FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
FIYTA Precision Technology Co., Ltd.
2020 Annual Report
March, 2021
1
FIYTA Precision Technology Co., Ltd. 2020 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 the future plan, development strategy, etc. involved in the 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 risk factors possibly to be confronted with and the
countermeasures in the Company's future development prospect in Section 4 Discussion and Analysis of the
Management
The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: With the total
capital stock as at the date of record as the base, the Company would distribute cash dividend at the rate of CNY 4 for
every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to the
whole shareholders and shall capitalize no reserve.
2
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Table of Contents
Section 1 Important Notice, Table of Contents and Definition
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Chapter 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, Senior Executives and Employees
Chapter 10 Corporate Governance
Section 11 Bond Related Information
Section 12 Financial Report
Section 13 Documents Available for Inspection
3
FIYTA Precision Technology Co., Ltd. 2020 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 Holdings 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
Shiyuehui Boutique (Shenzhen) Co., Ltd.
SHIYUEHUI Refers to
Hengdarui Refers to Liaoning Hengdarui Commerce & Trade Co., Ltd.
Harmony E-Commerce Limited Refers to Shenzhen Harmony E-Commerce Limited
Shanghai Watch Industry Refers to Shanghai Watch Industry Co., Ltd.
Rainbow Ltd. Refers to Rainbow Digital Commercial Co., Ltd.
Shennan Circuit Refers to Shennan Circuit Co., Ltd.
4
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 2 Company Profile and Financial Highlights
I. Company Information
Short form of the stock FIYTA and FIYTA B Stock Code 000026 and 200026
Stock Exchange Listed with Shenzhen Stock Exchange
Company Name in Chinese FIYTA Precision Technology Co., Ltd.
Abbreviation of the Company
飞亚达公司
Name in Chinese
Company name in English (if
FIYTA Precision Technology Co., Ltd.
any)
Abbreviation of the Company
FIYTA
name in English (if any)
Legal Representative Huang Yongfeng
Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Registered
518057
Address
Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Registered
518057
Address
Website: www.fiytagroup.com
E-mail: investor@fiyta.com.cn
II. Liaison Persons and Communication Information
Secretary of the Board Securities Affairs Representative
Names Chen Zhuo Xiong Yaojia
20th Floor, FIYTA Technology Building,
18th Floor, FIYTA Technology Building, Gaoxin
Liaison Address Gaoxin S. Road One, Nanshan District,
S. Road One, Nanshan District, Shenzhen
Shenzhen
Tel. 0755-86013669 0755-86013669
Fax 0755-83348369 0755-83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
III. Information Disclosure and Place where the Regular Reports are Prepared
Names of the media chosen by the Company for disclosing
Securities Times and Hong Kong Commercial Daily
information
Internet Web Site Designated by China Securities
www.cninfo.com.cn
Regulatory Commission for Publishing the annual report:
5
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Place where the Company’s Annual Report was prepared
Company Planning & Operation Department
and is placed for inquiry
IV. Changes in Registration
Organization Code 91440300192189783K
Changes in principal business activities since
No change
listing (if any)
Changes in the controlling shareholder over
No change
the past years (if any)
V. Other Relevant Information
The CPAs appointed by the Company
Name of the CPAs Grant Thornton LLP
Office address 5/F, SciTech Building, No.22 JianGuoMenWai Avenue, Chaoyang District, Beijing
Names of the CPAs as the authorized
Dong Xu, Meng Junfeng
signatories
The sponsor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
The financial advisor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
VI. Summary of Accounting/Financial Data
Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years?
No
Increase/decrease in the
2020 2019 reporting year over the 2018
previous year
Turnover in CNY 4,243,439,952.59 3,704,210,734.90 14.56% 3,400,450,599.90
Net profit attributable to the
294,115,156.04 215,909,014.15 36.22% 183,835,095.29
Company’s shareholders, in CNY
Net profit attributable to the
Company’s shareholders less the non- 269,095,012.41 199,678,661.09 34.76% 162,758,061.00
recurring items, in CNY
Net cash flows arising from operating
378,210,505.87 444,820,768.61 -14.97% 331,627,789.62
activities, in CNY
Basic earning per share (CNY/share) 0.6764 0.4943 36.84% 0.4190
Diluted earning per share (CNY/share) 0.6764 0.4943 36.84% 0.4190
Return on equity, weighted average
10.78% 8.21% 2.57% 7.30%
(%)
6
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Increase/decrease of the
end of the reporting year
End of 2020 End of 2019 End of 2018
over the end of the
previous year
Total assets, in CNY 4,018,712,700.18 3,760,923,285.37 6.85% 3,599,691,650.26
Net assets attributable to the
Company’s shareholders (owner’s
2,799,948,388.09 2,654,533,766.99 5.48% 2,570,134,782.90
equity attributable to the Company’s
shareholders, in CNY)
The lower of the company’s net profit before and after the deduction of non-recurring gains and losses in the last three
fiscal years is negative, and the auditor's report of the previous year shows that the Company’s going concern ability is
uncertain.
No
The lower of the net profit before and after the deduction of the non-recurring gains and losses is negative.
No
VII. Discrepancy in accounting data between IAS and CAS
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
VIII. Financial Data Summary based on Quarters
In CNY
The first quarter The second quarter The third quarter The fourth quarter
Turnover 588,361,057.06 993,473,657.97 1,362,598,720.97 1,299,006,516.59
Net profit attributable to the
-12,974,795.53 90,713,701.83 137,048,377.83 79,327,871.91
Company’s shareholders
Net profit less the non-recurring
profit/loss attributable to the -13,738,773.72 82,408,251.17 129,723,577.01 70,701,957.95
Company’s shareholders
Net cash flows arising from operating
-106,747,751.88 210,392,987.15 112,503,592.52 162,061,678.08
activities
Are the above financial indicators or their totals significantly different from the financial indicators disclosed by the
Company in the quarterly and semi-annual reports?
No
7
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
IX. Extraordinary items and amount
In CNY
Items Amount in 2020 Amount in 2019 Amount in 2018 Note
Gain/loss from disposal of non-current assets,
including the part written-off with the provision -369,857.30 -926,118.60 -180,302.24
for impairment of assets.
The government subsidies included in the
profits and losses of the current period
( (excluding government grants which are
30,634,128.57 18,428,906.18 19,375,618.48
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 163,925.30 0.00 7,533,121.86
been tested individually for impairment
Non-operating income and expenses other than
1,556,300.78 3,353,916.43 792,842.56
the aforesaid items
Other gains and losses in compliance with the
0.00
definition of non-recurring gains and losses.
Less: Amount affected by the income tax 6,964,353.72 4,626,350.95 6,444,246.37
Total 25,020,143.63 16,230,353.06 21,077,034.29 --
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
8
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 3 Business Summary
I. Principal business the Company operated in the reporting period
(1) Principal Business and Operation Model
With the establishment and development originated from aviation precision manufacturing and material technology, the
Company is mainly carrying out the activities of watch brand management and luxurious watch retails. From the
perspective of technical characteristics, the Company is engaged in precision technology industry.
Over the past three decades or more, relying on the advantages in precision manufacturing technology, material
technology and talents of the aviation industry, the Company has been continuously devoting itself to the building of
professional watch-making capability and brand operation, has successfully built the "FIYTA" brand and established the
brand a leading position in the domestic industry by virtue of the advantages in technology and quality, and has
cultivated brands of different styles such as "Emile Chouriet ", "JONAS&VERUS ", "Beijing" and "JEEP" to meet the
needs of market segments.
In 1997, in order to grasp the opportunities in the domestic famous watch market and accelerate the breakthrough of its
own brand, the Company developed the retail business of famous watches. As one of the first explorers of brand watch
retail chain business, the Company has been focusing on strengthening the construction of both brand and channel
resources, refining operations, and has established stable cooperation with international outstanding famous watch
brands and domestic high-end channels, which is contributing to the company’s revenue and profit while providing a
source of growth, it has also established a stable base for the growth and development of its own brands.
Under the general background of industrial upgrading and intelligent manufacturing, the Company relies on high-end
precision manufacturing technology and industrial accumulation, based on the development principle of “technology
being homologous, the industry being same-rooted and value being co-directional”, and extends the development of
precision technology business and smart wearable business. At present, these two businesses have begun to take
shape.
(2) Development Status of the Industry and the Company's Position Therein
Watches bear both characteristics of precision technology and fashion: high-end watch-making is supported by precision
technology, material technology and craftsmanship as the core. In addition, it is necessary to meet consumers' demands
for brands, aesthetics and artistic and cultural connotation. The global watch industry has developed for more than two
hundred years, and it has a long history. Technological innovation and design creativity have always pushed the brand
forward.
Globally, the high-end luxury watch market is mainly occupied by the Swiss watch brands. Middle-end and fashion
watches mainly consist of European and American brands, Japanese brands and domestic brands. In recent years,
smart watches are developing rapidly, and have won the favor of tech-savvy, sports-savvy and fashion-savvy citizens.
Today, the increase in national disposable income, the people’s yearning for a better life, and the demand for high-quality
life are driving consumption upgrading; in addition, with the effective advancement of tariff reduction, China's domestic
watch consumer market is ushering in a new development opportunity and the Company keeps optimistic about the
market development potential. In the past year 2020, affected by COVID-19, the global watch industry experienced a
severe test of growth pressure. With China’s effective control over the pandemic, the rapid growth of luxury goods
consumption, and the rise of duty-free shopping on Hainan offshore island, China outshone all the other countries in the
world in performance of the high-end luxury watch retail industry. According to the data disclosed by the Federation of
the Swiss Watch Industry FH, the export volume of Swiss watches in 2020 dropped by 21.8% year-on-year, but the
export to mainland China began to increase commencing from June, 2020 with a year-on-year growth by 20%. This was
the first time for mainland China to be the world's largest market of Swiss watches. These data are the best evidence of
the strong consumption power of Chinese consumers.
9
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The company has focused on the watch industry. After years of hard work, it has grown into the flagship enterprise of
Chinese watches, and has been ranked first in China's watch industry for many consecutive years. The Brand "FIYTA" is
one of China's most well-known watch brands that have grown up under the market economy after China’s reform and
opening-up. The Company has adhered to the original intention of "Big Country Brand", relying on precision
manufacturing technology, brand perception and deep cultivation of channels to promote continuous brand
breakthroughs, and its sales scale ranks among the top in the industry. In 2017, the Brand was selected as the unique
watch brand in the country in the "Made-in-China" Brand Plan by the Ministry of Commerce; "FIYTA won the "China
Grand Awards for Industry" in 2018, and was honorably put on the "70 Top Brands for the 70th Anniversary of the
Founding of New China" List in 2019, and honorably won the "People's Ingenuity Brand Award 2019".2020, the
Company honorably won the title of “the 40 Brand Makers in the Past 40 Years of Shenzhen”; Sun Lei, the Company’s
chief designer, won the title of “40 Persons of Innovation and Entrepreneurship and Model Worker.” After more than two
decades’ development, Harmony World Watches has been operating brand watch retail business in more than 60 cities
across the country and has nearly 200 chain stores. It has established abound brand and channel resources and good
operating ability, and its market share ranks domestically forefront in the watch retail industry.
II. Significant Movements in Prime Assets
1. Significant Movements in Prime Assets
Major assets Note to the significant changes
Equity assets Inapplicable
Fixed assets Inapplicable
Intangible assets Inapplicable
Construction-in-process Inapplicable
2. Major Overseas Assets
Inapplicable
III. Analysis on Core Competitiveness
I. Adhering to Brand Leadership and Having Accumulated Rich Experience in Brand Management
Since its establishment, FIYTA has always adhered to brand leadership, with building of a flagship brand in the Chinese
watch industry as its development goal, and has achieved multiple industry firsts in brand building, marketing
communication, product design, etc., and has a solid brand operation foundation. In the 1990s, with the CCTV news
broadcast announcing "FIYTA Telling Time for you", the Company successfully established the popularity and influence
of the FIYTA Brand in China; at the beginning of the 21st century, since the Chinese astronauts first entered space, their
professional chronographs were all manufactured by FIYTA. “FIYTA” has become one of the world's three biggest
aerospace watch brands, and the spirit of professional watch-making continues to be passed on with the country's
manned aerospace industry. Meanwhile, the Company actively promoted the development of internationalization and by
participating in the preparation of international standards, entered BASELWORLD etc., strengthen exchanges and
interactions with outstanding Swiss brands, played an active role on the world watch stage, and persistently increased
global influence.
II. Construction of Deep Ploughed Channel and Creating Excellent Channel Management Ability
FIYTA persistently constructed the deeply ploughed channel, and provided a continuous source of power for brand
development with high-quality services and refined operation capability. The Company has formed a globalized sales
network centered on the domestic market. FIYTA brand channels have been distributed in more than 30 countries and
regions around the world, with more than 3,000 business outlets; HARMONY World Watch Retails have upgraded the
deep ploughed channels with more than 200 business outlets; on the basis of full coverage of cooperation with
mainstream e-commerce platforms, the Company focused on promoting the expansion of innovative channels, and
10
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
started trial for the new channels, such as live video, mini programs, etc. The Company has always devoted itself to
building the ability of outstanding channel operation, powerful team, excellent services, and providing customers with the
best consumption experience in all aspects. The “Three-Level Marketing”, “Perfect Sales”, “Outstanding Operation” etc.
have already been deposited as the core base work logic of channel operation.
In recent years, the Company has comprehensively promoted digital construction, achieved full coverage of online and
offline self-operated stores, and shall provide customers with more systematic professional services and create more
value.
III. Building the Advantages of the Leading Core technology Based on Precision Technology
Over more than 30 years, the company has been devoting itself to the building of precision technology research and
development capability, has successively built advanced R & D, production technology and manufacturing technology
platforms, and has established R & D and production bases in Shenzhen and Switzerland respectively; and has
established professional watch-making capabilities, including self-made driving units of watches and key components
manufacturing, space watch research and development and high-end watch-making techniques, etc., and achieved
continuous breakthroughs in research and development and application of new materials, new processes and new
technologies. At present, the Company has 2 national high-tech enterprises, established a national enterprise technology
center, a national industrial design center, and is a national technological innovation demonstration enterprise. The
Company has accumulatively applied for 558 patents and been granted 509 patents, including 4 honorable mentions of
the Chinese patents, 1 gold award of China Design and 5 honorable mentions of China design; the Company has taken
lead in preparation of more than 55% of the national watch industry standards and has also actively participated in
preparation of the international industrial standards and took lead and participated in preparation of many international
standards.
11
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 4 Discussion and Analysis of the Operation
I. General
2020 is an extraordinary year. The sudden pandemics of COVID-19 has brought a huge impact to the Company's
business. The Company suffered a quarterly loss in its operation result in the first quarter. In the face of unprecedented
challenge, the Company actively responded and quickly launched the "Wartime Command System", mobilized all
employees to prevent and control the epidemic, and at the same time, fully promoted the operational counterattack,
controlled costs and expenses, and captured market opportunity through innovations such as live video and community
marketing, accelerated digital transformation, and established close relationships with customers. With gradual recovery
of the market, the Company’s operating performances turned better and better continuously. In the second half year, the
Company seized the opportunity of the explosive growth of the high-end luxury watch business after the epidemic in the
country was basically brought under control, actively deployed new growth opportunities in Hainan’s tax-free channels,
and continued to accelerate internal capacity building and the cultivation of new growth points. As a result, the Company
realized a big growth on year-on-year basis in the whole year. In the reporting period, the Company realized revenue
amounting to CNY 4243.44 million with year-on-year growth of 14.56% and realized total profit amounting to CNY
373.4606 million with a year-on-year growth of 35.20%. The Company has also made further breakthrough in high-
quality development with the efficiency and performance indicator rapidly improved, the return on net assets has
increased to 10.78% with the year-on-year growth of 2.57%, and the inventory turnover rate has reached 1.35 times, an
increase of 0.17 times over the previous year. With the joint efforts of the team, the Company has achieved sustained
and rapid growth in operating profit for 4 consecutive years.
During the reporting period, the Company carried out the following key work.
I. Promoting the epidemic prevention and control work steadily, and having achieve "zero suspicion and zero
diagnosis" throughout the year
After the outbreak of COVID-19, the Company’s management team took the lead in commanding, followed the overall
deployment of the CPC Central Committee and authorities, refined the deployment of prevention and control strategies
based on the situation at different stages of epidemic prevention and control, implemented responsibilities at all levels,
and achieved "zero suspicion and zero diagnosis" prevention and control performance, implemented the obligation and
responsibilities of a central enterprise with practical actions, and ensured the safety of employees’ lives and the
Company’s assets.
II. Activating the "wartime command system” and having demonstrated strong "combat power”
During the reporting period, in the face of the severe market environment, the Company established a "wartime
command system", quickly adjusted the status of the team, actively organized the resumption of work and production,
strictly controlled internal costs, lean management, and seized market opportunity externally and actively expanded
community marketing through WeChat, live video and other methods, adapted itself to the market situation and
competitive situation in an innovative way after the epidemic, and promoted business breakthrough through multiple
channels and multi ways. From the basic zero revenue in February to the profit-making in the main business in March,
the Company achieved year-on-year profit growth in April, hit a new high in monthly revenue in August. The Company
achieved one step at a time, with strong combat effectiveness, it has achieved growth against trend in operating
performance in a down-to-earth way, which has demonstrated powerful market recovery and adjustment and adaptation
capability, and further improved the ability of the team.
III. Continuously tamping the basic management and persistently consolidating the core competition
advantages
During the reporting period, the Company continued to build professional capabilities around the“brand power, product
power, and channel power” to strengthen the advantage of the core competition.
12
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
During the reporting period, the Company continued to build professional capabilities around the “brand power, product
power, and channel power” to strengthen the advantage of the core competitiveness. Under the severe situation of the
off-line sales once returning to zero for a time, the Company deepened the integration of products and sales. With the
brand of “FIYTA”, the livestreaming hosted by “Gao Yuanyuan X Viya” set the highest sales record of watch category in
Tmall single store livestreaming; the Company focused on improvement of product efficiency with the core series. The
new products, such as Four-Leaf clover and Xtreme Series, were launched in the market as scheduled. Professional
series products such as "Mars-500" and "Attack-11" are favored by consumers; the Company promoted the
implementation of the "Excellent Operation, Excellent Sales" project in a solid way; and the per unit yield of self-operated
stores continued to increase. The sales began to rebound steadily in the third quarter. HARMONY World Watch Retail
seized the opportunity, continuously deepened and refined store operations. In the second quarter, it began to achieve
year-on-year sales growth, with an average monthly growth of more than 50%.
IV. Continuously promoting channel upgrading and reserving the core kinetic energy for future development
During the reporting period, the Company paid close attention to changes in consumption trends and market conditions,
and continued to promote channel optimization, adjustment and upgrading. The retail business of “HARMONY” World
Watches Retail focused on core cities and core business area, systematically counted future opportunities, drew a
strategic channel map, promoted channel entry in an orderly manner, and further increased the number of high-end
brand accounts. While maintaining endogenous growth, it was also actively exploring extensional expansion model and
accelerated the coverage of target channels. “FIYTA” Brand reshaped the image of the terminal and actively promoted
the entry of shopping malls and also achieved good results. During the reporting period, the Company actively seized the
opportunity in Hainan’s existing duty-free channel market, accelerated the entry and sales of its own brands, and actively
explored channel development opportunities.
V. Breakthrough in digital transformation and initial results of membership operation
During the reporting period, the Company was persistently building a customer-centered digital operation system. The
full implementation and popularization of the "HARMONY" Digital Retail System effectively promoted customer value
mining and operational efficiency improvement. The on-line and off-line service interactions were realized. Potential
customer transactions and repurchases of regular customers made important contribution to the growth of sales
throughout the year. During the Pandemic of COVID-19, the system has provided a strong guarantee for making up the
income gap. The own-brand membership management system was also officially launched in September and full
coverage of all self-run stores both online and offline was realized, which laid the foundation for in-depth operations with
focus on "people, goods, and markets".
VI. Accelerating the cultivation of new growth points and transforming and upgrading to high-end precision
technology
During the reporting period, the Company continued to promote the development of precision technology business and
smart wearables business. The precision technology business accelerated the expansion of the medical and aerospace
markets on the basis of deep cultivating optical communications and lasers, and initiated cooperation with core
customers in related fields. The revenue increased by more than 50% year-on-year; the smart wearable business
completed its own R&D team formation. The new products of "Little Red Watch" and "Black Knight" came into the market
smoothly; more than 100,000 smart watches were sold during the “Double Eleven” activities.
Balance sheet items
Opening Variation
Items Ending balance Cause of the movement
balance proportion
Mainly due to the influence from the growth of the precision
Notes receivable 48,192,442.15 10,596,431.31 354.80%
technology business scale and the bill payment term.
Advance payment for Mainly due to the increase of advance payment for purchases
16,612,773.76 10,847,962.28 53.14%
goods for HARMONY World Watch Retail
Other non-current Mainly due to the increase of advance payment for
13,536,307.13 7,373,248.48 83.59%
assets refurbishment for HARMONY World Watch Retail
Mainly due to the impact of the new bill payable business in the
Notes payable 3,581,360.00 - -
precision technology business in the reporting year.
Mainly due to the impact of the adjustment of presentation in
Advance receipts 9,991,850.67 23,433,463.57 -57.36% accordance with the requirements of the new revenue standard
in the reporting year.
Mainly due to the impact of the adjustment of presentation in
Contract liabilities 18,213,396.49 - - accordance with the requirements of the new revenue standard
in the reporting year.
Payroll payable to Mainly due to the growth in performance in the reporting year
132,853,462.20 82,602,845.67 60.83%
the employees and the issuance of excess incentives.
Mainly due to the increase in taxes and fees payable due to the
Payable taxes 68,925,271.90 24,064,803.00 186.42%
increase in income in the reporting year and the greater impact
13
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
of retainment in the same period last year.
Mainly due to the increase in dividends payable in the equity
Dividends payable 1,639,513.77 848,233.27 93.29%
incentive part of the current year.
Mainly due to the impact of the tax part of the contract liabilities
Other current
2,299,755.09 - - in accordance with the requirements of the new income
liabilities
standards in the reporting year.
Deferred income tax Mainly due to the impact of a one-off pre-tax deduction of fixed
3,067,834.55 1,256,242.49 144.21%
liability assets.
Other
Mainly due to movement of the translation balance of foreign
comprehensive 976,871.41 -940,209.09 203.90%
currency statements
income
Income statement items from the beginning of the year to the end of the reporting period
Amount Amount
Variation
Items incurred in the incurred in the Cause of the movement
proportion
reporting period previous period
Mainly due to the impact of the increase in the stock of
Interest income 4,941,334.19 1,956,334.31 152.58%
monetary funds in the current year.
Mainly due to the increase in government subsidies received in
Other income 25,170,397.09 18,428,906.18 36.58%
the reporting year.
Return on Mainly due to the influence from the profit increase of Shanghai
5,072,577.64 1,787,907.10 183.72%
Investment Watch Industry in the current year.
Loss from Mainly due to the decrease in bad debt provision for individual
-9,096,922.74 -16,640,961.07 45.33%
impairment of credit accounts receivable in the current year.
Loss from
Mainly due to the increase in the price falling of the proprietary-
impairment of -15,426,526.41 -4,295,134.47 -259.16%
brand inventory.
assets
Income from Mainly due to big loss from the auxiliary facilities and
-369,857.30 -926,118.60 60.06%
disposal of assets equipment of Xi'an FIYTA Building in the same period last year.
Mainly due to the greater impact of the adjustment of the
Non-operating
3,111,413.64 4,754,105.30 -34.55% compensation received by some of HARMONY's stores in the
income
same period last year.
Income tax The increase in income tax expenses was mainly due to the
79,338,516.60 60,324,629.25 31.52%
expenses increase in profit.
Cash flow statement items from the beginning of the year to the end of the reporting period
Amount Amount
incurred in incurred in Variation
Items Cause of the movement
the reporting the previous proportion
period period
Mainly due to the reduction in export tax rebates caused by the
Rebated taxes
1,849,055.57 5,510,592.39 -66.45% reduction in export business affected by the overseas pandemic
received
in the current year.
Net cash received
from disposal of fixed
Mainly due to decrease of the fixed assets disposed in the
assets, intangible 150,556.62 626,107.64 -75.95%
current year.
assets and other long-
term assets
Mainly due to the implementation of equity incentives in the
Cash received from
- 18,585,600.00 -100.00% same period and received subscription payments last year, but
absorbing investment
none in the current year.
Cash paid for other
72,317,669.93 53,117,325.02 36.15% Mainly due increase of B-shares repurchased.
financing activities
Influence of the
change of exchange
-2,810,603.32 468,366.93 -700.09% Mainly due to the influence of the change of exchange rate.
rate on the cash and
cash equivalent
II. Analysis on the Principal Business
1. General
Refer to the relevant details of “I. General" of “Business Discussion and Analysis”.
2. Revenue and Costs
(1) Composition of Revenues
In CNY
14
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
2020 2019
Year-on-year
Proportion in the Proportion in the increase/decrease
Amount Amount
revenue revenue
Total operating
4,243,439,952.59 100% 3,704,210,734.90 100% 14.56%
revenue
Based on sectors
Watches 3,970,903,426.36 93.58% 3,463,608,966.45 93.50% 14.65%
Precision technology
138,806,456.76 3.27% 91,341,945.34 2.47% 51.96%
business
Leases 117,282,310.32 2.76% 132,005,033.07 3.56% -11.15%
Others 16,447,759.15 0.39% 17,254,790.04 0.47% -4.68%
Based on products
Watch brand business 970,035,756.22 22.86% 1,110,678,489.04 29.98% -12.66%
Watch retail and
3,000,867,670.14 70.72% 2,352,930,477.41 63.52% 27.54%
services
Precision technology
138,806,456.76 3.27% 91,341,945.34 2.47% 51.96%
business
Leases 117,282,310.32 2.76% 132,005,033.07 3.56% -11.15%
Others 16,447,759.15 0.39% 17,254,790.04 0.47% -4.68%
Based on regions
South China 2,198,531,106.33 51.81% 1,823,927,995.51 49.24% 20.54%
Northwest China 601,805,121.89 14.18% 586,521,631.97 15.83% 2.61%
Northeast China 198,893,856.16 4.69% 204,386,707.45 5.52% -2.69%
East China 561,941,020.36 13.24% 502,541,659.80 13.57% 11.82%
Northeast China 233,806,759.67 5.51% 230,662,172.16 6.23% 1.36%
Southwest China 448,462,088.18 10.57% 356,170,568.01 9.62% 25.91%
(2) 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 increase/decrease increase/decrease
Turnover Operating cost Gross profit rate of operating of operating costs of gross profit rate
revenue over the over the previous over the previous
previous year year year
Based on sectors
Watches 3,970,903,426.36 2,478,548,735.40 37.58% 14.65% 17.47% -1.50%
Precision
technology 138,806,456.76 113,748,608.41 18.05% 51.96% 54.30% -1.24%
business
Leases 117,282,310.32 40,571,940.35 65.41% -11.15% 43.98% -13.25%
Others 16,447,759.15 6,360,252.90 61.33% -4.68% 19.26% -7.76%
15
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Based on products
Watch brand
970,035,756.22 279,990,343.43 71.14% -12.66% -15.40% 0.93%
business
Watch retail and
3,000,867,670.14 2,198,558,391.97 26.74% 27.54% 23.58% 2.34%
services
Precision
technology 138,806,456.76 113,748,608.41 18.05% 51.96% 54.30% -1.24%
business
Leases 117,282,310.32 40,571,940.35 65.41% -11.15% 43.98% -13.25%
Others 16,447,759.15 6,360,252.90 61.33% -4.68% 19.26% -7.76%
Based on regions
South China 2,198,531,106.33 1,379,454,259.35 37.26% 20.54% 25.74% -2.60%
Northwest China 601,805,121.89 369,787,266.01 38.55% 2.61% 8.66% -3.42%
Northeast China 198,893,856.16 116,170,996.21 41.59% -2.69% -1.69% -0.59%
East China 561,941,020.36 349,031,725.16 37.89% 11.82% 24.51% -6.33%
Northeast China 233,806,759.67 161,639,375.02 30.87% 1.36% -1.07% 1.70%
Southwest China 448,462,088.18 263,145,915.33 41.32% 25.91% 20.72% 2.52%
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
(3) Is the physical sales income greater than the service income
Yes
Classified based on Year-on-year
Items In CNY 2020 2019
sectors increase/decrease
Sales volume pcs 820,987 1,027,428 -20.09%
Brand watches Output pcs 793,206 783,328 1.26%
Inventory pcs 1,064,881 1,092,662 -2.54%
Note to the cause of the year-on-year movement of the relevant data by over 30%
Inapplicable
(4) Implementation of Important Sale Contracts Concluded at the End of the Reporting Period
Inapplicable
(5) Composition of Operating Costs
Classified based on sectors and products
In CNY
16
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
2020 2019
Classified based on Year-on-year
Items
sectors Proportion in Proportion in increase/decrease
Amount Amount
operating costs operating costs
Goods purchase
2,198,558,391.97 83.30% 1,779,026,456.80 80.24% 23.58%
cost
Raw materials 250,957,959.33 9.51% 299,121,692.67 13.49% -16.10%
Labor costs 22,639,961.48 0.86% 25,707,020.23 1.16% -11.93%
Depreciation
Watches 1,290,580.38 0.05% 920,871.70 0.04% 40.15%
expense
Water and
576,614.61 0.02% 463,093.67 0.02% 24.51%
electricity fees
Rent 198,298.53 0.01% 474,202.58 0.02% -58.18%
Others 4,326,929.11 0.16% 4,265,462.80 0.19% 1.44%
Raw materials 89,561,279.27 3.39% 53,786,506.65 2.43% 66.51%
Labor costs 15,492,911.02 0.59% 13,444,932.42 0.61% 15.23%
Depreciation
1,715,869.90 0.07% 1,478,005.14 0.07% 16.09%
Precision expense
technology
business Water and
936,944.23 0.04% 760,873.00 0.03% 23.14%
electricity fees
Rent 111,201.56 0.00% 11,389.02 0.00% 876.39%
Others 5,930,402.44 0.22% 4,235,897.00 0.19% 40.00%
Depreciation
16,013,313.84 0.61% 14,296,604.24 0.64% 12.01%
expense
Leases
Labor costs 2,642,580.58 0.10% 3,012,991.57 0.14% -12.29%
Others 21,916,045.93 0.83% 10,868,573.83 0.49% 101.65%
Others Purchase cost 6,360,252.90 0.24% 5,333,158.72 0.24% 19.26%
In CNY
2020 2019
Classified based on Year-on-year
Items
products Proportion in Proportion in increase/decrease
Amount Amount
operating costs operating costs
Raw materials 250,957,959.33 9.51% 299,121,692.67 13.49% -16.10%
Labor costs 22,639,961.48 0.86% 25,707,020.23 1.16% -11.93%
Depreciation
1,290,580.38 0.05% 920,871.70 0.04% 40.15%
expense
Watch brand
business
Water and
576,614.61 0.02% 463,093.67 0.02% 24.51%
electricity fees
Rent 198,298.53 0.01% 474,202.58 0.02% -58.18%
Others 4,326,929.11 0.16% 4,265,462.80 0.19% 1.44%
Watch retail and Goods purchase
2,198,558,391.97 83.30% 1,779,026,456.80 80.24% 23.58%
services cost
Precision Raw materials 89,561,279.27 3.39% 53,786,506.65 2.43% 66.51%
technology
17
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
business Labor costs 15,492,911.02 0.59% 13,444,932.42 0.61% 15.23%
Depreciation
1,715,869.90 0.07% 1,478,005.14 0.07% 16.09%
expense
Water and
936,944.23 0.04% 760,873.00 0.03% 23.14%
electricity fees
Rent 111,201.56 0.00% 11,389.02 0.00% 876.39%
Others 5,930,402.44 0.22% 4,235,897.00 0.19% 40.00%
Depreciation
16,013,313.84 0.61% 14,296,604.24 0.64% 12.01%
expense
Leases
Labor costs 2,642,580.58 0.10% 3,012,991.57 0.14% -12.29%
Others 21,916,045.93 0.83% 10,868,573.83 0.49% 101.65%
Others Purchase cost 6,360,252.90 0.24% 5,333,158.72 0.24% 19.26%
(6) Is there any change in the consolidation scope in the reporting period
No
(7) Is there any significant change or adjustment related situation taken place in the Company’s business,
products or services in the reporting period
Inapplicable
(8) Major sales customers and major suppliers
Information about the major sales customers
Total sales to the top five customers, in CNY 793,076,242.10
Proportion of the total sales to the top five customers in the
18.69%
total sales of the year
Proportion of the total sales to the related parties in the top five
0.00%
customers in the total sales of the year
Information of the top 5 customers
No. Customers Sales (in CNY) Proportion in the total sales of the year
1 No. 1 316,092,550.43 7.45%
2 No. 2 150,789,882.00 3.55%
3 No. 3 116,465,800.58 2.74%
4 No. 4 105,902,072.12 2.50%
5 No. 5 103,825,936.97 2.45%
Total -- 793,076,242.10 18.69%
Other Information about the major customers
Inapplicable
18
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Major suppliers
Total amount of purchase from top five suppliers, in CNY 1,901,830,932.90
Proportion of the purchase amount from the top five suppliers
68.49%
in the Company’s total purchase amount
Proportion of the purchase amount from the related parties in
0.00%
the top five suppliers in the Company’s total purchase amount
Information about the top 5 suppliers
Proportion in the total purchases of the year
No. Suppliers Purchase amount, in CNY
(%)
1 No. 1 835,143,338.28 30.08%
2 No. 2 394,122,512.72 14.19%
3 No. 3 252,040,548.41 9.08%
4 No. 4 233,222,529.80 8.40%
5 No. 5 187,302,003.69 6.75%
Total -- 1,901,830,932.90 68.49%
Other information about the major suppliers
Inapplicable
3. Expenses
In CNY
Year-on-year
2020 2019 Note to significant changes
increase/decrease
Sales costs 870,713,899.32 865,792,078.61 0.57% Inapplicable
Administrative expenses 256,559,127.23 240,619,989.04 6.62% Inapplicable
Financial expenses 33,449,276.41 32,815,277.57 1.93% Inapplicable
R & D expenditures 51,489,323.49 45,057,740.25 14.27% Inapplicable
4. Investment in R & D
The Company's R&D investment is mainly to consolidate and strengthen the Company's advantages in independent
technology innovation and core capabilities in the field of watches. The Company continuously increased investment in
personnel, equipment, raw materials, etc. for such key technology fields as driving units of mechanical watches,
industrial design, smart watches, research on application of new materials, etc.and space watches and had made a
number of scientific research achievements.
In 2020, the Company’s total investment in R & D amounted to CNY 51,489,323.49, taking 1.84% of the net assets as
audited in the most recent period and taking 1.21% of the operation revenue as audited in the most recent period. In
2020, the Company applied for 54 patents for invention, and 22 utility model patents and 32 design patents; was
accumulatively granted 3 patents for invention, 16 utility model patents and 32 design patents. During the reporting
period, the Company led and participated in the formulation and revision of 3 international standards, 2 national
standards, and translation of 1 national standard in foreign language, and published 3 international standards, 3 national
standards, and 2 industry standards which the Company led and participated in the formulation and revision of. Based on
19
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
the accumulation of innovation mechanism, innovation ability, innovation talents and innovation achievements, the
Company has been recognized as an enterprise with superiority in intellectual property at national level in addition to the
titles of the "National Enterprise Technology Center for Accreditation", "National Industrial Design Center" and "National
Technology Innovation Demonstration Enterprise".
Investment in R & D
2020 2019 Variation proportion
Number of R & D staff (persons) 58 55 5.45%
Proportion of R & D staff in total
1.18% 1.10% 0.08%
employees
Amount of investment in R & D, in
51,489,323.49 45,057,740.25 14.27%
CNY
Proportion of investment in R & D
1.21% 1.22% -0.01%
in operating revenue
Amount of capitalized investment
0.00 0.00 0.00%
in R & D (in CNY)
Proportion of capitalized
investment in R & D in the total 0.00% 0.00% 0.00%
investment in R & D
Cause(s) of significant change of the total investment in R & D in the operating revenue
Inapplicable
Note to the cause of significant change in the capitalization rate of investment in R & D and note to the reasonability
Inapplicable
5. Cash Flow
In CNY
Items 2020 2019 Year-on-year increase/decrease
Subtotal of cash flow in from
4,682,489,563.33 4,157,510,367.81 12.63%
operating activity
Subtotal of cash flow out from
4,304,279,057.46 3,712,689,599.20 15.93%
operating activity
Net cash flow arising from
378,210,505.87 444,820,768.61 -14.97%
operating activities
Subtotal of cash flow in from
150,556.62 626,107.64 -75.95%
investment activity
Subtotal of cash flow out from
133,531,954.47 166,689,454.32 -19.89%
investment activity
Net cash flows arising from
-133,381,397.85 -166,063,346.68 -19.68%
investment activities
Subtotal of cash flow in from fund
743,213,671.65 718,848,326.76 3.39%
raising activity
Sub-total cash flow paid for
947,268,455.73 845,603,610.50 12.02%
financing activities
20
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Net cash flow arising from capital-
-204,054,784.08 -126,755,283.74 60.98%
raising activities
Net increase of cash and cash
37,963,720.62 152,470,505.12 -75.10%
equivalents
Note to the major influencing factors for the significant change in the relevant year-on-year data
Net cash flow arising from financing activities amounting to CNY -204,054,784.08 in the reporting year, a year-on-year
increase of CNY 77,299,500.34 in comparison with the previous year amounting to CNY -126,755,283.74 was mainly
due to increase of the repayment of bank loans, increase of costs for repurchase of B-shares and decrease of the
consideration for subscription of the incentive equity as received.
Note to the cause of significant difference between the net cash flow arising from the Company's business activities and
the net profit of the reporting year during the reporting period.
Inapplicable
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Analysis on Assets and Liabilities
1. Significant Changes in Assets Composition
The Company started implementing the new revenue criteria or new lease criteria commencing from 2020 and adjusted
and implemented the relevant items of the financial statements at the beginning of the very year.
Applicable
In CNY
End of 2020 Beginning of 2020
Increase/decr
Note to significant
ease in
Proportion in total Proportion in total changes
Amount Amount proportion
assets assets
Monetary fund 353,057,285.71 8.79% 316,668,565.09 8.42% 0.37% Inapplicable
Accounts
475,598,684.89 11.83% 397,471,106.98 10.57% 1.26% Inapplicable
receivable
Inventories 1,931,780,185.85 48.07% 1,808,820,089.92 48.10% -0.03% Inapplicable
Investment-
398,086,447.78 9.91% 407,503,307.24 10.84% -0.93% Inapplicable
oriented real estate
Long-term equity
51,400,665.92 1.28% 46,423,837.85 1.23% 0.05% Inapplicable
investment
Fixed assets 352,734,280.76 8.78% 363,997,098.94 9.68% -0.90% Inapplicable
Short term loans 542,673,278.09 13.50% 567,908,833.21 15.10% -1.60% Inapplicable
Long-term
4,070,330.00 0.10% 4,321,680.00 0.11% -0.01% Inapplicable
borrowings
2. Assets and liabilities measured based on fair value
Inapplicable
21
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
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 13,441,613.2 was used as a
collateral for the overseas long term loan amounting to CNY 4,070,330.00.
V. Investment
1. General
Amount of investment in the reporting period Amount of investment in the same period of
Amount of variation
(CNY) the previous year (CNY)
139,500,000.00 0.00 100.00%
Note: During the reporting period, the Company increased the total capital amounting to CNY 139.50 million in three of
the wholly-owned subsidiaries. For the detail, refer to the relevant announcement disclosed in the Securities Times,
Hong Kong Commercial Daily and http://www.cninfo.com.cn. On July 30, 2020.
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 investment
(1) Portfolio investment
Inapplicable
(2) Investment in derivatives
Inapplicable
5. Application of the raised capital
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%.
22
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
In CNY
Registered
Company name Company type Principal business Total assets Net assets Turnover Operating profit Net profit
capital
Purchase & sale and
Shenzhen Harmony
repairing service of 182,326,839.0
World Watches Subsidiaries
watches and 600,000,000 1,872,531,386.05 909,806,638.88 2,988,916,368.26 242,765,902.85
Center Co., Ltd. 5
components
Design, R & D and
FIYTA Sales Co.,
Subsidiary sales of watches and 450,000,000 613,384,970.16 390,941,692.32 516,455,170.73 -18,885,348.17 -15,282,974.47
Ltd.
components & parts
Manufacture and
Shenzhen FIYTA
production of
Precision Subsidiary
watches and 100,000,000 380,728,155.21 264,949,431.18 501,248,791.25 76,691,131.96 67,842,354.18
Technology Co., Ltd.
components
Production and
Shenzhen FIYTA
machining of
Technology
Development Co.,
Subsidiary sophisticated 50,000,000 171,890,633.16 118,704,721.47 163,533,818.78 11,997,378.38 11,243,899.59
components and
Ltd.
parts
Trading of watches
FIYTA (Hong Kong)
Subsidiary and accessories and 137,737,520 245,079,582.50 199,324,329.81 102,497,627.67 17,412,906.01 14,987,003.85
Limited
investment
Design, R & D and
Shiyuehui Boutique
Subsidiary sales of watches and 5,000,000 46,639,986.23 -3,147,245.07 16,907,500.74 1,169,756.35 841,500.91
(Shenzhen) Co., Ltd.
components & parts
Liaoning Hengdarui Purchase & sale of
Commerce & Trade Subsidiary watches and 51,000,000 135,784,477.86 42,304,571.28 8,307,801.99 1,269,830.63 952,372.97
Co., Ltd. components & parts
Shenzhen Harmony Purchase & sale of
E-Commerce Subsidiary watches and 10,000,000 13,581,535.33 13,218,443.00 66,825.10 43,066.94 41,150.82
Limited components & parts
Design, R & D and
Emile Chouriet
Subsidiary sales of watches and 41,355,200 110,356,093.35 55,197,428.59 77,916,505.74 1,924,473.04 1,420,717.84
(Shenzhen) Limited
components & parts
Production and sales
Shanghai Watch Mutual shareholding
Industry Co., Ltd. company
of watches and 15,350,000 155,920,380.87 119,920,567.63 96,146,565.15 20,602,896.80 19,907,312.29
components & parts
Acquisition and disposal of subsidiaries in the reporting period
Way of acquisition and disposal of subsidiaries in the Impact upon the overall production and operation and
Company name
reporting period performances
Shenzhen Xunhang Precision Technology Co., Ltd.
The establishment of a wholly-owned subsidiary is
(Ended the reporting period, the said company has
conducive to promoting the business expansion of
not yet completed the registration with the
Newly established smart wearables and precision technology, and will
administration for industry and commerce and is
have a positive impact on the long-term development
subject to the final approval by the authority of
and benefit improvement of the Company.
industry and commerce.
Note to the principal mutual shareholding companies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Expectation on future development of company
I. Development trend of the industry
Over the centuries, with the continuous innovation of technology, watches with precision technology as the core are
gradually becoming the carrier of high-quality life, carrying human emotional needs such as "love" and "beauty", and
23
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
becoming the choice of more and more consumers. Watches are a symbolic presentation of consumers’ quality of life.
Under the background of China’s continuous economic growth, consumption upgrading, the rise of Generation-Z
consumers (born after 1995), the “dual cycle” and tariff adjustments shall all provide sufficient power for the development
of the industry. The Company is firmly optimistic about the long-term growth and development potential of the industry.
In 2021, benefited from the remarkable result of China's COVID-19 prevention and control, China's economy is expected
to achieve a full recovery and rapid growth of rebound from which the watch consumption industry the Company is
engaged in shall also be benefited. From the view of trend, the industry has shown structural changes after the pandemic.
It is expected that the market share of high-end brands shall further increase, the competition of mid-end and fashion
brands shall become more intense, and the high-quality resources of the channel industry shall also tend to be
concentrated. The evolution of the duty-free policy of Hainan Island shall also have a significant impact on the channel
structure. The Company is at the forefront of the industry in the distribution of high-end luxury watches and its proprietary
brand business, can better cope with the impact of changes in the market structure and grasp the overall opportunities of
the development of the industry. The Company shall conduct in-depth research on the industry change trend, and
respond timely to various market segments and seize growth opportunities.
From the view of long term, the Company is confident in the development of its own brand. There is still a large gap
between domestically produced watches and superior Swiss watch brands in terms of design, watch-making technology,
and brand influence. However, thanks to the continuous improvement of China's manufacturing level and the drive of
“self-confidence in culture”, Chinese consumers’ increasing sense of national pride shall also help the development of
brands with local characteristics, and domestic watch brands shall also usher in new development opportunities.
The two new growth points of precision technology business and smart wearable business are also on the track of
accelerated growth. The Company shall accelerate capacity building, actively seize development opportunities, and
continue to promote customer expansion, product research and development, technology upgrading, and scale
expansion in related fields.
