FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary Stock Code: 000026 200026 Short Form of Stock: FIYTA, FIYTA B Announcement No: 2020 - 065 FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary Section 1 Important Notice 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. All the directors attended the board meeting for reviewing the Quarter Report. Huang Yongfeng, the Company leader, Chen Zhuo, the chief financial officer, and Tian Hui, the manager of the accounting department (treasurer) hereby confirm authenticity, accuracy and completeness of the financial report enclosed in the Quarter Report. FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary Section 2 Company Profile I. Summary of Accounting/Financial Data Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous year No Year-on-year increase/decrease End of the reporting period End of the previous year in the reporting period Total assets, in CNY 4,028,147,973.14 3,760,923,285.37 7.11% Net assets attributable to the 2,747,088,050.30 2,654,533,766.99 3.49% Company’s shareholders, in CNY Year-on-year Increase/decrease as of From the year beginning increase/decrease from the reporting period over Reporting period to the end of the the year beginning to the the same period of the reporting period end of the reporting previous year period Revenue in CNY 1,362,598,720.97 42.73% 2,944,433,436.00 7.47% Net profit attributable to the 137,048,377.83 148.12% 214,787,284.13 20.17% Company’s shareholders, in CNY Net profit attributable to the Company’s shareholders less the non- 129,723,577.01 133.96% 198,393,054.46 17.34% recurring items, in CNY Net cash flows arising from operating 112,503,592.52 -22.79% 216,148,827.79 -29.07% activities, in CNY Basic earning per share, in CNY/share 0.3165 153.00% 0.4940 22.31% Diluted earning per share, in 0.3165 153.00% 0.4940 22.31% CNY/share Return on equity, weighted average 4.99% 2.94% 7.91% 1.17% Non-recurring gain/loss items and the amount involved In CNY Amount from the year beginning Items to the end of the reporting Note period Gain/loss from disposal of non-current assets, including the part offset -376,069.86 from the 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 20,135,145.46 to the Company’s business and conform with the national standard amount or quantity) Accounts receivable separately tested for impairment and reversal of 134,236.87 the impairment provision of contract assets Other non-operating income and expenses other than the aforesaid 1,288,291.48 items Less: Amount affected by the income tax 4,787,374.28 Total 16,394,229.67 -- FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary 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 II. State ment of total shareholders and shares held by the top 10 shareholders by the end of the reporting period 1. Quantity of the shares held by the common and preferred shareholders whose voting rights are recovered and statement of shareholding by the top 10 shareholders In shares Total preference shareholders Total common shareholders at the end with the voting power recovered 23,854 0 of the reporting period at the end of the reporting period (if any) Shareholding by top 10 shareholders Pledging or freezing Number of the Names of the Nature of the Shareholding Shareholding restricted shares Shareholders shareholder proportion quantity Status of the held Quantity shares AVIC International State corporate 38.07% 162,977,327 0 Holding Limited China Construction Bank Corporation - Penghua Value Domestic non- Advantage Hybrid state-owned legal 1.25% 5,331,735 0 Securities person Investment Fund (LOF) JPMORGAN CHASE Overseas legal 1.07% 4,598,412 0 BANK,NATIONAL person ASSOCIATION Domestic natural # Huang Xuhua 0.93% 3,998,594 0 person Domestic natural Song Jianbo 0.65% 2,790,000 0 person China Construction Bank Corporation - Rongtong Internet Domestic non- Media Flexible state-owned legal 0.58% 2,470,000 0 Configuration person Hybrid Securities Investment Fund Domestic natural # Zheng Zhenhong 0.58% 2,467,500 0 person Domestic natural # Jin Xiaojing 0.50% 2,159,900 0 person Hua An Fund - Fujiangnan Shengfu Tian Ying Domestic non- Plan A, Issue state-owned legal 0.47% 2,000,500 0 S1601 - 01 - Hua person An Fund - Jiangnan Rural Commercial Bank FIYTA Precision Technology Co., Ltd. 2020 Third Quarter Report, Summary Single Asset Management Plan Domestic natural # Zhu Kaisheng 0.42% 1,784,126 0 person Shares held by top 10 shareholders of unrestricted shares Share type Names of the Shareholders Quantity of unrestricted shares held Share type Quantity CNY ordinary AVIC International Holding Limited 162,977,327 162,977,327 shares China Construction Bank Corporation - CNY ordinary Penghua Value Advantage Hybrid 5,331,735 5,331,735 shares Securities Investment Fund (LOF) JPMORGAN CHASE BANK, CNY ordinary 4,598,412 4,598,412 NATIONAL ASSOCIATION shares CNY ordinary # Huang Xuhua 3,998,594 3,998,594 shares CNY ordinary Song Jianbo 2,790,000 2,790,000 shares China Construction Bank Corporation - Rongtong Internet Media Flexible CNY ordinary 2,470,000 2,470,000 Configuration Hybrid Securities shares Investment Fund CNY ordinary # Zheng Zhenhong 2,467,500 2,467,500 shares CNY ordinary # Jin Xiaojing 2,159,900 2,159,900 shares Hua An Fund - Fujiangnan Shengfu Tian Ying Plan A, Issue S1601 - 01 - CNY ordinary Hua An Fund - Jiangnan Rural 2,000,500 2,000,500 shares Commercial Bank Single Asset Management Plan CNY ordinary # Zhu Kaisheng 1,784,126 1,784,126 shares Explanation on associated relationship or consistent action of the above Inapplicable shareholders Note to the top 10 shareholders involved in margin financing & securities Inapplicable lending (if any) Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual repurchase during the reporting period? No 2. Total preferred shareholders and the shareholding by the top 10 preferred shareholders Inapplicable FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary Section 3 Significant Events I. Changes of the major financial data and financial indicators during the reporting period and the causes (I) Balance sheet items Variation Items Ending balance Opening balance Cause of the movement proportion Mainly due to increase of the net flow-in from operating Monetary capital 440,841,813.69 316,668,565.09 39.21% activities Mainly due to growth of the income from the business of Notes receivable 31,643,491.93 10,596,431.31 198.62% precision technology. Mainly due to growth of the income from the watch Accounts receivable 517,102,018.23 397,471,106.98 30.10% business and income from the business of precision technology. Mainly due to decrease of the excess VAT credit over the Other current assets 42,265,897.66 68,858,096.74 -38.62% beginning of the year. Mainly due to increase of the advance payment for Other non-current assets 20,641,356.90 7,373,248.48 179.95% refurbishment and equipment over the year beginning. Mainly due to the influence from the reclassification in Advance receipts 7,603,874.94 23,433,463.57 -67.55% compliance with the new income code. Mainly due to the influence from the reclassification in Contract liabilities 17,765,957.61 - - compliance with the new income code. Mainly due to increase of the VAT and business income Tax payable 88,754,288.51 24,064,803.00 268.81% tax payable over the year beginning. Mainly due to increase of the shopping mall expenses, Other payables 161,123,219.49 119,616,721.63 34.70% rent, etc. arising from the revenue growth. Mainly due to repurchase of the B-shares written-off in Treasury stock 34,143,512.92 71,267,118.78 -52.09% the current year. (II) Items of the Statement of Profit in the Reporting Period Amount incurred in Amount incurred in Variation Items the same period of Cause of the movement the reporting period proportion the previous year Mainly due to the growth of income from the watch Operating revenue 1,362,598,720.97 954,666,662.24 42.73% business during the reporting period. Mainly due to the increase of the operating costs arising Operating costs 843,233,284.52 564,943,912.45 49.26% from the growth of income from the watch business during the reporting period. Mainly due to the increase of the governmental subsidies Other income 9,981,129.79 321,181.31 3007.63% received during the reporting period. Loss from impairment of Mainly due to further enhancement of control over the -2,704,695.51 -5,221,223.17 48.20% credit accounts receivable during the reporting period. Income from disposal of Mainly due to relatively big amount from disposal of -175,929.69 -671,226.52 73.79% assets equipment in the same period of the previous year. Mainly due to the influence from the donation of anti- Non-operating expenses 289,010.70 159,270.28 81.46% epidemic supplies during the reporting period. Total