence on the investee, the equity method may be
used for accounting instead, and the remaining equity shall be regarded as self-acquisition, and the equity method shall
be adopted for accounting adjustment; if the residual equity after disposal can no longer jointly control or exert significant
influence on the investee, the accounting treatment shall be carried out in accordance with the relevant provisions of the
Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and the difference
between the fair value and the book value on the day when the control is lost shall be recorded in the current profit and
loss.
If the Company’s shareholding proportion decreases due to the increase of capital by other investors so that its control
power has lost but can still exercise joint control over or exert significant influence on the invested entity, the new
shareholding proportion shall be used to confirm the Company’s share of the invested entity due to capital increase and
the increase in the share of net assets due to share expansion and the difference between the original book value of the
long-term equity investment corresponding to the decline in the shareholding proportion which should be carried forward
is included in the current profit and loss; and subsequently according to the new shareholding proportion, it is deemed to
be adjusted using the equity method when the investment is obtained
The unrealized internal transaction profit and loss between the Group and associates and joint ventures are calculated
based on the shareholding proportion attributable to the Group, and the investment profit and loss are recognized on the
basis of offsetting. However, the loss from the unrealized internal transaction between the Group and an investee shall not
be offset if the loss belongs to impairment of the assets assigned.
(3) Recognition basis of the joint control over and significant influence upon an invested entity
Joint control refers to the joint control over some arrangement made according to the relevant agreement and the relevant
activities for the arrangement must be jointly decided by all the parties sharing the control power. In judging whether there
exists joint control, firstly determine whether all the participants or a combination of participants collectively control the
arrangement, and secondly determine whether the decision-making on the related activities of the arrangement must be
unanimously agreed by the participants collectively controlling the arrangement. If all the participants or a group of
participants must act in concert to determine the relevant activities of an arrangement, then all the participants or the
group of the participants are considered as collectively in control of the arrangement; If there exists a portfolio of two or
more participants that can collectively control an arrangement, it does not constitute joint control. When judging whether
there exists joint control, the protective right enjoyed shall not be taken into consideration.
Significant influence refers to the investor's power of participation in making an investee's financial and operation policies
but the investor cannot control or jointly control with other parties to make such policies. When determining whether
significant influence may be exerted on the investee, it is necessary to consider the influence from that the voting shares
of the investee directly or indirectly held by the investor and the currently executable potential voting rights held by the
investor and other parties are assumed to be convered into equity of the investee,including the influence of current
convertible warrants, share options and convertible corporate bonds issued by the investee.
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When the company directly or indirectly through its subsidiaries owns more than 20% (including 20%) but less than 50%
of the voting shares of the investee, it is generally considered to have a significant influence on the investee, unless there
is clear evidence that this condition is not allowed to participate in the production and operation decision-making of the
invested entity, which means no significant influence has formed; when the Group owns less than 20% (with 20%
exclusive) of the voting shares of the investee, it is generally not considered to have a significant influence on the investee
unless there is clear evidence that it can participate in the production and operation decision-making of the investee under
such circumstances, which means significant influence has formed.
(4) Method for testing the impairment and provision for impairment
About the investment in subsidiaries, associates and joint ventures, see Note V.31 Method of Provision for Impairment of
Assets
23. Investment based real estate
Measurement model for investment real estate
Measured based on the cost method
Depreciation or amortization method
About the depreciation method of investment based real estate and the depreciation method of fixed assets, see Note
V.24.
24. Fixed asset
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for product production, supply of services, lease or operation and
administration with useful life more than one fiscal year. A fixed asset shall be recognized only when it is probable that
economic benefits associated with the asset will flow into the enterprise and the cost of the asset can be measured reliably.
The Group's fixed assets are initially measured at the actual cost at the time of acquisition.
(2) Depreciation methods
Categories Depreciation methods Depreciation life Residual rate Yearly depreciation rate
Plant & buildings Average service life method 20 -35 5% 4.80%-2.70%
Machinery & equipment Average service life method 10 5%-10% 9.50%-9.00%
Electronic equipment Average service life method 5 5% 19%
Motor vehicle Average service life method 5 5% 19%
Other equipment Average service life method 5 5% 19%
(3) Basis for recognizing the fixed assets under financing lease, Pricing and Depreciation Methods
Inapplicable
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25. Construction-in-process
The Group determines the cost of construction-in-process according to the actual expenditure incurred for the
construction, including all necessary construction expenditures incurred during the construction period, borrowing costs
that shall be capitalized before the construction reaches the condition for intended use and other relevant expenses.
Construction-in-process is transferred to fixed assets when the asset is ready for its intended use.
About the method of provision for asset impairment of construction-in-process, refer to Note V. 31.
26. Borrowing Costs
1. Principle for recognition of the capitalization of the borrowing costs
If the borrowing costs incurred to the Group may be directly attributable to the purchase, construction or production of
assets that meet the capitalization conditions, they shall be capitalized and included in the cost of the relevant assets;
other borrowing costs are recognized as the expenses based on the amount incurred at the time of occurrence, and
counted to the current profit and loss. If the borrowing costs meet the following conditions at the same time, they shall be
capitalized:
① The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest
bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for
capitalization;
② The borrowing costs have already incurred; and
③ The acquisition and construction or production activities which are necessary to prepare the asset for its intended use
or sale have already started.
(2) Capitalization period of borrowing costs:
When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the
capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after the qualified asset under
acquisition and construction or production is ready for the intended use or sale shall be recognized as expenses at the
incurred amount when they are incurred, and shall be recorded into the current profits and losses.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption
period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.
(3) Calculation for the capitalization rate and capitalization amount of the borrowing costs
Interest expenses of special borrowings incurred actually for the current period less interest income from borrowings at
bank or investment income from temporary investments is capitalized; capitalization amount is determined as
accumulative asset expenditure of general borrowings over weighted average asset expenditure of special borrowings
multiples capitalization rate of general borrowings. Capitalization rate is determined as calculating weighted average
interest rate of general borrowings.
In the capitalization period, exchange differences of special borrowings in foreign currency is totally capitalized; exchange
differences of general borrowings in foreign currency is recognized in profit or loss for the current period.
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27. Biological Assets
Inapplicable
28. Oil and Gas Assets
Inapplicable
29. Use right assets
Inapplicable
30. Intangible assets
(1) Pricing Method, Service Life and Impairment Test
The Group's intangible assets include land use rights, software systems, trademark use rights, etc.
Intangible assets are initially measured at cost and the useful life of an intangible asset is analyzed and defined at the time
of acquisition of the asset. An intangible asset with a finite useful life should be amortized over its estimated useful life
using an amortization method that can reflect the expected consumption pattern of the economic benefits associated with
the asset, commencing from the time when the intangible asset is available for use. When the expected consumption
pattern cannot be determined reliably the asset should be amortized based on a straight-line method. An intangible asset
with an indefinite useful life should not be amortized.
The method for amortization of intangible assets with limited service life is as follows:
Categories Useful Life Amortization Method Remarks
Land use right 50 Straight-line method
Software system 5 Straight-line method
Trademark rights 5 -10 Straight-line method
At the end of each year, the Group shall review the service life and amortization method of intangible assets with limited
service life. If the former estimate is different, the previous estimate shall be adjusted and treated as the change of the
accounting estimate.
If an intangible asset is no longer expected to bring future economic benefits to the enterprise on the balance sheet date,
the book value of the intangible asset shall be transferred into the current profit and loss.
About the method of provision for asset impairment of intangible assets, refer to Note V. 31.
(2) Accounting policy for internal research and development expenditure
The internal research and development expenditures of the Group are divided into research expenditures and
development expenditures.
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Expenditures on research phase are recorded into profit or loss when it occurred.
Expenditure in development stage can be capitalized while meeting the following conditions, i.e. completing the intangible
asset so that it is technically feasible to use or sale; has the intent to complete the intangible asset and use or sell it; the
way of the intangibles to generate economic benefits, including being able to prove that the products that produced with
the use of the intangibles have market or the intangible asset itself has market, the intangible assets will be used internally,
and can prove its usefulness; have adequate technical, financial resources and other resources support to complete the
development of the intangible assets, and have the ability to use or sell the intangible asset; the expenditure attributable to
the intangible asset development phase can be reliably measured. Development expenditure does not meet the above
conditions are recognized in the current profit and loss.
When the Group’s research and development projects meet the above conditions, through technical feasibility and
economic feasibility studies, the development stage begins after project is approved.
Expenditures on the development phase after capitalization is listed on the balance sheet as development expenditure
and transferred to intangible assets after the project reach its intended use.
31. Impairment of long term assets
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments, foreclosed assets,
investment property subsequently measured at cost model, fixed assets, construction in progress, and intangible assets
(with inventories, deferred income tax asset and financial assets exclusive) are determined as follows:
At each balance sheet date, the Group determines whether there may be indication of impairment of the assets, if there is
any, the Group will estimate the recoverable amount of the asset, and perform test for impairment. For goodwill and the
intangible assets with the service life undetermined and the intangible assets which have not reached applicable status,
regardless whether there exists sign of impairment, the Group makes impairment test every year.
The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the disposal
expenses, and the current value of the expected future cash flow of the asset, whichever is higher. The recoverable
amount of asset is estimated on individual basis. If it is not possible to estimate the recoverable amount of the individual
asset, the Bank determines the recoverable amount of the asset group to which the asset belongs. The recognition of an
asset group shall base on whether the main cash inflow generated by the asset group is independent of those generated
by other assets or other group assets.
When the asset or asset group’s recoverable amount is lower than its book value, the Group reduces its book value to its
recoverable amount, the reduced amount is recorded in profit or loss for the current period and the provision for
impairment of assets are recognized.
As far as the goodwill impairment test concerned, the book value of the goodwill formed by merger is apportioned to the
relevant asset group according to the reasonable method commencing from the date of acquisition; in case it is difficult to
be apportioned to the relevant asset group, it is apportioned to the portfolio of the relevant asset groups. The relevant
asset group or portfolio of asset groups are those which get benefit from the coordinative effect of enterprise consolidation
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but should not be greater than the reporting segment determined by the Group.
When the relevant asset group or portfolio of asset groups with goodwill included undergo the impairment testing, in case
there exists impairment evidence in the goodwill related asset group or portfolio of asset groups, impairment testing
should be first conducted on the asset group or portfolio of asset groups without goodwill and the recoverable amount is
calculated, and the corresponding impairment loss is recognized. Impairment testing is then conducted on the asset group
or portfolio of asset groups with goodwill included. In comparison with the book value and recoverable amount, in case the
recoverable amount is lower than the book value, the loss of goodwill impairment is recognized.
The loss of asset impairment, once recognized, shall no longer be reversable in the future fiscal periods.
32. Long term expenses to be apportioned
Long-term expenses to be apportioned occurred by the Group are priced according to the actual cost, and are amortized
averagely according to the expected period of benefit. As for the long-term deferred expenses that can not benefit the
future accounting period, the amortized value is recognized in the current profit and loss.
33. Contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship between
performance obligations and customer payments. The obligation of the Company to transfer goods or provide services to
customers after receiving or receivable consideration from customers are listed as contractual liabilities. Contract assets
and liabilities under the same contract are presented in net.
34. Employees’ Wages and Salaries
(1) Accounting treatment of short term salaries
During the accounting period in which the employees render services to the Group, the Group recognizes the actual
wages, bonuses, medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums
and other social insurance premiums and housing provident funds paid for the employees in accordance with the
prescribed standards and proportions as liabilities which are included in the current profit and loss or related asset costs. If
the liability is not expected to be fully paid within twelve months after the end of the annual reporting period in which
employees have rendered the related services while the financial impact is significant, the liability will be measured at the
discounted amount.
(2) Post-employment benefits
A post-employment benefit plan consists of the defined contribution plan and the defined benefit plan. Where, the defined
contribution plan refers to a post-employment benefit plan in which the Company no longer assumes further payment
obligation after paying fixed fees to an independent fund; the defined benefit plan refers to a post-employment benefit plan
other than the defined contribution plan.
Defined Contribution Plans
The defined contribution plan includes the basic pension insurance, unemployment insurance and enterprise annuity
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plans.
In addition to basic pension insurance, the Group has established an enterprise annuity plan (the "annuity plan") in
accordance with the relevant policies of the national enterprise annuity system, and employees may participate in the
annuity plan voluntarily. With the exception of the above, the Group has no other significant social security commitments
to employees.
During the accounting period in which employees provide services to the Group, the amount of the deposits calculated
based on the defined contribution plan is recognized as a liability and counted in the current profit or loss or related asset
costs.
The defined benefit plan
For the defined benefit plan, an independent actuary performs actuarial valuation on the annual balance sheet date, and
uses the expected cumulative benefit unit method to determine the cost of providing benefits. The employee
compensation cost resulting from the defined benefit plan of the Group includes the following components:
① Service costs include current service costs, past service costs, and settlement profit or loss. Where, the current service
cost refers to the increase in the present value of the defined benefit plan obligations caused by the employees providing
services in the current period; past service costs refer to the increase or decrease in the present value of defined benefit
plan obligations related to previous employee services as a result of modification of the defined benefit plan.
② Net interest on net liabilities or net assets of the defined benefit plan, including interest income on the plan assets,
interest expense on the defined benefit plan obligations, and interest on the asset cap effect.
③ Movement of the net liabilities and net assets re-measured for setting the beneficial plan.
Unless other accounting standards require or permit the cost of employee benefits to be included in the cost of assets, the
Group will include the above Items ① and ② in the current profit and loss; Item ③ will be included in other
comprehensive income and will not be converted back to profit and loss in subsequent accounting period. The part
originally included in other comprehensive income will be carried forward to the retained earnings within the scope of
equity at the end of the original defined benefit plan.
(3) Accounting treatment for termination benefits
If the Group provides termination benefits to employees, the employee compensation liabilities arising from the
termination benefits shall be recognized as soon as possible and included in the current profit and loss: when the Group
cannot unilaterally withdraw the termination benefits provided due to the termination of the labor relationship plan or
reduction proposal; when the Group confirms the costs or expenses related to the reorganization involving the payment of
termination benefits.
In the case of implementing an internal retirement plan, the economic compensation prior to the official retirement date
shall be considered as termination benefit. During the period from the time when an employee ceases to render services
to the day of normal retirement, the salary to the employee of internal retirement and the social insurance premium to be
paid shall be recorded into the current profit and loss in a lump sum. The economic compensation after the official
retirement date (such as normal old-age pension) shall be treated as post-employment benefits.
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(4) Accounting treatment for other long term employees' welfare
Other long term employees' welfare provided by the Group to its employees shall undergo the accounting treatment
according to the defined contribution plan as long as it complies with the defined contribution plan. If it meets the defined
benefit plan, it shall be treated in accordance with the above relevant provisions of the defined benefit plan. However, in
the relevant employee compensation cost, the part of "change caused by remeasurement of net liabilities or net assets of
the defined benefit plan" shall be recorded into the current profit and loss or the cost of relevant assets.
35. Lease liabilities
Inapplicable
36. Predicted liabilities
If the obligation related to the contingencies meet the following conditions at the same time, the Group will recognize it as
estimated liability:
(1) The obligation is a current obligation of the Group;
(2) The performance of this obligation is likely to lead to the outflow of economic benefit from the Group;
(3)The amount of the obligation can be reliably measured.
The estimated liabilities shall be initially measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation, and the Bank shall take into full consideration of the risks, uncertainty, time value of
money, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the best
estimate shall be determined after discounting the relevant future outflow of cash. On the balance sheet date, the Group
re-checks the book value of the estimated debts and makes proper adjustment in order to reflect the best estimated
amount at present.
If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and the compensated
amount can only be received basically, it is recognized separated as asset. The compensated amount shall not be greater
than the book value of the predictive liability.
37. Share-based payment
(1) Type of share-based payment
Share-based payments are divided into equity-settled share-based payment and cash-settled share-based payment.
(2) Method for determining the fair value of equity instruments
The Group determines the fair value of the equity instruments granted, such as options with an active market according to
the price quoted in the active market. The fair value of equity instruments such as options without active market is
determined by option pricing model. In selecting the option pricing model, the following factors have been taken into
consideration: A. price for exercising the option; B. validity of the option; C. the current price of the underlying shares; D.
the expected volatility of stock prices; E. the expected dividends on the shares; F. the risk-free interest rate within the term
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of the option.
(3) Basis for determining the best estimate of the vested equity instruments
On each balance sheet date during the vesting period, the Group may make best estimate based on the subsequent
information, such as the movement of the number of employees eligible for exercising the rights as latest obtained and the
number of the vested equity instruments is corrected. On the vesting date, the number of the final estimated vested equity
instrument should be equal to the number of the actually vested equity instruments.
(4) Relevant accounting treatment for implementation, amendment or termination of the share-based payment plan
Share-based payment settled with equity is measured with the fair value of the employee's equity instruments at the grant
date. If the right may be exercised immediately after the grant, the fair value of the equity instruments shall, on the date of
the grant, be included in the relevant cost or expense and the capital reserves shall be increased accordingly. As to a
equity-settled share-based payment in return for employee services, if the right cannot be exercised until the vesting
period comes to an end or until the prescribed performance conditions are met, then on each balance sheet date within
the vesting period, the services obtained in the current period shall, based on the best estimate of the number of vested
equity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equities
instruments on the date of the grant. The Group shall, after the vesting date, make no adjustment to the relevant costs or
expenses as well as the total amount of the owner's equities which have been confirmed.
A cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated and
confirmed based on the shares or other equity instruments undertaken by the Group. As to a cash-settled share-based
payment instruments, if the right may be exercised immediately after the grant, the fair value of the liability undertaken by
the Group shall, on the date of the grant, be included in the relevant costs or expenses, and the liabilities shall be
increased accordingly. As to a cash-settled share-based payment, if the right may not be exercised until the vesting period
comes to an end or until the specified performance conditions are met, on each balance sheet date within the vesting
period, the services obtained in the current period shall, based on the best estimate of the information about the
exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the fair value of the
liability undertaken by the Group. The fair value of the liabilities is re-measured and the movement is counted in the
current profits and losses on each balance sheet date and settlement day before the settlement of related liabilities.
When the Group amends the share-based payment plan, if the amendment increases the fair value of the equity
instruments granted, the increase of the services obtained is recognized accordingly based on the increase of the fair
value of the equity instruments. If the amendment increases the number of equity instruments granted, the fair value of the
increased equity instruments is correspondingly recognized as increase in the services acquired. Increase of the fair value
of the equity instrument refers to the difference between the fair value of the equity instrument on the amendment day
before and after the amendment. If the amendment reduces the total fair value of the share-based payment or adopts any
other method unfavorable to the employees, the service obtained will continue to undergo accounting treatment as if such
amendment has never taken place unless the Group has canceled part or all of the granted equity instruments.
If the granted equity instrument has been canceled (unless the non-market condition which does not satisfy the right of
feasibility is cancelled)during the vesting period, the Group shall treat the cancellation of the granted equity instrument as
accelerated vesting, the amount which should be recognized during the remaining vesting period is counted to the current
profit and loss immediately and at the same time the capital reserve is recognized. If an employee or other party can
choose to meet the non-vesting conditions but fails to meet the vesting period, the Group shall treat it as a cancellation of
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the granted equity instrument.
38. Other financial instruments, such as preferred shares, perpetual liabilities, etc.
Inapplicable
39. Revenue
The accounting policy used for revenue recognition and measurement
The Company recognizes revenue when it has satisfied the performance obligation under the contract, that is, when the
customer has obtained the right to control the relevant goods or services “Obtaining the right to control the relevant goods
or services” means that it is able to dominate the use of the goods or services and derive almost all economic benefits
therefrom.
If a contract contains two or more performance obligations, the Company shall allocate the transaction price to each
individual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods or
services promised by each individual performance obligation on the date of the contract The Company measures revenue
based on the transaction price allocated to each individual performance obligation.
The transaction price refers to the amount of consideration that the company expects to be entitled to receive due to the
transfer of goods or services to customers, excluding payments collected on behalf of third parties and payments
expected to be returned to customers. The Company determines the transaction price in accordance with the terms of the
contract with combination of its past customary practices. When determining the transaction price, the influence from
variable consideration, major financing components in the contract, non-cash consideration, consideration payable to
customers and other factors should be taken into consideration. The Company determines the transaction price that
includes variable consideration at an amount that does not exceed the amount of accumulated recognized revenue that is
unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is a significant financing component
in the contract, the Company determines the transaction price based on the amount payable in cash when the customer
obtains control of the goods or services, and uses the actual interest method to amortize the difference between the
transaction price and the contract consideration during the contract period. One of the following conditions shall be fulfilled
within a certain period of time; otherwise, it shall be fulfilled at a certain point in time:
A customer obtains and consumes the economic benefits brought by the Company's performance at the same time as
the Company's performance.
A customer may control the products under construction in the Company's performance process.
The goods produced by the Company during the performance of the contract have irreplaceable uses, and the Company
has the right to collect payment for the cumulative performance part that has been completed so far during the entire
contract period.
For performance obligations performed within a certain period of time, the Company recognizes revenue in accordance
with the performance progress during that period, except where the performance progress cannot be reasonably
determined. The Company determines the progress of a contract by using the output method or input method with
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consideration of the nature of goods or services. When the performance progress cannot be reasonably determined, and
the costs incurred are expected to be compensable, the Company recognizes the revenue according to the amount of the
costs incurred until the performance progress can be reasonably determined.
For performance obligations performed at a certain point of time, the Company recognizes revenue at the point when a
customer obtains control of the relevant goods or services. In judging whether a customer has obtained control of goods
or services, the Company considers the following signs:
The Company has the current right to receive payment for the goods or services, that is, the customer has the current
payment obligation for the goods or services.
The Company has transferred the legal ownership of the product to the customer, that is, the customer has the legal
ownership of the product.
The Company has transferred the goods to the customer in kind, that is, the customer has taken possession of the
goods in kind.
The Company has transferred the main risks and rewards of the ownership of the goods to the customer, that is, the
customer has obtained the main risks and rewards of the ownership of the goods.
The customer has accepted the goods or services, etc.
Differences in revenue recognition accounting policies caused by different business models in similar businesses
Nil
40. Government subsidies
Government subsidies are recognized when they meet the conditions attached to the government subsidies and can be
received.
Government subsidies for monetary assets are measured according to the amount received or receivable. If a
government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in a
reliable way, it shall be measured at its nominal amount.
The government subsidies pertinent to assets mean the government subsidies that are obtained by the Group used for
purchase or construction, or forming the long-term assets by other ways with those pertinent to income exclusive.
If the subsidy recipient is not specified in the government documents and long-term assets can be formed, the part of the
government subsidies corresponding to the asset value is regarded as the government subsidy pertinent to the asset, and
the rest is regarded as the government subsidy pertinent to the income; if it is difficult to distinguish, the government
subsidies as a whole are regarded as the government subsidies pertinent to the income.
Government subsidies pertinent to assets are recognized as deferred income and recorded in profit and loss in
installments in accordance with a reasonable and systematic method within the useful life of the relevant assets. If
government subsidies pertinent to income are used to compensate related cost or loss already incurred, they are included
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in the current profit and loss or offsets the related costs; if they are used to compensate related costs or losses in
subsequent periods, they shall be included in the deferred income, and included in the current profit and loss or offset the
related costs during the recognition period of the related costs or losses. The government subsidy measured at a nominal
amount is directly counted to the current profit and loss. The Group adopts the same method to deal with the same or
similar government subsidy business.
Government subsidies pertinent to daily activities are included in other income in accordance with the nature of economic
business. Government subsidies irrelevant with the daily activities are included in non-operating revenue and expenditure.
When the government subsidy already recognized needs to be returned, if there is a relevant deferred income balance,
the book balance of the relevant deferred income shall be offset, and the excess part shall be included in the current profit
and loss; in other cases, it shall be directly included in the current profit and loss.
41. Deferred income tax asset/deferred income tax liability
Income tax includes current income tax and deferred income tax. Income taxes should be recognized as income tax
expenses in profit or loss for current period except for deferred income tax associated with goodwill arising from business
combination, or transactions or events that are directly recognized in owners’ equity, which should be recorded under
owners’ equity.
A deferred income tax asset or liability is recognized based on the temporary differences between the book value of an
asset or a liability at the balance sheet date and its tax basis using the balance sheet liability method.
A deferred income tax liability should be recognized for all taxable temporary differences, except to the extent that the
deferred income tax liability arises from the following transactions:
(1) The initial recognition of goodwill; or the initial recognition of an asset or liability in a transaction that has both of the
following characteristics: the transaction is not a business combination; and at the time of the transaction, it neither affects
the accounting profit nor taxable profit.
(2) A deferred income tax liability should be recognized for all taxable temporary differences arising from the investments
in subsidiaries, joint ventures and associates, except to the extent that both of the following conditions are satisfied: A. the
Group is able to control the timing of the reversal of the temporary differences; and B. it is probable that the temporary
difference will not reverse in the foreseeable future.
In respect of deductible temporary differences, the carry-forward of deductible losses and tax deductions, the Group
should recognize deferred tax assets to the extent that it is probable that future taxable profit will be available against
which the deductible temporary differences, the deductible losses and tax deductions can be utilized, unless the
deductible temporary differences arises from the following transactions.
(1) The transaction is not business combination and at the time of the transaction, it neither affects accounting profit nor
taxable profit.
(2) Deferred tax assets should be recognized for all deductible temporary differences associated with investments in
subsidiaries, joint ventures and associates if all of the following conditions are satisfied: it is probable that the deductible
temporary difference will reverse in the foreseeable future and it is probable that taxable profit in the future will be
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available against which the deductible temporary difference can be utilized.
At the balance sheet date deferred income tax assets and liabilities should be measured at tax rates expected to be
applied to the period when the asset is recovered or the liability is settled and the measurement of deferred income tax
assets and liabilities should reflect the tax consequences that would follow from the manner in which The Bank expects, at
the balance sheet date, to recover or settle the book value of its assets and liabilities.
At the balance sheet date the Bank should review the book value of deferred income tax assets. The book value of a
deferred income tax asset should be reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow the benefit of the deferred income tax asset to be utilized. Any such reduction in amount is reversed
when it becomes probable that sufficient taxable profits will be available.
42. Lease
(1) Accounting process for operating lease
A. The Group as the Lessor
The rents from operating leases shall be recorded in the profits and losses of the current period by using the straight-line
method over each period of the lease term. The initial direct costs incurred shall be recorded into the profits and losses of
the current period.
B. The Group as the Tenant
Lease income from operating leases shall be recorded in the profits and losses of the current period using the straight-line
method over each period of the lease term. The initial direct costs incurred shall be recorded into the profits and losses of
the current period.
(2) Accounting treatment method for finance lease
Inapplicable
43. Other important accounting policy and accounting estimate
(1) Repurchased shares
The shares repurchased by the Company shall be managed as treasury stock before they are cancelled or transferred,
and all expenditures for the repurchase of shares shall be transferred to the cost of treasury stock. The consideration and
transaction costs paid in the repurchase reduce the owner’s equity. In process of repurchasing, transferring or canceling
the Company’s shares, no profit or loss is recognized.
When transferring treasury shares, the difference between the actual amount received and the book value of treasury
shares is included in the capital reserve. If the capital reserve is insufficient to offset, the surplus reserve and retainted
earnings shall be offset. For the cancellation of treasury shares, the share capital shall be reduced according to the book
value of the shares and the number of shares cancelled, and the capital reserve shall be reduced according to the
difference between the book balance and the book value of the cancelled treasury shares. If the capital reserve is
insufficient, the surplus reserve and retained earnings shall be written-down.
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(2) Restricted stocks
In the equity incentive plan, the Company grants restricted stocks to the motivated objects. The motivated objects first
subscribe for the stocks. If the unlocking conditions stipulated in the equity incentive plan are not met subsequently, the
Company shall repurchase the stocks at the previously agreed price. If the restricted stocks issued to employees have
fulfilled the capital increase procedures such as registration in accordance with relevant regulations, on the grant date, the
Company shall confirm the share capital and capital reserve (share capital premium) based on the subscription monies
paid by the employees; at the same time, the treasury stock and other payables are confirmed for the repurchase
obligation.
44. Changes in significant accounting policies and accounting estimates
(1) Change in significant accounting policies
Contents and cause of the change in the accounting
Examination and approval procedures Remarks
policy
On July 5, 2017, the Ministry of Finance revised and
issued the "Accounting Standards for Enterprises No.
14-Revenue". According to the requirements of the
Ministry of Finance, companies listed both at home and
abroad or listed overseas should prepare their financial
The Company reviewed and approved the
statements according to the IFRS or the Accounting
implementation at its 16th Session of the Ninth Board of
Standards for Enterprises commencing from January 1,
Directors.
2018; other domestically listed companies implement the
same commencing from January 1, 2020; non-listed
companies implementing the Accounting Standards for
Business Enterprises shall implement the same
commencing from January 1, 2021.
The Ministry of Finance revised the "Accounting Standards for Enterprises No. 14 - Revenue" in 2017. The revised
standards stipulate that in the initial implementation of the standards, an enterprise should adjust the amount of retained
earnings and other related items in the financial statements at the beginning of the year based on the cumulative impact,
and no adjustments should be made to comparable period information.
The Company started to implement the new standards for revenue commencing from January 1, 2020. According to the
standards, the Company only adjusts the accumulated impact of contracts that have not been completed on the date of
first implementation. The retained earnings at the beginning of 2020 and the amount of other related items in the financial
statements would not be adjusted in the 2019 financial statements. The implementation of these standards has no impact
on retained earnings at the beginning of 2020 and the amount of other related items in the financial statements.
The main impacts of the changes in accounting policies caused by the above new standards for revenue in the financial
statements on January 1, 2020 are as follows::
Consolidated Financial Statements:
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Book value as presented according to the Reclassified Book value as presented according to the new
previous standards (December 31, 2019) standards
January 1, 2020)
Advance Receipts 23,433,463.57 -19,999,056.53 3,434,407.04
Contract liabilities 19,999,056.53 19,999,056.53
Financial Statements, Parent Company
Book value as presented according to the Reclassified Book value as presented according to the new
previous standards (December 31, 2019) standards
January 1, 2020)
Advance Receipts 3,434,407.04 3,434,407.04
Contract liabilities
(2) Change in significant accounting estimates
Inapplicable
(3) Adjustment of the relevant financial statements at the current year beginning according to the new standards
for revenues and the new standards for lease initially implemented commencing from 2020
Consolidated Balance Sheet
In CNY
Items December 31, 2019 January 01, 2020 Amount involved in the adjustment
Current assets:
Monetary fund 316,668,565.09 316,668,565.09
Settlement reserve
Inter-bank lending
Transactional financial assets
Derivative financial assets
Notes receivable 10,596,431.31 10,596,431.31
Accounts receivable 397,471,106.98 397,471,106.98
Financing with accounts
receivable
Advance payment 10,847,962.28 10,847,962.28
Receivable premium
Reinsurance accounts receivable
Reserve for reinsurance contract
receivable
Other receivables 47,239,844.58 47,239,844.58
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Including: Interest receivable
Dividends receivable
Redemptory monetary capital for
sale
Inventories 1,808,820,089.92 1,808,820,089.92
Contract assets
Held-for-sale assets
Non-current assets due within a
year
Other current assets 68,858,096.74 68,858,096.74
Total current assets 2,660,502,096.90 2,660,502,096.90
Non-current assets:
Loan issuing and advance in
cash
Equity investment
Other equity investment
Long term accounts receivable
Long-term equity investment 46,423,837.85 46,423,837.85
Investment in other equity
85,000.00 85,000.00
instruments
Other non-current financial assets
Investment-oriented real estate 407,503,307.24 407,503,307.24
Fixed assets 363,997,098.94 363,997,098.94
Construction-in-process
Productive biological asset
Oil and gas assets
Use right assets
Intangible assets 38,711,821.26 38,711,821.26
Development expenses
Goodwill
Long-term expenses to be
152,587,491.33 152,587,491.33
apportioned
Deferred income tax asset 83,739,383.37 83,739,383.37
Other non-current assets 7,373,248.48 7,373,248.48
Total non-current assets 1,100,421,188.47 1,100,421,188.47
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Total assets 3,760,923,285.37 3,760,923,285.37
Current liabilities:
Short term borrowings 567,908,833.21 567,908,833.21
Borrowings from central bank
Loans from other banks
Transactional financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 279,772,787.37 279,772,787.37
Advance Receipts 23,433,463.57 3,434,407.04 -19,999,056.53
Contract liabilities 19,999,056.53 19,999,056.53
Income from sale of the
repurchased financial assets
Deposits taking and interbank
placement
Acting trading securities
Income from securities
underwriting on commission
Payroll payable to the employees 82,602,845.67 82,602,845.67
Taxes payable 24,064,803.00 24,064,803.00
Other payables 119,616,721.63 119,616,721.63
Including: interest payable
Dividends payable 848,233.27 848,233.27
Service charge and commission
payable
Payable reinsurance
Held-for-sale liabilities
Non-current liabilities due within a
360,140.00 360,140.00
year
Other current liabilities
Total current liabilities 1,097,759,594.45 1,097,759,594.45
Non-current liabilities:
Reserve for insurance contract
Long-term borrowings 4,321,680.00 4,321,680.00
Bonds payable
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Including: preferred shares
Perpetual bond
Lease liabilities
Long-term accounts payable
Long term payroll payable to the
employees
Estimated liabilities
Deferred income 3,046,090.60 3,046,090.60
Deferred income tax liability 1,256,242.49 1,256,242.49
Other non-current liabilities
Total non-current liabilities 8,624,013.09 8,624,013.09
Total liabilities 1,106,383,607.54 1,106,383,607.54
Owner’s equity:
Capital stock 442,968,881.00 442,968,881.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital Reserve 1,081,230,215.32 1,081,230,215.32
Less: shares in stock 71,267,118.78 71,267,118.78
Other comprehensive income -940,209.09 -940,209.09
Special reserve
Surplus Reserve 235,701,180.14 235,701,180.14
Provision for general risks
Retained earnings 966,840,818.40 966,840,818.40
Total owners’ equity attributable to the
2,654,533,766.99 2,654,533,766.99
parent company
Minority shareholders’ equity 5,910.84 5,910.84
Total owner’s equity 2,654,539,677.83 2,654,539,677.83
Total liabilities and owners’ equity 3,760,923,285.37 3,760,923,285.37
Note to the Adjustment
Balance Sheet, Parent Company
In CNY
Items December 31, 2019 January 01, 2020 Amount involved in the adjustment
Current assets:
Monetary fund 270,673,346.02 270,673,346.02
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Transactional financial assets
Derivative financial assets
Notes receivable
Accounts receivable 2,848,025.39 2,848,025.39
Financing with accounts
receivable
Advance payment
Other receivables 783,647,732.22 783,647,732.22
Including: Interest receivable
Dividends receivable
Inventories
Contract assets
Held-for-sale assets
Non-current assets due within a
year
Other current assets 12,380,243.67 12,380,243.67
Total current assets 1,069,549,347.30 1,069,549,347.30
Non-current assets:
Equity investment
Other equity investment
Long term accounts receivable
Long-term equity investment 1,380,895,239.27 1,380,895,239.27
Investment in other equity
85,000.00 85,000.00
instruments
Other non-current financial assets
Investment-oriented real estate 329,970,083.18 329,970,083.18
Fixed assets 238,594,698.50 238,594,698.50
Construction-in-process
Productive biological asset
Oil and gas assets
Use right assets
Intangible assets 30,925,974.54 30,925,974.54
Development expenses
Goodwill
Long-term expenses to be 12,106,759.98 12,106,759.98
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apportioned
Deferred income tax asset 1,125,840.75 1,125,840.75
Other non-current assets 4,707,236.86 4,707,236.86
Total non-current assets 1,998,410,833.08 1,998,410,833.08
Total assets 3,067,960,180.38 3,067,960,180.38
Current liabilities:
Short term borrowings 540,650,622.50 540,650,622.50
Transactional financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 12,952,934.93 12,952,934.93
Advance Receipts 3,434,407.04 3,434,407.04
Contract liabilities
Payroll payable to the employees 19,019,554.57 19,019,554.57
Taxes payable 1,713,130.68 1,713,130.68
Other payables 82,631,590.46 82,631,590.46
Including: interest payable
Dividends payable 848,233.27 848,233.27
Held-for-sale liabilities
Non-current liabilities due within a
year
Other current liabilities
Total current liabilities 660,402,240.18 660,402,240.18
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: preferred shares
Perpetual bond
Lease liabilities
Long-term accounts payable
Long term payroll payable to the
employees
Estimated liabilities
Deferred income 3,046,090.60 3,046,090.60
Deferred income tax liability
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Other non-current liabilities
Total non-current liabilities 3,046,090.60 3,046,090.60
Total liabilities 663,448,330.78 663,448,330.78
Owner’s equity:
Capital stock 442,968,881.00 442,968,881.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital Reserve 1,086,885,756.42 1,086,885,756.42
Less: shares in stock 71,267,118.78 71,267,118.78
Other comprehensive income
Special reserve
Surplus Reserve 235,701,180.14 235,701,180.14
Retained earnings 710,223,150.82 710,223,150.82
Total owner’s equity 2,404,511,849.60 2,404,511,849.60
Total liabilities and owners’ equity 3,067,960,180.38 3,067,960,180.38
Note to the Adjustment
Inapplicable
(4) Note to the retroactive adjustment of the previous comparative data according to the new standards for
revenue and the new standards for lease to be implemented commencing from year 2020
Inapplicable
45. Miscelleneous
Inapplicable
VI. Taxation
1. Types of major taxes and tax rates
Type of taxes Tax basis Tax rates
Value-added tax Taxable income 13%, 10%, 9%, 6% and 5%
Consumption tax Taxable income 20%
Urban maintenance and construction tax Amount of payable turnover tax 5% and 7%
Enterprise income tax Taxable income amount Refer to the Note
Real estate tax Cost of the property or rental income 1.2% and 12%
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In case there exists taxpayers subject to different corporate income tax rates, disclose the information.