II. Development Strategy
Looking forward to the future, as a leading company in the watch industry, the Company shall adhere to its original
aspiration for development, practice the strategy of "Big Country Brand", and continue to promote the creation of
products and brands that represent China's identity, Chinese quality, Chinese technology and Chinese culture; promote
the Company's high-quality development and transformation , focus on brand power, product power, and channel power,
and comprehensively create the advantage of differentiated competition; enhance high-end precision technology
innovation and research and development capabilities, strengthen self-centered design and development and key watch-
making capability; accelerate digital transformation and business model innovation, and deepen customer value work;
continue to cultivate and promote the development of precision technology and smart wearable business and form a new
business growth point for the Company. In the process of carrying forward these strategic measures, the Company shall
always keep an eye on the goal of "value creation", realize the Company's long-term sustainable and healthy growth, and
is committed to creating greater value for shareholders.
III. Key Work in 2021
1.Tamping the basic management and consolidating the advantage of core competitiveness
The Company shall continue to improve brand professional operation capabilities, strengthen core DNA creation of the
brand and transmission, strengthen product sales integration, and continue to improve "Brand Power"; focus on full life
cycle management, optimize product planning and development, supply chain management, efficiency improvement, and
premium capacity improvement, focus on the core series to create explosive products, strengthen “product power”;
continue to promote deep and detailed channel operations, and continue to improve customer satisfaction and store
yields with competitive images and products, and excellent store and after-sales service experience, and effectively
improve the “channel power”.
2. Grasping market opportunities and accelerating channel adjustment and upgrading
Relying on existing successful practices, the Company's proprietary brands continue to promote the entry and layout of
shopping centers; the retail business of HARMONY World Watch Retail shall strengthen the construction of brand
resources and channel resources, and “locate” in a planned, rhythmic and strategic way around the “Channel Map”; at
the same time, the Company shall continue to keep a close eye on business opportunities such as duty-free shopping on
Hainan Islands, explore and innovate models, and promote channel layout.
3. Embracing the Development of the Times and Accelerating Steadily Digital Transformation
The Company shall continue to accelerate the digital transformation of its core business, continue to strengthen
membership operation capability, and provide customers with better products and services with precise insights into
24
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
product development, marketing activities, and store operations; continue to advance the exploration of new retail
channels and actively promote the creation of a full-scenario, high-efficiency retail and service network.
4.Focusing on precision technology, strengthening investment and enhancing strength
The Company shall continue to adhere to innovation-drive and technology-drive, strengthen the building of watch-making
capability, improve the Company's technological level, and strive to continue to make breakthroughs in key links such as
independent driving unit design and development, key components manufacturing, new material development and
application, and high-end watch-making process capacity building, etc.
5. Accelerating Innovation Drive and Actively Cultivating New Growth Points
The Company shall accelerate innovation drive and actively cultivate new growth points The precision technology
business shall accelerate the business expansion in new fields such as medical and aviation, and continue to improve
the technical level and solution capacity building; the JEEP smart watch business shall continue to explore the fields of
“active health”, “grand pension”, aerospace, etc., and continue to introduce products with more competitive power and
accelerate business scale breakthrough.
6.Strengthening Team Building and Creating a Highly Effective Team
The future is always full of challenges. The Company firmly believes that only a combative and competitive team may
achieve success in the future. The Company shall continue to forge a team with high professional capability and efficient
execution ability, consolidate an “Iron Army” team; continue to deepen the full coverage of the power mechanism, and
further stimulate the enthusiasm and creativity of the core team to deal with many uncertain factors in the future.
IV. Capital Necessary for Future Development
According to the Company's business development plan and financial budget planning in 2021 and for the purpose of
satisfying the demand on investment and operation capital and at the same time timely seizing the development
opportunity possibly brought about from the market change, the Company plans to apply for financing credit line with
amount not exceeding CNY 1.2 billion by various means, including credit, guarantee, loan to subsidiaries, mortgage, etc.
in 2021.
V. Risks Possibly to be Confronted with
1. The domestic and international pandemic situation still being confronted with many uncertainties
Looking forward to Year 2021, the repeated outbreaks of COVID-19 shall continue to bring about many uncertain factors
to the development of the domestic economy and the growth of the watch industry. The Company shall seize the
historical development opportunity of winning back consumers and the rise of domestic brands to promote the stable
growth of the Company.
2. The continuous evolution of the domestic competition pattern and increasing pressure of competition
The Company also clearly realizes that under the general situation of rapid domestic consumption development, being
confronted with the continuous pressure from duty-free imported goods on Hainan Island, changes in consumption habits,
changes in industry concentration, etc., the Company needs to adhere to innovation-drive, promote the consolidation of
core competitive advantages, strengthen key resource capability and actively respond to market changes.
X. Statement of Such Activities as Reception of Survey, Communications, Interview, etc.
1. Registration Form of the Activities, such as Reception of Survey, Communications, Interviews, etc. in the
Reporting Period
Types of
Place of Way of Main contents discussed and Index of Basic Information on
Reception time Visitors Visitors Received
reception reception information provided the Investigation and Survey
Received
The Company conducted
communication on FIYTA
http://irm.cninfo.com.cn/ircs/co
Brand upgrading, sales of
The Great Wall Fund Management Co., Ltd. And China mpany/companyDetail?stockco
January 08, 2020 Field survey Institution HARMONY World Watch and
Company Universal Asset Management Co., Ltd. de=000026&orgId=gssz000002
development of smart watches
6
and new business of precision
technology with investors.
Teleconfe Telephone Zhongtai Securities Co., Ltd., China Merchants The Company conducted http://irm.cninfo.com.cn/ircs/co
May 12, 2020 Institution
rence communication Fund Management Co., Ltd., Huashang Fund communication on mpany/companyDetail?stockco
Management Co., Ltd., Bosera Asset Management development of smart watch de=000026&orgId=gssz000002
25
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Co., Ltd. and ABC-CA Fund Management Co.,Ltd. business with investors 6
Changjiang Securities Co., Ltd., Hunan Yuancheng
Investment Management Co., Ltd., Shenzhen
Zhongna Bojin Investment Management Co., Ltd.,
The Company conducted
CITIC Securities Co., Ltd., Shenzhen Hengwin
communication on FIYTA
Fidelity Asset Management Co., Ltd., Zhuhai http://irm.cninfo.com.cn/ircs/co
Brand upgrading, sales of
The Hengqin Chengle Hui Capital Management Co., mpany/companyDetail?stockco
August 19, 2020 Field survey Institution HARMONY World Watch and
Company Ltd., Infore Capital Management Co., Ltd., Avic de=000026&orgId=gssz000002
development of smart watches
Fund Management Co.,Ltd., Shenzhen Shanshi 6
and new business of precision
Fund Management Co., Ltd., TruValue Asset
technology with investors.
Management Co., Ltd., JX Asset Management Co.,
Ltd., Shenzhen Minsen Investment Co., Ltd., Avic
Fund Management Co., Ltd.
China Merchants Fund Management Co., Ltd.,
Ping An Fund Management Company Limited,
Shanghai Chongshan Investment Co., Ltd.,
Shenzhen Upright Asset Management Co., Ltd., The Company conducted
Shenzhen KWT Investment Co., Ltd., Shanghai communication on FIYTA
http://irm.cninfo.com.cn/ircs/co
Huahong Asset Management Co., Ltd., Shenzhen Brand upgrading, sales of
The mpany/companyDetail?stockco
August 21, 2020 Field survey Institution Qianhai Yunxi Fund Management Co., Ltd., HARMONY World Watch and
Company de=000026&orgId=gssz000002
Shenzhen Haifuling Capital Management Co., Ltd., development of smart watches
6
Shanghai Sunshine Capital Management Co., Ltd., and new business of precision
Penghua Fund Management Co., Ltd., Bosera technology with investors.
Funds Management Co., Ltd., Shenzhen Qianhai
Chengbeile Investment Co., Ltd., and Dongxin
Holding Co., Ltd.
The Company conducted
communication on FIYTA
http://irm.cninfo.com.cn/ircs/co
Shenzhen Upright Asset Management Co., Ltd., Brand upgrading, sales of
The mpany/companyDetail?stockco
August 25, 2020 Field survey Institution Shanghai Huahong Asset Management Co., Ltd., HARMONY World Watch and
Company de=000026&orgId=gssz000002
and Southern Fund Management Co., Ltd. development of smart watches
6
and new business of precision
technology with investors.
Wanlian Securities Co., Ltd., Great Wall Securities
Co., Ltd., Shenzhen Haifuling Capital Management
Co., Ltd., Shenzhen Qianhai Chengbeile
Investment Co., Ltd., and Dongxin Holding Co.,
Ltd., Shenzhen Qianhai Quanda Investment Co.,
Ltd., China Merchants Securities Co., Ltd., Zhuhai
Hengqin Changlehui Capital Management Co., The Company conducted
Ltd., Minsheng Securities Co., Ltd., Pingan Fund communication on FIYTA
http://irm.cninfo.com.cn/ircs/co
Management Co., Ltd., Guotai Junan Securities Brand upgrading, sales of
The mpany/companyDetail?stockco
October 27, 2020 Field survey Institution Co., Ltd., UBS SDIC Fund Management Co., Ltd., HARMONY World Watch and
Company de=000026&orgId=gssz000002
Morning Bell Asset Management Co.,Ltd., development of smart watches
6
Shenzhen Jinyou Chuangzhi Asset Management and new business of precision
Co., Ltd., Shenzhen Maoyuan Wealth technology with investors.
Management Co., Ltd., Shenzhen Zhengdetai
Investment Co., Ltd., Guosen Securities Co., Ltd.,
Great Wall Fund Management Co., Ltd., Shenzhen
Qianhai SUNFO Capital Management Group
Limited, Shenwan Hongyuan Securities Co., Ltd.
and China Merchants Fund Management Co., Ltd.
Number of reception 6
Number of institutions received 69
Number of persons received 73
Number of other visitors received 0
Is there any important information disclosed, revealed or leaked to the
No
public?
26
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 5 Significant Events
I. Profit Distribution for Common Stock and Conversion of Capital Reserve into Share Capital
Preparation, Implementation or Adjustment of the Policy for Common Stock Profit Distribution, Especially the Policy for
Cash Dividend Distribution in the Reporting Period
The Company's 2019 Profit Distribution Plan was reviewed and approved at the 16th session of the Ninth Board of
Directors held on March 18, 2020 and is going to be brought to 2019 Annual General Meeting for review. It was dissolved
that with the Company’s total share capital as at the date of record for future implementation of the profit distribution plan
as the base, the Company shall distribute cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive)
with the total cash dividend not exceeding CNY 88,593,776.2, distribute bonus share at the rate of 0 share for every 10
shares to the whole shareholders and capitalize no reserve into capital.
In view of the fact that the total share capital of the Company decreased from 442,968,881 shares to 428,171,881 shares
during the period from the disclosure to the implementation. The Company adjusted the total amount of distribution in
accordance with the principle of fixed distribution proportion. The final implementation plan for the 2019 annual equity
distribution is: based on the number of the Company's capital stock being 428,171,881 shares, the Company would
distribute cash dividend to all shareholders at the rate of CNY 2.00 for every 10 shares (with tax inclusive) , 0 bonus
shares and would not convert any capital reserve into capital.
The implementation of the profit distribution plan was finished on July 3, 2020. For the detail, refer to the Announcement
on Implementation of the Profit Distribution for Year 2019 (2020-034).
Special Note to Cash Dividend Distribution Policy
Does it comply with the Articles of Association or the resolution of the
Yes
General Meeting?
Are the dividend distribution standard and proportions explicit and
Yes
clear?
Are the relevant decision-making procedures and mechanism
Yes
complete?
Have the independent directors done their duties and brought their role
Yes
into full play?
Do minority shareholders have opportunity to fully express their
Yes
opinions and claims? Has their legal interest been fully protected?
In case the cash dividend distribution policy has been adjusted or
altered, do the conditions and procedures comply with the law and are Inapplicable
they transparent?
The profit distribution plan or proposal and the preplan or proposal of conversion of the capital reserve into share capital
in the past three years (with the reporting period inclusive):
According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared
specific cash dividend distribution plan after the Board of Directors and the Shareholders’ General Meeting have
reviewed strictly according to the requirements. In the past three years, the Company has well implemented the cash
27
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
dividend distribution policy, fully asked for the independent directors’ opinions, effectively ensured the minority
shareholders’ benefit and made timely and accurate disclosure in its annual report and the relevant media.
Profit Distribution Plan in 2018: With the total share capital of 438,744,881 shares as at December 31, 2018 as the
base, the Company distributed to the whole shareholders cash dividend at CNY 2.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
(1) As of the date of application for equity distribution, the Company implemented 2018 Restricted A-Share incentive
scheme (the first phase), and granted 4,224,000 restricted A-shares to 128 participants. Upon completion of the granting
and registration for listing, the Company’s share capital increased to 442,968,881 shares.
(2) The Company has repurchased 6,000,000 shares of domestically listed foreign shares (B shares) through the special
account for repurchase. According to the relevant provisions of the Implementation Rules of Shenzhen Stock Exchange
on Repurchase of Shares by Listed Companies, the Company’s repurchased shares in the special account would not be
qualified for participating in this equity distribution.
In view of the above reason, the base of the shares available for dividend distribution in the Company's equity in 2018
was adjusted to 436,968,881 shares. According to the relevant provisions of the Guidelines of Shenzhen Stock
Exchange on Business Handling No. 2 - Issues Related to Regular Report Disclosure, in compliance with the principle of
the total amount of cash dividends remaining unchanged, the Company's final implementation plan for the 2018 annual
equity distribution was: based on the Company's number of shares for distribution being 436,968,881 shares, the
Company distributed cash dividend to all shareholders at CNY2.008128 in cash (including tax) for every 10 shares, and 0
bonus shares and would convert no public reserve into capital.
Profit Distribution Plan in 2019: Based on the profit distribution plan reviewed and approved by 2019 Annual General
Meeting, it was decided that with the Company’s total share capital as at the date of record for future implementation of
the profit distribution plan as the base, the Company would distribute cash dividend at the rate of CNY 2.00 for every 10
shares (with tax inclusive) with the total cash dividend not exceeding CNY 88,593,776.2, distribute bonus share at the
rate of 0 share for every 10 shares to the whole shareholders and capitalize no reserve into capital. Ended the date of
disclosing the Profit Distribution Plan 2019, the Company’s total capital stock was 442,968,881 shares.
(1) According to the Company's "Proposal on the Repurchase of the Company's Partial Domestically Listed Foreign
Shares (B Shares)", the Company would, within the validity period stipulated in the repurchase program (April 23, 2019
to April 23, 2020), continuously implement the B share repurchase. The shares repurchased are used to reduce the
Company’s registered capital. Ended the date of implementing the profit distribution plan, the Company’s repurchase
term expired. The Company completed the procedures for cancellation of the shares repurchased (14,730,000 shares).
The Company’s total capital stock was reduced from 442,968,881 shares to 428,238,881 shares.
(2) According to the “Proposal for Repurchase and Cancellation of the Partially Restricted Shares Involved in 2018 A
Share Restricted Stock Incentive scheme (Phase I)” approved at the 15th and 16th Sessions of the Ninth Board of
Directors, the Company repurchased and canceled a total of 67,000 Restricted A-shares that were granted with the
restriction not released to the three former original participants who have left the Company in the 2018 restricted A-share
incentive scheme (Phase I). This matter was reviewed and approved at the Company's 2020 1st Extraordinary General
Meeting. By the date of implementing the profit distribution plan, the Company had completed the procedures for
28
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
cancellation of the shares repurchased. The Company’s total capital stock was reduced from 428,238,881 shares to
428,171,881 shares.
In view of the above reason, the base of the shares available for dividend distribution in the Company's equity distribution
for 2019 was adjusted to 428,171,881 shares. The Company's final implementation plan for the 2019 annual equity
distribution was: based on the Company's number of shares available for distribution being 428,171,881 shares, the
Company distributed cash dividend to all shareholders at CNY 2.00 (with tax inclusive) for every 10 shares and 0 bonus
share; and would convert no public reserve into capital.
(3) According to the "Implementation Rules of Shenzhen Stock Exchange on the Repurchase of Shares by Listed
Companies", if a listed company has repurchased the shares by means of centralized competitive bidding with the
consideration in cash, the amount paid for the repurchase in the very year shall be deemed as cash dividends which
shall be put in the calculation based on the relevant proportion of cash dividends for the year. During the reporting period,
the Company accumulatively repurchased 10,010,000 shares of the Company’s own stock by means of the centralized
competitive bidding through its special securities account for repurchase, has already paid total amount of
HK$ 60,289,369.30 (excluding the stamp duty, commission and other trading costs equal to CNY 53,524,330.10). This
amount of money was included in the cash dividend distribution in 2019.
Profit Distribution Plan in 2020: As of the disclosure date, the Company's total share capital was 435,751,881 shares,
and the Company's total capital base for profit distribution must not exceed 435,751,881 shares in maximum.
(1) According to the Company's "Proposal on the Repurchase of the Company's Partial Domestically Listed Foreign
Shares (B Shares) 2020-038", the Company would, within the validity period stipulated in the repurchase program (July
23, 2020 to July 23, 2021), continuously implement the B share repurchase. It is expected that by the time of
implementing the profit distribution plan, the Company's repurchase period would expire and the cancellation of the
repurchased shares would be completed. At that time, the total share capital base would decrease.
(2) According to the “Proposal for Repurchase and Cancellation of the Partial Restricted Shares Involved in 2018
Restricted A-Share Incentive scheme (Phase I)” and the “Proposal for Repurchase and Cancellation of the Partial
Restricted Shares Involved in 2018 Restricted A-Share Incentive scheme (Phase II) reviewed and approved at 2021 2nd
Extraordinary General Meeting, the Company intended to repurchase and cancel a total of 51,359 restricted A-share that
were granted with the restriction but not yet released to the one retired and one deceased participants in the 2018
Restricted A-shares Incentive scheme (Phase I); and intended to repurchase and cancel a total 150,000 restricted A-
shares held by and granted with restriction not yet released to one retired participant in the 2018 Restricted A-shares
Incentive scheme (Phase II); It is expected that when the profit distribution plan is implemented, the Company shall have
completed the above Restricted A-Share repurchase and cancellation procedures, then the total capital stock base shall
be reduced. In the event of subsequent departure of other participants, the Company shall conduct repurchase-
cancellation in accordance with regulations,and the Company's total share capital shall be reduced.
For these reasons, with the total capital stock as at the date of record as the base, the Company would distribute cash
dividend at the rate of CNY 4.00 for every 10 shares (with tax inclusive), with the total cash dividend to be distributed not
exceeding CNY 174,300,752.40 , and no bonus share to the whole shareholders and would capitalize no reserve.
29
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(3) According to the "Implementation Rules of Shenzhen Stock Exchange on the Repurchase of Shares by Listed
Companies", if a listed company has repurchased the shares by means of centralized competitive bidding with the
consideration in cash, the amount paid for the repurchase in the very year shall be deemed as cash dividends which
shall be put in the calculation based on the relevant proportion of cash dividends for the year. During the reporting period,
the Company accumulatively repurchased 12,866,401 shares (where, 4,720,000 shares were involved in the first
repurchase plan, and 8,146,401 shares in the second) of the Company’s own stock by means of the centralized
competitive bidding through its special securities account for repurchase, has already paid total amount of
HK$ 81,319,545.03 (excluding the stamp duty, commission and other trading costs equal to CNY 71,338,916.62). This
amount of money was included in the cash dividend distribution in 2020.
The accumulative amount of cash dividend distributed in the past three years took 204.31% of the annual average net
profit in the past three years, which complies with the rules and regulations.
Statement of cash dividends distributed in the past three years (with the reporting period inclusive)
In CNY
Proportion of the Ratio of the total
cash dividend amount of cash
Net profit attributable to Ratio of the net Amount of cash distributed in other dividend (including
the Company’s profit attributable to dividend way(s) in the net Total amount of other way(s)) in the
Year of Amount of Cash
shareholders in the the Company’s distributed in other profit attributable to cash dividend net profit attributable
Dividend Dividend
consolidated statements shareholders taken way(s) (such as the Company’s (including other to the Company’s
Distribution (including tax)
of the year of dividend in the consolidated shares shareholders of way(s)) shareholders of
distribution statements repurchased) ordinary shares in ordinary shares in the
the consolidated consolidated
statements statements
2020 174,300,752.40 294,115,156.04 59.26% 71,338,916.62 24.26% 245,639,669.02 83.52%
2019 85,634,376.20 215,909,014.15 39.66% 53,524,330.10 24.79% 139,158,706.30 64.45%
2018 87,748,976.20 183,835,095.29 47.73% 0.00 0.00% 87,748,976.20 47.73%
In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders of ordinary
shares were positive but no common stock cash dividend distribution proposal has been put forward.
Inapplicable
II. Profit Distribution and Conversion of Capital Reserve into Share Capital in the Reporting Period
Bonus shares distributed at the rate of ___ (share) for every 10
0
shares
Dividend distributed at the rate of CNY___ for every 10 shares
4
(with tax inclusive)
Number of shares converted for every 10 shares (shares) 0
Based on the total number of shares on the date of record when the profit distribution plan is
Share capital base for the dividend distribution preplan (shares)
implemented in the future
Total cash dividend distributed (with tax inclusive) 174,300,752.40
Amount of cash dividend distributed in other way(s) (such as
71,338,916.62
shares repurchased)
Total amount of cash dividend (including other way(s)) 245,639,669.02
Profit available for distribution (CNY) 722,064,955.20
Proportion of the cash dividend in the total profit available for
100%
distribution (%)
Cash Dividend Distribution for the Reporting Year
Others
Detailed information for profit distribution or conversion of capital reserve into share capital preplan
The Company's 2020 Profit Distribution Plan was reviewed and approved at the 27th session of the Ninth Board of Directors held on March 8, 2021 and is going to be
brought to 2020 Annual General Meeting for review. It was planned that with the Company’s total share capital as at the date of record for future implementation of the
profit distribution plan as the base, the Company shall distribute cash dividend at the rate of CNY 4.00 for every 10 shares (with tax inclusive) with the total cash
30
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
dividend distributed not exceeding CNY 174,300,752.40, distribute bonus share at the rate of 0 share for every 10 shares to the whole shareholders and capitalize no
reserve into capital. The reasons are as follows:
(1) According to the Company's "Proposal on the Repurchase of the Company's Partial Domestically Listed Foreign Shares (B Shares) 2020-038", the Company
would, within the validity period stipulated in the repurchase program (July 23, 2020 to July 23, 2021), continuously implement the B share repurchase. It is expected
that by the time of implementing the profit distribution plan, the Company's repurchase period would expire and the cancellation of the repurchased shares would be
completed. At that time, the total share capital base would decrease.
(2) According to the “Proposal for Repurchase and Cancellation of the Partial Restricted Shares Involved in 2018 Restricted A-Share Incentive scheme (Phase I)”
approved at the 26th Sessions of the Ninth Board of Directors, the Company intended to repurchase and cancel a total of 51,359 Restricted A-shares that were
granted with the restriction but not yet released to the one retired and one deceased participants in the 2018 Restricted A-Share incentive scheme (Phase I). This
matter was reviewed and approved at the Company's 2021 2nd Extraordinary General Meeting.
According to the “Proposal for Repurchase and Cancellation of the Partial Restricted Shares Involved in 2018 A Share Restricted Stock Incentive scheme (Phase II)”
approved at the 26th Session of the Ninth Board of Directors, the Company intended to repurchase and cancel a total of 150,000 Restricted A-shares that were
granted with the restriction buy not yet released to one retired former incentive object in the 2018 Restricted A-Share incentive scheme (Phase II). This matter was
reviewed and approved at the Company's 2021 2nd Extraordinary General Meeting.
It is expected that when the profit distribution plan is implemented, the Company shall have completed the above Restricted A-Share repurchase and cancellation
procedures, then the total capital stock base shall be reduced. In the event of subsequent departure of other participants, the Company shall conduct repurchase-
cancellation in accordance with regulations, and the Company's total share capital shall be reduced.
The profit distribution plan is subject to review and approval of the General Meeting before implementation.
III. Implementation of Commitments
1. Commitments finished in implementation by the Company, shareholders, actual controller, acquirer, directors,
supervisors, senior executives or other related parties in the reporting period and commitments unfinished in
implementation at the end of the reporting period
Inapplicable
2. There existed profit anticipation for the Company’s assets or projects while the reporting period was still
within the duration of the profit anticipation. The Company made explanation on whether the assets or projects
reached the anticipated profit and the cause
Inapplicable
IV. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties
Inapplicable
V. Explanation of the Board of Directors, the Supervisory Committee and Independent Directors (if any) on the
“Qualified Auditor’s Report” issued by the CPAs in the Reporting Period
Inapplicable
VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and Accounting Method in
Comparison with the Financial Report of the Previous Year
The Ministry of Finance revised and issued the "Accounting Standards for Enterprises No. 14-Revenues" on July 5, 2017.
According to the requirement of the Ministry of Finance, a company which is listed both at home and abroad or listed
overseas and prepares its financial statements according to the International Financial Reports Standards or the
Accounting Standards for Enterprises started implementing the said accounting standards commencing from January 1,
2018; other domestically listed enterprises started the implementation commencing from January 1, 2020; non-listed
companies started the implementation commencing from January 1, 2021.
31
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
On September 19, 2019, the Ministry of Finance promulgated the “Circular on Amending and Issuing the General
Corporate Financial Statement Templates for the Year 2019” (CAI KUAI [2019] No. 16), according to which the Company
amended its general corporate financial statement templates; and prepared the consolidated financial statements for
year 2019 and the consolidated financial statements for the subsequent periods in accordance with the accounting
standards and the Amendment Circular.
According to the concerned requirements of the aforesaid accounting standards and the consolidated financial statement
templates,the Company implemented the aforesaid new rules and prepared the consolidated financial statements for
year 2019 and the consolidated financial statements for the subsequent periods according to the relevant provisions. For
details, please refer to the “Announcement on Change of the Accounting Policies 2020-015” disclosed by the Company
on the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn/ on March 20, 2020.
The Ministry of Finance revised and issued the "Accounting Standards for Enterprises No. 21-Revenues” (CAI KUAI
[2018] No. 35) on December 7, 2018. According to the requirement of the Ministry of Finance, a company which is listed
both at home and abroad or listed overseas and prepares its financial statements according to the International Financial
Reports Standards or the Accounting Standards for Enterprises started implementing the said accounting standards
commencing from January 1, 2019; other domestically listed enterprises started the implementation commencing from
January 1, 2021. The Company as a domestically listed company started implementing the new lease standards
commencing from January 1, 2021 according to the aforesaid standards and circular promulgated by the Ministry of
Finance. For details, please refer to the “Announcement on Change of the Accounting Policies 2021-030” disclosed by
the Company on the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn/ on March 10, 2021.
VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period Necessary to be Restated
Retrospectively
Inapplicable
VIII. Explanation on the Changes in the Scope of the Consolidated Statements in Comparison with the Financial
Report of the Previous Year
Inapplicable
IX. Engagement/Disengagement of CPAs
CPAs currently engaged by the Company
Name of the domestic CPAs Grant Thornton LLP
Remuneration to the domestic CPAs (in CNY 10,000) 120
Successive years of the domestic CPAs offering auditing services 2
Name of the certified public accountants from the domestic CPAs Dong Xu and Meng Junfeng
Successive years of the domestic CPAs offering auditing services 2
Has the CPAs been changed for the reporting period?
No
32
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Employment of CPAs, financial consultant or sponsor for auditing the internal control
The 16th session of the Ninth Board of Directors of the Company held on March 18, 2020 and 2019 Annual General
Meeting held on June 4, 2020 reviewed and approved the ``Proposal for the Payment of the Audit Fee for Year 2019 and
the Reappointment of the Company's Auditor for Year 2020. The Company decided to reappoint Grant Thornton Certified
Public Accountants LLP as the Company's auditor for auditing its financial report and internal control for year 2020 for a
term of one year. For the detail, please refer to the “Announcement on the Reappointment of the Company’s Auditor for
Year 2020, 2020-017” disclosed by the Company on the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn/ on March 20, 2020.
During the reporting period, the Company paid the audit fee amounting to CNY 800,000.00 for auditing the financial
report and CNY 300,000.00 for auditing the internal control for year 2019 to Grant Thornton Certified Public Accountants
LLP.
X. Delisting Possibly to be Confronted with after Disclosure of the Annual Report
Inapplicable
XI. Matters concerning Bankruptcy Reorganization
Inapplicable
XII. Significant Lawsuits and Arbitrations
Inapplicable
XIII. Penalty and Rectification
Inapplicable
XIV. Integrity of the Company and its Controlling Shareholder and Actual Controller
Inapplicable
XV. Implementation of the Company’s Equity Incentive Scheme, Employee Stock Ownership Scheme or other
Employee Incentive Measures
1. Restricted A-Share Incentive Scheme 2018(Phase I)
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 Restricted A-Share Incentive Scheme (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 announcements disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
33
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
on January 12, 2019. This part of Restricted A-Share was all granted and registered for listing by January 30, 2019.
The Company held the 24th session of the Ninth Board of Directors on December 29, 2020, and believed that it has been
matured for relieving the restriction conditions in the first restriction relief period of the Restricted A-Share incentive
Scheme (Phase I) in 2018. With the exception of 147,000 shares held by 6 retired former participants with the restriction
unreleased which have been repurchased and canceled by the Company, the Company has handled the matter
concerning the restriction for the 122 participants in compliance with the condition for relieving the restriction for sale.
The total number of Restricted A-Share involved in relieving the restriction is 1,357,641 shares. This part of the restricted
shares with the restriction released got listed for trading on February 1, 2021. For the detail, refer to the relevant
announcements disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn. on
January 29, 2021.
The 26th session of the Ninth Board of Directors held on February 4, 2021 and 2021 2nd Extraordinary General Meeting
held on February 24, 2021 decided to repurchase and cancel the 51,359 restricted A-shares which were already granted
to but with the restriction not yet released and held by1 retired and 1 deceased participants. For the detail, refer to the
relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
respectively on February 5, 2021 and February 25, 2021.
2. Restricted A-Share Incentive Scheme 2018(Phase II)
The 23rd session of the Ninth Board of Directors held on December 4, 2020 and 2021 1st Extraordinary General Meeting
held on January 6, 2021 decided to start 2018 Restricted A-Share Incentive Scheme (Phase II), which was later on
reviewed and approved at the 25th session of the Ninth Board of Directors held on January 15, 2021, and the Company
eventually granted 7.66 million restricted A-shares to 135 persons eligible for the incentive. For the detail, refer to the
relevant announcements disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
on January 16, 2021. This part of Restricted A-Share was all granted and registered for listing by January 29, 2021.
The 26th session of the Ninth Board of Directors held on February 4, 2021 and 2021 2nd Extraordinary General Meeting
held on February 24, 2021 decided to repurchase and cancel the 150,000 restricted A-shares which were already
granted to but with the restriction not yet released and held by1 retired participants. For the detail, refer to the relevant
announcement disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
respectively on February 5, 2021 and February 25, 2021.
XVI. 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
34
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current Associated Rights of Credit and Liabilities
Inapplicable
5. Other Significant Related Transactions
The 16th session of the Ninth Board of Directors held on March 18, 2020 and 2019 Annual General Meeting held on
June 4, 2020 reviewed and approved the Proposal on Prediction of Regular Related Transactions in 2020. For the detail,
refer to the Announcement on the Resolution of the 16th Session of the Ninth Board of Directors No. 2020-011, the
Announcement on the Prediction of the Regular Related Transactions in 2020 No. 2020-014 and the Announcement on
the Resolution of 2020 Annual General Meeting No. 2020-031. During the reporting period, the cumulative transaction
amount of the Company's related transactions related to its daily operations was within the expected range of the year.
Inquiry on the website for disclosing the provisional report concerning significant related transactions
Description of the provisional announcements Date of disclosure Disclosure website
Announcement on the Resolution of the 16th Session of the Ninth
March 20, 2020 www.cninfo.com.cn
Board of Directors, 2020-011
Announcement of the Prediction of the Regular Related Transactions
March 20, 2020 www.cninfo.com.cn
in 2020, 2020-014
Announcement on the Resolution of 2019 Annual General Meeting,
June 05, 2020 www.cninfo.com.cn
2020-031
XVII. Important Contracts and Implementation
1. Custody, Contacting and Leases
(1) Custody
Inapplicable
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
35
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
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 Actual Guarant Guarantee
Guarantee Implementa
Names of Guarantees announcement on the Date of occurrence amount of Type of guarantee ee to related
line tion status
guarantee line guarantee period party?
Inapplicable
Guarantee to the subsidiaries
Date of the Actual Guarant Guarantee
Guarantee Implementa
Names of Guarantees announcement on the Date of occurrence amount of Type of guarantee ee to related
line tion status
guarantee line guarantee period party?
Guarantee with joint
Harmony December 30, 2020 20,000 December 30, 2020 10,000 1 year No No
responsibility
Guarantee with joint
Harmony May 12, 2020 10,000 September 10, 2020 10,000 1 year No No
responsibility
Guarantee with joint
Harmony May 12, 2020 5,000 September 15, 2020 5,000 1 year No No
responsibility
Guarantee with joint
the Hong Kong Co. August 03, 2020 3,366.56 October 29, 2020 296.02 1 year No No
responsibility
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
38,366.56 subsidiaries actually incurred in the 25,296.02
approved in the reporting period (B1)
reporting period (B2)
Total balance of actual guarantee to
Total guarantee quota to the subsidiaries
38,366.56 the subsidiaries at the end of the 25,296.02
approved at the end of the reporting period (B3)
reporting period (B4)
Guarantee among the subsidiaries
Date of the Actual Guarant Guarantee
Guarantee Implementa
Names of Guarantees announcement on the Date of occurrence amount of Type of guarantee ee to related
line tion status
guarantee line guarantee period party?
Inapplicable
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 balance of actual guarantee to
Total guarantee quota to the subsidiaries
0 the subsidiaries at the end of the 0
approved at the end of the reporting period (C3)
reporting period (C4)
Total amount of guarantees (i.e. Total of the previous three major items)
Total amount of outward guarantee
Total guarantee quota to the subsidiaries
38,366.56 actually incurred in the report 25,296.02
approved in the reporting period (A1)
period (A2)
Total amount of guarantees already approved at Total ending balance of guarantees
38,366.56 25,296.02
the end of the report period (A3) at the end of the report period (A4)
Proportion of the actual guarantees in the Company’s net assets (namely A4+B4 + C4) 9.03%
where
Amount of guarantees offered to the shareholders, actual controller and its related parties
0
(D)
Amount of guarantee for liabilities directly or indirectly offered to the guarantees with the
0
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 period or
Inapplicable
description of the possible related discharge duty (if any)
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
36
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
3. Entrusting a Third Party to Manage the Cash Assets
(1) Finance Management on Commission
Inapplicable
(2) Entrusted Loan
Inapplicable
4. Important contracts for day-to-day operation
Inapplicable
5. Other Important Contracts
Inapplicable
XVIII. Social Responsibilities
1. Implementation of social responsibilities
"The Social Responsibility Report " was already published on www.cninfo.com.cn on March 10, 2021.
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 necessary to be carried out.
3. 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-
Company or its pollutants or discharging the discharging
discharging concentration Standards in volume volume verified discharging
Subsidiary specific outlets outlets
Force
pollutant
At the port of Nickel ﹤ 0.03,
Shanghai Nickel and Intermittent
effluent Nickel:0.1;
Watch Industry chromium and 1 chromium ﹤ 1640 tons/year 2960 tons/year None
treatment chromium:0.1
Co., Ltd. effluent interruption 0.01
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 during 2018. Up to now, the facility has been operating normally and its emission has never exceeded
37
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
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.
In order to implement the requirements of the Eco-Environment Bureau for energy saving and consumption reduction,
the Company has basically reached the standard for clean water after treatment of the wastewater from electroplating.
Therefore, the Company recycled part of the water and reduced the total annual discharge by about 1,000 tons each
year.
In compliance with the Document of Shanghai Municipal Bureau of Ecology and Environment, HU HUAN GUI (2020) No.
6, the primary pollutant wastewater should comply with the general principle of “the water which should be classified
must be classified; the water which can be classified must be classified”. The Company started to entrust the municipal
engineering department to arrange and improve the Company’s existing wastewater pipelines commencing from August,
2020, separate, collect and treat the domestic sewage and electroplating effluent.
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.has passed the pollution discharge verification organized by
Yangpu District Environmental Protection Bureau of Shanghai and has 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 conducted supervision once every quarter. The Company
entrusted Shanghai Light Industry Environment Protection and Pressure Vessel Monitoring General Station, a competent
independent agent, to conduct the monitoring every half a year. The Company was itself equipped with monitoring
instruments and conducted 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
38
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
XIX. Notes to Other Significant Events
1. Amendment of the Company’s Internal Rules and Regulations
At the 18th session of the Ninth Board of Directors held on May 11, 2020, the Company reviewed and approved the
"Proposal for Amending the Implementation Rules of the Special Committees of the Board of Directors". For the detail,
refer to the relevant announcement of the Company disclosed in the Securities Times, Hong Kong Commercial Daily and
and http://www.cninfo.com.cn. on May 13, 2020.
At the 18th session of the Ninth Board of Directors held on May 11, 2020, the Company reviewed and approved the
"Proposal for Amending the Articles of Association". For the detail, refer to the relevant announcements of the Company
disclosed in the Securities Times, Hong Kong Commercial Daily and and http://www.cninfo.com.cn. on May 13, 2020 and
June 5, 2020.
At the 20th session of the Ninth Board of Directors held on July 28, 2020, the Company reviewed and approved the
"Proposal for Amending the Investment Management System” and the “Proposal for Amending the Internal Control
System”. For the detail, refer to the relevant announcement of the Company disclosed in the Securities Times, Hong
Kong Commercial Daily and and http://www.cninfo.com.cn. on July 30, 2020.
2. Repurchase of Partial Domestically Listed Foreign Investment Shares (B-Shares)
The Company’s 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 on Repurchase of Certain Domestically Listed
Foreign Investment Shares of the Company (B- Shares), and subsequently disclosed the repurchase report and series of
progress announcements in accordance with relevant regulations. Ended April 29, 2020, the repurchase of the shares
was finished in implementation. For the detail, please refer to the “Announcement on the Completion of the Cancellation
of Certain Domestically Listed Foreign Investment Shares (B-Shares) as Repurchased and the Change of the
Company’s Shares 2020-026” disclosed in the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn on April 30, 2020.
The Company’s 19th Session of the Ninth Board of Directors held on July 6, 2020 and 2020 2nd Extraordinary General
Meeting held on July 23, 2020 reviewed and approved the “Proposal on Repurchase of Certain Domestically Listed
Foreign Investment Shares of the Company (B- Shares), and subsequently disclosed the repurchase report and series of
progress announcements in accordance with relevant regulations. Ended the reporting period, the Company already
repurchased 8,146,401 shares. For the detail, refer to the relevant announcement disclosed in the Securities Times,
Hong Kong Commercial Daily and http://www.cninfo.com.cn.
3. Capital increase to wholly-owned subsidiaries
The Company's 20th session of the Ninth Board of Directors held on July 28, 2020 reviewed and approved the "Proposal
on Capital Increase to Shenzhen Fiyta Precision Technology Ltd., One of the Company's Wholly-owned Subsidiaries",
the "Proposal on Capital Increase to Shenzhen Fiyta Precision Technology Development Ltd., One of the Company's
Wholly-owned Subsidiaries", and the "Proposal on Capital Increase to Shenzhen Harmony E-Commerce Co., Ltd., One
of the Company’s Wholly-owned Subsidiaries, and decided to increase capital to the above three wholly-owned
subsidiaries by CNY 90 million and CNY 40 million and CNY 9.5 million respectively. For the detail, refer to the relevant
39
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
announcement disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn. On July
30, 2020.
4. Investment for Establishment of Wholly-owned Subsidiary
The Company's 23rd Session of the Ninth Board of Directors held on December 4, 2020, reviewed and approved the
"Proposal on the Establishment of a Wholly Owned Subsidiary" and decided to invest in the establishment of a wholly-
owned subsidiary with its own capital amounting to CNY10 million. (Shenzhen Xunhang Precision Technology Co., Ltd.,
tentatively named, subject to the registered name of the with the administration for industry and commerce). For the
detail, please refer to the“Announcement on Investment and Establishment of a Wholly Owned Subsidiary 2020-072”
disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com on December 5, 2020 . As of the
end of the reporting period, this wholly-owned subsidiary has not yet completed the registration with the administration
for industry and commerce, and the Company shall perform its subsequent information disclosure obligations in
accordance with relevant regulations.
XX. Significant Events of the Company’s Subsidiaries
Inapplicable
Section 6 Change of the Shares and Particulars about Shareholders
I. Change of the Shares
1. Change of the Shares
In shares
Before the change Increase/decrease (+, -) involved in the change After the change
Shares
Bonus converted
Quantity Proportion New issuing Others Sub-total Quantity Proportion
shares from
reserve
I. Restricted shares 4,604,513 1.04% -147,000 -147,000 4,457,513 1.04%
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 4,604,513 1.04% -147,000 -147,000 4,457,513 1.04%
Including: Domestic corporate
0 0.00% 0 0 0 0.00%
shares
Shares held by domestic
4,604,513 1.04% -147,000 -147,000 4,457,513 1.04%
natural persons
4. Foreign invested shares 0 0.00% 0 0 0 0.00%
Including: Foreign corporate
0 0.00% 0 0 0 0.00%
shares
Shares held by foreign
0 0.00% 0 0 0 0.00%
natural persons
II. Unrestricted shares 438,364,368 98.96% -14,730,000 -14,730,000 423,634,368 98.96%
1. CNY ordinary shares 356,716,368 80.53% 0 0 356,716,368 83.33%
2. Foreign invested shares listed
81,648,000 18.43% -14,730,000 -14,730,000 66,918,000 15.63%
in Mainland China
3. Foreign invested shares listed 0 0.00% 0 0 0 0.00%
40
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
abroad
4. Others 0 0.00% 0 0 0 0.00%
III. Total shares 442,968,881 100.00% -14,877,000 -14,877,000 428,091,881 100.00%
Cause of the change of shares
During the reporting period, 6 original participants of the 2018 Restricted A-Share incentive scheme (Phase I) no longer
met the incentive conditions due to their retirement. According to the provisions of the incentive scheme, the Company
repurchased and canceled 147,000 Restricted A-shares that have been granted but whose restriction has not been
released.
According to the Company’s “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares (B-Shares) by
the Company 2019-017”, the Company repurchased 14,730,000 B-shares in total during the period from April 23, 2019 to
April 23, 2020. Part of the B-shares were cancelled on April 29, 2020.
Due to the above reason, the Company's total shares changed from 442,968,881 shares to 428,091,881 shares.
Approval of the Change of the Shares
With the approval of the Company's 2020 1st Extraordinary General Meeting held on April 13, 2020, the Company
repurchased and cancelled 67,000 Restricted A-shares that had been granted to the former participants but the
restriction had not yet been released.
With the approval of the Company's 2019 Annual General Meeting held on June 4, 2020, the Company repurchased and
cancelled 27,000 Restricted A-shares that had been granted to the former participants but the restriction had not yet
been released.
With the approval of the Company's 2020 2nd Extraordinary General Meeting held on July 23, 2020, the Company
repurchased and cancelled 20,000 Restricted A-shares that had been granted to the former participants but the
restriction had not yet been released.
With the approval of the Company's 2020 3rd Extraordinary General Meeting held on September 15, 2020, the Company
repurchased and cancelled 33,000 Restricted A-shares that had been granted to the former participants but the
restriction had not yet been released.
With the approval and authorization of the Company's 2019 2nd Extraordinary General Meeting held on April 23, 2019,
the Company cancelled 14,730,000 domestically listed foreign shares (B shares) that had been repurchased through the
special account for repurchase of securities by centralized bidding during the reporting period.
Transfer of the Shares Changed
During the reporting period, the Company completed the repurchase and cancellation of a total of 147,000 restricted A-
shares with CSDC Shenzhen Office on June 5, 2020, July 29, 2020, September 14, 2020, and November 9, 2020
respectively.
41
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
During the reporting period, the Company completed the cancellation of a total of 14,730,000 domestically listed foreign
shares (B-shares) with CSDC Shenzhen Office on April 29, 2020.
Progress of implementation of the stock repurchase
The Company’s 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 (B-Shares), according to which the Company was approved to repurchase part of the company's
domestically listed foreign shares (B-shares) through a centralized bidding with its own fund to repurchase part of the
Company's domestically listed foreign shares (B-shares) through centralized bidding to reduce the registered capital.
During the reporting period, the repurchase of the aforesaid shares was completed in implementation. The Company
repurchased 14,730,000 domestically listed foreign shares (B- shares) through centralized bidding by means of the
special account for the securities repurchased and completed the cancellation.
