SHENZHEN FIYTA HOLDINGS LTD.
2010 Semi-Annual Report （Full Text）
August 17, 20102
Table of Contents
Chapter 1 Important Notice, Definition and Table of Contents
Chapter 2 Company Information
Chapter 3 Change in the Capital Stock and Shares Held by the Principal Shareholders
Chapter 4 Directors, Supervisors and Senior Executives
Chapter 5 Report of the Board of Directors
Chapter 6 Significant Events
Chapter 7 Financial Report (Unaudited)
Chapter 8 Documents Available for Inspection3
Chapter 1 Important Notice, Definition and Table of Contents
I. Important Notice
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives
of the Company hereby confirm that there are no important omissions, fictitious statements or
serious misleading information carried in this report, and shall take all responsibilities, individually
and/or jointly, for the authenticity, accuracy and completeness of the whole contents.
None of the directors, supervisors or senior executives declares that he/she cannot ensure or has
any objection to the authenticity, accuracy and completeness of the contents of the semi-annual
report.
The semi-annual report has not been audited.
There is no discrepancy between the Chinese and internal accounting standards in the
semi-annual report.
Mr. Wu Guangquan, the Chairman of the Board, Mr. Xu Dongsheng, the Managing Director, Mr. Li
Dehua, Deputy General Manager and Chief Financial Officer and Mr. Hu Xinglong, Manager of
the Financial Department, hereby ensure the accuracy and completeness of the financial report
enclosed in this semi-annual report.
II. Definitions
In this report, unless the context otherwise required, the following names in abbreviation shall
refer to the following organizations:
The Company or Fiyta: Shenzhen Fiyta Holdings Co., Ltd.
CATIC Shenzhen Corporation: China National Aero-Technology Corporation Shenzhen
Shenzhen CATIC Group: Shenzhen CATIC Group Co., Ltd.
Harmony: Shenzhen Harmony World Watches Center Co., Ltd.
Rainbow Supermarket: Shenzhen Rainbow Supermarket Co., Ltd.
CATIC Property: Shenzhen CATIC Property Management Co., Ltd.
CATIC Real Estate: Shenzhen CATIC Real Estate Development Co.4
Chapter 2 Company Information
I. Company Profile
1. Company Name in Chinese: 深圳市飞亚达（集团）股份有限公司
In English: SHENZHEN FIYTA HOLDINGS LTD.
Short Form in Chinese: 飞亚达公司
Short Form in English: FIYTA
2. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form & Code of the Stock: FIYTA A 000026
FIYTA B 200026
3. Registered Office Address: 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: 518057
Internet Web Site: http:// www. fiytagroup.com.cn
E-mail: szfiyta@public.szptt.net.cn
4. Legal Representative: Mr. Wu Guangquan
5. Secretary of the Board: Mr. Chen Libin
Securities Affairs Representative: Mr. Zhang Yong
Liaison Address: 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District,
Shenzhen
Tel : 0755－86013669 86013992
Fax: 0755－83348369
E-mail: investor@fiyta.com.cn
6. Newspapers Designated for Disclosing the Information: Securities Times, Hong Kong
Commercial Daily
Internet Website for publishing this semi-annual report: http://www.cninfo.com.cn
Place Where the Semi-Annual Report is Prepared and Placed: the Secretary Office of the Board
of Directors
7. Other Relevant Information:
(1) Date of first registration: March 30, 1990
Date of change in registration: January 30, 1997
Registration with: Shenzhen Municipal Administration for Industry and Commerce.
(2) Business License No.: 440301103196089
Taxation Registration No.: 440301192189783
Organization Code: 19218978-3
Certified public accountant engaged
Types Description Office address
Stock A
and
Stock B
Zhongrui Yuehua Certified Public
Accountants Co., Ltd.
8th – 9th Floors, Block A,
International Enterprise
Building No. 35, Jinrong
Avenue, Xicheng District,
Beijing5
II. Financial Highlights
In RMB
End of the report
period
End of the previous
year
Increase/decrease of the end of
the report period vs the end of
the previous year (%)
Total assets 1,639,985,004.37 1,523,936,983.79 7.62%
Owner’s equity attributable to the Company’s
shareholders
757,192,985.42 714,808,466.77 5.93%
Capital Stock 249,317,999.00 249,317,999.00 -
Net asset per share attributable to the
shareholders (RMB/share)
3.037 2.867 5.93%
Report period (Jan
to Jun)
Same Period of the
Previous Year
Increase/decrease of the report
period vs the same period of the
previous year (%)
Turnover 810,811,910.82 572,693,689.88 41.58%
Operating profit 44,751,195.21 32,387,858.65 38.17%
Total profit 51,957,376.73 34,520,507.09 50.51%
Net profit attributable to the shareholders 42,399,471.66 27,167,061.42 56.07%
Net profit attributable to the Company’s
shareholders excl. extraordinary items
36,774,788.99 25,460,942.67 44.44%
Basic earnings per share, in RMB/share 0.171 0.109 56.07%
Diluted earnings per share (RMB/share) 0.171 0.109 56.07%
Net assets-income ratio (%) 5.62% 3.80% 1.82%
Net cash flow generated from operating
activities
875,685.15 80,330,737.00 -98.91%
Net cash flows per share arising from operating
activities, in RMB/share
0.004 0.322 -98.91%6
Chapter 3 Change in the Capital Stock and Shares Held by the Principal Shareholders
I. Change in the Capital Stock
1. Change in the Company’s capital stock ended June 30, 2010 is as follows:
In shares
Before the change Increase / Decrease (+/ -) After the change
Quantity
Proportio
n
New
issuing
Bonus
issue
Shares
converted
from
reserve
Others
Sub-to
tal
Quantity
Proportio
n
I. Restricted shares 111,451,025 44.70% 111,451,025 44.70%
1. State shares
2. State corporate
shares
111,415,501 44.69% 111,415,501 44.69%
3. Other domestic
shares
Including:
Domestic non-state
owned corporate
shares
Domestic
natural person
shares
4. Foreign shares
Including: Foreign
corporate shares
Overseas
natural person
shares
5. Senior executive
shares
35,524 0.01% 35,524 0.01%
II. Unrestricted
shares
137,866,974 55.30% 137,866,974 55.30%
1. RMB ordinary
shares
79,546,974 31.91% 79,546,974 31.91%
2. Foreign shares
listed domestically
58,320,000 23.39% 58,320,000 23.39%
3. Foreign invested
shares listed out of
Mainland China
4. Others
III. Total Shares 249,317,999 100.00% 249,317,999 100.00%
Statement of change of the restricted shares
Shareholder
Names
Number of
restricted
Number of
shares
Increase of
restricted
Number of
restricted
Causes of
restriction
Date of discharging7
shares at year
beginning
discharged for
restriction
shares in the
report year
shares at year
end
Shenzhen
CATIC Group
Co., Ltd.