Taxpayers Income tax rates
The Company 25.00%
Shenzhen Harmony World Watches Center Co., Ltd. (HARMONY) 25.00%
Shenzhen FIYTA Precision Technology Co., Ltd. 15.00%
FIYTA (Hong Kong) Limited (FIYTA HK) 16.50%
Station-68 Co. 16.50%
Shenzhen FIYTA Technology Development Co., Ltd. (Technology Development Co.) 15.00%
Shiyuehui Boutique (Shenzhen) Co., Ltd. (Shiyuehui ) 25.00%
Shenzhen Harmony E-Commerce Co., Ltd. 20.00%
Emile Chouriet (Shenzhen) Limited (Emile Choureit Shenzhen Company) 25.00%
FIYTA Sales Co., Ltd. (FIYTA Sales Co.) 25.00%
Liaoning Hengdarui Commerce & Trade Co., Ltd. (Hengdarui) 25.00%
Montres Chouriet SA (the Swiss Co.) 30.00%
2. Tax Preferences
(1) According to Article 2 of the Circular on Transmission of the Provisions on the Policy in Connection with the Property
Tax and Urban Land Use Tax Promulgated by the State Administration of Taxation (SHEN DI SHUI FA [2003] No. 676: for
the new properties newly constructed or purchased by taxpayers, the property tax may be exempted for three years
commencing from the next month after completion of the construction or purchase. Our FIYTA Watch Building located at
Guangming New Zone of Shenzhen enjoys exemption from the property tax for three years commencing from the next
month of completion of the construction in September 2016.
(2) In accordance with Notice of the Ministry of Finance and the State Administration of Taxation on Extending the Loss
Carryover Period for High and New Technology Enterprises and Small and Medium-Sized Technological Enterprises (CAI
SHUI [2018] No. 76), beginning on January 1, 2018, the losses of an enterprise currently qualified as a high and new
technology enterprise that occurred during the prior five years and are still not fully covered may be carried over for
covering in subsequent years, and the maximum carryover period shall be extended from 5 years to 10 years.
3. Others
Note: Property tax
According to the provisions of Article 5 of the Notice of Shenzhen Local Tax Bureau on the Issuance of the "Questions and
Answers on the Policy for the Property Tax and Vehicle & Vessel Use Tax": Production and business units leasing its
properties should pay real estate tax based on 70% of the cost of the properties at the tax rate of 1.2%.
The Group pays the property tax for its properties located in Shenzhen at the tax rate specified in the said Notice, and
pays the property tax for its properties located in other cities according to local regulations.
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VII. Notes to items of consolidated financial statements
1. Monetary capital
In CNY
Items Ending balance Opening balance
Cash in stock 215,989.73 229,258.38
Bank deposit 343,931,215.59 285,306,297.62
Other Monetary Funds 2,334,436.36 31,133,009.09
Total 346,481,641.68 316,668,565.09
Including: total amount deposited overseas 1,156,395.61 3,641,389.51
Total amount with restrictions on use due to
1,575,000.00 1,575,000.00
mortgage, pledge or freezing of account
Other notes
Of other monetary fund, CNY 1,575,000.00 (December 31, 2017: CNY 1,575,000.00) was the margin deposits deposited
by the Company for application to banks for unconditional and irrevocable letter of guarantee.
2. Transactional financial assets
Inapplicable
3. Derivative financial assets
Inapplicable
4. Notes receivable
(1) Presentation of classification of notes receivable
In CNY
Items Ending balance Opening balance
Bank acceptance 6,593,239.62 6,187,353.98
Trade acceptance 14,638,303.74 4,409,077.33
Total 21,231,543.36 10,596,431.31
In CNY
Ending balance Opening balance
Categories
Book balance Bad debt reserve Book value Book balance Bad debt reserve Book value
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Provision Provision
Amount Proportion Amount Amount Proportion Amount
proportion proportion
where
Notes receivable for which
21,448,726. 21,231,543.3 10,813,614.0 10,596,431.3
bad debt reserve has been 100.00% 217,182.73 1.01% 100.00% 217,182.73 2.01%
09 6 4 1
provided based on portfolios
where
6,593,239.6
Bank acceptance 30.74% 6,593,239.62 6,187,353.98 57.22% 6,187,353.98
2
14,855,486. 14,638,303.7
Trade acceptance 69.26% 217,182.73 1.46% 4,626,260.06 42.78% 217,182.73 4.69% 4,409,077.33
47 4
21,448,726. 21,231,543.3 10,813,614.0 10,596,431.3
Total 100.00% 217,182.73 1.01% 100.00% 217,182.73 2.01%
09 6 4 1
Individual provision for bad and doubtful debts:
Inapplicable
Total provision for bad and doubtful debts based on portfolio:
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Trade acceptance 14,855,486.47 217,182.73 1.46%
Total 14,855,486.47 217,182.73 --
Note to the basis for determining the combination:
Inapplicable
(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Amount recovered or Ending balance
Provision Writing-off Others
reversed
Trade acceptance 217,182.73 217,182.73
Total 217,182.73 217,182.73
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
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(3) Notes receivable already pledged by the Company at the end of the reporting period
Inapplicable
(4) Endorsed or discounted notes receivable at the end of the reproting period, but not yet due on the balance
sheet date
Inapplicable
(5) Notes transferred to receivables due to issuer’s default at the end of the reporting period
Inapplicable
(6) Notes receivable actually written off in current period
Inapplicable
5. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
Ending balance Opening balance
Book balance Bad debt reserve Book balance Bad debt reserve
Categories
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts receivable for
which bad debt reserve has 18,435,421. 17,685,254. 24,140,377.5 17,562,041.1
4.01% 95.93% 750,166.85 5.66% 72.75% 6,578,336.42
been provided based on 50 65 7 5
individual items
where
Accounts receivable from 18,435,421. 17,685,254. 24,140,377.5 17,562,041.1
4.01% 95.93% 750,166.85 5.66% 72.75% 6,578,336.42
other customers 50 65 7 5
Accounts receivable for
which bad debt reserve has 441,309,124 13,905,071. 427,404,053. 402,376,052. 11,483,281.4
95.99% 3.15% 0.94% 2.85% 390,892,770.56
been provided based on .89 76 13 00 4
portfolios
where
Portfolios 1 (Receivables
from related parties within
the scope of consolidation)
Portfolios 2 (Accounts 441,309,124 95.99% 13,905,071. 3.15% 427,404,053. 402,376,052. 94.34% 11,483,281.4 2.85% 390,892,770.56
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receivable from other .89 76 13 00 4
customers)
459,744,546 31,590,326. 428,154,219. 426,516,429. 29,045,322.5
Total 100.00% 6.87% 100.00% 6.81% 397,471,106.98
.39 41 98 57 9
Individual provision for bad and doubtful debts:
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion Provision reason
Accounts receivable from other
18,435,421.50 17,685,254.65 95.93% Expected to be unrecoverable
customers
Total 18,435,421.50 17,685,254.65 -- --
Individual provision for bad and doubtful debts:
Inapplicable
Total provision for bad and doubtful debts based on portfolio:
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Accounts receivable from other customers 441,309,124.89 13,905,071.76 3.15%
Total 441,309,124.89 13,905,071.76 --
Note to the basis for determining the combination:
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 449,801,260.02
1 to 2 years 7,015,459.22
2 to 3 years 942,383.55
Over 3 years 1,985,443.60
3 to 4 years 1,953,085.41
4 to 5 years 32,358.19
Total 459,744,546.39
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(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Amount recovered or Ending balance
Provision Writing-off Others
reversed
Accounts receivable
29,045,322.59 2,928,414.87 383,411.05 31,590,326.41
from other customers
Total 29,045,322.59 2,928,414.87 383,411.05 31,590,326.41
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion of the ending balance of the
Description of Units Ending balance of accounts receivable Ending balance of the provision for bad debts
accounts receivable
Accounts receivable from the top
70,888,754.40 15.41% 3,544,437.72
five debtors
Total 70,888,754.40 15.41%
(5) Account receivable with recognition terminated due to transfer of financial assets
Inapplicable
(6) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
6. Financing with accounts receivable
Inapplicable
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7. Advance payments
(1) Advance payments are presented based on ages
In CNY
Ending balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 15,017,714.46 81.60% 10,221,061.48 94.23%
1 to 2 years 2,759,153.37 14.99% 284,733.40 2.62%
2 to 3 years 284,733.40 1.55% 342,167.40 3.15%
Over 3 years 342,167.40 1.86%
Total 18,403,768.63 -- 10,847,962.28 --
Note to the reason why the prepayment with age exceeding 1 year and a significant amount of money has not been
settled in time:
Inapplicable
(2) Advance payment to the top five payees of the ending balance collected based on the payees of the advance
payment
The total amount of advance payment to the top five payees of the ending balance collected based on the payees of the
advance payment was CNY 10,980,253.84, taking 59.66% of the toal ending balance of the advance payment.
Other notes:
Inapplicable
8. Other receivables
In CNY
Items Ending balance Opening balance
Other receivables 106,768,399.40 47,239,844.58
Total 106,768,399.40 47,239,844.58
(1) Interest receivable
1) Classification of interest receivable
Inapplicable
2) Significant overdue interest
Inapplicable
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3) Provision for bad debts
Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable
Inapplicable
2) Significant dividends receivable with age exceeding 1 year
Inapplicable
3) Provision for bad debts
Inapplicable
(3) Other receivables
1) Classification of other receivables based on nature of payment
In CNY
Nature of Payment Ending book balance Opening book balance
Reserve 5,462,300.98 2,147,617.27
Cash deposits 45,511,609.60 45,014,657.70
Commodity promotion fee 749,974.83 2,518,891.09
Advance payment for equity allocation 53,183,393.38
Others 12,376,982.56 7,903,069.93
Total 117,284,261.35 57,584,235.99
2) Provision for bad debts
In CNY
The 1st stage The 2nd stage The 3rd stage
Predicted credit loss in the whole Predicted credit loss in the whole
Bad debt reserve Predicted credit loss in the Total
duration (no credit impairment taken duration (credit impairment already
future 12 months
place) taken place)
Balance as at January 01, 2020 2,450,903.29 7,893,488.12
Balance as at January 01, 2020
—— —— —— ——
during the reporting period
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Provision in the reporting period 49,663.99
Reversal in the reporting period 120,707.78
Other changes 242,514.33
Balance as at June 30, 2020 2,379,859.50 8,136,002.45
Movement of the book balance of provision for loss with significant amount in the reporting period
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 93,144,499.37
1 to 2 years 6,207,121.99
2 to 3 years 4,015,241.00
Over 3 years 13,917,398.99
3 to 4 years 11,790,568.98
4 to 5 years 1,922,066.01
Over 5 years 204,764.00
Total 117,284,261.35
3) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Amount recovered or Ending balance
Provision Writing-off Others
reversed
Bad debt reserve 10,344,391.41 49,663.99 120,707.78 242,514.33 10,515,861.95
Total 10,344,391.41 49,663.99 120,707.78 242,514.33 10,515,861.95
Where the significant amount of the provision for bad debt recovered or reversed:
Inapplicable
4) Accounts receivable actually written off in the reporting period
Inapplicable
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5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion in total ending Ending balance of the
Description of Units Nature of Payment Ending balance Aging
balance of other receivables provision for bad debts
A Payment for goods 6,293,233.44 Over 3 years 5.37% 6,293,233.44
B Deposit in security 3,166,648.00 Within 1 year 2.70% 158,332.40
C Deposit in security 1,672,563.00 Within 1 year 1.43% 83,628.15
D Deposit in security 1,151,403.00 Within 1 year 0.98% 57,570.15
E Deposit in security 946,179.00 Within 1 year 0.81% 47,308.95
Total -- 13,230,026.44 -- 11.28% 6,640,073.09
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables with recognition terminated due to transfer of financial assets
Inapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
9. Inventories
Does the Company need to comply with the disclosure requirements of real estate industry
No
(1) Classification of inventories
In CNY
Ending balance Opening balance
Provision for price Provision for price
falling of inventories or falling of inventories or
Items
Book balance provision for Book value Book balance provision for Book value
impairment of contract impairment of contract
performance costs performance costs
Raw materials 198,721,964.25 21,420,955.08 177,301,009.17 195,644,341.20 21,197,269.90 174,447,071.30
Products in process 6,274,467.37 6,274,467.37 11,707,382.99 11,707,382.99
Commodities in stock 1,676,669,349.53 62,029,785.83 1,614,639,563.70 1,684,674,585.69 62,008,950.06 1,622,665,635.63
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Total 1,881,665,781.15 83,450,740.91 1,798,215,040.24 1,892,026,309.88 83,206,219.96 1,808,820,089.92
(2) Provision for price falling of inventories or provision for impairment of contract performance costs
In CNY
Increase in the reporting period Decrease in the reporting period
Items Opening balance Reversal or Ending balance
Provision Others Others
Offset
Raw materials 21,197,269.90 223,685.19 21,420,955.08
Commodities in stock 62,008,950.06 20,835.76 62,029,785.83
Total 83,206,219.96 244,520.95 83,450,740.91
(3) Note to the amount of capitalized borrowing costs involved in the ending balance of inventories
Inapplicable
(4) Note to the amortized amount of the contract performance costs in the reporting period
Inapplicable
10. Contract assets
Inapplicable
11. Classified as assets held for sale
Inapplicable
12. Non-current assets due within a year
Inapplicable
13. Other current assets
In CNY
Items Ending balance Opening balance
Input VAT to be offset 28,805,937.14 47,626,820.11
Income tax paid in advance 3,248,429.93 1,313,954.49
Others - short-term expenses to be apportioned 11,240,638.19 15,661,429.95
VAT paid in advance 1,243,045.91 4,255,892.19
Total 44,538,051.17 68,858,096.74
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Other notes:
Inapplicable
14. Equity investment
Inapplicable
15. Other equity investment
Inapplicable
16. Long term accounts receivable
(1) About long term accounts receivable
Inapplicable
(2) Long term account receivable with recognition terminated due to transfer of financial assets
Inapplicable
(3) Amount of assets and liabilities formed through transfer of long-term accounts receivable and continuing to
be involved
Inapplicable
17. Long-term equity investments
In CNY
Increase/ Decrease (+ / -) in the reporting period
Income from Announced Ending
Opening equity Other for Ending balance of
Investees balance Additional Decrease of investment comprehensi Other equity distributing Provision for balance the provision
Others
(book value) investment investment recognized ve income movement cash impairment (book value) for
under equity adjustment dividend or impairment
method profit
I. Joint Venture
II. Associates
Shanghai
Watch
46,423,837.8 48,584,749.7
Industry Co., 2,160,911.92
5 7
Ltd.