The Company’s 19th Session of the Ninth Board of Directors held on July 6, 2020 and 2020 2nd Extraordinary General
Meeting held on July 23, 2020 reviewed and approved the “Proposal on Repurchase of Partial Domestically Listed
Foreign Shares (B- Shares), and subsequently disclosed the repurchase report and series of progress announcements in
accordance with relevant regulations. For the detail, please refer to the relevant announcements disclosed on the
Securities Times, Hong Kong Commercial Daily and www.cninfo.com. Ended the reporting period, the Company
accumulatively repurchased 8,146,401 shares in the Company through a centralized bidding method with the special
account for the securities repurchased, accounting for 1.90% of the company’s total share capital. The highest
transaction price of the repurchased shares was HK$6.74 per share, and the lowest transaction price was HK$5.93.
/share, the total amount paid was HK$ 52,515,985.20 (with the trading costs, such as stamp duty, commission, etc.
exclusive, it is equivalent approximately to CNY 44,199,553.78).
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
During the reporting period, the Company carried out repurchase and cancellation of the partial restricted shares in the
2018 Restricted A-Share Incentive Program (Phase I) and repurchased and canceled the B-shares as repurchased; and
the earnings per share and return on equity at the end of the reporting period were calculated by weighted average.
Earnings per share
Net return on equity, weighted average
(%)
Basic earning per share (CNY/share) Diluted earning per share (CNY/share)
2020 2019 2020 2019 2020 2019
10.78% 8.21% 0.6764 0.4943 0.6764 0.4943
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
Inapplicable
42
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
2. Change of the Restricted Shares
In shares
Number of restricted Number of restricted
Number of restricted Number of restricted
shares at the shares at the end Date of relieving the
Names of the Shareholders shares increased in shares released in Cause of restriction
beginning of the of the reporting restriction
the reporting period the reporting period
reporting period period
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Huang Yongfeng 160,000 0 0 160,000 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Pan Bo 117,500 0 0 117,500 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Lu Wanjun 117,500 0 0 117,500 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Liu Xiaoming 117,500 0 0 117,500 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Li Ming 117,530 0 0 117,530 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Chen Zhuo 118,250 0 0 118,250 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
Restricted shares as the to the measures for the
Tang Haiyuan 60,000 0 0 60,000
granted locked shares Company’s equity
incentive management
To be unlocked subject
to the conditions of the
Locked shares for senior
locked shares for
executives and restricted
Chen Libin (retired) 160,000 0 0 160,000 senior executives and
shares as the granted
the measures for the
locked shares
Company’s equity
incentive management
To be unlocked subject
Locked shares for senior to the conditions of the
Lu Bingqiang (retired) 96,311 0 24,078 72,233
executives locked shares for
senior executives
To be unlocked subject
Restricted shares as the to the measures for the
Xu Chuangyue (retired) 50,000 0 0 50,000
granted locked shares Company’s equity
incentive management
To be unlocked subject
Other persons eligible for
Restricted shares as the to the measures for the
the incentive of Restricted 3,514,000 0 0 3,367,000
granted locked shares Company’s equity
A-Share (Note)
incentive management
Total 4,628,591 0 24,078 4,457,513 -- --
43
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Note: During the reporting period, the Company repurchased and canceled 147,000 shares held by the 6 original
participants with the restriction not yet released. Therefore, the number of restricted shares at the end of the period
decreased by 147,000 shares compared with the beginning of the period.
II. Issuing and Listing
1. Issuing of securities (with preferred stock exclusive) in the reporting period
Inapplicable
2. Note to changes of the company’s total shares and the structure of shareholders as well as the structure of
assets and liabilities
During the reporting period, 6 original participants of the 2018 Restricted A-Share incentive scheme (Phase I) no longer
met the incentive conditions due to their retirement. According to the provisions of the incentive scheme, the Company
repurchased and canceled 147,000 Restricted A-shares that have been granted but whose restriction has not been
released.
According to the Company’s “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares (B-Shares) by
the Company 2019-017”, the Company repurchased 14,730,000 B-shares in total during the period from April 23, 2019 to
April 23, 2020. Part of the B-shares were cancelled on April 29, 2020.
Due to the above reason, the Company's total shares changed from 442,968,881 shares to 428,091,881 shares.
3. Existing Employee Shares
Inapplicable
III. Shareholders and Actual Controlling Shareholder
1. Number of Shareholders and Shareholding
In shares
Total preference
Total common shareholders with the
Total preference
Total common shareholders at the voting power
shareholders with the
shareholders at the end of the month recovered at the end
29,546 30,247 voting power recovered 0 0
end of the reporting before the date of of the month before
at the end of the
period disclosing the annual the day of disclosing
reporting period (if any)
report the Annual Report (if
any)
Shares held by the shareholders holding over 5% shares or the top ten shareholders
Number of Increase/decr Pledging or freezing
Number of Quantity of
Names of the Nature of the Shareholding shares held at ease in the
the restricted unrestricted
Shareholders shareholder proportion the end of the reporting Status of the shares Quantity
shares held shares held
reporting period period
AVIC International
State corporate 38.07% 162,977,327 0.00 0.00 162,977,327
Holdings Limited
Construction Bank of Domestic non-state-
China - Penghua Value 1.75% 7,472,435 7,472,435 0.00 7,472,435
owned legal person
Superiority Hybrid
44
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Securities Investment
Fund (LOF)
Construction Bank of
China - Penghua High
Domestic non-state-
Quality Growth Hybrid 1.23% 5,250,906 5,250,906 0.00 5,250,906
owned legal person
Securities Investment
Fund
UBS AG Foreign corporate 1.04% 4,461,801 4,271,445 0.00 4,461,801
Construction Bank of
China - Penghua
Domestic non-state-
Selected Growth Hybrid 0.54% 2,322,734 2,322,734 0.00 2,322,734
owned legal person
Securities Investment
Fund
Basic Endowment
Domestic non-state-
Insurance Fund Portfolio 0.46% 1,988,500 1,988,500 0.00 1,988,500
owned legal person
904
MORGAN STANLEY &
CO. INTERNATIONAL Foreign corporate 0.44% 1,894,750 1,894,700 0.00 1,894,750
PLC.
Construction Bank of
China - Penghua
Hongjia Flexible Domestic non-state-
0.40% 1,714,400 1,714,400 0.00 1,714,400
Configuration Hybrid owned legal person
Securities Investment
Fund
Domestic natural
# Chi Dexuan 0.40% 1,703,500 1,703,500 0.00 1,703,500
person
Domestic natural
Qiu Hong 0.37% 1,600,000 1,600,000 0.00 1,600,000
person
About the fact that a strategic investor or
ordinary corporate became one of the top ten
Inapplicable
shareholders due to placement of new shares (if
any)
Explanation on associated relationship or
Inapplicable
consistent action of the above shareholders
Among the above shareholders, AVIC International Holdings Limited authorized representatives to exercise voting
Note to the aforesaid shareholders involving rights on their behalf in the company’s 2020 1st Extraordinary General Meeting, 2020 2nd Extraordinary General
entrusting/being entrusted with voting power Meeting, 2019 Annual General Meeting and 2020 3rd Extraordinary General Meeting. The number of representative
and the waiver of voting power shares is 162,977,327 shares. For the detail of the result of the aforesaid voting, refer to the relevant announcement
disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
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 Holdings Limited 162,977,327 CNY ordinary shares 162,977,327
Construction Bank of China - Penghua Value
Superiority Hybrid Securities Investment Fund 7,472,435 CNY ordinary shares 7,472,435
(LOF)
Construction Bank of China - Penghua High
Quality Growth Hybrid Securities Investment 5,250,906 CNY ordinary shares 5,250,906
Fund
UBS AG 4,461,801 CNY ordinary shares 4,461,801
Construction Bank of China - Penghua Selected
2,322,734 CNY ordinary shares 2,322,734
Growth Hybrid Securities Investment Fund
Basic Endowment Insurance Fund Portfolio 904 1,988,500 CNY ordinary shares 1,988,500
MORGAN STANLEY & CO. INTERNATIONAL
1,894,750 CNY ordinary shares 1,894,750
PLC.
Construction Bank of China - Penghua Hongjia
Flexible Configuration Hybrid Securities 1,714,400 CNY ordinary shares 1,714,400
Investment Fund
# Chi Dexuan 1,703,500 CNY ordinary shares 1,703,500
Qiu Hong 1,600,000 CNY ordinary shares 1,600,000
Explanation to the associated relationship or
consistent action among the top 10
shareholders of non-restricted negotiable
Inapplicable
shares and that between the top 10
shareholders of non-restricted negotiable
shares and top 10 shareholders.
Note to the top 10 common shareholders
Among the above shareholders, Chi Dexuan purchased 1,703,500 shares through the customer credit transaction
involved in margin financing & securities lending
guarantee securities account of Huaxin Securities Co., Ltd.
(if any)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
45
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
repurchase during the reporting period?
No
2. Controlling Shareholder
Nature of the controlling shareholder: State-owned shareholding directly under the central government
Type of the controlling shareholder: corporate
Legal Representative
Name of the Controlling Shareholder Date of incorporation Organization Code Leading business activities
/Leader
Investment in industries (specific
projects are subject to application
for approval); domestic trade,
material supply and distribution
AVIC International Holdings Limited Fu Fangxing June 20, 1997 91440300279351229A
(with commodities for exclusive
operation, exclusive control and
monopoly exclusive); import and
export.
Equity in other domestic and foreign
listed companies held by the
AVIC International Holdings Limited holds 11.86% equity in Tianma Micro-electronics Co., Ltd. (SHEN TIANMA A 000050) and
controlling shareholder by means of
67.05% equity in Shennan Circuits Company Limited (SHENNAN CIRCUITS 002916).
control and mutual shareholding in the
reporting period.
Change of the controlling shareholder in the reporting period
Inapplicable
3. Actual Controller and its Concerted Parties
Nature of the actual controller: State-owned assets regulatory agency directly under the central government
Type of the actual controller: corporate
Legal Representative
Name of the Actual Controller Date of incorporation Organization Code Leading business activities
/Leader
Import & export; warehousing;
investment and management of industry,
hotel, property, real estate industry;
development, sales and maintenance of
new energy equipment; exhibitions; sales
of communications equipment,
computers, software and ancillary
equipment; technology service,
technology development, technology
AVIC International Holding Corporation Lai Weixuan April 12, 1983 911100001000009992 consultation, technology transfer and
technology promotion; satellite
communications services; information
system integration service; software
development; dispatching contract
workers abroad to carry out overseas
projects ; sales of precursor chemicals
and other hazardous chemicals;
telecommunications services; Internet
information services.
Equity in other domestic and foreign
listed companies controlled by the AVIC International holds 66.07% equity in AVIC International Holdings Limited and 7% equity in SHEN TIANMA (000050).
actual controller in the reporting period.
Change of the actual controller in the reporting period
Inapplicable
Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller
46
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
State-owned Assets Supervision and Administration
Commission of the State Council
100%
AVIC CCB Aviation Industry Equity Investment (Tianjin)
Aviation Industry Corporation of China Co., Ltd.
91.14% 8.86%
AVIC International Holding Corporation
100%
AVIC International Shenzhen Company Limited
66.07% 33.93%
AVIC International Holdings Limited
38.07%
FIYTA Precision Technology Co., Ltd.
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. Other Corporate Shareholder Holding over 10% of the Company’s Shares
Inapplicable
5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the Reorganizing
Party and other Committing Party
Inapplicable
47
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 7 About the Preferred Shares
Inapplicable
Section 8 About the Convertible Bonds
Inapplicable
Section 9 Directors, Supervisors, Senior Executives and Employees
I. Change in Shares Held by Directors, Supervisors and Senior Executives
Number of Sharehold Sharehold
Number of
shares held ing ing Change of
shares held at
at the increased decrease other
Office Starting date of end of the
Names Title Gender Age Expiry date of tenure beginning of in the d in the increase/d
Status tenure reporting
the reporting reporting reporting ecrease
period
period period period (shares)
(shares)
(shares) (shares) (shares)
Huang Chairman of the
In office Male 47 September 11, 2018 September 11, 2021 180,000 0 0 0 180,000
Yongfeng Board
Zhang
Director In office Male 48 February 24, 2021 September 11, 2021 0 0 0 0 0
Zhibiao
Xiao Yi Director In office Male 47 February 24, 2021 September 11, 2021 0 0 0 0 0
Xiao
Director In office Male 45 September 11, 2018 September 11, 2021 0 0 0 0 0
Zhanglin
Li Peiyin Director In office Male 35 February 24, 2021 September 11, 2021 0 0 0 0 0
Managing
Pan Bo In office Male 45 February 24, 2021 September 11, 2021 130,000 0 0 0 130,000
Director
Wang Independent
In office Male 51 September 11, 2018 September 11, 2021 0 0 0 0 0
Jianxin Director
Zhong Independent
In office Male 46 September 11, 2018 September 11, 2021 0 0 0 0 0
Hongming Director
Tang Independent
In office Male 47 September 11, 2018 September 11, 2021 0 0 0 0 0
Xiaofei Director
Chairman of the
Zheng
Supervisory In office Male 58 February 24, 2021 September 11, 2021 0 0 0 0 0
Qiyuan
Committee
Cao Zhen Supervisor In office Female 50 February 24, 2021 September 11, 2021 0 0 0 0 0
Sheng
Supervisor In office Female 45 September 11, 2018 September 11, 2021 0 0 0 0 0
Qing
Lu Wanjun Deputy GM In office Male 54 October 08, 2018 September 11, 2021 130,000 0 0 0 130,000
Liu
Deputy GM In office Male 50 October 08, 2018 September 11, 2021 130,000 0 0 0 130,000
Xiaoming
Li Ming Deputy GM In office Male 48 October 08, 2018 September 11, 2021 130,040 0 0 0 130,040
Chief
Chen Accountant &
In office Male 45 October 08, 2018 September 11, 2021 131,000 0 0 0 131,000
Zhuo Secretary of the
Board
Tang
Deputy GM In office Male 48 September 29, 2019 September 11, 2021 60,000 0 0 0 60,000
Haiyuan
Wang
Mingchua Director Retired Male 55 September 11, 2018 February 02, 2021 0 0 0 0 0
n
Fu Debin Director Retired Male 44 September 11, 2018 February 02, 2021 0 0 0 0 0
48
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Wang Bo Director Retired Male 42 September 11, 2018 February 02, 2021 0 0 0 0 0
Chen Managing
Retired Male 57 September 11, 2018 February 02, 2021 180,000 0 0 0 180,000
Libin Director
Chairman of the
Wang
Supervisory Retired Male 57 September 11, 2018 February 24, 2021 0 0 0 0 0
Baoying
Committee
Fang
Supervisor Retired Male 35 April 12, 2019 February 24, 2021 0 0 0 0 0
Jiasheng
Xu
Chuangyu Deputy GM Retired Male 42 September 29, 2019 February 03, 2021 50,000 0 0 0 50,000
e
Total -- -- -- -- -- -- 1,121,040 0 0 0 1,121,040
II. Personnel Change in Directors, Supervisors and Senior Executives
Names Office Taken Type Date Cause
Appointed as a non-independent director of the Ninth Board of Directors
Appointment &
Zhang Zhibiao Director February 24, 2021 at the 26th session of the Ninth Board of Directors and 2021 2nd
removal
Extraordinary General Meeting.
Appointed as a non-independent director of the Ninth Board of Directors
Appointment &
Xiao Yi Director February 24, 2021 at the 26th session of the Ninth Board of Directors and 2021 2nd
removal
Extraordinary General Meeting.
Appointed as a non-independent director of the Ninth Board of Directors
Appointment &
Li Peiyin Director February 24, 2021 at the 26th session of the Ninth Board of Directors and 2021 2nd
removal
Extraordinary General Meeting.
Appointed as a non-independent director of the Ninth Board of Directors
Appointment &
Pan Bo Director February 24, 2021 at the 26th session of the Ninth Board of Directors and 2021 2nd
removal
Extraordinary General Meeting.
Appointed as a supervisor of non-independent director of the Ninth
Appointment &
Zheng Qiyuan Supervisor February 24, 2021 Supervisory Committee at the 23rd session of the Ninth Supervisory
removal
Committee and 2021 2nd Extraordinary General Meeting.
Chairman of the
Appointment & Appointed as the Chairman of the Ninth Supervisory Committee at the
Zheng Qiyuan Supervisory March 08, 2021
removal 24th session of the Ninth Supervisory Committee.
Committee
Appointed as a supervisor of non-independent director of the Ninth
Appointment &
Cao Zhen Supervisor February 24, 2021 Supervisory Committee at the 23rd session of the Ninth Supervisory
removal
Committee and 2021 2nd Extraordinary General Meeting.
Appointment &
Pan Bo GM January 15, 2021 Appointed as the GM at the 25th session of the Ninth Board of Directors.
removal
Secretary of the Appointment & Appointed as the Secretary of the Board at the 25th session of the Ninth
Chen Zhuo January 15, 2021
Board removal Board of Directors.
resigned as a director, a member of the Strategy Committee and Audit
Wang Mingchuan Director Retired February 02, 2021 Committee of the of the Ninth Board of Directors due to the job transfer.
He no longer holds any position in the Company after his resignation.
Resigned as a director, a member of the Nomination, Remuneration and
Assessment Committee of the of the Ninth Board of Directors due to the
Fu Debin Director Retired February 02, 2021
job transfer. He no longer holds any position in the Company after his
resignation.
Resigned as a director, a member of the Nomination, Remuneration and
Assessment Committee of the of the Ninth Board of Directors due to the
Wang Bo Director Retired February 02, 2021
job transfer. He no longer holds any position in the Company after his
resignation.
resigned as a director, a member of the Strategy Committee and Audit
Chen Libin Director Retired February 02, 2021 Committee of the of the Ninth Board of Directors due to the job transfer.
He no longer holds any position in the Company after his resignation.
Chairman of the resigned as a supervisor and the chairman of the Ninth Supervisory
Wang Baoying Supervisory Retired February 24, 2021 Committee due to the job transfer. He no longer holds any position in the
Committee Company after his resignation.
resigned as a supervisor of the Ninth Supervisory Committee due to the
Fang Jiasheng Supervisor Retired February 24, 2021 job transfer. He no longer holds any position in the Company after his
resignation.
resigned as the GM of the Company. He still holds other positions in the
Chen Libin GM Termination January 14, 2021
Company after his resignation.
Deputy GM and the
resigned as Deputy GM of the Company and the Secretary of the Board.
Pan Bo Secretary of the Termination January 14, 2021
He still holds other positions in the Company after his resignation.
Board
resigned as Deputy GM of the Company. He no longer holds any position
Xu Chuangyue Deputy GM Termination February 03, 2021
in the Company after his resignation.
49
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
I. About Senior Executives
Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office
Mr. Huang Yongfeng, born in May, 1974, senior engineer, master of management engineering of the Economic
Management College of Beijing University of Aeronautics & Astronautics, and EMBA of China Europe International
Business School. He is now Chairman of the Board of the Company and deputy GM of AVIC International Holding
Corporation. Mr. Huang used to be the chairman and general manager of AVIC INTL Zhuhai Co., Ltd., assistant to the
general manager of AVIC International Holding Corporation, deputy general manager, assistant to the general manager,
manager of the enterprise strategy and management department of AVIC International Shenzhen Co., Ltd., director of
AVIC Sunda Holding Company Limited, director of Rainbow Department Store Co., Ltd., director of Tianma
Microelectronics Co., Ltd. and chairman of Shenzhen Zhongshi Mechanical Equipment Co., Ltd.
Mr. Zhang Zhibiao, born in October, 1973, Master. Mr.Zhang is a director of the Company, and the Manager of the
Planning & Development Department of AVIC International Holding Corporation. He used to be the assistant to the GM of
AVIC Securities Co., Ltd., the director of the Institute of Finance, the chief of the comprehensive management
department and the chief of the operation management department of AVIC International Holding Corporation.
Mr. Xiao Yi, male, born in March 1974, MBA of the Economic Management College of Beijing University of Aeronautics &
Astronautics. Mr.Xiao is a director of the Company, the director of the Organization Department and the director of the
Human Resource Department of AVIC International Holding Corporation. Mr. Xiao used to be the project manager of the
Technology Transfer Center of Beijing Beihang Assets Operation Co.,Ltd., the comprehensive secretary of the
management department, the assistant to the director of the administrative management department, the deputy director
and director of the comprehensive management department of AVIC International Holding Corporation
Mr. Xiao Zhanglin, born in January 1976, senior engineer, MBA of Shanghai Jiao Tong University. Mr. Xiao is a director of
the Company, the chief of the planning and operation department of AVIC International Holding Corporation, a director of
Shennan Circuit Co., Ltd. and a director of Rainbow Department Store Co., Ltd. He used to be deputy chief of the
strategy development department and deputy chief of the operation and management department of AVIC International
Holding Corporation, the secretary of AVIC International Holdings Limited, a director of Tianma Micro-electronics Co., Ltd.
and a director of AVIC Sunda Holding Company Limited.
Mr. Li Peiyin , born in September, 1986, Master of Accounting of Xiamen University, MBA of Missouri State University,
CPA and senior accountant. Mr.Li is a director of the Company, and deputy manager of the Financial Management
Department of AVIC International Holding Corporation (presiding the work). He used to be the business manager, the
assistant to the chief and the deputy chief of the Financial Management Department of AVIC International Holding
Corporation.
Mr. Pan Bo, born in March, 1976, bachelor of electromechanical engineering of Beijing University of Aeronautics &
Astronautics, and EMBA of China Europe International Business School. He is the Managing Director of the Company.
Mr. Pan used to be a deputy GM, the secretary of the board, and the assistant to the GM of the Company, the GM,
deputy GM, the assistant to the GM, manager of the sales department, manager of the logistics department, manager of
50
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
the after-sale service department of FIYTA Sales Co., Ltd.
Mr. Wang Jianxin, born in June, 1970, graduated from Zhongnan University of Economics and Law, a Chinese CPA. Mr.
Wang is an independent director of the Company and a partner of ShineWing Certified Public Accountants (Special
General Partnership) and independent director of Chongqing Fuling Zhacai Group
Mr. Zhong Hongming, born in January 1975, PhD of Civil and Commercial Law in Renmin University of China and post-
doctor of Civil and Commercial Law in SouthwestUniversity Political Science and Law. He is an independent director of
the Company, an associate research fellow of Law Research Institute of Sichuan Academy of Social Sciences and
concurrently a director of China Securities Law Research Council, and an independent director of Mango Excellent
Media Co., Ltd.
Mr. Tang Xiaofei, born in May, 1974, graduated from Southwest Jiaotong University, professor and doctorial tutor. Mr.
Tang is an independent director of the Company, a professor and doctorial tutor of the Business School of Southwest
Jiaotong University, director of Urban Brand Strategy Research Institute of Southwest University of Finance and
Economics, enjoying the title of Outstanding Talent of the New Century granted by the Ministry of Education, a council
member of the Chinese Association of Market Development, an expert consultant of brand development of Chengdu
Municipal Government, expert of Chengdu Famous Trademark Determination Board ,an independent director of Sichuan
Languang Development Co., Ltd. , the chief expert of Inquiry Platform for Chinese Enterprises of Chengdu Zhongzhi
Zhongcheng, and a consultant of APEX Ogilvy.
Mr. Zheng Qiyuan, born in July, 1963, MBA of the Economic Management College of Beijing University of Aeronautics &
Astronautics, MBA of Paris Business School; senior engineer. Mr.Zheng is the Chairman of the Supervisory Committee of
the Company and and a full-time director and supervisor of AVIC International Holding Corporation. Mr. Zheng used to
be the secretary of the Ministry of Aviation Industry,chief staff of the Planning Department of the Ministry of Aviation
Industry, deputy chief and chief of the Planning Department of AVIC Corporation, deputy manager and manager of the
Bidding Center of AVIC Corporation, deputy manager and manager of AVIC International Economic & Trade
Development Limited, a commissioner of AVIC International Holding Corporation, Chief Business Officer of AVIC
International (HK) Group Limited, GM of AVIC International (HK) Trading Limited.
Ms. Cao Zhen, born in October, 1971, EMBA of China Europe International Business School. Ms. Cao is a supervisor of
the Company, vice-secretary of the Discipline Inspection Commission and the chief of the Discipline Inspection
Department of AVIC International Holding Corporation. Ms. Cao used to be the chief editor, deputy manager and
manager of the administrative management department, the secretary of the Board, the assistant to the GM of AVIC
News of AVIC International Shenzhen Company Limited, the manager of the enterprise culture department of AVIC
International Holding Corporation,the chief of the CPC Construction and Ideological and Political Work Department,the
discipline secretary and the chairman of the trade union of AVIC International Shenzhen Company Limited, deputy leader
of the discipline inspection team and the chief of the discipline inspection, supervision and audit department of AVIC
International Holding Corporation.
Ms. Sheng Qing, born in April, 1976, accountant, bachelor of international accounting specialization of Jiangxi University
of Finance and Economics, master of organization and HR management of the University of Hong Kong. She is a
supervisor of the Company and the manager of the discipline inspection, supervision,audit and law department of the
51
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Company. She used to be a supervisor of the Eighth Supervisory Committee, assistant to manager, deputy manager and
manager of HR department and senior business manager of the supervision and audit department of the Company.
Mr. Lu Wanjun, born in February, 1967, accountant and EMBA of China Europe International Business School. Mr. Lu is
the Secretary of Committee for Discipline Inspection, a deputy GM of the Company. He used to be the assistant to the
GM of the Company, executive deputy GM and deputy GM, the assistant to the GM and concurrently the manager of the
financial department of Shenzhen Harmony World Watches Center Co., Ltd.
Mr. Liu Xiaoming, born in 1971, engineer, economist, bachelor of mechanical engineering of Beijing University of
Aeronautics & Astronautics, and EMBA of China Europe International Business School. He is a deputy GM of the
Company,and the managing director of Shenzhen Harmony World Watches Center Co., Ltd. He used to be the assistant
to the GM of the Company, a deputy GM and the assistant to the GM of Shenzhen Harmony World Watches Center Co.,
Ltd.
Mr. Li Ming, born in September, 1973, bachelor of marketing of Zhongnan University of Economics and Law and EMBA
of China Europe International Business School. He is now a deputy GM of the Company. Mr. Li used to be the assistant
to the GM and chief HR officer of the Company, a deputy GM, the assistant to the GM and manger of the HR department
of Shenzhen Harmony World Watches Center Co., Ltd.; chief HR officer and the GM of the marketing center of China
Netcom Shenzhen; manager of big customer market planning of China Telecom Shenzhen.
Mr. Chen Zhuo, born in September, 1976, senior accountant, bachelor of accounting of Central University of Finance and
Economics, MBA of Wuhan University and EMBA of China Europe International Business School. He is the chief
accountant and concurrently the Secretary of the Board of the Company. Mr. Chen used to be a supervisor and the
assistant to the GM of the Company, the manager of the strategy and information department, deputy manager of the
strategy and information department and securities affairs representative of the Company, a deputy GM, the assistant to
the GM and the manager of the financial information department of FIYTA Sales Co., Ltd.
Mr. Tang Haiyuan, born in February, 1973, senior engineer, bachelor of plastic molding technology and equipment of
Hefei University of Technology, and EMBA of China Europe International Business School. He is a deputy GM of the
Company and the GM of Shenzhen FIYTA Technology Development Co., Ltd. Mr. Tang used to work for Shenzhen FIYTA
Sophisticated Timepieces Manufacture Co., Ltd., taking the offices of the GM, a deputy GM, the assistant to the GM, and
the manager of its quality department, manager and deputy manager of the engineering and technical department; also
work for Shenzhen FIYTA Technology Development Co., Ltd., taking offices of the assistant to the GM and the manager
of the technical department.
Office taking in shareholder companies
Does he/she receive
Names of the Titles engaged in the Starting date of remuneration or
Names of the Shareholders Expiry date of tenure
persons in office shareholders tenure allowance from the
shareholder
Huang Yongfeng AVIC International Holding Corporation Deputy GM No
Planning & Development
Zhang Zhibiao AVIC International Holding Corporation Yes
Department
Xiao Yi AVIC International Holding Corporation Chief of the CPC Yes
Organization Department
52
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
and the director of the
Human Resource
Department
Chief of the Operation
Xiao Zhanglin AVIC International Holding Corporation and Management Yes
Department
Deputy chief of the
financial management
Li Peiyin AVIC International Holding Corporation Yes
department (presiding the
work)
Full-time independent
Zheng Qiyuan AVIC International Holding Corporation Yes
supervisor
Vice-secretary of the
discipline inspection
Cao Zhen AVIC International Holding Corporation committee and the chief Yes
of the discipline
inspection department
Office taking in
shareholder Inapplicable
companies
Office taking in other organizations
Does he/she receive
Names of the Titles engaged in remuneration or
Names of the other organizations Starting date of tenure Expiry date of tenure
persons in office other organizations allowance from other
organization
SHINEWING Certified Public
Wang Jianxin Partnership December 01, 2006 Yes
Accountants LLP
Institute of Law of Sichuan Academy of Associate research
Zhong Hongming November 24, 2017 Yes
Social Sciences fellow
Zhong Hongming Mango Excellent Media Co., Ltd. Independent Director June 14, 2017 Yes
Zhong Hongming Dagang Holding Group Co., Ltd. Independent Director October 27, 2017 December 02, 2020 Yes
The School of Business Administration of
Tang Xiaofei Southwest University of Finance Doctorial tutor September 01, 2008 Yes
Economics
The School of Business Administration of
Tang Xiaofei Southwest University of Finance Professor December 01, 2011 Yes
Economics
Office taking in
Inapplicable
other organizations
Punishment imposed by the securities regulatory authority on the directors, supervisors and senior executives both in
office and having left their posts in the reporting period.
Inapplicable
IV. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis for determining the remuneration and actual payment to directors, supervisors and
senior executive to directors, supervisors and senior executives
The Company practiced the annual salary system for its directors and senior executives. The annual salary structure
consists of the basic annual salary and performance based annual salary. The assessment of senior executives is
conducted according to the Measures for Administration of the Remuneration to Senior Executives.
Remuneration to Directors, Supervisors and Senior Executives during the Reporting Period
In CNY 10,000
Is the remuneration
Total pretax remuneration
from one of the
Names Title Gender Age Office Status received from the
Company's related
Company
parties
53
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Huang Yongfeng
Chairman of the Board Male 47 In office 220.00 No
Zhang Zhibiao Director Male 48 In office 0 Yes
Xiao Yi Director Male 47 In office 0 Yes
Xiao Zhanglin Director Male 45 In office 0 Yes
Li Peiyin Director Male 35 In office 0 Yes
Pan Bo Managing Director Male 45 In office 187.33 No
Wang Jianxin Independent Director Male 51 In office 9.00 No
Zhong Hongming Independent Director Male 46 In office 9.00 No
Tang Xiaofei Independent Director Male 47 In office 9.00 No
Chairman of the
Zheng Qiyuan Male 58 In office 0 Yes
Supervisory Committee
Cao Zhen Supervisor Female 50 In office 0 Yes
Sheng Qing Supervisor Female 45 In office 97.07 No
Lu Wanjun Deputy GM Male 54 In office 177.40 No
Liu Xiaoming Deputy GM Male 50 In office 206.15 No
Li Ming Deputy GM Male 48 In office 182.40 No
Chief Accountant &
Chen Zhuo Male 45 In office 182.40 No
Secretary of the Board
Tang Haiyuan Deputy GM Male 48 In office 176.89 No
Wang Mingchuan Director Male 55 Retired 0 Yes
Fu Debin Director Male 44 Retired 0 Yes
Wang Bo Director Male 42 Retired 0 Yes
Chen Libin Managing Director Male 57 Retired 190.92 No
Chairman of the
Wang Baoying Male 57 Retired 0 Yes
Supervisory Committee
Fang Jiasheng Supervisor Male 35 Retired 40.71 No
Xu Chuangyue Deputy GM Male 42 Retired 164.53 No
Total -- -- -- -- 1,852.80 --
Equity incentive to directors and senior executives of the Company during the reporting period
In shares
Strike
price and
Quantity of Quantity of
the Market Quantity of
Number of Number of restricted Quantity of restricted Price of the
number of price at the restricted
vested striked shares held the shares shares restricted
striked end of the shares held
shares shares at the unlocked in newly shares
Names Title shares reporting at the end
during the during the beginning the granted granted
during the period of the
reporting reporting of the reporting during the (CNY/share
reporting (CNY/share reporting
period period reporting period reporting )
period ) period
period period
(CNY/shar
e)
Huang Chairman of
0 0 0 11.43 100,000 0 0 4.40 100,000
Yongfeng the Board
Managing
Pan Bo 0 0 0 11.43 80,000 0 0 4.40 80,000
Director
Lu Wanjun Deputy GM 0 0 0 11.43 80,000 0 0 4.40 80,000
Liu
Deputy GM 0 0 0 11.43 80,000 0 0 4.40 80,000
Xiaoming
Li Ming Deputy GM 0 0 0 11.43 80,000 0 0 4.40 80,000
Chief
Accountant &
Chen Zhuo 0 0 0 11.43 80,000 0 0 4.40 80,000
Secretary of
the Board
Tang
Deputy GM 0 0 0 11.43 60,000 0 0 4.40 60,000
Haiyuan
Chen Libin Managing 0 0 0 11.43 100,000 0 0 4.40 100,000
Director
54
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(retired)
Xu
Deputy GM
Chuangyue 0 0 0 11.43 50,000 0 0 4.40 50,000
(retired)
Total -- 0 0 -- -- 710,000 0 0 -- 710,000
Granting of the Restricted A-Share to aforesaid persons was completed on January 30, 2019; ended the reporting
Remarks (If any)
period, the shares were still in the lockup period (two years) according to the regulations.
V. Employees
1. Number, Job Composition and Education Background of Employees
Number of employees working for the parent company 134
Number of employees working for the major subsidiaries 4,767
Total employees on active duty 4,901
Total employees receiving remuneration in the reporting period 4,901
Number of the retired employees for whom the parent company and
0
the major subsidiaries need to share the pension
Job Composition
Job Composition Categories Number of persons involved in the job composition
Production 380
Sales 3,542
Technical 362
Financial 162
Administrative 455
Total 4,901
Education background
Education levels Number of persons
Master's degree or higher 73
Undergraduate 716
Junior college 1,295
Below junior college 2,817
Total 4,901
2. Remuneration Policy
The Company has worked out its remuneration policy by taking its business development planning and characteristics of
the industry it is engaged in into consideration and based on the principles of focusing on the values, co-creating and
sharing and core concepts, following hierarchical management, budget control, performance orientation, efficiency
priority, fairness, positive incentives, and long-term attention. The Company has established a remuneration system with
the assessment based annual salary system for medium and senior executives, performance-based salary systems for
staff positions, and the production & performance jointly related payroll systems for production operators in accordance
with the national laws, regulations and policies. The following administrative measures have been taken in
implementation of the remuneration policy:
Classification and grading management: The Company has established a differentiated, standardized, and market-
oriented salary framework system that matches the job sequence and job level according to the
professional/occupational development system of employees;
55
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Total budget management: The Company has prepared an annual remuneration budget based on the annual business
planning, adjusted and controlled the total remuneration with such factors as the market remuneration level,organization
efficiency,adjustment of the talent team, etc., and has achieved the management goal of benefit-orientation, positive
incentive, classification management and adjusted distribution;
Being value-oriented and creating shared value: The Company designs a remuneration incentive system in accordance
with the closed-loop value chain of value creation-value evaluation-value distribution. With value creation as the key link,
the Company has established incentive mechanism with the features of the remuneration to employees fluctuating
depending on the Company's business achievement and personal performances while in favor of the core and key
talents through the establishment of value assessment system in compliance with the strategy development goal and the
real-time incentive system.
3. Training Program
Building a team of high-quality professional talents and improve the readiness of talents for key positions
The Company focuses on the watch industry and has established the strategic goal of "Inheriting AVIC’s Spirit of Serving
the Country and Practicing the Great Brand". The brand strategy of the great brand is promoting the business
transformation and upgrading. With the rapid business development, the Company has higher requirements on the
preparation of business leaders, key technical personnel and talents for the specialized posts. Therefore, in terms of staff
training, the Company relies on FIYTA College to focus on echelon talent training, build a talent reserve pool, and
improve the readiness of talents in the organization.In the training of talents for key posts, the Company strengthens the
learning of professional ability of key posts, extracts the knowledge and experience of the posts, and creates a learning
atmosphere within the organization. The Company carries forward the construction of the professional post talent training
system through the "Master Craftsmen Reservoir", "Lean Six Sigma" and other projects.
Strengthening knowledge management ability and precipitating the intra-company lecturer team
The Company has built an intra-company lecturer system, extracted position experts and key staff’s job experience,
converted personal experience in the organization into organizational experience, and improved the overall professional
capabilities of the team. With each department and each business type as a unit, the lecturer activities are carried out,
and excellent internal courses are selected through the "whoever learns better can be the teacher" to form a learning
system for each post in the Company.
Consolidating the terminal business talent training system, and building a strong terminal professional team
In terms of terminal business talent training, the Company is building a customer-oriented terminal retail post training
system, has strengthened the training of business personnel through the “bullseye training model”, optimized learning
contents, strengthened learning methods, and used "double excellence" as a starting point to consolidate the business
echelon management and operation ability.
4. Labor Outsourcing
Inapplicable
56
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 10 Corporate Governance
I. General
In year 2020, the Company kept improving the Company’s corporate governance structure strictly according to the PRC
Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission concerning
governance of listed companies, and tried to enhance construction of modern enterprise system, upgraded the level of
regulatory operation of the Company. As a result, there was no discrepancy between the situation of the Company’s
corporate governance and the regulatory documents of China Securities Regulatory Commission concerning governance
of listed companies.
The Company established and improved relatively standardized corporate governance structure and rules of procedures
strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of Association of the
Company, formed a decision-making and operation management system with the Shareholders’ Meeting, the Board of
Directors, the Supervisory Committee and the management of the Company as the principal structure. They
implemented their respective duties according to the PRC Company Law and the Articles of Association.
The General Meeting is the Company’s supreme organ and has the power of deciding the Company’s operation policy
and investment plan, reviewing and approving the Company’s annual financial budget scheme, settlement scheme, profit
distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makes
resolution on increase and decrease of the Company’s registered capital, issuing bond, etc., election and replacement of
directors, non-staff supervisors and decision on their remuneration and way of payment. 。
The Board of Directors is the Company’s decision-making organ, takes charge of implementing the decisions made by
the Shareholders’ General Meeting, assumes responsibility to the Shareholders’ General Meeting and reports the work to
it. Within the authorization from the General Meeting, decides the Company’s external investment, acquisition and sales
of assets, assets pledge, external guarantee, related transactions, etc., decides establishment of the Company’s internal
management organs, engagement and disengagement of the Company’s general manager, the Board secretary and
other senior executives, etc. The Board of Directors consists of nine directors, including three independent directors. The
Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit
Committee and Nomination, Emolument and Assessment Committee.
The Supervisory Committee is the Company’s supervisory organ in charge of supervising the directors, managers and
other senior executives in performing duties according to the law and proposes dismissal of any director or senior
executive who breaches the law, the administrative rules and regulations, the Articles of Association or resolutions of the
General Meeting. The Supervisory Committee consists of three supervisors including one staff supervisor.
The management assumes responsibility to the Board of Directors and the General Manager takes full responsibility for
the Company’s routine operation and management and development under the leadership of the Board of Directors,
supervises the work of every functional department, assesses the work result of each functional department and
coordinate the relationship of all departments.
Does there exist any difference in compliance with the corporate governance, the PRC Company Law and the relevant
57
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
provisions of CSRC.
No
II. Independence in Business, Personnel, Assets, Organization, Finance, etc. from the Controlling Shareholders
The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder.
The Company has completed and independent business and the ability of autonomous operation.
Business: The Company is mainly engaged in timepiece businesses and has independent production, auxiliary
production system and complementary facilities, and possesses its own procurement and sales systems. There exists no
competition in the same sector between the Company and its controlling shareholder.
Personnel: The Company is completely independent in organization and has sound systems in labor, personnel and
salaries management. Except Mr. Huang Yongfeng, Mr. Zhang Zhibiao, Mr. Xiao Yi, Mr. Xiao Zhanglin and Mr. Li Peiyin,
the five directors, and Mr. Zheng Qiyuan, the chairman of the Supervisory Committee, and Ms. Cao Zhen as supervisor,
none of other senior executives takes any concurrent office in the shareholders and none of the financial staff works
concurrently for any related parties.
Assets: The assets of the Company and its controlling shareholder are highly distinct. The Company enjoys the
corporate ownership over its assets and the assets are completely independent from its controlling shareholder. In
addition, the Company enjoys sole ownership of such trademarks as FIYTA, HARMONY, etc.
Organization: The Board of Directors, the Supervisory Committee and the other internal organs are well established and
work independently. There exist neither subordinate relations between the controlling shareholder/its functional
departments nor doing joint office work. The controlling shareholder enjoys its rights and undertakes the corresponding
obligations according to the law and has never been involved in any action which directly or indirectly interferes the
Company’s business activities surpassing the authority of the General Meeting.
Finance: The Company has established independent financial department, worked out sound and independent financial
and accounting system and financial management system and independently opened bank accounts. The controlling
shareholder has never interfered the Company in its financial and accounting activities.
III. Horizontal Competitions
Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings in the Reporting Period
1. General Meetings
Proportion of
Sessions Meeting type attendance of the Meeting date Date of disclosure Disclosure index
investors
2020 1st Extraordinary General Extraordinary http://www.cninfo.
36.96% April 13, 2020 April 14, 2020
Meeting General Meeting com.cn/
58
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Annual General http://www.cninfo.
2019 Annual General Meeting 38.61% June 04, 2020 June 05, 2020
Meeting com.cn/
2020 2nd Extraordinary General Extraordinary http://www.cninfo.
38.16% July 23, 2020 July 24, 2020
Meeting General Meeting com.cn/
2020 3rd Extraordinary General Extraordinary http://www.cninfo.
38.17% September 15, 2020 September 16, 2020
Meeting General Meeting com.cn/
2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting power
recovered.
Inapplicable
V. Duty Performance of Independent Directors in the Reporting Period
1. Attendance of Independent Directors for Board Meetings and General Meetings
Attendance of Independent Directors for Board Meetings and General Meetings
Number of Failure to
Board meetings Number of Number of personally Number of
Names of
which should be Number of Spot Meetings attendances of Number of attend board attendance of
Independent
be attended in Attendances Attended by board meeting absence meetings the General
Directors
the reporting Communication by proxy successively Meeting
period twice
Wang Jianxin 10 0 10 0 0 No 4
Zhong Hongming 10 0 10 0 0 No 0
Tang Xiaofei 10 0 10 0 0 No 0
Note to failure to attend the board meeting successively twice
Inapplicable
2. Objection of independent directors on some relevant issues
Have the independent directors proposed any objection on the relevant issues of the Company
No
3. Other Note to Duty Performance of Independent Directors
Have the independent directors' recommendations to the Company been accepted
Yes
Explanation on why the independent directors' recommendations have been accepted or not been accepted
During the reporting period, the Company’s independent directors actively attended relevant meetings held by the
company in 2020, performed their duties as independent directors diligently, independently, objectively and fairly strictly
in accordance with relevant laws and regulations, gave full play to the role of independent directors, and effectively
maintained The overall interests of the Company and the legitimate rights and interests of shareholders, especially
minority shareholders. The Company positively listens to and adopts its independent directors’ opinions on business
59
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
development and corporate governance.
VI. Duty Performance of Special Committees under the Board of Directors in the Reporting Period
Summary Report on Performances of the Strategy Committee of the Board of Directors:
During the reporting period, the Strategy Committee performed its duties strictly according to the law and regulations, the
Articles of Association and the Rules for Implementation of the Special Committees of the Board of Directors, continued
to do research work on the strategic planning for the Company’s long term development and supervised the Company in
implementation of various strategies. The Strategy Committee held 2 meetings. The two meetings reviewed and
approved the Work Report of the Board of Directors of Year 2019 and the Profit Distribution for Year 2019 and increment
of capital to its solely-owned subsidiaries.
Summary Report on Performances of the Audit Committee of the Board of Directors:
During the reporting period, the Audit Committee performed its duties strictly according to the law and regulations, the
Articles of Association and the Rules for Implementation of the Special Committees of the Board of Directors. The
committee held altogether 6 meetings which reviewed and approved 2019 Annual Report, the Internal Control Self-
Assessment Report for Year 2019, 2019 Internal Audit Report, 2020 1st Quarterly Report, 2020 Semi-annual Report,
2020 3rd Quarterly Report, the Proposal for Repurchase of Partial Domestically Listed Foreign Shares (B-shares) and
the Proposal for Increment of Capital in the Solely-owned Subsidiaries, etc.
Summary Report on Performance of the Committee of Nomination, Remuneration and Assessment of the Board
of Directors
During the reporting period, the Committee of Nomination, Remuneration and Assessment performed its duties strictly
according to the law and regulations, the Articles of Association and the Rules for Implementation of the Special
Committees of the Board of Directors. The committee held altogether 7 meetings which reviewed and approved the
Proposal for Repurchasing and Canceling Partial Restricted Shares Involved in 2018 Restricted A-Share Incentive
scheme (Phase I),the Proposal for the Remuneration to Directors and Senior Executives and Change of the Securities
Affairs Representative for Year 2019, 2018 Restricted A-Share Incentive scheme (Phase II) (Draft) and the summary, the
Measures for Implementation, Assessment and Management of 2018 Restricted A-Share Incentive scheme (Phase
II),and the release conditions for the first release period of 2018 Restricted A-Share Incentive Scheme (Phase I) have
been satisfied, etc.