111,415,501 0 0 111,415,501
Equity
separation
reform
November 9, 2010
Lu Bingqiang 35,524 0 0 35,524
Senior
executives’
restricted
shares
－
Total 111,451,025 0 0 111,451,025 － －
2. Issuing and Listing
(1) Within three years prior to the end of the report period, the Company had not issued any
shares or derivatives.
(2) In the report period, the Company never conducted such activities as distributing bonus shares,
converting public reserve into share capital, share allotment, new issuing, stock absorption and
combination, converting convertible bonds into shares, capital reduction, issuing or listing
employee shares or shares of the Company’s employees or any other activity which caused
change in total shares and the structure.
(3) At present, there are no employees’ shares in the Company.
II. Shareholders
1. Ended June 30, 2010, there were totally 19,185 shareholders in the Company: including 11,075
shareholders of A shares (including one senior executive); 8,110 shareholders of B shares.
2. Shares held by the Company’s top ten shareholders
Shares held by the top 10 shareholders ended June 30, 2010:
Total number of
Shareholders
19,185
Shareholding of top 10 shareholders
Shareholder Names
Shareholder
type
Holding rate
Total shares
held
Quantity of restricted
shares
Quantity of shares
pledged or frozen
Shenzhen CATIC Group
Co., Ltd.
State-owned
corporate
shares
44.69% 111415501 111,415,501 0
Industrial and Commercial
Bank of China – E-Fund
Value Growth Mixed
Securities Investment Fund
Domestic
non-state
corporate
shares
2.77% 6907830 0 0
BBH BOS S/A FIDELITY FD
- CHINA FOCUS FD
Overseas
corporate
1.92% 4775113 0 0
Industrial and Commercial
Bank of China – Huitianfu
Balance Growth Stock
Based Securities Investment
Fund
Domestic
non-state
corporate
shares
1.60% 4000070 0 0
Construction Bank of China Domestic 1.13% 2829174 0 08
– MANULIFE TEDA
Market Capitalization
Selected Stock Based
Securities Investment Fund
non-state
corporate
shares
Industrial and Commercial
Bank of China – Huitianfu
Growth Focus Stock Based
Securities Investment Fund
Domestic
non-state
corporate
shares
0.87% 2162643 0 0
Zhongrong International
Trust Co., Ltd. – Zhongrong
Construction Bank Fortune
No. 4 - 001
Domestic
non-state
corporate
shares
0.79% 1971700 0 0
Zhonghai Trust Co., Ltd. –
Zhonghai – Ocean Star No.
1 Assembled Funds Trust
Domestic
non-state
corporate
shares
0.70% 1738073 0 0
Industrial and Commercial
Bank of China – Guotou
Ruiyin Growth Selected
Stock Based Securities
Investment Fund
Domestic
non-state
corporate
shares
0.69% 1730311 0 0
Construction Bank of China
– Huabao Industrial Income
Growth Mixed Type
Securities Investment Fund
Domestic
non-state
corporate
shares
0.63% 1566784 0 0
Shareholding of top 10 shareholders of unrestricted shares
Shareholder Names Quantity of non-restricted shares held Share type
Industrial and Commercial Bank of China –
E-Fund Value Growth Mixed Securities
Investment Fund
6907830 A Shares
BBH BOS S/A FIDELITY FD - CHINA
FOCUS FD
4775113 B shares
Industrial and Commercial Bank of China –
Huitianfu Balance Growth Stock Based
Securities Investment Fund
4000070 A Shares
Construction Bank of China – MANULIFE
TEDA Market Capitalization Selected Stock
Based Securities Investment Fund
2829174 A Shares
Industrial and Commercial Bank of China –
Huitianfu Growth Focus Stock Based
Securities Investment Fund
2162643 A Shares
Zhongrong International Trust Co., Ltd. –
Zhongrong Construction Bank Fortune No. 4
- 001
1971700 A Shares
Zhonghai Trust Co., Ltd. – Zhonghai – Ocean 1738073 A Shares9
Star No. 1 Assembled Funds Trust
Industrial and Commercial Bank of China –
Guotou Ruiyin Growth Selected Stock Based
Securities Investment Fund
1730311 A Shares
Construction Bank of China – Huabao
Industrial Income Growth Mixed Type
Securities Investment Fund
1566784 A Shares
Industrial and Commercial Bank of China –
Guotou Ruiyin Core Enterprise Stock Based
Securities Investment Fund
1500000 A Shares
Note to the association
relation or acting in concert
of the above shareholders
The Company has not found any connectivity relations among the aforesaid shareholders of
negotiable shares and between the top ten shareholders of negotiable shares and the top ten
shareholders.
In the report period, there was no change in increase/decrease of the shares held by Shenzhen
CATIC Group Co., Ltd., a shareholder holding over 5% of the Company’s shares and there was
no hypothecation, freezing or custody of any of the shares either.
3. About the Controlling Shareholder
Shenzhen CATIC Group Co., Ltd. was founded in June, 1997, with total registered capital of RMB
678.90909 million and its legal representative is Wu Guangquan. Shenzhen CATIC Group Co.,
Ltd. is a diversified holding company, engaged in the business of manufacture and sales of LCD,
PCB, medium and high grade watches, and agriculture related resources, etc. through its
subsidiaries. The Group was listed with Hong Kong Stock Exchange in September 1997.
