FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
FIYTA Precision Technology Co., Ltd.
2021 Annual Report
March, 2022
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FIYTA Precision Technology Co., Ltd. 2021 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.
Zhang Xuhua, the Company leader, Song Yaoming, 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 the Company's future development prospect in Section
3 Discussion and Analysis of the Management.
The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: based
on the number of shares after deducting the shares in the special securities account for repurchase from the
total number of shares on the equity registration date when the profit distribution plan is implemented in the
future, the Company is going to distribute cash dividend to all shareholders at the rate of CNY 3.00 (with tax
inclusive) for every 10 shares, and 0 bonus shares (with tax inclusive) shall be distributed and no public reserve
shall be capitalized.
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FIYTA Precision Technology Co., Ltd. 2021 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 Discussion and Analysis by the Management
Section 4 Corporate Governance
Section 5 Environment and Social Responsibility
Section 6 Significant Events
Section 7 Change of the Shares and Particulars about Shareholders
Section 8 About the Preferred Shares
Section 9 About Bonds
Section 10 Financial Report
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Documents Available for Inspection
I. Financial Statements signed by and under the seal of the legal representative, chief accountant and accounting
supervisors;
II. The original Auditors’ Report affixed with the seal of the accounting firm, signed by and affixed with the seal of the
certified public accountant.
III. Originals of all documents and manuscripts of all the Company’s documents disclosed to the public during the
reporting period.
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FIYTA Precision Technology Co., Ltd. 2021 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 Industrial Refers to AVIC International Industrial Holding Co., Ltd.
AVIC International Shenzhen Refers to AVIC International Shenzhen Co., Ltd.
AVIC IHL Refers to AVIC International Holding Limited
The Sales Co. Refers to FIYTA Sales Co., Ltd.
Harmony Refers to Shenzhen Harmony World Watches Center Co., Ltd.
Precision Technology Co. Refers to Shenzhen FIYTA Precision Technology Co., Ltd.
Science & Technology Development Co. Refers to Shenzhen FIYTA Technology Development Co., Ltd.
the Hong Kong Co. Refers to FIYTA (Hong Kong) Limited
SHIYUEHUI Refers to Shiyuehui Boutique (Shenzhen) Co., Ltd.
Hengdarui Refers to Liaoning Hengdarui Commerce & Trade Co., Ltd.
Harmony E-Commerce Limited Refers to Shenzhen Harmony E-Commerce Limited
Xunhang Co. Refers to Shenzhen XUNHANG Precision Technology Co., Ltd.
HARMONY (Hainan) Co. Refers to Harmony World Watches Center (Hainan) Ltd.
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.
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FIYTA Precision Technology Co., Ltd. 2021 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 Zhang Xuhua
Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Registered
518057
Address
On January 30, 1997, the Company’s registered address was changed from "Building 6, CATIC Zone,
Shennan Road Central, Shenzhen" to "Building 6, CATIC Zone, Shennan Road Central, Futian District,
Changes of the Company's
Shenzhen"; on April 5, 2000, the registered address was changed to "Fiyta Building, 163 Zhenhua Road,
Registered Address
Futian District, Shenzhen"; on February 20, 2004, the registered address was changed to "FIYTA Technology
Building, Gaoxin S. Road One, Nanshan District, Shenzhen".
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 Song Yaoming (acting ) Xiong Yaojia
20th Floor, FIYTA Technology Building, Gaoxin 18th Floor, FIYTA Technology Building, Gaoxin
Liaison Address
S. Road One, Nanshan District, Shenzhen S. Road One, Nanshan District, Shenzhen
Tel. 0755-86013669 0755-86013669
Fax 0755-83348369 0755-83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
III. Information Disclosure and Place where the Regular Reports are Prepared
The website of the Stock Exchange on which the Company
http://www.szse.cn
discloses the Annual Report
Names and websites of the media on which the Company
Securities Times, Hong Kong Commercial Daily, and www.cninfo.com.cn
discloses the Annual Report
Place where the Company’s Annual Report was prepared
The Planning & Operation Department of the Company
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 the
No change
past years (if any)
V. Other Relevant Information
The CPAs appointed by the Company
Name of the CPAs Da Hua Certified Public Accountants (Special General Partnership)
Office address 1101, Building 7, No. 16 Xisi huanzhong Road, Haidian District, Beijing
Names of the CPAs as the authorized
Long Jiao and Wang Dong
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
2021 2020 reporting year over the 2019
previous year
Turnover in CNY 5,243,733,540.93 4,243,439,952.59 23.57% 3,704,210,734.90
Net profit attributable to the Company’s
387,840,282.95 294,115,156.04 31.87% 215,909,014.15
shareholders, in CNY
Net profit attributable to the Company’s 369,418,754.83 269,095,012.41 37.28% 199,678,661.09
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
shareholders less the non-recurring
items, in CNY
Net cash flows arising from operating
547,249,108.45 378,210,505.87 44.69% 444,820,768.61
activities, in CNY
Basic earning per share (CNY/share) 0.9036 0.6764 33.59% 0.4943
Diluted earning per share (CNY/share) 0.9036 0.6764 33.59% 0.4943
Return on equity, weighted average (%) 13.39% 10.78% 2.61% 8.21%
Increase/decrease of the
end of the reporting year
End of 2021 End of 2020 End of 2019
over the end of the
previous year
Total assets, in CNY 4,110,579,952.49 4,018,712,700.18 2.29% 3,760,923,285.37
Net assets attributable to the Company’s
shareholders (owner’s equity attributable 3,013,232,642.53 2,799,948,388.09 7.62% 2,654,533,766.99
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 respectively according to 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 1,378,277,735.81 1,399,241,785.53 1,307,278,222.69 1,158,935,796.90
Net profit attributable to the
118,222,042.23 115,322,684.32 109,034,679.41 45,260,876.99
Company’s shareholders
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Net profit less the non-recurring
profit/loss attributable to the 113,576,505.85 110,219,727.57 104,537,027.94 41,085,493.47
Company’s shareholders
Net cash flows arising from operating
28,711,219.83 176,443,344.10 163,056,189.37 179,038,355.15
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
IX. Extraordinary items and amount
In CNY
Items Amount in 2021 Amount in 2020 Amount in 2019 Note
Gain/loss from disposal of non-current assets,
including the part written-off with the provision for 730,134.87 -369,857.30 -926,118.60
impairment of assets.
The government subsidies included in the
profits and losses of the current period
( (excluding government grants which are closely
23,476,186.50 30,634,128.57 18,428,906.18
related to the Company’s normal business and
conform with the national standard amount or
quantity)
Reversal of provision for impairment of accounts
receivable that has been separately tested for 2,225,653.32 163,925.30
impairment
Other non-operating income and expenses other
-3,058,731.52 1,556,300.78 3,353,916.43
than the aforesaid items
Less: Amount affected by the income tax 4,951,715.05 6,964,353.72 4,626,350.95
Total 18,421,528.12 25,020,143.63 16,230,353.06 --
Details of other gains and losses in compliance with the definition of non-recurring gains and losses.
Inapplicable
Explanation of the non-recurring gains and losses listed in the Explanatory Announcement No.1 on Information Disclosure
for Companies Offering their Securities to the Public - Non-recurring Gains and Losses as recurring gains and losses
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Section 3 Discussion and Analysis by the Management
I. About the Industry the Company Engages in
As a representative of precision technology, watches bear diversified attributes of function and art. They carry emotional
needs such as "love" and "beauty" on the wrist, and are gradually becoming a symbolic representation of consumers'
pursuit of quality life.
Watch industry in which the Company engages has experienced flourishing for centuries with continuous appearance,
technological innovation and profound historical and cultural accumulation. It has formed a relatively stable industry
structure. The high-end luxury watches mainly represented by Swiss watch brands, mid-end and fashion watches
composed represented by European and American brands, Japanese brands, and domestic brands are facing the broad
global watch consumer market.
With the economic growth of China, consumption upgrading and the guidance of consumption policies, the continuous
expansion of the domestic watch consumption market has become a consensus. Even after the impact of COVID-19, its
overall scale has a compound growth rate of more than 6% in the past five years.
What is noticeable that the expansion of high-net-worth individuals and the change of consumption concept have
promoted the continuous popularization and rejuvenation of domestic mid-to-high-end consumption, and the consumption
of mid-to-high-end watches mainly by Swiss watch brands has performed well. According to the statistics of the Swiss
Watch Industry Federation , the compound growth rate of Swiss watch exports to Mainland China in the past five years is
nearly 20%, and it will hit a record high in 2021. At the same time, driven by the overall improvement of domestic
manufacturing level, digital transformation, cultural self-confidence and return of consumption, the rise of national tide
culture, domestic brands in the watch industry have also ushered in new development opportunities, and continue to
upgrade quality and personalization .
In August 2021, the tenth meeting of the Central Committee for Financial and Economic Affairs made policy arrangements
on promoting common prosperity, further clarifying the expansion of the scale of the middle-income group and optimizing
the income structure.
It is true that economic development and policy dividends have provided many development opportunities for the industry
we are in, but also brought about great challenges.
At present, the mid-to-high-end watch brands dominated by the Swiss watch brand are still the main driving force for the
growth of the industry, and the top brand effect is significant. Domestic watch brands are facing many challenges in terms
of operational capabilities and resource integration capabilities. The rapid development has put forward a new topic of
accelerating digital transformation for offline physical business; the normalization and periodic repetition of COVID-19 has
caused cyclical fluctuations in the consumer market and consumer confidence.
Year 2021 is the first year of the "14th Five-Year Plan". We are now standing on a new level. Looking back at the past 30
years, the Company has always been deeply involved in the watch industry, and has grown into a flagship company in
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
China's watch industry. The "FIYTA" brand has become one of the most well-known watch brands in China after the
reform and opening up, and the market share and comprehensive competitive strength of HARMONY watch retail
business rank among the forefront of the domestic watch retail industry. In the face of increasing industry competition, we
shall adhere to the "empty cup attitude", face up to the challenges, seize opportunities, and take the initiative to
consolidate and enhance core competitiveness to adapt to market changes.
The road is ahead. We believe that time shall witness our growth.
II. Main business the Company operated in the reporting period
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.
Since its establishment, 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.
In order to grasp the opportunities in the domestic famous brand watch market and accelerate the breakthrough of its own
brand, the Company began to expand the retail chain business of famous brand watches in 1997, and is committed to
becoming the most outstanding comprehensive service provider of famous brand watches. The Company has always
focused on strengthening the construction of brand resources and channel resources, deepening the cooperative
relationship between international excellent watch brands and domestic high-end retail channels, refined operations, and
digital development. While expanding the Company’s revenue sources, it has also established stable base are for the
development of its own brand.
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 wears business. At present, these two businesses have begun to take shape.
The Company adheres to the original intention of "Big Country Brand", and relies on precision manufacturing technology,
brand influence and channel deep cultivation to promote continuous brand breakthroughs. The Company's sales scale is
at the forefront of the industry. Over the years, the Company has achieved a favorable industry recognition and reputation.
In 2021, the Company was honorably awarded the titles of "International Reputation Brand", "Top 200 Enterprises in
China's Light Industry", "Top 20 Listed Companies in Governance in the Greater Bay Area in 2021", and was granted
"Shenzhen R&D and Standardization Synchronization Demonstration Enterprise Grade A", and its wholly-owned
subsidiary was elected in the List of Key Technologically Advanced Enterprises in Guangdong Province. Accompanied by
the launch of the "Shenzhou 12" manned spacecraft, the Company has once again helped China's manned spaceflight
industry.
III. Analysis on Core Competitiveness
(I) Adhering to Brand Leadership and Having Accumulated Rich Experience in Brand Management
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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 watchmaking 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 continuously provided a 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
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 work logic of channel operation.
In recent years, the Company has comprehensively promoted digital construction, made a preliminary result in the digital
transformation and 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 watchmaking capabilities, including self-made driving units of watches and key components
manufacturing, space watch research and development and high-end watchmaking 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 611 patents and been granted 566 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.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
IV. Analysis on Principal Businesses
1. General
In 2021, the macro economy was full of complexity, and the rebound of consumption gradually slowed down since the
third quarter, and the year-on-year growth rate of total domestic retail sales projected a “high to low” outlook. In the face of
the complex and changeable consumer market, repeated epidemics in many places and occasional natural disasters and
many other impacts, the Company continued to focus on "Brand Strength, Product Strength, and Channel Strength" on
the premise of strictly preventing and controlling the epidemic and ensuring the health of employees, made every effort to
promote high-quality development and the implementation of the strategy of great brand, and cooperated with all
employees to effectively respond to external pressures and challenges, and continued to achieve breakthrough in the
business performances. In the reporting period, the Company realized revenue amounting to CNY 5,243.73 million with
year-on-year growth of 23.57% and realized total profit amounting to CNY 502.33 million with a year-on-year growth of
34.51%. The Company realized growth and reached new highs successively for five years. At the same time, the
Company's operational capability and efficiency were further improved. The return on net assets reached 13.39%, an
increase of 2.61 percentage points year-on-year; the inventory turnover rate reached 1.57 times, an increase of 0.22
times year-on-year.
(1) Adhered to brand leadership and continued to promote brand building and product operation capability
During the reporting period, the FIYTA brand solidly promoted the integration of products and sales, renewed the brand
image of the terminal, deepened the core DNA of aerospace, and carried out integration of the marketing activities in
conjunction with the "Shenzhou 12", "Zhuhai Air Show", "Aerospace Month" and other hot spots. As a result, the revenue
from aerospace series products increased significantly year-on-year. The Company deeply cultured the core series,
optimized the logic of new product development, and significantly improved the success rate of new product development;
continued to focus on "excellent operation", "outstanding sales" and CRM system, and solidly promoted refinement in
operation, and achieved an increase in the average unit price per customer by 12% year-on-year. HARMONY continued
to consolidate its operation capability and dig deep into the dimensions of high-quality services, excellent operation, and
customer research. The average single-store output of the old stores increased by 27.93% year-on-year, the average
customer unit price increased by 25.44% year-on-year, and the inventory turnover rate exceeded 2 times.
(2) Accelerated upgrading of channel structure and improved channel layout
During the reporting period, the FIYTA brand steadily promoted the entry of stores in shopping malls, and newly opened
100 self-operated stores in shopping malls; deepened online channel operations, and achieved good overall performance
during the "Double Eleven" period; Harmony steadily promoted high-quality products in the expansion of new stores and
the renovation of old stores with mid-to-high-end channels accounting for more than 55%; actively promoted the
innovative cooperation model of stores, and opened high-end collection stores Time Vallée in cooperation with Richemont
Group in Shenzhen and Dongguan. At the same time, on the basis of the full coverage of the Hainan duty-free system of
its own brand, the Company further improved the strategic layout of Hainan Offshore Duty-free Market by establishing a
wholly-owned subsidiary in Hainan.
(3) Adhered to innovation-driving, accelerated movement production capacity building and digital transformation
During the reporting period, the Company continued to promote the watch movement production capacity building, and
realized successful application of some self-developed movements in a series of products such as aerospace watches.
The FIYTA brand continued to deepen the operation of the CRM system. Membership recruitment and potential customer
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
conversion continued to grow steadily, and offline member sales accounted for 94%. The branch cloud store project was
officially launched, and private domain operations were actively explored. On the basis of the iteration of the digital retail
system, HARMONY further promoted the integration of online and offline development, and the transaction amount from
repurchase by regular customers and purchase by potential customers increased significantly, and the total amount
accounted for more than 50% of the overall revenue; new media operations also achieved innovative breakthrough.
(4) Seized market opportunities and accelerated the development of new businesses
During the reporting period, the Company, on the basis of deep cultivation of optical communications and lasers in
precision technology business, promoted the expansion of new markets and new customers, such as aerospace and
medical equipment in an orderly manner, and some projects entered the stage of batch cooperation; the smart wearable
business focused on creating hot-selling products and improving the proportion of self-operated channels. As a result, its
revenue increased by 70% year-on-year.
Year-on-year Movements of the Key Financial Items are summarized as follows:
Balance sheet items
Items Ending balance Opening balance Variation Cause of the movement
proportion
Mainly due to the impact of short-term loan repayment
Monetary capital 210,254,737.14 353,057,285.71 -40.45%
during the reporting year.
Mainly due to the decrease of advance payment for
Advance payment for goods 7,946,750.81 16,612,773.76 -52.16%
purchases in HARMONY World Watch Retail
Mainly due to the increase in advance payments for the
Other non-current assets 42,680,753.78 13,536,307.13 215.31%
purchase of real estate during the reporting year.
Mainly due to the impact of short-term loan repayment
Short term loans 265,994,595.43 542,673,278.09 -50.98%
during the reporting year.
This was mainly due to the due acceptance of the notes
Notes payable 21,223.10 3,581,360.00 -99.41%
payable of the precision technology business.
Mainly due to the increase in dividends payable in the
Dividends payable 5,015,026.30 1,639,513.77 205.88%
equity incentive during the reporting year.
Mainly due to the impact of the write-off of deferred
Deferred income 1,792,833.90 2,916,346.43 -38.52%
income during the reporting year.
Mainly due to the influence from the implementation of the
Deferred income tax liability 5,236,514.03 3,067,834.55 70.69%
new standards for lease during the reporting year.
Other comprehensive Mainly due to movement of the translation balance of
-7,658,346.40 976,871.41 -883.97%
income foreign currency statements
Income statement items from the beginning of the year to the end of the reporting period
Items Amount incurred Amount incurred Variation Cause of the movement
in the reporting in the previous proportion
period period
Taxes and surcharges 37,563,586.80 25,444,139.30 47.63% Mainly due to the influence of the revenue growth
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
during the reporting year.
Mainly due to the increase of the provision for price
Loss from impairment of
-25,861,394.56 -15,426,526.41 -67.64% falling of the brand watch inventory in the reporting
assets
year.
Mainly due to the increase in income from disposal of
Income from disposal of
730,134.87 -369,857.30 297.41% assets related to the implementation of the new lease
assets
standards.
Mainly due to the greater impact from the adjustment of
Non-operating income 627,435.03 3,111,413.64 -79.83% the compensation received by stores in the same
period of the previous year.
The increase in income tax expenses was mainly due
Income tax expenses 114,467,375.88 79,338,516.60 44.28%
to the increase in profit.
Cash flow statement items from the beginning of the year to the end of the reporting period
Items Amount incurred Amount incurred Variation Cause of the movement
in the reporting in the previous proportion
period period
Mainly due to the increase in taxes and surcharges due
Various taxes paid 346,383,502.98 222,180,568.75 55.90%
to the increase in income during the reporting year.
Cash paid for
purchase/construction of
Mainly due to the increase in expenditure on new store
fixed assets, Intangible 204,422,787.61 133,531,954.47 53.09%
additions and improvements during the reporting year.
assets and other long term
assets
Mainly due to the subscription money received from
Cash received from the implementation of the 2018 A-share Restricted
58,216,000.00 - 100.00%
absorbing investment Stock Incentive Plan (Phase II) during the reporting
year.
Mainly due to the increase in bank borrowings during
Cash received from loans 1,155,724,412.23 743,213,671.65 55.50%
the reporting year.
Mainly due to the increase in debt repayment during
Cash paid for debt repayment 1,386,708,158.95 768,247,433.10 80.50%
the reporting year.
Cash paid for dividend/profit
Mainly due to increase of the cash dividends during the
distribution or repayment of 187,069,913.31 106,703,352.70 75.32%
reporting year.
interest
Mainly due to the influence from the implementation of
Other fund-raising activity
124,710,390.58 72,317,669.93 72.45% the new standards for lease and decrease of payment
related cash payments
for repurchase of B-shares during the reporting year.
Influence of the change of
Mainly due to the influence of the change of exchange
exchange rate on the cash -1,140,476.33 -2,810,603.32 59.42%
rate.
and cash equivalent
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
2. Revenue and Costs
(1) Composition of Revenues
In CNY
2021 2020
Year-on-year
Proportion in the Proportion in the
Amount Amount increase/decrease
revenue revenue
Total operating
5,243,733,540.93 100% 4,243,439,952.59 100% 23.57%
revenue
Based on sectors
Watches 4,923,280,724.48 93.89% 3,970,903,426.36 93.58% 23.98%
Precision technology
150,094,350.20 2.86% 138,806,456.76 3.27% 8.13%
business
Leases 151,461,309.62 2.89% 117,282,310.32 2.76% 29.14%
Others 18,897,156.63 0.36% 16,447,759.15 0.39% 14.89%
Based on products
Watch brand business 1,012,443,357.87 19.31% 970,035,756.22 22.86% 4.37%
Watch retail and
3,910,837,366.61 74.58% 3,000,867,670.14 70.72% 30.32%
services
Precision technology
150,094,350.20 2.86% 138,806,456.76 3.27% 8.13%
business
Leases 151,461,309.62 2.89% 117,282,310.32 2.76% 29.14%
Others 18,897,156.63 0.36% 16,447,759.15 0.39% 14.89%
Based on regions
South China 2,685,613,515.77 51.21% 2,198,531,106.33 51.81% 22.15%
Northwest China 746,028,947.88 14.23% 601,805,121.89 14.18% 23.97%
Northeast China 249,949,686.95 4.77% 198,893,856.16 4.69% 25.67%
East China 732,103,484.67 13.96% 561,941,020.36 13.24% 30.28%
Northeast China 294,675,252.56 5.62% 233,806,759.67 5.51% 26.03%
Southwest China 535,362,653.10 10.21% 448,462,088.18 10.57% 19.38%
Distribution model
Direct selling 5,047,771,480.39 96.26% 4,040,253,573.70 95.21% 1.05%
Distribution 195,962,060.54 3.74% 203,186,378.89 4.79% -1.05%
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
(2) Sector(s), Product(s), Region(s) and Sales Models 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 4,923,280,724.48 3,117,288,604.21 36.68% 23.98% 25.77% -0.90%
Precision
technology 150,094,350.20 123,279,446.44 17.87% 8.13% 8.38% -0.19%
business
Leases 151,461,309.62 42,866,382.31 71.70% 29.14% 5.66% 6.29%
Others 18,897,156.63 2,221,796.17 88.24% 14.89% -65.07% 26.91%
Based on products
Watch brand
1,012,443,357.87 287,829,118.76 71.57% 4.37% 2.80% 0.43%
business
Watch retail and
3,910,837,366.61 2,829,459,485.45 27.65% 30.32% 28.70% 0.91%
services
Precision
technology 150,094,350.20 123,279,446.44 17.87% 8.13% 8.38% -0.19%
business
Leases 151,461,309.62 42,866,382.31 71.70% 29.14% 5.66% 6.29%
Others 18,897,156.63 2,221,796.17 88.24% 14.89% -65.07% 26.91%
Based on regions
South China 2,685,613,515.77 1,715,184,561.60 36.13% 22.15% 24.34% -1.12%
Northwest China 746,028,947.88 461,425,308.95 38.15% 23.97% 24.78% -0.40%
Northeast China 249,949,686.95 143,242,438.82 42.69% 25.67% 23.30% 1.10%
East China 732,103,484.67 440,933,119.23 39.77% 30.28% 26.33% 1.88%
Northeast China 294,675,252.56 203,497,030.88 30.94% 26.03% 25.90% 0.08%
Southwest China 535,362,653.10 321,373,769.65 39.97% 19.38% 22.13% -1.35%
Distribution model
Direct selling 5,047,771,480.39 3,215,136,567.11 36.31% 24.94% 25.61% -0.34%
Distribution 195,962,060.54 70,519,662.02 64.01% -3.56% -11.49% 3.23%
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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 2021 2020
sectors increase/decrease
Sales volume pcs 795,178 820,987 -3.14%
Brand watches Output pcs 727,091 793,206 -8.34%
Inventory pcs 996,794 1,064,881 -6.39%
Note to the cause of the year-on-year movement of the relevant data by over 30%
Inapplicable
(4) Implementation of Important Sale Contracts and Important Purchase Contracts Concluded during the
Reporting Year
Inapplicable
(5) Composition of Operating Costs
Classified based on sectors and products
In CNY
2021 2020
Classified based on Year-on-year
Items Proportion in Proportion in
sectors Amount Amount increase/decrease
operating costs operating costs
Goods purchase
2,829,459,485.45 86.12% 2,198,558,391.97 83.30% 28.70%
cost
Raw materials 256,857,016.25 7.82% 250,957,959.33 9.51% 2.35%
Labor costs 24,624,829.03 0.75% 22,639,961.48 0.86% 8.77%
Depreciation
Watches 776,630.56 0.02% 1,290,580.38 0.05% -39.82%
expense
Water and
557,212.31 0.02% 576,614.61 0.02% -3.36%
electricity fees
Rent 254,302.70 0.01% 198,298.53 0.01% 28.24%
Others 4,759,127.90 0.14% 4,326,929.11 0.16% 9.99%
Precision Raw materials 88,916,323.84 2.71% 89,561,279.27 3.39% -0.72%
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
technology Labor costs 19,308,218.35 0.59% 15,492,911.02 0.59% 24.63%
business
Depreciation
2,929,018.86 0.09% 1,715,869.90 0.07% 70.70%
expense
Water and
1,185,220.49 0.04% 936,944.23 0.04% 26.50%
electricity fees
Rent 127,758.44 0.00% 111,201.56 0.00% 14.89%
Others 10,812,906.46 0.33% 5,930,402.44 0.22% 82.33%
Depreciation
16,068,736.92 0.49% 16,013,313.84 0.61% 0.35%
expense
Leases
Labor costs 3,216,088.80 0.10% 2,642,580.58 0.10% 21.70%
Others 23,581,556.59 0.72% 21,916,045.93 0.83% 7.60%
Purchase of
Others 2,221,796.17 0.07% 6,360,252.90 0.24% -65.07%
finished products
In CNY
2021 2020
Classified based on Year-on-year
Items Proportion in Proportion in
products Amount Amount increase/decrease
operating costs operating costs
Raw materials 256,857,016.25 7.82% 250,957,959.33 9.51% 2.35%
Labor costs 24,624,829.03 0.75% 22,639,961.48 0.86% 8.77%
Depreciation
776,630.56 0.02% 1,290,580.38 0.05% -39.82%
Watch brand expense
business Water and
557,212.31 0.02% 576,614.61 0.02% -3.36%
electricity fees
Rent 254,302.70 0.01% 198,298.53 0.01% 28.24%
Others 4,759,127.90 0.14% 4,326,929.11 0.16% 9.99%
Watch retail and Goods purchase
2,829,459,485.45 86.12% 2,198,558,391.97 83.30% 28.70%
services cost
Raw materials 88,916,323.84 2.71% 89,561,279.27 3.39% -0.72%
Labor costs 19,308,218.35 0.59% 15,492,911.02 0.59% 24.63%
Depreciation
Precision 2,929,018.86 0.09% 1,715,869.90 0.07% 70.70%
expense
technology
Water and
business 1,185,220.49 0.04% 936,944.23 0.04% 26.50%
electricity fees
Rent 127,758.44 0.00% 111,201.56 0.00% 14.89%
Others 10,812,906.46 0.33% 5,930,402.44 0.22% 82.33%
Depreciation
Leases 16,068,736.92 0.49% 16,013,313.84 0.61% 0.35%
expense
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Labor costs 3,216,088.80 0.10% 2,642,580.58 0.10% 21.70%
Others 23,581,556.59 0.72% 21,916,045.93 0.83% 7.60%
Purchase of
Others 2,221,796.17 0.07% 6,360,252.90 0.24% -65.07%
finished products
(6) Is there any change in the consolidation scope in the reporting period
During the reporting period, Shenzhen Xunhang Precision Technology Co., Ltd. and HARMONY World Watch Center
(Hainan) Limited, the Company's newly established wholly-owned subsidiaries, were included in the scope of the
Company's consolidated statements; the deregistration of 68 Station Co., Ltd., one of the Company's wholly-owned
subsidiaries was completed on March 5, 2021, and it has been excluded from the scope of the Company's consolidated
statements.
(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 1,075,275,776.18
Proportion of the total sales to the top five customers in the total
20.50%
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. 1 401,690,557.55 7.66%
2. No. 2 213,674,973.69 4.07%
3. No. 3 160,522,193.39 3.06%
4. No. 4 152,600,173.29 2.91%
5 No. 5 146,787,878.26 2.80%
Total -- 1,075,275,776.18 20.50%
Other Information about the major customers
Inapplicable
Major suppliers
Total amount of purchase from top five suppliers, in CNY 2,442,268,149.63.
Proportion of the purchase amount from the top five suppliers in 71.43%
20
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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. 1 843,772,178.18 24.68%
2. No. 2 649,684,534.95 19.00%
3. No. 3 429,363,470.59 12.56%
4. No. 4 259,899,372.30 7.60%
5 No. 5 259,548,593.61 7.59%
Total -- 2,442,268,149.63 71.43%
Other information about the major suppliers
Inapplicable
3. Expenses
In CNY
Year-on-year
2021 2020 Note to significant changes
increase/decrease
Sales costs 1,049,898,223.28 870,713,899.32 20.58% Inapplicable
Administrative expenses 261,626,762.41 256,559,127.23 1.98% Inapplicable
Financial expenses 34,677,073.65 33,449,276.41 3.67% Inapplicable
R & D expenditures 57,802,569.17 51,489,323.49 12.26% Inapplicable
4. Investment in R & D
Description of the Impact on the predicted future
Project purpose Project progress The objective to be reached
Main R & D Projects development of the Company
Developing multiple series of
New series products Innovative products with the
Fulfillment of the tasks products with FIYTA brand
with the quality of brand characteristics Providing innovative products
in the very year characteristics, and launching
FIYTA Brand provided to the market
sales as planned
Development of an innovative
Developing new Improving new product structure to improve watch Improving new product
Fulfillment of the tasks
product innovation performances and market protection performance was performances and market
in the very year
protection structure competitiveness completed and it has been competitiveness
applied in watch products
Development of Improving new product In process According to the needs of brand Improving new product
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
mechanical watch performances and market differentiation, developing performances and market
movements with competitiveness mechanical watch movements competitiveness
brand differentiation with special functions and
characteristics indication methods
According to the requirements of
Development of Providing special Providing special equipment
Fulfillment of the tasks manned space missions,
watch for manned equipment watches for the watches for the field of manned
in the very year developed and delivered special
spaceflight field of manned spaceflight spaceflight
equipment watches
Development of smart watches
Smart watch with Improving new product with camera function with the Improving new product
Fulfillment of the tasks
camera and body sign performances and market capacity of monitoring body sign performances and market
in the very year
monitoring competitiveness data which have been launched competitiveness
in the market as planned
R & D Staff
2021 2020 Variation proportion
Number of R & D staff (persons) 128 117 9.40%
Proportion of R & D staff in total
2.52% 2.39% 0.13%
employees
Educational background structure
—— —— ——
of R & D staff
Undergraduate 63 64 -1.56%
Master 22 22 0.00%
Doctor 3 2 50.00%
Junior college and below 40 29 37.93%
研发人员年龄构成 —— —— ——
Below 30 47 46 2.17%
30 - 40 60 46 30.43%
Over 40 21 25 -16.00%
Investment in R & D
2021 2020 Variation proportion
Amount of investment in R & D, in
57,802,569.17 51,489,323.49 12.26%
CNY
Proportion of investment in R & D
1.10% 1.21% -0.11%
in operating revenue
Amount of capitalized investment
0.00. 0.00. 0.00%
in R & D (in CNY)
Proportion of capitalized
0.00% 0.00% 0.00%
investment in R & D in the total
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
investment in R & D
Reasons and effects of major changes in the composition of the Company's R&D personnel
Inapplicable
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 2021 2020 Year-on-year increase/decrease
Subtotal of cash flow in from
5,944,580,198.34 4,682,489,563.33 26.95%
operating activity
Subtotal of cash flow out from
5,397,331,089.89 4,304,279,057.46 25.39%
operating activity
Net cash flow arising from operating
547,249,108.45 378,210,505.87 44.69%
activities
Subtotal of cash flow in from
59,657.53 150,556.62 -60.38%
investment activity
Subtotal of cash flow out from
204,422,787.61 133,531,954.47 53.09%
investment activity
Net cash flows arising from
-204,363,130.08 -133,381,397.85 -53.22%
investment activities
Subtotal of cash flow in from fund
1,213,940,412.23 743,213,671.65 63.34%
raising activity
Sub-total cash flow paid for financing
1,698,488,462.84 947,268,455.73 79.30%
activities
Net cash flow arising from
-484,548,050.61 -204,054,784.08 -137.46%
capital-raising activities
Net increase of cash and cash
-142,802,548.57 37,963,720.62 -476.16%
equivalents
Notes to the major influencing factors for the significant change in the relevant year-on-year data
1. During the reporting year, the net cash flow from operating activities was CNY 547,249,108.45, an increase of CNY
169,038,602.58 compared with CNY 378,210,505.87 in the same period last year, mainly due to the implementation of the
new lease standards.
2. Net cash flow arising from investment activities amounted to CNY -204,363,130.08 in the reporting year, while it was
CNY -133,381,397.85 in the same period of the previous year with the payment increased by CNY 70,981,732.23, which
was mainly due to increase of the increase of payments for refurbishment and improvement of the stores during the
23
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
reporting period.
3. Net cash flow arising from financing activities amounting to CNY -484,548,050.61 in the reporting year, a year-on-year
increase of CNY 280,493,266.53 in comparison with the previous year amounting to CNY -204,054,784.08 was mainly
due to increase of the repayment of bank loans, increase of cash dividends and influence from the implementation of the
new lease standards.
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
V. Analysis on Non-Principal Businesses
Inapplicable
VI. Analysis on Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
End of 2021 Beginning of 2021
Proportion Proportion Increase/decrease
Note to significant changes
Amount in total Amount in total in proportion
assets assets
Monetary fund 210,254,737.14 5.11% 353,057,285.71 8.46% -3.35% Inapplicable
Accounts receivable 388,885,601.28 9.46% 475,598,684.88 11.39% -1.93% Inapplicable
Contract assets 0.00 0.00% 0.00 0.00% 0.00% Inapplicable
Inventories 2,050,148,750.89 49.87% 1,931,780,185.85 46.28% 3.59% Inapplicable
Investment-oriented
383,425,916.35 9.33% 398,086,447.78 9.54% -0.21% Inapplicable
real estate
Long-term equity
55,155,605.31 1.34% 51,400,665.92 1.23% 0.11% Inapplicable
investment
Fixed assets 349,495,316.65 8.50% 352,734,280.76 8.45% 0.05% Inapplicable
Construction-in-process 0.00 0.00% 0.00 0.00% 0.00% Inapplicable
Use right assets 147,932,475.42 3.60% 163,169,400.44 3.91% -0.31% Inapplicable
Short term loans 265,994,595.43 6.47% 542,673,278.09 13.00% -6.53% Inapplicable
Contract liabilities 22,505,426.65 0.55% 18,213,396.49 0.44% 0.11% Inapplicable
Long-term borrowings 0.00 0.00% 4,070,330.00 0.10% -0.10% Inapplicable
Lease liabilities 64,918,722.10 1.58% 77,439,579.30 1.86% -0.28% Inapplicable
Higher proportion of foreign assets
24
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Inapplicable
2. Assets and liabilities measured based on fair value
Inapplicable
3. Restriction on rights in the assets ended the reporting period
A property owned by Switzerland based Montres Chouriet SA with net value of CNY 11,490,566.65 was used as a
collateral for the overseas long term loan amounting to CNY 3,924,900.00.
VII. Analysis of Investment Situation
1. General
Amount of investment in the reporting period Amount of investment in the same period of the
Amount of variation
(CNY) previous year (CNY)
20,000,000.00 139,500,000.00 -85.66%
Notes: 1. With review and approval of the Company's 23rd Session of the Ninth Board of Directors on December 14, 2020,
the Company decided to invest in the establishment of a wholly-owned subsidiary - Shenzhen Xunhang Precision
Technology Co., Ltd., with its own capital amounting to CNY10 million. The relevant procedures for establishment and
registration with the authority for industry and commerce were completed on April 7, 2021. For the detail, please refer to
the "Announcement 2021-035 on the Investment and Establishment of Wholly-owned Subsidiaries and Completion of
Industrial and Commercial Registration" disclosed by the Company on www.cninfo.com.cn；
2. With review and approval of the Company's 29th Session of the Ninth Board of Directors on May 21, 2021, the
Company decided to invest in the establishment of a wholly-owned subsidiary - HARMONY World Watch Center (Hainan)
Limited, with its own capital amounting to CNY10 million. The relevant procedures for establishment and registration with
the authority for industry and commerce were completed on June 17, 2021. For the detail, please refer to the
"Announcement 2021-058 on the Investment and Establishment of Wholly-owned Subsidiaries and Completion of
Industrial and Commercial Registration" disclosed by the Company on www.cninfo.com.cn；
2. Significant Equity Investment Acquired in the Reporting Period
Inapplicable
3. Significant non-equity investment in process in the reporting period
Inapplicable
25
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
4. Financial assets investment
(1) Portfolio investment
Inapplicable
(2) Investment in derivatives
Inapplicable
5. Application of the raised capital
Inapplicable
VIII. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
2. Sales of Significant Equity
Inapplicable
IX. Analysis on Mutual Shareholding Companies
Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit
by over 10%.
In CNY
Company Company Principal Registered
Total assets Net assets Turnover Operating profit Net profit
name type business capital
Shenzhen Purchase &
Harmony sale and
World Subsidiari repairing 2,102,556,925. 1,068,121,963. 3,868,319,859.
600,000,000 382,325,720.42 289,056,005.29
Watches es service of 63 67 65
Center Co., watches and
Ltd. components
Design, R & D
and sales of
FIYTA Sales
Subsidiary watches and 450,000,000 506,762,746.87 392,336,579.87 580,635,486.42 4,064,580.03 -233,569.13
Co., Ltd.
components &
parts
Shenzhen Subsidiary Manufacture 100,000,000 321,057,850.26 169,167,312.11 372,362,396.35 58,418,500.85 53,979,457.58
26
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
FIYTA and production
Precision of watches and
Technology components
Co., Ltd.
Shenzhen Production and
FIYTA machining of
Technology Subsidiary sophisticated 50,000,000 188,352,333.30 133,415,385.71 173,195,343.47 13,634,825.72 13,094,286.88
Development components
Co., Ltd. and parts
Trading of
FIYTA (Hong watches and
Subsidiary 137,737,520 229,791,419.84 202,225,606.14 104,597,635.75 14,247,097.40 12,930,206.75
Kong) Limited accessories
and investment
Design, R & D
Emile Chouriet and sales of
(Shenzhen) Subsidiary watches and 41,355,200 122,151,707.51 59,031,329.02. 91,239,738.45. 4,216,166.14 3,138,963.28
Limited components &
parts
Production and
Mutual
Shanghai sales of
shareholdi
Watch Industry watches and 15,350,000 160,904,718.18 134,940,325.17 150,929,452.87 15,094,324.17 15,019,757.54
ng
Co., Ltd. components &
company
parts
Acquisition and disposal of subsidiaries in the reporting period
Way of acquisition and disposal of subsidiaries Impact upon the overall production and
Company name
in the reporting period operation and performances
The establishment of a wholly-owned
subsidiary is conducive to promoting the
Shenzhen XUNHANG Precision Technology business expansion of smart wearables and
Newly established
Co., Ltd. precision technology, and will have a positive
impact on the long-term development and
benefit improvement of the Company.
The establishment of wholly-owned
subsidiaries is conducive to promoting the
business development of retail of brand
Harmony World Watches Center (Hainan) Ltd. Newly established
watches, and will have a positive impact on the
long-term development and benefit
improvement of the Company.
It does not have a significant impact on the
68-Station Limited Deregistration completed Company's overall production, operation and
performance.
27
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Note to the principal mutual shareholding companies
Inapplicable
X. Structural Subjects Controlled by the Company
Inapplicable
XI. Expectation on future development of the Company
(I) External Environment and Risks
In 2022, the global political and economic environment shall remain complex and changeable. The COVID-19 epidemic
has entered a stage of normalization, and the economic recovery shall gradually become moderate. China's economic
development shall also face the triple pressures of shrinking demand, supply shocks, and weakening expectations. The
consumer market shall be confronted with profound changes.
Changes in the consumer market have driven continuous innovation in the competition pattern of the watch industry. The
industry structure has been significantly differentiated. The market share of mid-to-high-end brands has further expanded,
and continues to sink to younger consumer groups. Light luxury and niche brands emerge one after another to meet the
needs of consumer segmentation, diversified consumer demand, and further intensified competition of the industry.
At the same time, under the guidance of economic growth and policies, the middle-income group corresponding to the
watch industry continues to expand; increasingly personalized consumer demand provides development space for market
segmentation; cultural confidence drives the rise of the national tide, and domestic watch brands are receiving the
opportunity to overtake on a bend; the rapid development of e-commerce platforms promotes the overall digital
transformation of retail business, and the integration of online and offline channels; the development of tax-free channels
brings new opportunities for incremental markets.
Crisis and opportunity coexist. In the journey of people's continuous pursuit for a better life, the Company is firmly
optimistic about the development prospects of the industry, and shall adhere to the original intention and mission of
"creating a quality life", continuously consolidate its core competitiveness, and accelerate business transformation and
upgrading.
(II) Key Work in 2022
In 2022, the Company shall continue to practice the strategy of "big country brand", continue to promote the creation of
products and brands that represent Chinese image, Chinese quality, Chinese technology and Chinese culture, with
"focusing on the three forces, strengthening professionalism, and systematically enhancing superiority of competition;
conduct digital transformation. , build a hard core, and rapidly promote transformation and upgrading" as the annual work
theme, and solidly promote the following work:
1. Focusing on the three forces, strengthening professionalism, and systematically enhancing superiority of competition
To establish the high-end Chinese watch brand construction as the lead, with aerospace as the support, solidly promote
the integration of products and sales, build an integrated marketing system, systematically enhance the "brand power";
continuously improve product operation efficiency, build and strengthen product life cycle operation management, focus
on the core series, strive to create high-quality products, improve product quality management system and after-sales
28
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
service system, strictly implement the extended warranty policy, improve "product power"; by applying leverage on the
two main lines of "operation improvement + structure upgrading", deepen the construction of digital retail system, improve
the operation capacity of individual stores, promote the expansion and upgrading of middle and high-end channels
through multiple means, continuously improve the market share of each region, and enhance the "channel power".
2. To conduct digital transformation, build a hard core, and rapidly promote transformation and upgrading
Continue to adhere to the long-term investment in digitalization, and gradually establish and deepen the digital
management system of "people, goods, stores, customers and finance"; adhere to the leadership of science and
technology, accelerate the application of home-made products, improve the localization rate of home-made watch
movements, and continue to explore new materials, new technologies and new processes to be applied in making
high-end watches.
3. Driven with innovation, to accelerate the development of new business
In respect of precision technology business, continue to strengthen and expand the fields of superiority, including optical
communication, lasers, etc., further expand new markets and develop new customers in aerospace, medical equipment,
etc., take technology as the lead, constantly improve the complexity of the process, and further improve the overall
solution capacity; in respect of smart wear business, continue to promote technological innovation, strengthen
technological reserves, accelerate the iteration of new products, and constantly improve the construction of outdoor light
entertainment ecosystem. Meanwhile, continue to explore the layout of "active health", "great pension" and other fields.
4.To consolidate management, strengthen coordination and systematically improve team execution
Further exert the "Iron Army" spirit formed by the operation and counterattack during the Anti-COVID-19, continue to forge
the professional ability of the team, take the "Big Country Brand" strategy as the lead, strengthen the synergy between the
business and the team, continuously deepen the full coverage of the power mechanism, and further stimulate the
enthusiasm and creativity of the core team, and systematically improve the team execution.
XII. Reception of Survey, Communications, Interviews, etc. during the Reporting Period
Index of Basic
Types of
Way of Main contents discussed Information on the
Reception time Place of reception Visitors Visitors Received
reception and information provided Investigation and
Received
Survey
In order to provide
investors with a
comprehensive and
in-depth understanding of
the Company’s situation,
the Company held a 2020
Online Performance
http://irm.cninfo.co
Wechat Mini Briefing and conducted
Extensive investors’ participation in the Company's m.cn/ircs/company/
March 25, Program Titled communications and
Others Others 2020 Annual Online Performance Presentation by companyDetail?sto
2021 “FIYTA Relationship exchange with investors
network remoteness ckcode=000026&or
with Investors on the Company’s 2020
gId=gssz0000026
operating status,
development strategy,
watch brand management
business, brand watch
retails, and development
of precision technology
and smart wearables.
TF Securities Co., Ltd., Shanghai Guotai Junan
Securities & Assets Management Co., Ltd.,
Shenzhen Qianhai Shengyao Capital Investment The Company conducted
Management Co., Ltd., Shenzhen Qianhai communication on
http://irm.cninfo.co
Dengcheng Asset Management Co.,Ltd., Ningbo management of watch
m.cn/ircs/company/
20th Floor, FIYTA Field Deovolente Investment Partnership Enterprise (L.P.), brands, retail of
April 20, 2021 Institution companyDetail?sto
Technology Building survey GF Securities Co., Ltd., Rongtong Fund Management well-known brand
ckcode=000026&or
Co., Ltd., China Merchants Securities Co., Ltd, watches, development of
gId=gssz0000026
Shenzhen Jindou Investment Co., Ltd., Everbright precision technology
Securities Company Limited, Wanlian Securities business, etc.