VII. Work Summary of the Supervisory Committee
Did the Supervisory Committee find any risk involved in performing the supervision activities in the reporting period
No
VIII. Assessment and Incentive Mechanism for Senior Executives
1. Assessment of Senior Executives
In order to give full play to and mobilize the enthusiasm and creativity of the Company's senior executives, to better
improve the Company's operating ability, economic benefit and ensure the realization of the Company's strategic goals,
based on the establishment of an incentive and constraint mechanism compatible with the modern enterprise system,the
60
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Company conducts comprehensive assessments according to the annual business performance and the work objectives
of the senior executives in charge of the respective work, and conducts strategic review and assessment on a quarterly
basis, based on the results of the assessment and performance completion and determine the total remuneration and
whether to renew their offices.
2. Incentive to Senior Executives
(1) 2018 Restricted A-Share Incentive Scheme (Phase I)
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 Restricted A-Share Incentive scheme (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. These restricted shares
were awarded at price of CNY 4.40/share and were entirely awarded and registered for trading by January 30, 2019, Of
them, 9 persons were directors and senior executives. They were awarded total 710,000 shares of Restricted A-Share,
taking 0.1618% of the Company's total capital stock.
The 24th session of the Ninth Board of Directors held on December 29, 2020 reviewed and approved the Proposal on
the Release Conditions having been Satisfied for the First Release Period of 2018 Restricted A-Share Incentive Scheme
(Phase I). According to the incentive scheme, the release conditions for the first release period of 2018 Restricted A-
Share Incentive Scheme (Phase I) have been satisfied. Authorized by 2019 1st Extraordinary General Meeting, the
Board of Directors decided that the Company was to release the restriction for the participants in compliance with the
release conditions. The number of restricted shares to be released this time accounted for 33.3% of the restricted shares.
Among them, the number of restricted shares granted to 9 directors and senior executives totaled 710,000 shares. The
total number of the restricted shares which can be released this time was 236,430 shares, accounting for 0.0552% of the
Company's total share capital.
Proportion of restricted
Number of restricted Remaining number of
Number of restricted shares to be released
shares to be released restricted shares not
Names Title shares awarded this time in the
this time (in 10,000 to be released (in
(in 10,000 shares) Company’s total share
shares) 10,000 shares)
capital (%)
Huang Yongfeng Chairman of the Board 10 3.33 6.67 0.0078
Pan Bo Managing Director 8 2.664 5.336 0.0062
Lu Wanjun Deputy GM 8 2.664 5.336 0.0062
Liu Xiaoming Deputy GM 8 2.664 5.336 0.0062
Li Ming Deputy GM 8 2.664 5.336 0.0062
Chen Zhuo Chief Accountant & Secretary of the
8 2.664 5.336 0.0062
Board
Tang Haiyuan Deputy GM 6 1.998 4.002 0.0047
Chen Libin Managing Director (retired) 10 3.33 6.67 0.0078
Xu Chuangyue Deputy GM (retired) 5 1.665 3.335 0.0039
Core personnel of management, business,
336.7 112.1211 224.5789 0.2619
professions and technology (113 persons)
Total (122 persons) 407.7 135.7641 271.9359 0.3171
The above restricted shares with the restriction released got listed for trading on February 1, 2021.
(2) 2018 Restricted A-Share Incentive Scheme (Phase II)
The 23rd session of the Ninth Board of Directors held on December 4, 2020 and 2021 1st Extraordinary General Meeting
held on January 6, 2021 decided to start 2018 Restricted A-Share Incentive Scheme (Phase II), which was later on
reviewed and approved at the 25th session of the Ninth Board of Directors held on January 15, 2021, and the Company
eventually granted 7.66 million restricted A-shares to 135 persons eligible for the incentive. These restricted shares were
61
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
awarded at price of CNY 7.60/share and were entirely awarded and registered for trading by January 29, 2021. Of them,
8 persons were directors and senior executives. They were awarded total 1.23 million restricted A-shares, taking 0.2873%
of the Company's total capital stock, with the detail as follows:
Number of restricted Proportion of the awarded Proportion of the awarded
Names Title shares awarded (in 10,000 equity equity
shares) In the total equity in the total capital stock
Pan Bo Managing Director 15 1.96% 0.35
Lu Wanjun Deputy GM 15 1.96% 0.35
Liu Xiaoming Deputy GM 15 1.96% 0.35
Li Ming Deputy GM 15 1.96% 0.35
Chief Accountant & Secretary of the
Chen Zhuo 15 1.96% 0.35
Board
Tang Haiyuan Deputy GM 15 1.96% 0.35
Chen Libin Managing Director (retired) 18 2.35% 0.42
Xu Chuangyue Deputy GM (retired) 15 1.96% 0.35
Other core personnel of management, sales, professions
and technology 643 83.93% 15.02
(127 persons)
Total (135 persons) 766 100% 17.89‰（1.79%）
This part of restricted shares are still in the lock-up period.
IX. Internal Control
1. Particular case found involving material defects in the internal control during the reporting period
No
2. Self-assessment Report of the Internal Control
Date of disclosing the full text of the internal control
March 10, 2021
assessment report
Index of disclosure of the full text of the internal
www.cninfo.com.cn
control assessment report
Proportion of the total assets of the organizations
involved in the assessment in the total assets of the 100.00%
Company’s consolidated financial statements
Proportion of the operation revenue of the entitled
involved in the assessment in the total operation
100.00%
revenue of the Company’s consolidated financial
statements
Criteria for affirming the defects
Categories Financial report Non-financial Report
① seriously violating the PRC laws, administrative
regulations and normative documents; ② "decision
① The defect involving fraud of the directors, on major issues, important officer appointment
and/or removal and arrangement of important
supervisors and senior executives; ② correction of the
projects as well as application of big sum of fund
financial statements already published;③ the CPA found have not undergone collective decision-making
Qualitative criteria that there existed serious misstatement in the financial procedures; ③ serious running off of officers and
statements of the reporting period while the internal
control failed to find the misstatement in process of technicians of the key positions; ④ there is no
operation; ④ the Company's auditing committee and system control available for the Company’s
supervision and audit department conducted ineffective production and operation practice or the system no
supervision of the internal control. longer works; ⑤ the internal control for information
disclosure no longer works, having caused the
Company censured publicly by the regulatory
authority; ⑥the results of the internal control
62 assessments, especially the material defects or
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
important defects have not been rectified.
① Material defects：Misstatement≥ 5% of the pre-
① Material defects：Misstatement≥ 5% of the pre-tax
tax profit；② Important defects：1% of profit before
Quantitative criteria profit；② Important defects：1% of profit before tax ≤
tax ≤ Misstatement＜5% of profit before tax; ③
Misstatement＜5% of profit before tax; ③ Common
Common defects：Misstatement＜1% of profit
defects：Misstatement＜1% of profit before tax.
before tax.
Number of material defects in the financial statements
0
(pcs)
Number of material defects in the non-financial
0
statements (pcs)
Number of important defects in the financial report
0
(pcs)
Number of important defects in the non-financial
0
statements (pcs)
X. Internal Control Audit Report
Deliberation Opinions in the Internal Control Audit Report
In our opinion, the Company maintained effective internal control over its financial report in all major aspects in accordance with the
Basic Standard for Enterprise Internal Control and other relevant regulations as at December 31, 2020.
Disclosure of the internal control audit
Disclosed
report
Date of disclosing the full text of the
March 10, 2021
internal control assessment report
Index of disclosing the full text of the
www.cninfo.com.cn
internal control audit report
Type of the onions in the internal
Standard unqualified auditor’s report
control audit report
Are there any material defects in the
No
non-financial report
Has the CPAs issued a qualified auditor’s report of internal control
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors
Yes
Section 11 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 Annual Report was approved for issuing or failed to be fully cashed by the end of the
reporting period.
No
63
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section 12 Financial Report
Auditor’s Report
GTCNSZ(2021)NO.110A002280
To All Shareholders of FIYTA Precision Technology Co., Ltd.:
Opinion
We have audited the financial statements of FIYTA Precision Technology Co., Ltd.
(“FIYTA Ltd.” or the “Company”), which comprise the consolidated and Company balance
sheets as at 31 December 2020, and the consolidated and Company income statements,
consolidated and Company cash flow statements and consolidated and Company
statements of changes in shareholders’ equity for the year then ended, and notes to the
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material
respects, the consolidated and Company financial positions of FIYTA Ltd. as at 31
December 2020, and their financial performance and their cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the FIYTA Ltd. and have fulfilled our other ethical responsibilities in
accordance with the Code of Ethics for Chinese Certified Public Accountants. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
64
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
1. Existence of inventory and its net realizable value
Refer to Note III 12 and Note V 6 for detailed information.
(1) Description
As at 31 December 2020, the book balance, provision for decline in value, and carrying
amount of inventory were RMB 2,029.51 million, RMB97.73 million and RMB 1,931.78
million respectively. The carrying amount of inventory accounts for 48.07% of the total
assets of the Company.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and other
branded watches, the main inventory of FIYTA Ltd are finished watches and watch
components. The inventories are distributed in stores, regional warehouses,
resellers’ warehouses and the Company’s warehouses which caused difficulty in
inventory physical observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net
realizable value (NRV) at balance sheet date. Where the cost of an inventory
exceeds its NRV, the difference is recognized as provision for decline in value. The
determination of NRV involves significant judgment and estimates by the
Management.
Inventory value is significant to the Company’s assets and it requires significant judgement
by the Management, as a result, we identified existence of inventory and its net realizable
value as key audit matters.
(2) How our audit addressed the key audit matter
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls of procurement and payment, production and storage, and the
provision for decline in value of inventory;
(ii) Understanding and evaluating the appropriateness of the Company’s policy in
provision for decline in value;
(iii) Understanding and inquiring the locations of inventory storage, measurement
method of inventory so as to determining the scope of inventory physical
observation;
(iv) Discussing physical inventory count status with the Management and attending the
physical inventory count and conducting observation and test count on site to check
65
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
the quantity of the inventories and observe their condition.
(v) Obtaining the ageing report of inventory and taking into consideration of inventory
condition in order to perform analytical review on the ageing as well as analyze the
reasonableness of provision for decline in value;
(vi) Reviewing and evaluating the appropriateness of significant estimates made by the
Management in determining the NRV of inventory;
(vii) Obtaining the calculation of provision for decline in value of inventory, reviewing
whether the provision was made in compliance with relevant accounting policies
and performing recalculation of provision. Checking the movements of prior year’s
provision and analyzing whether the provision was adequately accrued in prior
period.
(viii) Tracing samples of large purchases in current period to their corresponding
contracts and tax invoices, and inspecting their purchase requisition form and
goods receipt notes.
Based on audit work conducted above, we believe that the presentation and disclosure of
inventory and the judgment on NRV made by the management is supportable.
2. Revenue recognition
Refer to Note III 25 and Note V 34 for detailed information.
(1) Description
In 2020, the Company’s income from main business was RMB4,226.99 million. The
Company’s revenue mainly comes from sales of FIYTA brand watches and distribution of
other branded watches. Except for small amount of sales by direct sales and consignment
sales of FIYTA brand watches, most of the sales of FIYTA brand watches and other
branded watches are sold through shops in department store and on-line shops. Refer to
Note III 25 for accounting policy relating to revenue recognition.
Operating revenue represents major line item in income statement and is main source of
profit, the accuracy and completeness of revenue recognition have significant impact to
the Company’s profit, as a result, we identified revenue recognition as a key audit matter.
(2) How our audit addressed the key audit matter
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls relating to revenue recognition;
(ii) Obtaining and understanding accounting policies relating to revenue recognition,
and reviewing and evaluating whether the point in time of control right transfer,
measurement of transaction price and accounting for special transactions are
66
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
complied with the accounting standards;
(iii) Selecting samples from current year’s transaction records, and tracing them to
supporting documents such as contract, tax invoice and goods dispatch note (if
applicable) and courier waybill (if applicable);
(iv) In connection with audit of accounts receivable, selecting major customers and
confirming corresponding sales in current year and year-end balance;
(v) Conducting cut-off test to revenue recognized before and after the balance sheet
date by selecting samples to check supporting documents such as contract, tax
invoice and goods dispatch note (if applicable) and courier waybill (if applicable) to
evaluate whether the revenue was recorded in appropriate accounting period;
Based on audit work conducted above, we believe that the Company’s revenue
recognition is in conformity to its revenue recognition policy.
Other Information
The management of FIYTA Ltd (the “Management”) are responsible for the Other
Information. The Other Information comprises all of the information included in the
Company’s 2020 annual report other than the financial statements and our auditors’ report
thereon.
Our opinion expressed on the financial statements does not cover the Other Information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
Other Information and, in doing so, consider whether the Other Information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this Other Information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Management and those Charged with Governance for the
Financial Statements
The Management is responsible for the preparation of the financial statements that give a
fair view in accordance with Accounting Standards for Business Enterprises and for the
design, implementation and maintenance of such internal controls as the Management
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
67
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
In preparing the financial statements, the Management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
Management either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Those who charged with governance is responsible for overseeing the Company’s
financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with China
Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Management.
4. Conclude on the appropriateness of the Management’s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required, according to China Standards on Auditing, to draw
attention in our auditors’ report to the related disclosures in the financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based
68
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within FIYTA Ltd to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Grant Thornton Auditor's signature and stamp
China Beijing (Engagement partner)
Auditor's signature and stamp
8 March 2021
69
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
70
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated and Company Balance Sheet
as at 31 December 2020
Expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB
As at 31/12/2020 As at 31/12/2019
Item Not Consolidate
e Company Consolidated Company
d
Current assets:
Cash at bank and on hand V. 1 353,057,285.71 292,055,169.74 316,668,565.09 270,673,346.02
Financial assets held for
trading - - - -
Bills receivable V. 2 48,192,442.15 - 10,596,431.31 -
Accounts receivable V. 3 475,598,684.88 1,464,798.79 397,471,106.98 2,848,025.39
Accounts receivable
financing - - - -
Prepayments V. 4 16,612,773.76 - 10,847,962.28 -
Other receivables V. 5 52,902,779.63 621,512,680.69 47,239,844.58 783,647,732.22
including: interests
receivables - - - -
dividend
receivables - - - -
Inventories V. 6 1,931,780,185.85 - 1,808,820,089.92 -
Contract assset - -
Not applicable Not applicable
Assets held for sale - - - -
Non-current assets due
within one year - - - -
Other current assets V. 7 75,935,141.76 11,655,617.82 68,858,096.74 12,380,243.67
Total current
assets 2,954,079,293.74 926,688,267.04 2,660,502,096.90 1,069,549,347.30
Non-current assets:
Debt investment - - - -
Other debt investment - - - -
Long-term receivable - - - -
Long-term equity
V. 8
investments 51,400,665.92 1,529,415,188.28 46,423,837.85 1,380,895,239.27
Other equity instrument
V. 9 85,000.00 85,000.00 85,000.00 85,000.00
investments
Other non-current
financial assets - - - -
71
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
V.
Investment properties
10 398,086,447.78 323,296,494.84 407,503,307.24 329,970,083.18
V.
Fixed assets 352,734,280.76 224,709,747.39 363,997,098.94 238,594,698.50
11
Construction in progress - - - -
V.
Intangible assets
12 37,859,316.51 27,347,950.13 38,711,821.26 30,925,974.54
Development costs - - - -
Goodwill - - - -
Long-term deferred V.
expenses 13 130,017,587.99 11,980,697.97 152,587,491.33 12,106,759.98
V.
Deferred tax assets
14 80,913,800.35 1,380,180.94 83,739,383.37 1,125,840.75
V.
Other non-current assets 13,536,307.13 473,312.35 7,373,248.48 4,707,236.86
15
Total non-current
assets 1,064,633,406.44 2,118,688,571.90 1,100,421,188.47 1,998,410,833.08
Total assets 4,018,712,700.18 3,045,376,838.94 3,760,923,285.37 3,067,960,180.38
72
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated and Company Balance Sheet (continued)
as at 31 December 2020
As at 31/12/2020 As at 31/12/2019
Item
Note Consolidated Company Consolidated Company
Current liabilities:
Short-term loans V. 16 542,673,278.09 400,425,930.05 567,908,833.21 540,650,622.50
Financial liabilities held for
trading - - - -
Bills payable V. 17 3,581,360.00 - - -
Accounts payable V. 18 301,211,515.39 1,481,135.49 279,772,787.37 12,952,934.93
Advances from customers V. 19 9,991,850.67 9,991,850.67 23,433,463.57 3,434,407.04
Contract liabilitites V. 20 18,213,396.49 37,735.85
Not applicable Not applicable
Employee remuneration
V. 21
payable 132,853,462.20 25,256,531.70 82,602,845.67 19,019,554.57
Taxes payable V. 22 68,925,271.90 2,778,265.84 24,064,803.00 1,713,130.68
Other payables V. 23 128,577,597.94 240,824,305.37 119,616,721.63 82,631,590.46
including: interest
payables - - - -
dividend
payables 1,639,513.77 1,639,513.77 848,233.27 848,233.27
Liabilities held for sale - - - -
Non-current liabilities due
V. 24 370,030.00 - 360,140.00 -
within one year
Other current liabilities V. 25 2,299,755.09 2,264.15 - -
Total current
liabilities 1,208,697,517.77 680,798,019.12 1,097,759,594.45 660,402,240.18
Non-current liabilities:
Long-term loans V. 26 4,070,330.00 - 4,321,680.00 -
Bonds payable - - - -
Long-term payables - -
Provisions - - - -
Deferred income V. 27 2,916,346.43 2,377,718.35 3,046,090.60 3,046,090.60
Deferred tax liabilities V. 14 3,067,834.55 - 1,256,242.49 -
Other non-current
liabilities - - - -
73
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Total non-current
liabilities 10,054,510.98 2,377,718.35 8,624,013.09 3,046,090.60
Total liabilities 1,218,752,028.75 683,175,737.47 1,106,383,607.54 663,448,330.78
Shareholder's equity:
Share capital V. 28 428,091,881.00 428,091,881.00 442,968,881.00 442,968,881.00
Capital reserve V. 29 1,021,490,387.78 1,027,145,928.88 1,081,230,215.32 1,086,885,756.42
Less: treasury shares V. 30 61,633,530.48 61,633,530.48 71,267,118.78 71,267,118.78
Other comprehensive -
V. 31 976,871.41 - 940,209.09 -
income
Specific reserve - - - -
Surplus reserve V. 32 246,531,866.87 246,531,866.87 235,701,180.14 235,701,180.14
Undistributed profit V. 33 1,164,490,911.51 722,064,955.20 966,840,818.40 710,223,150.82
Total equity attributable to
shareholders of the Company 2,799,948,388.09 2,362,201,101.47 2,654,533,766.99 2,404,511,849.60
Non-controlling interests 12,283.34 - 5,910.84 -
Total shareholders' equity 2,799,960,671.43 2,362,201,101.47 2,654,539,677.83 2,404,511,849.60
Total liabilities and
shareholders' equity 4,018,712,700.18 3,045,376,838.94 3,760,923,285.37 3,067,960,180.38
74
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated and Company Income Statement
For the year ended 31 December 2020
Expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB
Year ended 31/12/2020 Year ended 31/12/2019
Item Not Consolidat Compan Consolida
e Company
ed y ted
V.
I.Operating income 4,243,439,952.5 137,381,79 3,704,210,734
140,511,246.61
34 9 5.95 .90
V.
Less:operating costs 2,639,229,537.0 36,497,097. 2,217,207,732
21,776,539.35
34 6 45 .04
V.
Taxes and surcharges 4,435,717.7
35 25,444,139.30
3
28,192,789.55 4,623,611.23
V.
Selling and distribution expenses 870,713,899.32
1,579,092.5 865,792,078.6
1,130,383.07
36 1 1
General and administrative V. 76,604,523. 240,619,989.0
expenses 37 256,559,127.23 84,134,946.30
40 4
Research and development V. 19,933,292.
expenses 38 51,489,323.49
70
45,057,740.25 17,580,327.66
V.
Financial expenses 33,449,276.41
3,127,102.3
32,815,277.57 7,037,707.90
39 9
Including: Interest expenses 21,315,119.78
6,230,252.3
23,975,351.93 8,393,727.80
9
Interest income 4,941,334.19
4,609,988.6
1,956,316.52 1,696,829.44
8
V.
Add: Other income 25,170,397.09
9,324,872.5
18,428,906.18 9,066,722.30
40 9
V.
Investment income ("-" for losses) 5,072,577.64
104,976,82
1,787,907.10 114,542,774.70
41 8.07
Including: Income from investment 4,976,828.0
in associates and joint ventures ("-" for losses) 5,072,577.64 1,787,907.10 1,542,774.70
7
Gain from de-recognition of financial
assets measured at amortized costs ("-" for - - - -
losses)
Gain from net exposure hedging ("-
" for losses) - - - -
Gain from fair value changes ("-" for
losses) - - - -
Credit impairment losses ("-" for V. - - - -
losses) 42 9,096,922.74 158,252.51 16,640,961.07 100,882.96
Asset impairment losses ("-" for V. - -
losses) 43 15,426,526.41 - 4,295,134.48 -
75
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Gains from assets disposal ("-" for V. - - - -
losses) 44 369,857.30 25,000.50 926,118.60 537,935.27
II.Operating profit ("-" for losses) 371,904,318.06
109,323,41 272,879,726.9
127,198,409.87
7.42 7
V.
Add: Non-operating income 3,111,413.64 259,345.80 4,754,105.30 88,886.65
45
V.
Less: Non-operating expenses
46 1,555,112.86 15,864.83 1,400,188.87 210,174.24
III.Profit before income tax ("-" for losses) 373,460,618.84
109,566,89 276,233,643.4
127,077,122.28
8.39 0
V.
Less: Income tax expenses 79,338,516.60
1,260,031.0
60,324,629.25 223,258.88
47 8
IV.Net profit for the year ("-" for net losses) 294,122,102.24
108,306,86 215,909,014.1
126,853,863.40
7.31 5
(1) Classification according to operation
continuity
Including: Net profit from continuing 108,306,86 215,909,014.1
operations ("-" for net loss) 294,122,102.24 126,853,863.40
7.31 5
Net profit from discontinued
operations ("-" for net loss) - - - -
(2) Classification according to ownership
Including: attributable to shareholders of 108,306,86 215,909,014.1
the Company ("-" for net loss) 294,115,156.04 126,853,863.40
7.31 5
attributable to non-controlling
interests ("-" for net loss) 6,946.20 - - -
V.Other comprehensive income, net of tax 1,916,506.80 - 4,502,059.89 -
Other comprehensive income (net of tax)
attributable to shareholders of the company 1,917,080.50 - 4,501,930.69 -
A.Items that will not be reclassified to profit
or loss - - - -
B. Items that may be reclassified to profit
or loss 1,917,080.50 - 4,501,930.69 -
a. Translation differences arising
from translation of foreign currency financial 1,917,080.50 - 4,501,930.69 -
statements
b. Others - - - -
Other comprehensive income (net of tax) -
attributable to non-controlling interests 573.70 - 129.20 -
VI.Total comprehensive income for the year 296,038,609.04
108,306,86 220,411,074.0
126,853,863.40
7.31 4
Attributable to: Shareholders of the 108,306,86 220,410,944.8
Company 296,032,236.54 126,853,863.40
7.31 4
76
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Non-controlling interests 6,372.50 - 129.20 -
VII.Earnings per share:
(1) Basic earnings per share 0.6764 0.4943
(2) Diluted earnings per share 0.6764 0.4943
77
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated and Company Cash Flow Statement
For the year ended 31 December 2020
Prepared by: FIYTA Precision
Expressed in RMB
Technology Co., Ltd.
Year ended 31/12/2020 Year ended 31/12/2019
Item Not Consolidate
Company Consolidated Company
e d
I.Cash flows from operating
activities
Cash received from sales of goods and
4,602,638,695.3
rendering of services 178,808,738.19 4,058,167,395.57 129,299,543.07
1
Cash received from refund of taxes 1,849,055.57 - 5,510,592.39 301,416.23
Cash received from other operating V. 4,238,779,521.4
activities 48 78,001,812.45 93,832,379.85 3,935,449,332.96
6
Subtotal of cash inflows from operating
4,682,489,563.3 4,417,588,259.6
activities 4,157,510,367.81 4,065,050,292.26
3 5
Cash paid for purchasing goods and
3,046,261,111.4
services 8
- 2,398,294,588.87 -
Cash paid to and for employees 578,179,070.15 61,903,446.81 584,435,566.86 74,123,969.83
Cash paid for tax and surcharges 222,180,568.75 9,345,329.15 241,905,980.66 12,227,836.75
V.
Cash paid for other operating activities 3,948,860,602.8
48 457,658,307.08
9
488,053,462.81 3,807,983,200.74
Subtotal of cash outflows in operating
4,304,279,057.4 4,020,109,378.8
activities 3,712,689,599.20 3,894,335,007.32
6 5
Net cash flows from operating activities 378,210,505.87 397,478,880.80 444,820,768.61 170,715,284.94
II. Cash flows from investing activities
Cash received from disposal of
investments - - - -
Cash received from returns on investments - 100,000,000.00 - 113,000,000.00
Net cash received from disposal of fixed
assets, intangible assets and other long-term 150,556.62 1,630.00 626,107.64 134,060.00
assets
Net cash received from disposal of
subsidiaries and other business units - - - -
Cash received from other investing
activities - - - -
Subtotal of cash inflows from investing
activities 150,556.62 100,001,630.00 626,107.64 113,134,060.00
Cash paid to acquire fixed assets,
intangible assets and other long-term assets 133,531,954.47 17,398,218.00 166,689,454.32 40,173,154.98
Cash paid to acquire investments - 139,500,000.00 - -
Net cash paid to acquire subsidiaries and
other business units - - - -
Cash paid for other investing activities - - - -
78
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Subtotal of cash outflows in investing
activities 133,531,954.47 156,898,218.00 166,689,454.32 40,173,154.98
- - -
Net cash flows from investing activities 133,381,397.85 56,896,588.00 166,063,346.68 72,960,905.02
III. Cash flows from financing activities：
Cash received from capital contributions - - 18,585,600.00 18,585,600.00
Including: Cash received from capital
contributions by non-controlling intetests of - - - -
subsidiaries
Cash received from loans 743,213,671.65 601,000,000.00 700,262,726.76 670,000,000.00
Cash received from other financing
activities - - - -
Sub-total of cash inflows from financing
activities 743,213,671.65 601,000,000.00 718,848,326.76 688,585,600.00
Cash repayments of borrowings 768,247,433.10 741,000,000.00 681,461,355.87 635,000,000.00
Cash paid for dividends and profits
distribution and interests 106,703,352.70 104,195,155.07 111,024,929.61 110,048,303.96
Including: Cash payments for dividends or
profit to non-controlling intetests of - - - -
subsidiaries
V.
Cash paid for other financing activities 72,317,669.93 72,317,669.93 53,117,325.02 53,117,325.02
48
Sub-total of cash outflows in financing
activities 947,268,455.73 917,512,825.00 845,603,610.50 798,165,628.98
- - - -
Net cash flows from financing activities 204,054,784.08 316,512,825.00 126,755,283.74 109,580,028.98
IV. Effect of foreign exchange rate - -
changes on cash and cash equivalents 2,810,603.32 1,112,644.08 468,366.93 31,718.77
V. Net increase in cash and cash
equivalents 37,963,720.62 22,956,823.72 152,470,505.12 134,127,879.75
Add: cash and cash equivalents at beginning
of year 315,093,565.09 269,098,346.02 162,623,059.97 134,970,466.27
VI.Cash and cash equivalent at end
of year 353,057,285.71 292,055,169.74 315,093,565.09 269,098,346.02
79
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2020
Expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB
Year ended 31/12/2020
Total shareholders’ equity attributable to shareholders of the parent company
Sp Non-
Item Other eci contro
Less: lling Total
Share comprehen fic Surplus Undistribute
Capital reserve treasury intere
capital sive res reserve d profit
shares sts
income erv
e
I. Balance at the end of 442,968,881.00 1,081,230,215.32 71,267,118.78 -940,209.09 235,701,180.14 966,840,818.40 2,654,539,677.83
prior year - 5,910.84
Add：Changes in - -
accounting policies - - - - - - -
Correction - -
of prior period errors - - - - - - -
Business
combination involving - -
enterprises under - - - - - - -
common control
Others -
-
- - - - - -
-
II. Balance at the
-
beginning of current 442,968,881.00
1,081,230,215.32
71,267,118.78 940,209.09 - 235,701,180.14 966,840,818.40 5,910.84
2,654,539,677.83
year
III.Changes in equity -
-59,739,827.54
-
145,420,993.60
during the year( "- "for 14,877,000.00 9,633,588.30 1,917,080.50 - 10,830,686.73 197,650,093.11 6,372.50
80
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
decrease)
(I)Total - 296,038,609.04
comprehensive income - - 1,917,080.50 - - 294,115,156.04 6,372.50
(II)Shareholders'
- -
contributions and 14,877,000.00
-59,739,827.54
9,633,588.30 - - - - -
-64,983,239.24
decrease of capital
1.Contribution -
-65,264,104.92
-
-71,338,916.62
by ordinary shareholders 14,877,000.00 8,802,188.30 - - - - -
2.Increase in
shareholders' equity 5,570,601.49
-
6,402,001.49
resulted from share- - 831,400.00 - - - - -
based payments
3. Others -
-46,324.11
- - - - - -
-46,324.11
(III) Appropriation of -
-
-85,634,376.20
profits - - - - 10,830,686.73 96,465,062.93 -
1.
-
Appropriation for surplus -
-
- - - 10,830,686.73 10,830,686.73 -
-
reserves
2. Distributions -
-
-85,634,376.20
to shareholders - - - - - 85,634,376.20 -
3. Others -
-
- - - - - -
-
(IV) Transfer within - -
equity - - - - - - -
1.Share capital
increased by capital -
-
- - - - - -
-
reserves transfer
2.Share capital
increased by surplus -
-
- - - - - -
-
reserves transfer
81
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
3.Transfer of
surplus reserve to offset -
-
- - - - - -
-
losses
4. Other
comprehensive income -
transferred to retained - - - - - - -
earning
5. Others -
-
- - - - - -
-
(V)Specific Reserve -
-
- - - - - -
-
1. Appropriation - -
during the year - - - - - - -
2.Utilisation - -
during the year - - - - - - -
(VI)Others -
-
- - - - - -
-
IV.Balance at end of 1,021,490,387.78 12,283.3 2,799,960,671.43
current year 428,091,881.00 61,633,530.48 976,871.41 - 246,531,866.87 1,164,490,911.51
4
82
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Consolidated Statement of Changes in Shareholder's Equity
For the year ended 31 December 2020
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Total shareholders’ equity attributable to shareholders of the parent company Non-
Item Other controll
Less: ing Total
Share Capital comprehe Specific Surplus Undistribute
treasury interest
capital reserve nsive reserve reserve d profit
shares s
income
-
I. Balance at the end of prior year 438,744,881.0 1,062,455,644.
- 5,442,139.78 -
223,015,79
851,360,603.66 5,781.64
2,570,140,564.5
0 22 3.80 4
Add：Changes in accounting
policies - - - - - - - - -
Correction of prior
period errors - - - - - - - - -
Business combination
involving enterprises under common - - - - - - - - -
control
Others - - - - - - - - -
II. Balance at the beginning of 438,744,881.0 1,062,455,644.
-
223,015,79 2,570,140,564.5
current year 0 22
- 5,442,139.78 -
3.80
851,360,603.66 5,781.64
4
III.Changes in equity during the 71,267,118. 12,685,386.
year( "- "for decrease) 4,224,000.00 18,774,571.10 4,501,930.69 - 115,480,214.74 129.20 84,399,113.29
78 34
(I)Total comprehensive income - - - 4,501,930.69 - - 215,909,014.15 129.20 220,411,074.04
(II)Shareholders' contributions 71,267,118.
-
and decrease of capital 4,224,000.00 18,774,571.10
78
- - - - - 48,268,547.68
83
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
1.Contribution by ordinary 71,267,118.
-
shareholders 4,224,000.00 14,361,600.00 - - - - 52,681,518.78
78
2.Increase in shareholders'
equity resulted from share-based - 4,440,625.91 - - - - - - 4,440,625.91
payments
- -
3. Others - 27,654.81 - - - - - - 27,654.81
- -
(III) Appropriation of profits - - - - -
12,685,386.
100,428,799.41 - 87,743,413.07
34
1. Appropriation for surplus 12,685,386.
-
reserves - - - - - 12,685,386.34 - -
34
2. Distributions to - -
shareholders - - - - - - 87,743,413.07 - 87,743,413.07
3. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Share capital increased by
capital reserves transfer - - - - - - - - -
2.Share capital increased by
surplus reserves transfer - - - - - - - - -
3.Transfer of surplus reserve
to offset losses - - - - - - - - -
4. Other comprehensive
income transferred to retained earning - - - - - - - - -
5. Others - - - - - - - - -
(V)Specific Reserve - - - - - - - - -
1. Appropriation during the
year - - - - - - - - -
2.Utilisation during the year - - - - - - - - -
84
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(VI)Others - - - - - - - - -
-
IV.Balance at end of current year 442,968,881.0 1,081,230,215. 71,267,118.
940,209.09 -
235,701,18
966,840,818.40 5,910.84
2,654,539,677.8
0 32 78 0.14 3
85
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Statement of Changes in Shareholders' Equity
For the year ended 31 December 2020
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Item Less: Other
Share Capital Specific Surplus Undistribu
treasury comprehen Total
capital reserve reserve reserve ted profit
shares sive income
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 -
-
- 223,015,793.80
683,798,086.8 2,413,669,946.9
3 5
Add：Changes in accounting -
policies - - - - - - -
Correction of prior period -
errors - - - - - - -
Others - - -
-
- - - -
II. Balance at the beginning of current - 683,798,086.8 2,413,669,946.9
year 438,744,881.00 1,068,111,185.32 - - 223,015,793.80
3 5
III.Changes in equity during the year( "- 71,267,118. -
-
"for decrease) 4,224,000.00 18,774,571.10 - 12,685,386.34 26,425,063.99 9,158,097.35
78
(I)Total comprehensive income - - -
-
- -
126,853,863.4
126,853,863.40
0
(II)Shareholders' contributions and 71,267,118. -
-
decrease of capital 4,224,000.00 18,774,571.10 - - - 48,268,547.68
78
1.Contribution by ordinary 71,267,118. -
-
shareholders 4,224,000.00 14,361,600.00 - - - 52,681,518.78
78
86
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
2.Increase in shareholders'
equity resulted from share-based - 4,440,625.91 -
-
- - - 4,440,625.91
payments
- -
3. Others - 27,654.81 -
-
- - - 27,654.81
-
-
(III) Appropriation of profits - - -
-
- 12,685,386.34
100,428,799.4
87,743,413.07
1
1. Appropriation for surplus -
-
reserves - - - - 12,685,386.34 12,685,386.34 -
- -
2. Distributions to shareholders - - -
-
- - 87,743,413.07 87,743,413.07
3. Others - - -
-
- - - -
(IV) Transfer within equity - - -
-
- - - -
1.Share capital increased by -
capital reserves transfer - - - - - - -
2.Share capital increased by -
surplus reserves transfer - - - - - - -
3.Transfer of surplus reserve to -
offset losses - - - - - - -
4. Other comprehensive income -
transferred to retained earning - - - - - - -
5. Others - - -
-
- - - -
(V)Specific Reserve - - -
-
- - - -
1. Appropriation during the year - - -
-
- - - -
2.Utilisation during the year - - -
-
- - - -
(VI)Others - - -
-
- - - -
IV.Balance at end of current year 442,968,881.00 1,086,885,756.42
71,267,118. -
- 235,701,180.14
710,223,150.8 2,404,511,849.6
78 2 0
87
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Notes to the Financial Statements
I. Company status
1. Company’s profile
FIYTA Precision Technology Co., Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259 issued by
the General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time Industrial
Company by the promoter of China National Aero-Technology Import and Export Shenzhen Industry & Trade Center (name changed
to “China National Aero-Technology Shenzhen Co., Ltd” lately) on 25 December 1992, and the name changed to “Shenzhen FIYTA
Holdings Limited”. The headquarters is located at FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District, Shenzhen,
Guangdong Province.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen Special Economic Zone
Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special shares (B shares) publicly on 10 March
1993. On 3 June 1993, both the Company’s A shares and B shares were listed and traded on Shenzhen Stock Exchange pursuant to
the approval of Shen Zheng Ban Fu (1993] 20 issued by Shenzhen Securities Regulatory Office and Shen Zheng Shi Zi (1993)16
issued by Shenzhen Stock Exchange.
On 30 January 1997, the Company name changed to Shenzhen FIYTA Holdings Limited with the approval of Shenzhen Municipal
Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company") transferred 72,360,000
corporate shares (accounting for 52.24% of the Company's total share capital) to Shenzhen China Aviation Group Company Limited
(previously known as "Shenzhen China Aviation Industry Company Limited", hereinafter referred to as "China National Aviation
Group") according to share transfer agreement signed by both parties. As a result, the Company’s controlling shareholder changed
from CATIC Shenzhen Company to China National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the prerequisite of maintaining the Company's total of
249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1 shares per 10 tradable shares to all
the tradable share shareholders registered on registration date designated by the split-share reform program. At that point, after the
reform, the shares held by China National Aviation Group reduced from 52.24% to 44.69%.
On 29 February 2008, due to expanding the scope of business, the Company’s corporate business license was altered from Shen Si
Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen Municipal Administration for Industry and
Commerce.
With the approval of “Reply of China Securities Regulatory Commission (CSRC) to the Approval of Private Placement of Shenzhen
FIYTA Holdings Limited” (Zheng Jian Xu Ke [2010]1703) and “Reply of State-owned Assets Supervision and Administration
Commission of the State Council (SASAC) on Issues in Private Placement of Shenzhen FIYTA Holdings Limited” (SASAC (2010)430)
in 2010, the Company is approved to issue not more than 50,000,000 ordinary shares (A shares) by private placement. After the
completion of the placement on 9 December 2010, the Company’s registered capital increased to RMB280,548,479.00 and the
equity capital of the Company held by China National Aviation Group reduced to 41.49%.
88
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
On 3 March 2011, the Company name changed to FIYTA Holdings Limited with the approval of Shenzhen Municipal Administration
for Industry and Commerce. On 8 April 2011, the Company increased its share capital by 4 shares for every 10 shares by capitalizing
the capital reserve on the basis of total shares of 280,548,479 as at 31 December 2010. Total shares of the Company changed to
392,767,870 shares after the increase.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of non-public offering of stocks
of Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the approval of State-owned Assets Supervision and
Administration Commission of the State Council (SASAC) “Reply of non-public offering of stocks of Shenzhen FIYTA Holdings
Limited” (SASAC(2015)415), the Company was approved to issue not more than 46,911,649 ordinary shares (A shares) through
non-public offering. After the completion of the non-public offering of shares on 22 December 2015, the Company’s registered capital
was increased to RMB438,744,881.00 and the equity capital of the Company held by China National Aviation Group reduced to
37.15%.
On 4 January 2019, pursuant to the approval by “Reply to approval of Implementation of First Phase of Restricted Share Incentive
plan of FIYTA (Group) Holding Ltd.” (GuoZi KaoFen [2018] No. 936) issued by SASAC, and approved by the board of directors and
shareholder’s general meeting, the Company implemented the incentive plan. On 11 January 2019, the restricted share incentive
plan (first phase) granted a total of 4,224,000 restricted A-shares to 128 incentive individuals. As a result, the Company’s registered
capital increased to RMB442,968,881.00 and the equity capital held by China National Aviation Group decreased to 36.79%.
According to the “Proposal of Change the Company’s name and initials for A share stock” approved by the 3rd extraordinary
shareholder’s meeting in 2019, and upon examination and approval by Shenzhen Administration for Industry and Commerce, the
Company’s name was changed from “FIYTA (Group) Co., Ltd. to “FIYTA Precision Technology Co., Ltd.” since 9 January 2020.
On 29 April 2020, under the review and confirmation by China Securities Depository and Clearing Co., Ltd Shenzhen Branch, the
Company de-registered 14,730,000 shares of B-share that were repurchased previously.
Pursuant to the resolution of “Proposal of repurchase and de-registration part of restricted shares authorised under 2018 A-share
Restricted Share Incentive Plan (First Phase)”, in 2020, the Company repurchased and de-registered 147,000 A-share restricted
shares that had been authorised but still under restriction period. Those shares were owned by 6 former incentive individuals that are
resigned. After the change, the Company’s registered capital reduced to RMB428,091,881.00.
As of 31 December 2020, total outstanding shares issued by the Company was 428,091,881.00 shares. Refer to Note V. 28 “Share
capital” for details.
Corporate governance established by the Company includes General Meeting of Shareholders, Board of Directors, Board of
Supervisors, Strategy Committee, Audit Committee, and Nomination, Remuneration and Evaluation Committee. The Company’s
functional departments include Administration, Party Affairs, Inspection and Audit and Legal, Finance, Human Resources, Strategy
and Operating, Data and Information, and Property Management departments.
The business nature and main operation activities of the Company and its subsidiaries (collectively as “the Group”) mainly includes:
producing and selling of analogue indication mechanical watches, quartz watches and its movements, components, various timing
devices, processing and wholesaling karat gold jewellery watches, intelligent watches; domestic commercial and material supply and
distributing business (excluding goods under exclusive operational rights, special control and exclusive sales); property management
89
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
and leasing; providing design service; research, design, production, sales and technical support for precise watches and
components; import and export business (according to Shen Mao Guan Deng Zheng Zi No.2007-072). The legal representative of
the Company is Huang Yongfeng.
The financial statements have been approved and authorised for issue by the 27th meeting of the 9th Board of Directors on 8 March
2021.
2. Scope of consolidation
There are 11 subsidiaries that are included in the Company’s scope of consolidation for year 2020, see Note VII “Interests in other
entities” for detail. No changes in scope of consolidation in 2020.
II. Basis of preparation
The financial statement is prepared in accordance with the requirements of Accounting Standards for Business Enterprises and
associated application guidance, illustrations to the standards and related pronouncements (collectively known as “Accounting
Standards for Business Enterprises” or “CAS”). These financial statements also comply with the disclosure requirements of
“Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for
Financial Reports” (revised in 2014) issued by China Securities Regulatory Commission (CSRC).
The financial statements of the Company have been prepared on going concern basis.
Accrual basis is adopted for the Group’s accounting activity. Except for some financial instruments, the financial statements are
measured using historical cost. In case of impairment occurred on assets, provisions for impairment are provided for in accordance
with related regulations.
III. Significant accounting policies and accounting estimates
Based on actual business characteristics, the Group determined fixed asset depreciation, intangible assets amortization and revenue
recognition policies. Refer to Note III 15, Note III 18 and Note III 25 for specific accounting policies.
1. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company have been prepared in accordance with the requirements of Accounting Standards for
Business Enterprises. These financial statements present truly and completely the financial position as at 31 December 2020, the
results of operations and the cash flows for the year then ended of the Company.
2. Accounting period
The accounting period of the Company is the calendar year, i.e. from 1 January to 31 December of each year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording currency.
FIYTA (Hong Kong) Limited (“FIYTA Hong Kong”), a subsidiary of the Company outside mainland China, and Station 68 Limited
(“Station 68”), a subsidiary of FIYTA Hong Kong, use Hong Kong Dollar (“HKD”) as the recording currency according to the main
economic environment where the companies operated in. Montres Chouriet SA, a subsidiary of FIYTA Hong Kong (“Swiss
90
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Company”), uses Swiss Franc as the recording currency according to the main economic environment where the Swiss Company
operated in. The recording currencies mentioned above will be translated to Renminbi when preparing financial statements. The
currency used in preparing the Group’s financial statements is Renminbi.
5. Accounting treatment for business combinations involving entities under common control and not under common control
(1) Business combination involving entities under common control
For a business combination involving enterprises under common control, the assets acquired and liabilities assumed are measured
based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date,
except for adjustments due to different accounting policies. The difference between the carrying amount of the net assets acquired
and the consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the
capital reserve, with any excess adjusted against retained earnings.