4. Actual Controller
CATIC Shenzhen Corporation, legal representative: You Lei; date of incorporation: December 1,
1982; registered capital: RMB 1000 million; principal business: import and export of commodities
and technologies other than those exported exclusively by the central government or under the
control by the central government, compensation trade as importer/exporter as well as agent;
invest to set up economic entities; domestic commerce and supply and sale of goods and
materials (excluding the commodities monopolized for operation, under control of and for
exclusive sale by the central government); sales of home-made automobiles (with cars exclusive);
development of real estate.
Controller of the actual controller: AVIC International Holding Corporation was incorporated in
1983 with registered capital of RMB 7422 million; China National Aviation Industry Group Co., Zhongjin
Innovation (Tianjin) Investment Co., Ltd. and National Council for Social Security Fund holds the equity in AVIC
International Holding Corporation respectively by 67.38%, 16.31% and 16.31%. Legal
representative: Fu Shula, licenced businesses: supply of labor services to the engineering
projects carried out abroad; sales of methylbenzene, acetone, methyl ethyl ketone, piperidine,
ether, potassium permanganate, chloroform, sulfuric acid, hydrochloric acid, acetic anhydride,
combustible liquid, combustible solid, articles inflammable naturally and with moisture, oxidizer
and organic peroxide, toxic and corrosive goods; insurance for motor vehicles, assets of
enterprises, household property and cargo freight. General businesses: import and export;
warehousing; industry, hotel, property, real estate development investment and management;
new energy equipment development, sales and repairing; exhibition; technology transfer and
technical services in connection with the aforesaid business.
The eventual controller of the Company’s actual controller - AVIC International Holding
Corporation, is State-owned Assets Supervision and Administration Commission of the State
Council10
5. 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
16.31% 67.38% 16.31%
CATIC International Holdings Limited
100%
CATIC Shenzhen Corporation
58.77%
Shenzhen CATIC Group Co., Ltd.
44.69%
SHENZHEN FIYTA HOLDINGS LTD.
National Council of Social
Security Fund
Zhongjin Innovation (Tianjin)
Investment Co Ltd11
Chapter 4 Directors, Supervisors and Senior Executives
I. Change of the Company’s Shares Held by them
Of the directors, supervisors and senior executives in current office, only Deputy General
Manager Mr. Lu Bingqiang holds 47,365 shares in which no change took place in the report
period.
II. The Company has not yet started implementation of any equity incentive program. In the
report period, there was no director, supervisor or senior executive held any of the
Company’s stock option or restricted shares.
III. New Engagement or Disengagement of Directors, Supervisors and Senior Executives
Appointment of Members of the Board of Directors and the Supervisory Committee
On June 22, 2010, the Company’s 2009 Annual Shareholders’ General Meeting reviewed and
approved the proposal on Mr. Lai Weixuan’s application for resignation of the Company’s director
and vice chairman of the Board, and nominated Mr. You Lei as the director candidate and
nominated Mr. Sui Yong as the candidate of the Company’s supervisor. The meeting approved
Mr. Lai Weixuan to resign the office of director and vice chairman of the Board and elected Mr.
You Lei a member of the Company’s Sixth Board of Director and Mr. Sui Yong became a member
of the Sixth Supervisory Committee.
The announcement of the aforesaid information was published on Securities Times, Hong Kong
Commercial Daily and http://www.cninfo.com.cn. on June 23, 2010.12
Chapter 5 Report of the Board of Directors
I. Operation Review
(I) Operation Summary
In the first half year of 2010, the situation of macro-economy was relatively steady and gradually
turned better. China’s luxury market showed a situation of quickened growth in the first half year of
2010 after successful going through the test of the financial crisis. Facing the ever changing
market environment, the Company insisted on the two principal businesses of Harmony World
Watches and FIYTA Brand under the general guideline of pursuing of change, innovation and
development, improved the core competitiveness by continuously optimizing and integrating the
internal resources, developing the market field, looking for strategic partners, etc. so as to realize
a quick breakthrough in industry scope and operation performances. In the report period, the
Company realized operating income amounting to RMB 810.81 million, a year-on-year growth
of 41.58%, realized total profit amounting to RMB 51.96 million, a year-on-year growth of
50.51%, a net profit amounting to RMB42.40 million, a year-on-year growth of 56.07%.
(For the detail, refer to the following statement. In RMB 10,000)
Jan to Jun, 2010 Jan to Jun, 2009
increase/decreas
e
increase/decreas
e (%)
Operating income 81,081 57,269 23,812 41.58%
Total profit 5,196 3,452 1,758 50.51%
Net profit 4,240 2,717 1,538 56.07%
1. Retail of Famous Brand Watches
In the report period, HARMONY Famous Brand Watch Retail continued to optimize the network
development and realized a turnover of RMB 671.04 million, a year-on-year growth of
49.32%.
Development of Channels: In the report period, in addition to steady operation, the Company
quickly developed the network and newly opened 9 chain shops; at the end of the report period,
the number of retailers of Harmony world watches chain shops reached 139 (excluding 30
Henglianda shops). The Company’s chain shop network layout became more rational and the
competitiveness was further enhanced. Meanwhile, the Company further enhanced the shop
optimization and upgrading of the existing retailers and expansion of the famous brand watches.
In the first half year, the Company finished shop improvement of 7 chain shops, upgraded the
shop identity and provided consumers with more pleasant shopping environment.
Enhancing international cooperation and brand promotion: The Company continued enhancing
and deepening the communication and cooperation with international watch group and brands. In
the report period, leaders from numerous international timepiece groups and brands visited
Harmony; The Company kept good cooperation with leading watch brands and jointly carried
out promotion activities. popularized timepieces culture, fostered and developed consumer
groups by means of such activities as high-end VIP salon, theme show, etc. and achieved a
good result both in the sector and all circles of life.