(Shanghai
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Watch)
46,423,837.8 48,584,749.7
Sub-total 2,160,911.92
5 7
46,423,837.8 48,584,749.7
Total 2,160,911.92
5 7
Other notes
Inapplicable
18. Investment in other equity instruments
In CNY
Items Ending balance Opening balance
Xi'an Tangcheng Co., Ltd. 85,000.00 85,000.00
Total 85,000.00 85,000.00
Itemized disclosure of investment in non-trading equity instruments in the reporting period
Inapplicable
19. Other non-current financial assets
Inapplicable
20. Investment based real estate
(1) Investment property measured based on the cost method
In CNY
Items Housing and buildings Land use right Construction-in-process Total
I. Original book value
1. Opening balance 603,886,647.35 603,886,647.35
2. Increase in the reporting period
(1) Purchased
(2) Inventories\fixed
assets/construction- in – process
transferred in
(3) Increase of enterprise
consolidation
3. Amount decreased in the
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reporting period
(1) Disposal
(2) Other transfer out
4. Ending balance 603,886,647.35 603,886,647.35
II. Accumulative depreciation and
accumulative amortization
1. Opening balance 196,383,340.11 196,383,340.11
2. Increase in the reporting period 7,621,323.86 7,621,323.86
(1) Provision or amortization 7,621,323.86 7,621,323.86
3. Amount decreased in the
reporting period
(1) Disposal
(2) Other transfer out
4. Ending balance 204,004,663.97 204,004,663.97
III. Provision for impairment
1. Opening balance
2. Increase in the reporting period
(1) Provision
3. Amount decreased in the
reporting period
(1) Disposal
(2) Other transfer out
4. Ending balance
IV. Book value
1.Book value at the end of the
399,881,983.38 399,881,983.38
reporting period
2.Book value at the beginning of
407,503,307.24 407,503,307.24
the reporting period
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(2) Investment property measured based on fair value
Inapplicable
(3) Investment property that does not have certificate for property right
Inapplicable
21. Fixed asset
In CNY
Items Ending balance Opening balance
Fixed assets 354,294,685.37 363,997,098.94
Total 354,294,685.37 363,997,098.94
(1) About fixed assets
In CNY
Items Plant & buildings Machinery & equipment Motor vehicle Electronic equipment Others Total
I. Original book value
1. Opening balance 399,884,182.37 88,576,975.77 15,357,879.37 45,484,697.66 46,262,752.19 595,566,487.36
2. Increase in the
1,673,662.24 2,374,605.84 987,842.49 602,909.94 5,639,020.51
reporting period
(1) Purchase 1,673,662.24 2,374,605.84 987,842.49 602,909.94 5,639,020.51
(2)
Construction-in-process
transferred in
(3) Increase of
enterprise consolidation
3. Amount
decreased in the 418,674.85 779,760.00 406,310.94 1,604,745.79
reporting period
(1) Disposal or
418,674.85 779,760.00 406,310.94 1,604,745.79
scrapping
4. Ending balance 401,557,844.61 90,532,906.76 15,357,879.37 45,692,780.15 46,459,351.19 599,600,762.08
II. Accumulative
depreciation
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1. Opening balance 99,134,756.79 49,325,868.54 13,492,690.81 32,184,334.98 37,431,737.30 231,569,388.42
2. Increase in the
6,968,805.33 3,933,316.11 201,480.66 2,214,596.73 1,601,335.24 14,919,534.07
reporting period
(1) Provision 6,968,805.33 3,933,316.11 201,480.66 2,214,596.73 1,601,335.24 14,919,534.07
3. Amount
decreased in the 217,213.16 643,229.61 322,403.01 1,182,845.78
reporting period
(1) Disposal or
217,213.16 643,229.61 322,403.01 1,182,845.78
scrapping
4. Ending balance 106,103,562.12 53,041,971.49 13,694,171.47 33,755,702.10 38,710,669.53 245,306,076.71
III. Provision for
impairment
1. Opening balance
2. Increase in the
reporting period
(1) Provision
3. Amount
decreased in the
reporting period
(1) Disposal or
scrapping
4. Ending balance
IV. Book value
1.Book value at the
end of the reporting 295,454,282.49 37,490,935.27 1,663,707.90 11,937,078.05 7,748,681.66 354,294,685.37
period
2.Book value at the
beginning of the 300,749,425.58 39,251,107.23 1,865,188.56 13,300,362.68 8,831,014.89 363,997,098.94
reporting period
(2) About temporarily idle fixed assets
Inapplicable
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(3) Fixed assets rented through finance lease
Inapplicable
(4) Fixed assets leased through operating lease
Inapplicable
(5) Fixed assets that do not have certificate for property right
The reason why the property ownership certificate has
Items Book value
not been granted
Office occupancy of Harbin Office 247,083.50 There existed problem in ownership
(6) Disposal of fixed assets
Inapplicable
22. Construction-in-process
Inapplicable
(4) Engineering materials
Inapplicable
23. Productive biological asset
(1) Productive biological asset by using the cost measurement model
Inapplicable
(2) Productive biological asset by using the fair value measurement model
Inapplicable
24. Oil and Gas Assets
Inapplicable
25. Use right assets
Inapplicable
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26. Intangible assets
(1) About the intangible assets
In CNY
Items Land use right Patent Right Non-patent technology Software system Trademark rights Total
I. Original book value
1. Opening
34,933,822.40 24,114,126.36 11,930,531.38 70,978,480.14
balance
2. Increase in the
1,268,215.40 1,711,282.42 2,979,497.82
reporting period
(1) Purchase 1,268,215.40 1,711,282.42 2,979,497.82
(2) Internal R &
D
(3) Increase of
enterprise consolidation
3. Amount
decreased in the
reporting period
(1) Disposal
4. Ending balance 34,933,822.40 25,382,341.76 13,641,813.80 73,957,977.96
II. Accumulative
amortization
1. Opening
11,353,509.97 15,410,275.67 5,502,873.24 32,266,658.88
balance
2. Increase in the
366,776.65 2,197,060.87 1,270,464.12 3,834,301.64
reporting period
(1) Provision 366,776.65 2,197,060.87 1,270,464.12 3,834,301.64
3. Amount
decreased in the
reporting period
(1) Disposal
4. Ending balance 11,720,286.62 17,607,336.54 6,773,337.36 36,100,960.52
III. Provision for
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impairment
1. Opening
balance
2. Increase in the
reporting period
(1) Provision
3. Amount
decreased in the
reporting period
(1) Disposal
4. Ending balance
IV. Book value
1.Book value at
the end of the reporting 23,213,535.78 7,775,005.22 6,868,476.44 37,857,017.44
period
2.Book value at
the beginning of the 23,580,312.43 8,703,850.69 6,427,658.14 38,711,821.26
reporting period
Proportion 0% of the intangible assets formed through the Company’s internal R & D in the balance of the intangible
assets at the end of the reporting period.
(2) About the land use right that does not have certificate of title
Inapplicable
27. Development expenditure
Inapplicable
28. Goodwill
(1) Original book value of the goodwill
Inapplicable
(2) Provision for impairment of the goodwill
Inapplicable
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29. Long term expenses to be apportioned
In CNY
Increase in the reporting Amount amortized in the
Items Opening balance Other decrease Ending balance
period reporting period
Charge of fabrication of
41,961,947.89 11,476,444.96 23,585,536.88 29,852,855.97
special counters
Refurbishment expenses 95,266,200.86 13,998,397.46 23,273,140.55 85,991,457.77
Others 15,359,342.58 0.00 4,632,330.36 10,727,012.22
Total 152,587,491.33 25,474,842.42 51,491,007.79 126,571,325.96
Other notes
Inapplicable
30. Deferred income tax asset/deferred income tax liability
(1) Deferred income tax asset without offsetting
In CNY
Ending balance Opening balance
Items
Offsetable provisional difference Deferred income tax asset Offsetable provisional difference Deferred income tax asset
Asset impairment reserve 103,310,389.63 22,788,457.81 100,912,679.00 22,188,996.64
Unrealized profit from the
156,287,413.96 38,840,027.68 179,676,673.34 44,654,504.04
intracompany transactions
Offsetable loss 122,599,534.04 30,135,383.47 50,678,682.32 12,074,057.61
Deferred income 3,046,090.60 761,522.65 3,046,090.60 761,522.65
Share-based payment 7,606,027.81 1,823,052.62 4,440,625.91 1,062,967.67
Advertisement fee available for
8,221,847.42 1,718,803.47 14,988,443.65 2,997,334.76
carrying-forward to the next year
Total 401,071,303.46 96,067,247.70 353,743,194.82 83,739,383.37
(2) Deferred income tax liabilities without offsetting
In CNY
Ending balance Opening balance
Items
Taxable provisional difference Deferred income tax liability Taxable provisional difference Deferred income tax liability
One-time pre-tax deduction of
7,951,478.07 1,192,721.71 8,374,949.93 1,256,242.49
fixed assets
Total 7,951,478.07 1,192,721.71 8,374,949.93 1,256,242.49
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(3) Deferred income tax asset or liabilities stated with net amount after offsetting
Inapplicable
(4) Statement of deferred income tax asset not recognized
In CNY
Items Ending balance Opening balance
Offsetable loss 68,005,378.21 64,205,351.75
Provision for impairment of assets 22,775,235.70 22,200,437.70
Total 90,780,613.91 86,405,789.45
(5) Unrecognized deferred income tax asset available for offsetting loss is going to expire in the following years
In CNY
Amount at the beginning of the reporting
Year Amount at the end of the reporting period Remarks
period
2020
2021
2022
2023 2,417,279.16 2,417,279.16
2024 7,798,677.32 7,798,677.32
2025 11,684,299.22 11,684,299.22
2026 18,449,678.50 18,449,678.50
2027 23,855,417.55 23,855,417.55
2028 3,800,026.46
Total 68,005,378.21 64,205,351.75 --
Other notes:
Inapplicable
31. Other non-current assets
In CNY
Ending balance Opening balance
Items Impairment Impairment
Book balance Book value Book balance Book value
reserve reserve
Advance payment for engineering works and equipment 10,492,964.34 10,492,964.34 7,373,248.48 7,373,248.48
Total 10,492,964.34 10,492,964.34 7,373,248.48 7,373,248.48
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Other notes:
Inapplicable
32. Short term loans
(1) Classification of short-term loans
In CNY
Items Ending balance Opening balance
Secured loan 60,512,090.66 37,271,502.38
Credit loan 613,050,268.89 530,637,330.83
Total 673,562,359.55 567,908,833.21
Note to classification of short term borrowings:
Inapplicable
(2)Short-term loans overdue but still remaining outstanding
Inapplicable
33. Transactional financial liabilities
Inapplicable
34. Derivative financial liabilities
Inapplicable
35. Notes payable
In CNY
Categories Ending balance Opening balance
Trade acceptance 1,400,000.00 0.00
Total 1,400,000.00 0.00
Total amount of notes payable due but not paid amounting to CNY 0 at the end of the reporting period.
36. Accounts payable
(1) Statement of accounts payable
In CNY
Items Ending balance Opening balance
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Payment for goods 189,556,864.82 254,887,129.91
Payment for materials 11,932,722.53
Construction cost payable 1,484,563.53 12,952,934.93
Total 191,041,428.35 279,772,787.37
(2) Significant accounts payable with age exceeding 1 year
Inapplicable
37. Advance Receipts
(1) Statement of advances from customers
In CNY
Items Ending balance Opening balance
Payment for goods
Engineering fees
Rent 7,251,488.79 3,434,407.04
Unfinished projects formed in the construction contract
but already settled
Total 7,251,488.79 3,434,407.04
(2) Significant advances from customers with age exceeding 1 year
Inapplicable
38. Contract liabilities
In CNY
Items Ending balance Opening balance
Payment for goods 21,475,843.30 19,999,056.53
Total 21,475,843.30 19,999,056.53
Amount and reason of the significant change in the book value during the reporting period
Inapplicable
39. Employee remuneration payable
(1) Statement of employee remuneration payable
In CNY
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Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
I. Short term remuneration 75,434,545.00 254,001,441.87 271,417,606.03 58,018,380.84
II. Post-employment benefit
program - defined contribution 7,067,511.52 6,552,660.39 9,405,143.24 4,215,028.67
plan.
III. Dismissal welfare 100,789.15 614,333.23 715,122.38
Total 82,602,845.67 261,168,435.49 281,537,871.65 62,233,409.51
(2) Presentation of short term remuneration
In CNY
Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
1. Salaries, bonus, allowances
74,919,776.81 229,817,392.02 247,521,739.12 57,215,429.71
and subsidies
2. Staff’s welfare 5,604,972.00 5,604,972.00
3. Social security premium 6,959,476.34 6,791,592.13 167,884.21
Including: medical insurance
6,408,859.43 6,259,816.74 149,042.69
premium
Work injury
117,511.50 117,078.36 433.14
insurance
Maternity Insurance 433,105.41 414,697.03 18,408.38
4. Public reserve for housing 8,279,142.71 8,233,410.71 45,732.00
5. Trade union fund and staff
514,768.19 3,308,991.61 3,234,424.88 589,334.92
education fund
6. Short-term paid leave 31,467.19 31,467.19
Total 75,434,545.00 254,001,441.87 271,417,606.03 58,018,380.84
(3) Presentation of the defined contribution plan
In CNY
Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
1. Basic endowment insurance
255,571.47 5,508,582.11 5,376,258.34 387,895.24
premium
2. Unemployment insurance
137,321.18 329,926.24 -192,605.06
premium
3. Contribution to the enterprise
6,811,940.05 906,757.10 3,698,958.66 4,019,738.49
annuity scheme
Total 7,067,511.52 6,552,660.39 9,405,143.24 4,215,028.67
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Other notes:
Inapplicable
40. Taxes payable
In CNY
Items Ending balance Opening balance
Value-added tax 26,548,335.81 6,929,833.12
Enterprise income tax 24,101,242.37 15,512,840.60
Individual income tax 1,487,307.93 1,227,923.78
Urban maintenance and construction tax 127,921.38 91,612.52
Education Surcharge 84,988.48 65,887.11
Others 738,858.32 236,705.87
Total 53,088,654.29 24,064,803.00
Other notes:
Inapplicable
41. Other payables
In CNY
Items Ending balance Opening balance
Dividends payable 53,887,144.07 848,233.27
Other payables 136,628,253.92 118,768,488.36
Total 190,515,397.99 119,616,721.63
(1) Interest payable
Inapplicable
(2) Dividend payable
In CNY
Items Ending balance Opening balance
Dividends of common shares 53,887,144.07 848,233.27
Total 53,887,144.07 848,233.27
Other note, including the significant dividends payable remaining outstanding for more than 1 year and necessary to
disclose the reason of unpayment:
Inapplicable
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(3) Other payables
1) Other payments stated based on nature of fund
In CNY
Items Ending balance Opening balance
Cash pledge or cash deposit 68,019,256.56 45,114,205.97
Fund for shop-front activities 1,535,874.76 16,636,771.40
Personal account payable 1,280,092.78 1,321,518.82
Refurbishment 3,558,722.65 4,556,469.41
Obligation for repurchase of the restricted stocks 17,442,566.73 17,737,366.73
Others 44,791,740.44 33,402,156.03
Total 136,628,253.92 118,768,488.36
2) Other payables in significant amount and with aging over 1 year
Inapplicable
42. Held-for-sale liabilities
Inapplicable
43. Non-current liabilities due within a year
In CNY
Items Ending balance Opening balance
Long-term liabilities due within a year 373,530.00 360,140.00
Total 373,530.00 360,140.00
Other notes:
Inapplicable
44. Other current liabilities
Inapplicable
45. Long-term Loan
(1) Classification of Long-term Borrowings
In CNY
Items Ending balance Opening balance
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Mortgage loan 4,295,595.00 4,321,680.00
Total 4,295,595.00 4,321,680.00
Note to classification of long term borrowings:
(1) The Company has no overdue and outstanding long term borrowing.
(2) The Company has no secured borrowings in the balance of the long term borrowings during the reporting period
Other notes, including the interest rate interval:
The interest rate of long term borrowings is 3.00%.
46. Bonds Payable
(1) Bonds payable
Inapplicable
(2) Increase/Decrease of bonds payable (excluding other financial instruments classified as financial liabilities,
such as preferred shares, perpetual bonds, etc.)
Inapplicable
(3) Note to the conditions and time of share conversion of convertible company bonds
Inapplicable
(4) Note to other financial instruments classified as financial liabilities
Inapplicable
47. Lease liabilities
Inapplicable
48. Long term accounts payable
Inapplicable
(1) Long term accounts payable stated based on the nature
Inapplicable
(2) Special accounts payable
Inapplicable
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49. Long term payroll payable
(1) Statement of long term payroll payable
Inapplicable
(2) Change of defined benefit plans
Inapplicable
50. Predicted liabilities
Inapplicable
51. Deferred income
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance Cause of formation
period period
Government subsidies 3,046,090.60 3,046,090.60 Income to be recognized
Total 3,046,090.60 3,046,090.60 --
Items involving government subsidies:
In CNY
Amount counted
Amount of newly Amount counted Amount offsetting
to the Related with
added subsidy in to the other costs and
Liabilities Opening balance non-operating Other changes Ending balance assets/related
the reporting income in the expenses in the
income in the with income
period reporting period reporting period
reporting period
Special purpose
fund of Shenzhen
Related with
industrial design 729,945.01 729,945.01
assets
development
(Note (1))
Funding project
for construction of
enterprise Related with
1,218,274.51 1,218,274.51
technology center assets
designated by the
state (Note (2))
Special purpose
Related with
fund for 2017 1,031,833.34 1,031,833.34
income
Industry and
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Informationization
at Provincial Level
(Note (3))
Special fund for
upgrading
Related with
standard and 66,037.74 66,037.74
income
quality of
consumer goods
Other notes:
Note (1): It is the special fund for development of industrial design in Shenzhen obtained according to the Operation
Instructions on Certification and Financial Support Program for Industrial Design Centers in Shenzhen (Trial
Implementation) SHEN JING MAO IT Zi [2013] No. 227 jointly promulgated by Economy, Trade and Information
Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality;
Note (2) : It is the fund from the financial support for construction of enterprise technology centers in Shenzhen obtained
according to the Circular of Development and Reform Commission of Shenzhen Municipality on Issuing the First Batch of
Supporting Program of Financial Support Fund for Construction of Enterprise Technology Centers in Shenzhen in 2015
(SHEN JING MAO XINXI YU [2015] No. 129 ;
Note (3): The special purpose fund obtained according to the Circular of the Economic and Information Commission of
Guangdong Province on Doing a Good Job in Submission to the Special Project Library of Production and Services at
Provincial Level in 2017 (YUE JING XIN SHENG CHAN HAN (2016) No. 53) jointly promulgated by the Economic &
Information Commission of Guangdong Province and the Finance Department of Guangdong Province.