Business combinations involving entities under common control achieved in stages that involves multiple transactions
In the separate financial statements, initial investment cost is the acquirer’s share of the carrying amount of the net assets of the
acquiree in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between
the initial investment cost and the sum of carrying amount of investment prior to combination date and carrying amount of new
considerations paid for the combination at the combination date is adjusted to capital reserve (share premium). If the capital reserve
is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
In the consolidated financial statements, assets acquired and liabilities assumed by acquirer in a business combination are
measured at their carrying amount as recorded in the consolidated financial statements of the ultimate controlling party at the
combination date, except for adjustments due to different accounting policies. The difference between the carrying amount of the net
assets acquired and the sum of carrying amount of investment prior to combination date and carrying amount of new considerations
paid for the combination at the combination date is adjusted to capital reserve (share premium). If the capital reserve is not sufficient
to absorb the difference, any excess is adjusted against retained earnings. The profit or loss, other comprehensive income and
changes in other owner’s equity recognized by the acquirer during the period from the later of initial investment date and the date
that the acquirer and acquiree both under common ultimate control to the combination date are offset the opening retained earnings
or profit for loss for the current period in the comparative statements.
(2) Business combinations involving entities not under common control
For business combinations involving enterprises not under common control, the consideration costs include acquisition-date fair
value of assets transferred, liabilities incurred or assumed and equity securities issued by the acquirer in exchange for control of the
acquiree. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are measured at their fair
value. The acquiree’s identifiable asset, liabilities and contingent liabilities, are recognised at their acquisition-date fair value.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is
recognised as goodwill, and subsequently measured on the basis of its cost less accumulated impairment provisions. Where the
combination cost is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is
recognised in profit or loss for the current period after reassessment.
91
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Business combinations involving entities not under common control achieved in stages that involves multiple transactions
In the separate financial statements, the initial investment cost is the sum of the carrying amount of equity investment of the acquiree
held prior to the acquisition date and additional investment cost at the acquisition date. When the previously-held equity investment
which was accounted for under the equity method before the acquisition date, any other comprehensive income previously
recognized is not adjusted on acquisition date. When the investment is disposed of in later date, the amount that was recognized in
other comprehensive income is recognized on the same basis as would be required if the investee had disposed directly of the
related assets or liabilities. The owners’ equity recognized as the changes of the investee’s other owners’ equity except for net profit
or loss, other comprehensive income and profit distribution, are transferred to profit or loss for the current period when disposing the
investment. When the previously-held equity investment which was measured at fair value before the acquisition date, the
accumulated changes in fair value included in other comprehensive income is transferred to profit or loss for the current period upon
commencement of the cost method.
In the consolidated financial statements, the combination cost is the sum of the consideration paid at the acquisition date and the fair
value of equity investment of the acquiree held prior to the acquisition date. The cost of equity investment of the acquiree held prior
to the acquisition date is re-measured at the fair value at the acquisition date, the difference between the fair value and carrying
value is recognized as profit or loss for the current period. Other comprehensive income and changes of other owners’ equity from
the equity interest held in the acquiree prior to the acquisition date are transferred to profit or loss for the current period, except for
other comprehensive income resulted in the change of net liabilities or assets in the investee’s re-measurement of defined benefit
plan.
(3) Transaction costs for business combination
The overhead for the business combination, including the expenses for audit, legal services, valuation advisory, and other
administrative expenses, are recorded in profit or loss for the current period when incurred. The transaction costs of equity or debt
securities issued as the considerations of business combination are included in the initial recognition amount of the equity or debt
securities.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
The scope of consolidated financial statements is based on control. Control exists when the Company has power over the investee;
exposure, or rights to variable returns from its involvement with the investee and has the ability to affect its returns through its power
over the investee. A subsidiary is an entity that is controlled by the Company (including enterprise, a portion of an investee as a
deemed separate component, and structured entity controlled by the enterprise).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant information. When preparing consolidated financial statements, the accounting policies and
accounting periods of the subsidiaries should be consistent with those established by the Company, and all significant intra-group
balances and transactions are eliminated.
92
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Where a subsidiary or business has been acquired through a business combination involving enterprises under common control in
the reporting period, the subsidiary or business is deemed to be included in the consolidated financial statements from the date they
are controlled by the ultimate controlling party. Their operating results and cash flows are included in the consolidated income
statement and consolidated cash flow statement respectively from the date they are controlled by the ultimate controlling party.
Where a subsidiary or business has been acquired through a business combination not involving enterprises under common control
in the reporting period, the operating results and cash flow of the subsidiary or business after the acquisition date are included in the
consolidated income statement and consolidated cash flow statement respectively.
The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-controlling interests and presented
separately in the consolidated balance sheet within shareholders’ equity. The portion of net profit or loss of subsidiaries for the period
attributable to non-controlling interests is presented separately in the consolidated income statement below the “net profit” line item.
When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-
controlling shareholders’ share of the opening owners’ equity of the subsidiary, the excess is still allocated against the non-controlling
interests.
(3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a portion of
an interest in a subsidiary without a change in control, the transaction is treated as equity transaction, and the book value of
shareholder’s equity attributed to the Company and to the non-controlling interest is adjusted to reflect the change in the Company’s
interest in the subsidiaries. The difference between the proportion interests of the subsidiary’s net assets being acquired or disposed
and the amount of the consideration paid or received is adjusted to the capital reserve in the consolidated balance sheet, with any
excess adjusted to retained earnings.
(4) Losing control over the subsidiary
When the Company loses control over a subsidiary because of disposing part of equity investment or other reasons, the remaining
part of the equity investment is re-measured at fair value at the date when the control is lost. A gain or loss is recognised in the
current period and is calculated by the aggregate of consideration received in disposal and the fair value of remaining part of the
equity investment deducting the share of net assets in proportion to previous shareholding percentage in the former subsidiary since
acquisition date and the goodwill.
Other comprehensive income related to the former subsidiary is transferred to profit or loss when the control is lost, except for the
comprehensive income arising from the movement of net liabilities or assets in the former subsidiary’s re-measurement of defined
benefit plan.
7. Joint arrangement classification and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies joint arrangements
into joint operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities,
93
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
relating to the arrangement.
The Company recognizes the following items relating to its interest in a joint operation, and account for them in accordance with
relevant accounting standards:
A. its solely-held assets, and its share of any assets held jointly;
B. its solely-assumed liabilities, and its share of any liabilities assumed jointly;
C. its revenue from the sale of its share of the output arising from the joint operation;
D. its share of the revenue from the sale of the output by the joint operation; and
E. its solely-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the joint investors have rights to the net assets of the arrangement.
The Company adopts equity method under long-term equity investment in accounting for its investment in joint venture.
8. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term, highly
liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency financial statements
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company, using the exchange rates prevailing at the
dates of the transactions.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date.
The resulting exchange differences between the spot exchange rate on balance sheet date and the spot exchange rate on initial
recognition or on the previous balance sheet date are recognised in profit or loss. Non-monetary items that are measured at
historical cost in foreign currencies are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items
that are measured at fair value in foreign currencies are translated using the exchange rate at the date the fair value is determined.
The resulting exchange differences are recognised in profit or loss.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets and liabilities of foreign operation are
translated to Renminbi at the spot exchange rate at the balance sheet date. Equity items, excluding “retained earnings”, are
translated to Renminbi at the spot exchange rates at the transaction dates.
Income and expenses of foreign operation are translated to Renminbi at the spot exchange rates.
Cash flow statement of foreign operation is translated to Renminbi at the spot exchange rates at the cash flow occurrence dates.
Effect of foreign exchange rate changes on cash and cash equivalents is presented separately as “Effect of foreign exchange rate
changes on cash and cash equivalents” in the cash flow statement.
The resulting translation differences are recognised in other comprehensive income in shareholders’ equity of balance sheet.
94
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The translation differences accumulated in shareholders’ equity with respect to a foreign operation are transferred to profit or loss in
the period when the foreign operation is disposed.
10. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or an equity instrument of
other parties.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognised when the Group becomes one party of financial instrument contracts.
If one of the following conditions is met, the financial assets are terminated:
① The right of the contract to receive the cash flows of financial assets terminates
② The financial asset has been transferred, and is in accordance with the following conditions for derecognition.
If the obligations of financial liability have been discharged in total or in part, derecognize all or part of it. If the Group (debtor) makes
an agreement with the creditor to replace the current financial liability of assuming new financial liability which contract provisions are
different in substance, derecognize the current financial liability and meanwhile recognize as the new financial liability.
If the financial assets are traded in regular ways, they are recognised and derecognised at the transaction date.
(2) Classification and measurement of financial assets
Financial assets are classified into the following three categories depends on the Group’s business mode of managing financial
assets and cash flow characteristics of financial assets: financial assets measured at amortized cost, financial assets at fair value
through other comprehensive income and financial assets at fair value through profit or loss.
Financial assets measured at amortised cost
The Group shall classify financial assets that meet the following conditions and are not designated as financial assets at fair value
through profit or loss as financial assets measured at amortized cost:
The Group’s business model for managing the financial assets is to collect contractual cash flows;
The terms of the financial asset contract stipulate that cash flows generated on a specific date are only payments of principal and
interest based on the amount of outstanding principal.
After initial recognition, the effective interest rate method is used to measure the amortized cost of such financial assets. Profits or
losses arising from financial assets measured at amortized costs and not part of any hedging relationship are included in current
profit or loss when the recognition is terminated, amortized or impaired according to the effective interest rate.
Financial assets at fair value through other comprehensive income
The Group shall classify financial assets that meet the following conditions and are not designated as financial assets measured at
fair value and whose changes are recorded in current profit or loss as financial assets measured at fair value through other
comprehensive income:
The Group’s business model for managing the financial assets is both to collect contractual cash flows and to sell the financial
assets;
95
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The terms of the financial asset contract stipulate that cash flows generated on a specific date are only payments of principal and
interest based on the amount of outstanding principal.
After initial recognition, financial assets are subsequently measured at fair value. Interest, impairment losses or gains and exchange
gains calculated by the effective interest rate method are recognised in profit or loss, while other gains or losses are recognised in
other comprehensive income. When derecognized, the accumulated gains or losses previously recognised in other comprehensive
income are transferred from other comprehensive income and recorded in current profit or loss.
Financial assets at fair value through profit or loss
In addition to the above financial assets which are measured at amortized cost or at fair value through other comprehensive income,
the Group classifies all other financial assets as financial assets at fair value through profit or loss. When initial recognition, in order
to eliminate or significantly reduce accounting mismatches, the Group irrevocably designates some financial assets that should have
been measured at amortized cost or at fair value through other comprehensive income as financial assets at fair value through profit
or loss.
After initial recognition, the financial assets are subsequently measured at fair value, and the profits or losses (including interest and
dividend income) generated from which are recognised in profit or loss, unless the financial assets are part of the hedging
relationship.
However, for non-tradable equity instrument investment, when initially recognized, the Group irrevocably designates them as
financial assets at fair value through other comprehensive income. The designation is made on the basis of individual investment,
and the relevant investment conforms to the definition of equity instruments from the issuer’s point of view.
After initial recognition, financial assets are subsequently measured at fair value. Dividend income that meets the requirements is
recognised in profit and loss, and other gains or losses and changes in fair value are recognised in other comprehensive income.
When derecognized, the accumulated gains or losses previously recognised in other comprehensive income are transferred from
other comprehensive income to retained earnings.
The business model of managing financial assets refers to how the group manages financial assets to generate cash flow. The
business model decides whether the source of cash flow of financial assets managed by the Group is to collect contract cash flow,
sell financial assets or both of them. Based on objective facts and the specific business objectives of financial assets management
decided by key managers, the Group determines the business model of financial assets management.
The Group evaluates the characteristics of the contract cash flow of financial assets to determine whether the contract cash flow
generated by the relevant financial assets on a specific date is only to pay principal and interest based on the amount of unpaid
principal. Among them, principal refers to the fair value of financial assets at the time of initial confirmation; interest includes the
consideration of time value of money, credit risk related to the amount of unpaid principal in a specific period, and other basic
borrowing risks, costs and profits. In addition, the Group evaluates the terms and conditions of the contracts that may lead to
changes in the time distribution or amount of cash flow in financial asset contracts to determine whether they meet the requirements
of the above contract cash flow characteristics.
Only when the Group changes its business model of managing financial assets, all the financial assets affected shall be reclassified
96
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
on the first day of the first reporting period after the business model changes, otherwise, financial assets shall not be reclassified
after initial confirmation.
Financial assets are measured at fair value at initial recognition. For financial assets at fair value through profit or loss, the related
transaction costs are directly recognized through profit or loss, and the related transaction costs of other types of financial assets are
included in the initial recognition amounts.
(3) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair value through profit or loss (FVTPL), and financial
liabilities measured at amortized cost. For financial liabilities not classified as at fair value through profit or loss, the transaction costs
are recognised in the initially recognised amount.
Financial liabilities at fair value through profit or loss
Financial liabilities at FVTPL include transaction financial liabilities and financial liabilities designated as at fair value through profit or
loss in the initial recognition. Such financial liabilities are subsequently measured at fair value, all gains and losses arising from
changes in fair value and dividend and interest expense relative to the financial liabilities are recognised in profit or loss for the
current period.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost using the effective interest method; gains and losses arising
from derecognition or amortization is recognised in profit or loss for the current period.
Financial guarantee contract
Financial guarantee contracts that are not designated as financial liabilities measured at fair value through profit or loss are initially
recognised at fair value. Subsequent to initial recognition, the subsequent measurement is determined according to the higher loss
allowance of contingent liabilities under expected credit loss model and the initial recognition amount deducting by the accumulated
amortization.
Distinction between financial liabilities and equity instruments
The financial liability is the liability that meets one of following criteria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets or financial liabilities with other parties.
③ A contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be
obliged to deliver a variable number of the entity’s own equity instruments.
④ A derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed
number of the entity’s own equity instruments.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
If the group cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or other financial assets, the contractual
obligation meets the definition of financial liability.
If a financial instrument must or are able to be settled by the group’s own equity instrument, the group should consider whether the
97
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
group’s equity instrument as the settlement instrument is a substitute of cash or other financial assets or the residual interest in the
assets of an entity after deducting all of its liabilities. If the former, the tool is the group’s financial liability; if the latter, the tool is the
equity instrument of the group.
(4) Fair value of financial instruments
Refer to Note III. 11 for determining the fair value of financial assets and financial liabilities.
(5) Impairment of financial assets
On the basis of expected credit losses (“ECL”), the Group performs impairment assessment on the following items and recognises
the loss provision.
financial assets measured at amortized cost;
accounts receivable and debt investments at fair value through other comprehensive income;
Contract assets that are defined in Accounting Standards for Business Enterprises 14 – Revenue;
Lease receivables;
Financial guarantee contract (except measured at fair value through profit or loss or formed by continuing involvement of
transferred financial assets or the transfer does not qualify for derecognition).
Measurement of expected credit losses
The expected credit losses refer to the weighted average of the credit losses of financial instruments that are weighted by the risk of
default. Credit loss refers to the difference between all contractual cash flows receivable from the contract and all cash flows
expected to be received by the Group at the original effective interest rate, that is, the present value of all cash shortages.
The Group considers reasonable and basis information about past events, current situation and forecast of future economic situation
to calculate expected credit losses. Expected credit losses are a probability-weighted estimate of the difference between the cash
flows in accordance with the contract and the cash flows expect to receive by the risk of default.
The Group separately measures the expected credit losses of financial instruments at different stages. The credit risk on a financial
instrument has not increased significantly since initial recognition, which is in the first stage. The Group shall measure the loss
allowance for that financial instrument at an amount equal to 12-month expected credit losses. If the credit risk of financial
instruments has increased significantly since the initial recognition, but no credit impairment has occurred, which is in the second
stage. The Group shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. If the financial instrument has occurred credit impairment since initial recognition, which is in the third stage, and the Group
shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses.
For financial instruments with lower credit risk at the balance sheet date, the Group assumes that their credit risk has not increased
significantly since the initial recognition, and shall measure the loss allowance for that financial instrument at an amount equal to 12-
month expected credit losses.
The lifetime expected credit losses, refer to the expected credit losses caused by all possible defaults during the whole expected
lifetime. The 12-month expected credit losses, refer to the expected credit losses caused by all possible defaults during the 12-month
after balance sheet date (if the expected duration of financial instrument is less than 12 months, then for the expected duration),
98
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
which is part of the lifetime expected credit losses.
When measure the expected credit loss, the longest contract period (including the option of renewal) that the group needs to
consider is the longest contract period the enterprise facing credit risk.
For financial instruments in the first stages, second stages and with lower credit risk, the Group calculates interest income on the
basis of their book balances without deduction of impairment provisions and actual interest rates. For financial instruments in the
third stage, the Group calculates interest income according to their book balance minus the impairment provision and the actual
interest rate.
For bills receivable, accounts receivable and contract assets, whether or not there are significant financing elements, the Group shall
always measure the loss allowance for them at an amount equal to the lifetime expected credit losses.
According to the characteristics of credit risk, the Group divides and combines bills receivable and accounts receivable, contract
assets and leased receivables. On the basis of the combination, the Group calculates the expected credit losses. The basis of
determining the combination is as follows:
A. Bills receivable
Bill receivable group 1: Bank acceptance bills
Bill receivable group 2: Trade acceptance bills
B. Accounts receivable
Accounts receivable group 1: Account receivables from related parties that are within the scope of consolidation
Accounts receivable group 2: Amount receivables of other customers
C. Contract asset
Contract assets group 1: product sales
For bills receivables and contract assets that are divided into groups, the Group refers to historical credit losses, with the current
situation and the forecast of future economic situation, in calculation of the expected credit losses through the exposure on default
and the lifetime expected credit losses rate.
For accounts receivable that is divided into groups, the Group refers to the historical credit losses, combines the current situation
with the forecast of future economic situation, and compiles a comparison table between the ageing of accounts receivable and the
lifetime expected credit losses rate to calculate the expected credit losses.
Other receivables
According to the characteristics of credit risk, the Group divides other receivables into groups. On the basis of the combination, the
Group calculates the expected credit losses. The basis of determining the combination is as follows:
Other receivables group 1: Receivables of down payment and guarantee
Other receivables group 2: Petty cash for employees
Other receivables group 3: Social security payment paid on-behalf of employees
Other receivables group 4: Receivables from related parties within scope of consolidation
Other receivables group 5: Others
99
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
For other receivables that divided into groups, the Group calculates the expected credit losses through the exposure on risk of
default and expected credit losses rate in the next 12 months or the lifetime of receivables.
Debt investments and other debt investments
For debt investments and other debt investments, the Group calculates the expected credit losses through risk of default and
expected credit losses rate in the next 12 months or the lifetime, according to the nature of the investment, the types of counterparty
and risk exposure.
Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet day with that on initial recognition day, the Group determines
the relative change of default risk of financial instruments during the expected life of financial instruments, to evaluate whether the
credit risk of financial instruments has increased significantly since the initial recognition.
To determine whether credit risk has increased significantly since the initial recognition, the Group considers reasonable and valid
information, including forward-looking information that can be obtained without unnecessary additional costs or efforts. Information
considered by the Group includes:
The debtor can’t pay principal and interest on the expiration date of the contract;
Serious deterioration of external or internal credit ratings (if any) of financial instruments that have occurred or are expected to
occur;
Serious deterioration of the debtor’s operating results that have occurred or are expected to occur;
Changes in the existing or anticipated technological, market, economic or legal environment will have a significant negative impact
on the debtor’s repayment capacity.
According to the nature of financial instruments, the Group evaluates whether credit risk has increased significantly on the basis of a
single financial instrument or a combination of financial instruments. When assessing on the basis of the combination of financial
instruments, the Group can classify financial instruments based on common credit risk characteristics, such as overdue information
and credit risk rating.
Financial assets that have occurred credit impairment
On the balance sheet date, the Group assesses whether credit impairment has occurred in financial assets measured at amortized
cost and debt investments measured at fair value through other comprehensive income. When one or more events adversely affect
the expected future cash flow of a financial asset occur, the financial asset becomes a financial asset with credit impairment.
Evidence of credit impairment of financial assets includes the following observable information:
Significant financial difficulties occur to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal,
etc.;
For economic or contractual considerations related to the financial difficulties of the debtor, the Group grants concessions to the
debtor that will not be made under any other circumstances.
The debtor is probable to go bankrupt or undergo other financial restructuring.
100
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Financial difficulties of issuer or debtor lead to the disappearance of financial assets active market.
Presentation of expected credit losses allowance
In order to reflect the changes happened to the credit risk of financial instruments since the initial recognition, the Group recalculates
the expected credit losses on each balance sheet day. The increase or reversal of the loss provision resulting therefrom is
recognised as an impairment loss or gain in the current profit or loss. For financial assets measured at amortized cost, loss provision
offsets the carrying amount of the financial assets shown on the balance sheet; for debt investments measured at fair value through
other comprehensive income, the Group recognizes its loss provision through other comprehensive income and does not offset the
financial assets’ carrying amount.
Write off
If the Group no longer reasonably expects that the financial assets contract cash flow can be recovered fully or partially, the financial
assets book balance will be reduced directly. Such reduction constitutes the derecognition of the financial assets. What usually
occurs when the Group determines that the debtor has no assets or sources of income to generate sufficient cash flows to pay the
amount to be reduced. However, in accordance with the Group’s procedures for recovering due payment, the financial assets
reduced may still be affected by enforcement activities.
If the reduced financial assets are recovered later, the returns as impairment losses shall be included in the profit or loss of the
recovery period.
(6) Transfer of financial assets
Transfer of financial assets refers to the transference or deliverance of financial assets to the other party (the transferee) other than
the issuer of financial assets.
The Group derecognizes a financial asset only if it transfers substantially all the risks and rewards of ownership of the financial asset
to the transferee; the Group should not derecognize a financial asset if it retains substantially all the risks and rewards of ownership
of the financial asset.
The Group neither transfers nor retains substantially all the risks and rewards of ownership, shows as the following circumstances: if
the Group has forgone control over the financial assets, derecognize the financial assets and verify the assets and liabilities; if the
Group retains its control of the financial asset, the financial asset is recognized to the extent of its continuing involvement in the
transferred financial asset and recognize an associated liability is recognized.
(7) Offsetting financial assets and financial liabilities
When the Group has the legal rights to offset the recognized financial assets and financial liabilities and is capable to carry it out, the
Group plans to settlement or realize the financial assets and pay off the financial liabilities in net amount, the financial assets and
financial liabilities shall be presented in the balance sheet at net amount. Except this, financial assets and financial liabilities shall be
presented separately in balance sheet and are not allowed to offset.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
101
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The Group measures related assets or liabilities at fair value assuming the assets or liabilities are exchanged in an orderly
transaction in the principal market; in the absence of a principal market, assuming the assets or liabilities are exchanged in an
orderly transaction in the most advantageous market. Principal market (or the most advantageous market) is the market that the
Group can normally enter into a transaction on measurement date. The Group adopts the presumptions that would be used by
market participants in achieving the maximized economic value of the assets or liabilities.
For financial assets or financial liabilities with active markets, the Group uses the quoted prices in active markets as their fair value.
Otherwise, the Group uses valuation technique to determine their fair value.
Fair value measurement of a non-financial asset takes into account market participants’ ability to generate economic benefits using
the asset in its best way or by selling it to another market participant that would best use the asset.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximizing the use of relevant observable inputs, and using unobservable inputs only if the observable inputs
aren’t available or impractical.
Fair value level for assets and liabilities measured or disclosed at fair value in the financial statements are determined according to
the significant lowest level input to the entire measurement: Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the measurement date; Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the assets or liabilities, either directly or indirectly; Level 3 inputs are unobservable
inputs for the assets or liabilities.
At the balance sheet date, the Group re-values assets and liabilities being measured at fair value continuously in the financial
statements to determine whether to change the levels of fair value measurement.
12. Inventories
(1) Classification
Inventories include raw materials, work in progress, and finished goods.
(2) Measurement method of cost of inventories
Inventories are initially measured at cost. Raw materials and finished goods are calculated using weighted average method (except
for branded watches) and specific identification method (for branded watches).
(3) Basis for determining the net realisable value and method for provision for obsolete inventories
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale and relevant taxes. The net realisable value is measured based on the verified
evidences and considerations for the purpose of holding inventories and the effect of post balance sheet events.
Any excess of the cost over the net realisable value of inventories is recognised as a provision for obsolete inventories, and is
recognised in profit or loss. The Company usually recognises provision for decline in value of inventories by a single (type, group)
inventory item. If the factors caused the value of inventory previously written-down have disappeared, the provision for decline in
value of inventories previously made is reversed.
(4) Inventory count system
102
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The Company maintains a perpetual inventory system.
(5) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are charged to profit or loss when they are used.
13. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equity investments in joint ventures and associates. An
associate is an enterprise over which the Company has significant influence.
(1) Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combination involving enterprises under common
control is the Company’s share of the carrying amount of the subsidiary’s equity in the consolidated financial statements of the
ultimate controlling party at the combination date. For a long-term equity investment obtained through a business combination not
involving enterprises under common control, the initial cost is the combination cost.
A long-term equity investment acquired other than through a business combination: A long-term equity investment acquired other
than through a business combination is initially recognised at the amount of cash paid if the Company acquires the investment by
cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.
(2) Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method. An investment in a joint venture or an
associate is accounted for using the equity method for subsequent measurement.
For a long-term equity investment which is accounted for using the cost method, Except for cash dividends or profit distributions
declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company
recognises its share of the cash dividends or profit distributions declared by the investee as investment income for the current period.
For a long-term equity investment which is accounted for using the equity method, where the initial cost of a long-term equity
investment exceeds the Company’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the
investment is initially recognised at cost. Where the initial investment cost is less than the Company’s interest in the fair value of the
investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at the investor’s share of the fair
value of the investee’s identifiable net assets, and the difference is recognised in profit or loss.
Under the equity method, the Company recognises its share of the investee’s profit or loss and other comprehensive income as
investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment
accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced
by the amount attributable to the Company. Changes in the Company’s share of the investee’s owners’ equity, other than those
arising from the investee’s net profit or loss, other comprehensive income or profit distribution (referred to as “other changes in
owners’ equity”), is recognised directly in the Company’s equity, and the carrying amount of the investment is adjusted accordingly. In
calculating its share of the investee’s net profits or losses, other comprehensive income and other changes in owners’ equity, the
Group recognises investment income and other comprehensive income after making appropriate adjustments to align the accounting
policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of
103
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
acquisition.
When the Company becomes capable of exercising joint control or significant influence (but not control) over an investee due to
additional investment or other reasons, the Company uses the fair value of the previously-held equity investment, together with
additional investment cost, as the initial investment cost under the equity method. The difference between the fair value and carrying
amount of the previously-held equity investment, and the accumulated changes in fair value included in other comprehensive income,
shall be transferred to profit or loss for the current period upon commencement of the equity method.
When the Company can no longer exercise joint control of or significant influence over an investee due to partial disposal of the
equity investment or other reasons, the remaining equity investment shall be accounting for using Accounting Standard for Business
Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and the difference between the fair value and the
carrying amount of the remaining equity investment shall be charged to profit or loss for the current period at the date of the loss of
joint control or significant influence. Any other comprehensive income previously recognised under the equity method shall be
accounted for on the same basis as would have been required if the Company had directly disposed of the related assets or liabilities
for the current period upon discontinuation of the equity method. Other movement of owner’s equity related to original equity
investment is transferred to profit or loss for the current period.
When the Company can no longer exercise control over an investee due to partial disposal of the equity investment or other reasons,
and the remaining equity after disposal can exercise joint control of or significant influence over an investee, the remaining equity is
adjusted as using equity method from acquisition. When the remaining equity can no longer exercise joint control of or significant
influence over an investee, the remaining equity investment shall be accounted for using Accounting Standard for Business
Enterprises No. 22-Recognition and Measurement of Financial Instruments, and the difference between the fair value and the
carrying amount of the remaining equity investment shall be charged to profit or loss for the current period at the date of loss of
control.
When the Company can no longer exercise control over an investee due to new capital injection by other investors, and the
Company can exercise joint control of or significant influence over an investee, the Company recognizes its share of the investee’s
new added net assets using new shareholding percentage. The difference between its new share of the investee’s new added net
assets and its decreased shareholding percentage of the original investment is recognized in profit or loss. And the Company adjusts
to the equity method using the new shareholding percentage as if it uses the equity method since it obtains the investment.
Unrealised profit or loss resulting from transactions between the Company and its associates or joint ventures are eliminated to the
extent of the Company’s interest in the associates or joint ventures. Unrealised losses resulting from transactions between the
Company and its associates or joint ventures are eliminated in the same way as unrealised gains but only to the extent that there is
no impairment.
(3) Criteria for determining the existence of joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control. When assessing whether the Company can exercise joint
control over an investee, the Company first considers whether no single participant party is in a position to control the investee’s
104
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
related activities unilaterally, and then considers whether strategic decisions relating to the investee’s related activities require the
unanimous consent of all participant parties that sharing of control. All the parties, or a group of the parties, control the arrangement
collectively when they must act together to direct the relevant activities. When more than one combination of the parties can control
an arrangement collectively, joint control does not exist. A party that holds only protective rights does not have joint control of the
arrangement.
Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have
control or joint control over those policies. When determining whether the Company can exercise significant influence over an
investee, the effect of potential voting rights (for example, warrants, share options and convertible bonds) held by the Company or
other parties that are currently exercisable or convertible shall be considered.
When the Company, directly or indirectly through subsidiaries, owns 20% of the investee (including 20%) or more but less than 50%
of the voting shares, it has significant influence over the investee unless there is clear evidence to show that in this case the
Company cannot participate in the production and business decisions of the investee, and cannot form a significant influence. When
the Company owns less than 20% of the voting shares, generally it does not have significant influence over the investee, unless
there is clear evidence to show that in this case the Company can participate in the production and business decisions of the
investee so as to form a significant influence.
(4) Method of impairment testing and impairment provision
For investments in subsidiaries, associates and joint ventures, refer to Note III. 20 for the method of asset impairment.
14. Investment property
Investment properties are properties held either to earn rental income or for capital appreciation or for both. The Company’s
investment properties include leased land use rights, land use right held and provided for to transfer after appreciation and leased
building and construction.
Investment properties are initially measured at acquisition cost, and depreciated or amortized using the same policy as that for fixed
assets or intangible assets.
For the impairment of the investment properties accounted for using the cost model, refer to Note III.20.
Gains or losses arising from the sale, transfer, retirement or disposal of an item of investment property are determined as the
difference among the net disposal proceeds, the carrying amount of the item, related taxes and surcharges, and are recognised in
profit or loss for current period.
Depreciation method of investment property is the same as fixed assets. Refer to Note III. 15 for details.
15. Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Company for use in production of goods, use in supply of services, rental or
for administrative purposes with useful lives over one accounting year.
Fixed assets are only recognised when its related economic benefits are likely to flow to the Company and its cost can be reliably
measured.
105
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Fixed asset is initially measured at cost.
(2) Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state of intended use, unless the fixed asset is
classified as held for sale. Not considering impairment provision, the estimated useful lives, residual value rates and depreciation
rates of each class of fixed assets are as follows:
Estimated useful life Residual value
Class Depreciation rate %
(years) rate %
Property and plant 20-35 5.00 4.80-2.70
Machinery and equipment 10 5.00-10.00 9.50-9.00
Electronic equipment 5 5.00 19.00
Motor vehicles 5 5.00 19.00
Others 5 5.00 19.00
For impaired fixed assets, cumulative amount of impairment provision is deducted in determining the depreciation rate.
(3) For the impairment of the fixed assets, please refer to Note III. 20.
(4) Useful lives, estimated residual values and depreciation methods are reviewed at least at each year-end.
The Group adjusts the useful lives of fixed assets if their expected useful lives are different with the original estimates and adjusts
the estimated net residual values if they are different from the original estimates.
(5) Overhaul costs
Overhaul costs occurred in regular inspection are recognized in the cost if there is undoubted evidence to confirm that this part
meets the recognition criteria of fixed assets, otherwise, the overhaul costs are recognized in profit or loss for the current period.
Depreciation is provided during the period of regular overhaul.
16. Construction in progress
Construction in progress is recognized based on the actual construction cost, including all expenditures incurred for construction
projects, capitalised borrowing costs and any other costs directly attributable to bringing the asset to working condition for its
intended use.
Construction in progress is transferred to fixed asset when it is ready for its intended use.
For the impairment of construction in progress, please refer to Note III. 20.
17. Borrowing costs
(1) Capitalisation criteria
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalised as
part of the cost of that asset. Other borrowing costs are expensed in profit or loss as incurred. The capitalisation of borrowing costs
shall commence only when the following criteria are met:
① capital expenditures have been incurred, including expenditures that have resulted in payment of cash, transfer of other assets or
the assumption of interest-bearing liabilities;
106
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
② borrowing costs have been incurred;
③ the activities that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalisation period
The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use,
the borrowing costs incurred thereafter are recognised in profit or loss for the current period.
Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted
abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
(3) Capitalisation rate of borrowing costs and calculation basis of capitalised amount
For interest expense actually incurred on specific borrowings, the eligible capitalised amount is the net amount of the borrowing
costs after deducting any investment income earned before some or all of the funds are used for expenditures on the qualifying asset.
To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company
shall determine the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that
asset, the capitalisation rate shall be the weighted average of the borrowing costs applicable to the borrowings of the Company that
are outstanding during the period, other than borrowings specifically for the purpose of obtaining a qualifying asset.
In the capitalisation period, exchange differences of specific borrowings in foreign currency shall be capitalised; exchange
differences of general borrowings in foreign currency is recognised in profit or loss for the current period.
18. Intangible assets
Intangible assets include land use right, software systems and right to use the trademark etc.
Intangible assets are stated at actual cost upon acquisition and the useful economic lives are determined at the point of acquisition.
When the useful life is finite, amortisation method shall reflect the pattern in which the asset’s economic benefits are expected to be
realised. If the pattern cannot be determined reliably, the straight-line method shall be used. An intangible asset with an indefinite
useful life shall not be amortised.
Amortisation method for intangible assets with finite useful lives is as follows:
Categories Useful life (years) Amortisation methods Remarks
Land use right 50 Straight-line method
Software systems 5 Straight-line method
Right to use the trademark 5-10 Straight-line method
The Group shall review the useful life and amortisation method of an intangible asset with a finite useful life at least at each year end.
Changes of useful life and amortisation method shall be accounted for as a change in accounting estimate.
An intangible asset shall be derecognised in profit or loss when it is not expected to generate future economic benefits.
For the impairment of intangible assets, please refer to Note III. 20.
19. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure incurred during the research phase and
expenditure incurred during the development phase.
107
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Expenditure during the research phase is expensed when incurred.
Expenditure during the development phase is capitalised if the product or process is technically and commercially feasible; the
Group intends to complete the development; the intangible asset can generate economic benefits, including there is evidence that
the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for
internal use, there is evidence that there is usage for the intangible asset; there is sufficient support in terms of technology, financial
resources and other resources in order to complete the development and use or sell the intangible asset; and development costs can
be measured reliably. Other development expenditure is recognised as an expense in the period in which it is incurred.
Research and development projects of the Group will enter into the development phase when they meet the above conditions,
technical and economic feasibility research is finished and necessary approval of the project is obtained.
Capitalised expenditure on the development phase is presented as “development costs” in the balance sheet, and is transferred to
intangible assets when the project is completed to its intended use.
20. Impairment of assets
The impairment of long-term equity investments in subsidiaries, associates and joint ventures, investment properties measured using
a cost model, fixed assets, construction in progress, and intangible assets (excluding inventories, deferred tax assets and financial
assets) is determined as follows:
At each balance sheet date, the Group determines whether there is any indication of impairment. If any indication exists, the
recoverable amount of the asset is estimated. In addition, the Group estimates the recoverable amounts of goodwill, intangible
assets with indefinite useful lives and intangible assets not ready for use at each year-end, irrespective of whether there is any
indication of impairment.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its present value of expected future cash flows.
The recoverable amount is estimated for each individual asset. If it is not possible to estimate the recoverable amount of each
individual asset, the Company determines the recoverable amount for the asset group to which the asset belongs. An asset group is
the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other
assets or asset groups.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount. A
provision for impairment of the asset is recognised accordingly.
For goodwill impairment test, the carrying amount of goodwill arising from a business combination is allocated reasonably to the
relevant asset group since the acquisition date. If the carrying amount of goodwill is unable to be allocated to asset group, the
carrying amount of goodwill will be allocated to asset portfolio. Asset group or portfolio of asset group is asset group or portfolio of
asset group which can be benefit from synergies of a business combination and is not greater than the reportable segment of the
Company.
In impairment testing, if impairment indication exists in asset group or portfolio of asset group containing allocated goodwill,
impairment test is first conducted for asset group or portfolio of asset group that does not contain goodwill, and corresponding
recoverable amount is estimated and any impairment loss is recognized. Then impairment test is conducted for asset group or
108
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
portfolio of asset group containing goodwill by comparing its carrying amount and its recoverable amount. If the recoverable amount
is less than the carrying amount, impairment loss of goodwill is recognized.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized using a straight-line method within the benefit period.
For long-term deferred expense that cannot bring benefit in future period, the Company recognized its amortised cost in profit or loss
for the current period.
22. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by
employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-
employment benefits, termination benefits and other long-term employee benefits. Benefits provided to the Company’s spouse,
children, dependents, family members of deceased employees or other beneficiaries are also part of the employee benefits.
According to liquidity, employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable”
on the balance sheet.
(2) Short-term employee benefits
In the current period, the Company has accrued for the actual wages, bonuses, medical insurance for employees based on standard
rate, work injury insurance and maternity insurance and other social insurance and housing fund incurred and these are recognised
as liabilities and corresponding costs in the profit or loss. If these liabilities are not expected to be fully paid 12 months after the end
of the reporting period in which employee renders the service to the Company, and if the financial impact is significant, these
liabilities shall be discounted using the net present value method.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Defined contribution plans are post-
employment benefit plans under which an enterprise pays fixed contributions into a separate fund and will have no future obligations
to pay the contributions. Defined benefit plans are post-employment benefit plans other than defined contribution plans.
Defined contribution plans
Defined contribution plans include primary endowment insurance, unemployment insurance and enterprise annuity plan.
Besides basic pension insurance, the Company establishes corporate annuity plans in accordance with the related policies of
corporate pension regulations. Employees can join the pension plan voluntarily. The Company has no other significant commitment
of employees’ social security.
The Company shall recognise, in the accounting period in which an employee provides service, the contribution payable to a defined
contribution plan as a liability, with a corresponding charge to the profit or loss for the current period or the cost of a relevant asset.
Defined benefit plan
At each balance sheet date, actuarial calculation and valuation shall be carried out by independent actuary for defined benefit plan to
109
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
determine the cost of welfare using estimated cumulative welfare unit method. Employee benefit cost resulted from the Group’s
defined benefit plan including the followings:
① Service cost, which includes service cost for current period, prior period and gain or losses on settlement. Service cost for
current period refers to the increase in amount of present value of liability of defined benefit plan resulted from service provided
by employees in current period. Service cost for prior period refers to changes in amount of present value of liability of defined
benefit plan related to prior period due to alteration of the plan.
② Net interest of defined benefit plan net liability or net asset include interest gain of plan asset, interest expenses of defined
benefit plan liability and interest affected by the upper limit of asset.
③ Changes due to re-measurement of defined benefit plan net liability or net asset
Unless other accounting standards allow or permit the employee welfare cost to be charged into asset cost, the Company shall
charge the item ① and ② above into current period profit or loss. Item ③ shall be included in other comprehensive income and will
cannot be recycled into profit or loss in later accounting periods and when the plan is terminated, the portion that previously recorded
in other comprehensive shall be transferred into retained earnings in all.
(4) Termination benefits
The Company provides for termination benefits to the employees and shall recognise an employee benefits liability for termination
benefits, with a corresponding charge to the profit or loss for the current period, at the earlier of the following dates: When the
Company cannot unilaterally withdraw the offer of the termination benefits because of an employment termination plan or a
redundancy proposal; or when the Company recognises the costs or expenses relating to a restructuring that involves the payment
of the termination benefits.
When adopting employee internal retirement plan, the economic compensation before the official retirement date shall be included in
as termination benefits. The salary for internal retired employee and social security payments from the date when the employee
ceases service to the date of officially retired shall be charged to current profit or loss one-off. Economic compensation after official
retirement shall be dealt as post-employment benefits.
(5) Other long-term employee benefits
Other long-term employee benefits provided by the Company to the employees satisfied the conditions for classifying as a defined
contribution plan; those benefits shall be accounted for in accordance with the above requirements relating to defined contribution
plan. When the benefits satisfied a defined benefit plan, it shall be accounted for in accordance with the above requirements relating
to defined benefit plan, but the movement of net liabilities or assets in re-measurement of defined benefit plan shall be recorded in
profit or loss for the current period or cost of relevant assets.
23. Provisions
A provision is recognised for an obligation related to a contingency if all the following conditions are satisfied:
(1) the Company has a present obligation;
(2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be estimated reliably.
110
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors
pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching
the best estimate. Where the effect of the time value of money is material, provisions are determined by discounting the expected
future cash flows. The Company reviews the carrying amount of a provision at the balance sheet date and adjusts the carrying
amount to the current best estimate.
If all or part of the expenditure necessary for settling the provision is expected to be compensated by a third party, the amount of
compensation is separately recognized as an asset when it is basically certain to be received. The recognized compensation amount
shall not exceed the carrying amount of the provision.
24. Share-based payment
(1) Types of share-based payment
Share-based payments are divided into equity-settled share-based payments and cash-settled share-based payments.
(2) Method of determining share-based payment
The Company determining the fair value of equity instruments such as share options granted which has active markets using public
quotation. If no active markets exist, option pricing model shall be used to determine its fair value. The following factors shall be
considered when selecting option pricing models: A. Exercising price of option, B. Valid period of option, C. Current price of the target
share, D. Share’s estimated volatility rate, E. estimated share dividend and F. risk-free interest rate during the valid period.
(3) Evidence of determining the best estimate of exercisable equity instruments
On each balance sheet date during the vesting period, the Company makes the best estimate based on the latest information on the
changes in the number of employees with vesting rights, and corrects the number of equity instruments that are expected to be
exercised. On the exercise date, the number of final estimated exercisable equity instrument shall be the same as actual exercisable
equity instrument.
(4) Accounting treatment for implementation, modifying and terminating of the share-based payment plan
Equity settled share-based payment is measured using fair value of equity instruments granted to employees. If the option can be
exercised immediately after the grant, the relevant costs or expenses are included in the grant date, and the capital reserve are
increased accordingly. If the option can only be exercised after completing the service within the vesting period or meeting the
required performance conditions, the amount of the fair value shall be charged to cost or expenses and capital reserve based on
straight-line method during the vesting period using the best estimate of the amount of exercisable equity instrument. No changes to
related cost or expenses and equity after the exercisable date.
The cash-settled share-based payment is measured at the fair value of the liabilities determined by the Company based on shares or
other equity instruments. If the right can be exercise immediately after the grant, the relevant costs or expenses are included in the
grant date, and the liabilities are increased accordingly. If the option can only be exercised after completing the service within the
vesting period or meeting the required performance conditions, the service obtained by the Company in current period shall be
charged to profit or loss based on fair value of the liabilities undertake by the Company, calculated on the basis of the best estimation
of the exercisable option on each balance sheet date of the vesting period. The liabilities shall be increased accordingly. The fair
111
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
value of the liability is re-measured at each balance sheet date and settlement date before the settlement of related liabilities, the
changes are included in the current profit and loss.
When the Group changes the share-based payment plan, if the modification increases the fair value of the granted equity
instruments, the increase in the fair value of the equity instruments is recognized accordingly. The increase in the fair value of equity
instruments refers to the difference between the fair value, measured on the modification date, of the equity instruments before and
after the modification. If the modification reduces the total fair value of the share-based payment or adopts other methods that are
not in favour of employees, the accounting treatment of it will not be changed, as if the modification never happened unless the
Group cancelled part or all of the granted equity instruments.
During the vesting period, if the granted equity instrument is cancelled, the Company shall treat the cancelled equity instrument as
accelerated exercise, and shall immediately charge the amount that should be recognized in the remaining vesting period into the
current profit and loss and adjusting the capital reserves at the same time. If the employee or other party can choose to meet the
non-vesting conditions but fails during the vesting period, the Group will treat it as a cancellation of the equity instrument.
25. Revenue
(1) General principle
The Group recognises revenue when the contract performance obligations have been fulfilled i.e. the customer has gained control
over the relevant goods or services.
If two or more performance obligations are included in the contract, the Group shall, on the commencement date of the contract,
apportion the transaction price to the individual performance obligations according to the relative proportion of the individual selling
prices of the commodities or services promised by the individual performance obligations, and measure the income according to the
transaction price apportioned to the individual performance obligations.
If one of the following conditions is met, the Group shall be obliged to fulfil its performance obligations over a certain period;
otherwise, it shall be obliged to fulfil its performance obligations at a certain point:
① The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;
or
② The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
③ The commodities produced by the Group in the course of its performance are irreplaceable and the Group has the right to collect
payments for the part of performance that has been completed so far during the entire contract period.
For performance obligation that is to be fulfilled over a period of time, the Group recognises revenue based on the progress of the
performance obligations that have been fulfilled throughout the contract period. When the progress of the performance obligation
cannot be reasonably measured, if the cost incurred is expected to be recovered, the revenue shall be recognised according to the
amount of cost incurred, until the progress can be reasonably determined.