Deepening 3-level marketing and enhancing terminal operation: The Company continued to
enthusiastically pushed on and deepened the theory of “3-level marketing” and continuously
detailed the work at the terminal. Meanwhile, the Company carried out the best practical activities
in different professional fields in a deepened way according to the requirements of the 3-level
marketing theory. Especially in respect of customer service, the Company focused on developing
and fostering VIP customers. In the report period, the Company successfully held VIP based
subject activities in different forms and supported the steady growth of sales.
Popularization of Harmony Brand: With combination of advertisement promotion and terminal13
brand construction, the Company enthusiastically popularized HARMONY Brand. The Company’s
VIP Journal titled HARMONY WORLD was put into application at the terminal of various chain
shops and regularly mailed to VIP customers. With combination of the timepieces art and luxuries
culture and deepening the good reputation of HARMONY brand. The value of HARMONY Brand
has been continuously enhanced in the sector as well as the heart of the consumers.
Enhancing Team Construction and Training: Harmony introduced different types of talents through
various channels, enhanced construction of back-up talents and positively carried out training the
cadres in reserve. It devoted great efforts in routine training of shop sales persons, enhanced
training certification of the professional sales consultants and provided good development
channel for counter sales persons. Meanwhile, it implemented the training program for
improving the leading power of operating managers and carried out the training of the
professionals of different jobs in the shop on overall basis.
2. FIYTA Watches
In the report period, the Company continued to deepen the coordination and efficiency
improvement among different departments and business units, enhanced the marketing and
promotion, upgraded the identity of FIYTA brand with combination of new products to enter the
market, by means of the spokesman program and regional promotion project and the same time
continued to enhance the development of the overseas market. In the report period, FIYTA Watch
realized a turnover of RMB 117.24 million, a 25.14% growth over the same period of the previous
year.
Development of the domestic and overseas channels: In the report period, the Company kept on
enhancing investment and operation management of the franchised shops, promoted upgrading
of the channel quality, and demonstrated the high quality FIYTA products and brand identity to
more medium and high-end customers; continued to upgrade and maintain the sales quality of
RMB 1 million shops so as to promote channel optimization and sales improvement; continued
to develop overseas channels, conducted extensive contacts with the related customers. Up to
now, FIYTA watches have entered the overseas markets of Singapore, Malaysia, Canada,
Vietnam, etc. and are enjoying favorable sales situation.
New Product Research and Development and Launching to the Market: The Company has
speeded up carrying forward serialization and standardization of products. In the report period,
“TRIUMPHANT RETURN” series new products were successfully launched to the market. With
coordination of the spokesman’s advertisement, regional promotion activities and sales
competition, the new products series have once again achieved success in development of new
series products following the “Impression City” and “Photographer” series products. In recent
years, the Company’s series products launched have been highly recognized in the market and
the brand progress spirit has been further manifested. Meanwhile, the preparatory market test
project of launching new products of the next stage has started.
R & D and Design Award: In the report period, the Germany based Red Dot Design Award,
enjoying the title of “OSCAR of the Global Industrial Design Sector” announced the rewards.
FIYTA “Shenzhou No. 7” Space Suit Watch (i.e. Space Traveler Treasure) was rewarded RED
DOT PRODUCT DESIGN for its up-to-date lubricating technology, the antimagnetic technology of
application in the environment of high magnetic field intensity, shockproof technology, precision
machining technology and pure and fresh and concise design style. FIYTA has become the first
watch brand enjoying this honor in Mainland China.
Brand Promotion: This year, the Company still organized a delegation as usual to participate in
BASEL WORLD and received distributors and customers from Switzerland, France, Singapore,
etc. and achieved a good result; the Company’s spokesman plan was carried out in an orderly
way and once again started CCTV advertisement project and network promotion project. A good
result has been achieved. The Company continuously focused on the terminal promotion,
carried out regional star public relations activities to match up the launching of identity products
and new terminal identity, enhanced interaction with the channel agents and consumers and
deepened the brand identity.14
Sales Competition: In the first half year, the Company carried out promotion activities and sales
competition of a number of themes, powerfully promoted sales and optimized inventories. FIYTA
customers’ satisfaction has been continuously improved.
Enhancing Team Construction and Training: The Company has been continuously exploring new
training models. In the report period, the Company carried out republic relation training and
practical training in a number of regions which have great significance for sales and brand
promotion. Meanwhile, the Company has started implementation of the brand development
based new purchasing guider integration human resource system and the staff’s career promotion
passage have started implementation.
3. High-end Brand and Fashionable Brand
The high-end brand Emile Chouriet wrist watch enjoyed a big growth in sales in the report period
and realized quick growth. The sales quantity and amount realized 100% year-on-year growth. In
respect of channel construction, the Company increased 25 sales points for high-end brand watch
in the first half year. Up to now, there have been 85 sales points.
In the report period, the Company mainly focused on channel construction for fashionable brand.
The channel construction of COSMO and JEEP in the Southeast Asia market was basically
completed. The plan for developing the domestic market and new sales points have been
implemented.
4. Property Operation
In the report period, the Company further enhanced customer relationship management of FIYTA
Building, FIYTA Technology Building and Xi’an FIYTA Building, realized a turnover of RMB 33.12
million and maintained relative stability.
In the report period, the Company continued to apply the advanced management tools at deep
level, applied the
In the report period, the Company further applied the advanced management instruments and
popularized the balance scorecard project in various departments, posts and individuals and even
in performance assessment and management; further propelled 6 Sigma Green Ribbon Project
and Black Ribbon designated training. The Company further enhanced the human resource
reserve, continued to implement the campus recruitment program in key colleges and universities
and college students practical training program. Meanwhile, the Company devoted great efforts to
reinforce the on-service training and internal training work. The Company continued to reinforce
construction of relationship with investors and received personal visits and calls from many
investors.
(II) Principal Business and Operation
The Company is mainly engaged in design, development, manufacture, sales and repairing of
timepieces and components, including operation of FIYTA watch products and sales of
HARMONY world top brand watches; In addition, the Company had income from the properties,
including Fiyta Building, Fiyta Technology Building and Xi’an FIYTA Building.