profit 170,897,842.43 72,234,639.73 136.59% Mainly due to growth of revenue in the reporting period. FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary Mainly due to growth of the total profit in the reporting Income tax expense 33,842,369.19 16,999,335.26 99.08% period. (III) Items of the Statement of Profit from the Year Beginning to the End of the Reporting Period Amount incurred in Amount incurred in Variation Items the same period of Cause of the movement the reporting period proportion the previous year Mainly due to the impact from the increase of inventories Taxes and surcharges 14,676,717.58 22,031,072.60 -33.38% and procurements. Mainly due to the increase of the governmental subsidies Other income 20,135,145.46 13,366,923.67 50.63% received during the reporting period. Mainly due to increase of the profit of Shanghai Watch Return on investment 2,160,911.92 1,531,310.06 41.12% Industry, a shareholding enterprise in the reporting period. Loss from impairment of Mainly due to further enhancement of control over the -5,172,056.86 -8,302,992.06 37.71% credit accounts receivable during the reporting period. Income from disposal of Mainly due to big amount from disposal of equipment in -376,069.86 -883,236.65 57.42% assets the same period of the previous year. (IV) Items of the Cash Flow Statement from the Year Beginning to the End of the Reporting Period Amount incurred in Amount incurred in Variation Items the same period of Cause of the movement the reporting period proportion the previous year Mainly due to decrease of the rebated export tax and Rebated tax received 1,592,055.84 5,027,853.96 -68.34% duties arising from the drop of the overseas business income in the current year affected by COVID-19 Mainly due to the impact from the difference in the input Various taxes and duties paid 121,220,554.66 187,144,694.13 -35.23% VAT and output VAT in the current year. Net cash recovered from disposal of the fixed assets, Mainly due to decrease in disposal of fixed assets in the 84,522.81 203,980.63 -58.56% intangible assets and other current year long-term assets Cash received from Mainly due to the equity incentive implemented in the same - 18,585,600.00 100.00% absorption of investment period of the previous year. Influence of the change of the exchange rate upon cash and -598,916.46 335,308.39 -278.62% Mainly due to influence on the change of exchange rate. cash equivalent During the third quarter, benefited from the resumption of overseas consumption of famous brand watches and recovery of the market of the own proprietary brand as well as continuous carrying forward of quality improvement & efficiency improvement and transformation & upgrading, the Company achieved a historical high in operating performance in single quarter in the third quarter; the year-on-year growth rate of revenue was 42.73% and the year-on-year growth rate of total profit was 136.59%. During the reporting period, the Company continuously kept "war footing", seized the opportunity, controlled the cost, promoted transformation, the Company realized a positive growth on year-on-year basis in its own proprietary brand business in a single quarter, the total profit boosted enormously, continuously carried forward channel upgrading in the retail of world watch retails and the superiority of the channels was further consolidated, and kept high - speed growth in revenue and total profit; achieved a further breakthrough in digital transformation, provided effective support for breakthrough in business performance as the customer-centered digital operation system became further matured and; also made a new breakthrough in exploration of new retail models, such as “live video streaming by web celebrity”, and made a highest record in a single live broadcasting for sale of watches on the live streaming platform jointl y hosted by Wei Ya and Gao Yuanyuan; in precision technology business, the Company was persistently carr ying forward FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary customer deep ploughing and development of the new market field with the revenue growth rate exceeding 50% and smoothly boosted the technology reserve for the smart watch business and product development. During the reporting period, the Company was rated as one of the "Top Ten Enterprises of the Watch Sector of China’s Light Industry", ranking the first for many