For performance obligation that is to be fulfilled at certain point, the Group recognizes revenue when the customer gains control of
112
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
the relevant goods or services. When making judgement on whether customers have gained control of the relevant goods and
services, the Group considers the following signs:
① The Group has obtained the current collection rights, the customer has obtained the current payment obligation.
② The Group have transferred the legal ownership of the commodity to the customer, the customer has obtained the legal
ownership of the commodity.
③ The Group has transferred the physical commodity to the customer, the customer has possessed the commodity in kind.
④ The Group has transferred the ownership and accompanying risk and payment of goods to the customer, the customer has
obtained the ownership and accompanying risk and payment of goods.
⑤ The customer has accepted the goods or services.
⑥ Other signs that customers have acquired the control of goods.
The Group has transferred goods or services to its customers and has the right to receive consideration (which depends on factors
other than the passage of time) as its contract assets, which are deducted on the basis of expected credit losses(refer to Note III. 10
(5)). The unconditional (time-dependent) right to collect consideration from customers is shown as accounts receivable. The
obligation to transfer goods or services to the customer after consideration received or receivable is shown as contract liabilities.
Contract assets and contract liabilities under the same contract shall be shown in net amount, if the net amount is debit balance,
according to their liquidity, which shall be presented in the “contract assets” or “other non-current assets” project; if the net amount is
credit balance, according to its liquidity, which shall be presented in the “contract liabilities” or “other non-current liabilities” project.
(2) The specific methods
① Normal sale of goods
Revenue shall be recognised at the point that the goods are delivered to the customer and the good receive notes with customer’s
signature are obtained, and the customer gained control over the ownership of goods according to sales contract signed by both
parties.
② Direct sales
a. off-line retail sale: under direct sale mode, revenue shall be recognized at the point when the goods are delivered and payment by
customer is collected.
b. online retail sale: under e-commerce retail sale mode, revenue shall be recognized at the point that the goods are dispatched and
the customer confirmed received the goods.
③ Association with department store
Under this mode, the goods are delivered to customers after sales staff issues sales memo to retail customers who will carried out
inspection and accept the goods. The department store then collects the payment from the customer. At this point, the Group
recognizes revenue.
④ Consignment sale
Under consignment sales mode, the Group recognizes revenue when the Group receives the detail of the sales list from distributors
and confirms that the control over goods ownership were transferred to the purchaser.
113
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
⑤ Sale of consigned goods from others
Under Sale of consigned goods from others, the Group recognizes revenue in net amount when it delivered consigned sale goods to
customer and confirms that control over the ownership of goods were transferred to the purchaser.
26. Contract cost
Contract costs include incremental costs incurred to obtain a contract and costs to fulfil a contract.
Incremental costs incurred to obtain a contract refer to the costs (such as sales commissions) that the Group will not incur without
obtaining contracts. If the cost is expected to be recovered, the Group shall recognizes it as an asset as contract acquisition cost.
Expenditures incurred by the Group for the purpose of obtaining contracts, other than incremental costs expected to be recovered,
are recorded in current profit or loss when incurred.
The costs to fulfil a contract, which does not fall within the scope of other Accounting Standards for Business Enterprises such as
inventory and meets the following conditions at the same time, the Group recognizes it as an asset for the costs to fulfil a contract:
① This cost is directly related to a current or expected contract, including direct labor cost, direct materials cost, manufacturing costs
(or similar costs), costs clearly borne by the customer, and other costs incurred solely for the contract;
② This cost increases the group’s future resources for fulfilling its performance obligations;
③ The cost is expected to be recovered.
Assets recognized from contract acquisition cost and contract performance cost (hereinafter referred to as “assets related to contract
cost”) are amortized on the same basis as revenue recognition of goods or services related to the assets and are recorded in current
profit or loss. If the amortization period does not exceed one year, the profit or loss of the current period shall be included when it
occurs.
When the carrying amount of the assets related to contract cost is higher than the difference between the following two items, the
Group shall make provision for impairment in excess of the assets and shall consider the impairment loss of the assets as follows:
① The residual consideration that the Group expect to obtain for transferring goods or services related to the asset;
② The cost estimated to be incurred for transferring the relevant goods or services.
The contract performance cost recognized as assets shall be presented in the “inventory” project, if the amortization period is not
exceeding one year or a normal business cycle at initial recognition, and shall be presented in the “other non-current assets” project,
if the amortization period exceeding one year or a normal business cycle at initial recognition.
The contract acquisition cost recognized as assets shall be presented in the “other current assets” project, if the amortization period
is not exceeding one year or a normal business cycle at initial recognition, and shall be presented in the “other non-current assets”
project, if the amortization period exceeding one year or a normal business cycle at initial recognition.
27. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply
with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a
government grant is in the form of a transfer of a non-monetary asset, it is measured at fair value. If fair value cannot be reliably
114
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
determined, it is measured at a nominal amount of RMB 1.
Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase,
construct or otherwise acquire long-term assets. Government grants related to income are grants other than those related to assets.
For government grants with unspecified purpose, the amount of grants used to form a long-term asset is regarded as government
grants related to an asset, the remaining amount of grants is regarded as government grants related to income. If it is not possible to
distinguish, the amount of grants is treated as government grants related to income.
A government grant related to an asset is offset against the carrying amount of the related asset, or recognised as deferred income
and amortised to profit or loss over the useful life of the related asset on a reasonable and systematic manner. A grant that
compensates the Group for expenses or losses already incurred is recognised in profit or loss or offset against related expenses
directly. A grant that compensates the Group for expenses or losses to be incurred in the future is recognised as deferred income,
and included in profit or loss or offset against related expenses in the periods in which the expenses or losses are recognised.
A grant related to ordinary activities is recognised as other income or offset against related expenses based on the economic
substance. A grant not related to ordinary activities is recognised as non-operating income.
When a recognised government grant is to be returned, carrying amount of the related asset is adjusted if the grant was initially
recognized as offset against the carrying amount of the related asset. If there is balance of relevant deferred income, it is offset
against the carrying amount of relevant deferred income. Any excess of the reversal to the carrying amount of deferred income is
recognised in profit or loss for the current period. For other circumstances, reversal is directly recognized in profit or loss for the
current period.
Preferential subsidized interest received by the Group is accounted for in following ways: if the finance authority distributes
subsidized interest to the bank that providing the loan, the Group accounted for the loan based on actual amount of loan received
and consequently calculating borrowing expenses based on the principal amount and preferential subsidized interest. If the finance
authority distributes subsidized interest to the Group, the borrowing expenses will be off-set by the amount of subsidized interest
received.
28. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the
extent that they relate to transactions or items recognised directly in equity and goodwill arising from a business combination.
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differences respectively, being the
differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in the following transactions:
(1) initial recognition of goodwill, or assets or liabilities in a transaction that is not a business combination and that affects neither
accounting profit nor taxable profit (or deductible loss);
(2) taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and the Company is
able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
115
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The Company recognises a deferred tax asset for deductible temporary differences, deductible losses and tax credits carried forward
to subsequent periods, to the extent that it is probable that future taxable profits will be available against which deductible temporary
differences, deductible losses and tax credits can be utilised, except for those incurred in the following transactions:
(1) a transaction that is not a business combination and that affects neither accounting profit nor taxable profit (or deductible loss);
(2) deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, the corresponding
deferred tax asset is recognized when both of the following conditions are satisfied: it is probable that the temporary difference
will reverse in the foreseeable future; and it is probable that taxable profits will be available in the future against which the
temporary difference can be utilized.
At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from the expected manner of
recovery or settlement of the carrying amount of the assets and liabilities, using tax rates enacted at the reporting date that are
expected to be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced to the extent that it is no longer
probable that the related tax benefits will be utilised. Such reduction is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.
29. Operating leases and financing leases
When the Group is a lessor, a finance lease is a lease that transfers in substance all the risks and rewards incidental to ownership of
an asset. An operating lease is a lease other than a finance lease.
(1) As a lessor
Income derived from operating leases is recognized in profit or loss using the straight-line method over the lease term. Initial direct
costs are charged to profit or loss immediately.
(2) As a lessee
In finance leases, at the commencement of the lease, the Group recognizes the lower of the fair value of leased asset and the
present value of minimum lease payments as the book value of the leased asset. Present value of minimum lease payments is
recognized as long-term payables. The difference between the fair value of lease asset and the present value of minimum lease
payments is accounted for as unrecognized finance charge. Initial direct costs are recognized in the carrying amount of leased
assets. Unrecognized finance charge is amortized over the lease period by effective interest method and finance expenses is
recognized in profit or loss for the current period. The Group adopts the same depreciation policy of with self-owned fixed assets in
calculating the depreciation charge.
Rental payments under operating leases are recognized as part of the cost of another related asset or as expenses on a straight-line
basis over the lease term. Initial direct costs are charged to profit or loss immediately.
(3) Rent concessions arising as a direct consequence of Covid-19 pandemic
For rent concession modification to current lease agreement that agreed by the Group with the lessee or lessor as a direct
consequence of Covid-19 pandemic, the Group adopts simplified method to leases of property and plant if the following conditions
are met:
116
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
① the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change. Both discounted and not discounted lease payment are acceptable;
② any reduction in lease payments affects only payments originally due on or before 30 June 2021
③ there is no substantive change to other terms and conditions of the lease
The Group does not evaluate whether there is lease modification.
As a lessee, the Group treat operating lease the same way before the rent concession and accounting the rental of original
agreement in relevant asset or expense. If rent concession occurs, the Group treat the rental reduced as contingent rental and offset
cost or expenses during the concession period. If the payment of rental was deferred in timing, the Group recognizes rental payable
in the period that should make the payment and offsetting the payable at the time when making actual payment. As a lessee, the
Group treat finance lease the same way before the rent concession and accounting the unrecognized financing expense as current
period finance expense using the same discount rate before the rent concession. If rent concession occurs, the Group treat the
rental reduced as contingent rental and offset cost or expenses and adjusting long-term payables accordingly at the time that original
lease payment obligation is released as a result of concluding concession agreement etc. Unrecognised finance expense shall also
be adjusted if the discount rate used is the rate before the rent concession. If the payment of rental was deferred in timing, the Group
offset the long-term payables that previous recognised at the time when making actual payment.
As a lessor, the Group treat operating lease the same way before the rent concession and accounting the rental of original
agreement as rental income. If rent concession occurs, the Group treat the rental reduced as contingent rental and offset rental
income during the concession period. If the payment of rental was deferred in timing, the Group recognizes rental receivable in the
period that should make the payment and offsetting the receivable at the time when actually collected. As a lessor, the Group treat
finance lease the same way before the rent concession and accounting the unrecognized financing income as current period finance
income using the same lease inherent interest rate before the rent concession. If rent concession occurs, the Group treat the rental
reduced as contingent rental and offset rental income that recognized previously at the time that original lease payment obligation is
released as a result of concluding concession agreement etc. If rental income is not sufficient to offset, investment gain shall be
adjusted. At the same time, adjusting long-term receivables accordingly. Unrecognised finance income shall also be adjusted if the
discount rate used is the rate before the rent concession. If the payment of rental was deferred in timing, the Group offset the long-
term receivables that previous recognised at the time when the rental is actually collected.
30. Re-purchase of shares
Before written-off or transfer, the shares that the Company re-purchased are dealt as treasury shares. All expenses incurred for the
re-purchase are charged in the cost of treasury shares. Consideration and transaction expenses paid during the share re-purchase
shall decrease shareholder’s equity. No gain or losses shall be recognized during re-purchase, transfer or written-off of the
Company’s shares.
If the treasury shares is transferred, the difference between amount actually received and the share’s carrying amount shall be
charged to capital reserve, if the capital reserve is not sufficient to offset, surplus reserve and retained earing shall be offset. If the
treasury share is to written-off, the share capital shall be decreased based on the face value of shares and the difference between
117
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
the carrying amount and its face value shall offset the capital reserve. If the capital reserve is not sufficient to offset, deducting
surplus reserve and retained earnings.
31. Restricted share
Under the share option incentive plan, the Company grants restricted shares to the incentive individuals who will subscribe the
shares first. If the unlocking condition is not reached subsequently, the Company will re-purchase the shares according to the price
previously agreed. If the shares issued under the incentive plan has gone through capital increase filing procedures, the Company
recognizes share capital and capital reserve (share premium) based on consideration received from the employees and, at the same
time, recognizes treasury shares and other payables for the re-purchase obligation.
32. Significant accounting estimates and judgments
The Group gives continuous assessment of the reasonable expectations of future events and the critical accounting estimates and
key assumptions based on its historical experience and other factors. The critical accounting estimates and key assumptions that are
likely to lead to significant adjusted risks of the carrying amount of assets and liabilities for the next financial year are presented as
follows:
Classification of financial assets
The Group’s major judgments in determining the classification of financial assets include the analysis of business models and the
characteristics of contract cash flows.
At the level of financial asset groups, the Group determines the business model for managing financial assets, taking into account
factors such as the way to evaluate and report financial assets performance to key managers, the risks affecting financial assets
performance and their management methods, and the way in which relevant business managers are paid.
In assessing whether the contract cash flow of financial assets is consistent with the basic lending arrangements, the Group has the
following judgments: whether the principal’s time distribution or amount may change during the lifetime for early repayment and other
reasons; whether the interest only includes the time value of money, credit risk, other basic lending risks and the consideration of
cost and profit. For example, does the amount of advance payment only reflect the unpaid principal and interest based on the unpaid
principal, and reasonable compensation paid for the early termination of the contract.
Measurement of Expected Credit Loss of Receivables
The Group calculates the expected credit losses of accounts receivable by default risk exposure and expected credit losses rate of
accounts receivable, and determines the expected credit losses rate based on default probability and default loss rate. In
determining the expected credit losses rate, the Group uses internal historical credit loss and other data, and adjusts the historical
data with current situation and forward-looking information. In considering forward-looking information, the indicators used by the
Group include the risks of economic downturn, external market environment, technological environment and changes in customer
conditions. The Group regularly monitors and reviews assumptions related to the calculation of expected credit losses.
Provision for decline in value of inventories
The Group recognises provision for obsolete inventories based on the excess of the cost of inventory over its net realisable value. In
118
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
determining the net realisable value of inventories, the management uses significant judgments to estimate the selling price, cost to
finish manufacturing, and selling expenses and associated taxes.
Deferred income tax assets
Deferred tax assets relating to certain temporary differences and tax losses are recognised as management considers it is probable
that future taxable profit will be available against which the temporary differences or tax losses can be utilised. The management
needs significant judgment to estimate the time and extent of the future taxable profits and tax planning strategy to recognise the
appropriate amount of deferred income tax assets. Where the expectation is different from the original estimate of the future taxable
profits, such differences will impact the recognition of deferred tax assets and taxation in the years when the estimates are changed.
33. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
① New revenue standard
The Ministry of Finance have issued “the Accounting Standards for Business Enterprises No. 14 - Revenue (Revised)” (hereinafter
referred to as the “New Revenue Standards”). The Group has implemented the Accounting Standards since January 1, 2020, and
adjusted the relevant contents of accounting policies.
The Group recognize revenue when the contract performance obligations have been fulfilled, the customer has gained control of the
relevant goods and services. When certain condition is met, the Group shall be obliged to fulfil its performance obligations within a
certain period, otherwise, it shall be obliged to fulfil its performance obligations at a certain point. If two or more performance
obligations are included in the contract, the Group shall, on the commencement date of the contract, apportion the transaction price
to the individual performance obligations according to the relative proportion of the individual selling prices of the commodities or
services promised by the individual performance obligations, and measure the income according to the transaction price apportioned
to the individual performance obligations.
The Group has adjusted the related accounting policies in accordance with the specific provisions of the new revenue standards on
specific matters or transactions. For example: contract cost, quality assurance, the distinction between the principal responsible
person and the agent, the treatment of advances from customers, etc.
The right to receive consideration for transferring goods to the customer, which depends on factors other than the passage of time,
shall be presented as contract assets. The obligation to transfer goods to the customer after consideration received or receivable
shall be presented as contract liabilities.
Based on the cumulative impact of initial adoption of new revenue standards, the Group adjusted the retained earnings and other
related items in the financial statements at the beginning of 2020 without adjusting the comparative financial statements data. The
new revenue standards have no significant impact on consolidated financial statements shareholders’ equity. The first
implementation of the new revenue standards has the following impact on other related items of the financial statements:
Affected items in Amounts of adjustments
Details of and the reasons for the changes in accounting policies
the financial statements (1 January, 2020)
119
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
As a result of the implementation of the new revenue standards, contract liabilities 17,698,280.12
the Group will include the right to collect consideration related to
sale of goods and provision of services that do not satisfy the Other current liabilities 2,300,776.41
unconditional right to receive payment as contract assets; the
Group will reclassify the advance from customers from sales of Advance payment -19,999,056.53
goods and provision of services to contract liabilities.
Compared with the previous revenue standards, the impact of the implementation of new revenue standards on the related financial
statements items as at 31 December 2020 is as follows:
Amounts affected
Balance sheet items affected
(31 December, 2020)
Contract liabilities 18,213,396.49
Other current liabilities 2,299,755.09
Advance receipts -20,513,151.58
Amounts affected
Income statement items affected
(for the year ended 31 December 2020)
Revenue -29,996,402.36
Cost of sales -22,007,232.98
Selling and distributing expenses -7,989,169.38
② Interpretation No. 13 to Accounting Standards for Business Enterprises
The Ministry of Finance have issued Interpretation No.13 to Accounting Standards for Business Enterprises (Cai Kuai (2019) No. 21)
in December 2019 (the “Interpretation 13”).
The Interpretation 13 revised three elements that constitute business and specified judgement conditions to business. It also
introduced “degree of concentration test” when making judgement on whether the operating activities or asset group, acquired by the
purchaser in a business combination involving entities not under common control, constitutes a business.
The Interpretation 13 clarified that the related party of an enterprise shall include joint venture and associates of other common
members (including parent company and subsidiaries) that belong to the same enterprise group, and joint venture and associates of
the investor that exerts common control over the enterprise.
The Interpretation 13 was taken effective since 1 January 2020. The Group adopts prospective application to accounting for above
accounting policy changes.
The adoption of Interpretation 13 had no significant impact to the Group’s financial position, operation performance and related party
disclosure.
③ The Ministry of Finance have issued “Notice of Issue ‘Rules of Accounting Treatment to Rent Concession Related to Covid-19’
(Cai Kuai (2020) No. 10). According to the rules, rent concession can be accounted for using simplified method.
120
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The Group adopted simplified method for rent concession related to lease of property and plant since 1 January 2020 (refer to Note
III. 29 (3) for detail) and recognise related rental concession into profit or loss at the period of concession or the point that reach
agreement to relief and release related rights and obligations. As a lessee, the impact of above treatment to current period profit
before tax is RMB11,408,913.44. As a lessor, the impact of above treatment to current period profit before tax is - RMB15,091,785.03.
Rent concession occurred before 1 January 2020 of the Group does not applicable for the simplified method above.
(2) Significant changes in accounting estimates
The Group has no significant changes in accounting estimates this year.
(3) At the initial adoption of new revenue standard, the adjustments to relevant items of financial statements at the beginning of the
initial adoption year is as follow:
Consolidated balance sheet
Item As at 31/12/2019 2020.01.01 Amount adjusted
Current assets:
Cash at bank and on hand 316,668,565.09 316,668,565.09 -
Financial assets held for trading - - -
Bill receivable 10,596,431.31 10,596,431.31 -
Accounts receivable 397,471,106.98 397,471,106.98 -
Accounts receivable financing - - -
Prepayments 10,847,962.28 10,847,962.28 -
Other receivable 47,239,844.58 47,239,844.58 -
Including: interest receivable - - -
Dividend receivable - - -
Inventory 1,808,820,089.92 1,808,820,089.92 -
Contract asset Not applicable - -
Non-current assets due in one 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
Debt investments - - -
Other debt investments - - -
Long-term equity investments 46,423,837.85 46,423,837.85 -
Other equity investments 85,000.00 85,000.00 -
Other non-current financial assets - - -
Investment properties 407,503,307.24 407,503,307.24 -
Fixed assets 363,997,098.94 363,997,098.94 -
Construction-in-progress - - -
Intangible assets 38,711,821.26 38,711,821.26 -
Long-term deferred expenses 152,587,491.33 152,587,491.33 -
Deferred tax assets 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 -
Total assets 3,760,923,285.37 3,760,923,285.37 -
Current liabilities
Short-term loan 567,908,833.21 567,908,833.21 -
Financial liability held for trading - - -
Bill payable - - -
Accounts payable 279,772,787.37 279,772,787.37 -
Advanced payments 23,433,463.57 3,434,407.04 -19,999,056.53
Contract liabilities Not applicable 17,698,280.12 17,698,280.12
Employee remuneration payable 82,602,845.67 82,602,845.67 -
121
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item As at 31/12/2019 2020.01.01 Amount adjusted
Taxes payable 24,064,803.00 24,064,803.00 -
Other payables 119,616,721.63 119,616,721.63 -
Including: interest payable - - -
Dividend payable 848,233.27 848,233.27 -
Non-current liabilities due in one year 360,140.00 360,140.00 -
Other current liabilities - 2,300,776.41 2,300,776.41
Total current liabilities 1,097,759,594.45 1,097,759,594.45 -
Non-current liabilities
Long-term loan 4,321,680.00 4,321,680.00 -
Provisions - - -
Deferred income 3,046,090.60 3,046,090.60 -
Deferred tax liabilities 1,256,242.49 1,256,242.49 -
Other non-current liabilities - - -
Non-current liabilities 8,624,013.09 8,624,013.09 -
Total liabilities 1,106,383,607.54 1,106,383,607.54 -
Shareholder’s equity
Share capital 442,968,881.00 442,968,881.00 -
Capital reserve 1,081,230,215.32 1,081,230,215.32 -
Less: treasury shares 71,267,118.78 71,267,118.78 -
Other comprehensive income -940,209.09 -940,209.09 -
Special reserves - - -
Surplus reserve 235,701,180.14 235,701,180.14 -
Undistributed profit 966,840,818.40 966,840,818.40 -
Shareholder’s equity attributable to the
2,654,533,766.99 2,654,533,766.99 -
owners of parent company
Minority shareholder’s interest 5,910.84 5,910.84 -
Total shareholder’s equity 2,654,539,677.83 2,654,539,677.83 -
Liability and shareholder’s equity 3,760,923,285.37 3,760,923,285.37 -
Company Balance Sheet
Item As at 31/12/2019 2020.01.01 Amount adjusted
Current assets:
Cash at bank and on hand 270,673,346.02 270,673,346.02 -
Financial assets held for trading - - -
Bill receivable - - -
Accounts receivable 2,848,025.39 2,848,025.39 -
Accounts receivable financing - - -
Prepayments - - -
Other receivable 783,647,732.22 783,647,732.22 -
Including: interest receivable - - -
Dividend receivable - - -
Inventory - - -
Contract asset Not applicable - -
Non-current assets due in one 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 -
Debt investments - - -
Other debt investments - - -
Long-term equity investments 1,380,895,239.27 1,380,895,239.27 -
Other equity investments 85,000.00 85,000.00 -
Other non-current financial assets - - -
Investment property 329,970,083.18 329,970,083.18 -
Fixed assets 238,594,698.50 238,594,698.50 -
Construction-in-progress - - -
Intangible assets 30,925,974.54 30,925,974.54 -
122
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item As at 31/12/2019 2020.01.01 Amount adjusted
Long-term deferred expenses 12,106,759.98 12,106,759.98 -
Deferred tax assets 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 loan 540,650,622.50 540,650,622.50 -
Financial liabilities held for trading - - -
Bill payable - - -
Accounts payable 12,952,934.93 12,952,934.93 -
Advanced payments 3,434,407.04 3,434,407.04 -
Contract liabilities N.A. - -
Employee remuneration payable 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 - - -
Dividend payable 848,233.27 848,233.27 -
Non-current liabilities due in one year - - -
Other current liabilities - - -
Total current liabilities 660,402,240.18 660,402,240.18 -
Non-current liabilities
Long-term loans - - -
Provisions - - -
Deferred income 3,046,090.60 3,046,090.60 -
Deferred tax liabilities - - -
Other non-current liabilities - - -
Non-current liabilities 3,046,090.60 3,046,090.60 -
Total liabilities 663,448,330.78 663,448,330.78 -
Shareholder’s equity
Share capital 442,968,881.00 442,968,881.00 -
Capital reserve 1,086,885,756.42 1,086,885,756.42 -
Less: treasury shares 71,267,118.78 71,267,118.78 -
Other comprehensive income - - -
Surplus reserve 235,701,180.14 235,701,180.14 -
Undistributed profit 710,223,150.82 710,223,150.82 -
Total shareholder’s equity 2,404,511,849.60 2,404,511,849.60 -
Liability and shareholder’s equity 3,067,960,180.38 3,067,960,180.38 -
IV. Taxation
1. Main types of taxes and corresponding tax rates
Tax type Tax basis Tax rate %
VAT Taxable revenue 13, 9, 6 or 5
Consumption tax Taxable income 20
Urban maintenance and construction tax Turnover tax payable 7 or 5
Property tax (note (1)) Original cost of property or rental income 1.2 or 12
Corporate income tax Taxable income Note (2)
Note (1) property tax
In accordance with Article 5 of “Notice to Publish “Reply to Issues Related to Property Tax and Vehicle and Vessel Usage Tax””, Shen
Di Shui Fa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased out by manufacturing or business entity are
123
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
taxed at 1.2% on the bases of 70% of the original cost of the property.
Properties of the Company that situated in Shenzhen are taxed according to this notice. Properties situated in other cities are taxed
according to local regulations.
Note (2) Corporate income tax (‘CIT”)
Name of entity subject to corporate income tax Applicable tax rate
The Company (Note ①⑤) 25.00
Shenzhen HARMONY World Watch Center Co., Ltd. (HARMONY Company) (note ①⑤) 25.00
Shenzhen FIYTA Precision Technology Co., Ltd. (Precision Technology Company) (note ②③) 15.00
FIYTA Hong Kong (note ④) 16.50
Station 68 (note ④) 16.50
Shenzhen FIYTA Technology Development Co., Ltd (Technology Company) (note ②③) 15.00
TEMPORAL (Shenzhen) Co., Ltd. (TEMPORAL Company) (note ⑤) 25.00
Shenzhen Harmony E-commerce Co., Ltd. (E-commerce Company) (note ⑦) 20.00
Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit Shenzhen Company) (note⑤) 25.00
FIYTA Sales Co., Ltd (Sales Company) (note ①⑤) 25.00
Liaoning Hengdarui Commercial & Trade Co., Ltd (Hengdarui Company) (note ⑤) 25.00
Montres Chouriet SA (Swiss Company) (note ⑥) 30.00
Note ①:According to the regulations stated in Guo Shui Fa (2008) No. 28, “Interim Administration Method for Levy of Corporate
Income Tax to Enterprise that Operates Cross-regionally”, the head office of the Company and its branch offices, the head office of
HARMONY Company and its branch offices, and the head office of Sales Company and its branch offices adopt tax submission
method of “unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and adjustment by finance
authorities” starting from 1 January 2008. Branch offices mentioned above share 50% of the enterprise income tax and prepay
locally; and 50% will be prepaid by the head offices mentioned above.
Note ②: According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of Science on Improving
the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui (2018) No. 99), if the research and
development costs, which were incurred for developing new technologies, new products, and new processes by the Company, the
Precision Technology Company and the Technology Company, are not capitalized as intangible assets but charged to current profit
or loss, all of these entities can enjoy a 75% super deduction on top of the R&D expenses that allowed to deduct before income tax
during the period from 1 January 2018 to 31 December 2020.
Note ③:The Company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New Technology
Enterprises that Require Key Support from the State”.
Note ④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is 16.50% this year.
Note ⑤: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25% for residential
enterprises since 1 January 2008.
Note ⑥: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
124
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Note ⑦ According to “Notice of Ministry of Finance and State Administration of Taxation on implementation of the Inclusive Income
Tax Deduction and Exemption Policies for Small Low-Profit Enterprises” (Cai Shui (2019) No.13), the portion of annual taxable
income of small low-profit enterprise that is below RMB1,000,000.00, it is not taxed at 25% and will be taxed at a rate of 20%.
2. Preferential treatment and corresponding approval
(1) According to “Notice of Ministry of Finance and State Administration of Taxation in Extending Expiration Period of Utilizing
Losses for High-Tech Enterprises and Scientific Oriented Medium and Small Enterprises” (Cai Shui [2018] No. 76), unutilized
losses incurred in prior 5 years before obtaining the status of High and New Tech Enterprise can be carried forward and utilized
in future years. The longest period was extended from 5 years to 10 years.
V. Notes to the consolidated financial statements
1. Cash at bank and on hand
Item As at 31/12/2020 As at 31/12/2019
Cash on hand 183,759.72 229,258.38
Cash at bank 62,522,861.50 48,187,841.17
Deposit in finance company 283,532,347.79 237,118,456.45
Other monetary funds 6,818,316.70 31,133,009.09
Total 353,057,285.71 316,668,565.09
Including: Total overseas deposits 3,412,028.94 3,641,389.51
At the end of year, the Group does not have balance of cash or other monetary funds that are restricted because being pledged as
security, guaranteed or blocked frozen or overseas balances that have restriction on remittance back to the home country.
2. Bill receivables
As at 31/12/2020 As at 31/12/2019
Type
Carrying amount Provision Book value Carrying amount Provision Book value
Bank
acceptance 16,813,464.36 - 16,813,464.36 6,187,353.98 - 6,187,353.98
bills
Commercial
acceptance 33,030,502.96 1,651,525.17 31,378,977.79 4,626,260.06 217,182.73 4,409,077.33
bills
Total 49,843,967.32 1,651,525.17 48,192,442.15 10,813,614.04 217,182.73 10,596,431.31
Note:
(1) There is no pledge of notes at the end of the period.
(2) Bills have been endorsed but not yet due at the end of the period.
Type Amount de-recognised Amount not de-recognised
Bank acceptance bills - 3,697,813.75
Commercial acceptance bills - 13,107,174.13
Total - 16,804,987.88
125
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(3) Bill receivable that transferred to receivables due to issuer’s default at the end of the period.
Type Amount transferred to accounts receivable
Commercial acceptance bills 231,503.50
(4) Classification based on method of accrual of bad debt provision.
As at 31/12/2020 As at 31/12/2019
Book value Provision Book value Provision
Type ECL ECL
Percentage Book value Percentage Book value
Amount Amount rate Amount Amount rate
(%) (%)
(%) (%)
Standalone
- - - - - - - - - -
accrual
Accrued
based on 49,843,967.32 100.00 1,651,525.17 3.31 48,192,442.15 10,813,614.04 100.00 217,182.73 2.01 10,596,431.31
group
including
Commercial
acceptance 33,030,502.96 66.27 1,651,525.17 5.00 31,378,977.79 4,626,260.06 42.78 217,182.73 4.69 4,409,077.33
bills
Bank
acceptance 16,813,464.36 33.73 - - 16,813,464.36 6,187,353.98 57.22 - - 6,187,353.98
bills
Total 49,843,967.32 100.00 1,651,525.17 3.31 48,192,442.15 10,813,614.04 100.00 217,182.73 2.01 10,596,431.31
Bad debt provision accrued based on groups:
Item: Commercial acceptance bills
As at 31/12/2020 As at 31/12/2019
Name Bad debt Bad debt
Bill receivables ECL rate (%) Bill receivables ECL rate (%)
provision provision
Within 1 year 33,030,502.96 1,651,525.17 5.00 4,626,260.06 217,182.73 4.69
(5) Status of accrual, recovery or reversal of bad debt
Item Amount of bed debt provision
As at 31/12/2019 217,182.73
Accrual 1,434,342.44
Reversal -
Written-off -
Recycled -
Other -
As at 31/12/2020 1,651,525.17
(6) There is no written-off of bills receivable during the period.
3. Accounts receivable
(1) Presentation by ageing
126
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Ageing As at 31/12/2020 As at 31/12/2019
Within 1 year 489,913,393.98 412,028,202.94
1-2 years 10,509,894.86 9,278,600.90
2-3 years 6,142,706.69 1,196,515.64
Over 3 years 2,882,615.92 4,013,110.09
Subtotal 509,448,611.45 426,516,429.57
Less: provision for bad debt 33,849,926.57 29,045,322.59
Total 475,598,684.88 397,471,106.98
(2) Presentation by method of providing bad debt
As at 31/12/2020
Category Carrying amount Bad debt provision
Percentage Book value
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment 21,208,447.13 4.16 19,133,975.43 90.22 2,074,471.70
individually
Collectively assessed for
impairment based on credit 488,240,164.32 95.84 14,715,951.14 3.01 473,524,213.18
risk characteristics
Receivables from other
customers
Individually significant and
assessed for impairment 488,240,164.32 95.84 14,715,951.14 3.01 473,524,213.18
individually
Total 509,448,611.45 100.00 33,849,926.57 6.64 475,598,684.88
(continued)
As at 31/12/2019
Carrying amount Bad debt provision
Category
Percentage Book value
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment 24,140,377.57 5.66 17,562,041.15 72.75 6,578,336.42
individually
Collectively assessed for
impairment based on credit 402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
risk characteristics
Receivables from other
customers
Individually significant and
assessed for impairment 402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
individually
Total 426,516,429.57 100.00 29,045,322.59 6.81 397,471,106.98
Specific bad debt provision provided
As at 31/12/2020 As at 31/12/2019
Category Carrying Carrying ECL rate
Provision ECL rate (%) Provision Reason
amount amount (%)
Receivables Unable to
21,208,447.13 19,133,975.43 90.22 24,140,377.57 17,562,041.15 72.75
from other recover
127
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
customers
Bad debt provision based on groups
Group: Receivables from other customers
As at 31/12/2020 As at 31/12/2019
Category Accounts Bad debt Accounts Bad debt
ECL rate (%) ECL rate (%)
receivable provision receivable provision
Within 1 year 485,986,184.98 13,631,026.91 2.80 398,474,804.41 11,042,487.31 2.77
1-2 years 1,578,878.25 409,823.14 25.96 3,639,298.75 269,502.55 7.41
2-3 years 513,744.00 513,744.00 100.00 122,592.64 31,935.38 26.05
Over 3 years 161,357.09 161,357.09 100.00 139,356.20 139,356.20 100.00
Total 488,240,164.32 14,715,951.14 3.01 402,376,052.00 11,483,281.44 2.85
(3) Accrual, recovery or reversals of provision during the year:
Bad debt provision
As at 31/12/2019 29,045,322.59
Adjustment amount for initial adoption of new revenue standard -
2020.01.01 29,045,322.59
Accrual 6,813,816.36
Recovery or reversals 187,236.30
Written-off 1,799,519.78
Transferred -
Other -22,456.30
As at 31/12/2020 33,849,926.57
(4) Receivables that are written-off during the period.
Item Amount
Written-off of accounts receivable 1,799,519.78
Including: significant accounts receivables that were written-off are as follows:
Whether it
Procedures
Name Nature Amount Reason involves related
followed
party transaction
Xi’an Shiji Jinhua
Trade
Qujiang Shopping Mall 1,702,371.94 Unable to recover Approved No
receivable
Co., Ltd.
128
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB159,372,167.34, accounted for 31.28% of total balance of
accounts receivable as of the period end. Corresponding bad debt provision accrued is RMB4,797,102.24.
4. Prepayments
(1) Presented by ageing
As at 31/12/2020 As at 31/12/2019
Ageing
Amount Percentage % Amount Percentage %
Within 1 year 16,612,773.76 100.00 10,221,061.48 94.23
1-2 years - - 284,733.40 2.62
Over 2 years - - 342,167.40 3.15
Total 16,612,773.76 100.00 10,847,962.28 100.00
(2) Top 5 prepayment accounts as of period end
Total amount of prepayments to top five accounts amounts to RMB13,800,793.18, accounted for 83.07% of total balance of
prepayments as of the period end.
5. Other receivable
Item As at 31/12/2020 As at 31/12/2019
Interest receivable - -
Dividends receivable - -
Other receivables 52,902,779.63 47,239,844.58
Total 52,902,779.63 47,239,844.58
(1) Other receivables
① Presented by ageing
Ageing As at 31/12/2020 As at 31/12/2019
Within 1 year 55,677,698.47 49,453,416.07
1-2 years 662,641.27 11,101.80
2-3 years 11,101.80 186,180.00
Over 3 years 588,065.00 7,933,538.12
Subtotal 56,939,506.54 57,584,235.99
Less: bad debt provision 4,036,726.91 10,344,391.41
Total 52,902,779.63 47,239,844.58
② Presented by nature
129
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
As at 31/12/2020 As at 31/12/2019
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Petty cash 2,438,803.09 - 2,438,803.09 2,147,617.27 - 2,147,617.27
Security deposit 45,981,846.00 2,762,853.51 43,218,992.49 45,014,657.70 3,093,646.11 41,921,011.59
Social security
payment on- 792,711.42 - 792,711.42 526,453.88 - 526,453.88
behalf
Others 7,726,146.03 1,273,873.40 6,452,272.63 9,895,507.14 7,250,745.30 2,644,761.84
Total 56,939,506.54 4,036,726.91 52,902,779.63 57,584,235.99 10,344,391.41 47,239,844.58
③ Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in next
Category Book value Bad debt Provision Carrying amount Note
12 month (%)
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk 55,271,836.64 4.29 2,369,057.01 52,902,779.63
characteristics
Petty cash 2,438,803.09 - - 2,438,803.09
Security deposit 45,500,721.00 5.01 2,281,728.51 43,218,992.49
Social security payment on-
792,711.42 - - 792,711.42
behalf
Others 6,539,601.13 1.34 87,328.50 6,452,272.63
Total 55,271,836.64 4.29 2,369,057.01 52,902,779.63
As of the period end, the Company does not have other receivables at the second stage.
Bad debt provision at the third stage as of the period end:
ECL rate of the life Carrying
Category Book value Provision reason
time receivables (%) amount
Individually significant and
assessed for impairment
individually
Chances of recovery is
Huaming Hang Co., Ltd. 480,000.00 100.00 480,000.00 -
remote
Beijing Konggang Runze Exhibition Chances of recovery is
470,625.00 100.00 470,625.00 -
Co., Ltd. remote
SwissTech (Shenzhen) Co., Ltd. Chances of recovery is
649,029.90 100.00 649,029.90 -
remote
Chances of recovery is
Others 68,015.00 100.00 68,015.00 -
remote
Total 1,667,669.90 100.00 1,667,669.90 - ——
Bad debt provision as of 31 December 2019:
Bad debt provision at the first stage:
130
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
ECL rate of the
Carrying
Category Book value life time Provision Note
amount
receivables (%)
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk 49,690,747.87 4.93 2,450,903.29 47,239,844.58
characteristics
Petty cash 2,147,617.27 - - 2,147,617.27
Security deposit 44,214,657.70 5.19 2,293,646.11 41,921,011.59
Social security payment on-
526,453.88 - - 526,453.88
behalf
Others 2,802,019.02 5.61 157,257.18 2,644,761.84
Total 49,690,747.87 4.93 2,450,903.29 47,239,844.58
As of 31 December 2019, the Group does not have other receivables at the second stage.
Bad debt provision at the third stage as of 31 December 2019:
ECL rate of the
Carrying
Category Book value life time Provision reason
amount
receivables (%)
Individually significant and
assessed for impairment
individually
Chances of recovery is
Beat Blattman Marketing 4,189,004.42 100.00 4,189,004.42 -
remote
Chances of recovery is
Liberty Time Center GmbH 2,333,707.20 100.00 2,333,707.20 -
remote
China Resources (Chong Qing) Chances of recovery is
800,000.00 100.00 800,000.00 -
Industrial Co., Ltd. remote
Huaming Hang Co., Ltd. 480,000.00 100.00 480,000.00 - Unable to recover
Others 90,776.50 100.00 90,776.50 - Unable to recover
Total 7,893,488.12 100.00 7,893,488.12 - ——
④ Accrual, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
Bad debt provision ECL for the life time ECL for the life time Total
ECL in next 12
of receivables (no of receivables
month
impairment yet) (impaired)
Balance as at 31 December 2019 2,450,903.29 - 7,893,488.12 10,344,391.41
Current period
--transferred to 2nd stage - - - -
131
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
-- transferred to 3rd stage -1,119,654.90 - 1,119,654.90 -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
Accrued 1,054,047.15 - - 1,054,047.15
Reversed 15,285.41 - 2,761.50 18,046.91
Realized - - - -
Written-off - - 7,342,711.62 7,342,711.62
Other changes -953.12 - - -953.12
Balance as of 31 December 2020 2,369,057.01 - 1,667,669.90 4,036,726.91
⑤ Other receivables that were written-off during the year
Item Amount
Other receivables that actually written-off 7,342,711.62
Including: significant other receivables that were written-off
Whether it
Name Nature Amount Reason Procedures involves related
party transaction
Unable to
Beat Blattman Marketing Prepayment 4,189,004.42 Approved No
recover
Unable to
Liberty Time Center GmbH Prepayment 2,333,707.20 recover Approved No
China Resources (Chong Qing) Unable to
Deposit 800,000.00 recover Approved No
Industrial Co., Ltd.
Total —— 7,322,711.62 —— —— ——
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB19,908,642.37, accounted for 34.96% of total balance
of other receivable as of the period end. Corresponding bad debt provision accrued is RMB997,422.98.
6. Inventories
(1) Category
As at 31/12/2020 As at 31/12/2019
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Raw material 179,270,879.56 19,017,726.57 160,253,152.99 195,644,341.20 21,197,269.90 174,447,071.30
WIP 12,570,005.95 - 12,570,005.95 11,707,382.99 - 11,707,382.99
132
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Stored goods 1,837,664,688.01 78,707,661.10 1,758,957,026.91 1,684,674,585.69 62,008,950.06 1,622,665,635.63
Total 2,029,505,573.52 97,725,387.67 1,931,780,185.85 1,892,026,309.88 83,206,219.96 1,808,820,089.92
(2) Provision for inventory
Increase Decrease
Item 2020.01.01 Reverse or As at 31/12/2020
Accrual Others Others
realized
Raw material 21,197,269.90 - - 1,349,501.13 830,042.20 19,017,726.57
Merchandises 62,008,950.06 16,776,027.54 - - 77,316.50 78,707,661.10
Total 83,206,219.96 16,776,027.54 - 1,349,501.13 907,358.70 97,725,387.67
Provision for inventory (continue)
Item Evidence of determine NRV and future selling cost Reason for reversal or realized
Estimated selling price less estimated cost to complete and
Raw material Disposed
selling and distribution expenses and associated taxes
Estimated selling price less estimated selling and distributing
Merchandises Sold
expenses and associated taxes
7. Other current assets
Item As at 31/12/2020 As at 31/12/2019
Input VAT 59,218,711.69 47,626,820.11
Prepaid corporate income tax 25,684.51 1,313,954.49
Others 16,690,745.56 19,917,322.14
Total 75,935,141.76 68,858,096.74
133
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
8. Long-term equity investment
Changes during the period Balance
of
Investment
Cash impairm
Investe As at Addition/n gains and Adjustment Chang As at
divide Impairm ent
e 31/12/2019 ew Withdra losses of other es in Other 31/12/2020
nd ent provision
investmen wn recognised comprehens other s
declar provision as of
t by equity ive income equity
ed year end
method
Associa
te
Shangh
ai
Watch
Co., 46,423,837 4,976,828 51,400,665
- - - - - - - -
Ltd. .85 .07 .92
(Shang
hai
Watch)
134
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
9. Other equity instrument investment
Item As at 31/12/2020 As at 31/12/2019
Shenzhen Zhonghang Culture Co. Ltd - -
Xi’an Tangcheng Limited 85,000.00 85,000.00
Total 85,000.00 85,000.00
Because the equity investment to Shenzhen Zhonghang Culture Co. Ltd and Xi’an Tangcheng Limited is based on long term holding
for strategic purpose, the Group designated them as fair value through other comprehensive income.
10. Investment properties
Item Property and plant
I. Original cost
1.As at 31/12/2019 603,886,647.35
2.addition 5,718,759.44
(1) purchase -
(2) transferred from inventory/CIP 5,718,759.44
(3) increased due to business combination -
3.Decrease -
(1) Disposal -
(2) Others -
4.As at 31/12/2020 609,605,406.79
II. Accumulated depreciation
1.As at 31/12/2019 196,383,340.11
2.Addition 15,135,618.90
(1) accrual 14,201,033.04
(2) business combination -
(3) Others 934,585.86
3.Decrease -
(1) Disposal -
(2) Others -
4.As at 31/12/2020 211,518,959.01
III. Impairment provision
1.As at 31/12/2019 -
2.Increase -
(1) Accrual -
(2) Others -
135
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
3、Decrease -
(1) Disposal -
(2) Others -
4.As at 31/12/2020 -
IV. Carrying amount
1.As at 31/12/2020 398,086,447.78
2.As at 31/12/2019 407,503,307.24
Note:
(1) Reason of the investment properties without the certificate for property right:
As of 31 December 2020, there was no investment property without the certificate for property right.
(2) Changes of purpose of property
During the reporting period, certain self-use property of the Group were changed to lease out and they were transferred from
fixed assets to investment properties measured at cost model.