Co.,Ltd., China Great Wall Securities Co.,Ltd., Guotai
Junan Securities Co.,Ltd., Shenwan Hongyuan
29
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Securities Co.Ltd., China International Capital
Corporation Limited, Harmony Capital Group,
Changjiang Securities Company Limited , ESSENCE
SECURITIES Co., Ltd., Penghua Fund Management
Co., Ltd., Fullgoal Fund Management Company
Limited, Bosera Fund Management Co., Ltd.,
Hangzhou Mingliang Asset Management Co., Ltd.,
Shenzhen Haifuling Capital Management Co., Ltd.,
Shenzhen Qianhai Chengbeile Investment Co., Ltd.,
Essence Fund Management Co., Ltd. and PA asset
TF Securities Co., Wanlian Securities Co.,Ltd.,
Shenwan Hongyuan Securities Co. Ltd.,
FOUNDER SECURITIES CO.,LTD., Guolian
Securities Co., Ltd., Huatai Securities Co., Ltd.,
China Merchants Securities Co., Ltd., Soochow
The Company conducted
Securities Co., Ltd., Guotai Junan Securities Co.,Ltd.,
China Life Insurance Company Limited, Penghua communication on
http://irm.cninfo.co
management of watch
Telephone Fund Management Co., Ltd., China Universal Asset m.cn/ircs/company/
August 20, brands, retail of
Teleconference communic Institution Management Co.，Ltd., Hua An Fund Management companyDetail?sto
2021 well-known brand
ation Co., Ltd., Tianjin State-owned Capital Investment ckcode=000026&or
watches, development of
And Management Co., Ltd., Youngy Investment gId=gssz0000026
precision technology
Holding Group Co. Ltd., Yuancheng Investment
business, etc.
Management Co., Ltd. , China International Capital
Corporation Limited, Shenzhen Kangrui Capital
Management Co., Ltd. , Shanghai Premium Bright
Global Captial Co.,Ltd. and Shanghai Tourmaline
Asset Management CO.,Ltd.
Section 4 Corporate Governance
I. General
In year 2021, 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 power 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, the equity incentive
plan, etc., make resolutions on the Company's increase or decrease of registered capital, issuance of corporate bonds
and bond-like financing instruments, merger, division, dissolution, liquidation or change of company form, formulate or
approve the Company's articles of association and amendments to the articles of association, elect and replace the
directors and supervisors serving as employee representatives and decide matters concerning the remuneration of
directors and supervisors.
The Board of Directors plays the role of "setting strategies, making decisions, and preventing risks", and is responsible for
implementing the resolutions of the general meetings of shareholders, convening and reporting to the general meeting of
30
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
shareholders. 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 and branches, 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 reviewing the Company's regular reports,
examining the Company's financial affairs, supervising the directors and 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, etc. The Supervisory Committee consists of
three supervisors including one staff supervisor.
The management is responsible for "seeking operation, carrying out implementation, and strengthening management".
The General Manager is responsible to the Board of Directors, presides over the production, operation and management
of the Company under the leadership of the Board of Directors, organizes the implementation of resolutions of the Board
of Directors, reports work to the Board of Directors, and organizes the implementation of the Company's annual
development plan, operation and management; plans and formulates the Company's investment plan and investment
plan, annual financial budget plan, final account plan, profit distribution plan and loss recovery plan and the Company's
plan for increasing or decreasing registered capital, etc.
Whether there is a material difference between the actual situation of corporate governance and laws, administrative
regulations and regulations on the governance of listed companies issued by the China Securities Regulatory
Commission.
No
II. Independence in securing the Company's assets, personnel, finance, organization, business, etc. relative to
the controlling shareholder and actual controller
The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder.
The Company has complete 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. Xiao Yi, Mr. Xiao Zhanglin, Mr. Li Peiyin and Mr. Deng Jianghu as 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
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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
Resolutions of the
Sessions Meeting type attendance of the Meeting date Date of disclosure
meetings
investors
Announcement on the
2021 1st Extraordinary Extraordinary General Resolution of 2021 1st
38.17% January 06, 2021 January 07, 2021
General Meeting Meeting Extraordinary General
Meeting, 2021-002
Announcement on the
2021 2nd
Extraordinary General Resolution of 2021 2nd
Extraordinary General 40.45% February 24, 2021 February 25, 2021
Meeting Extraordinary General
Meeting
Meeting, 2021-023
Announcement on the
2020 Annual General Annual General Resolution of 2020
44.48% May 07, 2021 May 08, 2021
Meeting Meeting Annual General
Meeting, 2021-045
Announcement on the
2021 3rd Extraordinary Extraordinary General Resolution of 2021 3rd
37.53% July 01, 2021 July 02, 2021
General Meeting Meeting Extraordinary General
Meeting, 2021-059
Announcement on the
2021 4th Extraordinary Extraordinary General Resolution of 2021 4th
47.37% September 08, 2021 September 09, 2021
General Meeting Meeting Extraordinary General
Meeting, 2021-087
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Announcement on the
2021 5th Extraordinary Extraordinary General Resolution of 2021 5th
38.41% November 30, 2021 December 01, 2021
General Meeting Meeting Extraordinary General
Meeting, 2021-101
2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting power
recovered.
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
V. Directors, Supervisors and Senior Executives
1. Basic information
Number of Sharehol
shares held Number of ding
Shareholding Change of Number of shares
Starting at the restricted increased
Office Expiry date Stock decreased in the other held at end of the
Name Title Gender Age date of beginning of shares in the Cause of increase/decrease of shares
Status of tenure option reporting period increase/decr reporting period
tenure the reporting granted reporting
(shares) ease (shares) (shares)
period (shares) period
(shares) (shares)
Zhang Chairman of July 01,
In office Male 45 September 0 0 0 0 0 0 0
Xuhua the Board 2021
08, 2024
February
Xiao Yi Director In office Male 48 September 0 0 0 0 0 0 0
24, 2021
08, 2024
Xiao
Director In office Male 46 September September 0 0 0 0 0 0 0
Zhanglin
20, 2017 08, 2024
February
Li Peiyin Director In office Male 36 September 0 0 0 0 0 0 0
24, 2021
08, 2024
1. 2018 A-Share Restricted Stock Incentive Plan
(Phase II) granted 80,000 restricted shares
Deng 2. Before he became a director, he reduced his
Director In office Male 38 September September 33,000 0 80,000 0 -10,989 -102,011 0
Jianghu holdings of A shares by 10,989 shares;
08, 2021 08, 2024
3. After leaving office, 102,011 restricted A shares
were repurchased and canceled.
February
Director In office Male September
24, 2021
08, 2024 2018 A-Share Restricted Stock Incentive Plan
Pan Bo 46 130,000 0 150,000 0 0 0 280,000
(Phase II) granted 150,000 restricted shares
General January
In office Male September
Manager 15, 2021
08, 2024
Wang Independent
In office Male 52 September September 0 0 0 0 0 0 0
Jianxin Director
11, 2018 08, 2024
Zhong Independent
In office Male 47 September September 0 0 0 0 0 0 0
Hongming Director
11, 2018 08, 2024
Tang Independent
In office Male 48 September September 0 0 0 0 0 0 0
Xiaofei Director
11, 2018 08, 2024
Chairman of
Zheng the March 08,
In office Male 59 September 0 0 0 0 0 0 0
Qiyuan Supervisory 2021
08, 2024
Committee
February
Cao Zhen Supervisor In office Female 51 September 0 0 0 0 0 0 0
24, 2021
08, 2024
Hu Jing Supervisor In office Female 51 September September 9,000 0 0 0 0 0 9,000
07, 2021 08, 2024
August 2018 A-Share Restricted Stock Incentive Plan
Lu Wanjun Deputy GM In office Male 55 September 130,000 0 150,000 0 0 0 280,000
08, 2014 (Phase II) granted 150,000 restricted shares
08, 2024
34
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Chief Law October
In office Male September
Adviser 25, 2021
08, 2024
Liu October 2018 A-Share Restricted Stock Incentive Plan
Deputy GM In office Male 51 September 130,000 0 150,000 0 0 0 280,000
Xiaoming 17, 2016 (Phase II) granted 150,000 restricted shares
08, 2024
October 2018 A-Share Restricted Stock Incentive Plan
Li Ming Deputy GM In office Male 49 September 130,040 0 150,000 0 0 0 280,040
17, 2016 (Phase II) granted 150,000 restricted shares
08, 2024
Song Chief February
In office Male 55 September 0 0 0 0 0 0 0
Yaoming Accountant 06, 2022
08, 2024
Tang 2018 A-Share Restricted Stock Incentive Plan
Deputy GM In office Male 49 September September 60,000 0 150,000 0 0 0 210,000
Haiyuan (Phase II) granted 150,000 restricted shares
29, 2019 08, 2024
Huang Chairman of June 11, After leaving office, 66,700 restricted A shares
Retired Male 48 September 180,000 0 0 0 0 -66,700 113,300
Yongfeng the Board 2021 were repurchased and canceled.
08, 2017
Wang May 21, February
Director Retired Male 56 0 0 0 0 0 0 0
Mingchuan 2009 02, 2021
December February
Fu Debin Director Retired Male 45 0 0 0 0 0 0 0
09, 2016 02, 2021
February
Wang Bo Director Retired Male 43 September 0 0 0 0 0 0 0
02, 2021
20, 2017
May 31, February
Director Retired Male 58
2017 02, 2021 2018 A-Share Restricted Stock Incentive Plan
Chen Libin 180,000 0 180,000 0 0 0 360,000
General March 08, January (Phase II) granted 180,000 restricted shares
Retired Male
Manager 2017 15, 2021
Chairman of
Wang the June 02, February
Retired Male 58 0 0 0 0 0 0 0
Baoying Supervisory 2017 24, 2021
Committee
Sheng
Supervisor Retired Female 46 September September 0 0 0 0 0 0 0
Qing
11, 2018 07, 2021
Fang April 12, February
Supervisor Retired Male 36 0 0 0 0 0 0 0
Jiasheng 2019 24, 2021
Chief October January
Retired Male 46
Accountant 17, 2016 28, 2022 2018 A-Share Restricted Stock Incentive Plan
Chen Zhuo 131,000 0 150,000 0 0 0 281,000
Secretary of January January (Phase II) granted 150,000 restricted shares
Retired Male
the Board 15, 2021 28, 2022
1. 2018 A-Share Restricted Stock Incentive Plan
Xu February (Phase II) granted 150,000 restricted shares
Deputy GM Retired Male 43 September 50,000 0 150,000 0 0 -183,350 16,650
Chuangyue 03, 2021 2. After leaving office, 183,350 restricted A shares
29, 2019
were repurchased and canceled.
Total -- -- -- -- -- -- 1,163,040 0 1,310,000 0 -10,989 -352,061 2,109,990
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
During the reporting period, is there any resignation of directors and supervisors and dismissal of senior executives
during their term of office?
In January 2021, the Company received written resignation reports from Mr. Chen Libin, the managing director, and Mr.
Pan Bo, the deputy general manager and secretary of the Board of Directors. Mr. Chen Libin resigned from the position of
General Manager of the Company due to work reasons and continued to hold other positions in the Company after his
resignation; Mr. Pan Bo resigned from the positions of deputy General Manager and Board Secretary of the Company due
to work reason, and continued to hold other positions in the Company after his resignation.
In February 2021, the Company received written resignation reports submitted by directors Mr. Wang Mingchuan, Mr. Fu
Debin, Mr. Wang Bo and Mr. Chen Libin, supervisors Mr. Wang Baoying, Mr. Fang Jiasheng and deputy General Manager
Mr. Xu Chuangyue. Mr. Wang Mingchuan, Mr. Fu Debin and Mr. Wang Bo resigned as directors of the Company due to
work reason, and no longer hold any positions in the Company after their resignation; Mr. Chen Libin resigned as director
of the Company due to work reason, and continued to hold other positions in the Company after his resignation; Mr. Wang
Baoying resigned from the positions of supervisor and Chairman of the Supervisory Committee of the Company due to
work reason, and no longer holds any positions in the Company after his resignation; Mr. Fang Jiasheng resigned from the
position of supervisor of the Company due to work reason, and continued to hold other positions in the Company after
resignation; Mr. Xu Chuangyue resigned from the position of deputy General Manager of the Company for personal
reason and no longer hold any position in the Company after the resignation.
The Company received a written resignation report submitted by Mr. Huang Yongfeng, the Chairman of the Board , in
June 2021. Mr. Huang Yongfeng resigned as director and Chairman of the Company due to work reason, and no longer
holds any position in the Company after his resignation.
During the reporting period, the Company has completed the by-election of directors and supervisors and the appointment
of senior executives on schedule in accordance with relevant laws and regulations. The independent directors checked
the reasons for the resignation of the Chairman and the General Manager, and expressed their independent opinions on
the changes of directors and senior executives.
Personnel Change in Directors, Supervisors and Senior Executives
Name Office Taken Type Date Cause
Chairman of the Being Appointed as the Chairman of the Board at the 1st session of the
September 08, 2021
Board elected Tenth Board of Directors.
Chairman of the Being Appointed as the Chairman of the Board at the 31st session of
July 01, 2021
Board elected the Ninth Board of Directors.
Elected as a director of the Tenth Board of Directors of the
Zhang Xuhua Being
Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Director July 01, 2021 Company at the 30th session of the Ninth Board of Directors and
elected
the 2021 3rd Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
Xiao Yi
Elected as a director of the Ninth Board of Directors of the
Being
Director February 24, 2021 Company at the 26th session of the Ninth Board of Directors and
elected
the 2021 2nd Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Xiao Zhanglin Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Li Peiyin Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
36
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Elected as a director of the Ninth Board of Directors of the
Being
Director February 24, 2021 Company at the 26th session of the Ninth Board of Directors and
elected
the 2021 2nd Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Deng Jianghu Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Being
Director September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
elected
and the 2021 4th Extraordinary General Meeting.
General Being Appointed as the General Manager of the Company at the 1st
September 08, 2021
Manager appointed session of the Tenth Board of Directors.
Elected as a director of the Company at the 26th session of the
Being
Pan Bo Director February 24, 2021 Ninth Board of Directors and the 2021 2nd Extraordinary
elected
General Meeting.
General Being Appointed as the GM at the 25th session of the Ninth Board of
January 15, 2021
Manager appointed Directors.
Deputy GM and
Terminatio resigned as Deputy GM of the Company and the Secretary of
the Secretary of January 14, 2021
n the Board due to the work reason.
the Board
Elected as a director of the Tenth Board of Directors of the
Independent Being
Wang Jianxin September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
Director elected
and the 2021 4th Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Zhong Independent Being
September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
Hongming Director elected
and the 2021 4th Extraordinary General Meeting.
Elected as a director of the Tenth Board of Directors of the
Independent Being
Tang Xiaofei September 08, 2021 Company at the 32nd session of the Ninth Board of Directors
Director elected
and the 2021 4th Extraordinary General Meeting.
Chairman of the
Being Appointed as the Chairman of the Supervisory Committee at the
Supervisory September 08, 2021
elected 1st session of the Tenth Board of Directors.
Committee
Appointed as a supervisor of the Tenth Supervisory Committee
Being
Supervisor September 08, 2021 at the 28th session of the Ninth Supervisory Committee and
elected
2021 4th Extraordinary General Meeting.
Zheng Qiyuan
Chairman of the
Being Elected the Chairman of the Ninth Supervisory Committee at the
Supervisory March 08, 2021
elected 24th session of the Ninth Supervisory Committee.
Committee
Appointed as a supervisor of the Ninth Supervisory Committee
Being
Supervisor February 24, 2021 at the 23rd session of the Ninth Supervisory Committee and
elected
2021 2nd Extraordinary General Meeting.
Appointed as a supervisor of the Tenth Supervisory Committee
Being
Supervisor September 08, 2021 at the 28th session of the Ninth Supervisory Committee and
elected
2021 4th Extraordinary General Meeting.
Cao Zhen
Appointed as a supervisor of the Ninth Supervisory Committee
Being
Supervisor February 24, 2021 at the 23rd session of the Ninth Supervisory Committee and
elected
2021 2nd Extraordinary General Meeting.
Elected a staff representative supervisor of the Tenth
Being
Hu Jing Supervisor September 07, 2021 Supervisory Committee of the Company at 2021 1st Staff
elected
Representative Conference.
Chief Law Being Appointed as the Chief Law Adviser of the Company at the 2nd
October 25, 2021
Adviser appointed session of the Tenth Board of Directors.
Lu Wanjun
Being Appointed as deputy General Manager of the Company at the
Deputy GM September 08, 2021
appointed 1st session of the Tenth Board of Directors.
Being Appointed as deputy General Manager of the Company at the
Liu Xiaoming Deputy GM September 08, 2021
appointed 1st session of the Tenth Board of Directors.
Being Appointed as deputy General Manager of the Company at the
Li Ming Deputy GM September 08, 2021
appointed 1st session of the Tenth Board of Directors.
Being Appointed as the Chief Accountant of the Company at the 6th
Song Yaoming Chief Accountant February 06, 2022
appointed session of the Tenth Board of Directors.
Being Appointed as deputy General Manager of the Company at the
Tang Haiyuan Deputy GM September 08, 2021
appointed 1st session of the Tenth Board of Directors.
Huang Chairman of the resigned as director and Chairman of the Company due to work
Retired June 11, 2021
Yongfeng Board reason.
Wang Director Retired February 02, 2021 resigned as a director of the Company due to work reason.
37
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Mingchuan
Fu Debin Director Retired February 02, 2021 resigned as a director of the Company due to work reason.
Wang Bo Director Retired February 02, 2021 resigned as a director of the Company due to work reason.
Retired
Director upon office September 08, 2021 Retired upon expiry of the Ninth Board of Directors.
expiry
Zhang Zhibiao
Elected as a director of the Ninth Board of Directors of the
Being
Director February 24, 2021 Company at the 26th session of the Ninth Board of Directors and
elected
the 2021 2nd Extraordinary General Meeting.
Director Retired February 02, 2021 resigned as a director of the Company due to work reason.
Chen Libin General Terminatio
January 15, 2021 resigned as the GM of the Company due to the work reason.
Manager n
Supervisor and
Chairman of the resigned as a supervisor of the Company and the Chairman of
Wang Baoying Retired February 24, 2021
Supervisory the Supervisory Committee due to work reason.
Committee
Retired
Sheng Qing Supervisor upon office September 07, 2021 Retired upon expiry of the Ninth Supervisory Committee.
expiry
Fang Jiasheng Supervisor Retired February 24, 2021 resigned as a supervisor of the Company due to work reason.
Chief Accountant
Being Appointed as the Chief Accountant and the Board Secretary of
& Secretary of September 08, 2021
appointed the Company at the 1st session of the Tenth Board of Directors.
Chen Zhuo the Board
Secretary of the Being Appointed as the Secretary of the Board at the 25th session of
January 15, 2021
Board appointed the Ninth Board of Directors.
Terminatio resigned as deputy GM of the Company due to the personal
Xu Chuangyue Deputy GM February 03, 2021
n reason.
2. Incumbency
Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office
Mr. Zhang Xuhua, born in March, 1977, holding master degree and EMBA of China Europe International Business School.
He is now the Chairman of the Company. Mr. Zhang used to be the managing director, deputy GM, assistant to the GM,
GM of the business department of the shopping center of Rainbow Digital Commercial Co.,Ltd., the GM of Chengdu
Company, the GM of the business department of the shopping center, the GM of Chengdu Company, the GM of the
Merchandise Center, the GM, manager of the procurement department, the supervisor of the merchants department of
Dreams-On Department Store; staff of the market department of Vanke Industry Co., Ltd.
Mr. Xiao Yi, male, born in March 1974, MBA of the Economic Management College of Beijing University of Aeronautics &
Astronautics. Currently, he is a director of the Company, the Director of Organization Department/Human Resources
Department of the CPC Committee of AVIC International Holding Corporation, a director of Tianma Microelectronics Co.,
Ltd., a director of Shennan Circuit Co., Ltd., a director of AVIC International Holding (Zhuhai) Co., Ltd., a director of AVIC
International Economic and Trade Development Co., Ltd. He used to be the deputy manager and manager 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 Holding 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. Xiao is a director of the Company, the deputy chief of the financial management department
38
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
of AVIC International Holding Corporation (executive), a director of Shennan Circuit Co., Ltd. and a director of Rainbow
Department Store Co., Ltd. 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. Deng Jianghu, born in July 1984, graduated from Northeast Normal University with a master's degree in business
administration. He is a director of the Company, and deputy manager of the Planning & Development Department of AVIC
International Holding Corporation (executive) and a director of Tianma Micro-electronics Co., Ltd. He used to be deputy
manager and manager of the planning and operation department of the Company, director of modern service office of
AVIC International Shenzhen Co., Ltd., senior project manager of the operation management department of AVIC
International Holding Co., Ltd., a commissioner of the strategic management and senior commissioner of the Strategic
Development Department of Shennan Circuit Co., Ltd.
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 the after-sale
service department of FIYTA Sales Co., Ltd.
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. Hu Jing, born in September, 1971, is an intermediate accountant and holds a bachelor's degree in accounting from
Jiangxi University of Finance and Economics. He is currently the fund supervisor the financial department and a staff
representative supervisor of the Company. She used to be the senior business manager of the audit department and the
tax supervisor of the finance department of the Company.
Mr. Lu Wanjun, born in February, 1967, accountant and EMBA of China Europe International Business School. He is now
a deputy GM and chief law adviser of the Company. He used to be the assistant to the GM of the Company, executive
39
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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 now a deputy GM of the
Company. 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. Song Yaoming, born in July, 1967, accountant, master of economics of Shaanxi College of Finance and Economics
and EMBA of China Europe International Business School. He is now the chief accountant of the Company. He used to be
the deputy general manager and chief accountant of Rainbow Digital Commercial Co., Ltd., director of Shenzhen Aoxuan
Investment Co., Ltd., director of Shenzhen Aoer Investment Development Co., Ltd., and deputy manager and accountant
of the financial department of Shenyang FAW Jinbei Automobile 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 now a deputy GM of the
Company. 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
Names of the receive
Names of the Titles engaged in the Starting date Expiry date of
persons in remuneration or
Shareholders shareholders of tenure tenure
office allowance from
the shareholder
Chief of the CPC Organization
AVIC International
Xiao Yi Department/Human Resource Yes
Holding Corporation
Department
AVIC International Chief of the Operation and
Xiao Zhanglin Yes
Holding Corporation Management Department
Deputy chief of the financial
AVIC International
Li Peiyin management department Yes
Holding Corporation
(presiding the work)
Deputy chief of the planning &
AVIC International
Deng Jianghu development department Yes
Holding Corporation
(executive)
AVIC International Full-time independent
Zheng Qiyuan Yes
Holding Corporation supervisor
Vice-secretary of the discipline
AVIC International inspection committee and the
Cao Zhen Yes
Holding Corporation chief of the discipline
inspection department
Office taking in other organizations
40
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Does he/she
Titles receive
Names of the
engaged in Expiry date of remuneration or
persons in Names of the other organizations Starting date of tenure
other tenure allowance from
office
organizations other
organization
Tianma Micro-electronics Co.,
Director February 26, 2021 No
Ltd.
Shennan Circuit Co., Ltd. Director April 06, 2021 No
Xiao Yi
AVIC IHL (Zhuhai) Director December 27, 2021 No
AVIC International Economic &
Director December 27, 2021 No
Trade Development Limited
Shennan Circuit Co., Ltd. Director June 18, 2015 No
Xiao Zhanglin Rainbow Digital Commercial Co.,
Director September 27, 2017 No
Ltd.
Rainbow Digital Commercial Co.,
Director February 24, 2021 No
Li Peiyin Ltd.
Shennan Circuit Co., Ltd. Director April 06, 2021 No
Tianma Micro-electronics Co.,
Deng Jianghu Director November 29, 2021 No
Ltd.
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
3. 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
Total pretax
remuneration
remuneration
Name Title Gender Age Office Status from one of the
received from
Company's
the Company
related parties
Zhang Xuhua Chairman of the Board Male 45 In office 42.27 No
Xiao Yi Director Male 48 In office 0 Yes
Xiao Zhanglin Director Male 46 In office 0 Yes
Li Peiyin Director Male 36 In office 0 Yes
Deng Jianghu Director Male 38 In office 83.91 Yes
Pan Bo Managing Director Male 46 In office 232.22 No
Wang Jianxin Independent Director Male 52 In office 9 No
Zhong
Independent Director Male 47 In office 9 No
Hongming
41
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Tang Xiaofei Independent Director Male 48 In office 9 No
Chairman of the
Zheng Qiyuan Male 59 In office 0 Yes
Supervisory Committee
Cao Zhen Supervisor Female 51 In office 0 Yes
Hu Jing Supervisor Female 51 In office 37.24 No
deputy GM and chief law
Lu Wanjun Male 55 In office 198.94 No
adviser
Liu Xiaoming Deputy GM Male 51 In office 247.94 No
Li Ming Deputy GM Male 49 In office 189.94 No
Tang Haiyuan Deputy GM Male 49 In office 201.97 No
Huang
Chairman of the Board Male 48 Retired 184.75 Yes
Yongfeng
Wang
Director Male 56 Retired 0 Yes
Mingchuan
Fu Debin Director Male 45 Retired 0 Yes
Wang Bo Director Male 43 Retired 0 Yes
Chen Libin Managing Director Male 58 Retired 180.5 No
Chairman of the
Wang Baoying Male 58 Retired Yes
Supervisory Committee
Sheng Qing Supervisor Female 46 Retired 120.67 No
Fang Jiasheng Supervisor Male 35 Retired 49.75 No
Chief Accountant &
Chen Zhuo Male 46 Retired 198.94 No
Secretary of the Board
Xu Chuangyue Deputy GM Male 43 Retired 72.68 No
Total -- -- -- -- 2,068.72 --
VI. Duty Performance of Directors in the Reporting Period
1. Board Meetings
Sessions Meeting date Date of disclosure Resolutions of the meetings
Announcement on the Resolution of the 25th
25th session of the Ninth Board
January 15, 2021 January 16, 2021 Session of the Ninth Board of Directors,
of Directors.
2021-006
Announcement on the Resolution of the 26th
26th session of the Ninth Board
February 04, 2021 February 05, 2021 Session of the Ninth Board of Directors,
of Directors.
2021-015
Announcement on the Resolution of the 27th
27th session of the Ninth Board
March 08, 2021 March 10, 2021 Session of the Ninth Board of Directors,
of Directors
2021-026
Announcement on the Resolution of the 28th
28th session of the Ninth Board
April 12, 2021 April 13, 2021 Session of the Ninth Board of Directors,
of Directors
2021-037
Announcement on the Resolution of the 29th
29th session of the Ninth Board
May 21, 2021 May 22, 2021 Session of the Ninth Board of Directors,
of Directors
2021-048
Announcement on the Resolution of the 30th
30th session of the Ninth Board
June 11, 2021 June 15, 2021 Session of the Ninth Board of Directors,
of Directors
2021-052
Announcement on the Resolution of the 31st
31st session of the Ninth Board
July 01, 2021 July 02, 2021 Session of the Ninth Board of Directors,
of Directors
2021-062
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Announcement on the Resolution of the
32nd session of the Ninth
August 18, 2021 August 20, 2021 32nd Session of the Ninth Board of
Board of Directors
Directors, 2021-072
Announcement on the Resolution of the 1st
1st session of the Tenth Board September 08, September 09,
Session of the Tenth Board of Directors,
of Directors 2021 2021
2021-085
Announcement on the Resolution of the 2nd
2nd session of the Tenth Board
October 25, 2021 October 26, 2021 Session of the Tenth Board of Directors,
of Directors
2021-090
Announcement on the Resolution of the 3rd
3rd session of the Tenth Board November 12, November 13,
Session of the Tenth Board of Directors,
of Directors 2021 2021
2021-097
Announcement on the Resolution of the 4th
4th session of the Tenth Board December 28, December 29,
Session of the Tenth Board of Directors,
of Directors 2021 2021
2021-104
2. Attendance of Directors for Board Meetings and General Meetings
Attendance of Directors for Board Meetings and General Meetings
Number of
Board Failure to
Number of Number of
meetings personally Number of
Number of Meetings attendances
Names of which should Number of attend board attendance of
Spot Attended by of board
Directors be be absence meetings the General
Attendances Communicati meeting by
attended in successively Meeting
on proxy
the reporting twice
period
Zhang Xuhua 6 1 5 0 0 No 1
Xiao Yi 10 2 8 0 0 No 0
Xiao Zhanglin 12 2 10 0 0 No 0
Li Peiyin 10 2 8 0 0 No 0
Deng Jianghu 4 1 3 0 0 No 0
Pan Bo 10 2 8 0 0 No 5
Wang Jianxin 12 2 10 0 0 No 6
Zhong
12 2 10 0 0 No 0
Hongming
Tang Xiaofei 12 2 10 0 0 No 0
Note to failure to attend the board meeting successively twice
Inapplicable
3. Objection of directors on some relevant issues
Have the directors proposed any objection on the relevant issues of the Company
No
4. Other Note to Duty Performance of Directors
Have the directors' recommendations to the Company been accepted
Yes
Explanation on why the directors' recommendations have been accepted or not been accepted
During the reporting period, the Board of Directors gave full play to the role of "setting strategies, making decisions, and
43
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
preventing risks". The directors of the Company attended Board Meetings on time in strict accordance with the "Company
Law", "Code of Corporate Governance for Listed Companies" and other laws and regulations and the "Articles of
Association", diligently and conscientiously performed duties and rights of directors, and fully deliberated, made
suggestions and voted on the resolutions of the Board of Directors. The Company fully considered and adopted the
constructive opinions put forward by directors in terms of business development decision-making, internal system
construction, personnel appointment and dismissal, external investment, and implementation of equity incentive plans.
VII. Duty Performance of Special Committees under the Board of Directors in the Reporting Period
Names of Special Number of Description of Important comments Other duty Specific objections
About the members Meeting date
Committees meetings held meetings and suggestions made performances (if any)
Reviewed and During the reporting
approved 2020 period, the members of
Annual Work the Strategy
Report of the Board Committee conducted
March 08, 2021
of Directors and the in-depth discussions
Company's 2020 and analysis on the
Chairman of the
Profit Distribution Company's operating
committee: Zhang
Proposal. conditions and
Xuhua
development
Strategy Committee
2 prospects, proposed
Committee members: Xiao
Reviewed and valuable suggestions
Zhanglin, Deng
approved the and opinions for the
Jianghu, Pan Bo
proposal on Company's
and Tang Xiaofei
May 21, 2021 investing in the development strategy,
establishment of a and provided strong
wholly-owned support for the
subsidiary. scientific
decision-making of the
Board of Directors.
Reviewed and During the reporting
approved 2020 period, in line with the
Annual Report, principle of diligently
2020 Annual performing duties and
Chairman of the Internal Control seeking truth from
committee: Wang Self-assessment facts, members of the
Jianxin; Report, the 2020 Audit Committee
Audit Committee 4 March 08, 2021
members: Li Peiyin, Annual Internal provided advice and
Xiao Zhanglin and Audit Work Report, suggestions in guiding
Tang Xiaofei the Changes in internal audit work,
Accounting supervising and
Policies, the evaluating external
Provision for audit institutions, and
Impairment of establishing effective
44
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Assets and the internal control
Write-off of Bad mechanisms, and
Debts in Year 2020, actively safeguarded
etc. the interests of the
Company and all
Reviewed and
shareholders.
approved the
Company's 2021
1st Quarter Report
and summary, and
April 12, 2021 the 2021 1st
Quarter Audit Work
Report of the
Discipline
Inspection and Law
Department
Reviewed and
approved the
Company's 2021
Semi-annual
Report and
Summary, and such
proposals as the
August 18, 2021
change of
accounting firm,
and the signing of a
financial service
agreement with
AVIC Finance Co.,
Ltd.
Reviewed and
approved the
Company's 2021
3rd Quarterly
Report and the
October 25, 2021 proposal of
repurchase of the
Company's partial
domestically listed
foreign shares (B
shares).
Committee of Chairman of the Reviewed and During the reporting
Nomination, Committee: Zhong 10 January 15, 2021 approved the period, the members of
Remuneration and Hongming; Proposals on the Nomination,
45
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Assessment of the members: Xiao Yi, Adjusting the List of Remuneration and
Board of Directors Xiao Zhanglin, Incentive Objects of Assessment
Wang Jianxin and the Company's Committee prudently
Tang Xiaofei 2018 A-share discussed and judged
Restricted Stock the qualifications of
Incentive Plan nominated directors
(Phase II), the and senior executives,
Number of Grants carefully reviewed the
and the Granting of implementation of the
Restricted Shares Company's equity
and the incentive plan and the
Appointment of the directors’ remuneration
Company's assessment plan, etc.,
General Manager and effectively fulfilled
and Secretary of relevant
the Board. responsibilities.
Reviewed and
approved the
proposal on the
proposed change
February 04, 2021 of directors and the
repurchase and
cancellation of
some restricted
shares.
Reviewed and
approved the
proposal on the
remuneration of
directors and senior
March 08, 2021
executives in 2020
and the adjustment
of various special
committees of the
Board.
Reviewed and
approved the
proposal on the
April 12, 2021 repurchase and
cancellation of
some restricted
shares.
June 11, 2021 Reviewed and
46
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
approved the
proposal on the
proposed change
of directors and the
repurchase and
cancellation of
some restricted
shares.
Reviewed and
approved the
proposal on
electing the
Chairman of the
Company, adjusting
the members of the
July 01, 2021
Strategy
Committee of the
Board of Directors,
and repurchase
and cancellation of
some restricted
shares.
Reviewed and
approved the
proposal on the
election of directors
for the new Board
August 18, 2021
of Directors and
repurchase and
cancellation of
some restricted
shares.
Reviewed and
approved the
proposals on the
election of the
Chairman of the
September 08, 2021 Company, adjusting
the members of the
strategy committee
of the Board, and
repurchase and
cancellation of
47
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
some restricted
shares.
Reviewed and
approved the
proposal on the
October 25, 2021
appointment of the
Chief Law Adviser
of the Company.
Reviewed and
approved the
proposal on the
achievement of the
release of
December 28, 2021 restrictions during
the second release
period of the 2018
A-share Restricted
Stock Incentive
Plan (Phase I).
VIII. Work Summary of the Supervisory Committee
Did the Supervisory Committee find any risk involved in performing the supervision activities in the reporting period
No
IX. Employees
1. Number, Job Composition and Education Background of Employees
Number of employees working for the parent company at the end of the
129
reporting period (persons)
Number of employees working for the major subsidiaries at the end of
4,952
the reporting period (persons)
Total of employees at the end of the reporting period (persons) 5,081
Total employees receiving remuneration in the reporting period
5,081
(persons)
Number of the retired employees for whom the parent company and the
0
major subsidiaries need to share the pension (persons)
Job Composition
Job Composition Categories Number of persons involved in the job composition
Production 372
48
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Sales 3,745
Technical 399
Financial 142
Administrative 423
Total 5,081
Education background
Education levels Number of persons
Master's degree or higher 91
Undergraduate 731
Junior college 1,336
Below junior college 2,923
Total 5,081
2. Remuneration Policy
The Company has worked out its remuneration policy by taking its business development planning and management
practice into consideration and based on the principles of focusing on the values, creating and sharing 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:
Total salary 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;
Classification and grading of the 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;
With value as the key link, co-creating and sharing: the Company designs the incentive system according to the
closed-loop value chain of value creation, evaluation and distribution. Through the establishment of value evaluation
system and real-time incentive system consistent with the strategic development goals, the Company has formed a
compensation along with the Company's benefits and personal performance, incremental compensation to the core key
positions, excellent talent incentive mechanism.
49
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
3. Training Program
(I) Building a team of high-quality professional talents and improve the readiness of talents for key positions
In respect of training, the Company, relying on FIYTA Training Center, focused on the training of echelon talents, built a
talent reserve pool, and improved the organization's talent readiness; created a learning atmosphere within the
organization, and promoted the construction of a professional talent learning system through the projects such as
"Outstanding Craftsman Reservoir" and "Lean Six Sigma".
(II) 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.
(III) With the project-based talent training system to create sustainable training
Cultivate talents by means of project management method and logic, follow the 721 rules to design training programs,
introduce conceptual tools such as experience extraction, action learning, performance improvement, and situational
assessment, and precipitate star training programs such as "Nova Program", "Aerospace Learning Month", "Star Theory",
etc.
(IV) Carrying out targeted training in close combination with business strategic priorities
The training contents closely match the Company's strategic direction and business focus, and continue to promote
excellent sales ability improvement training to empower terminals; according to the needs of market development, timely
conduct training such as new media operation training, brand strategic positioning training, etc., to help improve brand
management capabilities and strategic transformation innovation.
4. Labor Outsourcing
Inapplicable
X. Profit Distribution and Reserve Capitalization
Preparation, Implementation or Adjustment of the Policy for Profit Distribution, Especially the Policy for Cash Dividend
Distribution in the Reporting Period
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 2020 Annual General Meeting held on May 7, 2021 for review. It was resolved 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 distributed cash dividend at the rate of CNY 4.00 for every 10 shares (with tax inclusive) with the
total cash 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 capitalized no reserve.
According to relevant laws and regulations, the Company's B shares held by the Company through the special securities
account for repurchase did not have the right to participate in the profit distribution. In accordance with the principle that
50
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
the amount of cash dividends remained unchanged, the final implementation plan of the Company's equity distribution in
2020 was as follows: with the Company's existing share capital amounting to 426,556,436 shares involved in the
distribution (the total share capital of 435,550,522 shares on the equity registration date deducting the repurchased
shares in the special securities account for repurchase totaling 8,994,086 shares) as the base, the Company distributed
the cash dividend at the rate of CNY 4.084341(with tax inclusive) to all shareholders for every 10 shares, distributed 0
bonus shares, and capitalized no reserve.
The profit distribution plan was implemented on June 3, 2021. For the detail, please refer to the “Announcement on the
Implementation of 2020 Annual Equity Distribution 2021-050”disclosed by the Company on www.cninfo.com.cn.
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?
In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders were positive
but no cash dividend distribution proposal has been put forward.
Inapplicable
Profit Distribution and Conversion of Capital Reserve into Share Capital in the Reporting Period
Bonus shares distributed at the rate of ___ (share) for
0
every 10 shares
Dividend distributed at the rate of CNY___ for every 10
3.00
shares (with tax inclusive)
Share capital base for the dividend distribution preplan
426,051,015
(shares)
Total cash dividend distributed (with tax inclusive) 127,815,304.50
Amount of cash dividend distributed in other way(s)
4,653,185.52
(such as shares repurchased)
Total amount of cash dividend (including other way(s))
132,468,490.02
(CNY)
Profit available for distribution (CNY) 834,920,189.09
51
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Proportion of the cash dividend in the total profit
100%
available for distribution (with other method inclusive)
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 2021 Profit Distribution Plan was reviewed and approved at the 6th session of the Tenth Board of Directors held on March 8,
2022. The Company plans to take the number of shares after deduction of the shares in the special securities account for repurchase from the
total number of shares on the equity registration date as the base when the profit distribution plan is implemented in the future and distributes
cash dividend at rate of CNY 3.00 (with tax inclusive) for every 10 shares to all shareholders, and distribute 0 bonus share, and capitalize no
reserve.
From the time of disclosing this profit distribution plan to that prior to the implementation, in the event of share repurchase, the Company intends
to adjust the total distribution amount in accordance with the principle of fixed distribution ratio.
The profit distribution plan is subject to review and approval of the General Meeting before implementation.
XI. Implementation of the Company’s Equity Incentive Plan, Employee Stock Ownership Plan or other Employee
Incentive Measures
1. Equity incentive
1. A-Share Restricted Shares Incentive Plan 2018(Phase 1)
The 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 decided to start 2018 A-Share Restricted Stock Incentive Plan (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, For the
detail, refer to the relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn. on January 12, 2019. The specific implementation during the reporting period is summarized as
follows:
Reviewed and approved at the 24th session of the Ninth Board of Directors, the conditions for the release of the restriction
for sales in the first release period of the Company's 2018 A-share Restricted Stock Incentive Plan (Phase I) were
satisfied, the 1.357641 million A-share restricted shares involved were listed for trading on February 1, 2021. For the
detail, refer to the relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn. on January 12, 2021.
Reviewed and approved at the 26th session of the Ninth Board of Directors and 2021 2nd Extraordinary General Meeting,
the Company decided to repurchase and cancel the 51,359 restricted A-shares which were already granted to but with the
restriction not yet relieved held by 1 retired and 1 deceased incentive objects. For the detail, refer to the relevant
announcement disclosed in http://www.cninfo.com.cn. respectively on February 5, 2021 and February 25, 2021.
Reviewed and approved at the 28th session of the Ninth Board of Directors and 2020 Annual General Meeting, the
Company decided to repurchase and cancel the 40,020 restricted A-shares which were already granted to but with the
restriction not yet relieved held by 2 retired incentive objects. For the detail, refer to the relevant announcement disclosed
52
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
in http://www.cninfo.com.cn. respectively on April 13, 2021 and May 8, 2021.
Reviewed and approved at the 30th session of the Ninth Board of Directors and 2021 3rd Extraordinary General Meeting,
the Company decided to repurchase and cancel the 33,350 restricted A-shares which were already granted to but with the
restriction not yet relieved held by 1 retired incentive objects. For the detail, refer to the relevant announcement disclosed
in http://www.cninfo.com.cn. respectively on June 15, 2021 and July 2, 2021.
Reviewed and approved at the 31st session of the Ninth Board of Directors, the 32nd session of the Ninth Board of
Directors and 2021 4th Extraordinary General Meeting, the Company decided to repurchase and cancel the 102,051
restricted A-shares which were already granted to but with the restriction not yet relieved held by 3 retired incentive
objects. For the detail, refer to the relevant announcement disclosed in http://www.cninfo.com.cn. respectively on July 2,
2021, August 29, 2021 and September 9, 2021.
Reviewed and approved at the 4th session of the Tenth Board of Directors, the conditions for the release of the restriction
for sales in the second release period of the Company's 2018 A-share Restricted Stock Incentive Plan (Phase I) were
satisfied, the 1.244421 million A-share restricted shares involved were listed for trading on February 7, 2022. For the
detail, refer to the relevant announcement disclosed in http://www.cninfo.com.cn. on January 28, 2022.
2. A-Share Restricted Shares Incentive Plan 2018(Phase 2)
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 A-Share Restricted Stock Incentive Plan (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
awarded at price of CNY 7.60/share and were entirely awarded and registered for trading by January 29, 2021. For the
detail, refer to the relevant announcement disclosed in http://www.cninfo.com.cn. on January 16, 2021. The specific
implementation during the reporting period is summarized as follows:
Reviewed and approved at the 26th session of the Ninth Board of Directors and 2021 2nd Extraordinary General Meeting,
the Company decided to repurchase and cancel the 150,000 restricted A-shares which were already granted to but with
the restriction not yet relieved held by 1 retired incentive object. For the detail, refer to the relevant announcement
disclosed in http://www.cninfo.com.cn. respectively on February 5, 2021 and February 25, 2021.
Reviewed and approved at the 28th session of the Ninth Board of Directors and 2020 Annual General Meeting, the
Company decided to repurchase and cancel the 120,000 restricted A-shares which were already granted to but with the
restriction not yet relieved held by 3 retired incentive objects. For the detail, refer to the relevant announcement disclosed
in http://www.cninfo.com.cn. respectively on April 13, 2021 and May 8, 2021.
Reviewed and approved at the 30th session of the Ninth Board of Directors and 2021 3rd Extraordinary General Meeting,
the Company decided to repurchase and cancel the 100,000 restricted A-shares which were already granted to but with
the restriction not yet relieved held by 1 retired incentive objects. For the detail, refer to the relevant announcement
disclosed in http://www.cninfo.com.cn. respectively on June 15, 2021 and July 2, 2021.
Reviewed and approved at the 32nd session of the Ninth Board of Directors and 2021 4th Extraordinary General
Meeting, the Company decided to repurchase and cancel the 110,000 restricted A-shares which were already granted to
53
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
but with the restriction not yet relieved held by 2 retired incentive objects. For the detail, refer to the relevant
announcement disclosed in http://www.cninfo.com.cn. respectively on August 20, 2021 and September 9, 2021.