consecutive years. Our Chairman was awarded the honorary title of "Tribute to the 40th Anniversary of the Establishment of the Shenzhen Special Economic Zone and Saluting 40 Persons of Brands " on behalf of the Company. At the 40th Anniversary Celebration of the Establishment of Shenzhen Special Economic Zone dated October 14, Sun Lei, the chief designer of the Company, was awarded the honorary title of "Innovative and Pioneering Figure and Advanced Model Figure" as the only representative of the watch industry. Looking forward to the future, the Company is optimistic about the huge potential of the domestic consumption market under the new development pattern of the “Dual Circulation”, shall still pay close attention to the potential impact of the global epidemic situation and the changes in the competition pattern in the Chinese market, and continue to strengthen the advantages of our core competition based on “Brand Power, Product Power and Channel Power”; insist on science and technology leading and innovation driving, speed up digital transformation, increase investment in key fields and strength creation of the hard core of precision technology and carry forward transformation upgrading and new breakthrough. II. Progress of Significant Events and their Impacts and Analysis and Explanation of Solutions 1. Repurchase of Partial Domestically Listed Foreign Shares (B-shares) The Company held the 19th Session of the Ninth Board of Directors on July 6, 2020 and 2020 2nd Extraordinary General Meeting on July 23, 2020. The two meetings examined and approved the "Proposal for Repurchase of Partial Domestically Listed Foreign Shares (B-shares)”, and published the repurchase report and a series of announcements on the progress according to relevant regulations subsequently. For the detail, please refer to the relevant announcements disclosed by the Company in www.cninfo.com.cn., the Securities Times and Hong Kong Commercial Daily. 2. Capital Increment in Wholly-owned Subsidiaries The Company held the 20th session of the Ninth Board of Directors on July 28, 2020. The meeting reviewed and approved the Proposal on Increasing Capital in Shenzhen FIYTA Precision Technology Ltd., One of the Company’s Wholly-owned Subsidiaries, the Proposal on Increasing Capital in Shenzhen FIYTA Technology Development Ltd., One of the Company’s Wholly-owned Subsidiaries, and the Proposal on Increasing Capital in Shenzhen HARMONY E-Commerce Ltd., One of the Company’s Wholly-owned Subsidiaries. The capital increment in the said three wholly-owned subsidiaries amounted to CNY 90 million, CNY 40 million and CNY 9.50 million respectively. For the detail, please refer to the relevant announcements disclosed by the Company in www.cninfo.com.cn., the Securities Times and Hong Kong Commercial Daily. Inquiry index of the provisional reports disclosed Summary of significant events Date of disclosure in the website Announcement on the Resolution of the 19th Session of the Ninth Board of Directors, 2020- http://www.cninfo.com.cn/ 036 July 7, 2020 Proposal for Repurchase of Partial Domestically Listed Foreign Shares (B- http://www.cninfo.com.cn/ shares), 2020-038 Announcement on the Resolution of 2020 2nd http://www.cninfo.com.cn/ Extraordinary General Meeting, 2020-044 July 24, 2020 Report on Repurchase of Partial Domestically http://www.cninfo.com.cn/ Listed Foreign Shares (B-shares), 2020-045 Announcement on the Resolution of the 20th Session of the Ninth Board of Directors, 2020- http://www.cninfo.com.cn/ 049 Announcement on Capital Increment in Shenzhen FIYTA Precision Technology Ltd., http://www.cninfo.com.cn/ One of the Company’s Wholly-owned Subsidiaries, 2020-051 July 30, 2020 Announcement on Capital Increment in Shenzhen FIYTA Technology Development http://www.cninfo.com.cn/ Ltd., One of the Company’s Wholly-owned Subsidiaries, 2020-052 Announcement on Capital Increment in http://www.cninfo.com.cn/ Shenzhen HARMONY E-Commerce Ltd., One of the Company’s Wholly-owned Subsidiaries, FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary 2020-053 Progress of Implementation of the Stock Repurchase The Company held the 19th Session of the Ninth Board of Directors on July 6, 2020 and 2020 2nd Extraordinary General Meeting on July 23, 2020. The two meetings examined and approved the "Proposal for Repurchase of Partial Domestically Listed Foreign Shares (B-shares)”, and