52. Other non-current liabilities
Inapplicable
53. Capital stock
In CNY
Increase / Decrease (+/ -)
Opening balance Shares converted Ending balance
New issuing Bonus shares Others Sub-total
from reserve
Total Shares 442,968,881.00 -14,797,000.00 -14,797,000.00 428,171,881.00
Other notes:
(1) The Company held the 7th session of the Ninth Board of Directors on April 4, 2019 and the 2nd Extraordinary General
Meeting 2019 on April 23, 2019, and reviewed and approved the "Proposal for Repurchase of the Company's Partial
Domestically Listed Foreign Shares (B-shares)”, according to which the Company was approved to repurchase the
Company’s partial domestically listed foreign shares (B-shares) by means of centralized bidding to reduce its registered
capital. Ended April 29, 2020, the Company completed the cancellation of the above shares (14,730,000 shares)
repurchased with China Securities Depository and Clearing Corporation Limited Shenzhen Branch. After cancellation of
the repurchased shares, the total capital stock of the Company decreased from 442,968,881 shares to 428,238,881
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shares.
(2) On January 10, 2020 and March 18, 2020, the Company held the 15th and 16th sessions of the Ninth Board of
Directors and reviewed and approved the “Proposal for Repurchase and Cancellation of the Partially Restricted Shares
Involved in 2018 A-Share Restricted Stock Incentive Plan (Phase 1)”, according to which the Company intended to
repurchase and cancel a total of 67,000 A-share restricted stock jointly held, already granted but with the restriction not
released to three former incentive objects who have left the Company.
54. Other equity instruments
(1) Basic information on the outstanding other financial instruments, including preferred shares, perpetual bonds,
etc. at the end of the reporting period
Inapplicable
(2)Movement of the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. at
the end of the reporting period
Inapplicable
55. Capital reserve
In CNY
Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
Capital premium (capital stock
1,062,297,140.76 0.00 65,007,645.82 997,289,494.94
premium)
Other capital reserve 18,933,074.56 3,165,401.89 2,948.60 22,095,527.85
Total 1,081,230,215.32 3,165,401.89 65,010,594.42 1,019,385,022.79
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
(1) The Company held the 7th session of the Ninth Board of Directors on April 4, 2019 and the 2nd Extraordinary General
Meeting 2019 on April 23, 2019, and reviewed and approved the "Proposal for Repurchase of the Company's Partial
Domestically Listed Foreign Shares (B-shares)”, according to which the Company was approved to repurchase the
Company’s partial domestically listed foreign shares (B-shares) by means of centralized bidding to reduce its registered
capital. The Company accumulatively repurchased 14,730,000 domestically listed foreign shares (B shares) by means of
centralized bidding through special securities repurchase accounts, and the capital reserve (capital stock premium)
decreased by CNY 65,007,645.82 (converted in Hong Kong dollars, including the service fees of CNY 243,340.90).
(2) Other capital reserve increased by CNY 3,165,401.89 in the reporting period are the restricted stock incentive
expenses of A-shares in January, 2020 provided from January to June, 2020.
56. Treasury shares
In CNY
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Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
Shares in stock 71,267,118.78 25,969,974.82 79,789,104.92 17,447,988.68
Total 71,267,118.78 25,969,974.82 79,789,104.92 17,447,988.68
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
The increase of the shares in stock during the reporting period consisted of two parts. One part was the cancelled retired
employees’ restrictive shares in stock with total amount of CNY 294,800.00 and the other part was the amount from the
repurchase of B-shares totaling CNY 25,969,974.82 and the repurchased B-shares in stock cancelled subsequently with
total amount of CNY 79,494,304.92.
57. Other comprehensive income
In CNY
Amount incurred in the reporting period
Less: the
amount counted
Less: the amount
to the retained
counted to the profit
earnings during
and loss during the
Amount incurred the reporting Attributable to Attributable to
reporting period Ending
Items Opening balance before income period which Less: Income the parent minority
which had been balance
tax in the had been tax expense company after shareholders
counted to the other
reporting period counted to the tax after tax
comprehensive
other
income in the
comprehensive
previous period.
income in the
previous period.
II. Other comprehensive income which shall be
-940,209.09 4,329,973.83 4,329,877.58 96.25 3,389,668.49
re-classified into profit and loss
Conversion difference in foreign currency
-940,209.09 4,329,973.83 4,329,877.58 96.25 3,389,668.49
statements
Total other comprehensive income -940,209.09 4,329,973.83 4,329,877.58 96.25 3,389,668.49
Other notes include the valid part of gain and loss of a cash-flow hedge converted into initial amount of arbitraged items
for adjustment:
The net amount of the other comprehensive income after tax incurred in the reporting period was CNY 4,329,973.83.
Where, the net after-tax amount of other comprehensive income attributable to shareholders of the parent company was
CNY 4,329,877.58; the net after-tax amount of other comprehensive income attributable to the minority shareholders
incurred in the reporting period was CNY 96.25.
58. Special reserve
Inapplicable
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59. Surplus Reserve
In CNY
Items Opening balance Increase in the reporting period Decrease in the reporting period Ending balance
Statutory surplus reserve 173,716,286.14 0.00 0.00 173,716,286.14
Discretionary surplus reserve 61,984,894.00 0.00 0.00 61,984,894.00
Total 235,701,180.14 0.00 0.00 235,701,180.14
Note to surplus reserve, including the note to its increase/decrease and the cause(s) of its movement in the reporting
period:
Inapplicable
60. Retained earnings
In CNY
Items Reporting period Previous period
Before adjustment: Retained earnings at the end of the previous
966,840,818.40 851,360,603.66
period
After adjustment: Retained earnings at the beginning of the
966,840,818.40 851,360,603.66
reporting period
Plus: Net profit attributable to the parent company’s owner in the
77,738,906.30 215,909,014.15
report period
Less: Provision of statutory surplus public reserve 12,685,386.34
Dividends of common shares payable 85,634,376.20 87,743,413.07
Retained earnings at the end of the reporting period 958,945,348.50 966,840,818.40
Statement of adjustment of retained earnings at the beginning of the reporting period:
1) The amount involved in the retroactive adjustment according to the Enterprise Accounting Standards and the relevant
new provisions influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
2) The amount involved in change of the accounting policy influencing the retained earnings at the beginning of the
reporting period was CNY 0.00.
3) The amount involved in correction of the significant accounting errors influencing the retained earnings at the beginning
of the reporting period was CNY 0.00.
4) The amount involved in change of the consolidation scope caused by the joint control influencing the retained earnings
at the beginning of the reporting period was CNY 0.00.
5) The total amount involved in other adjustments influencing the retained earnings at the beginning of the reporting
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period was CNY 0.00.
61. Operation Income and Costs
In CNY
Amount incurred in the reporting period Amount incurred in the previous period
Items
Income Costs Income Costs
Principal business 1,579,084,669.87 977,121,580.01 1,775,615,457.33 1,049,188,996.85
Other businesses 2,750,045.16 314,096.86 9,420,562.90 2,315,078.37
Total 1,581,834,715.03 977,435,676.87 1,785,036,020.23 1,051,504,075.22
Revenue related information:
Inapplicable
Information in connection with the performance obligation:
Inapplicable
Information related to the transaction price allocated to the remaining performance obligations:
Inapplicable
Other notes:
Inapplicable
62. Business Taxes and Surcharges
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Consumption tax 39,803.71 184,399.06
Urban maintenance and construction tax 2,489,349.64 6,395,004.36
Education Surcharge 1,762,953.17 4,548,531.69
Resource tax 0.00 0.00
Real estate tax 1,403,403.52 1,886,754.77
Land use tax 119,304.10 211,126.82
Tax on using vehicle and boat 2,880.00 1,035.00
Stamp duty 1,007,174.51 1,102,915.98
Others 446,115.04 765,107.65
Total 7,270,983.69 15,094,875.33
Other notes:
Inapplicable
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63. Sales expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Salaries & bonus 139,307,052.85 145,512,139.90
Employees’ welfare 2,813,685.58 3,159,080.44
Public reserve for housing 5,258,301.65 5,750,656.98
Social security premium 9,151,865.67 22,997,809.84
Shopping mall and rental fees 89,783,779.60 83,986,057.93
Advertising, exhibition and market promotion fee 61,631,796.14 72,972,500.97
Depreciation and amortization 44,191,277.25 43,315,834.35
Packing expenses 3,301,568.93 5,502,133.20
Water & power supply and property management fee 8,864,424.63 9,561,119.07
Freight 5,368,007.05 6,971,013.87
Office expenses 2,324,895.41 2,779,674.92
Business travel expenses 1,975,223.92 4,887,148.59
Others 6,956,433.83 8,380,858.89
Total 380,928,312.51 415,776,028.95
Other notes:
Inapplicable
64. Administrative expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Salaries & bonus 61,814,187.62 67,718,045.37
Employees’ welfare 1,940,091.63 1,790,667.18
Social security premium 2,319,177.99 5,755,767.56
Public reserve for housing 2,231,934.56 2,077,719.29
Enterprise annuity 961,256.78 1,125,994.66
Labor union dues 2,548,950.92 2,630,194.16
Training fee 341,994.77 518,230.67
Depreciation and amortization 13,362,685.84 14,295,251.10
Business travel expenses 967,235.20 3,353,907.41
Office expenses 2,085,464.53 1,688,108.77
Service fee to intermediary agencies 1,598,683.57 1,625,961.96
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Others 8,068,685.32 13,772,987.29
Total 98,240,348.73 116,352,835.42
Other notes:
Inapplicable
65. R & D expenditures
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Salaries & bonus 12,250,034.26 10,860,114.59
Employees’ welfare 198,645.82 205,127.58
Social security premium 392,814.93 924,124.54
Public reserve for housing 412,951.55 304,138.80
Cost of materials 9,453.09 63,256.68
Intellectual property fee 276,918.12 277,815.00
Payment for samples 593,599.24 868,357.42
Consulting fee 240,576.67 875,841.49
Depreciation and amortization 3,162,020.53 2,627,949.69
Technical cooperation fee 1,536,929.13 560,030.37
Others 1,630,327.42 1,959,654.77
Total 20,704,270.76 19,526,410.93
Other notes:
Inapplicable
66. Financial expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Interest payment 13,485,670.67 12,023,843.93
Less: capitalized interest 0.00 0.00
Less: Interest income 2,482,721.82 908,850.92
Exchange gain & loss 713,188.07 -134,740.68
Financial service charges and miscellaneous 4,812,806.44 5,258,713.56
Total 16,528,943.36 16,238,965.89
Other notes:
Inapplicable
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67. Other income
In CNY
Source of arising of other income Amount incurred in the reporting period Amount incurred in the previous period
Government subsidies 10,154,015.67 13,045,742.36
Total 10,154,015.67 13,045,742.36
68. Return on investment
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income from long term equity investment based on equity
2,160,911.92 1,531,310.06
method
Total 2,160,911.92 1,531,310.06
Other notes:
Inapplicable
69. Net exposure hedge income
Inapplicable
70. Income from change of the fair value
Inapplicable
71. Loss from impairment of credit
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Provision for bad debt of other receivables -1,851.58 -301,318.07
Loss from bad debt of accounts receivable -2,465,509.77 -2,780,450.82
Total -2,467,361.35 -3,081,768.89
Other notes:
Inapplicable
72. Loss from impairment of assets
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
II. Loss from price falling of inventories or loss from 0.00 2,514,740.86
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impairment of contract performance costs
Total 0.00 2,514,740.86
Other notes:
Inapplicable
73. Income from disposal of assets
In CNY
Source of income from disposal of assets Amount incurred in the reporting period Amount incurred in the previous period
Profit from disposal of assets 0.00 1,720.00
Loss from disposal of assets -200,140.17 -213,730.13
Total -200,140.17 -212,010.13
74. Non-operating expenses
In CNY
Amount counted to the current
Items Amount incurred in the reporting period Amount incurred in the previous period
non-operating gain and loss
Disposal of account payable impossible to
877,410.33 212,175.93 877,410.33
be paid
Carry-over of inventory overage 226,888.80 226,888.80
Others 287,560.29 82,135.77 287,560.29
Total 1,391,859.42 294,311.70 1,391,859.42
Government subsidy counted to the current profit and loss:
Inapplicable
75. Non-operating expenditure
In CNY
Amount counted to the current
Items Amount incurred in the reporting period Amount incurred in the previous period
non-operating gain and loss
Outward donation 0.00 200,000.00 0.00
Others 118,646.41 324,505.98 118,646.41
Total 118,646.41 524,505.98 118,646.41
Other notes:
Inapplicable
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76. Income tax expense
(1) Statement of income tax expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income tax expense in the reporting period 26,235,776.22 22,066,289.48
Deferred income tax expense -12,327,864.33 18,548,898.09
Total 13,907,911.89 40,615,187.57
(2) Process of adjustment of accounting profit and income tax expense
In CNY
Items Amount incurred in the reporting period
Total profit 91,646,818.19
Income tax expense calculated based on the statutory/ applicable tax rate 22,911,704.55
Influence of different tax rates applicable to subsidiaries -9,197,395.81
Influence of adjustment of the income tax in the previous period -49,934.25
Influence of the non-taxable income 0.00
Influence of the non-offsetable costs, expenses and loss 891,927.62
Influence from the offsetable loss of the unrecognized deferred income tax asset at the
0.00
end of the previous period
Influence from the offsetable provisional difference or offsetable loss of the
1,140,007.94
unrecognized deferred income tax asset at the end of the reporting period
Influence from the addition of the R & D expenses upon deduction of tax payment (to
-1,788,398.15
be stated with “-“)
Others 0.00
Income tax expenses 13,907,911.89
Other notes
Inapplicable
77. Other comprehensive income
For the detail, refer to Note 57.
78. Cash Flow Statement Items
(1) Other operation activities related cash receipts
In CNY
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Items Amount incurred in the reporting period Amount incurred in the previous period
Commodity promotion fee 5,210,311.30 7,326,827.42
Government subsidies 10,154,015.67 13,045,742.36
Cash deposit 7,315,744.37 6,493,217.88
Interest income 2,482,721.82 908,850.92
Reserve 1,303,065.89 687,618.62
Others 4,821,570.68 12,513,870.71
Total 31,287,429.73 40,976,127.91
Note to other cash received in connection with operating activities:
Inapplicable
(2) Other cash paid in connection with operation activities
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Market promotion 30,650,504.85 55,480,743.21
Rent 56,722,191.19 54,742,365.90
Shopping mall fees 12,740,511.78 30,786,192.52
Advertisement fee 6,000,177.41 11,083,207.52
Packing expenses 3,491,359.91 5,703,500.29
Business travel expenses 2,955,291.84 8,284,981.38
Water and electricity fees 5,422,039.82 6,714,986.63
R & D expenses 3,588,855.18 4,322,224.36
Office expenses 5,169,903.19 5,207,489.18
Freight 5,917,126.15 7,747,014.23
Exhibition fee 45,727.87 6,546,230.71
Property management fee 9,544,159.17 7,982,065.97
Business entertainment 1,310,428.39 2,683,582.53
Service fee to intermediary agencies 2,671,307.29 2,043,210.38
Others 19,696,640.17 27,973,348.54
Total 165,926,224.21 237,301,143.35
Note to other cash paid in connection with operating activities:
Inapplicable
(3) Other investment activities related cash receipts
Inapplicable
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(4) Other investment activities related cash payments
Inapplicable
(5) Other fund-raising activities related cash receipts
Inapplicable
(6) Other fund-raising activities related cash payments
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Repurchase of B-shares 26,825,873.78 17,565,400.00
Total 26,825,873.78 17,565,400.00
Note to other cash paid in connection with fund-raising activities:
The amount incurred in the reporting period was the payment for repurchase of B-shares.