Equity incentive to directors and senior executives of the Company
In shares
Strike price
Quantity of Quantity of
and the Quantity of
Number of Number of Market price restricted Quantity of restricted Price of the
number of restricted
vested shares strike shares at the end of shares held at the shares shares newly restricted
strike shares shares held at
Names Title during the during the the reporting the beginning unlocked in granted shares
during the the end of the
reporting reporting period of the the reporting during the granted
reporting reporting
period period (CNY/share) reporting period reporting (CNY/share)
period period
period period
(CNY/share)
Chairman of
Zhang Xuhua 0 0 0 0 0 0 0
the Board
Xiao Yi Director 0 0 0 0 0 0 0
Xiao Zhanglin Director 0 0 0 0 0 0 0
Li Peiyin Director 0 0 0 0 0 0 0
Deng Jianghu Director 0 0 0 33,000 10,989 80,000 7.60 0
Managing
Pan Bo 0 0 0 80,000 26,640 150,000 7.60 203,360
Director
Independent
Wang Jianxin 0 0 0 0 0 0 0
Director
Zhong Independent
0 0 0 0 0 0 0
Hongming Director
Independent
Tang Xiaofei 0 0 0 0 0 0 0
Director
deputy GM
Lu Wanjun and chief law 0 0 0 80,000 26,640 150,000 7.60 203,360
adviser
Liu Xiaoming Deputy GM 0 0 0 80,000 26,640 150,000 7.60 203,360
Li Ming Deputy GM 0 0 0 80,000 26,640 150,000 7.60 203,360
Tang Haiyuan Deputy GM 0 0 0 60,000 19,980 150,000 7.60 190,020
Huang
Chairman of
Yongfeng 0 0 0 100,000 33,300 0 0
the Board
(Retired)
Chen Libin Managing
0 0 0 100,000 33,300 180,000 7.60 246,700
(retired) Director
Chen Zhuo Chief 0 0 0 80,000 26,640 150,000 7.60 203,360
54
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
(retired) Accountant &
Secretary of
the Board
Xu
Chuangyue Deputy GM 0 0 0 50,000 16,650 150,000 7.60 0
(retired)
Total -- 0 0 -- -- 743,000 247,419 1,310,000 -- 1,453,520
According to the relevant regulations of the Company's equity incentive plan, since Mr. Deng Jianghu, Mr. Huang Yongfeng and Mr. Xu
Remarks (If any) Chuangyue are the original incentive objects who have resigned, the Company has respectively granted but not yet lifted the restrictions
on their holdings during the reporting period. The relevant repurchase and cancellation procedures have been completed.
Assessment and Incentive Mechanism for Senior Executives
In order to establish and improve the Company's incentive and restraint mechanism for senior executives, give full play to
and mobilize the enthusiasm of the Company's executives, improve the Company's operational capabilities and economic
benefits, and ensure the realization of the company's strategic goals, the Company continuously improved the work of
tenure and contractual management of executives. With year/tenure as a period, the Company carried out the
assessment of business performance objectives, and continued to promote the implementation of the rigid realization of
rewards and punishments based on the assessment results, reflecting the strong incentives and hard constraints of
remuneration, adhered to performance orientation, and strengthened effective incentives for accurate assessments.
2. Implementation of the Employee Stock Ownership Plan
Inapplicable
3. Other employee incentive measures
Inapplicable
XII. Construction and Implementation of the Internal Control System during the Reporting Period
1. Construction and Implementation of the Internal Control System
In order to strengthen the Company's internal control, promote the Company's standardized operation and healthy
development, and protect the legitimate rights and interests of shareholders, the Company has established and improved
the Company's internal control system in accordance with the "Company Law", "Securities Law" and other laws and
regulations, and has conducted effective implementation.
During the reporting period, the Company continued to promote the work related to the integration and optimization of
internal control, risk management and compliance management supervision. The Company did not have any significant
defects and shortcomings in the internal control.
2. Particular case found involving material defects in the internal control during the reporting period
No
55
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
XIII. Management and Control of the Subsidiaries during the Reporting Period
Inapplicable
XIV. Internal Control Self-assessment Report or Internal Control Audit Report
1. Self-assessment Report of the Internal Control
Date of disclosing the full text of the internal
March 10, 2022
control 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
100.00%
total assets of the Company’s consolidated
financial statements
Proportion of the operation revenue of the
entitled involved in the assessment in the total
100.00%
operation revenue of the Company’s
consolidated financial statements
Criteria for affirming the defects
Categories Financial report Non-financial Report
① Serious violation of national laws,
administrative regulations and
normative documents;
② ”Decision-making of major issues,
appointment and removal of important
① The defects involves fraud by directors,
cadres, arrangement of important projects,
supervisors and senior managers;
use of large funds” failed to undergo
② Correction of published financial statements;
collective decision-making process;
③ Certified public accountants found that there
③Serious loss of key officers and technical
was a material misstatement in the financial
personnel;
Qualitative criteria statements of the current period, while internal
④ Lack of rules and regulations for control of
control failed to find the misstatement in the
or expiry of the system of rules and
operation process;
regulations to important businesses of the
④ The Company’s audit committee and the
Company’s production and operation;
discipline inspection, audit and law department
⑤ Expiry of the internal control of
conducted ineffective supervision over the
information disclosure resulted in public
internal control.
censure to the Company by the regulatory
authority;
⑥ The result of the assessment of the
internal control showed extraordinary defect
56
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
or serious defect has not be rectified.
① Material defect: misstatement ≥ 5% of the ① Material defect: misstatement ≥ 5% of
pre-tax profit the pre-tax profit
② Important defect: 1% of the pre-tax ② Important defect: 1% of the pre-tax
Quantitative criteria profit≤misstatement＜ 5% of the pre-tax profit≤misstatement＜ 5% of the
profit pre-tax profit
③ General defect: misstatement＜1% of ③ General defect: misstatement＜1% of
pre-tax profit pre-tax profit
Number of material defects in financial reports
0
(pcs)
Number of material defects in non-financial
0
reports (pcs)
Number of important defects in financial reports
0
(pcs)
Number of important defects in non-financial
0
reports (pcs)
2. 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, 2021.
Disclosure of the internal control audit
Disclosed
report
Date of disclosing the full text of the
March 10, 2022
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
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
XV. Rectification of the Problems Found in the Self-inspection during the Special Campaign to Improve the
Governance of Listed Companies
During the reporting period, in accordance with the spirit of the CSRC’s “Announcement on Launching Special Campaign
to Improve the Governance of Listed Companies” (CSRC Announcement [2020] No. 69) and other documents, the
Company fully completed the special self-inspection work according to the special self-inspection list for governance of a
listed company. Through this self-inspection, the Company believes that that the Company complies with the
requirements specified in the "Company Law", "Code of Corporate Governance for Listed Companies.", "the Guidelines
on the Bylaws of Listed Companies" and other laws and regulations in its overall company governance with quite
complete governance structure and law-compliance operation.
The two problems existing in the Company and the rectification as following:
1. Some directors, supervisors and senior executives of the Company failed to attend the General Meeting of
Shareholders due to work arrangements and failed to implement the regulations for the application for leave.
Rectification: From the end of the self-inspection work to the end of the reporting period, the Company held 4 general
meetings of shareholders. The directors, supervisors and senior executives who were unable to attend (or attend as
non-voting delegates) the meeting due to work arrangements have all signed the application for leave.
2. There were 8 defects found in the Company's Self-assessment of the Internal Control in 2019 with the defect level as
general defects.
Rectification: The Company has completed the rectification of the above 8 general defects in 2020, and there were no
major defects in the Company's internal control.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Section 5 Environment and Social Responsibility
I. Significant Issues concerning Environmental Protection
Does the Company or any of its subsidiaries belong to a key pollutant discharging unit as announced to the public by the
environmental protection authority?
Yes
Description of
Pollutant
Name of the the major Number of Distribution of
Way of Discharging Discharge Total discharge Total discharge Over-dischargi
Company or its pollutants or discharging the discharging
discharging concentration Standards in volume volume verified ng
Subsidiary specific outlets outlets
Force
pollutant
At the port of
Shanghai Nickel and Nickel ﹤0.03,
Intermittent and effluent Nickel: 0.1;
Watch Industry chromium 1 chromium ﹤ 406 tons/year 650 tons/year None
interruption treatment chromium: 0.1
Co., Ltd. effluent 0.01
equipment
Construction and operation of the pollution prevention and control facilities
Shanghai Watch Co., Ltd. reconstructed the waste water treatment 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 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 Ministry of Ecology and Environment for energy saving and consumption
reduction, the Company newly added a set of membrane filtration heavy metal device during the reporting year. As a
result, its electroplating wastewater has reached the standard for clean water after the treatment. Therefore, the Company
reuses a part of the water (recycling) , so that the total wastewater discharge last year was reduced by about 244 tons,
and the recycling rate was about 37%.
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 Bureau of Ecology and Environment 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 Bureau of Ecology and Environment of Shanghai and has received the Pollutant Discharge Permit
issued by the said authority at the end of 2019. Since the individual non-heavy pollutant factors originally approved in the
"Pollutant Discharge Permit" did not belong to the Company's discharge scope, the Company requested to change the
59
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
"Pollutant Discharge Permit", which was now been re-examined by the Yangpu District Bureau of Ecology and
Environment and was issued on October 20, 2021.
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 Bureau of Ecology and Environment of Shanghai and has been published on the Environmental
Information Disclosure Platform of Enterprises and Institutions of Shanghai.
Environment Self-Monitoring Program
Yangpu District Bureau of Ecology and Environment of Shanghai monitors the Company once a quarter. The Company
entrusted a qualified third-party organization (Shanghai Textile Energy Conservation Center) to monitor and issue
monitoring report every six months. The Company is equipped with online monitoring instruments and communicates with
the district bureau of ecology and environment. The platforms of the bureau and the district government are connected to
the Internet to transmit the concentration data of heavy pollution factors 24 hours a day.
Administrative penalties for environmental issues during the reporting period
Inapplicable
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: https://e2.sthj.sh.gov.cn.
Measures taken to reduce carbon emissions during the reporting period and their effect
Inapplicable
Other information in connection with the environmental protection
Inapplicable
II. Social Responsibilities
For the detail, please refer to the "2021 Corporate Social Responsibility Report" disclosed by the Company on March 10,
2022 on www.cninfo.com.cn.
III. Consolidating and Expanding the Achievements of Poverty Alleviation and Rural Revitalization
During the reporting period, the Company actively responded to national policies and participated in targeted poverty
alleviation and rural revitalization through various means. Through the “LOVEAVIATION”, the aviation industry love
support platform the Company has purchased "LOVEAVIATION" agricultural products during the Dragon Boat Festival,
Mid-Autumn Festival and other traditional Chinese festivals to help poverty-stricken counties in Guizhou etc. in getting rid
of poverty; carried out culturally characteristic poverty alleviation activities. On August 3, 2021, the "Children Enjoying
Beautiful Time" Hand-in-Hand Summer Camp jointly organized by Shenzhen Chenghan Public Welfare Foundation and
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Gansu Aesthetic Education Promotion Association invited more than 50 teachers and students from Linxia, Gansu
Province to enter the Park of FIYTA Clock Building and hold a "Hand-in-Hand Summer Camp" and the “Love being only
Because of You" theme public welfare activities were successfully held.
61
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Section 6 Significant Events
I. Implementation of Commitments
1. Commitments made by the Company's actual controller, shareholders, related parties, acquirers, the Company
and other relevant parties fulfilled during the reporting period and not fulfilled as of 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
II. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties
Inapplicable
III. Outward guarantee against regulations
Inapplicable
IV. Explanation of the Board of Directors on the Qualified Auditors' Report for the Latest Period Issued by the
CPAs
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 of changes in accounting policies, accounting estimates or correction of significant accounting
errors compared with the financial report of the previous year
The Ministry of Finance revised and issued the "Accounting Standards for Enterprises No. 21-Leases" 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 enterprises implementing the accounting standards for enterprises started the implementation commencing
from January 1, 2021. The Company as a domestically listed company started implementing the new lease standards
62
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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 on
the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn/ on March 20, 2021.
VII. Explanation on the Changes in the Scope of the Consolidated Statements in Comparison with the Financial
Report of the Previous Year
During the reporting period, Shenzhen Xunhang Precision Technology Co., Ltd. and HARMONY World Watch Center
(Hainan) Limited, the Company's newly established wholly-owned subsidiaries, were included in the scope of the
Company's consolidated statements; the deregistration of 68 Station Co., Ltd., one of the Company's wholly-owned
subsidiaries, was completed on March 5, 2021, and it has been excluded from the scope of the Company's consolidated
statements.
VIII. Engagement/Disengagement of CPAs
CPAs currently engaged by the Company
Name of the domestic CPAs Da Hua Certified Public Accountants (Special General Partnership)
Remuneration to the domestic CPAs (in CNY 10,000) 120
Successive years of the domestic CPAs offering auditing services 1
Name of the certified public accountants from the domestic CPAs Long Jiao and Wang Dong
Successive years of the domestic CPAs offering auditing services 1
Has the CPAs been changed for the reporting period?
Yes
Has the CPAs been replaced during the auditing?
No
Have the examination and approval procedures been implemented in replacing the CPAs
Yes
Detailed explanation on the replacement/change of the CPAs
The 32nd Session of the Ninth Board of Directors held on August 18, 2021 and 2021 4th Extraordinary General Meeting
held on September 8, 2021 reviewed and approved the "Proposal on Change of the Accounting Firm". As the employment
term of Grant Thornton LLP as the Company's auditor expired, the Company decided to employ Da Hua Certified Public
Accountants as the Company's auditor of the financial statements and internal control of year 2021. For details, please
refer to the “Announcement on the Change of the CPAs 2021-077” disclosed by the Company on
http://www.cninfo.com.cn/ on August 20, 2021.
Employment of CPAs, financial consultant or sponsor for auditing the internal control
After review and approval at the Company's 4th Extraordinary General Meeting, the Company appointed Da Hua Certified
Public Accountants (Special General Partnership) as the auditor of Company's 2021 annual financial statements and
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
internal control.
IX. Delisting Possibly to be Confronted with after Disclosure of the Annual Report
Inapplicable
X. Matters concerning Bankruptcy Reorganization
Inapplicable
XI. Significant Lawsuits and Arbitrations
Inapplicable
XII. Penalty and Rectification
Inapplicable
XIII. Integrity of the Company, its Controlling Shareholder and Actual Controller
Inapplicable
XIV. Significant Related Transactions
1. Related Transactions Related with Day-to-Day Operations
Inapplicable
2. Related transactions concerning acquisition and sales of assets or equity
Inapplicable
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current Associated Rights of Credit and Liabilities
Inapplicable
5. Transactions with the finance company with incidence relation
Deposit business
Incidence Maximum Deposit interest Opening balance Amount incurred in the reporting Ending balance
Related parties
relation deposit limit per range (CNY 10,000) period (CNY 10,000)
64
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
day (CNY Total amount Total amount
10,000) deposited during withdrawn during
the reporting the reporting
period (in CNY period (in CNY
10,000) 10,000)
Finance
AVIC Finance company with
80,000 1.665% 28,353.23 313,638.76 327,213.39 14,778.60
Co., Ltd. incidence
relation
Loan business
Amount incurred in the reporting
period
Incidence Loan amount Loan interest Opening balance Total loan during Total repayments Ending balance
Related parties
relation (CNY 10,000) rate range (CNY 10,000) the reporting during the (CNY 10,000)
period (in CNY reporting period
10,000) (in CNY 10,000)
Finance
AVIC Finance company with
30,000 3.65% 0 20,000 20,000 0
Co., Ltd. incidence
relation
Credit extension and other financial business
Inapplicable
6. Transactions between the finance company controlled by the Company and the related parties
Inapplicable
7. Other Significant Related Transactions
The 27th session of the Ninth Board of Directors held on March 18, 2021 and 2020 Annual General Meeting held on May
7, 2021 reviewed and approved the Proposal on Prediction of Regular Related Transactions in 2021. For the detail, refer
to the Announcement on the Resolution of the 27th Session of the Ninth Board of Directors No. 2021-026, the
Announcement on the Prediction of the Regular Related Transactions in 2021 No. 2021-029 and the Announcement on
the Resolution of 2020 Annual General Meeting No. 2021-045. 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.
The 32nd Session of the Ninth Board of Directors held on August 18, 2021 and 2021 4th Extraordinary General Meeting
held on September 8, 2021, reviewed and approved the "Proposal for Signing Financial Service Agreement with AVIC
Finance Co., Ltd. The Company decided to terminate the original contract with the AVIC Finance Ltd. and sign new
Financial Services Agreement. For the detail, refer to the Announcement of the Resolution of the 32nd Session of the
Ninth Board of Directors No. 2021-072, the Announcement on the Related Transaction in Connection with Signing
Financial Service Agreement with AVIC Finance Co., Ltd. No. 2021-078 and the Announcement on the Resolution of 021
4th Extraordinary General Meeting No. 2021-087.
65
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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 27th Session of
March 10, 2021 www.cninfo.com.cn
the Ninth Board of Directors, 2021-026
Announcement of the Prediction of the Regular Related
March 10, 2021 www.cninfo.com.cn
Transactions in 2021, 2021-029
Announcement on the Resolution of 2020 Annual General
May 08, 2021 www.cninfo.com.cn
Meeting, 2021-045
Announcement on the Resolution of the 32nd Session of
August 20, 2021 www.cninfo.com.cn
the Ninth Board of Directors, 2021-072
the Announcement on the Related Transaction in
Connection with Signing Financial Service Agreement with August 20, 2021 www.cninfo.com.cn
AVIC Finance Co., Ltd. No. 2021-078
Announcement on the Resolution of 2021 4th
September 09, 2021 www.cninfo.com.cn
Extraordinary General Meeting, 2021-087
XV. Important Contracts and Implementation
1. Custody, Contacting and Leases
(1) Custody
Inapplicable
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
2. Significant Guarantees
In CNY 10,000
Outward guarantees Offered by the Company and its Subsidiaries (excluding guarantee to the subsidiaries)
Date of the
announceme Actual Counter Implement Guarantee
Names of Guarantee Date of Type of Collateral (if Guarantee
nt on the amount of guarante ation to related
Guarantees line occurrence guarantee any) period
guarantee guarantee e (if any) status party?
line
66
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Inapplicable
Total amount of outward Total amount of outward
guarantee approved in the 0 guarantee actually incurred 0
report period (A1) in the report period (A2)
Total amount of outward Total ending balance of
guarantee already outward guarantee at the
0 0
approved at the end of the end of the report period
report period (A3) (A4)
Guarantee to the subsidiaries
Date of the
announceme Actual Counter Implement Guarantee
Names of Guarantee Date of Type of Collateral (if Guarantee
nt on the amount of guarante ation to related
Guarantees line occurrence guarantee any) period
guarantee guarantee e (if any) status party?
line
Guarantee
March 10, December
Harmony 15,000 15,000 with joint 1 year No No
2021 23, 2021
responsibility
the Guarantee
March 10, June 23,
Technology 3,000 289 with joint 1 year No No
2021 2021
Co. responsibility
the Guarantee
March 10, April 01,
Technology 4,000 1,284 with joint 1 year No No
2021 2021
Co. responsibility
Guarantee
the Hong March 10,
3,270.4 0 with joint 1 year No No
Kong Co. 2021
responsibility
Total amount of guarantee
Total guarantee quota to
to the subsidiaries actually
the subsidiaries approved 25,270.4 16,573
incurred in the reporting
in the reporting period (B1)
period (B2)
Total guarantee quota to Total balance of actual
the subsidiaries approved guarantee to the
25,270.4 16,573
at the end of the reporting subsidiaries at the end of
period (B3) the reporting period (B4)
Guarantee among the subsidiaries
Date of the
announceme Actual Counter Implement Guarantee
Names of Guarantee Date of Type of Collateral (if Guarantee
nt on the amount of guarante ation to related
Guarantees line occurrence guarantee any) period
guarantee guarantee e (if any) status party?
line
67
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Inapplicable
Total amount of guarantee
Total guarantee quota to
to the subsidiaries actually
the subsidiaries approved 0 0
incurred in the reporting
in the reporting period (C1)
period (C2)
Total guarantee quota to Total balance of actual
the subsidiaries approved guarantee to the
0 0
at the end of the reporting subsidiaries at the end of
period (C3) the reporting period (C4)
Total amount of guarantees (i.e. Total of the previous three major items)
Total amount of outward
Total guarantee quota to the
guarantee actually incurred
subsidiaries approved in the 25,270.4 16,573
in the report period
reporting period (A1+B1+C1)
(A2+B2+C2)
Total ending balance of
Total amount of guarantees already
guarantees at the end of
approved at the end of the report 25,270.4 16,573
the report period
period (A3+B3+C3)
(A4+B4+C4)
Proportion of the actual guarantees in the Company’s
5.50%
net assets (namely A4+B4 + C4)
where
Amount of guarantees offered to the shareholders,
0
actual controller and its related parties (D)
Amount of guarantee for liabilities directly or indirectly
offered to the guarantees with the asset-liability ratio 0
exceeding 70% (E)
Guarantee with total amount exceeding 50% of the net
0
assets (F)
Total amount of the aforesaid three guarantees
0
(D+E+F)
For the guarantee contract not yet due, guarantee
responsibility incurred in the reporting period or there is
Inapplicable
evidence showing the description of the possible
related discharge duty (if any)
Note to the outward guarantee against the established
Inapplicable
procedures (if any)
Description of the guarantee with complex method
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2021 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. Other Important Contracts
Inapplicable
XVI. Notes to Other Significant Events
1. Amendment of the Company's Rules and Regulations
Authorized by 2021 1st Extraordinary General Meeting, the 26th session of the Ninth Board of Directors held on February
4, 2021 reviewed and approved the "Proposal on the Amendment of the Articles of Association". For the detail, refer to the
Amendment of the Articles of Association disclosed in http://www.cninfo.com.cn. on February 5, 2021.
The 3rd session of the Tenth Board of Directors held on November 12, 2021 and 2021 5th Extraordinary General Meeting
held on November 30, 2021, reviewed and approved the Proposal on the Amendment of the "Articles of Association", " the
Proposal on the Amendment of the Rules of Procedures for the General Meetings ","the Proposal on the Amendment of
the Rules of Procedures of Board Meetings ". For the detail, refer to the relevant announcement disclosed in
http://www.cninfo.com.cn. on November 13, 2021.
2. Repurchase of Partial Domestically Listed Foreign Investment Shares (B-Shares)
The Company’s 2nd Session of the Tenth Board of Directors held on October 25, 2021 and 2021 5th Extraordinary
General Meeting held on November 30, 2021 reviewed and approved the “Proposal for the Repurchase of Partial
Domestically Listed Foreign Shares (B-Shares). For the detail, refer to the Report on the Repurchase of Partial
Domestically Listed Foreign Shares (B-Shares) No. 2021-102.
XVII. Significant Events of the Company's Subsidiaries
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Section 7 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
New Bonus converted
Quantity Proportion Others Sub-total Quantity Proportion
issuing shares from
reserve
I. Restricted shares 4,457,513 1.04% 7,660,000 -1,982,029 5,677,971 10,135,484 2.38%
1. Shares held by the state 0 0.00% 0 0 0 0 0.00%
2. State corporate shares 0 0.00% 0 0 0 0 0.00%
3. Other domestic shares 4,457,513 1.04% 7,660,000 -1,982,029 5,677,971 10,135,484 2.38%
Including: Domestic
0 0.00% 0 0 0 0 0.00%
corporate shares
Shares held by
4,457,513 1.04% 7,660,000 -1,982,029 5,677,971 10,135,484 2.38%
domestic natural persons
4. Foreign invested shares 0 0.00% 0 0 0 0 0.00%
Including: Foreign corporate
0 0.00% 0 0 0 0 0.00%
shares
Shares held by foreign
0 0.00% 0 0 0 0 0.00%
natural persons
II. Unrestricted shares 423,634,368 98.96% 0 -7,718,837 -7,718,837 415,915,531 97.62%
1. CNY ordinary shares 356,716,368 83.33% 0 1,275,249 1,275,249 357,991,617 84.03%
2. Foreign invested shares
66,918,000 15.63% 0 -8,994,086 -8,994,086 57,923,914 13.60%
listed in Mainland China
3. Foreign invested shares
0 0.00% 0 0 0 0 0.00%
listed abroad
4. Others 0 0.00% 0 0 0 0 0.00%
III. Total shares 428,091,881 100.00% 7,660,000 -9,700,866 -2,040,866 426,051,015 100.00%
Cause of the change of shares
During the reporting period, the Company’s 2018 A-share Restricted Stock Incentive Plan (Phase II) was completed in
granting and registered for listing on January 29, 2021. 7,660,000 shares were granted.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
As in the Company's 2018 A-share Restricted Stock Incentive Plan (Phase I) and 2018 A-share Restricted Stock Incentive
Plan (Phase II), 8 original incentive objects resigned and one passed away, they were no longer eligible for incentives.
The Company has repurchased and canceled the 706,780 restricted A-shares that it had granted but had not yet lifted the
restriction on sales in accordance with the provisions of the incentive plan.
According to the Company’s Proposal for the Repurchase of Partial Domestically Listed Foreign Shares (B-Shares) by the
Company, the Company repurchased 8,994,086 B-shares in total during the period from July 23, 2020 to July 22, 2021.
This part of the B-shares were canceled on August 3, 2021.
Due to the above reason, the Company's total shares changed from 428,091,881 shares to 426,051,015 shares.
Approval of the Change of the Shares
2021 1st Extraordinary General Meeting held on January 6, 2021 reviewed and approved 2018 Restricted A-Share
Incentive Plan (Phase II) (Draft) and the summary, 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 restrictive A-shares
to 135 persons eligible for the incentive.
The Company's 2021 2nd Extraordinary General Meeting held on February 24, 2021 authorized the Board of Directors
of the Company to repurchase and cancel 201,359 A-share restricted shares with the restriction not yet relieved that had
been granted to and held by the former incentive objects one of whom had resigned and another of whom had passed
away.
The Company's 2020 Annual General Meeting held on May 7, 2021 authorized the Board of Directors of the Company to
repurchase and cancel 160,020 A-share restricted shares with the restriction not yet relieved that had been granted to and
held by the former incentive objects three of whom had resigned and another of whom had passed away.
The Company's 2021 3rd Extraordinary General Meeting held on July 01, 2021 authorized the Board of Directors of the
Company to repurchase and cancel 133,350 A-share restricted shares with the restriction not yet relieved that had been
granted to and held by a retired former incentive object.
The Company's 2021 4th Extraordinary General Meeting held on September 8, 2021 authorized the Board of Directors of
the Company to repurchase and cancel 212,051 A-share restricted shares with the restriction not yet relieved that had
been granted to and held by three retired former incentive object.
The Company held 2020 2nd Extraordinary General Meeting on July 23, 2020, authorized the Company's Board of
Directors to fully handle matters related to the cancellation of the repurchased shares after the repurchase of some
domestically listed foreign shares (B-shares) was completed.
Transfer of the Shares Changed
Verified by China Securities Depository & Clearing Corporation Limited Shenzhen Branch, the transfer of the Company's
share changes in the reporting period is as follows:
1. The Company's 2018 A-share Restricted Stock Incentive Plan (Phase II) was completed on January 29, 2021. As a
result, 7,660,000 shares were granted.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
2. The Company completed the repurchase and cancellation of A-share restricted shares on April 23, 2021, July 6, 2021,
August 24, 2021 and November 3, 2021. Total repurchase logout 706,780 shares A Shares restrictive stock.
3. As at August 3, 2021, the Company completed repurchase and cancellation of 8,994,086 domestically listed foreign
shares (B-shares).
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
Earnings per share
Net return on equity, weighted average (%)
Basic earning per share (CNY/share) Diluted earning per share (CNY/share)
2021 2020 2021 2020 2021 2020
13.39% 10.78% 0.9036 0.6764 0.9036 0.6764
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
Inapplicable
2. Change of the Restricted Shares
In shares
Number of restricted
Number of restricted Number of restricted Number of restricted
Names of the shares at the Date of relieving the
shares increased in shares relieved in the shares at the end of Cause of restriction
Shareholders beginning of the restriction
the reporting period reporting period the reporting period
reporting period
To be unlocked
subject to the
Locked shares for the
conditions of the
Chen Libin (retired) 160,000 180,000 33,300 306,700 retired senior
locked shares for the
executives
retired senior
executives
As of the disclosure
date, the Company
intended to
repurchase 176,720
restricted A-shares in
Locked and not yet accordance with the
unlocked restricted regulations, and the
Chen Zhuo (retired) 118,250 156,640 26,640 248,250
shares held by the remaining shares
senior executives shall be unlocked
according to the
conditions for
unlocking the locked
shares held by the
retired senior
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
executives.
To be unlocked
subject to the
conditions of the
Locked and not yet
locked shares for
unlocked restricted
Li Ming 117,530 156,640 26,640 247,530 senior executives and
shares held by the
the measures for the
senior executives
Company’s equity
incentive
management
To be unlocked
subject to the
conditions of the
Locked and not yet
locked shares for
unlocked restricted
Pan Bo 117,500 156,640 26,640 247,500 senior executives and
shares held by the
the measures for the
senior executives
Company’s equity
incentive
management
To be unlocked
subject to the
conditions of the
Locked and not yet
locked shares for
unlocked restricted
Lu Wanjun 117,500 156,640 26,640 247,500 senior executives and
shares held by the
the measures for the
senior executives
Company’s equity
incentive
management
To be unlocked
subject to the
conditions of the
Locked and not yet
locked shares for
unlocked restricted
Liu Xiaoming 117,500 156,640 26,640 247,500 senior executives and
shares held by the
the measures for the
senior executives
Company’s equity
incentive
management
To be unlocked
Locked and not yet subject to the
unlocked restricted conditions of the
Tang Haiyuan 60,000 154,980 19,980 195,000
shares held by the locked shares for
senior executives senior executives and
the measures for the
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Company’s equity
incentive
management
To be unlocked
subject to the
Not yet unlocked measures for the
Bao Xianyong 60,000 120,000 19,980 160,020
restricted shares Company’s equity
incentive
management
To be unlocked
subject to the
Not yet unlocked measures for the
Sun Lei 60,000 120,000 19,980 160,020
restricted shares Company’s equity
incentive
management
To be unlocked
subject to the
Not yet unlocked measures for the
Sheng Li 60,000 120,000 19,980 160,020
restricted shares Company’s equity
incentive
management
To be unlocked
subject to the
Locked and not yet conditions of the
unlocked restricted locked shares for
Other shareholders 3,469,233 6,264,212 1,111,221 7,915,444 shares held by the senior executives and
retired senior the measures for the
executives Company’s equity
incentive
management
Total 4,457,513 7,742,392 1,357,641 10,135,484 -- --
II. Issuing and Listing
1. Issuing of securities (with preferred stock exclusive) in the reporting period
Description of the Quantity
stock and its Issuing price (or approved for Expiry date of Date of
Date of issuing Quantity issued Date of listing Disclosure index
derivative interest rate) being listed for trading disclosure
securities trading
Type of stock
A-shares January 15, 7.60 7,660,000 January 29, http://www.cninfo January 28,
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
2021 2021 .com.cn/ 2021
Note to issuing of securities (with preferred stock exclusive) in the reporting period
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 A-Share Restricted Stock Incentive Plan (Phase 2), 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. This part of restricted A-shares
was all granted by January 15, 2021 and registered for listing by January 29, 2021. For the detail, please refer to the
"Announcement on Completion of the Grant Involved in the 2018 A-Share Restricted Stock Incentive Plan (Phase II)
2021-011” disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
2. Note to changes of the company’s total shares and the structure of shareholders as well as the structure of
assets and liabilities
Same as the description in “the Cause of the Change of Shares”.
3. Existing Employee Shares
Inapplicable
III. Shareholders and Actual Controlling Shareholder
1. Number of Shareholders and Shareholding
In shares
Total preference
shareholders with the
Total common Total preference
voting power
Total common shareholders at the shareholders with the
recovered at the end
shareholders at the end of the month prior voting power recovered at
34,412 34,634 0 of the month before 0
end of the reporting to the date of the end of the reporting
the day of disclosing
period disclosing the annual period (if any) (Refer to
the Annual Report (if
report Note 8)
any) (Refer to Note
8)
Shares held by the shareholders holding over 5% shares or the top ten shareholders
Number of Pledging, marking or freezing
shares held Number of
Increase/decrease Quantity of
Names of the Nature of the Shareholding at the end of the
in the reporting unrestricted
Shareholders shareholder proportion the restricted Status of the shares Quantity
period shares held
reporting shares held
period
AVIC International
State corporate 38.25% 162,977,327 - 0 162,977,327
Holding Limited
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Guoxin Investment Co.,
State corporate 1.82% 7,739,898 7,739,898 0 7,739,898
Ltd.
Construction Bank of
China - Penghua Huizhi Domestic
Optimized Hybrid non-state-owned legal 1.10% 4,679,494 4,679,494 0 4,679,494
Securities Investment person
Fund
Construction Bank of
China - Penghua Value Domestic
Superiority Hybrid non-state-owned legal 0.60% 2,556,742 -4,915,693 0 2,556,742
Securities Investment person
Fund (LOF)
Domestic natural
Qiu Hong 0.54% 2,300,000 700,000 0 2,300,000
person
China Ifund Asset
Management Co., Ltd.
Domestic
- Ifund All-Weather No.
non-state-owned legal 0.43% 1,841,716 1,841,716 0 1,841,716
2 Phase G Private
person
Equity Securities
Investment Fund
SOCIETE GENERALE Foreign corporate 0.30% 1,265,800 1,024,300 0 1,265,800
Domestic natural
Zhang Yinnan 0.28% 1,195,128 1,195,128 0 1,195,128
person
Domestic natural
Chen Hao 0.24% 1,041,143 -24,257 0 1,041,143
person
Domestic natural
Chen Chu 0.24% 1,004,400 508,599 0 1,004,400
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) (Refer to Note 3)
Explanation on associated relationship or
Inapplicable
consistent action of the above shareholders
Among the above shareholders, AVIC International Holding Limited authorized representatives to exercise its voting
Note to the aforesaid shareholders involving power on behalf at the Company’s 2021 1st Extraordinary General Meeting, 2021 2nd Extraordinary General Meeting,
entrusting/being entrusted with voting power 2020 Annual General Meeting, 2021 3rd Extraordinary General Meeting, 2021 4th Extraordinary General Meeting and
and the waiver of voting power 2021 5th Extraordinary General Meeting with the number of shares they represented was always 162,977,327. For the
detail of the result of the aforesaid voting, refer to the relevant announcement disclosed in http://www.cninfo.com.cn.
There is a special repurchase account among
the top 10 shareholders (if any) (see Note 10) Inapplicable
Special note to the designated repurchase
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
account in top 10 shareholders (if any) (Refer to
Note 11)
Shares held by top 10 shareholders of unrestricted shares
Share type
Names of the Shareholders Quantity of unrestricted shares held at the end of the reporting period
Share type Quantity
AVIC International Holding Limited 162,977,327 CNY ordinary shares 162,977,327
Guoxin Investment Co., Ltd. 7,739,898 CNY ordinary shares 7,739,898
Construction Bank of China - Penghua Huizhi
4,679,494 CNY ordinary shares 4,679,494
Optimized Hybrid Securities Investment Fund
Construction Bank of China - Penghua Value
Superiority Hybrid Securities Investment Fund 2,556,742 CNY ordinary shares 2,556,742
(LOF)
Qiu Hong 2,300,000 CNY ordinary shares 2,300,000
China Ifund Asset Management Co., Ltd. -
Ifund All-Weather No. 2 Phase G Private Equity 1,841,716 CNY ordinary shares 1,841,716
Securities Investment Fund
SOCIETE GENERALE 1,265,800 CNY ordinary shares 1,265,800
Domestically listed
Zhang Yinnan 1,195,128 1,195,128
foreign shares
Chen Hao 1,041,143 CNY ordinary shares 1,041,143
Chen Chu 1,004,400 CNY ordinary shares 1,004,400
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
involved in margin financing & securities lending Inapplicable
(if any) (Refer to Note 4)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
repurchase during the reporting period?
No
2. Controlling Shareholder
Nature of the controlling shareholder: State-owned shareholding directly under the central government
Type of the controlling shareholder: corporate
Name of the Controlling Legal Representative Date of incorporation Organization Code Leading business activities
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Shareholder /Leader
Investment in industries
(specific projects are subject
to application for approval);
domestic trade, material
supply and distribution (with
commodities for exclusive
operation, exclusive control
AVIC International Holding and monopoly exclusive);
Li Bin June 20, 1997 91440300279351229A
Limited import and export (excluding
items prohibited by laws and
regulations and the decisions
of the State Council; for the
above items subject to
approval, relevant approval
must be obtained prior to
operation).
Equity in other domestic and
foreign listed companies held by
the controlling shareholder by AVIC International Holdings Limited holds 11.86% equity in Tianma Micro-electronics Co., Ltd. (000050.SZ)
means of control and mutual and 67.05% equity in Shennan Circuits Company Limited (002916.SZ).
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
Operating state-owned assets within the
scope of authorization of the State
Council; military aircraft and engines,
guided weapons, military gas turbines,
weapons and equipment supporting
Aviation Industry Corporation of China,
Tan Ruisong November 06, 2008 91110000710935732K systems and products research, design,
Ltd.
development, testing, production, sales,
maintenance, guarantees and services,
etc.; investment and management of
finance, lease, general aviation services,
transportation, medical care, engineering
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
survey and design, engineering
contracting and construction, real estate
development and other industries;
design, research, development, testing,
production, sales and maintenance
services of civil aircraft and engines,
airborne equipment and systems, gas
turbines, automobiles and motorcycles
and engines (including parts and
components), refrigeration equipment,
electronic products, environmental
protection equipment and new energy
equipment; equipment leasing;
engineering survey and design; project
contracting and construction; real estate
development and operation; technology
transfer and technical services related to
the above businesses; import and export
business; technical development and
sales of ships; engineering equipment
technology development; technology
development of new energy products.
（The company independently chooses
operational projects according to law,
carries out business activities; the
projects must be approved according to
the law by the competent authorities
before carrying out business activities
based on the approved contents; the
company must not engage in any
business activities prohibited or restricted
by the local market industrial policy.）
In addition to holding the Company's equity, AVIC, directly or indirectly, holds or controls the shares of domestic and foreign
listed companies: holding 50% equity in AVICOPTER PLC (600038.SH), 48% equity in Jiangxi Hongdu Aviation Industry
Co., Ltd. (600316.SH), 66% in China Avionics Systems Co., Ltd. (600372.SH), 69% in AVIC Shenyang Aircraft Company
Limited (600760.SH), 55% in AVIC Xi’an Aircraft Industry Group Co., Ltd. (000768.SZ), 38% in AVIC Heavy Machinery Co.,
Ltd. (600765.SH), 52% in AVIC Electromechanical Systems Co., Ltd., (002013.SZ), 46% in Guizhou Guihang Automotive
Equity in other domestic and foreign
Components Co., Ltd. (600523.SH), 51% in Sichuan Chengfei Integration Technology Corp. Ltd. (002190.SZ), 40% in
listed companies controlled by the actual
AVIC Jonhon Optronic Technology Co.,Ltd. (002179.SZ), 54% in AVIC Electronic Measuring Instruments Company Limited
controller in the reporting period.
(300114.SZ), 50% in AVIC Industry-finance Holdings Co., Ltd. (600705.SH), 64% in Shennan Circuit Co., Ltd. (002916.SZ),
28% in Tianma Microelectronics Co., Ltd. (000050.SZ), 43% in Rainbow Digital Commercial Co., Ltd. (002419.SZ), 40% in
Baosheng Science And Technology Innovation Co., Ltd. (600973.SH), 47% in AVIC Forstar S&t Co., Ltd (835640.BJ), 62% in
AVICHINA INDUSTRY & TECHNOLOGY COMPANY LIMITED (2357.HK), 46% in Continental Aerospace Technologies
Holding Limited (0232.HK), 65% in Nexteer Automotive Group Limited (1316.HK), 89% in KHD Humboldt Wedag
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
International AG (KWG:GR), 55% in FACC AG (AT00000F ACC2), 56% in HEFEI JIANGHANG AIRCRAFT EQUIPMENT
CO., LTD. (688586.SH), 45% in AVIC Aviation High-Technology Co., Ltd. (600862.SH).
Note: According to the relevant provisions of Standards for the Contents and Formats of Information Disclosure by
Companies Offering Securities to the Public No. 1—— Prospectus promulgated by the Securities Regulatory Commission,
it is believed that the Company's actual controller is traced upstream from AVIC International Holding Corporation to
Aviation Industry Corporation of China, Ltd. The number and proportion of shares in the Company controlled by AVIC
International Holding Corporation and Aviation Industry Corporation of China, Ltd. remain unchanged.
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
State-owned Assets Supervision and Administration
Commission of the State Council
100%
Aviation Industry Corporation of China AVIC CCB Aviation Industry Equity Investment (Tianjin)
Co., Ltd.
91.14% 8.86%
AVIC International Holding Corporation
100% 100%
AVIC International Shenzhen Company Limited
AVIC International Industrial Holding Co., Ltd.
66.07% 33.93%
AVIC International Holdings Limited
38.25%
FIYTA Precision Technology Co., Ltd.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. The number of shares pledged by the Company's controlling shareholder or the first major shareholder and its
persons acting in concert having accounted for 80% of the shares held by them
Inapplicable
5. Other Corporate Shareholder Holding over 10% of the Company’s Shares
Inapplicable
6. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the Reorganizing
Party and other Committing Party
Inapplicable
IV. Specific implementation of the repurchase of shares during the reporting period
Progress of implementation of the stock repurchase
Proportion of the
number of
Number of shares
Number of Proportion in the Amount for the Duration for the
Proposal Purpose of shares already repurchased in
shares to be total share planned planned
disclosure time repurchase repurchased the target shares
repurchased capital repurchase repurchase
(shares) involved in the
equity incentive
plan (if any)
No lower than Canceled
13.02 million CNY 80 million according to the
July 23, 2020 to
July 07, 2020 shares to 26.04 3.04% to 6.08% but not law and the 8,994,086
July 22, 2021
million shares exceeding CNY registered capital
160 million decreased
No lower than Canceled
November 30,
7.46 million CNY 50 million according to the
October 27, 2021 to
shares to 14.92 1.75% to 3.5% but not law and the 0
2021 November 29,
million shares exceeding CNY registered capital
2022
100 million decreased
Progress of implementation of reduction of the holding size of the shares repurchased by centralized bidding
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Section 8 About the Preferred Shares
Inapplicable
Section 9 About Bonds
Inapplicable
82
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Independent Auditor ’s Report
D.H.S.Z.[2022]003511
To the Shareholders of FIYTA Precision Technology Co., Ltd.:
I.Audit Opinion
We have audited the accompanying financial statements of FIYTA Precision Technology
Co., Ltd. (herein after “FIYTA Ltd.” or the Company) , which comprise the consolidated and
the parent company’s balance sheet as at 31 December 2021, the consolidated and the
parent company’s statement of comprehensive income, the consolidated and the parent
company’s cash flow statements and the consolidated and the parent company’s statement
of changes in equity for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present in all material respects in
accordance with the requirements of Accounting Standards for Business Enterprises, and
fairly reflect FIYTA Ltd.’s financial position at 31 December 2021 and the financial
performance and cash flows for the year then ended.
II.Basis for Audit Opinion
We conducted our audit in accordance with CICPA Standards on Auditing (“CSAs”) . In
‘IV. Certified Public Accountant’s Responsibilities for the Audit of Financial
Statements’ of this report, our responsibilities under these standards are described. Those
standards require that we comply with CICPA professional ethical requirements, that we are
independent from FIYTA Ltd. and have fulfilled all other ethical obligations. We believe that
we have obtained sufficient and appropriate audit evidence as basis of for our opinion.
III.Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the following key audit matters that need to be communicated in
audit report.
(I) Existence of inventory and its net realizable value
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
1. Description
As at 31 December 2021, the book balance, provision for decline in value, and carrying
amount of inventory were RMB2,162.56 million, RMB112.41 million and RMB2,050.15
million respectively. The carrying amount of inventory accounts for 49.87% of the total
assets of the Company.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and other branded
watches, the main inventory of FIYTA Ltd are finished watches and watch components. The
inventories are distributed in stores, regional warehouses, resellers’ warehouses and the
Company’s warehouses which caused difficulty in inventory physical observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net
realizable value (NRV) at balance sheet date. Where the cost of an inventory exceeds its
NRV, the difference is recognized as provision for decline in value. The determination of
NRV involves significant judgment and estimates by the Management.
Inventory value is significant to the Company’s assets and it requires significant
judgement by the Management, as a result, we identified existence of inventory and its net
realizable value as key audit matters.
2. How our audit addressed the key audit matter
Major audit procedures we have conducted include:
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls of procurement and payment, production and storage, and the provision for
decline in value of inventory;
(ii) Using the work of experts to conduct IT audit to information system and evaluating
the authenticity and accuracy of business data which related to financial statements.
(iii) Understanding and evaluating the appropriateness of the Company’s policy in
provision for decline in value;
(iv) Understanding and inquiring the locations of inventory storage, measurement
method of inventory so as to determining the scope of inventory physical observation;
(v) Discussing physical inventory count status with the Management and attending the
physical inventory count and conducting observation and test count on site to check the
quantity of the inventories and observe their condition.
(vi) Obtaining the ageing report of inventory and taking into consideration of inventory
condition in order to perform analytical review on the ageing as well as analyze the
reasonableness of provision for decline in value;
(vii) Reviewing and evaluating the appropriateness of significant estimates made by the
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Management in determining the NRV of inventory;
(viii) Obtaining the calculation of provision for decline in value of inventory, reviewing
whether the provision was made in compliance with relevant accounting policies and
performing recalculation of provision. Checking the movements of prior year’s provision and
analyzing whether the provision was adequately accrued in prior period.