1. The Company’s income and profit from principal business are classified as follows:
In RMB 10,000
Sectors
Operating
income
Operating
costs
gross profit rate
(%)
Year-on-year
increase/decre
ase of
operating
income rate
(%)
Year-on-year
increase/decre
ase of business
cost (%)
Year- on-year
increase/decrea
se of gross profit
rate (%)
Commerce 67,104.15 52,431.99 21.86% 49.32% 51.30% -1.02%15
Industry 11,723.82 4,513.67 61.50% 25.14% 22.28% 0.90%
Property Operation 3,312.36 1,015.52 69.34% 7.81% 18.71% -2.82%
2. Watch business and property take over 10% of the Company’s income as well as the profit from
the principal business
(1) Watches The sales income and sales cost of FIYTA watches and foreign famous watches
are listed as follows:
Table 1: To be presented based on the categories of the products
In RMB 10,000
Products
Operating
income
Operating
costs
Gross profit
rate (%)
Year-on-year
increase/dec
rease of
operating
income rate
(%)
Year-on-year
increase/dec
rease of
business
cost (%)
Year- on-year
increase/decr
ease of gross
profit rate (%)
Sales of foreign
famous watches
67,104.15 52,431.99 21.86% 49.32% 51.30% -1.02%
Sales of FIYTA
watches
11,723.82 4,513.67 61.50% 25.14% 22.28% 0.90%
Table 2: Listed according to regions
In RMB 10,000
Regions Operating income
Year-on-year
increase/decrease of
revenue rate (%)
Northeast China 8,193.85 47.39%
North China 14,819.34 42.03%
Northwest China 19,600.49 52.99%
Southwest China 4,844.53 54.76%
East China 8,884.67 37.66%
South China 25,797.46 31.36%
Northeast China 8,193.85 47.39%
(2) Property The Company’s revenue and profit from property operation mainly came from
lease of FIYTA Building, FIYTA Technology Building and Xi’an FIYTA Building.
3. In the report period, no material change took place in the Company’s principal business or its
structure, and earning power of the principal business in comparison with the previous year.
4. In the report period, the Company had no other business activities having major influence on
the Company.
5. Problems existing in the operation, future development prospects and measures
The Company still has good expectation of the development of the Chinese luxuries market in the
second half year of 2010, plans to increase investment in the principal business, speed up
construction of HARMONY channels, continuously enrich FIYTA watches, high-end brand and
fashionable brand products, channels and terminal identity based on the brand development
strategy. In respect of construction of financial income and brand construction, the Company shall16
try to fulfill the objectives of the year and even make breakthrough. In the report period, the
Company formally started the work of issuing shares to the designated investors in a non-public
way. The project was approved by the State-owned Assets Supervision and Administration
Commission of the State Council and was officially submitted to China Securities Regulatory
Commission on June 24. The Company shall closely follow up the progress of the non-public
issuing and try to achieve a periodic success in the report year.
II. Investment
(I) In the report period, there were neither proceeds raised through share offering nor
previous IPO proceeds deferred to the report period for use
(II) In the report period, the Company had no material investment with funds raised from
other financing activities.
1. Establishment of Emile Chouriet (Shenzhen) Co., Ltd.
In the report period, FIYTA Hong Kong Limited, one of the Company’s subsidiaries, invested and
established Emile Chouriet (Shenzhen) Co., Ltd. The amount of investment was HK$ 5 million,
FIYTA Hong Kong held 100% of the equity and the date of establishment was April 26, 2010.
III. Accounting Policies, Change in Accounting Estimation and Correction of Material
Accounting Errors
In the report period, there was no change in the accounting policy and accounting estimation or
correction of any previous accounting errors.17
Chapter 6 Significant Events
I. The Company has carried out standardized operation in a strict way according to the
relevant regulations of China Securities Regulatory Commission, positively improved the
corporate governance structure. At present, the Company is in compliance with the
requirements of the relevant regulations concerning the corporate governance.
II. Profit Distribution Plan
In the report period, the Company’s 2009 Annual Shareholders’ General Meeting approved 2009
Profit Distribution Proposal: To pay cash dividend of RMB 1.00 per ten shares (including tax) to all
shareholders with the total capital stock of the Company, i.e., 249,317,999 shares as the base.
(After deduction of the tax, the Company actually distributed cash dividend to the individual
shareholders of A shares and the investment fund at the rate of RMB 0.9 for every 10 shares; and
to the shareholders of B-shares as non-resident enterprises at the rate of RMB0.90 for every 10
shares after conversion after deduction of the tax; while no income tax would be withheld for the
shareholders of B-shares not as non-resident enterprises). The cash dividend actually distributed
amounted to RMB 24,931,799.90. The cash dividend for B-shares is paid in Hong Kong Dollars
converted based on the average rate of Renminbi and Hong Kong Dollars published by the
People’s Bank of China on the last working day (June 23, 2010) after the Shareholders’ General
Meeting (1HKD = RMB 0.8753). The cash dividend for A-shares and B-shares shall be
distributed respectively on August 4 and August 6, 2010.
For the semi-annual of 2010, the Company has prepared neither profit distribution proposal nor
proposal for converting public reserve into capital stock.
III. In the report period, the Company has never been involved in any material lawsuit or
arbitration and no previous material lawsuit or arbitration has been extended to the report
period either.
IV. The Company held no equity in other listed company in the report period.
V. In the report period, the Company conducted no such activities as assets acquisition,
sales, absorption or consolidation.
1. Acquisition of the Equity in the Swiss Company
The 6th meeting of the Sixth Board of Directors held on October 26, 2009 reviewed and approved
the Proposal on Acquisition of the Equity in Montres Chouriet SA. According to the authorization
of the Board of Directors, the Company invested HKD 9 million to acquire 100% equity in Montres
Chouriet SA. The equity acquisition was completed on January 20, 2010.