79. Supplementary information of the cash flow statement
(1) Supplementary information of the cash flow statement
In CNY
Supplementary information Amount in the reporting period Amount in the previous period
1. Net cash flows arising from adjustment of net profit into
-- --
operating activities:
Net profit 77,738,906.30 123,495,460.90
Plus: Provision for impairment of assets 2,467,361.35 567,028.03
Depreciation of fixed assets, depletion of oil and
21,037,291.58 21,385,076.08
gas asset, depreciation of productive biological asset
Amortization of intangible assets 3,829,094.00 3,291,008.97
Amortization of the long-term expenses to be
50,739,190.23 46,754,405.36
apportioned
Loss (income is stated in “-”) from disposal of
200,140.17 212,010.13
fixed assets, intangible assets and other long term assets
Financial expenses (income is stated with “-”) 13,485,670.67 12,023,843.93
Investment loss (income is stated with “-”) -2,160,911.92 -1,531,310.06
Decrease of the deferred income tax asset
-12,327,864.33 17,382,217.94
(increase is stated with “_”)
Increase of deferred income tax liability
-63,520.78
(decrease is stated with “-”)
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Decrease of inventories (Increase is stated with
10,360,528.74 57,362,696.37
“-”)
Decrease of operative items receivable
-57,935,867.20 -112,532,040.70
(Increase is stated with “-”)
Increase of operative items payable (Decrease is
-3,724,783.54 -9,395,746.58
stated with “-”)
Net cash flows arising from operating activities 103,645,235.27 159,014,650.37
2. Significant investment and fund-raising activities with no
-- --
cash income and expenses involved:
3. Net change in cash and cash equivalents: -- --
Ending cash balance 344,906,641.68 224,316,552.42
Less: Opening balance of cash 315,093,565.09 162,623,059.97
Net increase of cash and cash equivalents 29,813,076.59 61,693,492.45
(2) Net cash paid for acquisition of subsidiary in the reporting period
Inapplicable
(3) Net cash received from disposal of subsidiary in the reporting period
Inapplicable
(4) Composition of cash and cash equivalents
In CNY
Items Ending balance Opening balance
I. Cash 344,906,641.68 315,093,565.09
Including: Cash in stock 344,906,641.68 315,093,565.09
Bank deposit available for payment at any time 215,989.73 229,258.38
Other monetary fund used for payment at any time 343,931,215.59 285,306,297.62
Due from central bank available for payment 759,436.36 29,558,009.09
III. Ending balance of cash and cash equivalents 344,906,641.68 315,093,565.09
Including: cash and cash equivalents restricted for use from
1,575,000.00 3,641,389.51
the parent company or other subsidiaries of the Group
Other notes:
Inapplicable
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80. Notes to items of statement of change in owner’s equity
Specify the description of the item "others" and the adjusted amount of the balance at the end of last year:
Inapplicable
81. Assets restricted in ownership or use right
In CNY
Items Book value at the end of the reporting period Cause of restriction
Monetary fund 1,575,000.00 Deposit for L/G
Fixed assets 14,201,915.48 Security guarantee
Total 15,776,915.48 --
Other notes:
Inapplicable
82. Foreign currency monetary items
(1) Foreign currency monetary items
In CNY
Items Ending balance of foreign currency Conversion rate Ending balance of Renminbi converted
Monetary fund -- --
Including: USD 2,733,938.06 7.07950 19,354,914.51
Euro 30,154.43 7.96100 240,059.40
HKD 8,747,941.93 0.91344 7,990,720.07
SF 138,202.79 7.44340 1,028,698.65
Accounts receivable -- --
Including: USD 603,055.08 7.0795 4,269,328.45
Euro 30,425.59 7.9610 242,218.13
HKD 2,970,361.11 0.91344 2,713,246.66
SF 30,527.96 7.4434 227,231.82
Long-term Loan -- --
Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 0.00 0.91344 0.00
SF 577,101.19 7.44340 4,295,595.00
Advance payment for goods
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Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 0.00 0.91344 0.00
SF 859,637.54 7.44340 6,398,626.07
JP Yen 10,477,519.30 0.06581 689,504.59
Accounts payable
Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 1,771,811.89 0.91344 1,618,443.85
SF 29,675.49 7.44340 220,886.54
Other receivables
Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 146,038.44 0.91344 133,397.35
SF 908,889.21 7.44340 6,765,225.95
Advance from customers
Including: USD 31,617.09 7.07950 223,833.19
Euro 0.00 7.96100
HKD 1,179,628.55 0.91344 1,077,519.90
SF 7.44340
Other payables
Including: USD 4,702.87 7.07950 33,293.97
Euro 1,090.35 7.96100 8,680.28
HKD 416,145.72 0.91344 380,124.15
SF 71,910.54 7.44340 535,258.91
Short term loans
Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 58,302.42 0.91344 53,255.76
SF 1,405,115.26 7.44340 10,458,834.93
Non-current liabilities due within a year
Including: USD 0.00 7.07950 0.00
Euro 0.00 7.96100 0.00
HKD 0.00 0.91344 0.00
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SF 50,182.71 7.44340 373,530.00
Other notes:
Inapplicable
(2) Note to overseas operating entities, including important overseas operating entities, which should be
disclosed about its principal business place, function currency for bookkeeping and basis for the choice. In case
of any change in function currency, the cause should be disclosed.
Inapplicable
83. Hedging
Inapplicable
84. Government subsidies
(1) Basic information of government subsidies
In CNY
Amount counted to the current profit and
Categories Amount Items presented
loss
Qualification of the enterprise in
150,000.00 Other income 150,000.00
Guangming District for Baselworld 2019
Financing the enterprises for project
development in the domestic market in 88,280.00 Other income 88,280.00
2020
The 1st fund allocation of the first R&D
571,000.00 Other income 571,000.00
financial support (A) in 2019
Financial support for improving both
technical innovation and brands (B) in 800,000.00 Other income 800,000.00
2020
Funding and award in the Shenzhen
176,681.00 Other income 176,681.00
Standard Field in 2019
Export credit insurance premiums for the
34,123.00 Other income 34,123.00
second half year of 2018
Financial support for improving both
quality and brand in the technical
800,000.00 Other income 800,000.00
innovation doubling special subsidy
program (C) in 2020
Business subsidy 3,601.49 Other income 3,601.49
Subsidy to the employees of the Education 500.00 Other income 500.00
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Bureau of Xiacheng District engaged in
nursing service
Business opening bonus received from the
100.00 Other income 100.00
Bureau of Commerce
Local government subsidy for COVID-19
6,577.35 Other income 6,577.35
prevention
Refunded education surcharge 273.22 Other income 273.22
Financial support for improving both
quality and brand in the technical
800,000.00 Other income 800,000.00
innovation doubling special subsidy
program (C) in 2020
Social insurance subsidy 12,100.00 Other income 12,100.00
Allowance for the Endowment and Medical
Insurance for the Disabled in the Second 3,590.52 Other income 3,590.52
Half of 2019 from Guangming District
Financial support for exhibition at
20,000.00 Other income 20,000.00
Guangdong Industrial Expo
Financial support for certifying the second
national hi-tech enterprises in 2019 from 100,000.00 Other income 100,000.00
Guangming District
Financing the enterprises for project
development in the domestic market in 71,510.00 Other income 71,510.00
2020
Special fund subsidy in the field of
60,814.00 Other income 60,814.00
Shenzhen Standards in 2019
Salary delivered to the employees still not
1,078,243.40 Other income 1,078,243.40
starting work as subsidy in Switzerland
Special financial support for 2019
Nanshan District Excellence-Creation
1,618,800.00 Other income 1,618,800.00
Rating Independent Innovation Project
(National Design Center) (D)
Special financial support for 2019
Nanshan District Innovation Carrier 776,500.00 Other income 776,500.00
Support Technology Project (E)
Special fund for 2019 Nanshan District
9,500.00 Other income 9,500.00
Patent Support Program
Special fund for 2019 Nanshan District
57,000.00 Other income 57,000.00
Standardization Work Support Plan
Award for 2019 Nanshan District
200,000.00 Other income 200,000.00
Technology Innovation (China Award for
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Excellence in Design)
Financial support from 2019 Nanshan
District Enterprise R & D Investment 657,400.00 Other income 657,400.00
Support Plan (F)
Basic electricity charge for February paid
103,740.00 Other income 103,740.00
on behalf by the municipal government
Special fund subsidy in the field of
Shenzhen Standards in 2019 from the
741,665.00 Other income 741,665.00
Market Supervision & Administration
Bureau of Shenzhen Municipality (G)
Financing the enterprises for project
development in the domestic market in 1,473.34 Other income 1,473.34
2020
Subsidies to the affected enterprises in
499,019.60 Other income 499,019.60
2019 (H)
Employment stabilization subsidies 433,480.80 Other income 433,480.80
Refunded individual income tax 278,042.95 Other income 278,042.95
Total 10,154,015.67 10,154,015.67
Notes:
A. It is the government subsidy obtained according to the Notice of Shenzhen Municipal Science & Technology Innovation
Commission on the First Supporting Fund Application Materials and Appropriation Materials for the Advance Reception of
the Enterprise R & D Funding Plan in 2019.
B. It is the government subsidy obtained according to the Notice of the Bureau of Industry and Information Technology of
Shenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme for Quality Brand Double Promotion
of the Special Subsidy Plan for Technology Improvement Multiplication in 2020.
C. It is the government subsidy obtained according to the Notice of the Bureau of Industry and Information Technology of
Shenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme for Quality Brand Double Promotion
of the Special Subsidy Plan for Technology Improvement Multiplication (Batch I) in 2020.
D. It is the government subsidy obtained according to the "Measures of the Bureau of Industry and Information
Technology of Nanshan District for Management of the Special Fund for Development of the Independent Innovation
Industry in Nanshan District" and the "Rules for Implementation of the Special Fund for Independent Innovation Industry
Development in Nanshan District - the Itemized Fund for Economic Development".
E. It is the government subsidy obtained according to the Notice of the General Office of Nanshan District People's
Government of Shenzhen Municipality on the Printing and Issuing of the "Measures for Management of the Special Fund
for Development of the Independent Innovation Industry in Nanshan District” SHEN NAN FU BAN GUI [2019] No. 2.
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F. It is the government subsidy obtained according to the Notice of the General Office of Nanshan District People's
Government of Shenzhen Municipality on the Printing and Issuing of the "Measures for Management of the Special Fund
for Development of the Independent Innovation Industry in Nanshan District” SHEN NAN FU BAN GUI [2019] No. 2.
G. It is the government subsidy obtained according to the Notice of the Market Supervision and Administration Bureau of
Shenzhen Municipality on the Special Fund Support and Incentive Scheme for the Standard Fields 2019 in Shenzhen.
H. It is the government subsidy obtained according to the Notice of the Small and Medium-sized Enterprise Service
Bureau of Shenzhen Municipality for Allocating the Subsidy for the Domestic Market Development Projects to the
Program of Innovative Development, Fostering and Support of Shenzhen Local Private and Small & Medium-sized
Enterprises in 2020.
(2) Refunding of the government subsidies
Inapplicable
85. Others
Inapplicable
VIII. Change in consolidation scope
1. Consolidation of enterprises not under the joint control
(1) Consolidation of enterprises not under joint control during the reporting period
Inapplicable
(2) Consolidation cost and goodwill
Inapplicable
(3) Purchasee's distinguishable assets and liabilities as at the date of purchase
Inapplicable
(4) Profit or loss of the equity held before the date of purchase arising from re-measurement based on the fair
value
Does there exist any transaction in which the enterprise consolidation is realized step by step through several transactions
and the control power is obtained within the reporting period.
No
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(5) Note to the consolidation consideration or the fair value of the distinguishable assets and liabilities of the
purchasee which cannot be reasonably identified as at the date of purchase or at the end of the very period of
consolidation
Inapplicable
(6) Other notes
No change took place in the consolidation scope of the Company in 2020
2. Consolidation of enterprises under the joint control
(1) Consolidation of enterprises under joint control during the reporting period
Inapplicable
(2) Consolidation cost
Inapplicable
(3) Book value of the consolidatee's assets and liabilities as at the date of consolidation
Inapplicable
3. Counter purchase
Inapplicable
4. Disposal of subsidiaries
Does there exist any such situation that a single disposal may cause the control power over the investment in a subsidiary
lost?
No
Does there exist any such situation that disposal in steps through a number of transactions may cause the control power
over the investment in a subsidiary lost during the reporting period?
No
5. Change of consolidation scope due to other reason
Note to the change in the consolidation scope (e.g. new subsidiaries, liquidation subsidiaries, etc.) caused by other
reasons and relevant information:
Inapplicable
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6. Others
Inapplicable
IX. Equity in other entities
1. Equity in a subsidiary
(1) Composition of an enterprise group
Shareholding proportion
Subsidiaries Main business location Place of registration Nature of business Way of acquisition
Direct Indirect
Establishment or
HARMONY Shenzhen Shenzhen Commerce 100.00% 0.00%
investment
Precision Technology Establishment or
Shenzhen Shenzhen Manufacture 90.00% 10.00%
Co. investment
Establishment or
the Hong Kong Co. Hong Kong Hong Kong Commerce 100.00% 0.00%
investment
Establishment or
Station-68 Co. Hong Kong Hong Kong Commerce 0.00% 60.00%
investment
Shenzhen Harmony Establishment or
Shenzhen Shenzhen Commerce 100.00% 0.00%
E-Commerce Co., Ltd. investment
Science & Technology Establishment or
Shenzhen Shenzhen Manufacture 100.00% 0.00%
Development Co. investment
Establishment or
SHIYUEHUI Shenzhen Shenzhen Commerce 100.00% 0.00%
investment
Emile Choureit Establishment or
Shenzhen Shenzhen Commerce 100.00% 0.00%
(Shenzhen) investment
Establishment or
FIYTA Sales Co., Ltd. Shenzhen Shenzhen Commerce 100.00% 0.00%
investment
Consolidation of
Hengdarui Shenyang Shenyang Commerce 100.00% 0.00% enterprises under the
joint control
Consolidation of
Swiss Company Switzerland Switzerland Commerce 0.00% 100.00% enterprises not under
the joint control
Other notes:
Inapplicable
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(2) Important non-wholly-owned subsidiaries
Inapplicable
(3) Key financial information of important non-wholly-owned subsidiaries
Inapplicable
(4) Significant restriction on use of enterprise group’s assets and paying off the enterprise group’s liabilities
Inapplicable
(5) Financial support or other support provided to the structured entities incorporated in the scope of
consolidated financial statements
Inapplicable
2. Transaction with a subsidiary with the share of the owner’s equity changed but still under control
(1)Note to change in the share of the owner's equity in subsidiaries
Inapplicable
(2) Affect of the transaction on the minority equity and owner's equity attributable to the parent company
Inapplicable
3. Equity in joint venture arrangement or associates
(1) Important joint ventures or associates
Shareholding proportion Accounting treatment
Name of joint venture or method for investment
Main business location Place of registration Nature of business
associate Direct Indirect in joint ventures or
associates
Shanghai Watch Shanghai Shanghai Commerce 25.00% Equity method
(2) Key financial information of important joint ventures
Inapplicable
(3) Key financial information of important associates
In CNY
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Ending balance/amount incurred in the reporting period Opening balance/amount incurred in the reporting period
Current assets 119,900,356.87 117,096,911.21
Non-current assets 15,186,082.97 13,556,720.58
Total assets 135,086,439.84 130,653,631.79
Current liabilities 21,476,491.68 22,661,506.61
Non-current liabilities - 7,978,869.84
Total liabilities 21,476,491.68 30,640,376.45
Equity attributable to the parent company’s shareholders 113,609,948.16 100,013,255.34
Share of net assets calculated according to the 28,402,487.04
25,003,313.84
shareholding proportion
Book value of the equity investment in associates 48,584,749.77 46,423,837.85
Revenue 54,674,292.84 57,039,155.07
Net profit 8,643,647.69 6,125,240.23
Total comprehensive income 8,643,647.69 6,125,240.23
Other notes
Inapplicable
(4) Financial information summary of unimportant joint ventures and associates
Inapplicable
(5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to the
Company
Inapplicable
(6) Excessive loss incurred to a joint venture or an associate
Inapplicable
(7) Unrecognized commitment in connection with investment in a joint venture
Inapplicable
(8) Contingent liabilities in connection with investment in joint ventures or associates
Inapplicable
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4. Important joint operation
Inapplicable
5. Equity in the structurized entities not incorporated in the consolidated financial statements
Inapplicable
6. Others
Inapplicable
X. Financial instruments and risk management
The Group's main financial instruments include monetary funds, notes receivable, accounts receivable, other receivables,
other equity instrument investments, accounts payable, other payables, short-term borrowings, non-current liabilities due
within 1 year, and long-term borrowings. Details of the financial instruments have been disclosed in the relevant notes.
The risks involved in these financial instruments and the Group’s risk control policies aiming at reducing these risks are
stated as follows. The Group’s management conducts management and monitoring of these risk exposures so as to
ensure risks to be controlled within a specific limitation.
1. Risk management goals and policies
The Group's objective in risk management is to achieve a proper balance between risk and return and to reduce the
adverse impact of financial risks on the Group's financial performance. Based on this risk management objective, the
Group has developed risk management policies to identify and analyze the risks faced by the Group, set appropriate
acceptable levels of risks and design corresponding internal control procedures to monitor the risk level of the Group. The
Group regularly reviews these risk management policies and relevant internal control systems to respond to changes in
market conditions or the Group's business activities. The Group's internal audit department also periodically or randomly
checks whether the implementation of the internal control system conforms to the risk management policy.
The main risks caused by the Group's financial instruments are credit risk, liquidity risk and market risk (including
exchange rate risk, interest rate risk and commodity price risk).
The Board of Directors is responsible for planning and establishing the risk management framework of the Group,
formulating the risk management policies and relevant guidelines of the Group and supervising the implementation of risk
management measures. The Group has formulated risk management policies to identify and analyze the risks faced by
the Group. These risk management policies clearly specify specific risks and cover many aspects such as market risk,
credit risk and liquidity risk management. The Group regularly evaluates the market environment and changes in the
Group's business activities to determine whether or not to update the risk management policy and system. The risk
management of the Group is carried out by the Risk Management Committee in accordance with policy approved by the
Board of Directors. The Risk Management Committee works closely with other business units of the Group to identify,
evaluate and mitigate risks. The internal audit department of the Group conducts regular audits of risk management
controls and procedures and reports the audit results to the audit committee of the Group.
The Group diversifies the risk of financial instruments through appropriate diversification of investments and business
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portfolios and reduces the risk of being concentrated in a single industry, a specific region or a specific counterparty by
developing appropriate risk management policy.