(ix) Tracing samples of large purchases in current period to their corresponding
contracts and tax invoices, and inspecting their purchase requisition form and goods receipt
notes.
Based on audit work conducted above, we believe that the inventory exists and the
measurement is reasonable stated according to the Company’s policies.
(II) Revenue recognition
1. Description
In 2021, the Company’s income from main business was RMB5,243.73 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 IV 31
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
Major audit procedures we have conducted include:
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls relating to revenue recognition;
(ii) Using the work of experts to conduct IT audit to information system and evaluating
the authenticity and accuracy of business data which related to financial statements.
(iii) Obtaining and understanding accounting policies relating to revenue
recognition, and reviewing and evaluating whether the point in time of control right transfer,
measurement of transaction price and accounting for special transactions are complied with
the accounting standards;
(iv) Selecting samples from current year’s transaction records, and tracing them to
supporting documents such as contract, tax invoice and goods dispatch note (if applicable)
and courier waybill (if applicable) ;
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
(v) In connection with audit of accounts receivable, selecting major customers and
confirming corresponding sales in current year and year-end balance;
(vi) Conducting cut-off test to revenue recognized before and after the balance
sheet date by selecting samples to check supporting documents such as contract, tax
invoice and goods dispatch note (if applicable) and courier waybill (if applicable) to evaluate
whether the revenue was recorded in appropriate accounting period;
Based on audit work conducted above, we believe that the Company’s revenue
recognition is in conformity to its revenue recognition policy.
IV.Other Information
The management of FIYTA Ltd (the “Management”) are responsible for the Other
Information. The Other Information comprises all of the information included in the
Company’s annual report other than the financial statements and our auditors’ report
thereon.
Our opinion expressed on the financial statements does not cover the Other Information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
Other Information and, in doing so, consider whether the Other Information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this Other Information, we are required to report that fact. We have nothing
to report in this regard.
V.Responsibilities of the Management and those Charged with
Governance for the Financial Statements
The Management of the Company is responsible for the preparation of the financial
statements that give a fair view in accordance with Accounting Standards for Business
Enterprises and for the design, implementation and maintenance of such internal controls as
the Management determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the Management
either intend to liquidate the Company or to cease operations, or have no realistic alternative
86
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
but to do so.
Those who charged with governance is responsible for overseeing the Company’s
financial reporting process.
VI.Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with China
Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Management.
4. Conclude on the appropriateness of the Management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required, according to China Standards on Auditing, to draw attention in our
auditors’ report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditors’ report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
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.
Da Hua Certified Public Accountants
CICPA:
(Special General Partnership)
Long Jiao
Beijing, China CICPA
Wang Dong
8 March 2022
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Balance Sheet
As at 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
[English Translation for Reference Only]
Assets Note VI Closing Balance Closing Balance of prior period
Current assets:
Monetary funds note 1 210,254,737.14 353,057,285.71
Financial assets held for trading
Derivative financial assets
Notes receivable note 2 61,258,145.80 48,192,442.15
Accounts receivable note 3 388,885,601.28 475,598,684.88
Accounts receivable financing
Prepayments note 4 7,946,750.81 16,612,773.76
Other receivables note 5 61,553,267.82 52,902,779.63
Inventories note 6 2,050,148,750.89 1,931,780,185.85
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets note 7 72,698,692.72 75,935,141.76
Total current assets 2,852,745,946.46 2,954,079,293.74
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments note 8 55,155,605.31 51,400,665.92
Investment in other equity instruments note 9 85,000.00 85,000.00
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Other non-current financial assets
Investment properties note 10 383,425,916.35 398,086,447.78
Fixed assets note 11 349,495,316.65 352,734,280.76
Construction in progress
Right-of-use assets note 12 147,932,475.42
Intangible assets note 13 34,035,330.43 37,859,316.51
Long-term deferred expenses note 14 163,790,333.44 130,017,587.99
Deferred tax assets note 15 81,233,274.65 80,913,800.35
Other non-current assets note 16 42,680,753.78 13,536,307.13
Total non-current assets 1,257,834,006.03 1,064,633,406.44
Total assets 4,110,579,952.49 4,018,712,700.18
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Balance Sheet (Continued)
As at 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Liability and Equity Note VI Closing Balance Closing Balance of prior period
Current liabilities:
Short-term borrowings note 17 265,994,595.43 542,673,278.09
Financial liabilities held for trading
Derivative financial liabilities
Notes payable note 18 21,223.10 3,581,360.00
Accounts payable note 19 254,588,895.34 301,211,515.39
Payments received in advance note 20 11,025,664.72 9,991,850.67
Contract liabilities note 21 22,505,426.65 18,213,396.49
Employee benefits payable note 22 145,936,150.06 132,853,462.20
Tax payables note 23 67,769,880.01 68,925,271.90
Other payables note 24 167,808,759.95 128,577,597.94
Held-for-sale liabilities
Current portion of non-current liabilities note 25 86,949,906.35 370,030.00
Other current liabilities note 26 2,798,738.32 2,299,755.09
Total current liabilities 1,025,399,239.93 1,208,697,517.77
Non-current liabilities:
Long-term borrowings note 27 4,070,330.00
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities note 28 64,918,722.10
Long-term payables
Long-term employee benefits payable
Provisions
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Deferred income note 29 1,792,833.90 2,916,346.43
Deferred tax liabilities note 15 5,236,514.03 3,067,834.55
Other non-current liabilities
Total non-current liabilities 71,948,070.03 10,054,510.98
Total liabilities 1,097,347,309.96 1,218,752,028.75
Equity:
Share capital note 30 426,051,015.00 428,091,881.00
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
Capital reserves note 31 1,040,908,194.13 1,021,490,387.78
Less: Treasury stock note 32 60,585,678.92 61,633,530.48
Other comprehensive income note 33 -7,658,346.40 976,871.41
Special reserves note 34 1,062,731.13
Surplus reserve note 35 275,010,401.50 246,531,866.87
Retained earnings note 36 1,338,444,326.09 1,164,490,911.51
Equity attributable to parent company 3,013,232,642.53 2,799,948,388.09
Non-controlling interests 12,283.34
Total owners' equity 3,013,232,642.53 2,799,960,671.43
Total liabilities and owners' equity 4,110,579,952.49 4,018,712,700.18
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Balance Sheet
As at 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Assets Note XVII Closing Balance Closing Balance of prior period
Current assets:
Monetary funds 171,022,392.92 292,055,169.74
Financial assets held for trading
Derivative financial assets
Notes receivable
Accounts receivable note 1 129,880.48 1,464,798.79
Accounts receivable financing
Prepayments
Other receivables note 2 717,183,139.00 621,512,680.69
Inventories
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets 13,389,835.13 11,655,617.82
Total current assets 901,725,247.53 926,688,267.04
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments note 3 1,542,067,945.03 1,529,415,188.28
Investment in other equity instruments 85,000.00 85,000.00
Other non-current financial assets
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Investment properties 311,379,234.57 323,296,494.84
Fixed assets 222,462,397.20 224,709,747.39
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 23,910,597.39 27,347,950.13
Development expenditure
Goodwill
Long-term deferred expenses 9,966,739.10 11,980,697.97
Deferred tax assets 1,671,761.28 1,380,180.94
Other non-current assets 1,435,800.93 473,312.35
Total non-current assets 2,112,979,475.50 2,118,688,571.90
Total assets 3,014,704,723.03 3,045,376,838.94
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO): Song Yaoming Financial Manager: Tian Hui
94
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Balance Sheet (Continued)
As at 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Note
Liability and Equity Closing Balance Closing Balance of prior period
XVII
Current liabilities:
Short-term borrowings 250,256,666.67 400,425,930.05
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable 1,232,967.42 1,481,135.49
Payments received in advance 11,025,664.72 9,991,850.67
Contract liabilities 37,735.85
Employee benefits payable 24,758,938.89 25,256,531.70
Tax payables 2,676,682.58 2,778,265.84
Other payables 230,594,166.14 240,824,305.37
Held-for-sale liabilities
Current portion of non-current liabilities
Other current liabilities 2,264.15
Total current liabilities 520,545,086.42 680,798,019.12
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities
Long-term payables
Long-term employee benefits payable
Provisions
95
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Deferred income 1,792,833.90 2,377,718.35
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 1,792,833.90 2,377,718.35
Total liabilities 522,337,920.32 683,175,737.47
Equity:
Share capital 426,051,015.00 428,091,881.00
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
Capital reserves 1,045,449,410.67 1,027,145,928.88
Less: Treasury stock 60,585,678.92 61,633,530.48
Other comprehensive income
Special reserves
Surplus reserve 275,010,401.50 246,531,866.87
Retained earnings 806,441,654.46 722,064,955.20
Total owners' equity 2,492,366,802.71 2,362,201,101.47
Total liabilities and owners' equity 3,014,704,723.03 3,045,376,838.94
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
96
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
(Unless otherwise indicated, the currency is expressed in
Prepared by: FIYTA Precision Technology Co., Ltd.
RMB)
Note
Items Current Period Prior Period
VI
note
1. Operating revenue 5,243,733,540.93 4,243,439,952.59
37
note
Less: Operating costs 3,285,656,229.13 2,639,229,537.06
37
note
Taxes and surcharges 37,563,586.80 25,444,139.30
38
note
Selling expenses 1,049,898,223.28 870,713,899.32
39
note
Administrative expenses 261,626,762.41 256,559,127.23
40
note
Research and development expenses 57,802,569.17 51,489,323.49
41
note
Finance expenses 34,677,073.65 33,449,276.41
42
Including: Interest expenses 23,159,963.74 21,315,119.78
Interest income 3,589,649.85 4,941,334.19
note
Add: Other income 21,328,673.21 25,170,397.09
43
note
Income from investments 3,754,939.39 5,072,577.64
44
Including: Investment income from associates and joint ventures 3,754,939.39 5,072,577.64
Derecognition of financial assets at
amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses note 45 -11,075,001.77 -9,096,922.74
Impairment losses note 46 -25,861,394.56 -15,426,526.41
Gains or losses from asset disposals note 47 730,134.87 -369,857.30
2. Operating profit 505,386,447.63 371,904,318.06
Add: Non-operating income note 48 627,435.03 3,111,413.64
Less: Non-operating expenses note 49 3,686,166.55 1,555,112.86
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FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
3. Profit before tax 502,327,716.11 373,460,618.84
Less: Income tax note 50 114,467,375.88 79,338,516.60
4. Net profit 387,860,340.23 294,122,102.24
Including: Net profit realized before business combinations under common control
I. Net profit classified by going concern
Net profit from continuing operations 387,860,340.23 294,122,102.24
Net profit from discontinuing operations
II. Net profit classified by ownership
Net profit attributable to parent company 387,840,282.95 294,115,156.04
Net profit attributable to non-controlling interests 20,057.28 6,946.20
5. Other comprehensive income after tax -8,635,217.81 1,916,506.80
Other comprehensive income after tax attributable to parent company
-8,635,217.81 1,917,080.50
I. Items of other comprehensive income that will not be reclassified to
profit or loss
i. Changes in remeasurement of defined benefit plans
Other comprehensive income that cannot be transferred to
ii.
profit or loss under the equity method
iii. Changes in fair value of investments in equity instruments
iv. Changes in fair value of the Company's own credit risk
II. Items of other comprehensive income that will be reclassified to
-8,635,217.81 1,917,080.50
profit or loss
Other comprehensive income that can be transferred to profit
i.
or loss under the equity method
ii. Changes in fair value of other debt investments
Amount of financial assets reclassified into other
iii.
comprehensive income
iv. Provisions for credit impairment of other debt investments
The effective portion of gains or losses arising from cash flow
v.
hedging
Translation differences arising from financial statements in
vi. -8,635,217.81 1,917,080.50
foreign currencies
Other comprehensive income attributable to non-controlling
interests after tax -573.70
98
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
6. Total comprehensive income 379,225,122.42 296,038,609.04
Total comprehensive income attributable to parent company 379,205,065.14 296,032,236.54
Total comprehensive income attributable to non-controlling interests 20,057.28 6,372.50
7. Earnings per share
I. Basic earnings per share 0.90 0.68
II. Diluted earnings per share 0.90 0.68
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
99
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Statement of Comprehensive Income
For the year ended 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Note
Items Current Period Prior Period
XVII
1. Operating revenue note 4 179,455,712.71 137,381,795.95
Less: Operating costs note 4 38,852,252.32 36,497,097.45
Taxes and surcharges 7,760,628.42 4,435,717.73
Selling expenses 6,483,523.47 1,579,092.51
Administrative expenses 72,514,603.81 76,604,523.40
Research and development expenses 21,461,359.36 19,933,292.70
Finance expenses 3,650,109.37 3,127,102.39
Including: Interest expenses 6,662,862.52 6,230,252.39
Interest income 3,158,156.74 4,609,988.68
Add: Other income 2,603,212.27 9,324,872.59
Income from investments note 5 263,673,435.95 104,976,828.07
Including: Investment income from associates and joint ventures 3,754,939.39 4,976,828.07
Derecognition of financial assets at
amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses 192,081.60 -158,252.51
Impairment losses
Gains or losses from asset disposals -63,188.36 -25,000.50
2. Operating profit 295,138,777.42 109,323,417.42
Add: Non-operating income 41,001.96 259,345.80
Less: Non-operating expenses 216,805.57 15,864.83
3. Profit before tax 294,962,973.81 109,566,898.39
100
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Less: Income tax 7,887,674.19 1,260,031.08
4. Net profit 287,075,299.62 108,306,867.31
Net profit from continuing operations 287,075,299.62 108,306,867.31
Net profit from discontinuing operations
5. Other comprehensive income after tax
I. Items of other comprehensive income that will not be
reclassified to profit or loss
i. Changes in remeasurement of defined benefit plans
Other comprehensive income that cannot be transferred to
ii.
profit or loss under the equity method
iii. Changes in fair value of investments in equity instruments
iv. Changes in fair value of the Company's own credit risk
II. Items of other comprehensive income that will be
reclassified to profit or loss
Other comprehensive income that can be transferred to
i.
profit or loss under the equity method
ii. Changes in fair value of other debt investments
Amount of financial assets reclassified into other
iii.
comprehensive income
iv. Provisions for credit impairment of other debt investments
The effective portion of gains or losses arising from cash
v.
flow hedging
Translation differences arising from financial statements in
vi.
foreign currencies
6. Total comprehensive income 287,075,299.62 108,306,867.31
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
101
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Cash Flows Statement
For the year ended 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Items Note VI Current Period Prior Period
1. Cash flows from operating activities
Cash received from sales and services 5,857,726,359.18 4,602,638,695.31
Tax and surcharge refunds 1,466,381.60 1,849,055.57
Other cash receipts related to operating activities note 51 85,387,457.56 78,001,812.45
Total cash inflows from operating activities 5,944,580,198.34 4,682,489,563.33
Cash paid for goods and services 3,862,745,653.01 3,046,261,111.48
Cash paid to and for employees 710,102,185.80 578,179,070.15
Taxes and surcharges paid 346,383,502.98 222,180,568.75
Other cash payments related to operating activities note 51 478,099,748.10 457,658,307.08
Total cash outflows from operating activities 5,397,331,089.89 4,304,279,057.46
Net cash flows from operating activities 547,249,108.45 378,210,505.87
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income
Net proceeds from disposals of fixed assets, intangible assets and
59,657.53 150,556.62
other long-term assets
Net proceeds from disposal of subsidiaries and other business
units
Other cash receipts related to investing activities
Total cash inflows from investing activities 59,657.53 150,556.62
Cash paid for fixed assets, intangible assets and other long-term
204,422,787.61 133,531,954.47
assets
Cash paid for investments
102
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Net cash paid for acquiring subsidiaries and other business units
Other cash payments related to investing activities
Total cash outflows from investing activities 204,422,787.61 133,531,954.47
Net cash flows from investing activities -204,363,130.08 -133,381,397.85
3. Cash flows from financing activities
Cash received from investments by others 58,216,000.00
Including: Cash received by subsidiaries from non-controlling
investors
Cash received from borrowings 1,155,724,412.23 743,213,671.65
Other cash receipts related to other financing activities
Total cash inflows from financing activities 1,213,940,412.23 743,213,671.65
Cash repayments for debts 1,386,708,158.95 768,247,433.10
Cash paid for distribution of dividends and profit and for interest
187,069,913.31 106,703,352.70
expenses
Including: Dividends or profit paid by subsidiaries to
non-controlling investors
Other cash payments related to financing activities note 51 124,710,390.58 72,317,669.93
Total cash outflows from financing activities 1,698,488,462.84 947,268,455.73
Net cash flows from financing activities -484,548,050.61 -204,054,784.08
4. Effect of changes in foreign exchange rates on cash and cash
equivalents -1,140,476.33 -2,810,603.32
5. Net increase in cash and cash equivalents -142,802,548.57 37,963,720.62
Add: Opening balance of cash and cash equivalents 353,057,285.71 315,093,565.09
6. Closing balance of cash and cash equivalents note 52 210,254,737.14 353,057,285.71
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tianhui
103
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Cash Flows Statement
For the year ended 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Items Note XVII Current Period Prior Period
1. Cash flows from operating activities
Cash received from sales and services 183,608,762.33 178,808,738.19
Tax and surcharge refunds
Other cash receipts related to operating activities 5,194,227,139.68 4,238,779,521.46
Total cash inflows from operating activities 5,377,835,902.01 4,417,588,259.65
Cash paid for goods and services
Cash paid to and for employees 68,672,552.40 61,903,446.81
Taxes and surcharges paid 22,768,419.51 9,345,329.15
Other cash payments related to operating activities 5,359,975,023.49 3,948,860,602.89
Total cash outflows from operating activities 5,451,415,995.40 4,020,109,378.85
Net cash flows from operating activities -73,580,093.39 397,478,880.80
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income 259,918,496.56 100,000,000.00
Net proceeds from disposals of fixed assets, intangible assets and other long-term assets 5,740.00 1,630.00
Net proceeds from disposal of subsidiaries and other business
units
Other cash receipts related to investing activities
Total cash inflows from investing activities 259,924,236.56 100,001,630.00
Cash paid for fixed assets, intangible assets and other long-term
21,039,730.26 17,398,218.00
assets
104
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Cash paid for investments 139,500,000.00
Net cash paid for acquiring subsidiaries and other business units
Other cash payments related to investing activities
Total cash outflows from investing activities 21,039,730.26 156,898,218.00
Net cash flows from investing activities 238,884,506.30 -56,896,588.00
3. Cash flows from financing activities
Cash received from investments by others 58,216,000.00
Cash received from borrowings 1,110,000,000.00 601,000,000.00
Other cash receipts related to other financing activities
Total cash inflows from financing activities 1,168,216,000.00 601,000,000.00
Cash repayments for debts 1,260,000,000.00 741,000,000.00
Cash paid for distribution of dividends and profit and for interest
185,045,678.32 104,195,155.07
expenses
Other cash payments related to financing activities 9,178,101.51 72,317,669.93
Total cash outflows from financing activities 1,454,223,779.83 917,512,825.00
Net cash flows from financing activities -286,007,779.83 -316,512,825.00
4. Effect of changes in foreign exchange rates on cash and cash equivalents -329,409.90 -1,112,644.08
5. Net increase in cash and cash equivalents -121,032,776.82 22,956,823.72
Add: Opening balance of cash and cash equivalents 292,055,169.74 269,098,346.02
6. Closing balance of cash and cash equivalents 171,022,392.92 292,055,169.74
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO): Song Yaoming Financial Manager:Tianhui
105
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
(Unless otherwise indicated, the currency is
Prepared by: FIYTA Precision Technology Co., Ltd.
expressed in RMB)
Items Current Period
Equity attributable to parent company
Other Non-contro
Less: lling Total shareholders' equity
Share Capital comprehen Special Surplus Retained
Treasury interests
capital reserves sive reserves reserves earnings
stock
income
1. Closing balance of last 428,091,88 1,021,490,3 61,633,530 246,531,86 1,164,490,9
976,871.41 12,283.34 2,799,960,671.43
year 1.00 87.78 .48 6.87 11.51
Add: Increase/decrease due to -11,188,268.
-11,188,268.01
changes in accounting policies 01
Increase/decrease
due to corrections of errors in
prior period
Business
combination under common
control
Others
2. Opening balance of 428,091,88 1,021,490,3 61,633,530 246,531,86 1,153,302,6
976,871.41 12,283.34 2,788,772,403.42
current year 1.00 87.78 .48 6.87 43.50
3. Increase/decrease for -2,040,866. 19,417,806. -1,047,851 -8,635,217. 1,062,73 28,478,534 185,141,682
-12,283.34 224,460,239.11
current year 00 35 .56 81 1.13 .63 .59
-8,635,217. 387,840,282
I. Total comprehensive income 20,057.28 379,225,122.42
81 .95
II. Owner's contributions to and -2,040,866. 19,417,806. -1,047,851
-32,340.62 18,392,451.29
withdrawals of capital 00 35 .56
i. Common stock
-8,994,086. -41,132,596. -45,368,94
contributed/paid-in capital by -4,757,740.96
00 76 1.80
shareholders/owners
ii. Capital contributed by
other equity instruments
holders
iii. Share-based 6,953,220. 60,553,780. 44,321,090
23,185,909.87
payments to owners' equity 00 11 .24
iv. Others -3,377.00 -32,340.62 -35,717.62
28,478,534 -202,698,60
III. Profits distribution -174,220,065.73
.63 0.36
i. Appropriation of surplus 28,478,534 -28,478,534.
reserve .63 63
106
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
-174,220,06
ii. Distribution to owners -174,220,065.73
5.73
iii. Others
IV. Transfers within owners'
equity
i. Capital reserves
transferred to paid-in capital
ii. Surplus reserve
transferred to paid-in capital
iii. Use of surplus reserve
to cover previous losses
iv. Changes in
remeasurement of defined
benefit plans transferred to
retained earnings
v. Other comprehensive
income transferred to retained
earnings
vi. Others
1,062,73
V. Special reserves 1,062,731.13
1.13
i. Appropriated during 1,421,60
1,421,605.68
current year 5.68
ii. Used during current -358,874.
-358,874.55
year 55
VI. Others
4. Closing balance of current 426,051,01 1,040,908,1 60,585,678 -7,658,346. 1,062,73 275,010,40 1,338,444,3
3,013,232,642.53
year 5.00 94.13 .92 40 1.13 1.50 26.09
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative:Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
107
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Items Prior Period
Equity attributable to parent company
Specia Non-control Total
Less: Other ling shareholders'
l Surplus Retained
Share capital Capital reserves Treasury comprehensiv interests equity
reserv reserves earnings
stock e income
es
442,968,881.0 1,081,230,215.3 71,267,118.7 235,701,180 966,840,818. 2,654,539,67
1. Closing balance of last year -940,209.09 5,910.84
0 2 8 .14 40 7.83
Add: Increase/decrease due to
changes in accounting policies
Increase/decrease due to
corrections of errors in prior period
Business combination
under common control
Others
442,968,881.0 1,081,230,215.3 71,267,118.7 235,701,180 966,840,818. 2,654,539,67
2. Opening balance of current year -940,209.09 5,910.84
0 2 8 .14 40 7.83
3. Increase/decrease for current -14,877,000.0 -9,633,588.3 10,830,686. 197,650,093. 145,420,993.
-59,739,827.54 1,917,080.50 6,372.50
year 0 0 73 11 60
294,115,156. 296,038,609.
I. Total comprehensive income 1,917,080.50 6,372.50
04 04
II. Owner's contributions to and -14,877,000.0 -9,633,588.3 -64,983,239.2
-59,739,827.54
withdrawals of capital 0 0 4
i. Common stock
-14,877,000.0 -8,802,188.3 -71,338,916.6
contributed/paid-in capital by -65,264,104.92
0 0 2
shareholders/owners
ii. Capital contributed by other
equity instruments holders
iii. Share-based payments to
5,570,601.49 -831,400.00 6,402,001.49
owners' equity
iv. Others -46,324.11 -46,324.11
10,830,686. -96,465,062.9 -85,634,376.2
III. Profits distribution
73 3 0
i. Appropriation of surplus 10,830,686. -10,830,686.7
reserve 73 3
-85,634,376.2 -85,634,376.2
ii. Distribution to owners
0 0
iii. Others
108
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
IV. Transfers within owners' equity
i. Capital reserves transferred to
paid-in capital
ii. Surplus reserve transferred to
paid-in capital
iii. Use of surplus reserve to
cover previous losses
iv. Changes in remeasurement
of defined benefit plans transferred to
retained earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
V. Special reserves
i. Appropriated during current
year
ii. Used during current year
VI. Others
428,091,881.0 1,021,490,387.7 61,633,530.4 246,531,866 1,164,490,91 2,799,960,67
4. Closing balance of current year 976,871.41 12,283.34
0 8 8 .87 1.51 1.43
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Zhang Xuhua Finance
Officer (CFO):Song Yaoming Financial Manager:Tian Hui
109
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Statement of Changes in Equity
For the year ended 31 December 2021
Prepared by: FIYTA Precision Technology Co., Ltd. (Unless otherwise indicated, the currency is expressed in RMB)
Items Current Period
Other Speci
Less:
Capital comprehe al Surplus Retained
Share capital Treasury Total shareholders' equity
reserves nsive reser reserves earnings
stock
income ves
1,027,145,9 61,633,53 246,531,8 722,064,955.
1. Closing balance of last year 428,091,881.00 2,362,201,101.47
28.88 0.48 66.87 20
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to corrections
of errors in prior period
Others
1,027,145,9 61,633,53 246,531,8 722,064,955.
2. Opening balance of current year 428,091,881.00 2,362,201,101.47
28.88 0.48 66.87 20
18,303,481. -1,047,851 28,478,53 84,376,699.2
3. Increase/decrease for current year -2,040,866.00 130,165,701.24
79 .56 4.63 6
287,075,299.
I. Total comprehensive income 287,075,299.62
62
II. Owner's contributions to and withdrawals of 18,303,481. -1,047,851
-2,040,866.00 17,310,467.35
capital 79 .56
i. Common stock contributed/paid-in capital -41,132,596 -45,368,94
-8,994,086.00 -4,757,740.96
by shareholders/owners .76 1.80
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' 59,439,455. 44,321,09
6,953,220.00 22,071,585.31
equity 55 0.24
iv. Others -3,377.00 -3,377.00
28,478,53 -202,698,600
III. Profits distribution -174,220,065.73
4.63 .36
28,478,53 -28,478,534.
i. Appropriation of surplus reserve
4.63 63
-174,220,065
ii. Distribution to owners -174,220,065.73
.73
iii. Others
IV. Transfers within owners' equity
110
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
i. Capital reserves transferred to paid-in
capital
ii. Surplus reserve transferred to paid-in
capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
1,045,449,4 60,585,67 275,010,4 806,441,654.
4. Closing balance of current year 426,051,015.00 2,492,366,802.71
10.67 8.92 01.50 46
(Attached notes to statements are part of the
consolidated financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
111
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
Parent Company's Statement of Changes in Equity
For the year ended 31 December 2021
(Unless otherwise
Prepared by: FIYTA Precision Technology Co., Ltd. indicated, the currency is
expressed in RMB)
Items Prior Period
Other Speci
Less:
Share Capital compre al Total shareholders'
Treasury Surplus reserves Retained earnings
capital reserves hensive reser equity
stock
income ves
442,968,8 1,086,885,7 71,267,118
1. Closing balance of last year 235,701,180.14 710,223,150.82 1,961,542,968.60
81.00 56.42 .78
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to
corrections of errors in prior period
Others
442,968,8 1,086,885,7 71,267,118
2. Opening balance of current year 235,701,180.14 710,223,150.82 2,404,511,849.60
81.00 56.42 .78
-14,877,00 -59,739,827 -9,633,588.
3. Increase/decrease for current year 10,830,686.73 11,841,804.38 -42,310,748.13
0.00 .54 30
I. Total comprehensive income 108,306,867.31 108,306,867.31
II. Owner's contributions to and withdrawals of -14,877,00 -59,739,827 -9,633,588.
-64,983,239.24
capital 0.00 .54 30
i. Common stock contributed/paid-in -14,877,00 -65,264,104 -8,802,188.
-71,338,916.62
capital by shareholders/owners 0.00 .92 30
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' 5,570,601.4 -831,400.0
6,402,001.49
equity 9 0
iv. Others -46,324.11 -46,324.11
III. Profits distribution 10,830,686.73 -96,465,062.93 -85,634,376.20
i. Appropriation of surplus reserve 10,830,686.73 -10,830,686.73
ii. Distribution to owners -85,634,376.20 -85,634,376.20
iii. Others
IV. Transfers within owners' equity
112
FIYTA Precision Technology Co., Ltd. 2021 Annual Report, Full Text
i. Capital reserves transferred to paid-in
capital
ii. Surplus reserve transferred to paid-in
capital
iii. Use of surplus reserve to cover
previous losses
iv. Changes in remeasurement of
defined benefit plans transferred to retained
earnings
v. Other comprehensive income
transferred to retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
428,091,8 1,027,145,9 61,633,530
4. Closing balance of current year 246,531,866.87 722,064,955.20 2,362,201,101.47
81.00 28.88 .48
(Attached notes to statements are part of the consolidated
financial statements)
Legal Representative: Zhang Xuhua Finance Officer (CFO):Song Yaoming Financial Manager:Tian Hui
113
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
I. Company status
1. Registered place, organization and address of headquarters
FIYTA Precision Technology Co., Ltd. (the “Company”) was founded, under the approval of Shen Fu
Ban Fu (1992) 1259 issued by the General Office of Shenzhen Municipal Government, through the
restructuring of former Shenzhen FIYTA Time Industrial Company by the promoter of China National
Aero-Technology Import and Export Shenzhen Industry & Trade Center (name changed to “China
National Aero-Technology Shenzhen Co., Ltd” lately) on 25 December 1992. On 3 June 1993, both the
Company was listed on Shenzhen Stock Exchange. The Company holds business license with the
Unified Social Credit Code of 91440300192189783K.
As at 31 December 2021, the outstanding shares issued by the Company was 426.05 million shares
and the registered capital was RMB426.05 million after a series of share dividend, right offering, share
capital conversion from retained earnings, and issuing of new shares. The Company’s registered address
is FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District, Shenzhen, Guangdong Province,
where the Company’s headquarters locates. The parent company of the Company is CATIC Shenzhen
Holdings Limited (CATIC Shenzhen) and the ultimate controlling party of the Company is Aviation Industry
Corporation of China, Ltd. (AVIC) .
2. Nature of the Company’s business and main operating activities
The business nature and main operating activities of the Company and its subsidiaries mainly include:
producing and selling of analogue indication mechanical watches, quartz watches and its movements,
components, various timing devices, processing and wholesaling karat gold jewelry watches, intelligent
watches; domestic commercial and material supply and distributing business (excluding goods under
exclusive operational rights, special control and exclusive sales) ; property management and leasing;
providing design service; research, design, production, sales and technical support for precise watches
and components; import and export business (according to Shen Mao Guan Deng Zheng Zi
No.2007-072) .
3. Authorization for issue
The financial statements have been approved and authorized for issue by the Board of Directors on 8
March 2022.
II. Scope of consolidation
There were 13 subsidiaries that are included in the Company’s scope of consolidation for year 2021,
see Note VIII for details. Comparing to prior year, the entities that were included in the consolidation
increased by 2 and decreased by 1. The Changes include:
Notes to the financial statements – Page 114
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
1. Subsidiaries that were newly included in the consolidation
Name Reasons for change
Harmony World Watch Center (Hainan) Co., Ltd. Incorporated by investment
Shenzhen Xunhang Precision Technology Co.,
Incorporated by investment
Ltd.
2. Subsidiary that was excluded out of the consolidation
Name Reasons for change
Station 68 Ltd. Deregistered on 5 March 2021
III. Basis of preparation
1. Basis of preparation
The financial statement is prepared in accordance with the requirements of Accounting Standards for
Business Enterprises and associated application guidance, illustrations to the standards and related
pronouncements (collectively known as “Accounting Standards for Business Enterprises” or “CAS”) .
These financial statements also comply with the disclosure requirements of “Regulation on the
Preparation of Information Disclosure of Companies Issuing Public Shares, No. 15: General
Requirements for Financial Reports” (revised in 2014) issued by China Securities Regulatory
Commission (CSRC) .
2. Going concern
The Company assesses the going concern ability to the extent of 12 month after the balance
sheet date. No issues that would result in significant doubt about the Company’s going concern is noted.
As a result, the financial statements of the Company have been prepared on going concern basis.
3. Basis and principles of accounting
Accrual basis is adopted for the Group’s accounting activity. Except for some financial instruments,
the financial statements are measured using historical cost. In case of impairment occurred on assets,
provisions for impairment are provided for in accordance with related regulations.
IV. Significant accounting policies and accounting estimates
1. Highlight to specific accounting policies and estimates
(1) The Company make specific accounting policies and estimates according to its nature of business.
Accounting policies and estimates mainly includes: method of estimated credit loss accrual (Note IV. 12,
Note IV. 13 and Note IV. 14) , measurement of inventory (Note IV. 15) , depreciation of investment
property and fixed asset and amortization of intangible asset (Note IV. 18, Note IV. 19 and Note IV. 23) ,
revenue (Note IV, 31) etc.
(2) Based on historical experience and other factors including reasonable estimation to future events,
the Company continues to evaluate significant accounting estimates and key assumptions. If material
changes to following accounting estimate and key assumption incurred, material impact would happened
to the carrying value of the Company’s assets and liabilities in coming accounting year.
Notes to the financial statements – Page 115
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
1) Measurement of Expected Credit Loss of accounts receivable and other receivables
The management estimates impairment loss provision to accounts receivable and other receivables
based on the judgments to estimated credit loss of accounts receivable and other receivables. If any
events occurred that indicated the Company may not be able to recover the balance amount, estimation
is needed in provision accrual. If the expected number is different with the estimated figure, the difference
will affect the carrying value of accounts receivable and other receivables and the impairment loss
expenses in corresponding accounting period.
2) Impairment to inventory. The Company recognizes provision for obsolete inventories based on the
excess of the cost of inventory over its net realizable value. In determining the net realizable value of
inventories, the management uses significant judgments to estimate the selling price, cost to finish
manufacturing, and selling expenses and associated taxes. If the management revises estimated selling
price and cost to finish manufacturing and selling expenses, the NAV estimation would be affected and
the difference would have an effect to the inventory provision.
3) Estimation of long-term asset impairment. When evaluating whether there is impairment to
long-term asset, the management mainly considers the following: (a) whether the events affect the asset
impairment have already incurred; (b) whether the discounted cash flow from continue usage of the asset
or disposal is lower than its carrying amount; and (c) whether major assumption used in estimating the
future cash flow is appropriate.
Changes to related assumption adopted in determining impairment such as profitability, discounting
rate and growth rate may have material impact to the present value used in impairment test and result in
impairment to above mentioned long-term assets.
(a) Depreciation and amortization. The estimated residual value and useful life of investment property,
fixed asset and intangible asset that used by the Company are based on historical actual useful life and
actual residual value of assets with similar nature or functions. In the process of using such assets,
estimated useful life and residual value may vary depending on the economic environment, technological
environment and other environment that the assets located. If there is difference between the expectation
and previous estimation, proper adjustments will be made by the management.
(b) Share-based payments. The management makes best estimation based on up-to-date number of
employees who have exercisable shares and adjusting the number of exercisable equity instrument on
each balance sheet date in the vesting period. If there is difference between current year exercisable
employee and previous estimation, proper adjustments will be made by the management.
(c) Deferred tax asset. Deferred tax asset of taxable losses shall be recognized to the extent that
there will have sufficient taxable income to offset. This involves significant judgments to estimate the
timing and amount of future taxable profit and taking into consideration of tax planning so as to determine
the amount of deferred tax asset.
(d) Corporate income tax. The final tax treatment of many transaction and events are with uncertainty
in the normal course of operation. Significant judgments involves in accrual of corporate income tax. If
Notes to the financial statements – Page 116
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
there is difference between the final discretion and the amount recorded in books, the difference will affect
the amount of tax in the period of final discretion.
2. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company have been prepared in accordance with the requirements
of Accounting Standards for Business Enterprises. These financial statements present truly and
completely the financial position as at 31 December 2021, the results of operations and the cash flows for
the year then ended of the Company.
3. Accounting period
The accounting period of the Company is the calendar year, i.e. from 1 January to 31 December of
each year.
4. Operating cycle
The operating cycle refer to the period from purchasing assets for process to realizing cash or cash
equivalent. The Company’s operating cycle is 12 months which is also used as standard to determine the
liquidity of asset and liabilities.
5. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording currency.
FIYTA (Hong Kong) Limited (“FIYTA Hong Kong”) , a subsidiary of the Company outside mainland China,
and Station 68 Limited (“Station 68”) , a subsidiary of FIYTA Hong Kong, use Hong Kong Dollar (“HKD”)
as the recording currency according to the main economic environment where the companies operated in.
Montres Chouriet SA, a subsidiary of FIYTA Hong Kong (“Swiss Company”) , uses Swiss Franc as the
recording currency according to the main economic environment where the Swiss Company operated in.
The recording currencies mentioned above will be translated to Renminbi when preparing financial
statements. The currency used in preparing the Group’s financial statements is Renminbi.
6. Accounting treatment for business combinations involving entities under common
control and not under common control
(1) If a business combination is achieved through multiple steps, of which the terms,
condition and economical effect is in line with one or more criteria as followed, the multiple
transactions shall be dealt with as one-basket transaction.
1) the transactions were entered into at the same time or by considering each other’s influence;
2) a complete business result can only be achieved by combining all these transactions together;
3) the performing of one transaction is depended on at least one other transaction;
4) a transaction is not economical if it is considered stand along but it will become economical if it is
considered in combination with other transactions.
(2) Business combination involving entities under common control
For a business combination involving enterprises under common control, the assets acquired and
liabilities assumed are measured based on their carrying amounts in the consolidated financial
statements of the ultimate controlling party at the combination date, except for adjustments due to
different accounting policies. The difference between the carrying amount of the net assets acquired and
Notes to the financial statements – Page 117
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
the consideration paid for the combination (or the total par value of shares issued) is adjusted against
share premium in the capital reserve, with any excess adjusted against retained earnings.
If there is contingent consideration and provision or assets are required to be recognized, the
difference between the provision or assets and the contingent consideration shall adjust the capital
reserve, with any excess adjusted against retained earnings.
If business combinations involving entities under common control achieved in stages that involves
multiple transactions belongs to one-basket transaction, all transactions shall be dealt with as one
transaction. If not, the accounting treatment is as follows: Initial investment cost is the acquirer’s share of
the carrying amount of the net assets of the acquiree in the consolidated financial statements of the
ultimate controlling party at the combination date. The difference between the initial investment cost and
the sum of carrying amount of investment prior to combination date and carrying amount of new
considerations paid for the combination at the combination date is adjusted to capital reserve (share
premium) . If the capital reserve is not sufficient to absorb the difference, any excess is adjusted against
retained earnings. he difference between the carrying amount of the net assets acquired and the sum of
carrying amount of investment prior to combination date and carrying amount of new considerations paid
for the combination at the combination date is adjusted to capital reserve (share premium) . If the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. The
profit or loss, other comprehensive income and changes in other owner’s equity recognized by the
acquirer during the period from the later of initial investment date and the date that the acquirer and
acquiree both under common ultimate control to the combination date are offset the opening retained
earnings or profit for loss for the current period in the comparative statements.
(3) Business combinations involving entities not under common control
The purchase date refers to the date that the Company actually acquired control over the acquire i.e.
the date when the control over the acquiree’s net assets or decision of business operation has been
transferred to the Company. If the Company fulfills the following conditions at the same time, it is
considered that the control has been transferred:
① the contract or agreement of business combination has been approved by internal power
department;
② related matters has been approved by state supervisory authorities, if needed;
③ procedures of asset transfer has been completed;
④ the Company has been made majority of payments and has the ability and plan to make the
residual payments;
⑤ the Company is in substances acquired the business and operating policies and enjoyed
corresponding interests and undertaking risks of the acquire.
On the purchase date, assets transferred, liabilities incurred or assumed as the consideration paid
shall be measured at fair value. The difference between the fair value and carrying amount shall be
charged to current period profit or loss.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference is recognized as goodwill, and subsequently measured on the basis
of its cost less accumulated impairment provisions. Where the combination cost is less than the acquirer’s
interest in the fair value of the acquiree’s identifiable net assets, the difference is recognized in profit or
loss for the current period after reassessment.
If business combinations involving entities not under common control achieved in stages that
involves multiple transactions belong to one-basket transaction, all the transactions shall be treated as
one. Otherwise, it shall be treated as follows: In the separate financial statements, the initial investment
cost is the sum of the carrying amount of equity investment of the acquiree held prior to the acquisition
date and additional investment cost at the acquisition date. When the previously-held equity investment
which was accounted for under the e Accounting treatment for business combinations involving entities
under common control and not under common control equity method before the acquisition date, any
other comprehensive income previously recognized is not adjusted on acquisition date. When the
investment is disposed of in later date, the amount that was recognized in other comprehensive income is
recognized on the same basis as would be required if the investee had disposed directly of the related
assets or liabilities. The owners’ equity recognized as the changes of the investee’s other owners’ equity
except for net profit or loss, other comprehensive income and profit distribution, are transferred to profit or
loss for the current period when disposing the investment. When the previously-held equity investment
which was measured at fair value before the acquisition date, the accumulated changes in fair value
included in other comprehensive income is transferred to profit or loss for the current period upon
commencement of the cost method.
(4) Transaction costs for business combination
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.
7. Consolidated financial statements
(1) Scope of consolidation
The scope of consolidated financial statements is based on control. All subsidiaries (including
standalone entity that controlled by the Company) are all included in the scope of consolidation.
(2) Procedures of consolidation
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and other relevant information. The whole enterprise is
considered as one accounting body when preparing consolidated financial statement and reflect the
whole group’s financial position, performance and cash flow according to unified accounting policies
based on accounting standards.
All subsidiaries that are included in the scope of consolidation adopt same accounting policies, and
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
accounting period. If there are differences, the subsidiaries shall adjust its policies and accounting period
accordingly.
When preparing consolidated financial statements, the accounting policies and accounting periods of
the subsidiaries should be consistent with those established by the Company, and all significant
intra-group balances and transactions are eliminated. If the treatment based on enterprise group angle is
different with the angle from subsidiaries’, it shall be treated based on enterprise group angle.
The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-controlling
interests and presented separately in the consolidated balance sheet within shareholders’ equity. The
portion of net profit or loss of subsidiaries for the period attributable to non-controlling interests is
presented separately in the consolidated income statement below the “net profit” line item. When the
amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders’ share of the opening owners’ equity of the subsidiary, the
excess is still allocated against the non-controlling interests.
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the subsidiary or business is deemed to be
included in the consolidated financial statements from the date they are controlled by the ultimate
controlling party. Their operating results and cash flows are included in the consolidated income
statement and consolidated cash flow statement respectively from the date they are controlled by the
ultimate controlling party.
Where a subsidiary or business has been acquired through a business combination not involving
enterprises under common control in the reporting period, the financial statements of subsidiaries shall be
adjusted on the basis of fair value of identifiable net assets on purchase date.
1） Addition of subsidiaries or business operation
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the subsidiary or business is deemed to be
included in the consolidated financial statements from the date they are controlled by the ultimate
controlling party. Their operating results and cash flows are included in the consolidated income
statement and consolidated cash flow statement respectively from the date they are controlled by the
ultimate controlling party.
If the Company can exert control over the investee under common control because of addition of
investment, adjustments shall be made as if all the combining party are at the current condition in the
angle of ultimate controlled party. Equity investment held before acquired control, profit or loss, other
comprehensive income and other net asset changes that have already recognized between the later of
acquiring original equity and the date under common control, and combination date shall offset opening
retained earnings or current period profit or loss respectively.
In the reporting period, if there is subsidiary or business addition involving entities not under common
control, no adjustments shall be made to the consolidated balance sheet. The revenue, expenses and
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
profit from the purchasing date to period end shall be included in consolidated income statement. The
cash flows from the purchasing date to period end shall be included in consolidated cash flow statement.
Where a subsidiary or business has been acquired through a business combination not involving
enterprises under common control by means of investment addition in the reporting period, equity held
before the purchase date shall be re-measured at fair value. Difference between the fair value and the
carrying amount shall be charged to current period investment gain. Changes related to equity method
such as other comprehensive income and other equity changes beside net profit, other comprehensive
income and profit distribution shall be transferred to current period investment gain.
2） Disposal subsidiary or business
a) General principal
In the reporting period, if the Company dispose of subsidiary or business, the subsidiary’s revenue,
expenses, profit and cash flows from the beginning of the period to the disposal date shall be included in
consolidated financial statements.