11. Fixed asset
Item As at 31/12/2020 As at 31/12/2019
Fixed asset 352,734,280.76 363,997,098.94
Fixed asset disposal - -
Total 352,734,280.76 363,997,098.94
(1) Fixed asset
①Status
Property and Transportation Electronic
Item Machinery Other equipment Total
buildings vehicles devices
I. Total cost
1.As at 31/12/2019 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. Additions 5,031,946.21 14,185,665.19 291,938.05 2,883,838.19 1,206,627.46 23,600,015.10
(1) Purchasing 3,803,273.74 13,563,231.62 291,938.05 2,863,667.79 1,150,661.76 21,672,772.96
(2) Transfer from
- - - - - -
construction in progress
(3) Others 1,228,672.47 622,433.57 - 20,170.40 55,965.70 1,927,242.14
3. Decrease 5,895,929.61 865,836.98 483,804.00 2,933,284.32 1,687,173.34 11,866,028.25
(1) Disposal or retired - 792,659.12 483,804.00 2,932,518.78 1,687,173.34 5,896,155.24
(2) transferred into
5,718,759.44 - - - - 5,718,759.44
investment property
(3) Others 177,170.17 73,177.86 - 765.54 - 251,113.57
136
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
4.As at 31/12/2020 399,020,198.97 101,896,803.98 15,166,013.42 45,435,251.53 45,782,206.31 607,300,474.21
II. Accumulated depreciation
1.As at 31/12/2019 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 13,666,448.03 7,620,683.90 396,299.62 4,507,211.15 2,780,144.56 28,970,787.26
(1) accrual 13,373,223.07 6,967,947.86 396,299.62 4,428,701.90 2,780,144.56 27,946,317.01
(2) others 293,224.96 652,736.04 - 78,509.25 - 1,024,470.25
3.Decrease 1,045,518.58 562,603.40 459,613.80 2,526,508.27 1,379,738.18 5,973,982.23
(1) disposal or retirement - 496,815.85 459,613.80 2,525,781.00 1,379,738.18 4,861,948.83
(2) transferred into
1,045,518.58 65,787.55 - 727.27 - 1,112,033.40
investment properties
4.As at 31/12/2020 111,755,686.24 56,383,949.04 13,429,376.63 34,165,037.86 38,832,143.68 254,566,193.45
III. Impairment provision
1.As at 31/12/2019 - - - - - -
2.Increase - - - - - -
(1) accrual - - - - - -
(2) others - - - - - -
3.Decrease - - - - - -
(1) disposal or retirement - - - - - -
(2) Others - - - - - -
4.As at 31/12/2020 - - - - - -
IV. Carrying amount
1.As at 31/12/2020 287,264,512.73 45,512,854.94 1,736,636.79 11,270,213.67 6,950,062.63 352,734,280.76
2.As at 31/12/2019 300,749,425.58 39,251,107.23 1,865,188.56 13,300,362.68 8,831,014.89 363,997,098.94
Note: As of the period, fixed assets used to pledge for the Group’s loan amounted to RMB13,441,613.20.
② Fixed assets that do not have certificate for property right
Reason for not having certificate for
Item Carrying amount
property rights
Office rooms of Harbin Branch 255,135.96 Issues relating to property right
137
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
12. Intangible asset
(1) Status
Right to use
Item Land-use right Software system Total
trademarks
I. Total original cost
1.As at 31/12/2019 34,933,822.40 24,114,126.36 11,930,531.38 70,978,480.14
2. Additions - 5,020,566.44 2,138,375.48 7,158,941.92
(1) Purchase - 5,020,566.44 2,138,375.48 7,158,941.92
(2) Internal R&D - - - -
(3) Increased due to - - - -
business combination
(4) Others - - - -
3. Decreases - - - -
(1) Disposal - - - -
(2) Others - - - -
4. As at 31/12/2020 34,933,822.40 29,134,692.80 14,068,906.86 78,137,422.06
II. Total accumulated amortization
1. As at 31/12/2019 14,315,262.17 12,448,523.47 5,502,873.24 32,266,658.88
2. Additions 733,553.28 6,164,217.44 1,113,675.95 8,011,446.67
(1) Accrual 733,553.28 6,164,217.44 1,113,675.95 8,011,446.67
(2) others - - - -
3. Decreases - - - -
(1) Disposal - - - -
(2) other - - - -
4. As at 31/12/2020 15,048,815.45 18,612,740.91 6,616,549.19 40,278,105.55
III. Total impairment provision
1. As at 31/12/2019 - - - -
2. Additions - - - -
(1) Accrual - - - -
(2) other - - - -
3. Decrease - - - -
(1) disposal - - - -
(2) others - - - -
4. As at 31/12/2020 - - - -
IV. Total carrying amount
1. As at 31/12/2020 19,885,006.95 10,521,951.89 7,452,357.67 37,859,316.51
2. As at 31/12/2019 20,618,560.23 11,665,602.89 6,427,658.14 38,711,821.26
138
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
13. Long-term deferred expenses
Decrease
Item As at 31/12/2019 Increase As at 31/12/2020
Amortized Others
Counter fabrication
41,961,947.89 30,796,935.58 47,612,116.76 - 25,146,766.71
expenses
Renovation
95,266,200.86 54,035,461.65 50,619,946.05 - 98,681,716.46
expenses
Others 15,359,342.58 - 9,170,237.76 - 6,189,104.82
Total 152,587,491.33 84,832,397.23 107,402,300.57 - 130,017,587.99
14. Deferred tax assets and deferred tax liabilities
(1) Detail of deferred income tax before offsetting
As at 31/12/2020 As at 31/12/2019
Item Deductible/Taxable Deductible/Taxable
DTA/DTL DTA/DTL
temporary difference temporary difference
Deferred tax asset:
Impairment provision 122,763,597.44 24,130,990.19 100,912,679.00 22,188,996.64
Unrealized profit for related party
135,402,764.86 33,674,974.92 179,676,673.34 44,654,504.04
transactions
Deductible losses 64,272,084.42 15,216,766.23 50,678,682.32 12,074,057.61
Restricted shares 10,011,227.40 2,398,201.09 4,440,625.91 1,062,967.67
Advertisement expenses that
18,840,253.36 3,378,321.23 14,988,443.65 2,997,334.76
allowed to deduct in future years
Others 8,458,186.73 2,114,546.69 3,046,090.60 761,522.65
Subtotal 359,748,114.21 80,913,800.35 353,743,194.82 83,739,383.37
Deferred tax liability
One-off deduction of fixed asset
20,452,230.39 3,067,834.55 8,374,949.93 1,256,242.49
before Corporate income tax
Subtotal 20,452,230.39 3,067,834.55 8,374,949.93 1,256,242.49
(2) Details of deductible temporary difference and deductible losses that does not recognize as deferred income tax asset
Item As at 31/12/2020 As at 31/12/2019
Impairment provision 14,790,427.78 22,200,437.70
Deductible losses 61,104,363.07 64,205,351.75
Total 75,894,790.85 86,405,789.45
Note: Deductible losses of Swiss Company, which are subsidiaries of the Company, is not recognized as deferred income tax asset as it’s
uncertain that the companies can get sufficient taxable income in future. Hong Kong Company, a subsidiary of the Company, does not
need to recognize the deferred income tax assets for impairment provision according to the local tax policy.
139
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(3) Deductible losses that are not recognized as deferred tax asset will due in the following years:
Year As at 31/12/2020 As at 31/12/2019 Note
2020 - -
2021 - -
2022 - -
2023 - 2,417,279.16
2024 7,114,967.80 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 - -
2029 - -
2030 - -
2031 - ——
Total 61,104,363.07 64,205,351.75
15. Other non-current assets
Item As at 31/12/2020 As at 31/12/2019
Prepayment for construction and equipment 13,536,307.13 7,373,248.48
16. Short-term loan
Item As at 31/12/2020 As at 31/12/2019
Guaranteed loans 142,247,348.04 37,271,502.38
Credit loans 400,425,930.05 530,637,330.83
Total 542,673,278.09 567,908,833.21
Refer to Note XII. 2 for details of guaranteed loans between parent companies and subsidiaries.
17. Bills payable
Type As at 31/12/2020 As at 31/12/2019
Commercial bills payable 3,581,360.00 -
18. Accounts payable
Item As at 31/12/2020 As at 31/12/2019
Trade payables 284,050,848.79 254,887,129.91
Payables for material purchased 15,679,531.11 11,932,722.53
Payables for project 1,481,135.49 12,952,934.93
Total 301,211,515.39 279,772,787.37
140
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
19. Advances from customer
Item As at 31/12/2020 As at 31/12/2019
Advances received for trade —— 19,999,056.53
Rental received 9,991,850.67 3,434,407.04
Total 9,991,850.67 23,433,463.57
20. Contract liabilities
Item As at 31/12/2020 2020.01.01 As at 31/12/2019
Contract liabilities 18,213,396.49 17,698,280.12 ——
Less: contract liabilities that
are included in non-current - - ——
liabilities
Total 18,213,396.49 17,698,280.12 ——
21. Employee remuneration payable
Item As at 31/12/2019 Increase Decrease As at 31/12/2020
Short-term employee benefits 75,434,545.00 610,053,139.26 559,506,445.64 125,981,238.62
Post-employment benefits - defined
7,067,511.52 15,809,654.89 16,109,688.83 6,767,477.58
contribution plans
Termination benefits 100,789.15 2,471,591.42 2,467,634.57 104,746.00
Other benefits due within one year - - - -
Total 82,602,845.67 628,334,385.57 578,083,769.04 132,853,462.20
(1) Short-term employee benefits
Item As at 31/12/2019 Accrued Paid As at 31/12/2020
Salaries, bonus, allowances 74,919,776.81 557,277,615.35 507,060,914.51 125,136,477.65
Staff welfare - 10,994,982.07 10,991,176.61 3,805.46
Social insurances - 16,737,415.16 16,737,415.16 -
Including:1.Medical insurance - 15,781,783.37 15,781,783.37 -
2.Work-related injury insurance - 158,613.03 158,613.03 -
3.Maternity insurance - 797,018.76 797,018.76 -
Housing Fund - 17,616,853.88 17,613,921.88 2,932.00
Labor union fees and education fee 514,768.19 7,426,272.80 7,103,017.48 838,023.51
Short-term paid absences - - - -
Short-term profit –sharing plan - - - -
Non-monetary benefits - - - -
Other short-term employee benefits - - - -
Total 75,434,545.00 610,053,139.26 559,506,445.64 125,981,238.62
141
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(2) Defined contribution plans
Item As at 31/12/2019 Accrued Paid As at 31/12/2020
Post-employment benefits 7,067,511.52 15,809,654.89 16,109,688.83 6,767,477.58
Including: 1.Basic pension insurance 255,571.47 9,262,583.57 9,222,178.59 295,976.45
2.Unemployment insurance - 195,627.59 195,189.83 437.76
3.Annuity 6,811,940.05 6,351,443.73 6,692,320.41 6,471,063.37
4.Others - - - -
Total 7,067,511.52 15,809,654.89 16,109,688.83 6,767,477.58
22. Taxes payable
Taxes As at 31/12/2020 As at 31/12/2019
VAT 36,028,888.63 6,929,833.12
Corporate income tax 29,488,177.68 15,512,840.60
Individual income tax 1,609,420.04 1,227,923.78
Urban maintenance and construction tax 631,469.18 91,612.52
Educational surcharges 450,946.60 65,887.11
Others 716,369.77 236,705.87
Total 68,925,271.90 24,064,803.00
23. Other payables
Item As at 31/12/2020 As at 31/12/2019
Interest payable - -
Dividends payable 1,639,513.77 848,233.27
Other payables 126,938,084.17 118,768,488.36
Total 128,577,597.94 119,616,721.63
(1) Dividends payable
Item As at 31/12/2020 As at 31/12/2019
Dividends for ordinary shares 1,639,513.77 848,233.27
(2) Other payables
Item As at 31/12/2020 As at 31/12/2019
Security deposit 46,419,944.64 45,114,205.97
Shop activity fund 21,861,578.14 16,636,771.40
Personal accounts payable 137,818.57 1,321,518.82
142
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Decoration expenses 7,481,768.84 4,556,469.41
Repurchase liability for restricted shares 16,299,166.73 17,737,366.73
Other 34,737,807.25 33,402,156.03
Total 126,938,084.17 118,768,488.36
24. Non-current liabilities due within one year
Item As at 31/12/2020 As at 31/12/2019
Mortgage loans 370,030.00 360,140.00
(1) Long-term loan due within one year
Item As at 31/12/2020 As at 31/12/2019
Long-term loan due within one year 370,030.00 360,140.00
See Note V.26 for type and amount of mortgaged assets.
25. Other current liabilities
Item As at 31/12/2020 As at 31/12/2019
Output VAT tax not realized 2,299,755.09 ——
26. Long-term loan
Item As at 31/12/2020 Interest rate As at 31/12/2019 Interest rate
Mortgage loans 4,440,360.00 3.00% 4,681,820.00 3.00%
Subtotal 4,440,360.00 —— 4,681,820.00 ——
Less: Long-term loan due within one year 370,030.00 3.00% 360,140.00 3.00%
Total 4,070,330.00 —— 4,321,680.00 ——
As of 31 December 2020, the carrying amount of fixed assets used in mortgage for the Group’s loan amounted to
RMB13,441,613.20.
27. Deferred income
Item As at 31/12/2019 Addition Decrease As at 31/12/2020 Reason
Government Criteria of recognizing gain is
3,046,090.60 609,576.69 739,320.86 2,916,346.43
grant not reached
See Note V. 52 Government grant for details of government grants that are included in deferred income.
28. Share capital
Total As at Movements(+, -) As at 31/12/2020
143
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
31/12/2019
Bonus Capitalization of
Newly issued Others subtotal
share capital reserves
Total shares 442,968,881 -14,877,000 - - - -14,877,000 428,091,881
(1) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board of
Directors and the 2nd extraordinary shareholder’s meeting of 2019, the Company was authorised to repurchased B Shares, using
the Company’s fund, to reduce the registered capital. On 29 April 2020, confirmed by China Securities Depository and Clearing Co.,
Ltd Shenzhen Branch, the Company de-registered 14,730,000 B-shares.
(2) Pursuant to the resolution of “Proposal of repurchase and de-registration a portion of restricted shares authorised under 2018 A-
share Restricted Share Incentive Plan (First Phase)”, in 2020, the Company repurchased and de-registered 147,000 A-share
restricted shares that had been authorised but still under restriction period. Those shares were owned by 6 former incentive
individuals that are resigned.
29. Capital reserve
Item As at 31/12/2019 Increase Decrease As at 31/12/2020
Share premium 1,062,297,140.76 - 65,310,429.03 996,986,711.73
Other capital reserve 18,933,074.56 5,570,601.49 - 24,503,676.05
Total 1,081,230,215.32 5,570,601.49 65,310,429.03 1,021,490,387.78
(1) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board of
Directors and the 2nd extraordinary shareholder’s meeting of 2019, the Company was authorised to repurchased B Shares, using
the Company’s fund, to reduced the registered capital. On 29 April 2020, confirmed by China Securities Depository and Clearing Co.,
Ltd Shenzhen Branch, the Company de-registered 14,730,000 B-shares. Capital reserve was reduced by RMB 64,764,304.92
accordingly.
(2) Pursuant to the resolution of “Proposal of repurchase and de-registration part of restricted shares authorised under 2018 A-share
Restricted Share Incentive Plan (First Phase)”, the Company repurchased and de-registered, in 2020, 147,000 A-share restricted
shares that had been authorised but still under restriction period. Those shares were owned by 6 former incentive object that are
resigned. Capital reserve was reduced by RMB 499,800.00 accordingly.
(3) On 4 January 2019, pursuant to the examination and approval given by SASAC under “Reply to Examination and approval of
Implementation of First Phase of Restricted Share Incentive plan of FIYTA (Group) Holding Ltd.” (GuoZi KaoFen [2018] No. 936),
and approved by the board of directors and shareholder’s general meeting, the Company implemented the incentive plan. On 11
January 2019, the restricted share incentive plan (first phase) had granted restricted A-shares to incentive individuals. In 2020, the
Group increased RMB 5,570,601.49 in capital reserve and charged the amount to related cost or expenses in exchange of the
incentive individuals’ service.
(4) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board of
Directors and the 2nd extraordinary shareholder’s meeting of 2019, and to “The Resolution of Plan of Re-purchase B Shares” which
was approved on the 19th meeting of the 9th Board of Directors and the 2nd extraordinary shareholder’s meeting of 2020, the
Company incurred transaction cost of RMB 46,324.11 for the repurchase. The expenses of RMB 46,324.11 was deducted from
capital reserve.
30. Treasury shares
144
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item As at 31/12/2019 Increase Decrease As at 31/12/2020
Treasury shares 71,267,118.78 71,338,916.62 80,972,504.92 61,633,530.48
(1) As described in Note V. 29 Capital reserve note (1), the Company de-registered B-shares and the treasury shares decreased by
RMB 79,494,304.92.
(2) As described in Note V. 29 Capital reserve note (2), the Company de-registered restricted shares repurchased and the treasury
shares decrease by RMB 646,800.00,. the cash dividend corresponding to the restricted shares of RMB 831,400.00 was deducted
treasury shares accordingly.
(3) In 2020, the Company re-purchased B-share of 12,866,401 shares. Consideration paid was HKD81,319,545.03 (excluding
trading fee), equivalent to RMB71,338,916.62. The treasury share increased by 71,338,916.62.
31. Other comprehensive income
Movements in 2020
Less:
recorded in
other
comprehen Attribute
As at sive income Attribute to to As at
Item 31/12/2019 Pre-tax in prior Less: parent minority 31/12/2020
movements period and CIT company after sharehol
transferred tax ders
to profit or after tax
loss in
current
period
I. Other
comprehensive
income items
which will not be - - - - - - -
reclassified
subsequently to
profit or loss
II. Other
comprehensive
income items
which may be
reclassified
subsequently to
profit or loss
Including:
translation
difference of
-940,209.09 1,916,506.80 - - 1,917,080.50 -573.70 976,871.41
foreign currency
financial
statements
Total -940,209.09 1,916,506.80 - - 1,917,080.50 -573.70 976,871.41
Note: Net-of-tax amount of other comprehensive income during the year 2020 is RMB1,916,506.80, in which net-of-tax amount of
other comprehensive income attributable to shareholders of the Company is RMB1,917,080.50, and net-of-tax amount of other
comprehensive income attributable to non-controlling interests is RMB-573.70.
32. Surplus reserve
145
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item As at 31/12/2019 Increase Decrease As at 31/12/2020
Statutory surplus reserve 173,716,286.14 10,830,686.73 - 184,546,972.87
Discretionary surplus reserve 61,984,894.00 - - 61,984,894.00
Total 235,701,180.14 10,830,686.73 - 246,531,866.87
Note: According to the Company Law and Articles of Association, the Company draws statutory surplus reserve at 10% of net profit.
If the statutory surplus reserve is over 50% of the Company’s registered capital, drawing of statutory surplus reserve will be stopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve. If approved, discretionary surplus
reserve can be used to make up for losses in previous years or increase share capital.
33. Undistributed profit
Item 2020 2019 Note
Undistributed profit at the end of prior year before adjustments 966,840,818.40 851,360,603.66 --
Adjustments to undistributed profit at the beginning of year - - --
Undistributed profit at the beginning of year after adjustment 966,840,818.40 851,360,603.66
Plus: Net profit attributable to the owner of the parent company
294,115,156.04 215,909,014.15 --
for the year
Less: statutory surplus reserve drawn 10,830,686.73 12,685,386.34
Dividends payable to ordinary shares 85,634,376.20 87,743,413.07
Undistributed profit at the end of year 1,164,490,911.51 966,840,818.40
Including: appropriation to surplus reserves made by the
26,409,371.15 10,229,847.23
Company’s subsidiaries attributable to the Company
34. Operating income and operating cost
(1) Operating income and operating cost
2020 2019
Item
Operating income Operating cost Operating income Operating cost
Main business 4,226,992,193.44 2,632,869,284.16 3,686,955,944.86 2,211,874,573.32
Other business 16,447,759.15 6,360,252.90 17,254,790.04 5,333,158.72
Total 4,243,439,952.59 2,639,229,537.06 3,704,210,734.90 2,217,207,732.04
(2) Main business presented by industry
2020 2019
Industry
Operating income Operating cost Operating income Operating cost
Main business
Watch 3,970,903,426.36 2,478,548,735.40 3,463,608,966.45 2,109,978,800.45
146
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Precision
138,806,456.76 113,748,608.41 91,341,945.34 73,717,603.23
manufacturing
Lease 117,282,310.32 40,571,940.35 132,005,033.07 28,178,169.64
Subtotal 4,226,992,193.44 2,632,869,284.16 3,686,955,944.86 2,211,874,573.32
Other business
Others 16,447,759.15 6,360,252.90 17,254,790.04 5,333,158.72
subtotal 16,447,759.15 6,360,252.90 17,254,790.04 5,333,158.72
Total 4,243,439,952.59 2,639,229,537.06 3,704,210,734.90 2,217,207,732.04
(3) Details of operating income
2020
Item Precision
Watch sales Others Total
manufacturing
Main business
Including: recognise at a point of time 3,970,903,426.36 138,806,456.76 - 4,109,709,883.12
Recognise over a period of
- - - -
time
Other business
Others - - 16,447,759.15 16,447,759.15
Total 3,970,903,426.36 138,806,456.76 16,447,759.15 4,126,157,642.27
Note: the above amount does not include lease income of RMB 117,282,310.32 under Accounting Standards for Business
Enterprises-21 lease.
35. Taxes and surcharges
Item 2020 2019
Urban maintenance and construction tax 10,068,664.42 11,435,460.45
Educational surcharge 4,314,874.91 4,891,150.79
Local educational surcharge 2,840,421.94 3,216,962.37
Property tax 4,094,171.89 4,037,914.43
Land use tax 314,851.20 391,201.52
Stamp duty 2,715,802.17 2,384,290.09
Others 1,095,352.77 1,835,809.90
Total 25,444,139.30 28,192,789.55
Note: The criteria of business taxes and surcharges accrued and paid refer to Note IV. Taxation.
36. Selling and distribution expenses
Item 2020 2019
Salary 359,485,012.85 359,640,526.77
147
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Department store expense and rental 225,399,141.62 181,211,260.52
Market promotion expenses 129,846,038.05 155,102,618.44
Depreciation and amortization 93,520,422.84 92,468,987.37
Packaging expenses 8,931,806.05 11,125,541.27
Utilities and property management
19,596,237.03 19,283,177.10
expenses
Shipping fees 5,316,601.90 14,689,427.89
Office expenses 5,894,271.36 5,827,092.35
Travel expenses 6,384,080.73 10,479,738.66
Entertainment expenses 3,437,118.33 4,549,777.07
Others 12,903,168.56 11,413,931.17
Total 870,713,899.32 865,792,078.61
37. Administrative expenses
Item 2020 2019
Salary 196,350,562.99 170,242,331.00
Depreciation and amortization 25,865,228.70 30,001,693.96
Travel expenses 3,537,267.52 7,543,194.55
Office expenses 4,446,219.38 3,966,450.49
Agents fees 5,371,712.37 5,146,625.69
Rental and utilities 1,007,513.11 6,140,097.22
Others 19,980,623.16 17,579,596.13
Total 256,559,127.23 240,619,989.04
38. Research and development expenses
Item 2020 2019
Salary 32,217,390.03 25,225,831.95
Material and mould 1,517,998.88 1,654,367.12
Sample fee 1,434,612.19 1,874,392.46
Depreciation and amortization 6,397,967.06 5,120,979.03
Technical cooperation fee 4,768,053.72 5,488,880.26
Others 5,153,301.61 5,693,289.43
Total 51,489,323.49 45,057,740.25
39. Financial expenses
Item 2020 2019
148
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Total interest expenses 21,315,119.78 23,975,351.93
Less: Interest capitalization - -
Interest income 4,941,334.19 1,956,316.52
Exchange gain 3,896,579.87 -2,920.03
Bank charges 13,178,910.95 10,799,162.19
Total 33,449,276.41 32,815,277.57
40. Other income
Asset or
Item 2020 2019 income related
Special fund of Nanshan district to support self-
4,526,600.00 918,600.00 income related
innovation industry development
Subsidy for stabilizing job position 3,743,398.00 209,468.63 income related
Headquarters enterprise award 2,872,900.00 4,843,500.00 income related
Special fund of Nanshan district Industrial and
2,592,300.00 - income related
Information Bureau to support trading industry
Quality and Branding Promotion Subsidy for
2,400,000.00 - income related
2020 Technique Multiplication Subsidy Plan
Guangdong Provincial Science and Technology
1,000,000.00 - income related
Innovation Strategy Fund
Subsidy to support sales promotion 1,000,000.00 - income related
2019 Shenzhen Standard Special Fund 979,160.00 - income related
Economic development special fund of
Guangming District to support intellectual
677,000.00 1,033,000.00 income related
property right, standardization certification
project
Training subsidy 611,500.00 - income related
Chengdu Social Insurance Management
70,948.61 - income related
Bureau Subsidy to stabilize job position
Corporate Research and Development Funding 571,000.00 3,156,000.00 income related
Plan to subsidy industrial internet development 520,000.00 - income related
Central government foreign trade development
446,964.00 - income related
special fund
Commission on IIT payment 370,789.08 469,005.01 income related
R&D project subsidy 355,000.00 - income related
Special subsidy to Shenzhen intelligence
300,000.00 - income related
property right area
149
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
State certified R&D center 293,147.06 293,147.06 Asset related
2019 Nanshan District self-innovation industry
209,500.00 - income related
development subsidy
Associate subsidy to China patent excellence
200,000.00 300,000.00 income related
award
Special fund for Shenzhen industrial designing 178,635.97 203,066.21 Asset related
Subsidy for SME to expanding market 176,920.00 387,940.49 income related
Provincial industry and information special
130,551.48 130,551.49 Asset related
subsidy
Social insurance subsidy 101,300.00 - income related
Nanshan Industrial and Information Bureau
100,000.00 - income related
subsidy for rental
Overseas exhibition key support project 72,105.56 - income related
Promoting of consumable product standard and
66,037.74 - income related
quality
Maternity insurance 56,449.40 100,789.68 income related
State level high and new technology certificate
50,000.00 30,000.00 income related
subsidy
Short term export credit insurance 42,723.00 20,200.00 income related
Special subsidy to promoting consuming - 1,655,200.00 income related
Subsidy to projects of economic development
- 286,000.00 income related
special fund
Subsidy to support investment in R&D and
- 669,545.00 income related
domestic economic and trading exhibition
Nanshan Economic Promoting Bureau subsidy
- 100,000.00 income related
for SME
Expanding production and improving efficiency - 300,000.00 income related
Promotion of human resource quality - 100,000.00 income related
Subsidy to support innovation development for
- 712,664.00 income related
business and trading
Shenzhen Standard Special Fund - 543,000.00 income related
Shenzhen Science and Technology Award - 300,000.00 income related
Examine intellectual property right using big
- 500,000.00 income related
data
Basel watch fair subsidy - 114,333.32 income related
Subsidy to support major enterprise to
- 1,000,000.00 income related
expanding production and improving efficiency
150
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Other subsidies 455,467.19 52,895.29 income related
Total 25,170,397.09 18,428,906.18 ——
Note: Refer to Note V. 52 Government grant for detailed information.
41. Investment gain
Item 2020 2019
Gain from long-term equity investments accounted for using the
5,072,577.64 1,787,907.10
equity method
42. Credit impairment loss ( “-“ for loss)
Item 2020 2019
Bad debt for bills receivable -1,434,342.44 -217,182.73
Bad debt for accounts receivable -6,626,580.06 - 16,346,637.18
Bad debt for other receivables -1,036,000.24 -77,141.16
Total -9,096,922.74 - 16,640,961.07
43. Asset impairment loss ( “-“ for loss)
Item 2020 2019
Inventory decline in value -15,426,526.41 -4,295,134.48
44. Gains from assets disposal
Item 2020 2019
Gains from assets disposal (“-“ for loss) -369,857.30 -926,118.60
45. Non-operating income
Amount included in non-
Item 2020 2019 recurring gains or losses in
current period
Compensation 1,751,149.83 2,700,000.00 1,751,149.83
Payables cannot be paid 448,719.74 275,162.46 448,719.74
Others 911,544.07 1,778,942.84 911,544.07
Total 3,111,413.64 4,754,105.30 3,111,413.64
46. Non-operating expense
Amount included in non-
Item 2020 2019 recurring gains or losses in
current period
Fine 1,032.13 44,727.07 1,032.13
151
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Donation - 200,000.00 -
Liquidated damages 525,343.36 383,283.33 525,343.36
Others 1,028,737.37 772,178.47 1,028,737.37
Total 1,555,112.86 1,400,188.87 1,555,112.86
47. Corporate income tax
(1) Details of income expenses
Item 2020 2019
Current tax expense for the year based on tax law and
74,701,341.52 42,132,064.04
regulations
Changes in deferred tax assets/liabilities 4,637,175.08 18,192,565.21
Total 79,338,516.60 60,324,629.25
(2) Reconciliation between income tax expenses and accounting profit is as follows:
Item 2020 2019
Profits before tax 373,460,618.84 276,233,643.40
Income tax calculated based on statutory tax rate 93,365,154.71 69,058,410.86
Effect of different tax rates applied by subsidiaries -10,089,238.59 -4,251,519.66
Adjustment to income tax of previous years 966,634.19 965,521.61
Effect of gains or losses from joint ventures and associates
-1,244,207.02 -385,693.68
accounted for using the equity method
Effect of non-taxable income (use “- “for presentation) - -
Effect of non-deductible costs, expenses and losses 863,320.48 1,178,297.49
Effect on opening balance of deferred tax due to changes
- -
in tax rate
Effect of using the deductible temporary differences or
deductible losses for which no deferred tax asset was -683,495.29 -
recognized in previous (use “-“ for presentation)
Effect of deductible temporary differences or deductible
losses for which no deferred tax asset was recognized this - 174,634.92
year
Effect of research and development expenses super
-3,839,651.88 -6,415,022.29
deduction (use “-“ for presentation)
Others - -
Income tax expenses 79,338,516.60 60,324,629.25
48. Notes to cash flow statement
(1) Cash received from other operating activities
152
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item 2020 2019
Government grant 29,643,860.40 17,802,141.42
Promotion expenses 12,486,890.27 14,023,190.48
Security deposit 16,369,729.33 31,127,235.94
Interest income 4,941,334.19 1,956,316.52
Return of petty cash 5,503,961.77 3,817,075.69
Penalty 631,987.23 4,298,036.35
Legal action security - 8,958,057.64
Others 8,424,049.26 11,850,325.81
Total 78,001,812.45 93,832,379.85
(2) Cash paid for other operating activities
Item 2020 2019
Current period expenses 433,410,006.32 478,806,783.39
Security deposit 13,371,641.24 4,393,654.88
Petty cash advanced to employee 8,618,216.90 734,763.81
Others 2,258,442.62 4,118,260.73
Total 457,658,307.08 488,053,462.81
(3) Cash paid for other financing activities
Item 2020 2019
Cash paid for re-purchase of shares 72,317,669.93 53,117,325.02
49. Supplement information to cash flow statement
(1) Supplement to cash flow statement
Item 2020 2019
1. Reconciliation of net profit/loss to cash flows from operating
activities：
Net profit 294,122,102.24 215,909,014.15
Add: Impairment for assets 15,426,526.41 4,295,134.48
Credit impairment loss 9,096,922.74 16,640,961.07
Depreciation of fixed assets, and investment property 42,147,350.05 44,206,119.17
Intangible asset amortization 8,011,446.67 6,897,790.40
Amortization of long-term deferred expenses 107,402,300.57 102,881,563.21
Loss on disposal of fixed assets, intangible assets, and
369,857.30 926,118.60
other long-term assets (“-“ for gain)
153
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Loss on scrap of fixed assets (“-“ for gain) - -
Loss on changes of fair value (“-“ for gain) - -
Financial expenses (“-“ for income) 21,315,119.78 23,975,351.93
Investment loss (“-“ for gain) -5,072,577.64 -1,787,907.10
Decrease in deferred tax assets (“-“ for increase) 2,825,583.02 16,936,322.72
Increase in deferred tax liabilities (“-“ for decrease) 1,811,592.06 1,256,242.49
Decrease in inventories (“-“ for increase) -137,479,263.64 -30,808,922.70
Decrease in operating receivables (“-“ for increase) -137,884,765.44 -41,745,826.01
Increase in operating payables (“-“ for decrease) 156,118,311.75 85,238,806.20
Others - -
Net cash flows from operating activities 378,210,505.87 444,820,768.61
2. Significant investment or financing activities not involving
cash:
Debts converted to capital - -
Convertible debts mature within one year - -
Fixed assets acquired under finance leases - -
3. Net changes in cash and cash equivalents:
Cash at end of year 353,057,285.71 315,093,565.09
Less: cash at beginning of year 315,093,565.09 162,623,059.97
Plus: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
Net increase in cash and cash equivalents 37,963,720.62 152,470,505.12
(2) Cash and cash equivalents
Item 31/12/2020 31/12/2019
I. Cash 353,057,285.71 315,093,565.09
Incl. Cash on hand 183,759.72 229,258.38
Bank deposit available for immediate payment 346,055,209.29 285,306,297.62
Other monetary funds available for immediate payment 6,818,316.70 29,558,009.09
II. Cash equivalents - -
Including Bond investment due in three months - -
III. Cash and cash equivalents at the end of year 353,057,285.71 315,093,565.09
Including Restricted cash and cash equivalents for the Company
3,412,028.94 3,641,389.51
and its subsidiaries
50. Assets with restricted ownership or usage right
154
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item Carrying amount as at 31 Dec 2020 Reason
Fixed assets 13,441,613.20 Mortgaged
Bills receivable 16,804,987.88 Factored
Total 30,246,601.08 ——
51. Monetary items denominated in foreign currency
(1) Monetary items denominated in foreign currency
Balance denominated in
Balance translated in RMB as at
Item foreign currency as at 31 Dec Exchange rate
31 Dec 2020
2020
Cash and bank balances
Including: HKD 19,526,414.16 0.8416 16,434,216.67
USD 3,191,547.66 6.5249 20,824,529.31
EUR 99,692.46 8.0250 800,031.99
CHF 426,309.51 7.4006 3,150,097.52
Accounts receivable
Including: HKD 1,405,271.07 0.8416 1,182,676.13
USD 434,640.09 6.5249 2,835,983.12
EUR 104,833.90 8.0250 841,292.05
CHF 2,242,072.50 7.4006 16,592,681.74
Other receivables
Including: HKD 146,580.92 0.8416 123,362.50
Short-term loans
Including: CHF 401,295.41 7.4006 2,969,826.81
Accounts payable
Including: HKD 2,134,375.70 0.8416 1,796,290.59
CHF 357,717.33 7.4006 2,647,322.87
Non-current liabilities due within one year
Including: CHF 50,000.00 7.4006 370,030.00
Long-term loans
Including: CHF 550,000.00 7.4006 4,070,330.00
(2) Overseas operational entity
For main business location and recording currency of important overseas operating entities, refer to Note III. 4.
52. Government grant
(1) Government grants recognized in deferred income, and subsequently measured using gross presentation method
155
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Income
Additions Recognition in Other As at statement item Related to
Item Type As at 31/12/2019
during the year profit and loss changes 31/12/2020 that asset/income
recognized in
Special fund for
Shenzhen industrial State
729,945.01 - 178,635.97 - 551,309.04 Other income Asset related
design industry treasury
development (A)
Funding project for
construction of
State
National Enterprise 1,218,274.51 - 293,147.06 - 925,127.45 Other income Asset related
treasury
Technology Center
(B)
2017 Provincial
Specialized Fund for
State
Industrial and 1,031,833.34 - 130,551.48 - 901,281.86 Other income Income related
treasury
Information
Technology (C)
Special funds for
consumer goods State
66,037.74 - 66,037.74 - - Other income Income related
standards and quality treasury
improvement
State
Others - 609,576.69 70,948.61 - 538,628.08 Other income Income related
treasury
Total 3,046,090.60 609,576.69 739,320.86 - 2,916,346.43
Note:
A. Special fund for Shenzhen industrial design industry development was obtained according to the Shen Jingmao Xinxi Jishu Zi
(2013) No. 227 - Operating Specification for Affirmation and Fund Plan of Shenzhen Industrial Design Center (Trial) which is
jointly issued by Economy, Trade and Information Commission of Shenzhen Municipality and Finance Commission of
Shenzhen Municipality.
B. Funding project for construction of Shenzhen Enterprise Technology Center was obtained according to the Notice for the 1st
Supportive Project in 2015 of Funding Project for Construction of Shenzhen Enterprise Technology Center which was issued by
Shenzhen Development and Reform Commission (Shen Jing Mao Xin Xi Yu[2015] No. 129).
C. According to the Notice of Guangdong Provincial Economic and Information Technology Commission on Doing a Good Job of
Applying for Provincial Special Projects in Production and Service Industry in 2017 (the Circular of the Ministry of Economic
Affairs and Information Technology of Guangdong Province and Guangdong Provincial Department of Finance) Guangdong
Letter of Manufacture [2016] No. 53), provincial 2017 special funds for industrial and information was obtained.
(2) Government grants recognized in profit and loss using gross method
Recognised in profit Recognised in profit
Presentation item
and loss for the and loss for the Related to
Item Type recognized in profit
year ended year ended asset/income
and loss
31/12/2019 31/12/2020
Special fund of Nanshan
district to support self-
State treasury 918,600.00 4,526,600.00 Other income Income related
innovation industry
development(A)
Subsidy for stabilizing job
position State treasury 209,468.63 3,743,398.00 Other income Income related
156
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Headquarters enterprise
State treasury 4,843,500.00 2,872,900.00 Other income Income related
award(B)
Special fund of Nanshan
District Industrial and
State treasury - 2,592,300.00 Other income Income related
Information Bureau to support
trading industry(C)
Quality and Branding
Promotion Subsidy for 2020
State treasury - 2,400,000.00 Other income Income related
Technique Multiplication
Subsidy Plan (D)
Guangdong Provincial
Science and Technology State treasury - 1,000,000.00 Other income Income related
Innovation Strategy Fund(E)
Subsidy to support sales
State treasury - 1,000,000.00 Other income Income related
promotion(F)
2019 Shenzhen Standard
State treasury - 979,160.00 Other income Income related
Special Fund(G)
Economic development
special fund of Guangming
District to support intellectual State treasury 1,033,000.00 677,000.00 Other income Income related
property right, standardization
certification project(H)
Training subsidy(I) State treasury - 611,500.00 Other income Income related
Corporate Research and
State treasury 3,156,000.00 571,000.00 Other income Income related
Development Funding(J)
Plan to subsidy industrial
State treasury - 520,000.00 Other income Income related
internet development(K)
Central government foreign
trade development special State treasury - 446,964.00 Other income Income related
fund(L)
Commission on IIT payment State treasury 469,005.01 370,789.08 Other income Income related
R&D project subsidy(M) State treasury - 355,000.00 Other income Income related
Special subsidy to Shenzhen
intelligence property right State treasury - 300,000.00 Other income Income related
area(N)
2019 Nanshan District self-
innovation industry State treasury - 209,500.00 Other income Income related
development subsidy(O)
Associate subsidy to China
State treasury 300,000.00 200,000.00 Other income Income related
patent excellence award(P)
Subsidy for SME to
State treasury 387,940.49 176,920.00 Other income Income related
expanding market(Q)
Social insurance subsidy(R) State treasury - 101,300.00 Other income Income related
Nanshan Industrial and
Information Bureau subsidy to State treasury - 100,000.00 Other income Income related
lease(S)
Overseas exhibition key
State treasury - 72,105.56 Other income Income related
support project(T)
Maternity insurance State treasury 100,789.68 56,449.40 Other income Income related
State level high and new
technology certificate State treasury 30,000.00 50,000.00 Other income Income related
subsidy(U)
Short term export credit
State treasury 20,200.00 42,723.00 Other income Income related
insurance(V)
Special subsidy to promoting
State treasury 1,655,200.00 - Other income Income related
consumption
Subsidy to projects of State treasury 286,000.00 - Other income Income related
157
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
economic development
special fund
Subsidy to support investment
in R&D and domestic
State treasury 669,545.00 - Other income Income related
economic and trading
exhibition
Nanshan Economic
Promoting Bureau subsidy for State treasury 100,000.00 - Other income Income related
SME
Expanding production and
State treasury 300,000.00 - Other income Income related
improving efficiency
Promotion of human resource
State treasury 100,000.00 - Other income Income related
quality
Subsidy to support innovation
development for business and State treasury 712,664.00 - Other income Income related
trading
Shenzhen Standard Special
State treasury 543,000.00 - Other income Income related
Fund
Shenzhen Science and
State treasury 300,000.00 - Other income Income related
Technology Award
Examine intellectual property
State treasury 500,000.00 - Other income Income related
right using big data
Basel watch fair subsidy State treasury 114,333.32 - Other income Income related
Subsidy to support major
enterprise to expanding
State treasury 1,000,000.00 - Other income Income related
production and improving
efficiency
Special fund for Shenzhen
industrial design industry State treasury 203,066.21 178,635.97 Other income Asset related
development
Funding project for
construction of National State treasury 293,147.06 293,147.06 Other income Asset related
Enterprise Technology Center
2017 Provincial Specialized
Fund for Industrial and State treasury 130,551.49 130,551.48 Other income Income related
Information Technology
Special funds for consumer
goods standards and quality State treasury - 66,037.74 Other income Income related
improvement
Other subsidies State treasury 52,895.29 526,415.80 Other income Income related
Total —— 18,428,906.18 25,170,397.09 —— ——
Note:
A. It is based on Shenzhen Nanshan District People’s Government Office on the issuance of the "Nanshan District Independent
Innovation Industry Development Special Fund Management Measures" (Shennan Fuban (2019) No. 2) and the "Nanshan
District Independent Innovation Industry Development Special Fund-Economic Development Sub-item Funding Implementation
Rules (for Trial Implementation)”, the Group received 2019 Nanshan District Innovation Carrier Support Technology Project
Special Funding, Nanshan District Enterprise R&D Investment Support Program Project Funding, Commercial Circulation
Enterprise Funding Project Subsidy Funds, and Steady Growth of the Retail Industry Funding and special funding for Nanshan
District's independent project of excellence and rating (national design center), etc.
B. It is the award granted by Development and Reform Commission of Shenzhen Municipality according to “Encourage
Headquarters Enterprise Development” (Shen Fu Gui (2017) No. 7).
C. It is subsidy to support commerce industry received from Shenzhen Nanshan Industrial and Information Bureau according to
“Operating Guideline to Subsidise Projects of Nanshan District Self-innovation Industrial Development Special Fund”.
D. It is 2020 technique improvement special fund to award quality and branding promotion according to “Operating Guideline of
158
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Shenzhen Technique Improvement Special Project” (Shen Gongxin Gui (2019) No. 3.
E. It is 2020 provincial science and technology innovation strategy project fund obtained according to “Notice of Department of
Science and Technology of Guangdong Province Regarding Circulating Guideline of 2020-2021 Science and Technology
Cooperation Platform”
F. It is award of promoting consuming received according to “Various Measures to Promoting Growth of Consuming” (Shen Fu
Han (2018) No. 392.
G. It is special fund award received from Shenzhen standard area 2019 according to “Operating Guideline of Shenzhen Standard
Area Special Fund Award of Shenzhen Municipal Market Supervision and Management Bureau” (Shen Shi Jian Gui (2019) No.
2).
H. It is based on the "Guangming District Economic Development Special Fund Management Measures" (Shenguang Fugui [2019]
No. 14), "Shenzhen Guangming District Intellectual Property, Standardization, Measurement Certification, Quality Support
Operating Regulations" (Shenzhen Jianguang [2020] No. 122) and "Notice of Guangming Supervision Bureau of Shenzhen
Municipal Market Supervision Administration on Printing and Distributing "Guidelines for Application of Special Funds for
Economic Development of Shenzhen Municipal Market Supervision Bureau Guangming Supervision Bureau in Support of
Intellectual Property, Standardization, and Measurement Certification Projects>" (Shenzhen City Supervision Bureau) Guang
[2019] No. 160) and other documents stipulate that the Group received special support funds for economic development, the
Guangdong Industry Fair exhibition subsidy funds, the Guangxi Fair subsidy funds, the national high-certified enterprise
subsidies, and the Swiss Basel World participation in the Guangming District enterprise qualification awards, etc. .
I. It is based on the "Notice of the Guangdong Provincial Department of Human Resources and Social Security and the
Guangdong Provincial Department of Finance on Doing a Good Job in Training Vocational Training Work" (Yue Ren She Gui
[2020] No. 38) and the "Resolution To do a good job in the relevant provisions of the "Notice on Vocational Training Work for
Workers", the 6th batch of vocational skills promotion (for worker training) subsidies in Nanshan District in 2020 has been
obtained..