(1) Credit risk
Credit risk refers to the risk of the Group's financial loss caused by the counterparty's failure to fulfill its contractual
obligations.
The Group manages credit risk by portfolio classification. Credit risk mainly arises from bank deposits, notes receivable,
accounts receivable, other receivables, etc.
The Group places its bank deposits mainly with financial institutions with good reputation and high credit rating, and the
Group does not expect that there exists any significant credit risk to the bank deposits.
For notes receivable, accounts receivable and other receivables, the Group has set the relevant policy to control credit
exposure. The Group evaluates the customer's credit qualification and sets the corresponding credit period based on their
financial position, credit history and other factors such as current market conditions. The Group shall regularly monitor
customers' credit records. For customers with poor credit records, the Group shall use such methods as written payment
reminders, shortening or canceling credit periods to ensure that the overall credit risks of the Group are under control.
The Group’s debtors of accounts receivable are customers engaged in different industries and located in different regions.
The Group continues to conduct credit assessment of the financial position of accounts receivable and, where appropriate,
purchases credit guarantee insurance.
The maximum credit risk exposure the Group accesses to is the book value of each financial asset in the balance sheet.
The Group is also exposed to credit risks due to the provision of financial guarantees, as detailed in Note XII.2.
In the Group's accounts receivable, the amount owed by the top five customers took 15.42% of the Group's total accounts
receivable (2019: 25.39%); in the Group's other receivables, the amount owed by the top five customers took 11.28% of
the Group's total other receivables (2019: 40.94%).
(2) Liquidity risks
Liquidity risk refers to the risk that the Group encounters a shortage of funds in fulfilling its obligation to settle by delivery of
cash or other financial assets.
When managing flow risks, each of the Group's affiliates is responsible for its own cash flow forecast. The Group's
financial center monitors long - and short-term fund demands at the Group level based on the cash flow forecast results of
each member enterprise. The Group manages the surplus fund within the Group through the capital pool plan established
with some large banking financial institution, and ensures that each member enterprise has sufficient cash reserves to
meet the payment obligations due for settlement. In addition, the Group has entered into agreements for line of financing
credit with its major correspondent banks to support the Group in fulfilling its obligations related to commercial paper.
The Group raises working capital through funds generated from its operations and bank borrowings. As at June 30,2020,
the amount of the bank loans not yet used by the Group was CNY 2,316.68 million (December 31,2019: CNY 1,970.39
million).
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(3) Market risks
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instruments may
fluctuate due to changes in market prices, including interest rate risk, exchange rate risk and other price risk.
Interest rate risks
Interest rate risk refers to the risk that the fair value of financial instruments or future cash flow may fluctuate due to
changes in market interest rates. Interest rate risk may arise from recognized interest bearing financial instruments and
unrecognized financial instruments (such as certain loan commitments).
The interest rate risk of the Group is mainly generated from short-term bank borrowing, long-term bank borrowing and
other interest-bearing debts. Financial liabilities with floating interest rate expose the Group to interest rate risk of cash
flow while financial liabilities with fixed interest rate expose the Group to interest rate risk of fair value. The Group
determines the relative proportion of fixed and floating rate contracts in accordance with prevailing market conditions and
maintains an appropriate portfolio of fixed and floating rate instruments through regular reviews and monitoring.
The interest-bearing financial instruments held by the Group are as follows (In CNY 10,000) :
Items Amount in the reporting year Amount in the previous year
Financial instruments with fixed interest rate
Financial liabilities
Where: short-term borrowings 67,356.24 48,710.37
Long-term Loan 466.91 468.18
Sub-total 67,823.15 49,178.55
Financial instruments with floating interest rate
Financial liabilities
Where: short-term borrowings 8,000.00
Total 67,823.15 57,178.55
For the financial instruments held on the balance sheet date that expose the Group to fair value interest rate risk, the
impact of net profit and shareholders' equity in the sensitivity analysis above is the impact after the re-measurement of the
financial instruments according to the new interest rate, assuming that the daily interest rate of the balance sheet changes.
For floating rate non-derivative instruments held at the balance sheet date that expose the Group to cash flow interest rate
risk, the impact on net profit and shareholders' equity in the sensitivity analysis above is the impact of the above interest
rate change on the annualized estimated interest expense or income. The previous year's analysis was based on the
same assumptions and methodology.
Exchange rate risk
Exchange rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to
movement in foreign exchange rates. Exchange rate risk may be derived from financial instruments denominated in
foreign currencies other than the functional currency.
Exchange rate risk mainly refers to the Group's financial position and cash flow affected by foreign exchange rate
fluctuations. In addition to the subsidiary established in Hong Kong holding assets in Hong Kong dollars and the
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sub-subsidiary established in Switzerland holding assets in Swiss Francs, the Group's other major business activities are
mainly settled in Renminbi. However, foreign exchange risks still exist in the foreign currency assets and liabilities
recognized by the Group and in future foreign currency transactions.
As of June 30, 2020, the amount of foreign currency financial assets and foreign currency financial liabilities held by the
Group converted into Renminbi is listed as follows (In CNY 10,000) :
Items Foreign currency liabilities Foreign currency assets
Amount at the end of the Amount at the beginning of Amount at the end of the Amount at the beginning of
reporting period the reporting period reporting period the reporting period
US$ 25.71 - 2,362.42 4,601.89
HK$ 312.93 1,939.47 1,083.74 1,072.77
CHF 1,588.41 1,700.89 1,441.98 3,497.65
Euro 0.87 - 48.23 359.81
JP Yen - 68.95
Total 1,927.93 3,640.36 5,005.32 9,532.12
The Group pays close attention to the impact of exchange rate fluctuations on exchange rate risks of the Group. The
Group is not currently taking any measures to protect itself from exchange rate risk. However, the management is
responsible for monitoring currency risks and will consider hedging significant currency risks as needed.
On June 30, 2020, for the Group’s foreign currency monetary funds, bank loans and other financial instruments, and so on,
may lead to appreciation or depreciation of the Group's shareholders' equity and net profit by about CNY 1.2494 million
(December 31, 2019: about CNY 2.9459 million) with the assumption that that Renminbi to foreign currencies (mainly
against US Dollars, HK Dollars and Swiss Franc) may be appreciated or depreciated by 5% with other factors remain
unchanged.
2. Capital management
The objective of the Group's capital management policy is to ensure that the Group is a going concern, thus providing
returns to shareholders and benefits to other stakeholders, while maintaining an optimal capital structure to reduce the
cost of capital.
In order to maintain or recapitalize, the Group may adjust the way of financing, adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares and other equity instruments, or sell assets to reduce its
debts.
The Group monitors its capital structure on the basis of the asset-liability ratio (that is, the total liabilities are divided by the
total assets). As at 30 June 2020, the Group's gearing was 31.52% (December 31, 2019: 29.420%).
XI. Disclosure of Fair Value
1、 Fair value at the end of the reporting period of the assets and liabilities measured based on the fair value
Inapplicable
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2. Basis for determining the market price of the items measured based on the continuous and non-continuous
first level fair value
Level 1: the quotation of the same assets or liabilities in an active market (unadjusted)
3. Items measured based on the continuous or uncontinuous 2nd level fair value, valuation technique as used,
nature of important parameters and quantitative information
Level 2: either directly (i.e., price) or indirectly (i.e., derived from price) use observable input value other than market
quotations for assets or liabilities at Level 1.
4. Items measured based on the continuous or uncontinuous 3rd level fair value, valuation technique as used,
nature of important parameters and quantitative information
Level 3: The asset or liability has used any input value not based on observable market data (non-observable input value).
5. Items measured based on the continuous 3rd level fair value, sensitivity analysis on adjusted information and
unobservable parameters between the book value at beginning and end of the period
Inapplicable
6. In case items measured based on fair value are converted between different levels incurred in the current
period, state the cause of conversion and determine conversion time point
This year, the fair value measurement of the Group's financial assets and financial liabilities has neither experienced any
conversion between Level 1 and Level 2, nor experienced transfer-in or transfer-out to/from Level 3.
7. Change of valuation technique incurred in the current period and cause of such change
Inapplicable
8. Fair value of financial assets and financial liabilities not measured at fair value
The Group's financial assets and financial liabilities measured with amortized costs mainly include monetary funds, notes
receivable, accounts receivable, other receivables, short-term loans, accounts payable, other payables, long-term loans
due within a year, long-term loans, etc.
The difference between the book value and fair value of the above financial assets and financial liabilities not measured
with fair value is very little.
9. Others
Inapplicable
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XII. Related parties and transactions
1. Details of the parent company of the Company
Shareholding ratio of the Ratio of vote right of the
Name of the parent
Place of registration Nature of business Registered capital parent company in the parent company in the
company
Company Company
Investment in industries,
AVIC IHL Shenzhen domestic trade, material CNY 1,166.162 million 38.06% 38.06%
supply and distribution
Note to the parent company:
The proportion of the equity held by AVIC International Shenzhen Co., Ltd. in AVIC International Holdings Limited is
33.93%. AVIC International Shenzhen is a wholly owned subsidiary of AVIC International Holdings Limited (AVIC IHL)
and China Aviation Industry Corporation (AVIC) directly holds 91.14% of the equity of AVIC IHL. Therefore, the Company’s
ultimate controller is AVIC.
Other notes:
Inapplicable
2. Subsidiaries of the Company
Refer to Note IX. 1 for details of subsidiaries of the Company.
3. Joint venture and association of the Company
Refer to NOTE IX.3 for details of the Company's major joint ventures or associates.
4. Other related parties of the Company
Names of other related parties Relationship between other related parties and the Company
AVIC Property Management Co., Ltd. (AVIC Property) An associate of the holding shareholder
Shenzhen AVIC Building Technology Co., Ltd. (AVIC Building Co.) An associate of the holding shareholder
China Merchants Jiyu Industry Operation & Service Co., Ltd. (China Merchants JIYU) An associate of the holding shareholder
Shenzhen AVIC Guanlan Real Estate Development Co., Ltd. (AVIC Guanlan Real
An associate of the holding shareholder
Estate)
Shenzhen AVIC 9 Square Assets Management Co., Ltd. (9 Square Asset) An associate of the holding shareholder
Shenzhen AVIC City Investment Co., Ltd.(AVIC City Investment) An associate of the holding shareholder
Ganzhou CATIC 9 Square Commerce Co., Ltd. (Ganzhou 9 Square) An associate of the holding shareholder
AVIC City Property (Kunshan) Co., Ltd. (AVIC City Property (Kunshan) ) An associate of the holding shareholder
Shenzhen AVIC Security Service Co., Ltd. (AVIC Security Service) An associate of the holding shareholder
Shenzhen AVIC Property Asset Management Co., Ltd. (AVIC Property Asset An associate of the holding shareholder
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Management)
Jiujiang 9 Square Commerce Management Co., Ltd. (9 Square Commerce
An associate of the holding shareholder
Management)
Shenzhen AVIC Real Estate Development Co., Ltd. (AVIC Real Estate) An associate of the holding shareholder
Shenzhen AVIC Nanguang Elevator Co., Ltd. An associate of the holding shareholder
Rainbow Department Store Co., Ltd. and its subsidiaries (RAINBOW) Controlled by the same party
Shennan Circuit Co., Ltd. and its subsidiaries (Shennan Circuit) Controlled by the same party
Shenzhen AVIC City Commerce development Co., Ltd. (AVIC City Development) Controlled by the same party
Shenzhen AVIC Huacheng Commerce development Co., Ltd. (AVIC Huacheng
Controlled by the same party
Commerce development)
Shenzhen AVIC City Parking Lots Management Co., Ltd. (AVIC Parking Lots
Controlled by the same party
Management)
Shenzhen CATIC Technical Testing Office Co., Ltd. (CATIC Technical Testing) Controlled by the same party
Tianma Micro-electronics Co., Ltd. (SHEN TIANMA) Controlled by the same party
AVIC Securities Co., Ltd. (AVIC Securities) Controlled by the same party
Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) Controlled by the same party
Shenzhen AVIC Changtai Investment Development Co., Ltd. (AVIC Changtai) Controlled by the same party
Shenzhen CATIC Group Training Center (CATIC Training Center) Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd. (Grand Skylight Hotel
Controlled by the same party
Management)
AVIC Finance Co., Ltd. (AVIC Finance ) Controlled by the same party
Shenzhen AVIC Grand Skylight Hotel Management Co., Ltd. (Grand Skylight Hotel) Controlled by the same party
Gongqingcheng CATIC Cultural Investment Co., Ltd. (Gongqingcheng CATIC Cultural
Controlled by the same party
Investment)
AVIC International Complete Set Equipment Co., Ltd. (AVIC Complete Set Equipment) Controlled by the same party
AVIC International Aero-Development Corporation Controlled by the same party
AVIC XI’AN AERONAUTICS COMPUTING TECHNIQUE RESEARCH INSTITUTE Controlled by the same party
AVIC JINCHENG NANJING ENGINEERING INSTITUTE OF AIRCRAFT SYSTEM Controlled by the same party
AVIC Lutong Industrial Co., Ltd. Controlled by the same party
AVIC East China Optoelectronic Co., Ltd. Controlled by the same party
AVIC East China Optoelectronic (Shanghai) Co., Ltd. Controlled by the same party
China Aviation Industry Supply and Marketing Zhongnan Co., Ltd. Controlled by the same party
Huang Yongfeng A senior executive
Wang Mingchuan A senior executive
Fu Debin A senior executive
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Xiao Zhanglin A senior executive
Wang Bo A senior executive
Chen Libin A senior executive
Wang Jianxin A senior executive
Zhong Hongming A senior executive
Tang Xiaofei A senior executive
Wang Baoying A senior executive
Sheng Qing A senior executive
Fang Jiasheng A senior executive
Lu Wanjun A senior executive
Liu Xiaoming A senior executive
Pan Bo A senior executive
Li Ming A senior executive
Chen Zhuo A senior executive
Tang Haiyuan A senior executive
Xu Chuangyue A senior executive
Other notes
Inapplicable
5. Related transactions
(1) Related transactions of purchase and sale of commodities and supply and acceptance of labor services
Statement of purchase of commodities and acceptance of labor services
In CNY
Description of Related Amount incurred in the Transaction quota as Has it exceeded the Amount incurred in the
Related parties
Transactions reporting period approved transaction quota previous period
Property management
AVIC Property 5,938,619.97 1,800.00 No 4,665,553.46
fee
Shopping mall
Rainbow Ltd. 2,389,264.94 1,000.00 No 3,005,499.82
fees/purchase of goods
SHEN TIANMA Purchase of goods 31,309.90 800.00 No
Ganzhou 9 Square Shopping mall fees 92,549.84 200.00 No
9 Square Commerce
Shopping mall fees 43,147.68 No
Management Co., Ltd.
AVIC Building Co. Refurbishment 32,924.52 No
Shenzhen AVIC Nanguang Repairing fee 122,830.20 No
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Elevator Co., Ltd.
AVIC City Commerce
Shopping mall fees 19,346.13 No
Development
Statement of sales of goods/supply of labor services
In CNY
Related parties Description of Related Transactions Amount incurred in the reporting period Amount incurred in the previous period
Rainbow Ltd. Products and labor services 29,669,833.80 35,273,411.88
Ganzhou 9 Square Products and labor services 8,748.67 68,392.00
Shennan Circuit Sales of materials and supply of labor 3,086,589.15 4,656,548.21
Gongqingcheng CATIC Cultural
Sales of products 182,271.24
Investment
AVIC International Sales of products 4,424.78
AVIC International Aero-Development
Sales of products 140,884.97
Corporation
Shanghai Watch Sales of products 1,812,292.04
AVIC City Commerce Development Sales of products 94,585.88
AVIC Changtai Sales of products 0
AVIC XI’AN AERONAUTICS COMPUTING Sales of products 7,061.95
TECHNIQUE RESEARCH INSTITUTE
AVIC JINCHENG NANJING Sales of products 176,991.15
ENGINEERING INSTITUTE OF
AIRCRAFT SYSTEM
AVIC Lutong Industrial Co., Ltd. Sales of products 14,123.89
AVIC East China Optoelectronic Co., Ltd. Sales of products 212,389.38
AVIC East China Optoelectronic Sales of products 35,398.23
(Shanghai) Co., Ltd.
China Aviation Industry Supply and Sales of products 7,079.65
Marketing Zhongnan Co., Ltd.
Note to the related transactions of purchase and sale of commodities and supply and acceptance of labor services
Inapplicable
(2) Related entrusted management/contracted and mandatory management/contracting
Inapplicable
(3) Related lease
The Company as lessor:
In CNY
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Rental income recognized in the current Rental income recognized in the
Names of lessees Categories of leasehold properties
period previous period
AVIC Property Housing 6,196,298.09 9,236,271.13
Tianyue Hotel Housing 2,095,238.09
CMPO Housing 972,906.73 926,577.86
AVIC City Investment Housing 139,986.58 133,320.56
AVIC Securities Housing 657,257.16 527,428.55
Rainbow Ltd. Housing 696,114.82 289,764.58
AVIC Huacheng Commerce Development Housing 117,566.50
9 Square Assets Housing 1,042,900.03 993,238.13
CATIC Public Security Service Co. Housing 502,635.07 706,043.41
Guanlan Real Estate Housing 69,993.29 172,145.99
AVIC City Property Housing 149,630.10
AVIC Real Estate Housing 140,569.86 133,876.07
The Company as lessee:
In CNY
Rental fee recognized in the Rental fee recognized in the
Names of lessees Categories of leasehold properties
current period previous period
Ganzhou 9 Square Housing 449,741.52 538,609.84
AVIC City Property (Kunshan) Housing 87,666.38
9 Square Commerce Management
Housing 192,860.44 191,570.45
Co., Ltd.