When the Company loses control over a subsidiary because of disposing part of equity investment or
other reasons, the remaining part of the equity investment is re-measured at fair value at the date when
the control is lost. A gain or loss is recognized in the current period and is calculated by the aggregate of
consideration received in disposal and the fair value of remaining part of the equity investment deducting
the share of net assets in proportion to previous shareholding percentage in the former subsidiary since
acquisition date and the goodwill.
2) Disposal of subsidiary through multiple steps
In the event that the Company losses control over a subsidiary through multiple transactions, if one or
more conditions below are fulfilled, it shall be treated as one-basket transaction:
a) the transactions were entered into at the same time or by considering each other’s influence;
b) a complete business result can only be achieved by combining all these transactions together;
c) the performing of one transaction is depended on at least one other transaction;
d) a transaction is not economical if it is considered stand along but it will become economical if it is
considered in combination with other transactions.
If the disposal was categorized as one-basket transaction, the Company dealt with all transactions as
one transaction that resulted in lost control over subsidiary. But, before losing control, the difference
between disposal consideration and the portion of net asset of the disposal part shall be recognized in
other comprehensive income each time of disposal and charged to income statement in whole in the
period loss control.
If the disposal does not belong to one-basket transaction, the accounting treatment before lost
control shall be in accordance with policies of disposal equity but not losing control. At the time control lost,
deal with as normal subsidiary disposal.
3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
shareholders, the book value of shareholder’s equity attributed to the Company and to the non-controlling
interest is adjusted to reflect the change in the Company’s interest in the subsidiaries. The difference
between the proportion interests of the subsidiary’s net assets being acquired or disposed and the
amount of the consideration paid or received is adjusted to the capital reserve in the consolidated balance
sheet, with any excess adjusted to retained earnings.
8. Joint arrangement classification and accounting treatment for joint operation
(1) Classification
The Company classifies joint arrangements into joint operations and joint ventures based on the
structure, legal form, terms and conditions in the arrangement, and other related facts.
Joint operations means joint arrangement that does not realized through independent entity. Joint
arrangement that realized through independent entity is normally recognized as joint venture but it also
can be classified as joint operation if clear evidence showed that one of the following condition is met:
1） The legal form of an joint arrangement showed that the joint parties enjoyed rights over related
assets and undertake liability respectively;
2） The contract showed that the joint parties enjoyed rights over related assets and undertake liability
respectively;
3） Other facts and situation indicated that the joint parties enjoyed rights over related assets and
undertake liability respectively;
(2) Accounting treatment to joint operation
The Company recognizes the following items relating to its interest in a joint operation, and account
for them in accordance with relevant accounting standards:
1) its solely-held assets, and its share of any assets held jointly;
2) its solely-assumed liabilities, and its share of any liabilities assumed jointly;
3) its revenue from the sale of its share of the output arising from the joint operation;
4) its share of the revenue from the sale of the output by the joint operation; and
5) its solely-incurred expenses, and its share of any expenses incurred jointly.
The Company contribute or disposal of assets (except that asset constitute business) . Before these
assets are sold to third party, the Company only recognizes the portion of profit or losses that attributes to
the other party. If the assets incurred impairment, the Company recognizes losses in full.
For the assets purchased from joint operation (except that constitutes business) , before it is sold to
third party, only the portion that attributable to the other parties. If assets incurred impairment, the
Company recognizes losses based on its share.
The Company does not enjoy joint control to joint operation. If the Company enjoys joint operation’s
asset and undertaking related liabilities, the accounting treatment is the same. Otherwise, it shall be
accounted for based on accounting standards.
9. Cash and cash equivalents
When preparing cash flow statement, the Company recognizes cash in hand and bank deposit that
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
available for payment as cash. 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.
10. Foreign currency transactions and translation of foreign currency financial statements
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company, using the
exchange rates prevailing at the dates of the transactions.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange
rate at the balance sheet date. The resulting exchange differences between the spot exchange rate on
balance sheet date and the spot exchange rate on initial recognition or on the previous balance sheet
date are recognized in profit or loss. Non-monetary items that are measured at historical cost in foreign
currencies are translated to Renminbi using the exchange rate at the transaction date.
Non-monetary items that are measured at fair value in foreign currencies are translated using the
exchange rate at the date the fair value is determined. The resulting exchange differences are recognized
in profit or loss.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets and
liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance sheet
date. Equity items, excluding “retained earnings”, are translated to Renminbi at the spot exchange rates
at the transaction dates.
When disposing overseas operations, foreign translation difference that related to the overseas
business shall be charged to current period profit or losses from other comprehensive income. If the
disposal resulted in decrease in shareholding but still maintain control, the translation difference will be
included in non-controlling interest. If the disposal related to associate entity or joint venture entities, the
translation difference will be included in current period profit or loss.
11. Financial instruments
The Company recognizes financial assets or financial liabilities when the Company become a party of
the financial instruments.
Effective interest rate method refer to calculating the amortized cost of financial assets or liabilities
and amortizes interest income or expenses into corresponding accounting period accordingly.
Effective interest rate refers to the interest that is used to discount the estimated future cash flows of
existing financial assets or financial liabilities to its amortized cost. When determining the effective interest
rate, the cash flow is estimated taking consideration of all contractual terms of financial assets or financial
liabilities but does not including estimated credit loss.
Amortized cost of financial assets or financial liabilities is the initial recognition amount deduct
principal and add or less accumulated amortization to the difference between initial recognition and the
amount at maturity and less accumulated loss provision (for financial assets only) .
(1) Recognition and derecognition of financial instruments
Financial assets are classified into the following three categories depends on the Company’s
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
business mode of managing financial assets and cash flow characteristics of financial assets
1) Financial assets measured at amortized cost
2) Financial assets at fair value through other comprehensive income
3) Financial assets at fair value through profit or loss
Financial assets are measured at fair value at initial recognition. But it is recognized using trading
price for accounts receivable or notes receivable arose from sale of goods or providing of service that
does not including material financing component or does not consider financing component within one
year.
For financial assets at fair value through profit or loss, the related transaction costs are directly
recognized through profit or loss, and the related transaction costs of other types of financial assets are
included in the initial recognition amounts.
Only when the Company changes its business model of managing financial assets, all the financial
assets affected shall be reclassified on the first day of the first reporting period after the business model
changes.
1） Financial assets measured at amortized cost
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets at fair value through profit or loss as financial assets measured at
amortized cost: The Company’s business model for managing the financial assets is to collect contractual
cash flows; The terms of the financial asset contract stipulate that cash flows generated on a specific date
are only payments of principal and interest based on the amount of outstanding principal. Financial assets
measured at amortized cost of the Company includes cash and bank balances, notes receivable,
accounts receivables and other receivables.
After initial recognition, the effective interest rate method is used to measure the amortized cost of
such financial assets. Profits or losses arising from financial assets measured at amortized costs and not
part of any hedging relationship are included in current profit or loss when the recognition is terminated,
amortized or impaired according to the effective interest rate.
a) for financial assets that already impaired when it is acquired, the Company determines its interest
income using adjusted effective interest rate based on its amortized cost.
b) for financial assets that does not impaired when it is acquired but impaired latterly, the Company
determines its interest income using adjusted effective interest rate based on its amortized cost. If there is
no credit impairment in later period due to changes to risk factors, the Company uses effective interest
rate times of carrying amount of the financial asset to determine interest income. 2) Financial assets at fair
value through other comprehensive income
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets measured at fair value and whose changes are recorded in current profit or
loss as financial assets measured at fair value through other comprehensive income: The Group’s
business model for managing the financial assets is both to collect contractual cash flows and to sell the
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
financial assets, and the terms of the financial asset contract stipulate that cash flows generated on a
specific date are only payments of principal and interest based on the amount of outstanding principal.
After initial recognition, financial assets are subsequently measured at fair value. Interest, impairment
losses or gains and exchange gains calculated by the effective interest rate method are recognized in
profit or loss, while other gains or losses are recognized in other comprehensive income. When
derecognized, the accumulated gains or losses previously recognized in other comprehensive income are
transferred from other comprehensive income and recorded in current profit or loss.
3) Financial assets designated as fair value through other comprehensive income
At initial recognition, the Company may designate non-trading equity instrument investments as
financial assets at fair value through other comprehensive income, presented as other equity instrument
investment, and recognize dividend income when the conditions are met (the designation cannot be
revoked once it is made) .
The fair value changes of this kind of financial asset shall be included in other comprehensive income
and no impairment provision is needed. When de-recognizing the financial asset, accumulated gain or
loss in other comprehensive income shall be transferred out of other comprehensive income and charged
to retained earnings. During the investing period when the Company holds equity instruments, the
Company recognizes dividends in current period profit or loss when the right of receiving dividends is
confirmed and the associated economic benefit is probable to flow into the Company and that the amount
can be measured reliably. The Company treated this kind of financial instrument under other equity
investment.
The designated equity instrument investment does not belong to the following: the purpose of
obtaining the financial asset is mainly for the recent sale; it is part of the identifiable financial asset
instrument combination under centralized management at initial recognition, and there is objective
evidence that the short-term gain actually exists in the near future; it is a derivative (except for derivatives
that meet the definition of a financial guarantee contract and are designated as effective hedging
instruments) .
4) Financial assets at fair value through profit or loss
The financial assets other than financial assets measured at amortized cost and financial assets at
fair value through other comprehensive income are classified as financial assets at fair value through
profit or loss.
After initial recognition, the financial assets are subsequently measured at fair value, and the profits
or losses generated from which are recognized in profit or loss.
The Company present the financial assets as financial asset held for trade, other non-current
financial assets.
5) Financial assets designated at fair value through profit or loss.
At initial recognition, if the accounting mismatch can be eliminated or significantly reduced, the
financial assets can be designated as financial assets at fair value through profit or loss.
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
If the hybrid contract includes one or more embedded derivatives and the main contract does not
belong to the above financial assets, the Company may designate the whole as a financial instrument that
is measured at fair value through profit or loss, except in the following cases:
a) Embedded derivatives do not materially change the cash flow of a hybrid contract
b) When it is first determined whether a similar hybrid contract requires a spin-off, there is little need
for analysis to make it clear that the embedded derivatives it contains should not be split. If the
prepayment right of the embedded loan allows the holder to repay the loan in advance with an amount
close to the amortized cost, the prepayment right does not need to be split.
After initial recognition, the financial assets are subsequently measured at fair value, and the profits
or losses generated from which are recognized in profit or loss.
The Company present the financial assets as financial asset held for trade, other non-current
financial assets.
(2) Classification and measurement of financial liabilities
The Company categorizes financial liabilities into financial liabilities and equity instrument based on
the contract terms and economical nature rather than solely on its legal form. Financial liabilities initially
recognized as financial liabilities at fair value through profit or loss, other financial liabilities and derivative
instrument designated as effective hedging instrument.
The financial liabilities of the Company are initially measured at fair value. The related transaction
costs of financial liabilities at fair value through profit or loss are directly recognized in profit or loss. The
related transaction costs of other categories of financial liabilities are included in the initial recognition
amount.
Subsequent measurement of financial liabilities depends on its category:
1） Financial liabilities at fair value through profit or loss
This category includes financial liabilities held for trade (including derivatives that are financial
liabilities) and financial liabilities designated at fair value through profit or loss.
At initial recognition, in order to provide more relevant accounting information, the Company
classifies financial liabilities that meet one of the following conditions as financial liabilities at fair value
through profit or loss (the designation cannot be revoked once it is made) : the aim of undertaking related
financial liabilities is to sell or repurchase in the short run; it is part of identifiable financial instruments and
there is objective evidence indicated that the enterprise adopts short-term profitability mode; belong to
derivative instrument except for derivative instrument designated as effective hedging instrument and
financial guarantee contract. Financial liabilities held for trade are measured at fair value subsequently
and all fair value changes except for hedging accounting shall be included in current period profit or loss.
At initial recognition, in order to provide more relevant accounting information, the Company
classifies financial liabilities that meet one of the following conditions as financial liabilities designated at
fair value through profit or loss (the designation cannot be revoked once it is made) :
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
a) accounting mismatches can be eliminated or significantly reduced.
b) management and performance evaluation of financial liability portfolios or combinations of financial
assets and financial liabilities based on fair value according to corporate risk management or investment
strategies as stated in formal written documents, and report to key management personnel on this basis.
When the Company initially recognizes a financial liability and designates it at fair value through profit
or loss according to stipulations of standards, the changes in the fair value of the financial liability arising
from changes in the company’s own credit risk are included in other comprehensive income, and other
changes in fair value are recognized in profit or loss for the period. However, if the accounting causes or
expands the accounting mismatch in profit or loss, the entire gain or loss of the financial liability (including
the affected amount from changes in the company’s own credit risk) is included in the current profit or
loss.
2) Other financial liabilities
Except for the following items, the Company classifies financial liabilities as financial liabilities
measured at amortized cost:
a) Financial liabilities at fair value through profit or loss.
b) The transfer of financial assets does not meet the conditions for derecognition or financial liabilities
arising from the continued involvement in the transferred financial assets.
c) Financial guarantee contracts that are not in the first two categories of this article, and loan
commitments granted at a rate lower than market interest rates and that are not in the first category of this
article
Financial guarantee contracts that are not designated as financial liabilities measured at fair value
through profit or loss are initially recognized at fair value. Subsequent to initial recognition, the
subsequent measurement is determined according to the higher loss allowance of contingent liabilities
under expected credit loss model and the initial recognition amount deducting by the accumulated
amortization.
(3) Derecognition of financial instruments
1) If a financial asset meets one of the following conditions, it shall be derecognized:
a) The contractual right to receive the cash flow of the financial asset is terminated.
b) The financial asset has been transferred, and the transfer meets the requirements of the
“Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets” regarding
derecognition of financial assets.
2) Conditions of derecognition of financial liabilities
If the current obligation of a financial liability (or a part thereof) has been discharged, the financial
liability (or such part of financial liability) is derecognized.
When the Company and the lender sign an agreement to replace the original financial liability with a
new financial liability, and the new financial liability is substantially different from the original financial
liability, the original financial liability is derecognized and a new financial liability is recognized. The
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
difference between the carrying amount and the consideration paid (including the transferred non-cash
assets or liabilities assumed) is recognized in profit or loss
If the Company repurchases part of the financial liabilities, the carrying amount of the financial
liabilities as a whole is allocated based on the proportion of the fair value of the continuing recognition
portion and the derecognition portion on the repurchase date. The difference between the carrying
amount assigned to the derecognition portion and the consideration paid (including the transferred
non-cash assets or liabilities assumed) shall be included in the current profit or loss.
(4) Recognition basis and measurement for transfer of financial assets
In the event of transfer of financial assets, the Company assesses the extent to which it retains the
risks and rewards of ownership of the financial assets and treats them in the following cases:
1) If almost all risks and rewards of ownership of financial assets are transferred, the financial assets
are derecognized and the rights and obligations arising from or retained in the transfer are separately
recognized as assets or liabilities.
2) If almost all the risks and rewards of ownership of financial assets are retained, the financial assets
shall continue to be recognized
3) If there is neither transfer nor retention of almost all risks and rewards of ownership of financial
assets (i.e., other than (1) and (2) of this article) , then depending on whether or not they retain control
over financial assets
a) If there is neither transfer nor retention of almost all risks and rewards of ownership of financial
assets (i.e., other than (1) and (2) of this article) , then depending on whether or not they retain control
over financial assets
b) If there is neither transfer nor retention of almost all risks and rewards of ownership of financial
assets (i.e., other than (1) and (2) of this article) , then depending on whether or not they retain control
over financial assets.
When judging whether the transfer of financial assets satisfies the conditions for derecognition above,
the principle of substance over form is adopted. The Company divides the transfer of financial assets into
the overall transfer and partial transfer of financial assets:
1) If the overall transfer of financial assets meets the conditions for derecognition, the difference
between the following is included in the current profit or loss
a) The carrying amount of the transferred financial assets on the date of derecognition.
b) The sum of the consideration received in respect of the transfer of financial assets and the amount
corresponding to the derecognized portion in the accumulated changes in the fair value originally and
directly recognized in other comprehensive income (the financial assets involved in the transfer are
measured at fair value through other comprehensive income)
If the transfer of a financial asset does not meet the conditions for derecognition, the financial asset
will continue to be recognized and the consideration received is recognized as a financial liability
(5) Method for determining the fair value of financial assets and financial liabilities
Notes to the financial statements – Page 128
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
The fair value of financial assets or financial liabilities with active market is determined by active
market quotations; active market quotations include quotations that are readily and regularly available
from exchanges, dealers, brokers, industry groups, pricing agencies or regulatory authorities for related
assets or liabilities, and represent actual and frequently occurring market transactions on a fair trade
basis. The fair value of financial assets initially acquired or derived or financial liabilities assumed shall
be determined on the basis of the market transaction price. The fair value of financial assets or financial
liabilities without active market is determined using valuation techniques. In valuation, the Company
adopts valuation techniques that are applicable under current circumstances and that are supported by
adequate available data and other information, selects inputs with consistent asset or liability
characteristics considered by market participants in trading related asset or liability, and uses relevant
observable inputs where possible. Unobservable inputs are used where the relevant observable inputs
are not available or are impracticable.
(6) Provision for impairment of financial assets
Based on the expected credit losses, the Company assesses the expected credit losses of the
financial assets measured at amortized cost and financial assets at fair value through other
comprehensive income, lease receivables, contract assets, loan commitment and financial liabilities that
are not measured at fair value through profit or loss, and financial guarantee contract etc., and makes
impairment accounting and recognizes loss provisions.
The expected credit loss refers to the weighted average of the credit losses of financial instruments
that are weighted by the risk of default. Credit loss refers to the difference between all contractual cash
flows discounted at the original effective interest rate and receivable from the contract and all cash flows
expected to be received by the Company, and the present value of all cash shortages. For financial assets
that have been purchased or generated with credit impairment, loss provision is recognized only for the
cumulative changes in lifetime expected credit losses after the initial recognition on the balance sheet
date.
For accounts receivable, contract assets, and lease receivables, the Company shall always measure
the loss allowance for them at an amount equal to the lifetime expected credit losses.
For financial assets that have been purchased or generated with credit impairment, loss provision is
recognized only for the cumulative changes in lifetime expected credit losses after the initial recognition
on the balance sheet date. On each balance sheet date, the amount of changes in lifetime expected
credit losses is included in profit or loss as an impairment loss or gain. Even if the lifetime expected credit
loss determined on the balance sheet date is less than the expected credit loss reflected in the estimated
cash flow at the initial recognition, the positive change in expected credit loss is also recognized as an
impairment gain
Except for the provision for loss of financial instruments in item (3) of this article, the Company
assesses whether the credit risk of the relevant financial instruments has increased significantly since the
initial recognition on each balance sheet date, and separately measures its loss provision, recognizes
Notes to the financial statements – Page 129
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
expected credit loss and its changes based on the following circumstances：
a) If the credit risk of the financial instruments has increased significantly since the initial recognition,
the loss provision is measured at the amount equivalent to the lifetime expected credit loss of the financial
instruments, regardless of whether the basis the Company assesses the credit losses is on individual
financial instrument or a combination of financial instruments, and the increase or reversal of the loss
provision resulting therefrom should be included in the current profit or loss as an impairment loss or gain
b) If the credit risk of the financial instruments has not increased significantly since the initial
recognition, the loss provision is measured at the amount equivalent to the expected credit loss of the
financial instruments in the next 12 months, regardless of whether the basis the Company assesses the
credit loss is on individual financial instrument or the combination of financial instruments, and the
increase or reversal of the loss provision resulting therefrom shall be included in the current profit or loss
as an impairment loss or gain.
For financial instruments in the third stage, the Company measures loss provision on the basis of
life-time expected credit loss and calculating interest income according to their book balance minus the
impairment provision and the actual interest rate.
Incremental or reversal of credit loss provision shall be included in current profit or loss as impairment
loss or gain. Except for financial asset at fair value through other comprehensive income, credit loss
provision is to offset the carrying amount of financial assets. For financial assets at fair value through
other comprehensive income, the credit loss provision is recognized in other comprehensive income and
will not offset the financial asset’s carrying amount in balance sheet.
If the Company recognized credit loss provision in prior accounting period in terms of life-time credit
loss, but on current period balance sheet date, the associated financial asset does not belong to the
situation of risk increased after the initial recognition, the Company shall accrue credit loss provision for
this financial asset based on the next 12 month expected credit loss. Difference arose from above
changes shall be included in current period profit or loss as impairment gain.
1） Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet day with that on initial
recognition day, the Company determines the relative change of default risk of financial instruments
during the expected life of financial instruments, to evaluate whether the credit risk of financial
instruments has increased significantly since the initial recognition.
To determine whether credit risk has increased significantly since the initial recognition, factors
considered by the Company includes:
a) Whether there is serious deterioration of the debtor’s operating results that have occurred or are
expected to occur;
b) Changes in the existing or anticipated technological, market, economic or legal environment will
have a significant negative impact on the debtor’s repayment capacity.
Notes to the financial statements – Page 130
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
c) Serious deterioration of external or internal credit ratings (if any) of financial instruments that
have occurred or are expected to occur;
d) Whether the expected performance and repayment of debtor changes significantly.
e) Whether the Company changed the way of managing financial assets.
On the balance sheet date, if the Company assesses that the financial instrument only has lower
level of credit risk, the Company assumes that the credit risk associated with the financial instrument
does not increased after the initial recognition. If the default rate of a financial instrument is low and the
debtor’s ability to fulfill its cash flow liability is strong, the financial instrument will be regarded with lower
credit risk even if there will be adverse changed in economic and operating environment in long-term
which may not necessarily decrease the debtor’s ability of fulfilling its cash flow liabilities.
2） Provision for impairment of financial assets
When one or more events that adversely affect the expected future cash flows of a financial asset
occur, the financial asset becomes a financial asset that has suffered credit impairment. Evidence that
credit impairment has occurred in a financial asset includes the following observable information:
a) significant financial difficulties of the issuer or debtor;
b) the debtor breaches the contract, such as failure to pay or delay in the payment of interest or
principal;
c) the creditor gives the debtor a concession which would not have been made under any other
circumstances for economic or contractual considerations relating to the financial difficulties of the debtor;
d) the debtor is likely to go bankrupt or carry out other financial restructurings;
e) the financial difficulties of the issuer or the debtor cause the active market of the financial asset to
disappear;
f) purchase or source a financial asset at a substantial discount that reflects the fact that credit losses
have occurred.
The credit impairment of financial assets may be caused by the joint action of multiple events, and
may not be caused by separately identifiable event
Determining expected credit loss (ECL)
The Company evaluates ECL based on single or portfolio of financial instrument. When evaluating
ECL, the Company considers past events, current situation and future economic condition.
The Company categorizes financial instrument into different portfolios based on common credit risk
characteristics. Common credit risk characteristics includes: types of financial instruments, aging
portfolio, settlement period, debtor’s industries etc… Refer to accounting policies of financial instruments
for standard for single evaluation and credit risk characteristics.
The Company uses the following way to determine the ECL of financial instruments:
a) For financial assets, credit loss is the present value of difference between all contractual cash
flows receivable from the contract and all cash flows expected to be received by the Company.
b) For lease receivable, credit loss is the present value of difference between all contractual cash
Notes to the financial statements – Page 131
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
flows receivable from the contract and all cash flows expected to be received by the Company.
c) For financial guarantee contract, credit loss is the present value of expected payment amount due
to credit losses happened to the owner of the contract and less any amount that the Company expected to
receive from the contract owner, debtor or other parties.
d) For financial assets that already impaired on balance sheet date but not impaired when purchasing,
the credit loss is the difference of carrying amount and present value of future cash flows discounted at
original effective interest rate.
Factors that the Company measures ECL of financial instrument includes: assessing a series of
possible results and to determine a weighted average amount without bias; time value of money;
information of past event, current situation and future economic condition forecast that can be obtained
without paying extra cost or efforts on balance sheet date.
3） Write off
If the Company no longer reasonably expects that the financial assets contract cash flow can be
recovered fully or partially, the financial assets book balance will be reduced directly. Such reduction
constitutes the derecognition of the financial assets.
(7) Offset of financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not
offset. However, if all of the following conditions are met, the net amount offset by each other is
presented in the balance sheet:
1) The Company has a statutory right to offset the recognized amount, and such legal right is
currently enforceable;
2) The Company plans to settle in net amount or to realize the financial assets and settle the financial
liabilities at the same time.
12. Bill receivables
Refer to Note XI. 6 Financial instrument impairment for details of ECL determination and accounting
method to bill receivable.
If the Company has sufficient evidence to evaluate the ECL of bill receivable on single basis, it will be
assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the bill receivable into different portfolios. The basis for portfolios is determined as follows:
Portfolio Basis method
Referencing historical impairment
Risk-free The issuer has higher level of credit rating and no default in
experience and taking into
banker’s past and has strong ability to fulfil its contractual cash follow
consideration of current situation and
acceptance note obligation
estimation of future conditions
Business Bill receivables with same aging have similar credit risk
Based on aging analysis
acceptance note characteristics
13. Accounts receivables
Notes to the financial statements – Page 132
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Refer to Note XI. 6 Financial instrument impairment for details of ECL determination and accounting
method to accounts receivable.
If the Company has sufficient evidence to evaluate the ECL of account receivable on single basis, it
will be assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the account receivable into different portfolios. The basis for portfolios is determined as
follows:
Portfolio Basis method
Referencing historical impairment
Account receivables for related parties in scope
Receivables for related parties experience and taking into
of consolidation have similar credit risk
in scope of consolidation consideration of current situation and
characteristics
estimation of future conditions
Accounts receivables from Account receivables with same aging have
Based on aging analysis
other parties similar credit risk characteristics
14. Other receivables
Refer to Note XI. 6 Financial instrument impairment for details of ECL determination and accounting
method to other receivables.
If the Company has sufficient evidence to evaluate the ECL of other receivables on single basis, it will
be assessed on single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make
judgment based on historical loss experience, current situation and future economic situation, and
classifying the other receivable into different portfolios. The basis for portfolios is determined as follows:
Portfolio Basis method
Receivables of down payment and The portfolio has similar credit risk
Based on aging and ECL rate
guarantee characteristics
The portfolio has similar credit risk Referencing historical impairment
characteristics experience and taking into
Petty cash for employees
consideration of current situation and
estimation of future conditions
The portfolio has similar credit risk Referencing historical impairment
Social security payment paid on-behalf characteristics experience and taking into
of employees consideration of current situation and
estimation of future conditions
The portfolio has similar credit risk Referencing historical impairment
Receivables from related parties within characteristics experience and taking into
scope of consolidation consideration of current situation and
estimation of future conditions
The portfolio has similar credit risk
Others Based on aging and ECL rate
characteristics
15. Inventory
(1) Classification
Inventory refers to the finished products or commodities that the Company holds for sale in its daily
activities, semi-products in the production process, materials and consumables used in the production
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
process or the provision of labour services. Inventories include raw materials, work in progress, and
finished goods.
(2) Valuation method of inventory
When inventory is acquired, it is initially measured at cost, including procurement costs, processing
costs and other costs. When the inventory is issued, it is measured by the weighted average method
(except for branded watches) and specific identification method (for branded watches) .
(3) Basis for determining the net realizable value and method for provision for obsolete
inventories
After the inventory is thoroughly inspected at the end of the period, the provision shall be provided or
adjusted at the lower of the cost of the inventory and its net realizable value. The net realizable value of
inventory of goods directly used for sale, such as finished goods, stocked goods and materials for sale in
the normal production and operation process, is determined by the estimated selling price of the inventory
minus the estimated selling expenses and related taxes; net realizable value of inventory of materials that
need to be processed is determined based on the estimated selling price of the finished products
produced minus the estimated cost till completion, estimated selling expenses and related taxes and fees
in the normal production and operation process; the net realizable value of the inventory held for the
execution of a sales contract or labour contract is calculated on the basis of the contract price. If the
quantity of the inventory held exceeds the quantity ordered by the sales contract, the net realizable value
of the excess inventory is calculated based on the general sales price.
The provision is accrued according to the individual inventory project at the end of the period; but for
a large number of inventories with lower unit price, the provision is accrued according to the category of
inventory; for those related to the product series produced and sold in the same region, have the same or
similar end use or purpose and that are difficult to measure separately from other projects, they are
combined for provision for inventory depreciation
If the influencing factors of the write-down of inventory value have disappeared, the amount of write
down will be restored and will be reversed within the amount of the provision for decline in value of the
inventory that has been accrued. The amount of the reversal is included in the current profit or loss
(4) Inventory count system
The Company maintains a perpetual inventory system.
(5) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are charged to profit or loss when they are used.
16. Contract assets
The Company has the right to receive the consideration for the transfer of goods to the customers. If
the right depends on factors other than the passage of time, it is recognized as a contract asset. If the
Company has the right (only depends on passage of time) to receive consideration from client, accounts
receivable shall be recognized.
Refer to Note XI 6 for impairment to contract asset.
Notes to the financial statements – Page 134
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
17. Long-term Equity Investment
(1) Determination of investment cost
1) For the long-term equity investment formed by business combination, the specific accounting
policies are detailed in the accounting treatment of business combination under common control and not
under common control as set out in this Note VI.
2) Long-term equity investment obtained by other means
The initial investment cost of the long-term equity investment obtained by cash payment is the actual
purchase price. The initial investment cost includes expenses directly related to the acquisition of
long-term equity investments, taxes and other necessary expenses
The initial investment cost of the long-term equity investment obtained by issuing equity securities is
the fair value of the issued equity securities; the transaction cost incurred in the issuance or acquisition of
its own equity instruments is deducted from equity if it is directly attributable to equity transactions.
Under the premise that the non-monetary asset exchange has the commercial substance and the fair
value of the assets received or surrendered can be reliably measured, the initial investment cost of the
long-term equity investment exchanged for non-monetary assets is determined based on the fair value of
the assets exchanged and relevant taxes payable, unless there is conclusive evidence that the fair value
of the assets transferred is more reliable; for the exchange of non-monetary asset that does not meet the
above premise, the initial investment cost of long-term equity investment is the carrying amount of the
assets exchanged and the related taxes and fees payable.
The initial investment cost of a long-term equity investment obtained through debt restructuring
includes the fair value of the waived debt, taxes that can be directly attributable to the asset and other
costs
(2) Subsequent measurement and profit and loss recognition
1) Cost method
The long-term equity investment that the Company can control over the investee is accounted for
using the cost method, and the cost of the long-term equity investment is adjusted by adding or
recovering the investment according to the initial investment cost. Except for the actual payment or the
cash dividends or profits included in the consideration that have been announced but not yet paid at the
time of acquiring the investment, the Company recognizes the current investment income according to
its share of cash dividends or profits declared to be distributed by the investee.
2) Equity method
The Company’s long-term equity investments in associates and joint ventures are accounted for
using the equity method, and some of the equity investments in associates that are indirectly held by
venture capital institutions, mutual funds, trust companies or similar entities including investment-linked
insurance funds are measured at fair value through profit or loss. When the initial investment cost of a
long-term equity investment is greater than the investment, the initial investment cost of the long-term
equity investment shall not be adjusted by the difference between the fair value of the identifiable net
Notes to the financial statements – Page 135
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
assets of the investee; if the initial investment cost is less than the investment, the difference between
the fair value of the identifiable net assets of the investee should be included in the current profit or loss
After obtaining the long-term equity investment, the Company shall recognize the investment income
and other comprehensive income according to the share of net profit and loss and other comprehensive
income realized by the investee that is entitled or should be shared respectively, and adjust the carrying
amount of the long-term equity investment; and reduces the carrying amount of the long-term equity
investment based on portion of the profit or cash dividend declared to be distributed by the investee; and
for other changes in the owners’ equity other than the net profit or loss, other comprehensive income and
profit distribution of the investee, the carrying amount of the long-term equity investment is adjusted and
included in the owners’ equity.
When recognizing the share of the net profit or loss of the investee, the Company shall adjust and
recognize the net profit of the investee based on the fair value of the identifiable assets of the investee at
the time of obtaining the investment. The unrealized internal transaction gains and losses between the
Company and the associates and joint ventures shall be offset against the portion attributable to the
Company in accordance with the proportion to be enjoyed, on the basis of which the investment gains
and losses are recognized.
When the Company recognizes the losses incurred by the investee that it should bear, it shall deal
with it in the following order: Firstly, offset the carrying amount of the long-term equity investment.
Secondly, if the carrying amount of the long-term equity investment is not enough to be offset, the
investment loss will continue to be recognized to the extent of carrying amount of other long-term equity
that virtually constitutes a net investment in the investee, and the carrying amount of the long-term
receivables is offset. Finally, after the above-mentioned treatment, if the enterprise still bears additional
obligations in accordance with the investment contract or agreement, the projected liabilities are
recognized according to the estimated obligations and included in the current investment losses. If the
investee realizes profit in the future period, after deducting the unrecognized loss share, and the reduction
of book balance of the recognized projected liabilities and recovery of other long-term equity that virtually
constitutes a net investment in the investee and carrying amount of long-term equity investment as
opposite to the order above, the Company shall restore the investment income.
(3) Conversion of accounting methods for long-term equity investment
1） Fair value measurement to equity method accounting
If the equity investment originally held by the Company that does not have control, joint control or
significant influence on the investee, which is accounted for according to the recognition and
measurement criteria of financial instruments, can exert significant influence on the investee or jointly
control but does not constitute control over it due to additional investment and otherwise, its initial
investment cost shall be the sum of the fair value of the equity investment originally held in accordance
with the “Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of
Financial Instruments” and new investment cost after being accounted for under the equity method.
Notes to the financial statements – Page 136
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
If the initial investment cost accounted for under the equity method is less than the fair value share of
the identifiable net assets of the investee on the additional investment date determined by the new
shareholding ratio after the additional investment, the carrying amount of the long-term equity investment
is adjusted and included in the current non-operating income.
2） Fair value measurement or equity method accounting to cost method accounting
If the equity investment originally held by the Company, that does not have control, joint control or
significant influence on the investee and which is accounted for in accordance with the financial
instrument recognition and measurement criteria, or the long-term equity investment originally held in
associates or joint venture, can exercise control over the investee not under common control due to
additional investment or otherwise, in the preparation of individual financial statements, the sum of the
carrying amount of the equity investment originally held plus the new investment cost shall be regarded as
the initial investment cost after being accounted for under the cost method.
The other comprehensive income recognized by the equity method in respect of the equity
investment originally held before the purchase date is accounted for on the same basis as the investee
directly disposes of the relevant assets or liabilities when the investment is disposed of.
If the equity investment held before the purchase date is accounted for in accordance with the
relevant provisions of the “Accounting Standards for Business Enterprises No. 22 – Recognition and
Measurement of Financial Instruments”, the cumulative fair value changes originally included in other
comprehensive income are transferred to current profit or loss when the cost method is adopted.
3） Equity method accounting to fair value measurement
If the Company loses joint control or significant influence on the investee due to the disposal of part of
the equity investment or otherwise, the remaining equity after disposal shall be accounted for according to
the “Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments”. The difference between the fair value and the carrying amount on the date of losing joint
control or significant impact is recognized in profit or loss.
The other comprehensive income recognized in respect of the original equity investment using the
equity method is accounted for on the same basis as the investee directly disposes of the relevant asset
4） Cost method to equity method
Where the Company loses control over the investee due to the disposal of part of the equity
investment, etc., in the preparation of individual financial statements, if the remaining equity after disposal
can exercise joint control or significant influence on the investee, the equity method is adopted for
accounting, and the remaining equity is deemed to be adjusted under the equity method when it is
acquired.
5） Cost method to fair value measurement
Where the Company loses control over the investee due to the disposal of part of the equity
investment, etc., in the preparation of individual financial statements, if the remaining equity after disposal
cannot jointly control or exert significant influence on the investee, the relevant provisions of the
Notes to the financial statements – Page 137
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
“Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments” are adopted. The difference between the fair value and the carrying amount on the date of
loss of control is recognized in profit or loss for the current period.
(4) Disposal of long-term equity investment
For the disposal of long-term equity investment, the difference between the carrying amount and the
actual purchase price shall be included in the current profit or loss. For the long-term equity investment
accounted for using the equity method, when the investment is disposed of, the part that is originally
included in the other comprehensive income is accounted for in the same proportion based on the same
basis as the investee directly disposes of the relevant assets or liabilities.
If the terms, conditions and economic impact of each transaction on disposal of the equity investment
in a subsidiary satisfy one or more of the following cases, the multiple transactions are treated as a
package transaction:
1) The transactions are made simultaneously or with consideration of each other’s influence;
2) The transactions as a whole can achieve a complete business outcome;
3) The occurrence of a transaction depends on the occurrence of at least one other transaction;
4) A transaction is uneconomic alone, but it is economic when considered together with other
transactions
Where the loss of control over the original subsidiary due to disposal of part of the equity investment
or otherwise which is not a package transaction, the individual financial statements and consolidated
financial statements shall be classified for relevant accounting treatment:
a) In the individual financial statements, the difference between the carrying amount of the disposed
equity and the actual purchase price is included in the current profit or loss. If the remaining equity after
disposal can exert joint control or significant influence on the investee, it shall be accounted for under the
equity method, and the residual equity shall be deemed to be adjusted by equity method when it is
acquired; if the remaining equity after disposal cannot exert joint control or significant influence over the
investee, it shall be accounted for by the relevant provisions of the “Accounting Standards for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments”, and the difference
between the fair value and the carrying amount on the date of loss of control is included in the current
profit or loss.
b) In the consolidated financial statements, for each transaction before the loss of control over the
subsidiary, capital reserve (share premium) is adjusted for the difference between the disposal price and
the share of the net assets corresponding to the disposed long-term equity investment that the subsidiary
has continuously calculated from the date of purchase or the merger date; if the capital reserve is
insufficient to offset, the retained earnings will be adjusted; when the control of the subsidiary is lost, the
remaining equity shall be re-measured according to its fair value on the date of loss of control. The sum of
the consideration for the disposal of the equity and the fair value of the remaining equity, less the share of
the net assets that that the original subsidiary has continuously calculated from the date of purchase
Notes to the financial statements – Page 138
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
calculated based on the original shareholding, is included in the investment income for the period of loss
of control, while reducing goodwill. Other comprehensive income related to the original subsidiary’s equity
investment will be converted into current investment income when control is lost.
If each transaction on disposal of the equity investment in a subsidiary until the loss of control is a
package transaction, each transaction is accounted for as a transaction to dispose of the equity
investment in the subsidiary with loss of control, which is distinguished between individual financial
statements and consolidated financial statements:
a) In the individual financial statements, the difference between each disposal price and the carrying
amount of the long-term equity investment corresponding to the disposed equity before the loss of control
is recognized as other comprehensive income, and when the control is lost, it is transferred to profit or
loss for the period of the loss of control.
b) In the consolidated financial statements, the difference between each disposal price and the
disposal investment that has the share of the net assets of the subsidiary before the loss of control is
recognized as other comprehensive income, and transferred to profit or loss for the period of the loss of
control.
(5) Judging criteria for joint control and significant influence
If the Company collectively controls an arrangement with other parties in accordance with the
relevant agreement, and the activity decision that has a significant impact on the return of the
arrangement needs to be unanimously agreed upon by the parties sharing the control, it is considered
that the Company and other parties jointly control an arrangement, which is a joint arrangement.
If the joint arrangement is reached through a separate entity and it determines that the Company has
rights to the net assets of the separate entity in accordance with the relevant agreement, the separate
entity is regarded as a joint venture and is accounted for using the equity method. If it is judged according
to the relevant agreement that the Company does not have rights to the net assets of the separate entity,
the separate entity acts as a joint operation, and the Company recognizes the items related to the share
of the interests of the joint operation and conducts accounting treatment in accordance with the relevant
ASBEs.
Significant influence refers to the investor’s power to participate in the decision-making of the
financial and operating policies of the investee, but it cannot control or jointly control the formulation of
these policies with other parties. The Company has a significant influence on the investee under one or
more of the following situations and taking into account all facts and circumstances: (1) it is represented
on the board of directors or similar authorities of the investee; (2) it involves in the formulation of financial
and operating policy of the investee; (3) it has important transactions with the investee; (4) it dispatches
management personnel to the investee; (5) it provides key technical information to the investee.
18. Investment Property
Investment property refers to property held for the purpose of earning rent or capital appreciation, or
both, including leased land use rights, land use rights held and prepared for transfer after appreciation,
Notes to the financial statements – Page 139
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
and leased buildings. Besides, for empty constructions that the Company held for rent lately but with the
written resolution from the board stated that it will be used as operating lease and that intention will not
be changed in short-term, it can be treated as investment property.
The Company’s investment property is recorded at its cost, and the cost of purchased investment
property includes the purchase price, related taxes and other expenses directly attributable to the asset;
the cost of self-built investment property is composed of the necessary expenses incurred before the
asset is ready for expected use.
The Company adopts the cost model for subsequent measurement of investment property, and
depreciates or amortizes buildings and land use rights according to their estimated service life and net
residual value. Expected useful life, residual value and annual depreciation rate are as follows:
Estimated useful
Category life Residual value rate % Depreciation rate %
(years)
Property 20-35 5.00 4.80-2.70
When the use of investment property is changed to self-use, the Company converts the investment
property into fixed assets or intangible assets from the date of change. When the use of self-use property
changes to rental earning or capital appreciation, the Company converts fixed assets or intangible assets
into investment property from the date of change. When a conversion occurs, the carrying amount before
conversion is used as the converted value
The investment property is derecognized when the investment property is disposed of, or
permanently withdrawn from use and is not expected to obtain economic benefits from its disposal. The
amount of disposal income from the sale, transfer, retirement or damage of the investment property after
deducting its carrying amount and related taxes and expenses is recognized in profit or loss for the
current period.
19. Fixed assets
(1) Recognition conditions of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing goods, providing labour
services, renting or operating management, and having a useful life of more than one fiscal year. Fixed
assets are recognized when they meet all of the following conditions:
1) the economic benefits associated with the fixed assets are likely to flow into the enterprise;
2) the cost of the fixed assets can be reliably measured.
(2) Initial measurement of fixed assets
The fixed assets of the Company are initially measured at cost.
1) The cost of outsourcing fixed assets includes the purchase price, import duties and other related
taxes and fees, as well as other expenses that can be directly attributed to the assets before they reach
their intended usable state.
2) The cost of self-built fixed assets is determined by the necessary expenditures incurred before the
assets reach their expected usable state.
Notes to the financial statements – Page 140
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
3) For fixed assets invested by investors, the value agreed in the investment contract or agreement is
regarded as the book value, but the value agreed in the contract or agreement is not accounted for at fair
value.
4) If the payment for the purchase of fixed assets is delayed beyond the normal credit conditions, and
is of a financing nature in essence, the cost of fixed assets is determined on the basis of the present value
of the purchase price. The difference between the actual payment and the present value of the purchase
price is recorded in the current profit or loss during the credit period, except where it should be capitalized.
(3) Subsequent measurement and disposal of fixed assets
1） Depreciation of fixed assets
Depreciation of fixed assets is accrued over the estimated useful life based on its recorded value less
the estimated net residual value. The fixed assets that have been provided for impairment losses are
depreciated in the future period based on the carrying amount after deducting the impairment provision
and the remaining useful life.
The Company determines the service life and estimated net residual value of fixed assets based on
the nature and use of fixed assets. At the end of the year, the service life, the estimated net residual
value and the depreciation method of the fixed assets are reviewed. If there is a difference from the
original estimate, corresponding adjustments will be made.
The depreciation method, depreciation period and annual depreciation rate of various fixed assets
are as follows.
Estimated
Method of Residual value
Class depreciation
useful life Depreciation rate %
rate %
(years)
Property and plant Straight-line 20-35 5.00 4.80-2.70
Machinery and Straight-line
10 5.00-10.00 9.50-9.00
equipment
Electronic equipment Straight-line 5 5.00 19.00
Motor vehicles Straight-line 5 5.00 19.00
Others Straight-line 5 5.00 19.00
2) Subsequent expenditures on fixed assets
Subsequent expenditures related to fixed assets that meet the conditions for recognition of fixed
assets are included in the cost of fixed assets; those that do not meet the conditions for recognition of
fixed assets are included in the current profit or loss when they occur.
3) Disposal of fixed assets
When a fixed asset is disposed of or no economic benefit is expected to result from its use or disposal,
the fixed asset is derecognized. The amount of disposal income from sale, transfer, retirement or
damage of the fixed asset after deducting its book value and related taxes is included into the current
profit or loss.
20. Construction in Progress
(1) Initial measurement of construction in progress
Notes to the financial statements – Page 141
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
The self-built construction in progress of the Company is measured at the actual cost, which is
determined by the necessary expenses incurred before the construction of the asset reaches the
intended usable condition, including the cost of engineering materials, labour costs and relevant taxes
payable, capitalized borrowing costs and indirect costs that should be apportioned. The Company’s
construction in progress is classified into projects when in accounting
(2) Criteria for and time point of construction in progress to convert into fixed asset
The total expenditure incurred before the construction in progress project is constructed to reach the
intended usable condition shall be recorded as the book value of the fixed assets. For the construction in
progress built which has reached the intended usable condition, but has not yet completed the final
accounts, since the date of reaching expected use condition, according to the project budget, cost or
actual project costs, it shall be converted into fixed assets at the estimated value, and fixed assets shall
be depreciated in accordance with the depreciation policy of the Company for fixed assets. After the
completion of the final accounts, the original estimated value shall be adjusted according to the actual
cost, but the original depreciation amount shall not be adjusted.