J. It is obtained according to “Measures to Promoting Science Innovation” (Shen fa (2016) No.7) and “Management Measures of
Shenzhen Science and Technology Research and Development Fund” issued by Shenzhen Finance Committee and Shenzhen
Science and Technology Innovation Committee.
K. It is subsidy received according to “Notice of Circulating Shenzhen Industrial Internet Development Action Plan (2018-2020)
and Associated Measures” (Shen Fu Ban Gui (2018) No. 7.
L. It is foreign trade development special fund received according to “Notice of Key Work of 2019 Foreign Trade Development
Special Fund” (Cai Xing (2019) No. 137.
M. It is obtained according to “Measures to Administrate Shenzhen R&D Funded Project and Hi-Tech Enterprise Foster Project”
issued by Shenzhen Science and Technology Innovation Committee.
N. It is China Patent Award and award to State Intellectual Property Right Advantage Enterprise obtained according to “Shenzhen
Municipal Treasury Special Fund Administration Measures” (Shen fu Gui (2018) No. 2), “Shenzhen Municipal Market
Supervision and Administration Special Fund Administration Measures” (Shen Shi Jian Gui (2020) No. 3, and “Shenzhen
Municipal Market Supervision and Administration Special Fund to Intellectual Property Right Area” (Shen Shi JianGui (2019)
No. 10.
O. It is 2019 Nanshan patent supporting special fund received according to “Administration Measures to Nanshan Self-innovation
Industrial Development Special Fund” (Shennan Fuban Gui (2019) No. 2 and “Implementation Details of Nanshan Self-
innovation Industrial Development Special Fund”.
P. It is associated patent award obtained from Shenzhen Market Supervision and Administration Bureau according to the
“Decision on the Award of the 20th China Patent Award” issued by the State Intellectual Property Office (Guo Zhi Fa Guan Zi
[2018] No. 36).
Q. It is 2020 domestic market expanding subsidy fund received according to “Administration Measures to Shenzhen Private and
SME Development Special Fund” (Shen Jingmao Xinxi Gui (2017) No. 8) and “Operating Guideline to Supporting Plan of
Shenzhen Private and SME” (Shen Gongxin Gui (2019) No. 13.
R. It is social insurance subsidy received according to “Notice of Application of Implementing Supporting Enterprise and
Stabalizing Job Positions ‘Four Increase’ Enterprise Social Insurance”.
159
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
S. It is rental subsidy received according to “Notice of Circulating Supporting Measures to Jointly Go Through COVID-19
Pandemic”.
T. It is subsidy received to support 2019 Swiss Basel World Watch and Jewelry Exhibition according to “Various Measure to
Support Enterprise to Improve Competitive Strength” (Shen Fa (2016) No. 8, “Notice of Circulating Measures to Stabalize
Foreign Trade, Adjusting Structure and Improve Quality” (Shen Fu (2017) No. 63).
U. It is award for obtaining High and New Technology Certificate according to “Administration Measures to Subsidy Shenzhen
R&D Funded Project and Hi-Tech Enterprise Foster Project” (Shen Keji Chuangxin Gui (2019) No.5 and “Notice of Distributing
2019 State Hi- and New Technology Certification Fund”.
V. It is short-term export insurance subsidy received according to “Shenzhen Foreign Trade Improving and Structure Adjusting
Measures” (Shen Fu (2017 No. 63).
(3) Government grant presented using net method
Amount in current Asset/income
Item Type Amount in prior period Offset item
period related
Subsidized interest State
- 4,603,207.48 Finance expense Income related
(A) treasury
Subsidy to electricity State Administration
865,721.20 860,524.00 Income related
fee (B) treasury expenses
Total —— 865,721.20 5,463,731.48 —— ——
Note:
A. It is subsidized interest received according to the following notices: “Notice of Circulating ‘Implementation Measures of
Subsidizing Interest to SME and Micro Enterprise Loan to Addressing COVID-19 Pandemic” (Shen Gongxin Gui (2020) No. 3;
“Notice of Circulating Supporting Measures to Jointly Go Through COVID-19 Pandemic”, “Notice of Distributing the Fourth
Batch of Subsidized Interest to SME and Micro Enterprises to Address COVID-19 Pandemic” etc…
B. It is electricity fee concession enjoyed according to “Interim Measure to Reduce Cost of Commercial Use of Electricity
of Shenzhen” (Shen Jingmao Xinxi Zi (2018) No. 12).
VI. Changes to the scope of consolidation
In 2020, there was no changes to the scope of consolidation.
VII. Interests in other entities
1. Equity in subsidiary
Main Shareholding ratio%
Place of Nature of
Name of subsidiary business Ways acquired
registration business Direct Indirect
location
Establishment or
HARMONY Company Shenzhen Shenzhen Commerce 100.00 -
investment
Precision Technology Establishment or
Shenzhen Shenzhen Manufacture 99.00 1.00
Company investment
Establishment or
FIYTA Hong Kong Hong Kong Hong Kong Commerce 100.00 -
investment
Establishment or
Station 68 Hong Kong Hong Kong Commerce - 60.00
investment
Establishment or
E-commerce Company Shenzhen Shenzhen Commerce 100.00 -
investment
Establishment or
Technology Company Shenzhen Shenzhen Manufacture 100.00 -
investment
Establishment or
TEMPORAL Company Shenzhen Shenzhen Commerce 100.00 -
investment
160
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Emile Choureit Establishment or
Shenzhen Shenzhen Commerce 100.00 -
Shenzhen Company investment
Establishment or
FIYTA Sales Company Shenzhen Shenzhen Commerce 100.00 -
investment
Business
combination
Hengdarui Company Shenyang Shenyang Commerce 100.00 -
under common
control
Business
combination not
Swiss Company Switzerland Switzerland Commerce - 100.00
under common
control
2. Equity in joint arrangement or associates
(1) Significant associates
Principal place Registration Business Shareholding ratio (%) Accounting treatment
Name
of business place nature Direct Indirect for associates
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method
(2) Principal financial information of significant associate company:
Item As at 31/12/2020 As at 31/12/2019
Current assets 142,137,359.85 117,096,911.21
Non-current assets 13,783,021.02 13,556,720.58
Total assets 155,920,380.87 130,653,631.79
Current liabilities 35,999,813.24 22,661,506.61
Non-current liabilities - 7,978,869.84
Total liabilities 35,999,813.24 30,640,376.45
Net assets 119,920,567.63 100,013,255.34
Including: minority shareholder’s interest - -
Owners’ equity attributable to parent
119,920,567.63 100,013,255.34
company
Portion of net asset calculated based on
29,980,141.91 25,003,313.84
shareholding
Adjustment matters
- Goodwill - -
- Unrealized profit or losses from internal
- -
transaction
- impairment provisions - -
- Others - -
Carrying value of investment to
51,400,665.92 46,423,837.85
associates
Fair value of equity investment that has
- -
public quotation
161
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Continued:
Item 2020 2019
Operating income 96,146,565.15 101,660,357.29
Net profit 19,907,312.29 6,171,098.80
Net profit from discontinued
- -
operation
Other comprehensive income - -
Total comprehensive income 19,907,312.29 6,171,098.80
Dividends received from
associated company during the - -
year
VIII. Risk management to financial instrument
Main financial instruments of the Group include cash at bank and in hand, bills receivable, accounts receivable, other receivables,
other current assets, other equity instruments investment, bills payable, accounts payable, other payables, short-term loans, non-
current liabilities due within one year and long-term loans. Details of financial instruments refer to related notes. The risks associated
with these financial instruments and the risk management policies adopted by the Group to mitigate these risks are described below.
The management of the Group manages and monitors these exposures to ensure that the above risks are controlled in a limited
extent.
1. Risk management goals and policies
The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence of financial risk to
financial performance of the Group to the minimum and maximize the benefit of shareholders and other equity investors. Based on
the goal, the fundamental risk management policies of the Group are to identify and analyse risks the Group faces, set proper
acceptable risk level to manage risk, supervise various risk reliably and timely and control risk within limited range. The Group
reviews the risk management policy and relevant internal control system to adapt to the changes of market or operations regularly.
The Group’s internal audit department also regularly or randomly performs tests to check whether the operations of internal control
system in accordance with the risk management policy.
Risks associated with the financial instrument mainly include credit risk, liquidity risk, market risk (including exchange rate risk,
interest rate risk and commodity price risk).
The board of director is responsible to plan and establish the Group’s risk management structure, make risk management policies
and related guidelines, and supervise the implementation of risk management. The Group has already made risk management risks
to identify and analyse risks that the Group face. These policies mentioned specific risks, covering market, credit risk and liquidity
risk etc. The Group regularly assesses market environment and the operation changes to determine if to make alteration to risk
management policy and systems. The Group’s risk management is implemented by Risk Management Committee according to the
approval of the board of directors. Risk Management Committee work closely with other business department of the Group to identify,
162
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
evaluating and avoiding certain risks. The Group’s internal audit department will audit the risk management control and procedures
regularly and report the result to audit committee of the Group.
The Group spreads risks through diverse investment and business lines, and through making risk management policy to reduce risks
of single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.
The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable, accounts receivable,
and other receivables.
The Group’s bank deposit mainly deposits in banks with good reputation and with higher credit rating. The Group anticipated that the
bank deposit does not have significant credit risk.
For bill receivable, accounts receivables and other receivables, the Group set related policies to control exposure of credit risks. The
Group evaluate client’s credit quality and set related credit period based on the client’s financial status, credit records and other
factors such as current market situation etc. The Group keep monitor the client’s credit record and for client with deteriorate credit
records, the Group will ensure the credit risk is under control in whole by means of written notice of payment collection, shorten or
cancel credit period.
The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation to receivables and
purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Group is the carrying amount of each financial assets in the balance sheet. The Group also
faces credit risks because of providing financial guarantee. Refer to Note XII. 2 for details.
The amount of top 5 accounts receivable of the Group accounted for 31.28% (2019: 25.39%) of the Group’s total accounts
receivables. The amount of top 5 other receivable of the Group accounted for 34.96% (2019: 40.94%) of the Group’s total other
receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financial liabilities that are
settled by delivering cash or other financial assets.
Regarding to the management of liquidity risk, the subsidiaries of the Group are responsible for cash flow forecast. The Group’s
finance center monitors cash and cash equivalents to meet operational needs at group level based on subsidiaries’ cash forecast.
The Group set up cash pool with major banks to arrange the Group’s cash and ensure that each subsidiary has sufficient cash
reserve to fulfil payment liability. Besides, the Group also signed facility agreement with banks to support the Group to fulfil liabilities
fall due.
Operating cash were generated from daily operation and bank loan. As of 31 December 2020, the Group’s unused bank loan credit
is RMB1,104.43million (2019: 1,970.39 million)
As at the period end, the financial liabilities of the Group at the reporting date are analysed by their maturity date as below at their
undiscounted contractual cash flows (in ten thousand RMB):
163
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
As at 31/12/2020
Item Within 1
1-2 years 2-3 years Over 3 years Total
year
Financial liabilities:
Short-term loans 55,023.98 - - - 55,023.98
Bills payable 358.14 - - - 358.14
Accounts payable 30,121.15 - - - 30,121.15
Other payables 12,693.81 - 163.95 - 12,857.76
Non-current liabilities due in one
38.11 - - - 38.11
year
Long-term loans 13.33 419.24 - - 432.57
Total financial liabilities 98,248.52 419.24 163.95 - 98,831.71
As at the beginning of the period, the financial liabilities of the Group at the reporting date are analysed by their maturity date as
below at their undiscounted contractual cash flows (in ten thousand RMB):
As at 31/12/2019
Item Within 1
1-2 years 2-3 years Over 3 years Total
year
Financial liabilities:
Short-term loans 57,945.57 - - - 57,945.57
Accounts payable 27,977.28 - - - 27,977.28
Other payables 11,876.85 - - 84.82 11,961.67
Non-current liabilities due in one
37.09 - - - 37.09
year
Long-term loans 12.97 11.89 441.62 - 466.48
Total financial liabilities 97,849.76 11.89 441.62 84.82 98,388.09
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the carrying amount of
the line items.
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of a financial
instrument will be fluctuated due to the changes in market price.
Interest risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated due to the floating
rate. Interest rate risk arises from recognised interest-bearing financial instrument and unrecognised financial instrument (e.g. loan
commitments).
The Group’s interest rate risk arises from borrowings and interest-bearing liabilities. Financial liabilities issued at floating rate expose
the Group to cash flow interest rate risk. Financial liabilities issued at fixed rate expose the Group to fair value interest rate risk. The
Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions
164
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
and to maintain an appropriate combination of financial instruments at fixed rate and floating rate through regular reviews and
monitors.
The Group’s finance department continuously monitors the interest rate position of the Group. The Group did not enter into any
interest rate hedging arrangements. But the management is responsible to monitor the risks of interest rate and consider to hedge
significant interest risk if necessary. Increase in interest rates will increase the cost of new borrowing and the interest expenses with
respect to the Group’s outstanding floating rate interest-bearing borrowings, and therefore could have a material adverse effect on
the Group’s financial result. The management will make adjustments with reference to the latest market conditions. These
adjustments may include enter into interest swap agreement to mitigate its exposure to the interest rate risk.
Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Item 2020 2019
Fixed interest rate
Financial liabilities
Including: short term loans 27,539.02 48,710.37
Long term loans 444.04 468.18
Subtotal 27,983.06 49,178.55
Floating interest rate:
Financial liabilities
Including: short term loans 25,000.00 8,000.00
Total 52,983.06 57,178.55
As at 31 December 2020, it is estimated that a general increase or decrease 50 basis points in the borrowings with floating interest
rates, with all other variables held constant, the Group’s net profit and shareholder’s equity for the year will decrease or increase by
approximately RMB1,250,000.00 (2019: RMB 400,000.00).
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk. This sensitivity
analysis as above has been determined assuming that the change in interest rates had occurred at the reporting date and arisen
from the recalculation of the above financial instrument issued at new interest rates. The non-derivative tools issued at floating
interest rate held by the Group at the reporting date expose the Group to cash flow interest rate risk. The effect to the net profit and
shareholder’s equity illustrated in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest
expenses or revenue at the floating interest rate. The analysis is performed on the same basis for last year.
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated due to the changes
in foreign currency rates. Foreign currency risk arises on financial instruments that are denominated in a currency other than the
functional currency in which they are measured.
The Group’s exchange risk mainly are financial position and cash flow that are affected by foreign exchange fluctuation. The Group’s
major operational activities are carried out in the PRC except for Swiss Company which held currency of CHF and Hong Kong
165
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Company which uses HKD for settlement. But risks also exist for the Group’s asset and liability denominated in foreign currency and
future foreign exchange transaction.
The following table details the financial assets and liabilities held by the Group which denominated in foreign currencies and
translated to RMB as at 31 December 2020 are as follows (in RMB ten thousands):
Liabilities denominated in foreign currency Asset denominated in foreign currency
Item
31/12/2020 31/12/2019 31/12/2020 31/12/2019
USD - - 2,366.05 4,601.89
HKD 179.63 1,939.47 1,774.03 1,072.77
CHF 1,005.75 1,700.89 1,974.28 3,497.65
EUR - - 164.13 359.81
Total 1,185.38 3,640.36 6,278.49 9,532.12
The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risk. The Group has not taken
any measures to avoid foreign exchange risks. But the management is responsible for monitor risk of exchange and, if necessary,
taking action to hedge material exchange risk.
As at 31 December 2020, for cash balances and bank loans that denominated in foreign currency, if Renminbi appreciate or
depreciate of 5% to foreign currency (mainly USD, HKD and CHF) and other factors remain unchanged, the shareholder’s equity and
net profit will increase or decrease about RMB -2.55 million (31 Dec 2019:RMB -2.95 million).
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders, return capital
to shareholders, issue new shares or disposes assets to reduce its liabilities.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total liabilities divided by total asset. As at 31
December 20120, the Group’s gearing ratio is 30.33% (31 December 2019: 29.42%).
IX. Fair value
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level
input that is significant to the entire fair value measurement. The levels are defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date for identical assets or
liabilities.
Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for underlying assets or liabilities.
Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
166
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
1. Fair value of assets and liabilities measured at fair value
As at 31 December 2020, assets and liabilities measured at fair value are shown as follows:
Level 1 fair value Level 2 fair value Level 3 fair value
Item Total
measurement measurement measurement
I.Recurring fair value measurement
(I) other equity instrument investment - - 85,000.00 85,000.00
There have been no transfers between level 1 and level 2 and no transfer into or out of Level 3 during the year ended 31 December
2020.
2. Fair values of assets and liabilities not measured at fair value
Financial assets and financial liabilities measured at amortized cost include: cash at bank and on hand, bills receivable, accounts
receivable, other receivables, short-term loans, accounts payable, other payables, long-term loans due within one year, and long-
term loans.
The difference between fair value and carrying amount of the above financial assets and liabilities that measured at cost is
insignificant.
X. Related party and related transaction
1. The parent company of the Company
Registered capital Shareholding ratio Ratio of vote right of
Registration
Name Type of business (in ten thousand of parent company parent company to
place
RMB) to the Company % the Company%
Investment in industries,
China National domestic trade, material
Shenzhen supply and distribution 116,616.20 38.07 38.07
Aviation Group
Note: China National Aviation Group is a subsidiary that 100% held, indirectly, by China Aero Space International Holdings Limited
(CASI), and China Aviation Industry Corporation (AVIC) directly holds 91.13% (ultimate beneficiary shares 91.897%) of the equity of
CASI. Therefore, the ultimate controlling party of the Company is AVIC.
2. Subsidiaries
Details of subsidiaries refer to Note VII. 1.
3. Joint venture and association
Details of joint ventures and associates refer to Note VII. 2.
4. Other related parties
Name Relationship with the Group
167
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Associate company of the
Shenzhen CATIC Property Management Limited (CATIC Property Management)
controlling shareholder
Associate company of the
Shenzhen CATIC Building Equipment Co., Ltd. (CATIC Building Company)
controlling shareholder
Associate company of the
Shenzhen CATIC Nanguang Elevator Engineering Co., Ltd. (CATIC Nanguang)
controlling shareholder
China Merchants Property Operation & Service Co., Ltd (China Merchants Property Associate company of the
OS) controlling shareholder
Associate company of the
CATIC Guanlan Property Development Co., Ltd. (CATIC Guanlan Property)
controlling shareholder
China Merchants Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Associate company of the
Company) controlling shareholder
Associate company of the
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment)
controlling shareholder
Associate company of the
Ganzhou CATIC 9 Square Trading Co, Ltd (Ganzhou 9 Square Company)
controlling shareholder
Associate company of the
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company)
controlling shareholder
Associate company of the
Shenzhen AVIC Security Service Co., Ltd (AVIC Security Service)
controlling shareholder
Jiujiang 9 Square Business Management Co., Ltd (Jiujiang 9 Square Business Associate company of the
Management) controlling shareholder
Associate company of the
Shenzhen CATIC Property Development Co., Ltd (CATIC Property)
controlling shareholder
AVIC Shanxi Bocheng Aviation Instrument Co., Ltd. (AVIC Baocheng) Controlled by the same party
Rainbow Digital Science Co., Ltd. and its associated companies (Rainbow Company) Controlled by the same party
Shennan Circuits Co., Ltd. and its associated companies (Shennan Circuits) Controlled by the same party
AVIC Lutong Co., Ltd.(AVIC Lutong) Controlled by the same party
AVIC International Aero-Development Corporation(AVIC Int’l Aero Development) Controlled by the same party
AVIC Huadong Photoelectric Co., Ltd.(AVIC Huadong Photoelectric) Controlled by the same party
AVIC Xi’an Flight Automatic Control Research Institute(AVIC Xi’an Flight Institute) Controlled by the same party
AVIC Jincheng Nanjing Engineering Institute of Aircraft System(AVIC Jincheng
Controlled by the same party
Nanjing Institute)
AVIC Supply and Distribution Co., Ltd.(AVIC Supply and Distribution) Controlled by the same party
Hubei AVIC Ye Steel Special Steel Sales Co., Ltd.(Hubei AVIC Ye Steel) Controlled by the same party
AVIC (Chengdu) Drone System Co., Ltd. (AVIC Drone) Controlled by the same party
AVIC Harbin Aircraft Industry Group Co., Ltd.(Harbin Aircraft) Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd (Grand Skylight Hotel
Controlled by the same party
Management Company)
Shenzhen CATIC City Real Estate Development Co., Ltd. (CATIC City Real Estate
Controlled by the same party
Company)
Shenzhen CATIC Huacheng Real Estate Development Co, Ltd (CATIC Huacheng
Controlled by the same party
Company)
Tianma Micro-electronics Co., Ltd. (Tianma) Controlled by the same party
168
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
AVIC Securities Co., Ltd. (AVIC Securities Company) Controlled by the same party
Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) Controlled by the same party
AVIC Training Center Controlled by the same party
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Shenzhen CATIC Grand Skylight Hotel Co., Ltd (Grand Skylight Hotel) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co., Ltd (Gongqingcheng CATIC Culture
Controlled by the same party
Investment Company)
Company directors, managers, CFO, and secretary of the board Key management member
5. Related party transactions
(1) Related purchase and sales
①Purchase good and receiving service
Related party Nature of transaction 2020 2019
CATIC Property Management Property management 11,112,069.09 11,480,515.57
Department store expenses/
Rainbow Company 4,841,752.49 5,327,244.54
Commodity purchase
AVIC Training Center Training fee 150,000.00 159,408.67
Ganzhou 9 Square Company Department store expense 182,754.97 185,711.09
CATIC City Estate (Kunshan) Company Department store expense 50,277.87 39,921.62
Jiufang Business Management Department store expense 84,262.98 54,731.80
AVIC Purchase of goods - 415,077.98
AVIC Information Center Training expenses - 1,603.77
Shanghai Watch Purchase of goods - 6,048.24
Tianma Purchase of goods 538,699.11 969,091.14
CATIC Building Company Renovation 114,002.02 17,390.67
Maintenance and management
Skytel Hotel - 28,886.00
fee
CATIC City Real Estate Company Department store expense - 76,275.91
CATIC Shenzhen Company Purchase of goods 451,327.43 -
AVIC Nanguang Company Elevator maintenance 245,660.40 -
Note：
(1) The pricing strategy for Group’s related transaction are based on market price.
(2) VAT tax is excluded in the amount listed above.
② sale of goods and providing services
Related party Nature of transaction 2020 2019
169
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Rainbow Company Product and service 75,021,802.86 73,641,080.14
Grand Skylight Hotel Management
Sale of product 17,610.62 -
Company
Ganzhou 9 Square Company Product and service - 93,750.40
Sale of material and providing
Shennan Circuit 13,308,898.52 10,573,861.17
service
Gongqingcheng CATIC Culture
Sale of product 398,249.10 -
Investment Company
CASI Sale of product 87,484.05 -
Share of Utilities and
CATIC Property Management 3,406,116.73 12,506,097.43
management fee
Grand Skylight Hotel Sale of product - 140,867.25
Shanghai Watch Sale of product 1,839,880.53 4,821,299.97
AVIC Training Center Others 2,180.53 3,270.80
Harbin Aircraft Sale of product 36,398.23 -
AVIC Sale of product 84,132.74 -
Hubei AVIC Ye Steel Sale of product 17,212.39 -
AVIC Huadong Photoelectric Sale of product 266,371.68 -
AVIC Supply and Distribution Sale of product 41,504.42 -
AVIC Int’l Aero Development Sale of product 140,884.96 -
AVIC Lutong Sale of product 14,123.89 -
AVIC Jincheng Nanjing Institute Sale of product 176,991.15 -
AVIC Drone Sale of product 33,021.24 -
AVIC Xi’an Flight Institute Sale of product 7,061.95 -
Jiujiang 9 Square Business Management Sale of product 45,374.42 -
Note：
(1) The pricing strategy for Group’s related transaction are based on market price.
(2) VAT tax is excluded in the amount list above.
(2) Related party lease
①The Company as a lessor
Recognized rental income in Recognized rental income in
Lessee Type of leased assets
current year prior year
CATIC Property Management Property 6,864,598.93 3,972,425.13
China Merchants Property OS Property 1,981,713.13 1,887,345.86
Skytel Hotel Property - 2,793,650.79
CATIC City Investment) Property 285,138.58 271,560.56
AVIC Securities Company Property 1,328,714.31 1,280,028.55
170
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Property
CATIC City Real Estate Company - 304,781.46
Rainbow Company Property 1,428,372.22 684,393.11
CATIC Huacheng Company Property - 239,471.14
CATIC 9 Square Asset Mgmt Property
1,829,906.11 2,023,126.13
Company
AVIC Security Service Property 902,359.45 1,438,139.41
CATIC Guanlan Property Property 142,569.29 135,780.28
CATIC Property Property 286,326.66 272,692.07
Note：
(1) The pricing strategy for Group’s related transaction are based on market price.
(2) VAT tax is excluded in the amount list above.
②The Company as lessee
Rental expenses charged in Rental expenses charged in
Lessor Type of leased assets
current year prior year
Ganzhou 9 Square Company Property 913,674.48 894,582.84
Kunshan Company Property 111,047.63 132,960.04
Jiufang Business Management Property 431,504.72 320,208.22
CATIC City Real Estate Company Property - 285,668.33
Note：
(1) The pricing strategy for Group’s related transaction are based on market price.
(2) VAT tax is excluded in the amount listed above.
(3) Related party funds lending
Related Party Amount starting date Expiring date Note
Borrowing from:
AVIC Finance
50,000,000.00 2019-3-26 2020-3-26
Company
AVIC Finance
50,000,000.00 2020-3-26 2020-6-23
Company
AVIC Finance
100,000,000.00 2019-4-2 2020-4-1
Company
AVIC Finance
100,000,000.00 2020-4-1 2020-12-28
Company
AVIC Finance
60,000,000.00 2019-10-25 2020-6-9
Company
AVIC Finance
50,000,000.00 2019-3-26 2020-3-26
Company
Note: The Company paid interest to AVIC Finance Company amounted to RMB 6,103,594.45 during the year.
(4) Remuneration to key management
171
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
The Company has 19 key management personnel in 2020, and 21 (including resigned) key management personnel in 2019.
Information about remuneration is as follows:
Item 2020 2019
Remuneration to key
17,150,200.00 17,845,000.00
management
(5) Other related party transactions
The year-end balance of the Company’s cash that is deposited with AVIC Finance Company is RMB283,532,347.79. Interests
received from the deposit during the year were RMB797,100.79.
6. Receivables from and payables to related parties
(1) Receivables
As at 31/12/2020 As at 31/12/2019
Item Related party Carrying Bad debt Carrying Bad debt
amount provision amount provision
Bills receivable
Shennan Circuit 5,083,025.01 - 2,263,719.32 -
Shanxi Bocheng 50,000.00 2,500.00 - -
Accounts
receivable
Rainbow Company 9,489,446.66 285,632.34 6,387,871.47 318,754.79
Shennan Circuit 1,370,425.31 41,249.80 1,704,634.58 85,061.27
Gongqingcheng CATIC Culture
58,834.76 - - -
Investment Company
CATIC Property Management 40,947.74 - - -
Shanghai Watch - - 140,000.00 6,986.00
Harbin Aircraft 20,130.00 605.91 - -
AVIC Security Service 0.27 0.01 - -
Other receivables:
Rainbow Company 1,064,073.00 45,648.73 975,867.00 50,647.50
Ganzhou 9 Square Company 189,432.77 8,126.67 122,665.60 6,366.34
Kunshan Company 40,000.00 1,716.00 32,000.00 1,660.80
Gongqingcheng CATIC Culture
7,462.00 320.12 - -
Investment Company
Jiufang Business Management 50,000.00 2,145.00 50,000.00 2,595.00
China National Aviation Group 11,101.80 476.27 11,101.80 576.18
CATIC City Real Estate
- - 59,923.00 3,110.00
Company
AVIC Training Center 2,464.00 74.17 - -
Prepayment
172
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Tianma - - 31,309.90 -
(2) Payables to related parties
Item Related party As at 31/12/2020 As at 31/12/2019
Accounts payable:
CATIC Building Company - 23,300.97
Tianma - 3,415.84
Other payables: CATIC Property Management 1,717,018.14 1,237,403.65
China Merchants Property OS 442,407.92 442,407.92
CATIC City Investment 309,732.00 309,732.00
AVIC Securities Company 238,560.00 213,000.00
CATIC Building Company 47,732.93 54,691.44
CATIC City Real Estate Company - 99,052.32
CATIC Huacheng Company - 73,819.68
CATIC Jiufang Asset Mgmt
- 378,483.84
Company
Rainbow Company 257,490.98 155,672.90
CATIC Property 51,014.88 51,014.88
CATIC Guanlan Property 25,401.60 25,401.60
AVIC Security Service 226,603.44 226,603.44
Skytel Hotel - 28,886.00
CATIC Nanguang 25,179.84 -
Advances from
AVIC Huadong Photoelectric 10,500.00 -
customer
XI. Share-based payments
1. General information about share-based payments
General information about share-based payments -
General information about share-based payments -
Total equity instruments voided in current period -
First phase restricted share exercise price: RMB4.4/share.
Scope of outstanding share option exercise price and The remaining of restricted 4.077 million shares will be
remaining contract term unlocked by 33.33% each in January 2021, January 2022
and January 2023.
Scope of outstanding other equity instrument exercise price
Not applicable
and remaining contract term.
2. Equity settled share-based payment
173
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Method of determining fair value of equity instrument on grant date Close price of share on grant date
Term of employee service, status of target
Evidence to determine the number of exercisable equity instrument
completion, and personal performance assessment
Reasons for significant difference between current period estimation and prior
NIL
period estimation
Accumulated amount charged to capital reserve for equity settled share-
10,011,227.40
based payment
Total expenses for equity settled share-based payment recognized in current
5,570,601.49
period
XII. Commitment and contingencies
1. Significant commitments
(1) Operating lease commitments
As at the balance sheet date, the total future minimum lease payments under non-cancellable operating leases were payable as
follows:
The total future minimum lease payments under non-
As at 31/12/2020 As at 31/12/2019
cancellable operating leases
Within 1 year 81,612,695.21 69,420,770.36
1-2 years 37,104,794.98 40,749,688.35
2-3 years 16,579,529.38 15,620,420.28
After 3 years 3,567,104.00 11,333,148.34
Total 138,864,123.57 137,124,027.33
(2) Other commitments
As at 31 December 2020, the Group does not have other commitments that required to disclose.
2. Contingencies
(1) Contingent liabilities arising from guarantee provided to other entities and related financial effects.
As at 31 December 2020, the intra-Group guarantees is as followings (in RMB Ten thousands):
Guaranteed Credit line Period of credit line Credit line
Guarantee Guarantor Period of guarantee
matter granted granted used
FIYTA Hong The From 2020-5-31 to From 2020-5-31 to
Loan 3,366.56 296.02
Kong Company 2022-5-31 2022-5-31
3 years after the day
HARMONY The From 2020-4-20 to
Loan 5,000.00 4,000.00 that contracted liability
Company Company 2021-4-20
is fulfilled.
HARMONY The Guarantee From 2020-9-23 to From 2020-10-1 to
5,000.00 5,000.00
Company Company letter 2021-12-22 2021-12-31
Single
HARMONY The From 2020-12-30 to
Guarantee —— —— 10,000.00
Company Company 2021-12-29
letter
Sales The From 2020-4-23 to 3 years after the day
Loan 5,000.00 5,000.00
Company Company 2021-4-23 that contracted liability
174
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
is fulfilled.
2 years after the day
Technology The From 2020-4-28 to
Loan 3,000.00 243.00 that contracted liability
Company Company 2021-4-20
is fulfilled.
Technology The Bill From 2020-10-15 to
—— —— 423.38
Company Company discounted 2021-2-25
Technology The Bill From 2020-10-15 to
—— —— 887.33
Company Company discounted 2021-5-31
Precision 2 years after the day
The From 2020-4-23 to
Technology Loan 3,000.00 3,000.00 that contracted liability
Company 2021-4-23
Company is fulfilled.
Total —— —— 24,366.56 —— 28,849.73 ——
(2) Other contingent liabilities
As at 31 December 2020, the Group does not have other contingent liabilities that required to disclose.
XIII. Post balance sheet date events
1. Profit appropriations after the balance sheet date
Cash dividend of RMB4.00 (tax inclusive) for every 10
Profit distributions or dividends proposed
shares held
2. Other events after the balance sheet date
(1) A-share Restricted Share Incentive Plan
Pursuant to the approval of the first extraordinary general meeting of 2021 and the 23th meeting of the 9th board of directors, the
Company intends to grant 8,770,000 A-share restricted shares to 149 incentive individuals at a price of RMB7.60 per share. As of 15
January 2021 (grant date), the actual number of individual received the grant was 135, and a total of 7,660,000 restricted stocks
were granted. The total amount of subscriptions received from incentive individuals was RMB58,216,000.00, of which
RMB7,660,000.00 increased share capital and RMB50,556,000.00 was included in capital reserve (share premium).
The incentive program is valid for 5 years (60 months), including a lock-up period of 2 years (24 months) and an unlock period of 3
years (36 months).
(2) Repurchase of shares
Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 19th meeting of the 9th Board of
Directors on 6 July 2020 and the 2nd extraordinary shareholder’s meeting of 2020 on 23 July 2020, the Company repurchased B
Shares in total of 8,994,086 shares as of 8 March 2021, accounted for 2.06% of the Company’s total shares. Total consideration paid
was HKD 58,207,259.00 (excluding stamp duty and commission).
(3) Financing and guarantee after the balance sheet date
① On 8 March 2021, pursuant to approval by the 27th meeting the 9th Board of directors, the Company proposed to apply for
financing facility of no more than RMB1,200 million by means of credit, pledge and mortgage. The resolution is pending for approval
by the shareholder’s meeting.
② On 8 March 2021, pursuant to approval by the 27th meeting the 9th Board of directors, the Company proposed to provide
175
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
guarantee for the Company’s wholly-owned subsidiary to borrow from banks of no more than RMB800 million. The credit line is
included in the actual usage limit of RMB1,200 million mentioned above. The resolution is waiting approval from the shareholder’s
meeting.
(4) De-registration of subsidiary
On 5 March 2021, the Company received the de-registration notice of Station 68 from Hong Kong Companies Registry. Station 68
cancelled its registration.
(5) Others
As at 8 March 2021, the Company does not have other post-balance sheet events that require to disclose.
XIV. Other Significant matters
As at 8 March 2021, the Company does not have other significant matters that require to disclose.
XV. Notes to the Company’s financial statements
1. Accounts receivable
(1) Presented by ageing
Ageing As at 31/12/2020 As at 31/12/2019
Within 1 year 1,633,186.27 2,997,921.46
Over 1 year 143,415.84 -
Subtotal 1,776,602.11 2,997,921.46
Less: bad debt provision 311,803.32 149,896.07
Total 1,464,798.79 2,848,025.39
(2) Presentation by method of providing bad debt
As at 31/12/2020
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment - - - - -
individually
Collectively assessed for
impairment based on credit 1,776,602.11 100.00 311,803.32 17.55 1,464,798.79
risk characteristics
Receivables from
related parties within scope - - - - -
of consolidation
Receivables from other
1,776,602.11 100.00 311,803.32 17.55 1,464,798.79
customers
Total 1,776,602.11 100.00 311,803.32 17.55 1,464,798.79
(continued)
Category As at 31/12/2019
176
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Book value Bad debt provision
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment - - - - -
individually
Collectively assessed for
impairment based on credit 2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
risk characteristics
Receivables from
related parties within scope - - - - -
of consolidation
Receivables from other
2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
customers
Total 2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
Bad debt provision based on groups
Group: Receivables from other customers
As at 31/12/2020
Item
Accounts receivable Bad debt provision ECL rate (%)
Within 1 year 1,633,186.27 168,387.48 10.31
Over 1 year 143,415.84 143,415.84 100.00
Total 1,776,602.11 311,803.32 17.55
(3) Accrual, recovery or reversals of provision during the year:
Item Bad debt provision
As at 31/12/2019 149,896.07
Adjustment amount for initial adoption of new revenue standards -
2020.01.01 149,896.07
Accrual 161,907.25
Reversal -
Written-off -
As at 31/12/2020 311,803.32
(4) There were no receivables that are written-off during the period.
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB1,253,596.04, accounted for 70.55% of total balance of
accounts receivable as of year end. Corresponding bad debt provision accrued is RMB251,032.07.
2. Other receivables
177
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Item As at 31/12/2020 As at 31/12/2019
Interest receivable - -
Dividends receivable - -
Other receivables 621,512,680.69 783,647,732.22
Total 621,512,680.69 783,647,732.22
(1) Other receivables
①Presented by ageing
Ageing As at 31/12/2020 As at 31/12/2019
Within 1 year 621,369,363.48 673,518,552.61
1-2 years 177,475.90 109,992,510.47
2-3 years 11,697.43 186,180.00
Over 3 years 40,050.00 40,050.00
Subtotal 621,598,586.81 783,737,293.08
Less: bad debt provision 85,906.12 89,560.86
Total 621,512,680.69 783,647,732.22
②Presented by nature
As at 31/12/2020 As at 31/12/2019
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Related party
620,792,324.27 - 620,792,324.27 783,005,800.85 - 783,005,800.85
balance
Security deposit 217,525.90 45,116.69 172,409.21 235,761.90 76,355.60 159,406.30
Social security
payment on- 392,074.21 - 392,074.21 242,726.90 - 242,726.90
behalf
Others 196,662.43 40,789.43 155,873.00 253,003.43 13,205.26 239,798.17
Total 621,598,586.81 85,906.12 621,512,680.69 783,737,293.08 89,560.86 783,647,732.22
③Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in next
Category Book value Bad debt Provision Carrying amount Note
12 month (%)
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Petty cash - - - -
178
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Security deposit 217,525.90 20.74 45,116.69 172,409.21
Social security payment on-
392,074.21 - - 392,074.21
behalf
Receivables from related party
620,792,324.27 - - 620,792,324.27
that within consolidation scope
Other receivables 196,662.43 20.74 40,789.43 155,873.00
Total 621,598,586.81 0.01 85,906.12 621,512,680.69
As of the period end, the Company does not have other receivables at the second stage.
As of the period end, the Company does not have other receivables at the third stage.
Bad debt provision as of 31 December 2019:
Bad debt provision at the first stage:
ECL rate in next 12 Bad debt
Category Book value Carrying amount Note
month (%) Provision
Individually significant and
assessed for impairment - - - -
individually
Collectively assessed for
impairment based on credit risk
characteristics
Petty cash - - - -
Security deposit 235,761.90 32.39 76,355.60 159,406.30
Social security payment on-
242,726.90 - - 242,726.90
behalf
Receivables from related party
783,005,800.85 - - 783,005,800.85
that within consolidation scope
Other receivables 253,003.43 5.22 13,205.26 239,798.17
Total 783,737,293.08 0.01 89,560.86 783,647,732.22
As of the period end, the Company does not have other receivables at the second stage.
As of the period end, the Company does not have other receivables at the third stage.
④ Accrual, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
Bad debt provision ECL for the life time ECL for the life time Total
ECL in next 12
of receivables (no of receivables
month
impairment yet) (impaired)
Balance as at 31 December 2019 89,560.86 - - 89,560.86
In current period
--transferred to 2nd stage - - - -
-- transferred to 3rd stage - - - -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
Accrued - - - -
179
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Reversed 3,654.74 - - 3,654.74
Realized - - - -
Written-off - - - -
Other changes - - - -
Balance as at 31 December 2020 85,906.12 - - 85,906.12
⑤There was no other receivables that are written-off during the period.
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB620,803,426.07, accounted for 99.87% of total balance
of other receivable as of year end.
3. Long-term equity investment
As at 31/12/2020 As at 31/12/2019
Item Impairment Impairment
Book value Carrying amount Book value Carrying amount
provision provision
Investment to
1,478,014,522.36 - 1,478,014,522.36 1,334,471,401.42 - 1,334,471,401.42
subsidiaries
Investment to
51,400,665.92 - 51,400,665.92 46,423,837.85 - 46,423,837.85
associates
Total 1,529,415,188.28 - 1,529,415,188.28 1,380,895,239.27 - 1,380,895,239.27
(1) Investment in subsidiaries
Balance of
Investee As at 31/12/2019 Increase Decrease As at 31/12/2020 Provision
provision
HARMONY Company 602,538,761.04 1,528,450.16 - 604,067,211.20 - -
E-commerce
2,184,484.39 9,500,000.00 - 11,684,484.39 - -
Company
Precision Technology
9,344,923.49 90,455,581.56 - 99,800,505.05 - -
Company
Technology Company 10,126,964.71 40,118,587.82 - 50,245,552.53 - -
FIYTA Hong Kong 137,737,520.00 - - 137,737,520.00 - -
TEMPORAL Company 5,000,000.00 - - 5,000,000.00 - -
FIYTA Sales
451,377,582.46 1,753,237.26 - 453,130,819.72 - -
Company
Hengdarui Company 36,867,843.96 - - 36,867,843.96 - -
Emile Choureit
79,293,321.37 187,264.14 - 79,480,585.51 - -
Shenzhen Company
Total 1,334,471,401.42 143,543,120.94 - 1,478,014,522.36 - -
180
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
(2) Investment in subsidiaries
Changes during the period Balance
of
Investmen
impairm
Invest As at t gains Adjustment Cash As at ent
Addition/ Chang Impairm
and losses of other divid
ee 31/12/2019 new Withdra es in ent Othe 31/12/2020 provisio
confirmed comprehen end
investme wn other provisio rs n as of
by the sive decla
nt equity n period
equity income red
end
method
Associ
ate
Shang
46,423,83 4,976,82 51,400,66
hai - - - - - - - -
7.85 8.07 5.92
Watch
181
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
4.Operating income and operating cost
2020 2019
Item
Operating income Operating cost Operating income Operating cost
Main business 134,821,552.25 36,497,097.45 140,511,246.61 21,776,539.35
Other business 2,560,243.70 - - -
Total 137,381,795.95 36,497,097.45 140,511,246.61 21,776,539.35
5.Investment gain
Item 2020 2019
Gain from long-term equity investments accounted for using the
100,000,000.00 113,000,000.00
cost method
Gain from long-term equity investments accounted for using the
4,976,828.07 1,542,774.70
equity method
Total 104,976,828.07 114,542,774.70
XVI. Supplementary information
1. Details of non-recurring gain or loss for the year
Item 2020 Note
Disposal gain or loss of non-current assets -369,857.30
Overridden approval, or without official approval
-
document, or incidental tax return or exemption
Government grants included in current profit or loss
(except for the fixed or quantitative government grants,
enjoyed in a consecutive way, which closely related to 30,634,128.57
the enterprise businesses and according to nation
policies)
Charges for the possessions of funds collected from
-
non-monetary enterprises
Gain from investment in subsidiaries, joint venture and
cooperative enterprises when cost of investment is less
-
than the profit incurred in identifiable net asset fair value
of invested unit when investment
Profit and loss of non-monetary assets exchange -
Profit and loss from entrusting others to invest or
-
manage assets
Asset impairment provision accrued due to force
-
majeure such as natural disasters
Profit and loss of debt restructuring -
Enterprise restructuring expenses, such as expenses for
-
arranging employees, integrating cost
Profit and loss over fair value part accrued in
-
transactions of unreasonable transaction price
182
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Current net profit and loss of subsidiaries from business
combination under common control from the opening -
period to combination date
Profit and loss incurred contingent matters unrelated to
-
normal operating business
Except for effective hedging business related to normal
operating business, profit and loss from changes in fair
value incurred in financial assets and financial liabilities,
-
and the investment gain from disposal of financial
assets, financial liabilities and available-for-sale financial
assets
Gain from disposal of tradable financial asset financial
-
liabilities and debt investment
Impairment provision reversal of accounts receivable
163,925.30
under standalone impairment test
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of
investment property subsequently measured in fair -
value mode
Influence on current profit and loss caused by one-off
adjustment according to requirements of laws and -
regulations about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than
1,556,300.78
the above items
Profit and loss items pursuant to the definition of non-
-
recurring profit and loss
Subtotal 31,984,497.35
Effect of income tax of non-recurring profit or loss 6,964,353.72
Net amount of non-recurring profit or loss 25,020,143.63
Less: Effect of non-recurring profit or losses attributable
-
to minority shareholders (after tax)
Non-recurring profit or loss attributable to shareholders
25,020,143.63
of the parent company
183
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
2. Return on Equity (ROE) and Earnings per share (EPS)
Weighted average EPS
Profit of the reporting period
ROE % Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders
10.78 0.6764 0.6764
of the Company
Net profit attributable to ordinary shareholders
of the Company after deducting non-recurring 9.87 0.6187 0.6187
profit or loss
184
FIYTA Precision Technology Co., Ltd. 2020 Annual Report, Full Text
Section13 Documents Available for Inspection
I. Financial Statements signed by and under the seal of the legal representative, chief
accountant and accounting supervisors;
II. Original of the Auditors’ Report under the seal of the accounting firm and signed by and
under the seals of certified public accountants.
III. 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.
Board of Directors of
FIYTA Precision Technology Co., Ltd.
10 March 2021
185