2. Sales of Sichuan Huashun Building
The 6th meeting of the Sixth Board of Directors held on October 26, 2009 reviewed and approved
the Proposal for Authorizing the Company to Sell the Property of Chengdu Huashun Building.
The Company sold the property by means of public auction at the price of RMB 15.05 million.
After deduction of the depreciation as already provided, reserve for impairment and the taxes
concerned and commission, the net income was RMB 6.92 million.
VI. Related Transactions
1. Implementation of Regular Related Transactions
(1) Both of the Company’s FIYTA Building and FIYTA Technology Building have received property
management services from Shenzhen CATIC Property Management Co., Ltd. The service
charges are determined with reference to the market price by both parties. In the report period,
the Company’s property management service charge and rental payable was RMB 843,000,
which complies with the estimate.
(2) The Company’s FIYTA Building and FIYTA Technology Building offered property lease
services to the related corporate bodies, including Shenzhen CATIC Real Estate Co., Ltd.,18
Shenzhen CATIC Real Estate Development Co., Ltd., Shenzhen Makway Cable TV Equipment
Co., Ltd. (Makway), Shenzhen CATIC Property Management Co., Ltd., CATIC Securities Co., Ltd.
and Shenzhen CATIC Hotel Management Co., Ltd. Both parties determined the prices according
to the market price. In the report period, the Company altogether received rental amounting to
RMB 5.2494 million which complied with the estimate at year beginning.
(3) The Company sells watches by the franchised counters of Rainbow Supermarket Co., Ltd. In
the report period, the sales costs of the franchised counters in the report period amounted to RMB
6.2646 million, which complied with the estimate at year beginning.
(4) The Company sold watches in odd lot and offerred product processing service to AVIC
International Holding Corporation, Aviation Industry Corporation and Shennan Circuit Co., Ltd., a related
corporate body. In the report period, the Company received different kinds of income amounting to RMB 1.0647
million, which complied with the estimate at year beginning.
Particulars about the Routine Related Transactions in 2009 and Predicted Routine Related
Transactions in 2010 was published on the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn on March 15, 2010.
2. Related Liabilities or Guarantees
Ended June 30, 2010, Shenzhen CATIC Group, the Company’s controlling shareholder,
accumulatively offered guarantee to the Company for the bank credit line amounting to RMB 505
million.
3. Neither the Company’s controlling shareholder nor subsidiaries occupied any of the Company’s
fund.
VII. Important Contracts and Implementation
1. In the report period, the Company was not involved in such events as keeping as custodian,
contracted or leased any other company’s assets and vice versa in the report period or extended
from the previous years.
2. In the report period, the Company offered guarantee to FIYTA Hong Kong Limited, one of the
Company’s solely funded subsidiaries, amounting to HKD 9,700,000 (roughly equal to RMB
8,540,850), taking 1.19% of the Company’s audited net asset in 2009. Ended June 30, 2010, the
accumulative amount of the external guarantee offered by the Company and the controlled
subsidiaries was RMB 68,540,850, taking 9.59% of the Company’s audited net asset in 2009. All
the Company’s external guarantees are for the purpose of satisfy the requirements of the
subsidiaries production and operation and are all the guarantees offered by the Company for the
loans borrowed by the Company’s subsidiaries; The Company had offered no guarantee to the
Company’s controlling shareholder or related parties and no other external guarantee had ever
occurred either. There existed no overdue guarantee, guarantee in connection with lawsuit or
any other matter like loss payable due to failure in lawsuit resulted from guarantee. The fund deals
with related parties all belong to those of normal operation and there existed no such situation as
the Company’s fund occupied by any of the related parties against the regulations.
3. In the report period, the Company had not been involved in entrustment for finance
management and no such event occurred previously but carried down to the report period either.
VIII. Commitments of the Shareholder Holding over 5% (with 5% inclusive) of the
Company’s Shares.
The Company’s equity separation reform plan was implemented on November 7, 2007. In the
Company’s equity separation reform plan, the commitments made by Shenzhen CATIC Group,
the shareholder holding over 5% of the Company’s shares and the implementation are as follows:
(1) Shenzhen CATIC Group committed that after completion of the equity separation reform of the
Company, the non-negotiable shares held by Shenzhen CATIC Group would not be listed for
trading through the trading system of Shenzhen Stock Exchange within 36 months commencing19
from the date when they were authorized for listing.
(2) Within 24 months after discharging the restriction three years later, if Shenzhen CATIC Group
would sell FIYTA non-negotiable shares held by it by listing with Shenzhen Stock Exchange, the
sales price must not be lower than RMB25.00 per share.
Implementation of the commitments: The aforesaid commitment is in process of implementation.
From the date of completion of the equity separation reform to the end of the report period,
Shenzhen CATIC Group had never reduced the holding size or assigned any of the restricted
shares held by it.
IX. Special interpretation and independent opinions of independent directors on
occupancy of the Company’s fund by related parties and the external guarantees offered
by the Company in the report period
In accordance with the Establishment of Independent Director Systems by Listed Companies
Guiding Opinion and Code of Corporate Governance for Listed Companies promulgated by China
Securities Regulatory Commission, and Stock Listing Rules of Shenzhen Stock Exchange, as
independent directors of Shenzhen Fiyta Holdings Ltd., we hereby present our special notice and
independent opinions on the accumulative and current external guarantees offered by the
Company and the fund occupancy of the related parties as follows:
In accordance with the Circular on Several Issues Concerning the Regulation of Cash Flows
Between Listed Companies and Their Affiliates and Security Provided to Outside Parties by Listed
Companies (ZHENG JIAN FA (2003) No. 56) and Circular on Regulating the External Guaranties
Provided by. Listed Companies (ZHANG JIAN FA (2005) No. 120, we have made careful and
responsible confirmation and finalization of the external guarantees offered by Shenzhen FIYTA
Holdings Ltd. and the funds occupied by its controlling shareholder and other related parties
based on the position of being responsible to the Company, the whole shareholders and investors
and according to the principle of seeking truth from facts.