21. Borrowing Costs
(1) Recognition principle for capitalization of borrowing costs
If the borrowing costs of the Company can be directly attributable to the acquisition and construction
or production of assets eligible for capitalization, it shall start capitalization and be included in the cost of
relevant assets in the case of eligible for capitalization; other borrowing costs shall be recognized as
expenses at the time of occurrence and shall be included in the current profit or loss.
Assets that are eligible for capitalization are assets that require a long period of time to purchase or
produce activities to achieve fixed assets, investment property and inventory that are available for
intended use or sale.
Borrowing costs begin to capitalize when all of the following conditions are met:
1) Assets expenditure has occurred, including expenditure incurred in the form of cash payment,
transfer of non-cash assets or assuming of interest-bearing debt for the acquisition and construction or
production of assets eligible for capitalization;
2) Borrowing costs have already occurred;
3) The purchase and construction or production activities necessary for the assets to reach the
intended use or saleable status have started.
(2) Capitalization period of borrowing costs
The period of capitalization refers to the period from the point of time when the borrowing costs are
capitalized to the point of time where the capitalization is stopped, excluding the period during which the
borrowing costs are suspended from capitalization.
The borrowing costs shall cease to be capitalized when the assets acquired or produced that meet
the conditions for capitalization are ready for intended use or sale.
When a part of the assets purchased or produced that meet the capitalization conditions are
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
completed and can be used alone, such part of the assets shall stop capitalization of borrowing costs.
Where each part of the assets purchased or produced is completed separately, but must wait until the
whole is completed or can be sold externally, the capitalization of the borrowing costs shall be stopped
when the assets are completed as a whole.
(3) Suspension of capitalization period
If the assets that meet the capitalization conditions are interrupted abnormally during the construction
or production process and the interruption time lasts for more than 3 months, the capitalization of
borrowing costs shall be suspended; the borrowing costs shall continue to be capitalized if the acquisition
or production of assets eligible for capitalization is necessary to meet the required usable status or the
availability of sales. The borrowing costs incurred during the interruption are recognized as profit or loss
for the current period and the borrowing costs continue to be capitalized until the acquisition or production
of assets is resumed.
(4) Calculation for capitalization amount of borrowing costs
Interest charges on special borrowings (excluding interest income on unused borrowings deposited
in the bank, or investment income on temporary investment) and their ancillary expenses shall be
capitalized before the assets purchased or produced that meet the capitalization conditions are ready for
intended use or sale.
The amount of capitalized interest on general borrowings is calculated by the weighted average of
the excess portion of the accumulative asset expenditures over the special borrowings multiplied by the
capitalization rate of general borrowings. The capitalization rate is determined based on the weighted
average interest rate of general borrowings.
Where there is a discount or premium in the borrowings, the interest amount shall be adjusted in
accordance with the effective interest rate method to determine the discount or premium amount that shall
be amortized during each accounting period.
22. Right-of-use Assets
The Company initially measures the right-to-use assets at cost, which includes:
(1) initial measurement amount of lease liabilities;
(2) lease payments made before or at the beginning of the lease term, and deduction of the
relevant amount of rental incentives if any;
(3) initial direct expenses incurred by the Company;
(4) expected costs to be incurred by the Company for dismantling and removing leased assets,
restoring the site of leased assets or restoring leased assets to the state agreed in the lease terms
(excluding costs incurred for the production of inventory)
After the beginning of the lease term, the Company adopts the cost model for subsequent
measurement of the right-of-use assets
If it is reasonably certain to obtain the ownership of the leased assets at the expiration of the lease
term, the Company shall depreciate the leased assets within the remaining useful life of the leased
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
assets. If it is not reasonably certain to obtain the ownership of the leased assets at the expiration of the
lease term, the Company shall depreciate the leased assets within the shorter of the lease term and the
remaining useful life of the leased assets. For the right-of-use assets with impairment provision,
depreciation shall be calculated based on the book value after deduction of impairment provision in
according with the above principles in future periods.
23. Intangible Assets and Development Expenditure
Intangible assets refer to the identifiable non-monetary assets owned or controlled by the Company
which have no physical form, including land use rights, software and trademark use rights.
(1) Initial measurement of intangible assets
The cost of externally purchased intangible assets includes the purchase price, relevant taxation and
other expenses directly attributable to bringing the assets to expected usage. If payment for the purchase
price of intangible assets is delayed beyond normal credit conditions and is in fact financing in nature, the
cost of the intangible assets is determined based on the present value of the purchase price.
For intangible asset obtained through debt restructuring for offsetting the debt of the debtor, its initial
measurement cost includes the fair value of the waived creditor’s rights and taxes and other costs directly
attributable to bringing the asset to expected usage. The difference between the fair value of the waived
creditor’s rights and the carrying amount shall be recognized in profit or loss for the period.
The book value of intangible asset received in exchange for non-monetary asset is based on the fair
value of the asset surrendered and relevant taxes payable, provided that the exchange of nonmonetary
asset has a commercial substance and the fair value of both the asset received and the asset
surrendered can be reliably measured, except there is definite evidence that the fair value of the asset
received is more reliable; for exchange of non-monetary asset that cannot satisfy the above conditions,
the cost of the intangible asset received is based on the carrying amount of the asset surrendered and
relevant taxes payable, and no profit or loss is recognized.
For intangible asset obtained through business absorption or combination under common control, its
book value is determined by the carrying amount of the combined party; for intangible asset obtained
through business absorption or merger not under common control, its book value is determined by the fair
value of the intangible asset.
The cost of an internally developed intangible asset includes the materials consumed in developing
the intangible asset, labour costs, registration fees, amortization of other patented rights and licensed
rights used during the development process, interest expenses meeting capitalization conditions, and
other direct costs for bringing the intangible asset to expected usage.
(2) Subsequent measurement of intangible assets
The Company determines the useful life of intangible assets on acquisition, which are classified as
intangible assets with limited useful life and indefinite useful life.
1） Intangible assets with a limited useful life
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Intangible assets with a limited useful life are depreciated using straight line method over the term
during which they bring economic benefits to the Company. The estimated life and basis for the intangible
assets with a limited useful life are as follows:
Estimated useful
Item Amortization method
life
Land use right 50 Straight-line
Software systems 5 Straight-line
Right to use the trademark 5-10 Straight-line
The useful life and depreciation method of intangible assets with a limited useful life are reassessed
at the end of each period. If there is a difference from the original estimate, corresponding adjustments
will be made.
Upon re-assessment, there was no difference in the useful life and depreciation method of intangible
assets from the previous estimates at the end of the period.
(3) Specific basis for determining the research stage and development
stage of internal research and development projects of the Company
Research stage: a stage of scheduled innovative investigations and research activities for the
acquisition and understanding of new scientific or technical knowledge.
Development stage: before the commercial production or use, the research results or other
knowledge will be applied to a plan or design to produce new or substantial improvements in materials,
devices, products and other activities.
The expenditure of the research stage of the internal research and development project is included in
the current profit or loss at the time of occurrence
(4) Specific standard for capitalization of expenditure in the development
stage
The expenditure of an internal research and development project in the development stage is
recognized as an intangible asset when meeting all of the following conditions:
1) It is technically feasible to complete the intangible asset so that it can be used or sold;
2) With an intention to complete the intangible asset and to use or sell it;
3) The way the intangible asset generates economic benefits can prove the existence of a market for
the products produced using the intangible asset or a market for the intangible asset itself, and if the
intangible asset will be used internally, its usefulness can be proven;
4) Having sufficient technical, financial resources and other resource support to complete the
development of the intangible asset, and having the ability to use or sell the intangible asset;
5) Expenditure attributable to the development stage of the intangible asset can be reliably
measured.
Expenditures incurred in the development stage that do not meet the above conditions shall be
included in the current profit or loss at the time of occurrence. The development expenditures which have
been included in the profit or loss in the previous periods will not be recognized as an asset in the future
Notes to the financial statements – Page 145
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
period. The capitalized expenditures in the development phase are shown in the balance sheet as
development expenditures and are converted into intangible assets from the date of the project’s intended
use.
24. Impairment on Long-term Assets
On the balance sheet date, the Company determines whether there may be a sign of impairment on
long-term assets. If there is a sign of impairment on long-term assets, the recoverable amount is
estimated on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single
asset, then determine the recoverable amount of the asset group on the basis of the asset group to which
the asset belongs.
The estimated recoverable amount of an asset is the higher of its fair value less the cost of disposal
and the present value of the expected future cash flow of the asset.
The measurement results of recoverable amount show that when the recoverable amount of an
long-term asset is lower than its book value, the book value of the long-term asset is reduced to its
recoverable amount. The reduced amount is recognized as an impairment loss on the asset and included
in the current profit or loss, at the same time, asset impairment provision will be made accordingly. Asset
impairment loss shall not be reversed during the subsequent accounting period once recognized.
After the asset impairment loss is recognized, the depreciation or amortization expenses of the
impaired assets will be adjusted accordingly in the future period, so that the assets’ book value after
adjustment (deducting the estimated net residual value) will be systematically apportioned over the
remaining useful life of the assets.
No matter whether there is any sign of impairment or not, the impairment test is carried out every
year for goodwill and intangible assets with an indefinite useful life arising from an enterprise merger.
In the impairment test of goodwill, the book value of goodwill would be apportioned to asset group or
portfolio of asset group expected to benefit from the synergy effect of an enterprise merger. When taking
an impairment test on the relevant asset group or portfolio of asset group containing goodwill, if there is a
sign of impairment on the asset group or portfolio of asset group related to the goodwill, the Company first
calculates the recoverable amount after testing the asset group or portfolio of asset group which does not
contain the goodwill for impairment, and then compares it with the related book value to recognize the
corresponding impairment loss. Next, the Company conducts an impairment test on the asset group or
portfolio of asset group which contains the goodwill and compares the book value of the related asset
group or portfolio of asset group (book value includes the share of goodwill) with the recoverable amount.
If the recoverable amount of the related asset group or portfolio of asset group is lower than the book
value, the Company will recognize the impairment loss of goodwill.
25. Long-term Deferred Expenses
(1) Amortization method
Long-term deferred expenses refer to expenses that have already been spent by the Company, but
shall be apportioned in the current period and the future periods and the benefit period is over 1 year.
Notes to the financial statements – Page 146
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Long-term deferred expenses are amortized in benefit period
(2) Amortization period
Category Amortization period Note
Counter fabrication expenses 2-3
Decoration expenses 3-5
Others 2-3
26. Contract liabilities
The obligation to transfer goods to a customer for which consideration has been received or
receivable is recognized in part as a contract liability
27. Employee Remuneration
Employee remuneration refers to the various forms of remuneration or compensation given by the
Company to obtain the services provided by the employees or to terminate the labour relationship.
Employee remuneration includes short-term remuneration, post-employment benefits, termination
benefits and other long-term employee benefits.
(1) Short-term remuneration
Short-term remuneration refers to the employee compensation other than post-employment benefits
and termination benefits required to be fully paid by the Company within 12 months after the end of the
annual reporting period in which the employees render relevant services. During the accounting period in
which the employees render services, the Company recognizes the short-term remuneration payable as
liabilities and includes the same in related asset costs or expenses according to the object which benefits
from the services rendered by employees.
(2) Post-employment benefits
Post-employment benefits refer to various forms of remuneration and benefits other than short-term
remuneration and termination benefits provided by the Company after the retirement of employees or
termination of labour relationship with the Company in exchange for the services rendered by employees.
The Company’s post-employment benefits is defined contribution plan.
Defined contribution plan of the post-employment benefits mainly refers to the social basic
endowment insurance, unemployment insurance, etc. organized and implemented by local labour and
social security institutions; in addition to social basic endowment insurance and unemployment insurance,
employees who retire after 1 January 2009 can voluntarily participate in the Company’s enterprise annuity
plan. During the accounting period when employees render services to the Company, amount payable
calculated by the defined contribution plan is recognized as a liability and included in the current profit or
loss or related asset costs.
The Company will no longer have any other payment obligations after making the above-mentioned
payments on a regular basis in accordance with the standards and annuity plans prescribed by the State.
(3) Termination benefits
Termination benefits refer to the compensation paid to an employee when the Company terminates
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
the employment relationship with the employee before the expiry of the employment contract or provides
compensation as an offer to encourage the employee to accept voluntary redundancy. The Company
recognizes the liabilities arising from the compensation paid to terminate the employment relationship
with employees and includes the same in the current profit or loss at the earlier date of the following: 1)
when the Company cannot reverse the termination benefits due to the plan of cancelling the labour
relationship or the termination benefits provided by the advice of reducing staff; and 2) the Company
recognizes the cost or expense relative to the payment of termination benefits of restructuring into the
current profit or loss.
The Company provides internal retirement benefits to employees who accept internal retirement
arrangements. The internal retirement benefits refer to the remuneration and the social insurance
premiums paid to the employees who have not reached the retirement age set by the State, and
voluntarily withdrew from the job after approval of the Company’s management. The Company pays
internal retired benefits to an internal retired employee from the day when the internal retirement
arrangement begins till the employee reaches the normal retirement age. For internal retirement benefits,
the Company conducts accounting treatment in contrast to the termination benefits. When the related
recognition conditions of termination benefits are met, the Company will recognize the remuneration and
the social insurance premiums of the internal retired employee to be paid during the period between the
employee’s termination of service and normal retirement date as liabilities and include the same in the
current profit or loss in one time. Changes in actuarial assumptions of internal retirement benefits and
differences arising from the adjustment of welfare standards are included in current profit or loss when
incurred.
(4) Other long-term employee benefits
Other long-term employee benefits refer to all employee benefits except for short-term remuneration,
post-employment benefits, and termination benefits. For other long-term employee benefits that meet the
conditions of the defined contribution plan, during the accounting period in which the employees provide
services for the Company, the amount that should be paid is recognized as a liability and is included in the
current profit or loss or related asset costs. In addition to the above situations, other long-term employee
benefits are actuarially calculated by the independent actuary using the expected cumulative welfare unit
method on the balance sheet date, and the welfare obligations arising from the defined benefit plans are
attributed to the period during which the employees provide services and are included in the current profit
or loss or related asset costs.
28. Projected liabilities
(1) Basis for recognition of projected liabilities
The Company will recognize projected liabilities if the obligation relating to contingent matters meets
all of the following conditions:
This obligation is a present obligation assumed by the Company;
The fulfillment of this obligation will probably cause the outflow of economic benefits from the
Notes to the financial statements – Page 148
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Company;
The amount of this obligation can be measured reliably.
(2) Measurement method of projected liabilities
The initial measurement of projected liabilities of the Company is based on the best estimate of the
expenditure required for the performance of the related present obligations.
When determining the best estimate, the Company comprehensively considers the risks,
uncertainties relating to the contingent matters and time value of currency. If the time value of currency
has a great influence, the Company determines the best estimate by discounting the related future cash
outflows.
The best estimate is determined in different situations as follow:
If there is a continuous range (or interval) of the required expenditure and the probability of the
occurrence of all the results in the range is the same, the best estimate is determined according to the
median value of the range, which is the average of the upper and lower limit.
Where there is not a continuous range (or interval) of the required expenditure, or there is a
continuous range, but the probability of the occurrence of all the results in the range is different, if the
contingencies involve a single project, the best estimate is determined by the amount which is most likely
to occur; if the contingencies involve a number of projects, the best estimate is determined based on
various possible results and related probability calculation.
If all or part of the expenses of the Company required to settle projected liabilities are expected to be
compensated by a third party and it is basically certain to receive the amount of compensation, it is
independently recognized as an asset. The amount of compensation recognized will not exceed the book
value of the projected liabilities.
29. Lease liabilities
The Company initially measures the lease liabilities according to the present value of the unpaid
lease payments at the beginning of the lease term. In calculating the present value of lease payments, the
Company adopts the interest rate implicit in the lease as the discount rate. If it is impossible to determine
the interest rate implicit in the lease, the incremental borrowing rate of the Company shall be used as the
discount rate. Lease payments include:
(1) Fixed payments and substantive fixed payments after deducting the relevant amount of lease
incentives;
(2) Variable lease payments depending on an index or rate;
(3) Where the Company reasonably determines that the option will be exercised, the amount of the
lease payment includes the exercise price of purchase option;
(4) Where the lease term reflects that the Company will exercise the option to terminate the lease, the
amount of the lease payment includes the amount to be paid for the exercise of the option to terminate the
lease;
(5) Expected payments based on the guaranteed residual value provided by the Company.
Notes to the financial statements – Page 149
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
The Company calculates the interest charges of the lease liabilities for each period of the lease term
at a fixed discount rate and includes the same in the profit or loss of the current period or the related asset
costs.
Variable lease payments not included in the measurement of lease liabilities shall be included in the
current profit or loss or the related asset costs when they actually occur.
30. Share-based payment
(1) Category of share-based payment
The Company’s share-based payments include equity-settled share-based payments and cash
settled share-based payments.
(2) Recognition method of fair value of equity instrument
For options and other equity instruments granted by the Company with an active market, the fair
value is determined at the active market quotations. For options and other equity instruments granted by
the Company with no active market, option pricing model shall be used to estimate the fair value of the
equity instruments. Factors as follows shall be taken into account using option pricing models: the
exercise price of the option, the validity of the option, the current price of the target share, the expected
volatility of the share price, predicted dividend of the share and risk-free rate of the option within the
validity period.
In determining the fair value of the equity instruments at the date of grant, the Company shall
consider the impact of market conditions in the vesting conditions and non-vesting conditions stated in the
share-based payment agreement. If there are no vesting conditions in the share-based payments, as long
as the employees or other parties satisfy the non-market conditions in all of the vesting conditions (such
as term of service) , the Company shall recognize the services rendered as an expense accordingly.
(3) Recognition basis for the best estimate of exercisable equity instruments
On each balance sheet date within the vesting period, the estimated number of exercisable equity
instruments is amended based on the best estimate made by the Company according to the latest
available subsequent information as to changes in the number of employees with exercisable rights. As at
the exercise date, the final estimated number of exercisable equity instruments should equal the actual
number of exercisable equity instruments.
(4) Accounting treatment
Equity-settled share-based payments are measured at the fair value of the equity instruments
granted to employees. For those exercisable immediately after the grant, they shall be included in the
relevant costs or expenses at the fair value of equity instruments at the grant date with an increase in
capital reserve accordingly. For those exercisable only after provision of services or satisfaction of
prescribed performance conditions within the vesting period, on each balance sheet date within the
vesting period, the Company will recognize the services received in the current period in related costs or
expenses and capital reserves at the fair value of equity instruments on the grant date based on the best
Notes to the financial statements – Page 150
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
estimate of the number of exercisable equity instruments. After the vesting period, relevant costs or
expenses and total owners’ equity which have been recognized will not be adjusted.
Cash-settled share-based payments are calculated by the fair value of liabilities assumed in
accordance with the Company’s shares or other equity instruments. For those exercisable immediately
after the grant, they shall be included in the relevant costs or expenses at the fair value of the liabilities
assumed by the Company at the grant date with an increase in liabilities accordingly. For cash-settled
share-based payments exercisable only after provision of services or satisfaction of prescribed
performance conditions within the vesting period, on each balance sheet date within the vesting period,
the Company will recognize the services received in the current period in costs or expenses and
corresponding liabilities at the amount of fair value of the liabilities assumed by the Company based on
the best estimate of the number of exercisable equity instruments. At each balance sheet date and the
settlement date prior to the settlement of relevant liabilities, the fair value of the liabilities is re-measured
through profit or loss.
During the vesting period, if the equity instruments granted are cancelled, the Company will treat the
cancelled equity instruments granted as accelerated vesting, and the amount within the remaining period
should be recognized immediately in profit or loss while recognizing the capital reverse. If employees or
other parties can meet non-vesting conditions but do not meet within the vesting period, the Company will
treat it as cancelled equity instruments granted.
31. Revenue
The Company’s revenue mainly come from:
(1) Sales of watch
(2) Precision manufacturing
(3) Property leasing
(1) General principal of revenue recognition
The Group recognizes revenue when the contract performance obligations have been fulfilled i.e. the
customer has gained control over the relevant goods or services.
Performance obligations means the Company’s commitment to transfer identifiable goods or service
to clients.
Obtaining control of the relevant goods means that it is able to dominate the use of the goods and
derive almost all economic benefits therefrom.
The Company assesses contracts at the beginning date of a contract to identify each performance
obligations contained in a contract and to determine whether each performance obligation is to be
finished over a period of time or at a point of time. The Company satisfies a performance obligation over
time if one of the following criteria is met; or otherwise, a performance obligation is satisfied at a certain
point in time: 1) the customer simultaneously receives and consumes the benefits provided by the
Company’s performance as the Company performs; 2) the customer can control the goods under
construction during the Company’s performance; 3) the Company’s performance does not create goods
Notes to the financial statements – Page 151
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
with an alternative use to it and the Company has a right to payment for performance completed to date
throughout the contract term. Otherwise, the Company recognizes revenue at the point of time.
For performance obligation satisfied over time, the Company recognizes revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. When the
outcome of that performance obligation cannot be measured reasonably, but the Company expects to
recover the costs incurred in satisfying the performance obligation, the Company recognizes revenue
only to the extent of the amount of costs incurred until it can reasonably measure the outcome of the
performance obligation
(2) Detailed method for revenue recognition
The Company has three main business sectors: sales of watch, precision manufacturing and
property leasing. Based on the Company’s business mode and terms of settlement, the Company set
detailed method of revenue recognition method as follows:
1) Sales of watch
Sale of watch belongs to fulfilling performance obligations at a point of time.
① Online sales
Revenue shall be recognized at the point that the goods are dispatched and the customer confirmed
received the goods.
② Offline sales
Revenue shall be recognized at the point when the goods are delivered and payment by customer is
collected.
③ Consignment sale
The Company recognizes revenue when the Company receives the detail of the sales list from
distributors and confirms that the control over goods ownership were transferred to the purchaser.
④ Sale of consigned goods from others
Under Sale of consigned goods from others, the Group recognizes revenue in net amount when it
delivered consigned sale goods to customer and confirms that control over the ownership of goods were
transferred to the purchaser.
2) Precision manufacturing
Precision manufacturing business belongs to fulfilling performance obligations at a point of time.
Revenue from domestic sales shall be recognized when the goods are delivered and the economic
benefit associated with the goods is probable to flow into the Company. Revenue from export shall be
recognized when the following criteria is satisfied: The Company declared the good at custom; obtained
bill of lading; the right of collecting payment is obtained and its probable that the economic benefit
associated with the goods flows into the Company.
3) Property leasing
Refer to Note IV 35. (4) for details.
(3) Revenue treatment principles for specific transactions
Notes to the financial statements – Page 152
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
1) Contracts with sales return provisions
When the customer obtains control of the relevant goods, revenue is recognized based on the
amount of consideration expected to be received due to the transfer of goods to the customers (exclusive
of the amount expected to be refunded due to the return of sales) , while liability is recognized based on
the amount expected to be refunded due to the return of sales.
The carrying amount of goods expected to be returned at sales of goods, after deduction of costs
expected to incur for recovery of such goods (including impairment of value of the returned goods) , will
be accounted for under the item of “Right of return assets”.
2) Contracts with quality assurance provisions
The Company assesses whether a separate service is rendered in respect of the quality assurance
besides guaranteeing the sales of goods to customers are in line with the designated standards. When
additional service is provided by the Company, it is considered as a single performance obligation and
under accounting treatment according to the standards on revenue; otherwise, quality assurance
obligations will be under accounting treatment according to the accounting standards on contingent
matters
32. Contract costs
(1) Contract performance cost
The Company recognizes the cost of contract performance as an asset for the cost of performing the
contract as meeting all of the following conditions:
1) The cost is directly related to a current or expected contract, including direct labour, direct
materials, manufacturing expenses (or similar expenses) , costs clearly to be borne by the customer, and
other costs incurred solely for the contract;
2) This cost increases the resources that the company will use to fulfill its performance obligations in
the future.
3) The cost is expected to be recovered
The asset will be presented under inventory or other non-current assets based on the length of its
amortization period.
(2) Contract obtainment cost
If the incremental cost of the Company is expected to be recovered, the contract acquisition cost is
recognized as an asset. Incremental cost refers to the cost that the Company will not occur without
obtaining a contract, such as sales commission. For the amortization period not exceeding one year, it is
included in the current profit or loss when it occurs.
(3) Amortization of contract costs The Company recognizes the contract performance cost and the
contract acquisition cost on the same basis as the commodity income related to the contract cost asset,
and amortizes it at the time when the performance obligation is performed or in accordance with the
performance of the performance obligation, and is included in the current profit or loss.
(4) Contract cost impairment For assets related to contract costs, if the book value is higher than the
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
difference between the remaining consideration expected to be received by the Company for transfer of
the goods related to the assets and the estimated cost of transferring the relevant goods, the excess
should be depreciated and confirmed as an asset impairment loss
If the factors caused impairment changed after impairment provision is accrued, impairment provision
shall be reversed and included in current period profit or loss but the carrying amount of asset after the
reversal shall not exceed the carrying amount at the reversal date as if there was no impair.
33. Government Subsidies
1． Classification
Government subsidies refer to monetary and non-monetary assets received from the government
without compensation, however excluding the capital invested by the government as a corporate owner.
According to the subsidy objects stipulated in the documents of relevant government, government
subsidies are divided into subsidies related to assets and subsidies related to income.
Government subsidies related to assets are obtained by the Company for the purposes of acquiring,
constructing or otherwise forming long-term assets. Government subsidies related to income refer to the
government subsidies other than those related to assets
2． Recognition of government subsidies
Where evidence shows that the Company complies with relevant conditions of policies for financial
supports and is expected to receive the financial support funds at the end of the period, the amount
receivable is recognized as government subsidies. Otherwise, the government subsidy is recognized
upon actual receipt.
Government subsidies in the form of monetary assets are stated at the amount received or
receivable. Government subsidies in the form of non-monetary assets are measured at fair value; if fair
value cannot be reliably obtained, a nominal amount (RMB1) is used. Government subsidies that are
measured at nominal amount shall be recognized in the current profit or loss directly.
3． Accounting treatment
The Company determines whether a government subsidy shall use gross method or net method
based on its economical substance. In general, only one method is used for one category or similar
government subsidy and it shall be used in a consistent way.
Government subsidies related to assets are recognized as deferred income, and are recognized,
under reasonable and systematic approach, in profit and loss in each period over the useful life of the
constructed or purchased assets;
Government subsidies related to income aiming at compensating for relevant expenses or losses to
be incurred by the enterprise in subsequent periods are recognized as deferred income, and are
recognized in current profit or loss when relevant expenses or losses are recognized. Government
subsidies aiming at compensating for relevant expenses or losses of the enterprise that are already
incurred are charged to current profit or loss once received.
Government subsidies related to daily activities of enterprises are included in other income;
Notes to the financial statements – Page 154
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
government subsidies that are not related to daily activities of enterprises are included in non-operating
income and expense.
Government subsidies related to the discount interest received from policy-related preferential loans
offset the relevant borrowing costs; if the policy-based preferential interest rate loan provided by the
lending bank is obtained, the borrowing amount actually received shall be taken as the recording value of
the borrowings, and borrowing cost should be calculated using the preferential interest rate according to
the loan principal and the policy.
When it is required to return recognized government subsidy, if such subsidy is used to write down
the carrying value of relevant assets on initial recognition, the carrying value of the relevant assets shall
be adjusted; if there is balance of relevant deferred income, it shall be written down to the book balance of
relevant deferred income, and the excess is included in the current profit or loss; where there is no
relevant deferred income, it shall be directly included in the current profit or loss
34. Deferred Income Tax Assets and Deferred Income Tax Liabilities
Deferred income tax assets and deferred income tax liabilities are measured and recognized based
on the difference (temporary difference) between the taxable base of assets and liabilities and book value.
On balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured
at the applicable tax rate during the period when it is expected to recover such assets or settle such
liabilities.
(1) Criteria for recognition of deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporary difference to
the extent it is probably that future taxable amount will be available against which the deductible
temporary difference can be utilized, and deductible losses and taxes can be carried forward to
subsequent years. However, the deferred income tax assets arising from the initial recognition of assets
or liabilities in a transaction with the following features are not recognized: 1) the transaction is not a
business combination; 2) neither the accounting profit or the taxable income or deductible losses will be
affected when the transaction occurs.
For deductible temporary difference in relation to investment in the associates, corresponding
deferred income tax assets are recognized in the following conditions: the temporary difference is
probably reversed in a foreseeable future and it is likely that taxable income is obtained for deduction of
the deductible temporary difference in the future.
(2) Criteria for recognition of deferred income tax liabilities
The Company recognizes deferred income tax liabilities on the temporary difference between the
taxable but not yet paid taxation in the current and previous periods, excluding:
1) temporary difference arising from the initial recognition of goodwill;
2) a transaction or event arising from non-business combination, and neither the accounting profit or
the taxable income (or deductible losses) will be affected when the transaction or event occurs;
3) for taxable temporary difference in relation to investment in subsidiaries or associates, the time for
Notes to the financial statements – Page 155
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
reversal of the temporary difference can be controlled and the temporary difference is probably not
reversed in a foreseeable future
(3) When all of the following conditions are satisfied, deferred income tax assets
and deferred income tax liabilities shall be presented on a net basis
1) An enterprise has the statutory right to settle the current income tax assets and current income tax
liabilities at their net amounts;
2) The deferred income tax assets and deferred income tax liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities which intend
either to settle current income tax assets and current income tax liabilities on a net basis, or to realize the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
35. Lease
On the commencement date of the contract, the Company evaluates whether the contract is a lease
or contains a lease. If one party to a contract gives up the right to control the use of one or more
identifiable assets for a period of time in exchange for consideration, the contract is a lease or contains a
lease.
(1) Splitting a lease contract
When the contract contains a number of separate leases, the Company will split the contract into
separate leases for accounting individually.
When the contract contains both leasing and non-leasing parts, the Company will split the leasing
and non-leasing parts. The leasing part shall be accounted for in accordance with the lease standards,
and the non-leasing part shall be accounted for in accordance with other applicable accounting
standards for business enterprises
(2) Combination of lease contracts
When two or more lease-containing contracts concluded by the Company with the same trader or its
related parties at the same time or at a similar time meet one of the following conditions, the Company
shall merge them into one contract for accounting:
1) Such two or more contracts are concluded for general commercial purposes and constitute a
package of transactions. If these are not considered as a whole, these overall commercial purposes
cannot be recognized.
2) The amount of consideration for a contract in such two or more contracts depends on the pricing or
performance of other contracts.
3) The right-of-use assets transferred by such two or more contracts together constitute a separate
lease
(3) Accounting treatment for the Company as a lessee
On the commencement date of lease term, the Company recognizes right-of-use assets and lease
Notes to the financial statements – Page 156
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
liabilities for leases, in addition to short-term leases and low-value asset leases with simplified treatment
(1) Short-term lease and low value lease
Short-term lease refers to a lease that does not include purchase options and has a lease term not
exceeding 12 months. Low-value asset lease refers to the lease with lower value when a single leased
asset is a new asset
The Company does not recognize right-of-use assets and lease liabilities for short-term lease and low
value lease. The payment of such leases shall be charged to profit or loss using straight-line method or
other systematic method.
(2) Refer to Note IV. 22 and Note IV. 29 for accounting policies for right-of-use assets and lease
liabilities.
(4) Accounting treatment for the Company as a lessor
1) Classification of leases
The Company divides leases into financial leases and operating leases on the start date of the lease.
Financial lease refers to a lease that essentially transfers almost all of the risks and rewards related to
the ownership of leased assets. Its ownership may or may not be transferred eventually. Operating
leases refer to leases other than financial leases.
If a lease has one or more of the following characteristics, the Company usually classifies it as a
financial lease:
1) At the expiry of the lease term, the ownership of the leased assets is transferred to the lessee.
2) The lessee has the option to purchase the leased assets, and the purchase price set by the lessee
is low enough compared with the expected fair value of the leased assets when exercising the option.
Therefore, it can be reasonably determined on the lease start date that the lessee will exercise the option.
3) Although the ownership of the assets is not transferred, the lease term accounts for the majority of
the life of the leased assets.
4) On the commencement date of the lease, the present value of the lease receipts is almost equal to
the fair value of the leased assets.
5) The nature of leased assets is special. If there is no major transformation, only the lessee can use
them
If one or more of the following conditions exist in a lease, it may also be classified as a financial
lease:
1) If the lessee stops the lease, the lessee shall bear the losses caused by the termination of the
lease to the lessor.
2) The profits or losses caused by the fluctuation of the fair value of the balance of assets belong to
the lessee.
3) The lessee can continue to lease far below the market level for the next period.
(2) Accounting treatment for financial leases
Notes to the financial statements – Page 157
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
On the commencement date of lease term, the Company recognizes the financial lease receivable on
the financial leases and derecognizes the financial lease assets.
When the initial measurement of the financial lease receivable is made, the book value of the
financial lease receivable is the sum of the unsecured balance and the present value of lease receipts
that have not yet been received at the beginning of the lease term discounted at the interest rate implicit in
the lease. The lease receipts include:
1) Fixed payments and substantive fixed payments after deducting the relevant amount of lease
incentives;
2) Variable lease payments depending on an index or rate;
3) In the case of reasonably determining that the lessee will exercise the purchase option, the lease
receipts include the exercise price of purchase option;
4) If the lease term reflects that the lessee will exercise the option to terminate the lease, the lease
receipts include the amount to be paid by the lessee in exercising the option to terminate the lease;
5) Guarantee residual value provided to the lessor by the lessee, the party concerned with the lessee
and an independent third party with financial capacity to fulfill the guarantee obligation
The Company calculates and recognizes the interest income for each period of the lease term based
on the fixed interest rate implicit in the lease, and the variable lease payments which are obtained and not
included in the net rental investment amount are included in the profit or loss of the period when they
actually occur.
(3) Accounting treatment for operating leases
The Company adopts the straight line method or other systematic and reasonable method to
recognize the lease receipts from operating leases as rental income during each period of the lease term.
Capitalization of the initial direct expenses incurred in connection with operating leases shall be
apportioned on the same basis as the recognition of rental income during the lease term, and shall be
recorded in the profit or loss of the current period. Variable lease payments obtained in connection with
operating leases that are not incorporated in the lease receipts shall be incorporated in the profit or loss of
the period when they actually occur.
36. Termination of business
The Company recognizes components as termination of business components if one of the following
condition is met and that the component has already been disposed or classified as held-for-sale assets
and identifiable.
(1) The component represents a stand along major business or a stand along major area in
conducting business.
(2) The component is part of plan connecting to disposal of a stand along major business or major
area of conducting business.
(3) The component is a subsidiary that obtained specifically for resale.
Notes to the financial statements – Page 158
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Operating profit or loss such as the impairment loss and the amount of reversal shall be presented in
income statement as profit or loss from terminated business.
37. Re-purchase of shares
Before written-off or transfer, the shares that the Company re-purchased are dealt as treasury shares.
All expenses incurred for the re-purchase are charged in the cost of treasury shares. Consideration and
transaction expenses paid during the share re-purchase shall decrease shareholder’s equity. No gain or
losses shall be recognized during re-purchase, transfer or written-off of the Company’s shares.
If the treasury shares is transferred, the difference between amount actually received and the share’s
carrying amount shall be charged to capital reserve, if the capital reserve is not sufficient to offset, surplus
reserve and retained earing shall be offset. If the treasury share is to written-off, the share capital shall be
decreased based on the face value of shares and the difference between the carrying amount and its face
value shall offset the capital reserve. If the capital reserve is not sufficient to offset, deducting surplus
reserve and retained earnings.
38. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Details of and reasons for the changes
Approval process Note
in accounting policies
Accounting Standards for Business Approved by the 27th meeting of the 9th
Enterprises No. 21 – Leases Session of the Board
Other explanations:
Impact on the Company from the adoption of the new lease standard
The Company adopts Accounting Standards for Business Enterprises No. 21 – Leases from 1
January 2021. Refer to Note IV for details of revised accounting policies.
For a contract which has existed before the initial execution date, the Company does not re-evaluate
whether it is a lease or contains a lease at the initial execution date, and does not adopt the accounting
policies below for the contract which is not identified as containing a lease under the original lease
standards before the initial execution date, and adopts the accounting policies below only for the contract
which is identified as a lease under the original lease standards before the initial execution date and the
contract whose commencement date is later than the initial execution date
Under the new lease standard, the Company choose to adjust the balance of retained earnings and
other related items in the financial statements at the beginning of the year of initial adoption of such
standard (1 January 2021) based on the cumulative effect of initial adoption of such standard, with no
adjustment to the information for the comparable period.
Upon adoption of the new lease standard, related items in the balance sheet as of 1 January 2021
are affected as follows:
Item 31 December 2020 Cumulated affect (note) 1 January 2021
Other current assets 75,935,141.76 -8,078,503.09 67,856,638.67
Right-of-use assets 163,169,400.44 163,169,400.44
Notes to the financial statements – Page 159
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item 31 December 2020 Cumulated affect (note) 1 January 2021
Total assets 4,018,712,700.18 155,090,897.35 4,173,803,597.53
Non-current liabilities due
370,030.00 88,839,586.06 89,209,616.06
within one year
Lease liabilities 77,439,579.30 77,439,579.30
Total liabilities 1,218,752,028.75 166,279,165.36 1,385,031,194.11
Undistributed profit 1,164,490,911.51 -11,188,268.01 1,153,302,643.50
Total shareholders’ equity 2,799,960,671.43 -11,188,268.01 2,788,772,403.42
Note: Only financial statement items that affected are list in above table, as a result, the figure of
subtotal and total cannot be calculated based on figures list above.
1) Weighted average incremental loan interest rate for adopted by the Company:
On 1 January 2021, The Company recognized lease liability of RMB166,279,165.36 and right-of-use
asset of 163,169,400.44. For operating lease on the adoption date, the Company used the discounted
value based on incremental loan interest rate to measure lease liabilities. The weighted average
incremental loan interest rate is 4.40%.
a) Difference of present value of minimum lease payment disclosed at the end of prior period and
present value of lease liabilities on the first adoption date:
The difference of lease liability recognized on 1 January 2021 and material lease commitment
disclosed in 2020 financial statement is as follows:
Item 1 January 2021 Note
1. Operating lease commitment as at 31 December 2020 138,864,123.57
Lease liability discounted using incremental loan interest on the 122,851,148.71
adoption date
Plus: option to renew 44,798,990.43
Less: exemption – short-term lease 1,370,973.78
Lease liability recognized related to previous operating lease 166,279,165.36
2. Lease liabilities at 1 January 2021 166,279,165.36
Including: current liabilities 88,839,586.06
Non-current liabilities 77,439,579.30
(2) Changes in accounting estimates
There were no changes in significant accounting estimates during the reporting period.
V. Taxes
1. Main types of taxes and corresponding tax rates
Tax type Basis Tax rate note
Domestic sales, providing
13%
manufacturing and repairing services
Property leasing 9%
VAT
Other taxable services 6%
Simplified method 5%
Notes to the financial statements – Page 160
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Tax type Basis Tax rate note
Consumption
Luxury watches 20%
tax
Urban
maintenance
Turnover tax payable 7%、5%
and construction
tax
Corporate
Taxable income See below table
income tax
70% or 80% of the original cost of
Property tax property or rental income
1.2%、12%
Corporate income tax of different entities:
Name of entities CIT rate
Shenzhen HARMONY World Watch Center
25%
Co., Ltd.(①)
FIYTA Sales Co., Ltd.(①) 25%
Shenzhen FIYTA Precision Technology Co.,
15%
Ltd.(②③)
Shenzhen FIYTA Technology Development
15%
Co., Ltd.(②③)
HARMONY World Watch Center(Hainan) Co.,
20%
Ltd.(⑥)
Shenzhen Xunhang Precision Technology Co., Ltd. 25%
Emile Choureit Timing (Shenzhen) Ltd. 25%
Liaoning Hengdarui Commercial & Trade Co.,
25%
Ltd.
EMPORAL (Shenzhen) Co., Ltd. 25%
Shenzhen Harmony E-commerce Co., Ltd.(⑥) 20%
FIYTA (Hong Kong) Ltd.(④) 16.5%
Montres Chouriet SA(⑤) 30%
Station 68(④) 16.5%
Note ①:According to the regulations stated in “Interim Administration Method for Levy of Corporate
Income Tax to Enterprise that Operates Cross-regionally”, the head office of the Company and its branch
offices, the head office of HARMONY Company and its branch offices, and the head office of Sales
Company and its branch offices adopt tax submission method of “unified calculation, managing by
classes, pre-paid in its registered place, settlement in total, and adjustment by finance authorities”.
Branch offices mentioned above share 50% of the enterprise income tax and prepay locally; and 50% will
be prepaid by the head offices mentioned above.
Note ②: According to “Notice of the Ministry of Finance, the State Administration of Taxation and
Ministry of Science on Further Perfection of the Pre-tax Super Deduction Ratio of Research and
Development Expenses” (Cai Shui (2021) No. 13) , 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 100% super deduction on top of the
Notes to the financial statements – Page 161
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
R&D expenses that allowed to deduct before income tax since 1 January 2021.
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: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in
Switzerland.
Note ⑥ These companies are small and low-profit enterprises, which enjoy 20% tax rate.
2. Preferential treatment and corresponding approval
According to “Proclamation of Ministry of Finance and State Administration of Taxation in Implementing
Preferential Tax Rate to Small and Low Profit Enterprises and Sole-proprietors” (Caishui (2021) No.12) and
“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 will be included in taxable
income at 12.5% and to be taxed at a rate of 20%; and for annual taxable income that is greater than
RMB1,000,000.00 but not exceeding RMB3,000,000.00, of which 50% will be included in taxable income and
to be taxed at 20%.
According to “Notice of Ministry of Finance and State Administration of Taxation in Extending Expiration
Period of Utilizing Losses for High-Tech Enterprises and Scientific Oriented Medium and Small Enterprises”
(Cai Shui [2018] No. 76) , 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.
VI. Notes to main items of the consolidated financial statements
(Unless otherwise indicated, the currency unit is Renminbi Yuan and the opening balance refers to the
balance as at 1 January 2021)
Note 1． Monetary funds
Item Closing balance Opening balance
Cash on hand 108,612.08 183,759.72
Cash at bank 188,908,798.10 346,055,209.29
Other monetary funds 21,237,326.96 6,818,316.70
Total 210,254,737.14 353,057,285.71
Including: Total overseas deposits 1,724,651.93 3,412,028.94
Including: deposit in finance company 147,786,041.19 283,532,347.79
Deposit in finance company mainly deposited with AVIC Finance Co., Ltd.
As at 31 December 2021, the Company 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
Notes to the financial statements – Page 162
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
that have restriction on remittance back to the home country.
Cash with restricted usage is as follows:
Item Closing balance Opening balance
Overseas deposit with restrictions remitting
1,724,651.93 3,412,028.94
back
Note 2． Bill receivable
1． Presented by category
Item Closing balance Opening balance
Bank acceptance bills 2,989,331.70 16,813,464.36
Commercial acceptance bills 58,268,814.10 31,378,977.79
Total 61,258,145.80 48,192,442.15
2． Presented by ECL types
Closing balance
Type Carrying amount Provision
Percentage Percentage Book value
Amount Amount
(%) (%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 64,324,925.49 100.00 3,066,779.69 4.77 61,258,145.80
losses on single basis
Including: Commercial
61,335,593.79 95.35 3,066,779.69 5.00 58,268,814.10
acceptance bills
Risk-free Bank
2,989,331.70 4.65 2,989,331.70
acceptance bills
Total 64,324,925.49 100.00 3,066,779.69 4.77 61,258,145.80
Continued
Opening balance
Type Carrying amount Provision
Percentage Percentage Book value
Amount Amount
(%) (%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 49,843,967.32 100.00 1,651,525.17 3.31 48,192,442.15
losses on single basis
Including: Commercial
33,030,502.96 66.27 1,651,525.17 5.00 31,378,977.79
acceptance bills
Risk-free Bank
16,813,464.36 33.73 - - 16,813,464.36
acceptance bills
Total 49,843,967.32 100.00 1,651,525.17 3.31 48,192,442.15
3． Notes receivable with expected credit loss provided based on credit risk characteristic
portfolio
Notes to the financial statements – Page 163
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Closing balance
Portfolio
Carrying amount Provision Percentage (%)
Bank acceptance bills 61,335,593.79 3,066,779.69 5.00
Commercial acceptance bills 2,989,331.70
Total 64,324,925.49 3,066,779.69 4.77
4． Bad debt movements in current period
Movements
Opening Closing
Types Received or Other
balance Accrual Written-off balance
reversal changes
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 1,651,525.17 1,415,254.52 3,066,779.69
losses on single basis
Including: Commercial
1,651,525.17 1,415,254.52 3,066,779.69
acceptance bills
Risk-free Bank
acceptance bills
Total 1,651,525.17 1,415,254.52 3,066,779.69
5． Bills have been endorsed but not yet due at the end of the period.