published the repurchase report and a series of announcements on the progress according to relevant regulations subsequently. For the detail, please refer to the relevant announcements disclosed by the Company in www.cninfo.com.cn., the Securities Times and Hong Kong Commercial Daily. By the end of the reporting period, the Company accumulatively repurchased 3,414,697 shares in the Company by means of centralized bidding through the special securities account through repurchase, taking 0.80% of the Company's total capital stock; the highest transaction price of the shares repurchased is HK$6.50/share and the lowest transaction price is HK$5.93/share and the total amount paid was HK$21,410,437.38 (with the transaction costs, such as the stamp duty, commission, etc. exclusive). The repurchase of the shares complied with the relevant law and regulations as well as the vested repurchase plan of the Company. Progress of implementation of reduction of the holding size of the shares repurchased by centralized bidding Inapplicable III. Commitments unfinished in implementation by the Company's actual controller, shareholders, related parties, acquirer and the Company, etc. in the reporting period Inapplicable IV. Portfolio investment 1. Investment in securities Inapplicable 2. Investment in derivatives Inapplicable V. Progress of the projects invested with the raised capital Inapplicable VI. Prediction of the Operating Performance of 2020 Inapplicable VII. Material Contracts in Day-to-Day Operations Inapplicable VIII. Entrusted Financing Inapplicable IX. Outward guarantee against regulations Inapplicable FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary X. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties Inapplicable XI. Registration Form of Activities of Reception for Investigation and Survey, Communications, Interviews, etc. in the Reporting Period Main Content of Types of Time of Place of Way of Discussion and Index of Basic Information on the Visitors Visitors Received Reception Reception Reception Materials Investigation and Survey Received Provided Changjiang Securities Company Limited, Hunan Yuancheng Investment Management Co., Ltd., Shenzhen Zhongna Bojin Investment Management Co., Ltd., CITIC Securities Company Limited, Shenzhen The Company Hengyingfuda Asset communicated Management Limited, with investors on Zhuhai Hengqin the businesses of Changle Hui Capital watch brands, http://irm.cninfo.com.cn/ircs/company/co August 19, Company Field survey Institution Management Co., watch retail mpanyDetail?stockcode=000026&orgId= 2020 Ltd., Infore Capital service, precision gssz0000026 Management Co., technology, new Ltd., Zhongrong Fund business Management Co., development of Ltd., Shenzhen smart watch, etc. Hillstone Fund Management Co., Ltd., Truvalue Asset Management Co., Ltd., Jinxin Fund Management Co.,Ltd., Shenzhen Minsen Investment Co., Ltd. and Zhongrong Fund Management Company. China Merchants Fund Management Co.,Ltd., Ping An Fund Management Company Limited, Shanghai Chongshan Investment Co., Ltd., Shenzhen Upright Asset Management Co., Ltd., Shenzhen The Company KWT Investment communicated Company, Shanghai with investors on Huahong Asset the businesses of Management Co.,Ltd., watch brands, http://irm.cninfo.com.cn/ircs/company/co August 21, Shenzhen Qianhai Company Field survey Institution watch retail mpanyDetail?stockcode=000026&orgId= 2020 Yunxi Fund service, precision gssz0000026 Management Co. Ltd., technology, new Shenzhen Haifuling business Capital Management development of Co., Ltd., Shanghai smart watch, etc. Tai Yang Asset Management Ltd., Penghua Fund Management Co., Ltd., Bosera Asset Management Co.,Ltd., Shenzhen Qianhai Shengbeile Investment Management Co.,Ltd. and Tonsin Financial FIYTA Precision Technology Co., Ltd. 2020 Fourth Quarter Report, Summary International Holdings Limited The Company communicated Shenzhen Upright with investors on Asset Management the businesses of Co., Ltd., Shanghai watch brands, http://irm.cninfo.com.cn/ircs/company/co August 25, Huahong Asset Company Field survey Institution watch retail mpanyDetail?stockcode=000026&orgId= 2020 Management Co., service, precision gssz0000026 Ltd., China Southern technology, new Asset Management business Co., Ltd. development of smart watch, etc. Board of Directors of FIYTA Precision Technology Co., Ltd. October 22, 2020