Through careful verification, the Company has strictly followed the concerned provision of the
Articles of Association, carefully implemented the Documents ZHENG JIAN FA (2003) and (2005)
No. 120 and strictly controlled the risk from the external guarantee. In the report period, the
Company offered guarantee to FIYTA Hong Kong Limited, one of the Company’s solely funded
subsidiaries, amounting to HKD 9,700,000 (roughly equal to RMB 8,540,850), taking 1.19% of the
Company’s audited net asset in 2009. Ended June 30, 2010, the accumulative amount of the
external guarantee offered by the Company and the controlled subsidiaries was RMB 68,540,850,
taking 9.59% of the Company’s audited net asset in 2009. All the Company’s external guarantees
are for the purpose of satisfy the requirements of the subsidiaries production and operation and
are all the guarantees offered by the Company for the loans borrowed by the Company’s
subsidiaries.
The Company had offered no guarantee to the Company’s controlling shareholder or related
parties and no other external guarantee had ever occurred either; There existed no overdue
guarantee, guarantee in connection with lawsuit or any other matter like loss payable due to
failure in lawsuit resulted from guarantee; The fund deals with related parties all belong to those of
normal operation and there existed no such situation as the Company’s fund occupied by any of
the related parties against the regulations.20
X. The financial report of the report period has not been audited yet and the Company has
not changed the certified public accountants.
XI. Investigation Reception and Interviews
In the report period, the Company implemented the Guidelines of Listed Companies for Fair
Information Disclosure. In receiving surveys and interviews, the Company and its officer in charge
of information disclosure strictly observed the principle of fair information disclosure without any
discrimination policy and had never been engaged in any activity of revealing, disclosing or letting
out in advance any private information to any designated addressees in a secret way. Reception
of visitors is summarized as follows:
Reception time
Reception
place
Way of
reception
Visitors received
Matters discussed and
information provided
March 19,
2010
The
Company
On-the-spot
survey
Dacheng Fund Management Co.,
Ltd.
April 21, 2010
The
Company
On-the-spot
survey
First Capital Securities Co., Ltd.,
Shanghai Liuhe Investment Co., Ltd.,
UBS SDIC Fund Management Co.,
Ltd., Guosen Securities Co., Ltd. and
China Securities Co., Ltd.
April 28, 2010
The
Company
On-the-spot
survey
Rongtong Fund Management Co.,
Ltd., Manulife Teda Fund
Management Co., Ltd., Penghua
Fund Management Co., Ltd. and
China Merchants Securities Co., Ltd.
May 13, 2010
The
Company
On-the-spot
survey
China International Finance Co., Ltd.
May 18, 2010
The
Company
On-the-spot
survey
Hongyuan Securities Co., Ltd.
May 18, 2010 Hong Kong
Investors’
Strategy
Seminar
SHENYIN WANGUO Investors
Strategy Seminar
May 19, 2010 Company
On-Site
Survey
Boshi Fund Management Co.,
Ltd. and Guotai Asset
Management Co., Ltd.
June 7, 2010 Company
On-Site
Survey
Guosen Securities Co., Ltd.
June 24, 2010 Company
On-Site
Survey
PICC Health Insurance Company
Limited
Development trend of the
domestic luxury goods
sector, some measures
concerning the
Company’s strategic
development, brand
construction, terminal
management in the past
three years. Provision
of 2009 Annual Report
and the Company’s
promotion brochures
XII. In the report period, the Company, its directors or senior executives had never been
examined or punished by the supervisory/administrative authority.21
XIII. Provisional Announcement Information Disclosed in the Report Period
Announce
ment No.
Announcement
Date
Description
Presses
where the
information is
disclosed
Websites for information
disclosure
2010-001 February 3, 2010
Suggestive
Announcement on
Risks
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-002 March 3, 2010
Announcement on
Death of the Chairman
of the Supervisory
Committee
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-003 March 15, 2010
2009 Annual Report
Summary
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-004 March 15, 2010
Announcement on
Resolution of the 7th
Meeting of the Sixth
Board of Directors
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-005 March 15, 2010
Announcement on
Resolutions of the 5th
Meeting of the Sixth
Supervisory Committee
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-006 March 15, 2010
Implementation of
Regular Related
Transactions in 2009
and Prediction of
Regular Related
Transactions in 2010
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-007 March 16, 2010
Supplementary
Announcement on 2009
Annual Report
Securities
Times and
Hong Kong
Commercial
http://www.cninfo.com.cn22
Daily
2010-008 April 13, 2010
Announcement on
Resolution of the 8th
Meeting of the Sixth
Board of Directors
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-009 April 13, 2010
Announcement on the
Related Transactions
Involved in the
Non-public Issuing
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-010 April 20, 2010
2010 First Quarterly
Report
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-011 April 20, 2010
Announcement on
Resolutions of the 9th
Meeting of the Sixth
Board of Directors
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-012 April 20, 2010
Announcement on
Resolutions of the 6th
Meeting of the Sixth
Supervisory Committee
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-013 April 20, 2010
Suggestive
Announcement on
Risks
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-014 May 21, 2010
Announcement on
Resolution of the 10th
Meeting of the Sixth
Board of Directors
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-015 May 21, 2010
Announcement on
Offering Guarantee to
the Solely Funded
Subsidiaries
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-016 June 1, 2010
Announcement on
Resolution of the 11th
Meeting of the Sixth
Securities
Times and
Hong Kong
http://www.cninfo.com.cn23
Board of Directors Commercial
Daily
2010-017 June 1, 2010
Announcement on
Resolution of the 7th
Meeting of the Sixth
Supervisory Committee
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-018 June 2, 2010
Notice for 2009 Annual
Shareholders’ General
Meeting
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-019 June 2, 2010
Announcement on
Resolutions of the 12th
Meeting of the Sixth
Board of Directors
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-020 June 18, 2010
Announcement on the
Official Approval of
State-owned Assets
Supervision and
Administration
Commission of the
State Council for the
Company to Issue
Shares in Non-public
Way
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-021 June 18, 2010
Suggestive
Announcement on
Holding 2009 Annual
Shareholders’ General
Meeting
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
2010-022 June 23, 2010
Announcement on
Resolutions of 2009
Annual Shareholders’
General Meeting
Securities
Times and
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
XIV. About Non-public Issuing to the Designated Investors in 2010
The Company held the 8th meeting of the Sixth Board of Directors on April 12, 2010
(Announcement No. 2010-008) and formally started the work of non-public issuing to the
designated investors. The project was approved by State-owned Assets Supervision and
Administration Commission of the State Council (ANNOUNCEMENT NO.2010-020) and approved
by the Company’s Shareholders’ Meeting on June 22, 2010 (ANNOUNCEMENT NO. 2010-22),
and then submitted to China Securities Regulatory Commission on June 24, 2010 and was
officially accepted for review by the authority on July 1, 2010. The Company shall timely follow up
the progress of the non-public issuing work and periodically announce the progress of the project.24
Chapter 7 Financial Report
I. Accounting Statements (Refer to Pages 20 -32 as attached hereinafter)
II. Accounting Statements (Refer to Pages 33 -97 as attached hereinafter)25
Chapter 8 Documents Available for Inspection
I. Semi-annual Report carried with personal signature of the Chairman of the Board;
II. Financial Statements signed by and under the seal of the Company leader, chief
accountant and accounting supervisors;
III. Originals of all documents and manuscripts of announcements of the Company
disclosed in public in the newspapers as designated by China Securities Regulatory
Commission.