Item Amount de-recognized Amount not de-recognized
Bank acceptance bills 3,064,791.21
Commercial acceptance bills 15,737,928.76
Total 3,064,791.21 15,737,928.76
6． Bill receivable that transferred to receivables due to issuer’s default at the end of the
period
Item Amount transferred to accounts receivable
Commercial acceptance bills 918,150.83
Note 3． Accounts receivable
1． Presentation by aging
Aging Closing balance Opening balance
Within 1 year 411,327,173.23 489,913,393.98
1-2 years 4,211,418.24 10,509,894.86
2-3 years 7,582,641.50 6,142,706.69
Over 3 years 8,867,120.13 2,882,615.92
Subtotal 431,988,353.10 509,448,611.45
Less: provision for bad debt 43,102,751.82 33,849,926.57
Total 388,885,601.28 475,598,684.88
Notes to the financial statements – Page 164
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
2． Presentation by method of providing bad debt
Closing balance
Category Carrying amount Bad debt provision
Percenta ECL rate Book value
Amount Amount
ge (%) (%)
Accounts receivable that
provided expected credit 41,742,982.67 9.66 32,056,051.67 76.79 9,686,931.00
losses on single basis
Accounts receivable that
390,245,370.4
provided expected credit 90.34 11,046,700.15 2.83 379,198,670.28
3
losses on portfolio basis`
Including: Receivable 390,245,370.4
90.34 11,046,700.15 2.83 379,198,670.28
from other customers 3
431,988,353.1
Total 100.00 43,102,751.82 9.98 388,885,601.28
0
Continued
Opening balance
Category Carrying amount Bad debt provision
Percentag ECL rate Book value
Amount Amount
e (%) (%)
Accounts receivable that
21,208,447.1
provided expected credit 4.16 19,133,975.43 90.22 2,074,471.70
3
losses on single basis
Accounts receivable that
488,240,164.
provided expected credit 95.84 14,715,951.14 3.01 473,524,213.18
32
losses on portfolio basis`
Including: Receivable 488,240,164.
95.84 14,715,951.14 3.01 473,524,213.18
from other customers 32
509,448,611.
Total 100.00 33,849,926.57 6.64 475,598,684.88
45
3． Accounts receivable that provided expected credit losses on single basis
included in the closing balance
Closing balance
Name Bad debt ECL rate
Carrying amount Reasons
provision (%)
Receivable from other
41,742,982.67 32,056,051.67 76.79 Chances of recovery is remote
customers
4． In the portfolio, accounts receivable with expected credit loss provided based on
credit risk characteristic portfolio
Portfolio of receivable from other customers
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 388,921,400.94 10,135,084.14 2.61
1-2 years 215,868.25 21,586.83 10.00
2-3 years 439,498.81 221,426.75 50.38
Over 3 years 668,602.43 668,602.43 100.00
Total 390,245,370.43 11,046,700.15 2.83
Notes to the financial statements – Page 165
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
5． Movements of provision during the period
Movements during the period
Opening Closing
Types Recovered or Other
balance Accrual Written-off balance
reversed movements
Accounts receivable
that provided
expected credit 19,133,975.43 14,695,144.56 1,773,068.32 32,056,051.67
losses on single
basis
Accounts receivable
that provided
expected credit 14,715,951.14 259,752.80 3,906,028.92 -22,974.87 11,046,700.15
losses on portfolio
basis`
Including:
Receivable from 14,715,951.14 259,752.80 3,906,028.92 -22,974.87 11,046,700.15
other customers
Total 33,849,926.57 14,954,897.36 5,679,097.24 -22,974.87 43,102,751.82
Including: main recovery of bad debt provision in current period:
Name Amount Way of recovery Note
Hunan Chongsheng Jingzhu Group
1,063,041.16 Bank transfer
Co., Ltd.
6． No actual write-off of accounts receivable during the current period
7． Top 5 receivable accounts
Proportion in
total closing
Name Closing balance balance of Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in total 153,286,032.19 35.48 17,111,402.62
Note 4． Prepayments
1． Presentation of prepayments by aging
Closing balance Opening balance
Aging Percentage Percentage
Amount Amount
(%) (%)
Within one year 7,946,750.81 100.00 16,612,773.76 100.00
2． Top 5 prepayments
Proportion in total closing balance of
Name Closing balance
prepayments (%)
Top 5 prepayments in total 3,930,082.16 49.46
Note 5． Other receivables
1． Presentation of other receivables by aging
Aging Closing balance Opening balance
Notes to the financial statements – Page 166
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Aging Closing balance Opening balance
Within one year 64,697,975.58 55,677,698.47
1 - 2 years 655,341.52 662,641.27
2- 3 years 484,750.05 11,101.80
Over 3 years 135,480.00 588,065.00
Subtotal 65,973,547.15 56,939,506.54
Less: bad debt provision 4,420,279.33 4,036,726.91
Total 61,553,267.82 52,902,779.63
2． Presented by nature
Nature Closing balance Opening balance
Security deposit 55,467,644.12 45,500,721.00
Petty cash 2,556,673.37 2,438,803.09
Others 7,949,229.66 8,999,982.45
Total 65,973,547.15 56,939,506.54
3． Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Carrying Bad debt
Book value Book value
amount provision amount provision
First stage 64,508,342.25 3,055,122.43 61,453,219.82 55,271,836.64 2,369,057.01 52,902,779.63
Second stage
Third stage 1,465,204.90 1,365,156.90 100,048.00 1,667,669.90 1,667,669.90
Total 65,973,547.15 4,420,279.33 61,553,267.82 56,939,506.54 4,036,726.91 52,902,779.63
4． Presented by bad debt provision method
Closing balance
category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Other receivables that provided
expected credit losses on single 1,465,204.90 2.22 1,365,156.90 93.17 100,048.00
basis
Other receivables that provided
expected credit losses on portfolio 64,508,342.25 97.78 3,055,122.43 4.74 61,453,219.82
basis
Including: Security deposit
55,467,644.12 84.08 2,781,540.05 5.01 52,686,104.07
portfolio
Petty cash portfolio 2,556,673.37 3.88 - - 2,556,673.37
Social security payment
483,396.42 0.73 - - 483,396.42
on-behalf portfolio
Portfolio of others 6,000,628.34 9.09 273,582.38 4.56 5,727,045.96
Total 65,973,547.15 100.00 4,420,279.33 6.70 61,553,267.82
Continued
Notes to the financial statements – Page 167
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%) (%)
Other receivables that provided
expected credit losses on single 1,667,669.90 2.93 1,667,669.90 100.00
basis
Other receivables that provided
expected credit losses on portfolio 55,271,836.64 97.07 2,369,057.01 4.29 52,902,779.63
basis
Including: Security deposit
45,500,721.00 79.91 2,281,728.51 5.01 43,218,992.49
portfolio
Petty cash portfolio 2,438,803.09 4.28 2,438,803.09
Social security payment
792,711.42 1.39 792,711.42
on-behalf portfolio
Portfolio of others 6,539,601.13 11.49 87,328.50 1.34 6,452,272.63
Total 56,939,506.54 100.00 4,036,726.91 7.09 52,902,779.63
5． Other receivables that provided expected credit losses on single basis included in the
closing balance
Closing balance
Name ECL rate
Carrying amount Bad debt provision Reason
(%)
Chances of recovery is
Receivable from others 1,465,204.90 1,365,156.90 93.17
remote
6． In the portfolio, other receivables with expected credit loss provided based on
credit risk characteristic portfolio
(1) Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 55,427,594.12 2,741,490.05 4.95
1 - 2 years
2- 3 years
Over 3 years 40,050.00 40,050.00 100.00
Total 55,467,644.12 2,781,540.05 5.01
(2) Petty cash portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 2,536,236.70
1 - 2 years 6,311.62
2- 3 years 14,125.05
Over 3 years
Total 2,556,673.37
Notes to the financial statements – Page 168
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
(3) Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 483,396.42
(4) Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 6,000,628.34 273,582.38 4.56
7． Bad debt provision status
First stage Second stage Third stage
Lifetime expected
Bad debt provision Expected credit Lifetime expected Total
credit losses (no
losses over the next credit losses (credit
credit impairment
12 months impairment occurred)
occurred)
Opening balance 2,369,057.01 1,667,669.90 4,036,726.91
Opening balance
movements in current -12,506.00 12,506.00
period
—Transfer into the
second stage
—Transfer into the
-12,506.00 12,506.00
third stage
—Reverse back to the
second stage
—Reverse back to the
first stage
Accrual during the period 781,582.86 137,566.00 919,148.86
Reversed during the
82,616.73 452,585.00 535,201.73
period
Recovered during the
period
Written-off during the
period
Other movements -394.71 -394.71
Closing balance 3,055,122.43 1,365,156.90 4,420,279.33
8． No other receivables were written-off during the period.
9． Top 5 other receivable accounts
Closing balance
Proportion to closing balance of
Name Closing balance of bad debts
other receivables (%)
provision
Top 5 other receivables in total 22,453,594.72 34.03 1,125,982.07
Note 6． Inventory
1． Classification
Item Closing balance Opening balance
Notes to the financial statements – Page 169
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Carrying amount Provision Book value Carrying amount Provision Book value
Raw
181,764,220.90 17,693,135.85 164,071,085.05 179,270,879.56 19,017,726.57 160,253,152.99
material
WIP 20,682,530.58 20,682,530.58 12,570,005.95 12,570,005.95
Stored
1,960,110,199.48 94,715,064.22 1,865,395,135.26 1,837,664,688.01 78,707,661.10 1,758,957,026.91
goods
Total 2,162,556,950.96 112,408,200.07 2,050,148,750.89 2,029,505,573.52 97,725,387.67 1,931,780,185.85
2． Provision for inventory
Increase in current
Opening Decrease in current period Closing
Item period
balance balance
Accrual Other Reversed Realized Others
Raw
19,017,726.57 132,907.16 1,088,930.94 368,566.94 17,693,135.85
material
Stored
78,707,661.10 26,817,418.34 10,775,684.06 34,331.16 94,715,064.22
goods
Total 97,725,387.67 26,950,325.50 1,088,930.94 10,775,684.06 402,898.10 112,408,200.07
Notes to provision for inventory
Item Evidence of determine NRV and future selling cost Reason for reversal or realized
Estimated selling price less estimated cost to complete Factors that caused impairment has been
Raw material and selling and distribution expenses and associated disappeared and the NAV is higher than its
taxes carrying amount
Estimated selling price less estimated selling and Inventory that already provided for was sold or
Stored goods
distributing expenses and associated taxes used in current period.
Note 7． Other current assets
Item Closing balance Opening balance
Input VAT 20,468,630.65 15,817,909.96
Input VAT not yet certified 41,895,970.19 43,400,801.73
Prepaid corporate income tax 2,459,142.75 25,684.51
Others 7,874,949.13 8,612,242.47
Total 72,698,692.72 67,856,638.67
Note 8． Long-term equity investment
Movements during the period
Investment
Opening Adjustment of
Investee Addition/new gains and
balance other
investment Withdrawn losses
comprehensive
recognized by
income
equity method
Associate
Shanghai Watch Co., Ltd.
51,400,665.92 3,754,939.39
(Shanghai Watch)
Continued
Notes to the financial statements – Page 170
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Movements during the period Closing
Cash Closing balance
Investee Changes in Impairment
dividend Others balance of
other equity provision inventory
declared
Associate
Shanghai Watch 55,155,605.31
Note 9． Other equity instrument investments
1. Details of other equity instrument investments
Item Closing balance Opening balance
Xi’an Tangcheng Limited 85,000.00 85,000.00
Note 10． Investment property
1． Details of investment property
Item Property
I. Original cost
1． Opening balance 609,605,406.79
2． Addition 1,281,008.88
Purchase
Transferred from fixed assets 1,281,008.88
Other reasons
3． Decrease
Disposal
Other reasons
4． Closing balance 610,886,415.67
II. Accumulated depreciation
1． Opening balance 211,518,959.01
2． Increased in current period 15,941,540.31
Accrual 15,941,540.31
Transferred from fixed assets
Other reasons
3． Decreased in current period
Disposal
Other reasons
4． Closing balance 227,460,499.32
III. Impairment provision
1． Opening balance
2． Increased in current period
Accrual
Notes to the financial statements – Page 171
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Property
Transferred from fixed assets
Other reasons
3． Decreased in current period
Disposal
Other reasons
4． Closing balance
IV. Book value
1． Carrying amount at end of the period 383,425,916.35
2． Carrying amount at opening of the period 398,086,447.78
2． Notes to investment property
During the reporting period, certain self-use property of the Company were changed to lease out and
they were transferred from fixed assets to investment properties measured at cost model.
Note 11． Fixed assets
1． Status of fixed assets
Property and Transportatio Electronic Other
Item Machinery Total
buildings n vehicles devices equipment
I. Original cost
1． Opening 399,020,198.9 101,896,803.9 15,166,013.4 45,435,251.5 45,782,206.3 607,300,474.2
balance 7 8 2 3 1 1
2． Increased in
current 13,096,971.22 7,074,376.88 678,419.96 3,474,487.12 2,202,046.67 26,526,301.85
period
Re-classificatio
n
Purchased 13,096,971.22 7,074,376.88 678,419.96 3,474,487.12 2,202,046.67 26,526,301.85
Transferred
from CIP
Translation
difference
Other increase
3． Decrease in
current 3,929,461.13 1,503,080.00 1,063,923.00 2,592,290.12 1,096,983.04 10,185,737.29
period
Disposal or
210,534.00 1,063,923.00 2,549,005.02 981,082.28 4,804,544.30
retired
Transferred to
investment 1,281,008.88 1,281,008.88
property
Translation
2,648,452.25 1,292,546.00 43,285.10 115,900.76 4,100,184.11
difference
Other decrease
4． Closing 408,187,709.0 107,468,100.8 14,780,510.3 46,317,448.5 46,887,269.9 623,641,038.7
balance 6 6 8 3 4 7
II. Accumulated
depreciation
1． Opening 111,755,686.2 13,429,376.6 34,165,037.8 38,832,143.6 254,566,193.4
56,383,949.04
balance 4 3 6 8 5
Notes to the financial statements – Page 172
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Property and Transportatio Electronic Other
Item Machinery Total
buildings n vehicles devices equipment
2． Increased in
current 11,861,411.82 7,755,938.59 428,821.03 4,106,119.29 2,310,544.40 26,462,835.13
period
Re-classificatio
n
Accrual 11,861,411.82 7,755,938.59 428,821.03 4,106,119.29 2,310,544.40 26,462,835.13
Translation
difference
Other increase
3． Decrease in
current 1,467,532.88 1,100,152.51 1,010,726.85 2,374,651.49 930,242.73 6,883,306.46
period
Disposal or
199,668.69 1,010,726.85 2,345,731.03 826,766.35 4,382,892.92
retired
Transferred to
investment
property
Translation
1,467,532.88 900,483.82 28,920.46 103,476.38 2,500,413.54
difference
Other decrease
4． Closing 122,149,565.1 12,847,470.8 35,896,505.6 40,212,445.3 274,145,722.1
63,039,735.12
balance 8 1 6 5 2
III. Impairment
provision
1． Opening
balance
2． Increase in
current
period
Re-classificatio
n
Accrual
Other increase
3． Decrease in
current
period
Disposal or
retired
Transferred into
investment
property
Other decrease
4． Closing
balance
IV. Book value
1． Carrying
amount at 286,038,143.8 10,420,942.8 349,495,316.6
44,428,365.74 1,933,039.57 6,674,824.59
end of 8 7 5
period
2． Carrying
amount at 287,264,512.7 11,270,213.6 352,734,280.7
45,512,854.94 1,736,636.79 6,950,062.63
beginning of 3 7 6
period
Note: As of the period, fixed assets used to pledge for the Company’s loan amounted to
Notes to the financial statements – Page 173
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
RMB11,490,566.65.
2． Fixed assets that do not have certificate for property right
Item Book value Reason for not having certificate for property rights
Property 255,135.96 Issues relating to property right
Property 3,067,640.30 Not yet completed
Note 12． Right-of-use assets
Item Property
I. Original cost
1． Opening balance 250,970,274.22
2． Increase in current period 98,622,544.53
Re-classification
Lease 98,622,544.53
Other increase
3． Decrease in current period 36,014,185.11
Maturity of lease term
Other decrease 36,014,185.11
4． Closing balance 313,578,633.64
II. Accumulated depreciation
1． Opening balance 87,800,873.78
2． Increase in the period 100,275,414.73
Reclassification
Accrual 100,275,414.73
Other increase
3． Decrease in the period 22,430,130.29
Maturity of lease term
Other decrease 22,430,130.29
4． Closing balance 165,646,158.22
III. Impairment provision
1． Opening balance
2． Increase in the period
Reclassification
Accrual
Other increase
3． Decrease in the period
Maturity of lease term
Other decrease
4． Closing balance
Notes to the financial statements – Page 174
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Property
IV. Book value
1． Carrying amount at end of period 147,932,475.42
2． Carrying amount at beginning of period 163,169,400.44
Note 13． Intangible assets
1． Status
Right to use
Item Land-use right Software system Total
trademarks
I. Original cost
1． Opening
34,933,822.40 29,134,692.80 14,068,906.86 78,137,422.06
balance
2． Increase in the
1,151,727.41 1,186,718.72 2,338,446.13
period
Purchase 1,151,727.41 1,186,718.72 2,338,446.13
Internal R&D
Other source
3． Decrease in the
period
Disposal
Other reasons
4． Closing balance 34,933,822.40 30,286,420.21 15,255,625.58 80,475,868.19
II. Accumulated
amortization
1． Opening
15,048,815.45 18,612,740.91 6,616,549.19 40,278,105.55
balance
2． Increase in
733,553.28 4,165,730.97 1,263,147.96 6,162,432.21
the period
Accrual 733,553.28 4,165,730.97 1,263,147.96 6,162,432.21
Other reasons
3． Decrease in
the period
Disposal
Other reasons
4． Closing
15,782,368.73 22,778,471.88 7,879,697.15 46,440,537.76
balance
III. Impairment
provision
1． Opening
balance
2． Increase in the
period
Accrual
Other reasons
3． Decrease in the
period
Transfer
Other reasons
Notes to the financial statements – Page 175
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Right to use
Item Land-use right Software system Total
trademarks
Other transfer
4． Closing balance
IV. Book value
1． Book value at
19,151,453.67 7,507,948.33 7,375,928.43 34,035,330.43
end of the period
2． Book value at
beginning of the 19,885,006.95 10,521,951.89 7,452,357.67 37,859,316.51
period
Note 14． Long-term deferred expenses
Opening Other Closing
Item Increase Amortized
balance decrease balance
Counter fabrication
25,146,766.71 37,577,009.80 34,160,604.79 28,563,171.72
expenses
Renovation 120,695,905.9
98,681,716.46 83,147,472.60 61,133,283.16
expenses 0
Others 6,189,104.82 16,981,131.74 8,638,980.74 14,531,255.82
130,017,587.9 137,705,614.1 103,932,868.6 163,790,333.4
Total
9 4 9 4
Note 15． Deferred tax assets and deferred tax liabilities
1． Detail of deferred tax assets before offsetting
Closing balance Opening balance
Item Deductible Deductible
temporary Deferred tax assets temporary Deferred tax assets
difference difference
Impairment provision 148,079,831.14 31,562,627.52 122,763,597.44 24,130,990.19
Unrealized profit for related
96,716,186.61 24,021,244.01 135,402,764.86 33,674,974.92
party transactions
Deductible losses 62,781,216.23 15,188,881.56 64,27s2,084.42 15,216,766.23
Restricted shares 17,502,152.62 4,121,326.77 10,011,227.40 2,398,201.09
Advertisement expenses that
allowed to deduct in future 11,503,471.12 2,219,622.49 18,840,253.36 3,378,321.23
years
Lease liabilities 147,888,578.26 36,972,144.57
Others 9,993,278.10 2,498,319.53 8,458,186.73 2,114,546.69
Total 494,464,714.08 116,584,166.45 359,748,114.21 80,913,800.35
2． Detail of deferred tax liabilities before offsetting
Closing balance Opening balance
Item taxable temporary Deferred tax Taxable temporary Deferred tax
difference liabilities difference liabilities
One-off deduction of fixed
asset before Corporate 24,113,302.98 3,616,995.45 20,452,230.39 3,067,834.55
income tax
Right-of-use asset 147,881,641.51 36,970,410.38
Total 171,994,944.49 40,587,405.83 20,452,230.39 3,067,834.55
Notes to the financial statements – Page 176
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
3． Net-off of deferred tax asset or liabilities
Closing balance of Opening balance of
Amount off-set at Amount off-set at
Item deferred tax asset or deferred tax asset or
current period prior period
liability after off-set liability after off-set
deferred tax asset 35,350,891.80 81,233,274.65 80,913,800.35
deferred tax
35,350,891.80 5,236,514.03 3,067,834.55
liabilities
4． Details of deductible temporary difference and deductible losses that does not
recognize as deferred income tax asset
Item Closing balance Opening balance
Impairment provision 15,218,179.77 14,790,427.78
Deductible losses 54,139,145.45 61,104,363.07
Total 69,357,325.22 75,894,790.85
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.
5． Deductible losses that are not recognized as deferred tax asset will due in the
following years：
Year Closing balance Opening balance Note
2021
2022
2023 149,750.18 7,114,967.80
2024 11,684,299.22 11,684,299.22
2025 18,449,678.50 18,449,678.50
2026 23,855,417.55 23,855,417.55
Total 54,139,145.45 61,104,363.07
Note 16． Other non-current assets
Closing balance Opening balance
Item
Carrying Carrying
Provision Book value Provision Book value
amount amount
Prepayment for
construction 42,680,753.78 42,680,753.78 13,536,307.13 13,536,307.13
and equipment
Note 17． Short-term loan
Item Closing balance Opening balance
Guaranteed loans 15,737,928.76 142,195,227.88
Credit loans 250,000,000.00 400,000,000.00
Notes to the financial statements – Page 177
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Closing balance Opening balance
Accrued interest payable 256,666.67 478,050.21
Total 265,994,595.43 542,673,278.09
Note 18． Notes payable
Types Closing balance Opening balance
Commercial bills payable 21,223.10 3,581,360.00
Note 19． Account payables
Item Closing balance Opening balance
Trade payables 232,841,934.81 284,050,848.79
Payables for material
20,513,993.11 15,679,531.11
purchased
Payables for project 1,232,967.42 1,481,135.49
Total 254,588,895.34 301,211,515.39
Note 20． Advances from customer
Item Closing balance Opening balance
Rental received in advance 11,025,664.72 9,991,850.67
Note 21． Contract liabilities
Item Closing balance Opening balance
Advances for goods received 22,505,426.65 18,213,396.49
Note 22． Employee remuneration payable
1． Status
Item Opening balance Increase Decrease Closing balance
Short-term employee benefits 125,981,238.62 671,171,231.14 662,456,183.27 134,696,286.49
Post-employment benefits -
6,767,477.58 48,794,359.96 46,097,963.35 9,463,874.19
defined contribution plans
Termination benefits 104,746.00 3,396,691.07 1,725,447.69 1,775,989.38
Total 132,853,462.20 723,362,282.17 710,279,594.31 145,936,150.06
2． Short-term employee benefits
Item Opening balance Increase Decrease Closing balance
Salaries, bonus, allowances 125,136,477.65 608,818,494.84 600,136,279.73 133,818,692.76
Staff welfare 3,805.46 11,377,936.46 11,381,033.12 708.80
Social insurances 22,210,707.38 22,190,086.72 20,620.66
Including:1.Medical insurance 20,788,454.25 20,767,833.59 20,620.66
2. Supplementary medical
26,898.00 26,898.00
insurance
Notes to the financial statements – Page 178
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
3.Work-related injury
782,748.63 782,748.63
insurance
4.Maternity insurance 612,606.50 612,606.50
Housing Fund 2,932.00 19,839,787.30 19,815,615.30 27,104.00
Labor union fees and education
838,023.51 8,924,305.16 8,933,168.40 829,160.27
fee
Short-term paid absences
Other short-term employee
benefits
Total 125,981,238.62 671,171,231.14 662,456,183.27 134,696,286.49
3． Defined contribution plans
Item Opening balance Increase Decrease Closing balance
Basic pension insurance 295,976.45 40,964,893.15 41,034,054.05 226,815.55
Unemployment insurance 437.76 1,210,037.85 1,210,475.61
Annuity 6,471,063.37 6,619,428.96 3,853,433.69 9,237,058.64
Total 6,767,477.58 48,794,359.96 46,097,963.35 9,463,874.19
Note 23． Taxes payable
Item Closing balance Opening balance
VAT 46,711,341.16 36,028,888.63
Corporate income tax 15,663,227.68 29,488,177.68
Individual income tax 1,568,912.16 1,609,420.04
Urban maintenance and
1,624,353.62 631,469.18
construction tax
Educational surcharges 1,161,292.58 450,946.60
Others 1,040,752.81 716,369.77
Total 67,769,880.01 68,925,271.90
Note 24． Other payables
Item Closing balance Opening balance
Dividends payable 5,015,026.30 1,639,513.77
Other payables 162,793,733.65 126,938,084.17
Total 167,808,759.95 128,577,597.94
Note: Other payables in above table refers to other payables excluding interest payable and
dividends payable.
1. Dividends payable
Reasons for not being
Item Closing balance Opening balance
paid
Dividends for ordinary shares 5,015,026.30 1,639,513.77 unlock
2. Other payables
(1) Other payables by nature
Notes to the financial statements – Page 179
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Nature Closing balance Opening balance
Security deposit 33,536,237.44 46,419,944.64
Shop activity fund 19,208,694.86 21,861,578.14
Decoration expenses 10,201,524.91 7,481,768.84
Repurchase liability for restricted shares 60,585,678.92 16,299,166.73
Other 39,261,597.52 34,875,625.82
Total 162,793,733.65 126,938,084.17
(2) Material other receivables with aging over 1 year
Name Closing balance Reasons for not being paid
Huazhu Hotel Management Co., Ltd 4,600,000.00 Undue
Shenzhen Coman Medical Equipment Co., Ltd. 1,676,337.60 Undue
Bilin Venture Capital (Shenzhen) Partnership LLP 1,442,275.27 Undue
Yading (Shenzhen) Industrial Co., Ltd. 1,332,652.89 Undue
Total 9,051,265.76
Note 25． Non-current liabilities due within one year
Item Closing balance Opening balance
Long-term loan due within one year 3,924,900.00 370,030.00
Lease liabilities due in one year 83,025,006.35 88,839,586.06
Total 86,949,906.35 89,209,616.06
Note 26． Other current liabilities
Item Closing balance Opening balance
Output VAT not yet realized 2,798,738.32 2,299,755.09
Note 27． Long-term loan
Category Closing balance Opening balance
Mortgage loans 3,924,900.00 4,440,360.00
Less: Long-term loan due within
3,924,900.00 370,030.00
one year
Total 4,070,330.00
As of 31 December 2021, the carrying amount of fixed assets used in mortgage for the Company’s loan
amounted to RMB11,490,566.65.
Note 28． Lease liabilities
Residual lease term Closing balance Opening balance
Within 1 year 87,412,539.35 94,225,765.63
1 - 2 years 45,978,062.22 60,405,317.90
2 - 3 years 13,813,526.70 16,268,969.19
Notes to the financial statements – Page 180
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Over 3 years 7,720,317.07 2,896,760.13
Total lease payables 154,924,445.34 173,796,812.85
Less: financing expense not realized 6,980,716.89 7,517,647.49
PV of lease payables 147,943,728.45 166,279,165.36
Less: lease liabilities due in one year 83,025,006.35 88,839,586.06
Total 64,918,722.10 77,439,579.30
Interest expenses for lease liabilities recognized in current period was RMB6,486,982.37.
Note 29． Deferred income
Opening Closing
Item Increase Decrease Reason
balance balance
Asset related government
2,377,718.35 584,884.45 1,792,833.90 See below table
subsidy
income related
538,628.08 538,628.08 See below table
government subsidy
Total 2,916,346.43 1,123,512.53 1,792,833.90
1． Deferred income related to government subsidy
Include in
Include in Offsetting Related to
Opening non-operating Closing
Item Addition other gains in expense asset
balance income in balance
current period or cost /income
current period
Special fund for
Shenzhen Asset
industrial design 551,309.04 161,185.89 390,123.15 related
industry
development
Funding project for
construction of
925,127.45 293,147.06 631,980.39 Asset related
National Enterprise
Technology Center
Provincial
Specialized Fund
901,281.86 130,551.50 770,730.36 Asset related
for Industrial and
Information
Income
Others 538,628.08 538,628.08 - related
Total 2,916,346.43 1,123,512.53 1,792,833.90
Note 30． Share capital
Movements: increase(+) , decrease(－) Closing balance
Opening Capitalization
Item Bonus
balance Newly issued of capital Others Subtotal
share
reserves
Total 428,091,88
7,660,000 -9,700,866 -2,040,866 426,051,015
shares 1
Notes to movements:
1. On 15 December 2020, pursuant to the examination and approval given by AVIC under “Reply to
Examination and approval of Implementation of Second Phase of Restricted Share Incentive plan of
Notes to the financial statements – Page 181
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
FIYTA Precision Technology Co., Ltd.” (Ren Zi [2020] No. 35) , and approved by the board of directors
and shareholder’s general meeting, the Company implemented the incentive plan. On 15 January 2021,
the restricted share incentive plan (second phase) had granted restricted A-shares of 7,660,000 shares
to 135 incentive individuals.
2. Pursuant to the resolution of “Proposal of repurchase and de-registration part of restricted shares
authorized under 2018 A-share Restricted Share Incentive Plan (First Phase) ”, and the resolution of
““Proposal of repurchase and de-registration part of restricted shares authorized under 2018 A-share
Restricted Share Incentive Plan (Second Phase) ”, the Company repurchased and de-registered, in 2021,
706,780 A-share restricted shares that had been authorized but still under restriction period. Those
shares were owned by 9 former incentive object that are resigned.
3. Pursuant 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 was authorized to repurchase B Shares, using the Company’s fund, to reduce the registered
capital. On 3 August 2021, confirmed by China Securities Depository and Clearing Co., Ltd Shenzhen
Branch, the Company de-registered 8,994,086 B-shares.
Note 31． Capital reserve
Item Opening balance Increase Decrease Closing balance
Share premium 996,986,711.73 54,257,795.84 41,135,973.76 1,010,108,533.81
Other capital reserve 24,503,676.05 13,667,981.68 7,371,997.41 30,799,660.32
Total 1,021,490,387.78 67,925,777.52 48,507,971.17 1,040,908,194.13
Notes to capital reserve
1. On 15 December 2020, pursuant to the examination and approval given by AVIC under “Reply to
Examination and approval of Implementation of Second Phase of Restricted Share Incentive plan of
FIYTA Precision Technology Co., Ltd.” (Ren Zi [2020] No. 35) , and approved by the board of directors
and shareholder’s general meeting, the Company implemented the incentive plan. On 15 January 2021,
the restricted share incentive plan (second phase) had granted restricted A-shares of 7,660,000 shares
to 135 incentive individuals. The Company received share purchase payment of RMB58,216,000.00.
Amongst, share capital increase by RMB7,660,000, and capital reserve increased by 50,556,000.00. At
the same time, recognized share repurchase obligation in other payables amounting to
RMB58,216,000.00 and corresponding treasury shares of RMB58,216,000.00. In 2021, the Company
charged RMB12,106,904.32 into cost or expenses in change of incentive personnel’s service and
increased the capital reserve by the same amount accordingly.
2. Pursuant 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 was authorized to repurchase B Shares, using the Company’s fund, to reduce the registered
capital. On 3 August 2021, confirmed by China Securities Depository and Clearing Co., Ltd Shenzhen
Branch, the Company de-registered 8,994,086 B-shares, which in turn decreased the capital reserve by
Notes to the financial statements – Page 182
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
RMB41,132,596.76.
3. Pursuant to the resolution of “Proposal of repurchase and de-registration part of restricted shares
authorized under 2018 A-share Restricted Share Incentive Plan (First Phase) ”, and the resolution of
““Proposal of repurchase and de-registration part of restricted shares authorized under 2018 A-share
Restricted Share Incentive Plan (Second Phase) ”, the Company repurchased and de-registered, in 2021,
706,780 A-share restricted shares that had been authorized but still under restriction period. Those
shares were owned by 9 former incentive object that are resigned. Capital reserve of RMB3,670,201.57
was deducted accordingly.
4. Differences, caused by fair value different when unlock the restricted shares, between CIT
deducted amount and cost or expenses recognized in vesting period increased the capital reserve by
RMB1,561,077.36.
5. Pursuant 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 3,377 for the repurchase. The expenses of RMB3,377 was
deducted from capital reserve.
Note 32． Treasury shares
Opening Closing
Item Increase Decrease
balance balance
Share repurchase 45,368,941.80 4,757,740.96 50,126,682.76
58,216,000.0
Share based payment 16,264,588.68 13,894,909.76 60,585,678.92
0
62,973,740.9
Total 61,633,530.48 64,021,592.52 60,585,678.92
6
Notes to treasury shares:
1. As described in Note VI. 31. 1, the treasury shares increased by RMB58,216,000.00 due to issue
of restricted shares.
2. As described in Note VI. 31. 2, the treasury shares decreased by RMB50,126,682.76 due to
re-purchase of B-share.
3. As described in Note VI. 31. 3, the treasury shares decreased by RMB4,376,981.57 due to
re-purchase of restricted shares. And cash dividend to the remaining restricted shares decreased
treasury shares by RMB4,088,467.68.
4. In 2021, the Company re-purchased B-share of 847,685 shares. Consideration paid was
HKD5,691,273.88 (excluding trading fee) , equivalent to RMB4,757,740.96. The treasury share
increased by 4,757,740.96.
5. On 29 December 2021, Pursuant to the “Resolution of Fulfilling Unlocking Condition for the 2018
A-Share Restricted Share Incentive Plan (First Phase) ” passed on the 24th meeting of the 9th Board,
the first unlocking condition was met. Based on the authorization of the General Meeting, the Board lifted
restriction for 122 incentive individuals. The corresponding shares can be traded on 1 February 2021, of
which the cash dividend decreased treasury shares by RMB5,429,460.51.
Notes to the financial statements – Page 183
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Note 33． Other Comprehensive income
Amount in current period
Less:
Less:
Less: recorde
recorde Less:
recorde d in
d in reserve
d in OCI in
OCI in of
OCI in Attribute prior
prior hedgin Less:
prior to period
Opening period g Attribute to movem Closing
Item period Les non-contr and
balance Pre-tax and transfer parent ents of balance
and s: olling transfer
amount transfer red to company defied
transfer CIT sharehold red to
red to related after tax benefit
red to ers after retaine
financia assets plan
profit or tax d
l assets or
loss in earning
at liabilitie
current s in
amortiz s
period current
ed cost
period
I. Other
comprehe
nsive
income
items
which will
not be
reclassifie
d
subseque
ntly to
profit or
loss
II. Other
comprehe
nsive
income
items
which
may be
reclassifie
d
subseque
ntly to
profit or
loss
translatio
n 976,87 -8,635,21 -8,635,21 -7,658,34
differenc 1.41 7.81 7.81 6.40
e
Notes to the financial statements – Page 184
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Note 34． Specific reserve
Opening
Item Increase Decrease Closing balance
balance
Safety production fee 1,421,605.68 358,874.55 1,062,731.13
Note 35． Surplus reserve
Item Opening balance Increase Decrease Closing balance
Statutory surplus
184,546,972.87 28,478,534.63 213,025,507.50
reserve
Discretionary surplus
61,984,894.00 61,984,894.00
reserve
Total 246,531,866.87 28,478,534.63 275,010,401.50
Notes to surplus reserve:
Note: According to the Company Law and Articles of Association, the Company draws statutory
surplus reserve at 10% of net profit. If the statutory surplus reserve is over 50% of the Company’s
registered capital, drawing of statutory surplus reserve will be stopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve. If
approved, discretionary surplus reserve can be used to make up for losses in previous years or increase
share capital.
Note 36． Undistributed profit
Item Current period Prior period
Undistributed profit at the end of prior year
1,164,490,911.51 966,840,818.40
before adjustments
Adjustments to undistributed profit at the
beginning of year (“+” for increase and “-“ for -11,188,268.01
decrease)
Undistributed profit at the beginning of year
1,153,302,643.50 966,840,818.40
after adjustment
Plus: Net profit attributable to the owner of the
387,840,282.95 294,115,156.04
parent company for the year
Less: statutory surplus reserve drawn 28,478,534.63 10,830,686.73
Dividends payable to ordinary shares 174,220,065.73 85,634,376.20
Undistributed profit at the end of year 1,338,444,326.09 1,164,490,911.51
Notes to adjusting undistributed profit at the beginning of year
Opening undistributed profit was adjusted by -11,188,268.01 because of change in accounting
policies. Refer to Note IV. 38 for details.
Note 37． Operating income and operating cost
1．Operating
income and operating
cost
Item Amount in current period Amount in prior period
Notes to the financial statements – Page 185
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Amount in current period Amount in prior period
Revenue Cost Revenue Cost
Main business 5,224,836,384.30 3,283,434,432.96 4,226,992,193.44 2,632,869,284.16
Other business 18,897,156.63 2,221,796.17 16,447,759.15 6,360,252.90
2．Revenue
generated by
contract
Types of contract Amount in current period Amount in prior period
I. Types of goods
Watch business 4,923,280,724.48 3,970,903,426.36
Precision manufacturing 150,094,350.20 138,806,456.76
Other business 18,897,156.63 16,447,759.15
II. Categorized based on timing of goods
transfer
At a point of time 5,078,899,659.72 4,115,090,762.09
During a period of time 13,372,571.59 11,066,880.18
Note: revenue generated by contract does not include lease income of RMB151,461,309.62 which is
regulated under “CAS No.21 – Lease”.
Note 38． Tax and surcharges
Item Amount in current period Amount in prior period
Urban maintenance and
13,898,225.16 10,068,664.42
construction tax
Educational surcharge 5,907,693.68 4,314,874.91
Local education surcharges 3,923,712.57 2,840,421.94
Property tax 7,224,965.66 4,094,171.89
Stamp duty 4,156,804.98 3,347,384.62
Others 2,452,184.75 778,621.52
Total 37,563,586.80 25,444,139.30
Note 39． Selling and distribution expenses
Item Amount in current period Amount in prior period
Salary 433,505,654.18 359,485,012.85
Department store expense and rental 189,748,898.49 225,399,141.62
Market promotion expenses 161,389,740.20 129,846,038.05
Depreciation and amortization 191,787,912.35 93,520,422.84
Packaging expenses 8,739,319.16 8,931,806.05
Utilities and property management
22,588,777.26 19,596,237.03
expenses
Shipping fees 8,530,775.41 5,316,601.90
Notes to the financial statements – Page 186
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Amount in current period Amount in prior period
Office expenses 7,446,024.76 5,894,271.36
Travel expenses 7,279,500.39 6,384,080.73
Entertainment expenses 4,046,655.86 3,437,118.33
Others 14,834,965.22 12,903,168.56
Total 1,049,898,223.28 870,713,899.32
Note 40． Administrative expenses
Item Amount in current period Amount in prior period
Salary 202,675,218.51 196,350,562.99
Depreciation and amortization 24,544,056.69 25,865,228.70
Travel expenses 3,980,000.38 3,537,267.52
Office expenses 5,390,287.09 4,446,219.38
Agents fees 3,342,562.00 5,371,712.37
Rental and utilities 852,555.31 1,007,513.11
Entertainment expenses 1,494,588.12 1,269,440.44
Vehicle and transportation expenses 1,718,083.11 1,781,896.05
Telecommunication expenses 983,910.06 1,009,390.54
Others 16,645,501.14 15,919,896.13
Total 261,626,762.41 256,559,127.23
Note 41． R&D expenses
Item Amount in current period Amount in prior period
Salary 40,498,469.51 32,217,390.03
Sample and material expenses 1,557,455.43 1,561,063.66
Molding expenses 744,578.81 986,988.83
Depreciation and amortization 6,048,741.96 6,397,967.06
Technical cooperation fee 2,480,127.69 4,768,053.72
Others 6,473,195.77 5,557,860.19
Total 57,802,569.17 51,489,323.49
Note 42． Financial expenses
Item Amount in current period Amount in prior period
Interest expenses 23,159,963.74 21,315,119.78
Less: Interest income 3,589,649.85 4,941,334.19
Exchange gain or losses 634,406.96 3,896,579.87
Bank charges 14,472,352.80 13,178,910.95
Total 34,677,073.65 33,449,276.41
Notes to the financial statements – Page 187
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Note 43． Other income
1． Details
Sources of other income Amount in current period Amount in prior period
Government subsidy 21,328,673.21 25,170,397.09
2． Government subsidy included in other income
Amount in current Amount in prior Asset or
Item
period period income related
Quality and Branding Promotion Subsidy
for 2020 Technique Multiplication Subsidy 1,960,000.00 2,400,000.00 Income related
Plan
Provincial industry and information special
130,551.50 130,551.48 Asset related
subsidy
Subsidy to promote consumption 420,000.00 Income related
High precision watch technology innovation
-160,000.00 Income related
project
Commission on IIT payment 502,644.31 370,789.08 Income related
Guangming District specific subsidy for
200,000.00 Income related
online market expanding
State certified R&D center 293,147.06 293,147.06 Asset related
Other subsidies 711,026.01 813,731.50 Income related
R&D project subsidy 378,000.00 355,000.00 Income related
2019 Shenzhen Standard Special Fund 836,705.00 979,160.00 Income related
Shenzhen post-doctoral subsidy 550,000.00 Income related
Special fund for Shenzhen industrial
161,185.89 178,635.97 Asset related
designing
Corporate Research and Development
756,000.00 571,000.00 Income related
Funding
Special fund of Nanshan district to support
4,913,900.00 4,526,600.00 Income related
self-innovation industry development
Subsidy to assist high quality development
3,730,000.00 Income related
of fashion industry
Subsidy for stabilizing job position 833,013.44 3,743,398.00 Income related
Subsidy to support sales promotion 3,500,000.00 1,000,000.00 Income related
Government subsidy for R&D project 200,000.00 Income related
Training subsidy 322,500.00 611,500.00 Income related
Economic development special fund of
Guangming District to support intellectual
1,090,000.00 677,000.00 Income related
property right, standardization certification
project
2019 Nanshan District self-innovation
209,500.00 Income related
industry development subsidy
Subsidy for SME to expanding market 176,920.00 Income related
Plan to subsidy industrial internet
520,000.00 Income related
development
Guangdong Provincial Science and
1,000,000.00 Income related
Technology Innovation Strategy Fund
Nanshan Industrial and Information Bureau
100,000.00 Income related
subsidy for rental
Social insurance subsidy 101,300.00 Income related
Notes to the financial statements – Page 188
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Headquarters enterprise award 2,872,900.00 Income related
Special fund of Nanshan district Industrial
and Information Bureau to support trading 2,592,300.00 Income related
industry
Special subsidy to Shenzhen intelligence
300,000.00 Income related
property right area
Associate subsidy to China patent
200,000.00 Income related
excellence award
Central government foreign trade
446,964.00 Income related
development special fund
Total 21,328,673.21 25,170,397.09
Note 44． Investment gain
Amount in current
Item Amount in prior period
period
Gain from long-term equity investments accounted
3,754,939.39 5,072,577.64
for using equity method
Note 45． Credit impairment loss
Item Amount in current period Amount in prior period
Bad debt loss -11,075,001.77 -9,096,922.74
Note 46． Asset impairment loss
Item Amount in current period Amount in prior period
Inventory decline in value -25,861,394.56 -15,426,526.41
Note 47． Gains from assets disposal
Item Amount in current period Amount in prior period
Gains (losses) from assets disposal -134,543.49 -369,857.30
Gains (losses) from right-of-use
864,678.36
assets disposal
Total 730,134.87 -369,857.30
Note 48． Non-operating income
Amount in current Amount included in non-recurring gains
Item Amount in prior period
period or losses in current period
Compensation 113,138.61 1,769,663.80 113,138.61
Payables cannot be paid 383,893.25 633,022.50 383,893.25
Others 130,403.17 708,727.34 130,403.17
Total 627,435.03 3,111,413.64 627,435.03
Note 49． Non-operating expense
Amount in current Amount in prior Amount included in non-recurring gains
Item
period period or losses in current period
Donation 300,000.00 300,000.00
Fine and penalty for late payment 698,864.04 1,032.09 698,864.04
Notes to the financial statements – Page 189
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Amount in current Amount in prior Amount included in non-recurring gains
Item
period period or losses in current period
Payment for breach of agreement 2,507,649.06 331,373.75 2,507,649.06
Others 179,653.45 1,222,707.02 179,653.45
Total 3,686,166.55 1,555,112.86 3,686,166.55
Note 50． CIT expenses
1． Details
Item Amount in current period Amount in prior period
Current tax expense for the year
112,084,704.70 82,548,458.59
based on tax law and regulations
Changes in deferred tax
2,382,671.18 -3,209,941.99
assets/liabilities
Total 114,467,375.88 79,338,516.60
2． Reconciliation between income tax expenses and accounting profit is as follows:
Item Amount in current period
Profits before tax 502,327,716.11
Income tax calculated based on statutory tax rate 125,581,929.05
Effect of different tax rates applied by subsidiaries -7,919,551.34
Adjustment to income tax of previous years 765,383.02
Effect of non-taxable income -946,628.62
Effect of non-deductible costs, expenses and losses 4,388,679.47
Effect of using the deductible temporary differences or deductible
-604,278.27
losses for which no deferred tax asset was recognized in prior period
Effect of deductible temporary differences or deductible losses for
which no deferred tax asset was recognized this year
Effect of research and development expenses super deduction -6,798,157.43
Others
Income tax expenses 114,467,375.88
Note 51． Notes to cash flow statement
1． Cash received from other operating activities
Item Amount in current period Amount in prior period
Security deposit 12,286,247.59 16,369,729.33
Government subsidy 22,985,857.32 29,643,860.40
Promotion expenses 13,582,651.81 12,486,890.27
Interest income 3,589,649.85 4,941,334.19
Return of petty cash 7,070,953.20 5,503,961.77
Others 25,872,097.79 9,056,036.49
Total 85,387,457.56 78,001,812.45
2． Cash paid for other operating activities
Notes to the financial statements – Page 190
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Amount in current period Amount in prior period
Security deposit 27,774,098.01 13,371,641.24
Petty cash advanced to employee 11,532,694.33 8,618,216.90
Current period expenses 436,157,747.82 433,410,006.32
Others 2,635,207.94 2,258,442.62
Total 478,099,748.10 457,658,307.08
3． Cash paid for other financing activities
Item Amount in current period Amount in prior period
Lease payment 115,532,289.07
Cash paid for re-purchase of shares 9,178,101.51 72,317,669.93
Total 124,710,390.58 72,317,669.93
Note 52． Supplement information to cash flow statement
1． Supplement to cash flow statement
Amount in current
Item Amount in prior period
period
1. Reconciliation of net profit/loss to cash flows from
operating activities：
Net profit 387,860,340.23 294,122,102.24
Add: Credit impairment loss 11,075,001.77 9,096,922.74
Impairment for assets 25,861,394.56 15,426,526.41
Depreciation of fixed assets, and investment property 42,404,375.44 42,147,350.05
Depreciation of right-of-use assets 100,275,414.73
Intangible asset amortization 6,162,432.21 8,011,446.67
Amortization of long-term deferred expenses 103,932,868.69 107,402,300.57
Loss on disposal of fixed assets, intangible assets,
-730,134.87 369,857.30
and other long-term assets (“-“ for gain)
Loss on scrap of fixed assets (“-“ for gain)
Loss on changes of fair value (“-“ for gain)
Financial expenses (“-“ for income) 23,159,963.74 21,315,119.78
Investment loss (“-“ for gain) -3,754,939.39 -5,072,577.64
Decrease in deferred tax assets (“-“ for increase) -319,474.30 2,825,583.02
Increase in deferred tax liabilities (“-“ for decrease) 2,168,679.48 1,811,592.06
Decrease in inventories (“-“ for increase) -133,051,377.44 -137,479,263.64
Decrease in operating receivables (“-“ for increase) 59,770,087.01 -137,884,765.44
Increase in operating payables (“-“ for decrease) -77,565,523.41 156,118,311.75
Others
Net cash flows from operating activities 547,249,108.45 378,210,505.87
2. Significant investment or financing activities not
involving cash:
Notes to the financial statements – Page 191
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Amount in current
Item Amount in prior period
period
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 210,254,737.14 353,057,285.71
Less: cash at beginning of year 353,057,285.71 315,093,565.09
Plus: cash equivalents at end of year
Less: cash equivalents at beginning of year
Net increase in cash and cash equivalents -142,802,548.57 37,963,720.62
2． Total cash outflows related to lease
Total cash outflows related to lease amounted to RMB115,532,289.07.