AVIC City Commerce Development Housing 68,807.29 203,568.04
Note to related lease
Inapplicable
(4) Related guarantee
The Company as a guarantor
In CNY
Guarantees Amount guaranteed Effective date Expiring date Is the guarantee finished
Harmony 100,000,000.00 December 30, 2019 December 29, 2020 No
Harmony 40,000,000.00 April 21, 2020 April 21, 2021 No
the Hong Kong Co. 3,721,700.00 August 22, 2019 August 19, 2020 No
the Hong Kong Co. 3,721,700.00 September 23, 2019 September 19, 2020 No
the Hong Kong Co. 2,977,360.00 October 31, 2019 October 25, 2020 No
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The Sales Co. 50,000,000.00 April 26, 2020 April 26, 2021 No
Precision Technology Co. 30,000,000.00 April 24, 2020 April 24, 2021 No
Science & Technology
2,430,000.00 April 29, 2020 April 29, 2021 No
Development Co.
The Company as a guarantee
Inapplicable
(5) Borrowings and lendings among related parties
In CNY
Related parties Borrowing amount Starting date Due date Note
Borrowed from
AVIC Financial Co. 50,000,000.00 March 26, 2019 March 26, 2020
AVIC Financial Co. 100,000,000.00 April 02, 2019 April 02, 2020
AVIC Financial Co. 60,000,000.00 October 25, 2019 October 25, 2020
Lending
(6) Assets assignment and liabilities reorganization of related parties
Inapplicable
(7)Remuneration to senior executives
Inapplicable
(8) Other related transactions
The balance of the Company's deposit at the end of the current year with AVIC Finance amounted to CNY 289,316,243.49,
of which the interest received in the current year amounted to CNY 469,992.60.
6. Accounts receivable from and payable to related parties
(1) Receivables
In CNY
Ending balance Opening balance
Project name Related parties
Book balance Bad debt reserve Book balance Bad debt reserve
Accounts receivable:
Rainbow Ltd. 8,983,247.13 449,162.36 633,187.49 31,596.06
Shennan Circuit 1,421,361.72 71,068.09 1,704,634.58 85,061.27
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Gongqingcheng CATIC
31,387.08 1,569.35
Cultural Investment
AVIC City Commerce
29,251.10 1,462.56
Development
AVIC Property 227,167.05 11,358.35
Tianyue Hotel 7,630.00 381.50
CATIC Public Security 271,533.23 13,576.66
Service Co.
Shanghai Watch 140,000.00 6,986.00
Notes receivable:
Shennan Circuit 2,094,782.89 2,263,719.32
Advance payment:
SHEN TIANMA 581,280.00 31,309.90
Other receivables:
Rainbow Ltd. 1,208,200.00 60,410.00 975,867.00 50,647.50
Ganzhou 9 Square 122,665.60 6,366.34 122,665.60 6,366.34
AVIC City Property 40,000.00 2,000.00
32,000.00 1,660.80
(Kunshan)
Gongqingcheng CATIC
5,500.00 275.00
Cultural Investment
9 Square Commerce
50,000.00 2,595.00 50,000.00 2,595.00
Management Co., Ltd.
AVIC City Commerce
59,923.00 3,110.00 59,923.00 3,110.00
Development
AVIC IHL 11,101.80 576.18 11,101.80 576.18
(2) Payables
In CNY
Project name Related parties Ending book balance Opening book balance
Accounts payable:
AVIC Building Co. 23,300.97
SHEN TIANMA 3,415.84
Advance receipts:
China Aviation Industry Supply and
29,175.00
Marketing Zhongnan Co., Ltd.
Other payables:
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AVIC Property 1,994,524.54 1,237,403.65
CMPO 442,407.92 442,407.92
AVIC City Investment 309,732.00 309,732.00
AVIC Securities 213,000.00 213,000.00
AVIC Building Co. 71,153.70 54,691.44
AVIC City Commerce Development 0.00 99,052.32
AVIC Huacheng Commerce Development 0.00 73,819.68
9 Square Assets 378,483.84 378,483.84
Rainbow Ltd. 257,490.98 155,672.90
AVIC Real Estate 51,014.88 51,014.88
Guanlan Real Estate 25,401.60 25,401.60
CATIC Public Security Service Co. 226,603.44 226,603.44
Tianyue Hotel 57,718.82 28,886.00
7. Related parties’ commitments
Inapplicable
8. Others
Inapplicable
XIII. Stock payment
1. General
Inapplicable
2. Stock payment for equity settlement
In CNY
Method for determining the fair value of equity instruments as at the granting day Closing price of the Company’s shares as at the granting day
Employee service period, achievement rate of performance indicators and
Basis for determining the quantity of exercisable equity instruments
individual performance evaluation result
Cause of significant difference between the estimation of the reporting period and that of
Nil
the previous period
Accumulated amount of the equity-settled share-based payment counted to the capital
17,447,988.68
reserve
Total expenses recognized in the equity-settled share-based payment during the reporting 3,165,401.89
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period
Other notes
Inapplicable
3. Stock payment for cash settlement
Inapplicable
4. Correction and termination of stock payment
Inapplicable
5. Others
Inapplicable
XIV. Commitments and contingencies
1. Important commitments
Important commitments existing as at the balance sheet date
Implementation of irrevocable operating lease contract signed by the Company ended the balance sheet date is as
follows:
Minimum rent payment for irrevocable operational lease Ending balance Opening balance
1st year after the balance sheet date 75,083,458.13 69,420,770.36
2nd year after the balance sheet date 34,286,090.53 40,749,688.35
3rd year after the balance sheet date 14,875,155.04 15,620,420.28
Subsequent years 5,240,332.87 11,333,148.34
Total 129,485,036.57 137,124,027.33
2. Contingencies
(1) Significant contingencies existing as at the balance sheet date
As of June 30, 2020, the guarantee status within the Group is as follows (in CNY 10,000) :
Guarantees Guarantors The guarantees Line of credit Used credit line Effective date Expiring date
Harmony The Company Letter of 20,000.00 10,000.00 December 30, 2019 December 29, 2020
guarantee
Harmony The Company Loan 4,000.00 4,000.00 April 21, 2020 April 21, 2021
the Hong Kong Co. The Company Loan 372.17 August 22, 2019 August 19, 2020
the Hong Kong Co. The Company Loan 3,653.76 372.17 September 23, 2019 September 19, 2020
the Hong Kong Co. The Company Loan 297.74 October 31, 2019 October 25, 2020
The Sales Co. The Company Loan 5,000.00 5,000.00 April 26, 2020 April 26, 2021
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Precision Technology The Company Loan 3,000.00 3,000.00 April 24, 2020 April 24, 2021
Co.
Science & Technology The Company Loan 3,000.00 243.00 April 29, 2020 April 29, 2021
Development Co.
Total 38,653.76 23,288.88
(2) Important contingencies unnecessary to be disclosed but necessary to be explained
Inapplicable
3. Others
As of June 30, 2020, there exist no other contingencies in the Group necessary to be disclosed.
XV. Events after balance sheet date
1. Significant non-adjustment events
Inapplicable
2. Profit distribution
In CNY
Profit or dividend to be distributed 85,634,376.20
Profit or dividend announced to be distributed after review and approval 85,634,376.20
3. Sales return
Inapplicable
4. Note to other matters after the balance sheet date
Inapplicable
XVI. Other significant events
1. Correction of the accounting errors in the previous period
(1) Retroactive restatement
Inapplicable
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(2) Prospective application
Inapplicable
2. Liabilities restructuring
Inapplicable
3. Replacement of assets
(1) Non-monetary assets exchange
Inapplicable
(2) Other assets exchange
Inapplicable
4. Pension plan
Inapplicable
5. Discontinuing operation
Inapplicable
6. Segment information
(1) Basis for determining the reporting segments and accounting policy
Inapplicable
(2) Financial information of the reporting segments
Inapplicable
(3) In case there is no reporting segment or the total assets and liabilities of the reporting segments cannot be
disclosed, explain the reason
Inapplicable
(4) Other notes
Inapplicable
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7. Other significant transactions and matters that may affect investors' decision making
Inapplicable
8. Others
Inapplicable
XVII. Notes to the parent company’s financial statements
1. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
Ending balance Opening balance
Book balance Bad debt reserve Book balance Bad debt reserve
Categories
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
where
Accounts receivable for which
provision for bad debt is based 4,699,542.96 100.00% 230,925.13 5.00% 4,468,617.83 2,997,921.46 100.00% 149,896.07 5.00% 2,848,025.39
on portfolios
where
Accounts receivable from other
4,699,542.96 100.00% 230,925.13 5.00% 4,468,617.83 2,997,921.46 100.00% 149,896.07 5.00% 2,848,025.39
customers
Total 4,699,542.96 100.00% 230,925.13 5.00% 4,468,617.83 2,997,921.46 100.00% 149,896.07 5.00% 2,848,025.39
Individual provision for bad and doubtful debts:
Inapplicable
Provision for bad debts based on portfolio: accounts receivable from other customers
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Accounts receivable from other customers 4,699,542.96 230,925.13 5.00%
Total 4,699,542.96 230,925.13 --
Note to the basis for determining the combination:
Inapplicable
Disclosed based on aging
In CNY
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Aging Ending balance
Within 1 year (with 1 year inclusive) 4,699,542.96
Total 4,699,542.96
(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Amount recovered or Ending balance
Provision Writing-off Others
reversed
Bad debt reserve 149,896.07 230,925.13 149,896.07 0.00 0.00 230,925.13
Total 149,896.07 230,925.13 149,896.07 0.00 0.00 230,925.13
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion of the ending balance of the Ending balance of the provision for bad
Description of Units Ending balance of accounts receivable
accounts receivable debts
Receivable from the top five customers 2,421,654.32 52.00% 121,082.71
Total 2,421,654.32 52.00%
(5) Account receivable with recognition terminated due to transfer of financial assets
Inapplicable
(6) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
2. Other receivables
In CNY
Items Ending balance Opening balance
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Other receivables 697,541,260.60 783,647,732.22
Total 697,541,260.60 783,647,732.22
(1) Interest receivable
1) Classification of interest receivable
Inapplicable
2) Significant overdue interest
Inapplicable
3) Provision for bad debts
Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable
Inapplicable
2) Significant dividends receivable with age exceeding 1 year
Inapplicable
3) Provision for bad debts
Inapplicable
(3) Other receivables
1) Classification of other receivables based on nature of payment
In CNY
Nature of Payment Ending book balance Opening book balance
Collateral and Deposit 235,761.90 235,761.90
Inter-company current account 643,492,028.31 783,005,800.85
Advance payment for equity allocation 53,183,393.38 0.00
Others 739,511.33 495,730.33
Total 697,650,694.92 783,737,293.08
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2) Provision for bad debts
In CNY
The 1st stage The 2nd stage The 3rd stage
Predicted credit loss in the whole Predicted credit loss in the whole
Bad debt reserve Predicted credit loss in the Total
duration (no credit impairment taken duration (credit impairment already
future 12 months
place) taken place)
Balance as at January 01, 2020 89,560.86
Balance as at January 01, 2020
—— —— —— ——
during the reporting period
Provision in the reporting period 19,873.46
Balance as at June 30, 2020 109,434.32
Movement of the book balance of provision for loss with significant amount in the reporting period
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 697,403,235.59
1 to 2 years 10,127.53
2 to 3 years 197,281.80
Over 3 years 40,050.00
3 to 4 years 40,050.00
4 to 5 years 0.00
Over 5 years 0.00
Total 697,650,694.92
3) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Amount recovered or Ending balance
Provision Writing-off Others
reversed
Bad debt reserve 89,560.86 19,873.46 0.00 0.00 0.00 109,434.32
Total 89,560.86 19,873.46 0.00 0.00 0.00 109,434.32
Where the significant amount of the provision for bad debt recovered or reversed:
Inapplicable
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4) Accounts receivable actually written off in the reporting period
Inapplicable
5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion in total ending Ending balance of the
Description of Units Nature of Payment Ending balance Aging
balance of other receivables provision for bad debts
Inter-company current
Harmony 447,480,015.30 Within 1 year 64.00% 0.00
account
Inter-company current
Hengdarui 93,350,157.00 Within 1 year 13.00% 0.00
account
Inter-company current
Precision Technology Co. 63,956,637.59 Within 1 year 9.00% 0.00
account
Inter-company current
SHIYUEHUI 27,809,145.33 Within 1 year 4.00% 0.00
account
Emile Chouriet (Shenzhen) Inter-company current
10,896,073.09 Within 1 year 2.00% 0.00
Limited account
Total -- 643,492,028.31 -- 92.00% 0.00
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables with recognition terminated due to transfer of financial assets
Inapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
3. Long-term equity investments
In CNY
Ending balance Opening balance
Items
Book balance Impairment reserve Book value Book balance Impairment reserve Book value
Investment in
1,336,734,871.73 0.00 1,336,734,871.73 1,334,471,401.42 0.00 1,334,471,401.42
subsidiaries
Investment in 48,584,749.77 0.00 48,584,749.77 46,423,837.85 0.00 46,423,837.85
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associates and joint
ventures
Total 1,385,319,621.50 0.00 1,385,319,621.50 1,380,895,239.27 0.00 1,380,895,239.27
(1) Investment in subsidiaries
In CNY
Increase/ Decrease (+ / -) in the reporting period Ending balance of
Opening balance Ending balance
Investees Additional Decrease of Provision for the provision for
(book value) Others (book value)
investment investment impairment impairment
Harmony 602,538,761.04 0.00 0.00 0.00 875,279.56 603,414,040.60 0.00
The Sales Co. 451,377,582.46 0.00 0.00 0.00 970,532.34 452,348,114.80 0.00
Precision Technology
9,344,923.49 0.00 0.00 0.00 255,455.31 9,600,378.80 0.00
Co.
Science & Technology
10,126,964.71 0.00 0.00 0.00 57,199.69 10,184,164.40 0.00
Development Co.
the Hong Kong Co. 137,737,520.00 0.00 0.00 0.00 0.00 137,737,520.00 0.00
SHIYUEHUI 5,000,000.00 0.00 0.00 0.00 0.00 5,000,000.00 0.00
Shenzhen Harmony
E-Commerce Co., 2,184,484.39 0.00 0.00 0.00 0.00 2,184,484.39 0.00
Ltd.
Hengdarui 36,867,843.96 0.00 0.00 0.00 0.00 36,867,843.96 0.00
Emile Chouriet
79,293,321.37 0.00 0.00 0.00 105,003.41 79,398,324.78 0.00
(Shenzhen) Limited
Total 1,334,471,401.42 0.00 0.00 0.00 2,263,470.31 1,336,734,871.73 0.00
(2) Investment in associates and joint ventures
In CNY
Increase/ Decrease (+ / -) in the reporting period
Income from
Opening equity Other Announced for Ending balance
Ending balance
Investees balance (book Additional Decrease of investment comprehensive Other equity distributing Provision for of the provision
Others (book value)
value) investment investment recognized income movement cash dividend impairment for impairment
under equity adjustment or profit
method
I. Joint Venture
II. Associates
Shanghai 46,423,837.85 0.00 0.00 2,160,911.92 0.00 0.00 0.00 0.00 0.00 0.00
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Watch Industry 48,584,749.77
Co., Ltd.
2,160,911.92
Sub-total 46,423,837.85 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
48,584,749.77
2,160,911.92
Total 46,423,837.85 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
48,584,749.77
(3) Other notes
Inapplicable
4. Operation Income and Costs
In CNY
Amount incurred in the reporting period Amount incurred in the previous period
Items
Income Costs Income Costs
Principal business 57,329,018.41 17,626,390.24 64,124,939.95 11,807,925.90
Other businesses -15,800.00 0.00 0.00 0.00
Total 57,313,218.41 17,626,390.24 64,124,939.95 11,807,925.90
5. Return on investment
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income from long term equity investment based on equity
2,160,911.92 1,531,310.06
method
Total 2,160,911.92 1,531,310.06
6. Others
Inapplicable
XVIII. Supplementary information
1. Statement of non-recurring gains and losses in the reporting period
In CNY
Items Amount Note
1. Gain/Loss from disposal of non-current assets -200,140.17
The government subsidies included in the profits and 10,154,015.67
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losses of the current period ( (excluding government grants
which are closely related to the Company’s business and
conform with the national standard amount or quantity)
Reversal of the impairment provision for
receivables and contract assets which have been tested 296,622.87
individually for impairment
Other non-operating income and expenses other than the
1,273,213.01
aforesaid items
Less: Amount affected by the income tax 2,454,282.53
Total 9,069,428.85 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring
gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it
is necessary to explain the reason.
Inapplicable
2. ROE and EPS
Earnings per share
Profit in the reporting period Return on equity, weighted average Basic earning per share Diluted earning per share
(CNY/share) (CNY/share)
Net profit attributable to the Company’s
2.91% 0.1775 0.1775
shareholders of ordinary shares
Net profit attributable to the Company’s
shareholders of ordinary shares less 2.57% 0.1568 0.1568
non-recurring gains and loss
3. Discrepancy in accounting data between IAS and CAS
(1) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to IAS and
CAS
Inapplicable
(2) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to the
accounting standards outside Mainland China and CAS
Inapplicable
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(3) Note to the discrepancy in accounting data under the accounting standards outside Mainland China. In case
the discrepancy in data which have been audited by an overseas auditing agent has been adjusted, please
specify the name of the overseas auditing agent.
Inapplicable
4. Others
Inapplicable
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Text
Section 12 Documents Available for Inspection
I. Financial statements signed by and under the seal of the legal representative, the chief financial officer
and the person in charge of the accounting office.
II. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities
Times and Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.
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