3． Cash and cash equivalents
Item Closing balance Opening balance
I. Cash 210,254,737.14 353,057,285.71
Incl. Cash on hand 108,612.08 183,759.72
Bank deposit available for immediate
188,908,798.10 346,055,209.29
payment
Other monetary funds available for
21,237,326.96 6,818,316.70
immediate payment
II. Cash equivalents
Including Bond investment due in three months
III. Cash and cash equivalents at the end of year 210,254,737.14 353,057,285.71
Including Restricted cash and cash equivalents for the
1,724,651.93 3,412,028.94
Company and its subsidiaries
Note 53． Assets with restricted ownership or usage rights
Item Balance Reasons
Bill receivables 15,737,928.76 Bill discounted
Fixed asset 11,490,566.65 Pledged
Total 27,228,495.41
Note 54． Monetary items denominated in foreign currency
1． Monetary items denominated in foreign currency
Balance denominated
Balance translated in RMB as at 31 Dec
Item in foreign currency as at Exchange rate
2021
31 Dec 2021
Monetary fund 8,514,180.39
HKD 218.63 0.8176 178.75
USD 1,019,499.31 6.3757 6,500,021.75
Notes to the financial statements – Page 192
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Balance denominated
Balance translated in RMB as at 31 Dec
Item in foreign currency as at Exchange rate
2021
31 Dec 2021
EUR 277,768.92 7.2197 2,005,408.28
CHF 1,226.15 6.9776 8,571.61
Accounts receivable 6,478,102.53
HKD 1,321,668.61 0.8176 1,080,596.26
USD 727,349.65 6.3757 4,637,364.76
EUR 91,897.19 7.2197 663,470.14
CHF 13,854.53 6.9776 96,671.37
Other receivables 98,186.34
HKD 120,090.92 0.8176 98,186.34
Accounts payable 1,232,833.10
HKD 459,366.53 0.8176 375,578.07
CHF 122,858.15 6.9776 857,255.03
Other payables 232,536.98
HID 284,414.11 0.8176 232,536.98
Long-term loan (including
3,924,900.00
due in one year)
CHF 562,500.00 6.9776 3,924,900.00
2． Overseas operational entity
For main business location and recording currency of important overseas operating entities, refer to Note
IV. 5.
Note 55． Government subsidy
1． Status
Amount included in
Amount in current
Types of government subsidy current period profit note
period
or loss
Subsidy included in deferred income 1,123,512.53 Note VI 29
Subsidy included in other income 20,365,160.68 20,365,160.68 Note VI 43
Subsidy used to offset cost or expenses 2,620,696.64 2,620,696.64 Note 2 below
Less: subsidy returned 633,183.35 633,183.35 Note 3 below
Total 22,352,673.97 23,476,186.50
2． Subsidy used to offset cost or expenses
Amount in current Amount in prior
Item Type Cost or expenses offset
period period
subsidized interest State treasury 2,170,134.64 4,603,207.48 Financial expenses
Subsidy for electricity expenses State treasury 450,562.00 860,524.00 Administrative expenses
Total 2,620,696.64 5,463,731.48
Notes to the financial statements – Page 193
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
3． Subsidy returned
Amount in Amount in prior
Item Type Reasons for return
current period period
Over disbursement of subsidy and
Income related 160,000.00 Over disbursement
its interest
Subsidized interest Income related 473,183.35 Not qualified
Total 633,183.35
VII. Changes to the scope of consolidation
Refer to Note II Scope of consolidation for information about entities that newly included or excluded
in the consolidation scope.
VIII. Interests in other entities
1. Equity in subsidiary
(1) Composition of enterprise group
Shareholding
Place of
Place of Nature of ratio (%)
Name registrati Ways acquired
operation business Indire
on Direct
ct
Shenzhen Harmony World Shenzhe Shenzhe
Commerce 100.00 incorporated or investment
Watch Center Co., Ltd. n n
Shenzhe Shenzhe
FIYTA Sales Co., Ltd. Commerce 100.00 incorporated or investment
n n
Shenzhen FIYTA Precision Shenzhe Shenzhe
Commerce 90.00 10.00 incorporated or investment
Technology Co., Ltd. n n
Shenzhen FIYTA Technology Shenzhe Shenzhe manufacturin
100.00 incorporated or investment
Development Co., Ltd. n n g
Harmony World Watch Center
Sanya Sanya Commerce 100.00 incorporated or investment
(Hainan) Co., Ltd.
Shenzhen Xunhang Precision Shenzhe Shenzhe manufacturin
100.00 incorporated or investment
Technology Co., Ltd. n n g
Emile Choureit Timing Shenzhe Shenzhe
Commerce 100.00 incorporated or investment
(Shenzhen) Ltd. n n
Liaoning Hengdarui Shenyan Shenyan Business combination
Commerce 100.00
Commercial & Trade Co., Ltd. g g under common control
TEMPORAL (Shenzhen) Co., Shenzhe Shenzhe
Commerce 100.00 incorporated or investment
Ltd. n n
Shenzhen Harmony Shenzhe Shenzhe
Commerce 100.00 incorporated or investment
E-commerce Co., Ltd. n n
Hong Hong
FIYTA (Hong Kong) Ltd. Commerce 100.00 incorporated or investment
Kong Kong
manufacturin 100.0 Business combination not
Montres Chouriet SA Swiss Swiss
g 0 under common control
Hong Hong
Station 68 Commerce 60.00 incorporated or investment
Kong Kong
2. Equity in joint arrangement or associates
(1) Significant associates
Nature Shareholding ratio
Place of
Place of of (%)
Name registrat Accounting treatment
operation busines
ion Direct Indirect
s
Shangh Comme
Shanghai Watch Co., Ltd. Shanghai 25% Equity method
ai rcial
Notes to the financial statements – Page 194
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
(2) Principal financial information of significant associate company
Closing balance/Amount in
Item Opening balance/Amount in prior period
current period
Current assets 143,367,298.98 142,137,359.85
Non-current assets 17,537,419.20 13,783,021.02
Total assets 160,904,718.18 155,920,380.87
Current liabilities 24,124,925.22 35,999,813.24
Non-current liabilities 1,839,467.79
Total liabilities 25,964,393.01 35,999,813.24
Non-controlling interest
Equity attributable to parent company 134,940,325.17 119,920,567.63
Portion of net asset calculated based
33,735,081.29 29,980,141.91
on shareholding
Adjustment matters 21,420,524.02 21,420,524.01
- Goodwill 21,420,524.02 21,420,524.01
- Unrealized profit or losses from
internal transaction
- Others
Carrying value of investment to
55,155,605.31 51,400,665.92
associates
Fair value of equity investment that
has public quotation
Operating income 150,929,452.87 96,146,565.15
Net profit 15,019,757.54 19,907,312.29
Net profit from discontinued operation
Other comprehensive income
Total comprehensive income 15,019,757.54 19,907,312.29
Dividends received from associated
company during the year
IX. Risk disclosure related to financial instrument
The major financial instruments of the Company primarily include cash at bank and on hand, equity
investments, borrowings, accounts receivable, accounts payables and bond payables. The Company is
exposed to risks from various financial instruments in day-to-day operation, mainly including credit risk,
liquidity risk and market risk. The risks in connection with such financial instruments and the risk
management policies adopted by the Company to mitigate such risks are summarized as follows:
The board of directors is responsible for planning and establishing the risk management structure for
the Company, developing risk management policies and the related guidelines across the Company, and
supervising the performance of risk management measures. The Company has developed risk
management policies to identify and analyse risks exposed by the Company. These risk management
policies have clear regulations over specific risks, covering various aspects of market risk, credit risk and
liquidity risk management. The Company will evaluate the market environment and changes of the
Company’s operating activities on a regular basis to decide whether to update the risk management
policies and systems. Risk management of the Company is carried out by the Risk Management
Notes to the financial statements – Page 195
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Committee based on the policies as approved by the board of directors. Risk Management Committee
identifies, evaluates and mitigates related risks by working closely with other business divisions of the
Company. Internal Audit Department of the Company will review the risk management control and
process regularly, and submit the review results to Audit Committee of the Company. The Company
spreads the risks of financial instruments through appropriate diversified investment and business
portfolio, and mitigates the risk of focusing on any single industry, specific regions or counterparties by
way of formulating the corresponding policies for risk management.
1. Credit risk
Credit risk refers to the risk of financial losses to the Company as a result of the failure of
performance of contractual obligations by the counterparties. The management has developed proper
credit policies and continuously monitors credit risk exposures.
The Company has adopted the policy of transacting with creditworthy counterparties only. In addition,
the Company evaluates the credit qualification of customers and sets up corresponding credit term based
on the financial status of customers, the possibility of obtaining guarantees from third parties, credit
records and other factors such as current market conditions. The Company monitors the balances and
recovery of bills and accounts receivable, and contract assets on a continual basis. As for bad credit
customers, the Company will use the written reminders, shorten the credit term or cancel the credit term
to ensure that the Company is free from material credit losses. In addition, the Company reviews the
recovery of financial assets on each balance sheet date to ensure adequate expected credit loss
provision is made for relevant financial assets.。
The Company’s other financial assets include currency funds and other receivables. The credit risk
relating to these financial assets arises from the default of counterparties, but the maximum exposure to
credit risk is the carrying amount of each financial asset in the balance sheet. The Company does not
provide any other guarantee that may expose the Company to credit risk.
The monetary funds held by the Company are mainly deposited with financial institutions such as
state-owned banks and other large and medium-sized commercial banks. The management believes that
these commercial banks have a higher reputation and assets, so there is no major credit risk and the
Company would not have any significant losses caused by the default by these institutions. The
Company’s policy is to control the amount deposited with these famous financial institutions based on
their market reputation, operating size and financial background, to limit the credit risk amount of any
single financial institution.
As a part of its credit risk asset management, the Company assesses the credit loss of receivables
using aging. The Company’s receivable and other receivables involve large amount of customers. Aging
information can reflect the ability to repay and risk of bad debt of these customers. The Company
determined expected loss rate by calculating historical bad debt rate for receivables with different aging
based on historical data and also taking forecast of future economic condition into consideration such as
GDP growth rate, state currency policy etc... For long-term receivables, the Company assesses expected
Notes to the financial statements – Page 196
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
credit loss reasonably by considering settlement period, contracted payment terms, debtor’s financial
situation and the economic situation of the debtor’s industry.
As at 31 December 2021, the carrying amount of related assets and corresponding ECL is as follows:
Aging Carrying amount Provision
Bill receivable 64,324,925.49 3,066,779.69
Accounts receivable 431,988,353.10 43,102,751.82
Other receivable 65,973,547.15 4,420,279.33
Total 562,286,825.74 50,589,810.84
As the Company’s customer base is large, no material credit concentration risk.
As at 31 December 2021, the balance of top 5 receivable accounts accounted for 35.48% of total
accounts receivables (2020: 31.28%) .
2. Liquidity risk
Liquidity risk refers to the risk of short of funds when the company performs its obligation of cash
payment or settlement by other financial assets. The Company’s subordinate member companies are
responsible for their respective cash flow projections. Based on the results thereof, the subordinate
financial management department continually monitors its short-term and long-term capital needs at the
company level to ensure adequate cash reserves; in the meantime, continually monitors the compliance
with loan agreements and secures undertakings for sufficient reserve funds from major financial
institutions, to address its short-term and long-term capital needs. Besides, the Company mainly signs
financing agreements with banks that have business transactions to provide support to fulfill commercial
bill obligation. As at 31 December 2021, the Company has financing facilities from several banks
amounting to RMB1,112.53 million. Amongst, RMB419.58 million has already been used.
As at 31 December 2021, the discounted contractual cash flows for financial liabilities and
off-balance sheet guarantee that presented in maturity are as follows:
Closing balance in ten thousands yuan
Item
Within 1 year 1 - 2 years 2 - 3 years Over 3 years Total
Short term loan 26,846.35 26,846.35
Bills payable 2.12 2.12
Accounts payable 25,458.89 25,458.89
Other payables 16,380.23 200.79 99.93 99.93 16,780.88
Non-current liabilities due
392.49 392.49
in one year
Total 69,080.08 200.79 99.93 99.93 69,480.73
3. Market risk
(1) Exchange rate risk
Except that the Company’s subsidiary in Hong Kong uses HKD as settlement currency and
sub-subsidiary in Swiss used CHF as settlement currency, the principal places of operations of the
Notes to the financial statements – Page 197
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Company are located in China and the major businesses are settled in RMB. However, the Company’s
recognized foreign currency assets and liabilities as well as the foreign currency transactions in the future
(the functional currencies of foreign assets and liabilities as well as the transactions are mainly HKD and
CHF) remain exposed to exchange rate risk
As at 31 December 2021, the RMB equivalent of financial assets and financial liabilities denominated
in foreign currencies are as follows:
Closing balance
Item
HKD USD EUR CHF Total
Financial asset
denominated in foreign
currency:
Monetary fund 178.75 6,500,021.75 2,005,408.28 8,571.61 8,514,180.39
Accounts receivable 1,080,596.26 4,637,364.76 663,470.14 96,671.37 6,478,102.53
Other receivables 98,186.34 98,186.34
11,137,386.5
Subtotal 1,178,961.35 2,668,878.42 105,242.98 15,090,469.26
1
Financial liabilities
denominated in foreign
currency:
Accounts payables 375,578.07 857,255.03 1,232,833.10
Other payables 232,536.98 232,536.98
Non-current liabilities due in
3,924,900.00 3,924,900.00
one year
Subtotal 608,115.05 4,782,155.03 5,390,270.08
Sensitivity analysis
As at 31 December 2021, for financial assets and financial liabilities that denominated in foreign currency, if
Renminbi appreciate or depreciate of 5% to foreign currency and other factors remain unchanged, the net profit
will decrease or increase about RMB 485,000 (31 Dec 2020:RMB 2.55 million) .
(2) Interest rate risk
The interest rate risk of the Company mainly associates with bank borrowings, bonds payable, etc.
Floating rate financial liabilities expose the Company to cash-flow interest rate risk, while fixed rate
financial liabilities expose the Company to fair-value interest rate risk. The Company determines the
comparative proportion of fixed rate contracts and floating rate contracts based on the then market
conditions.
The interest rate risk of the Company mainly associates with bank borrowings, bonds payable, etc.
Floating rate financial liabilities expose the Company to cash-flow interest rate risk, while fixed rate
financial liabilities expose the Company to fair-value interest rate risk. The Company determines the
comparative proportion of fixed rate contracts and floating rate contracts based on the then market
conditions.
Sensitivity analysis:
Notes to the financial statements – Page 198
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
As at 31 December 2021, it is estimated that a general increase or decrease 50 basis points in the
borrowings with floating interest rates, with all other variables held constant, the Company’s net profit and
shareholder’s equity for the year will decrease or increase by approximately RMB1,000,000.00 (2020:
RMB 1,250,000.00) .
The above sensitivity analysis assumes that interest rate changed on the balance sheet date and
applicable to all loans with floating interest rate terms.
X. Fair value
1. Financial instruments measured at fair value
As at 31 December 2021, the Company does not have financial instruments measured at fair value.
2. Status of financial assets and financial liabilities not measured at fair value
Financial assets and financial liabilities not measured at fair value include: accounts receivable,
short-term loans, accounts payable, long-term loans due within one year, and equity instrument
investment that does not have public quotation in an active market and its fair value cannot be measured
reliably.
The difference between fair value and carrying amount of the above financial assets and liabilities
that not measured at fair value is insignificant.
XI. Related party and related transaction
1. The parent company of the Company
Shareholdi
Registered ng ratio of
capital parent
Registration (in ten Ratio of vote right of parent
Name Type of business company
place thousand company to the Company%
to the
RMB) Company
%
CATIC Shenzhen Shenzhen Commercial 116,616.20 38.25 38.25
(1) Notes to the parent company
CATIC Shenzhen is a subsidiary that 100% held, indirectly, by AVIC International, and AVIC directly holds
91.91% of the equity of AVIC International.
(2) The ultimate controlling party of the Company is AVIC.
2. Refer to Note VIII. 1 for information about the Company’s subsidiaries
3. Refer to Note VIII. 2 for information about the Company’s material associates
4. Other related parties
Name of other related parties Relationship
Shenzhen CATIC Property Management Limited (CATIC Property Associate company of the controlling
Management) shareholder
Associate company of the controlling
Shenzhen CATIC Building Equipment Co., Ltd. (CATIC Building Company)
shareholder
Notes to the financial statements – Page 199
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Name of other related parties Relationship
Shenzhen CATIC Nanguang Elevator Engineering Co., Ltd. (CATIC Associate company of the controlling
Nanguang) shareholder
China Merchants Property Operation & Service Co., Ltd (China Merchants Associate company of the controlling
Property OS) shareholder
Associate company of the controlling
CATIC Guanlan Property Development Co., Ltd. (CATIC Guanlan Property)
shareholder
China Merchants Jiufang Asset Management Limited (CATIC Jiufang Asset Associate company of the controlling
Mgmt Company) shareholder
Associate company of the controlling
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment)
shareholder
Associate company of the controlling
Ganzhou CATIC 9 Square Trading Co, Ltd (Ganzhou 9 Square Company)
shareholder
Associate company of the controlling
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company)
shareholder
Associate company of the controlling
Shenzhen AVIC Security Service Co., Ltd (AVIC Security Service)
shareholder
Jiujiang 9 Square Business Management Co., Ltd (Jiujiang 9 Square Associate company of the controlling
Business Management) shareholder
Associate company of the controlling
Shenzhen CATIC Property Development Co., Ltd (CATIC Property)
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
Controlled by the same party
Company)
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
Controlled by the same party
Development)
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
Controlled by the same party
Institute)
AVIC Jincheng Nanjing Engineering Institute of Aircraft System(AVIC
Controlled by the same party
Jincheng 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)
Tianma Micro-electronics Co., Ltd. (Tianma) Controlled by the same party
AVIC Securities Co., Ltd. (AVIC Securities Company) Controlled by the same party
AVIC Training Center Controlled by the same party
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co., Ltd (Gongqingcheng CATIC
Controlled by the same party
Culture Investment Company)
China National Aero-Technology Shenzhen Co., Ltd. ( Controlled by the same party
Beijing Hangtou Real-Estate Co., Ltd. (Beijing Hangtou) Controlled by the same party
Avic Jonhon Optronic Technology Co., Ltd.(AVIC Jonhon) Controlled by the same party
China Aviation International Simulation Technology Services Co., Ltd. (China
Controlled by the same party
Aviation International Simulation )
AVIC International Holdings (Zhuhai) Co., Ltd. (AVIC Zhuhai) Controlled by the same party
China National Aero-technology Import & Export Corporation (CATIC) Controlled by the same party
Notes to the financial statements – Page 200
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Name of other related parties Relationship
China Aviation Industry General Aircraft Co., Ltd.(CAIGA) Controlled by the same party
AVIC Capital Co., Ltd. (AVIC Capital) Controlled by the same party
Company directors, managers, CFO, and secretary of the board Key management member
5. Related party transactions
(1) Related transaction between subsidiaries and between parent company
and subsidiaries which are in the scope of consolidation have already been
offset.
(2) Purchase good and receiving service
Purchase good and receiving Purchase good and Amount in current
Amount in prior period
service receiving service period
Property
CATIC Property Management 10,672,790.93 11,112,069.09
management
Department store
expenses/
Rainbow Company 4,964,647.21 4,841,752.49
Commodity
purchase
AVIC Training Center Training fee 147,652.13 150,000.00
Department store
Ganzhou 9 Square Company 178,484.53 182,754.97
expense
CATIC City Estate (Kunshan) Department store
64,060.80 50,277.87
Company expense
Department store
Jiufang Business Management 86,305.01 84,262.98
expense
Tianma Purchase of goods 538,699.11
CATIC Building Company Renovation 82,276.21 114,002.02
CATIC Shenzhen Company Purchase of goods 451,327.43
Elevator
AVIC Nanguang Company 463,226.05 245,660.40
maintenance
AVIC Jonhon Purchase of goods 76,667.61
Gongqingcheng CATIC Culture Departmental store
31,544.56
Investment Company expense
Total 16,767,655.04 17,770,806.36
Notes: All amount listed above exclude tax
(3) sale of goods and providing services
Nature of Amount in current
Related party period
Amount in prior period
transaction
Beijing Hangtou Sale of product 3,504.42
Ganzhou 9 Square Product and service 23,850.44
Gongqingcheng CATIC
Culture Investment Sale of product 461,064.03 398,249.10
Company
9 Square Business
Sale of product 2,648.00 45,374.42
Management
Sale of material
Shennan Circuit 2,179,951.09 13,308,898.52
and providing
Notes to the financial statements – Page 201
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
service
Grand Skylight Hotel
Sale of product 17,610.62 17,610.62
Management Company
Grand Skylight Hotel Others 2,180.53 2,180.53
Product and
Rainbow Company 79,467,519.77 75,021,802.86
service
AVIC International Sale of product 28,237.17 87,484.05
AVIC Jonhon Sale of product 383,989.41
China Aviation International
Simulation
Sale of product 60,530.97
AVIC Zhuhai Sale of product 31,831.86
CATIC Sale of product 105,929.20
CAIGA Sale of product 1,319,881.42
AVIC Capital Sale of product 8,681.42
Share of Utilities
CATIC Property
and management 3,372,087.78 3,406,116.73
Management
fee
Shanghai Watch Sale of product 1,839,880.53
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
Sale of product 41,504.42
Distribution
AVIC Int’l Aero Development Sale of product 140,884.96
AVIC Lutong Sale of product 14,123.89
AVIC Jincheng Nanjing
Sale of product 176,991.15
Institute
AVIC Drone Sale of product 33,021.24
AVIC Xi’an Flight Institute Sale of product 7,061.95
Total 87,469,498.13 94,945,300.01
Notes: All amount listed above exclude tax
(4) Related party lease
1） The Company as lessor
Recognized rental
Type of leased
Lessee income in current Recognized rental income in prior year
assets
year
CATIC Property
Property 7,876,636.32 6,864,598.93
Management
China Merchants Property
Property 1,981,713.13
OS
CATIC City Investment Property 285,138.58
AVIC Securities Company Property 1,377,399.99 1,328,714.31
Rainbow Company Property 931,939.92 1,428,372.22
Notes to the financial statements – Page 202
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Recognized rental
Type of leased
Lessee income in current Recognized rental income in prior year
assets
year
CATIC 9 Square Asset Mgmt
Property 1,829,906.11
Company
AVIC Security Service Property 799,448.76 902,359.45
CATIC Guanlan Property Property 142,569.29
CATIC Property Property 286,326.66
Total 10,985,424.99 15,049,698.68
2） The Company as lessee
Rental expenses
Type of leased
Lessor charged in current Rental expenses charged in prior year
assets
year
Ganzhou 9 Square Company Property 951,348.60 913,674.48
Jiufang Business
Property 508,577.07 431,504.72
Management
Kunshan Company Property 137,142.84 111,047.63
Total 1,597,068.51 1,456,226.83
(5) Related party fund lending and borrowing
1） Borrowings from related parties
Related Party Amount starting date Expiring date Note
AVIC Finance Company 100,000,000.00 15 July 2021 27 July 2021
30 December
AVIC Finance Company 100,000,000.00 14 December 2021
2021
Total 200,000,000.00
Note:
The Company paid interest to AVIC Finance Company amounted to RMB283,888.89 during the year.
(6) Remuneration to key management
Item Amount in current period Amount in prior period
Remuneration to key management 18,610,600.00 17,150,200.00
(7) Other related transactions
The year-end balance of the Company’s cash that is deposited with AVIC Finance Company is
RMB147,786,041.19. Interests received from the deposit during the year were RMB393,082.29.
(8) Receivables from and payables to related parties
1) Receivables from related parties
Closing balance Opening balance
Item Related party Carrying Bad debt Carrying
Bad debt provision
amount provision amount
Monetary
fund
147,786,041.1 283,532,347.7
AVIC Finance 9 9
Notes to the financial statements – Page 203
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Closing balance Opening balance
Item Related party Carrying Bad debt Carrying
Bad debt provision
amount provision amount
Company
Accounts
receivable
Ganzhou 9 Square 6,000.00 300.00
Gongqingcheng CATIC
Culture Investment 10,536.96 303.21 58,834.76
Company
Shennan Circuit 161,653.56 8,082.68 1,370,425.31 41,249.80
Rainbow Company 3,958,751.41 244,056.19 9,489,446.66 285,632.34
AVIC Jonhon 44,718.38 2,235.92
CAIGA 1,471,466.00 73,573.30
CATIC Property
0.30 40,947.74
Management
AVIC Security Service 0.27 0.01
Harbin Aircraft 20,130.00 605.91
Bill
receivable
Shennan Circuit 308,698.46 15,434.92 5,083,025.01 0.00
AVIC Jonhon 187,090.69 9,354.53
Shanxi Bocheng 50,000.00 2,500.00
Other
receivables
Ganzhou 9 Square
192,064.00 9,603.20 189,432.77 8,126.67
Company
Gongqingcheng CATIC
Culture Investment 5,500.00 275.00 7,462.00 320.12
Company
Jiufang Business
50,000.00 2,500.00 50,000.00 2,145.00
Management
Rainbow Company 1,051,020.00 52,551.00 1,064,073.00 45,648.73
Kunshan Company 56,000.00 2,800.00 40,000.00 1,716.00
AVIC 49.32 2.47 11,101.80 476.27
AVIC Training Center 2,464.00 74.17
2) Payables to related parties
Item Related party Closing balance Opening balance
Accounts
payable
CATIC Building Company 41,283.89
Advances
from
customer
Rainbow Company 16,537.50
AVIC Securities Company 123,540.00
Notes to the financial statements – Page 204
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Item Related party Closing balance Opening balance
AVIC Huadong Photoelectric 10,500.00
Other
payables:
Rainbow Company 198,661.82 257,490.98
AVIC International 3,600.00
CATIC Property Management 2,307,322.31 1,717,018.14
AVIC Securities Company 247,080.00 238,560.00
CATIC Nanguang 34,430.13
CATIC Building Company 31,270.67 47,732.93
AVIC Security Service 226,603.44 226,603.44
China Merchants Property OS 442,407.92
CATIC City Investment 309,732.00
CATIC Property 51,014.88
CATIC Guanlan Property 25,401.60
XII. Share-based payments
1. General information about share-based payments
Total equity instrument granted
7,660,000.00
during current period
Total equity instrument exercised
1,357,641.00
during current period
Total equity instruments voided in
current period
Scope of outstanding share
option exercise price and Not applicable
remaining contract term
Scope of outstanding other
equity instrument exercise price
and remaining contract term.
2. Equity settled share-based payment
Method of determining fair value of equity
Close price of share on grant date
instrument on grant date
Evidence to determine the number of Term of employee service, status of target completion, and
exercisable equity instrument personal performance assessment
Reasons for significant difference between
current period estimation and prior period Nil
estimation
Accumulated amount charged to capital
reserve for equity settled share-based 22,118,131.72
payment
Total expenses for equity settled
share-based payment recognized in 12,106,904.32
current period
XIII. Commitment and contingencies
1. Significant commitments
Notes to the financial statements – Page 205
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
(1) Lease contract that already signed or prepared to fulfil and its financial
effect
Refer to Note XV for details.
2. Contingencies on balance sheet date
The Company does not have material contingent events that need to be disclosed
XIV. Post balance sheet date events
1. Profit distribution
Cash dividend of RMB3.00 (tax inclusive) for every 10 shares
Profit distributions or dividends proposed
held
2. Other events after the balance sheet date
(1) Share repurchase
Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 2nd
meeting of the 10th Board of Directors on 25 October 2021 and the 5th extraordinary shareholder’s
meeting of 2021 on 30 November 2021, the Company repurchased B Shares in total of 3,176,824 shares
as of 8 March 2022, accounted for 0.75% of the Company’s total shares. Total consideration paid was
HKD 24,370,456.90 (excluding stamp duty and commission) .
(2) Financing and guarantee after the balance sheet date
1) On 8 March 2022, pursuant to approval by the 6th meeting the 10th Board of directors, the Company
proposed to apply for financing facility of no more than RMB1,200 million by means of credit, pledge and
mortgage in 2022. The resolution is pending for approval by the shareholder’s meeting.
2) On 8 March 2022, pursuant to approval by the 6th meeting the 10th Board of directors, the Company
proposed to provide guarantee for the Company’s wholly-owned subsidiary to borrow from banks of no more
than RMB600 million in 2022. 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.
(3) Others
As at 8 March 2022, the Company does not have other post-balance sheet events that need to be
disclosed.
XV. Disclosure regarding lease
The Company as a lessor:
1. Lease activities
All lease of the Company is property lease, including short-term lease and other leased that
recognized right-of-use asset and lease liabilities.
2. Short-term lease
Short-term leases are treated using simplified method. Short-term leases include lease term that is
shorter than 12 month and no renew options attached, and leases that will be matured in 12 month after
first adoption of CAS 21 – Lease. Short-term lease expenses charged to profit or loss was
RMB1,370,973.78.
Notes to the financial statements – Page 206
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
3. Future potential cash outflows that does not included in lease liabilities
(1) Variable lease payment
The lessee leased a lot of retail shops which contains variable lease payment terms in connection
with sales.
Many of the Company’s property lease contain variable lease payment terms in connection with sales.
In most circumstances, the Company uses these terms to matches lease payment to shops that can
generate more cash flows lease payment. For standalone shops, variable can reach 100% of all lease
payment at most and that the scope of percentage of sales used is quite large. In some circumstances,
variable payment terms include annual bottom payment and upper limit.
In 2021, the amount of variable lease payments included in the current profit and loss was
122,274,272.28 yuan.
(2) Option to renew
Many lease contracts entered by the Company has option to renew. The Company has already
estimated the option to renew reasonably when determining lease terms in measuring lease liabilities.
(3) Option to discontinue lease
Some of the lease contract entered by the Company has option to discontinue. The Company has
already estimated the option to discontinue reasonably when determining lease terms in measuring lease
liabilities.
(4) Residual value guarantee
The Company’s lease does not involve residual value guarantee.
(5) Lease that the lessee has already made commitment but not yet started
The Company does not have lease that has already made commitment but not yet started.
Disclosure as a lessor:
1. Lease activities
The Company’s leases are all properties.
2. Risk management strategy of retaining rights over lease assets
To reduce risks of lease, the Company normally asks lessee to pay rental in advance and collects 1-3
months rental as deposit.
XVI. Other material information
1. Segments
Operating segments of the Company are identified on the basis of internal organization structure,
management requirements and internal reporting system. An operating segment represents a component
of the Company that satisfied the following criteria simultaneously:
(1) Its business activities are engaged to earn revenue and incur expenses;
(2) Its operating results are regularly reviewed by the Company’s management to make decisions on
resources allocation and performance assessment;
Notes to the financial statements – Page 207
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
(3) Its financial conditions, operating results, cash flow and related accounting information are
available to the Company.
The Company determines the reporting segment based on the operating segment, and the operating
segment that meets any of the following conditions is determined as the reporting segment:
(1) The segment income of the operating segment accounts for 10.00% or more of total income of all
segments;
(2) The absolute amount of profits (losses) of the segment account for 10.00% or more of the higher
of the absolute amount of total profits of the profiting segment and the absolute amount of total losses of
the unprofitable segment.
The Company’s business is simple. The business mainly involves manufacturing and sales of watch.
The management considers the business as a whole in implementing management and assessing its
performance. As a result, no segment information is disclosed in this financial statement.
2. Other material events
As at 31 December 2021, the Company does not have other significant matters that require to
disclose.
XVII. . Notes to the parent company’s financial statement
Note 1． Accounts receivables
1． Presented by aging
Aging Closing balance Opening balance
Within 1 year 132,980.92 1,633,186.27
Over 1 year 3,942.90 143,415.84
Subtotal 136,923.82 1,776,602.11
Less: bad debt provision 7,043.34 311,803.32
Total 129,880.48 1,464,798.79
2． Presentation by method of providing bad debt
Closing balance
Category Carrying amount Bad debt provision
Percenta Book value
Amount Amount ECL rate (%)
ge (%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 136,923.82 100.00 7,043.34 5.14 129,880.48
losses on portfolio basis`
Including: Receivable
136,923.82 100.00 7,043.34 5.14 129,880.48
from other customers
Continued
Opening balance
Category
Carrying amount Bad debt provision Book value
Notes to the financial statements – Page 208
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Percenta ECL rate
Amount Amount
ge (%) (%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 1,776,602.11 100.00 311,803.32 17.55 1,464,798.79
losses on portfolio basis`
Including: Receivable
1,776,602.11 100.00 311,803.32 17.55 1,464,798.79
from other customers
3． In the portfolio, accounts receivable with expected credit loss provided based on credit
risk characteristic portfolio
(1) Portfolio of receivable from other customer
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 132,980.92 6,649.05 5.00
Over 1 year 3,942.90 394.29 10.00
Total 136,923.82 7,043.34 5.14
4． Movements of provision during the period
Movements during the period
Opening Closing
Category Recovered or Other
balance Accrual Written-off balance
reversed movements
Accounts receivable
that provided
expected credit losses
on single basis
Accounts receivable
that provided
311,803.32 304,759.98 7,043.34
expected credit losses
on portfolio basis`
Including: Receivable
311,803.32 304,759.98 7,043.34
from other customers
5． No actual write-off of accounts receivable during the current period.
6． Top 5 receivable accounts
Proportion in
total closing
Name Closing balance balance of Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in
107,840.25 78.76 5,557.26
total
Note 2． Other receivables
1． Presentation of other receivables by aging
Aging Closing balance Opening balance
Within 1 year 717,341,673.50 621,369,363.48
1 - 2 years 177,475.90
2- 3 years 11,697.43
Notes to the financial statements – Page 209
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Aging Closing balance Opening balance
Over 3 years 40,050.00 40,050.00
Subtotal 717,381,723.50 621,598,586.81
Less: bad debt provision 198,584.50 85,906.12
Total 717,183,139.00 621,512,680.69
2． Presented by nature
Nature Closing balance Opening balance
Related party in scope of
713,813,300.99 620,792,324.27
consolidation
Security deposit 3,117,526.90 217,525.90
Others 450,895.61 588,736.64
Total 717,381,723.50 621,598,586.81
3． Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Carrying Bad debt
Book value Book value
amount provision amount provision
717,381,723.5 717,183,139.0 621,598,586.8
First stage 198,584.50 85,906.12 621,512,680.69
0 0 1
Second stage
Third stage
717,381,723.5 717,183,139.0 621,598,586.8
Total 198,584.50 85,906.12 621,512,680.69
0 0 1
4． Presented by bad debt provision method
Closing balance
Category Carrying amount Bad debt provision Book value
Percenta ECL rate
Amount Amount
ge (%) (%)
Other receivables that provided
expected credit losses on single
basis
Other receivables that provided
expected credit losses on portfolio 717,381,723.50 100.00 198,584.50 0.03 717,183,139.00
basis
Including: Security deposit portfolio 3,117,526.90 0.44 193,923.85 6.22 2,923,603.05
Social security payment
357,682.66 0.05 357,682.66
on-behalf portfolio
Receivables from related
713,813,300.99 99.50 713,813,300.99
parties within scope of consolidation
Portfolio of others 93,212.95 0.01 4,660.65 5.00 88,552.30
Total 717,381,723.50 100.00 198,584.50 0.03 717,183,139.00
Continued
Opening balance
Category
Carrying amount Bad debt provision Book value
Notes to the financial statements – Page 210
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Percentag
Amount Amount ECL rate (%)
e (%)
Other receivables that provided
expected credit losses on single basis
Other receivables that provided
621,598,586.8
expected credit losses on portfolio 100.00 85,906.12 0.01 621,512,680.69
1
basis
Including: Security deposit portfolio 217,525.90 0.03 45,116.69 20.74 172,409.21
Social security payment
392,074.21 0.06 392,074.21
on-behalf portfolio
Receivables from related 620,792,324.2
99.88 620,792,324.27
parties within scope of consolidation 7
Portfolio of others 196,662.43 0.03 40,789.43 20.74 155,873.00
621,598,586.8
Total 100.00 85,906.12 0.01 621,512,680.69
1
5． In the portfolio, other receivables with expected credit loss provided based on
credit risk characteristic portfolio
(1) Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 3,077,476.90 153,873.85 5.00
1 - 2 years
2- 3 years
Over 3 years 40,050.00 40,050.00 100.00
Total 3,117,526.90 193,923.85
(2) Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 357,682.66
(3) Receivables from related parties within scope of consolidation
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 713,813,300.99
(4) Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 93,212.95 4,660.65 5.00
6． Bad debt provision status
Bad debt provision First stage Second stage Third stage Total
Notes to the financial statements – Page 211
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Lifetime expected
Expected credit Lifetime expected
credit losses (no
losses over the next credit losses (credit
credit impairment
12 months impairment occurred)
occurred)
Opening balance 85,906.12 85,906.12
Opening balance
movements in current
period
—Transfer into the
second stage
—Transfer into the
third stage
—Reverse back to the
second stage
—Reverse back to the
first stage
Accrual during the period 148,807.16 148,807.16
Reversed during the
36,128.78 36,128.78
period
Recovered during the
period
Written-off during the
period
Other movements
Closing balance 198,584.50 198,584.50
7． No other receivables were written-off during the period.
8． Top 5 other receivable accounts
Proportion to closing balance of Bad debt provision
Name Closing balance
other receivables (%) Closing balance
Top 5 other receivables in total 713,813,300.99 99.50
Note 3． Long-term equity investment
Closing balance Opening balance
Nature
Carrying amount Provision Book value Carrying amount Provision Book value
Investment in 1,486,912,339.7 1,486,912,339.7
1,478,014,522.36 1,478,014,522.36
subsidiaries 2 2
Investment in
55,155,605.31 55,155,605.31 51,400,665.92 51,400,665.92
associates
1,542,067,945.0 1,542,067,945.0
Total 1,529,415,188.28 1,529,415,188.28
3 3
1． Investment in subsidiaries
Provision
Addition/new Closing
Opening Withdra accrued
Investee investment Closing balance balance of
balance wn in current
provision
period
Shenzhen Harmony
604,067,211.2
World Watch Center 3,617,300.95 607,684,512.15
0
Co., Ltd.
Shenzhen Harmony
11,684,484.39 11,684,484.39
E-commerce Co., Ltd.
Shenzhen FIYTA
99,800,505.05 1,448,702.83 101,249,207.88
Precision Technology
Notes to the financial statements – Page 212
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Provision
Addition/new Closing
Opening Withdra accrued
Investee investment Closing balance balance of
balance wn in current
provision
period
Co., Ltd.
Shenzhen FIYTA
Technology 50,245,552.53 529,670.23 50,775,222.76
Development Co., Ltd.
137,737,520.0
FIYTA (Hong Kong) Ltd. 137,737,520.00
0
TEMPORAL
5,000,000.00 5,000,000.00
(Shenzhen) Co., Ltd.
453,130,819.7
FIYTA Sales Co., Ltd. 2,660,752.60 455,791,572.32
2
Liaoning Hengdarui
Commercial & Trade 36,867,843.96 36,867,843.96
Co., Ltd.
Emile Choureit Timing
79,480,585.51 641,390.75 80,121,976.26
(Shenzhen) Ltd.
1,478,014,522.3
Total 6
8,897,817.36 1,486,912,339.72
2． Investment in associates
Movements in current period
Opening Addition/new Investment gain
Investee
balance investment Withdrawn recognized under Adjustment to OCI
equity method
Associates
51,400,665.9
Shanghai Watch 3,754,939.39
2
Continued
Movements in current period
Cash
Impairme Closing balance of
Investee dividends Closing balance
Other equity nt provision
declared or Others
movements provision
distribution of
accrual
profit
Associates
Shanghai Watch 55,155,605.31
Note 4． Operating income and operating cost
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Main business 175,936,431.09 38,852,252.32 134,821,552.25 36,497,097.45
Other business 3,519,281.62 2,560,243.70
Note 5． Investment gain
Amount in current
Item Amount in prior period
period
Gain from long-term equity investments accounted for using equity
3,754,939.39 4,976,828.07
method
Gain from long-term equity investments accounted for using cost
259,918,496.56 100,000,000.00
method
Notes to the financial statements – Page 213
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
Amount in current
Item Amount in prior period
period
Total 263,673,435.95 104,976,828.07
XVIII. Supplementary information
1. Details of non-recurring gain or loss for the year
Item Amount Note
Disposal gain or loss of non-current assets 730,134.87
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 the enterprise 23,476,186.50
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
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
Impairment provision reversal of accounts receivable under standalone impairment test 2,225,653.32
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 the above items -3,058,731.52
Profit and loss items pursuant to the definition of non-recurring profit and loss
Effect of income tax of non-recurring profit or loss 4,951,715.05
Less: Effect of non-recurring profit or losses attributable to minority shareholders
(after tax)
Total 18,421,528.12
2. Return on Equity (ROE) and Earnings per share (EPS)
EPS
Profit of the reporting period Weighted average ROE %
Basic EPS Diluted EPS
Notes to the financial statements – Page 214
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2021
EPS
Profit of the reporting period Weighted average ROE %
Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of
13.39 0.90 0.90
the Company
Net profit attributable to ordinary shareholders of
the Company after deducting non-recurring profit 12.76 0.86 0.86
or loss
FIYTA Precision Technology Co., Ltd.
Board of Directors
March 10, 2022
Notes to the financial statements – Page 215