IV. Articles of Association of the Company.
SHENZHEN FIYTA HOLDINGS LTD.
Board of Directors
August 17, 201026
Attachment: Financial Report (unaudited)
I. Accounting statements
Balance Sheet
Prepared by: SHENZHEN FIYTA HOLDINGS LTD. June 30, 2010 In RMB
Ending balance Opening balance
Items
Consolidated Parent company: Consolidated Parent company:
Current assets:
Monetary funds 108,361,661.27 58,160,134.97 95,701,580.19 46,560,890.55
Settlement Reserve
Lendings
Transaction based financial
assets
Notes receivable
Accounts receivable 146,059,148.89 31,554,480.54 121,982,162.66 35,388,589.40
Advances to suppliers 10,881,369.00 9,635,501.76
Insurance premium payable
Accounts receivable
reinsurance
Reserve for accounts
receivable reinsurance
Interest receivable
Dividend receivable 55,240,828.01 52,881,874.21
Other receivables 28,686,962.06 354,020,111.85 17,788,978.11 311,998,322.20
Reverse repurchase
agreements
Inventories 830,559,086.52 91,476,537.77 761,181,955.71 73,836,464.73
Non-current assets due
within a Year
Other current assets 2,812,850.02 3,214,514.17
Total current assets 1,127,361,077.76 590,452,093.14 1,009,504,692.60 520,666,141.09
Non-Current Assets:
Loan provision and
advances
Available-for-sale financial
assets
Held –to-maturity investment
Long term accounts
receivable
Long-term equity investment 1,921,317.92 354,429,317.92 1,921,317.92 354,429,317.92
Investment based real estate 168,479,809.89 168,479,809.89 171,577,646.00 171,577,646.00
Fixed assets: 246,851,992.86 232,470,468.01 259,762,029.76 246,256,473.8127
Construction-in-process
Engineering supplies
Disposal of fixed assets
Production based biologic
assets
Oil and gas asset
Intangible assets 13,096,789.82 12,206,015.15 13,476,895.15 12,614,912.03
Development expenses
Goodwill 6,240,816.14
Long-term expenses to be
apportioned
60,458,487.90 19,104,218.00 54,969,153.37 14,079,756.40
Deferred income tax 15,574,712.08 3,553,212.41 12,725,248.99 3,553,212.40
Other non-current assets
Total non-current assets 512,623,926.61 790,243,041.38 514,432,291.19 802,511,318.56
Total assets 1,639,985,004.37 1,380,695,134.52 1,523,936,983.79 1,323,177,459.65
Current liabilities
Short-term Loan: 606,540,850.00 528,000,000.00 555,000,000.00 495,000,000.00
Amount due to the Central
Bank
Deposit taking and due from
banks
Borrowing from banks
Transactional financial
liabilities
Notes payable
Accounts payable 88,605,985.49 42,828,548.39 82,618,423.24 27,685,998.17
Advance receipts 3,026,408.61 766,979.38 2,012,363.70 1,302,325.64
Repurchased agreement
Service charge and
commission receivable
Staff’s wages payable 9,201,075.38 0.00 15,503,449.35 6,462,650.00
Taxes payable 21,529,110.73 11,368,961.71 7,825,840.81 10,287,916.08
Interest payable 860,498.61 860,498.61 860,498.61 860,498.61
Dividends payable 584,110.90 0.00 584,110.90
Other payables 32,093,096.34 21,358,159.71 23,025,452.89 22,697,269.81
Accounts receivable
reinsurance
Insurance contract reserve
Acting trading securities
Acting underwriting
securities
Non-current Liabilities due
within a Year
Other current liabilities 1,280,329.2828
Total current liabilities 762,441,136.06 605,183,147.80 688,710,468.78 564,296,658.31
Non-Current Liabilities:
Long-term borrowings 90,000,000.00 90,000,000.00 90,000,000.00 90,000,000.00
Bonds payable
Long term accounts payable 3,500,000.00 3,500,000.00
Special accounts payable
Predicted liabilities
Deferred income tax liability 116,716.30 106,989.94 106,989.94 106,989.94
Other non-current liabilities 6,300,000.00 5,800,000.00 6,400,000.00 5,900,000.00
Total non-current liabilities 99,916,716.30 95,906,989.94 100,006,989.94 96,006,989.94
Total liabilities 862,357,852.36 701,090,137.74 788,717,458.72 660,303,648.25
Owners’ equity (or
shareholders’ equity):
Paid up capital (or capital
stock)
249,317,999.00 249,317,999.00 249,317,999.00 249,317,999.00
Capital reserve 191,847,232.65 191,847,232.65 191,847,232.65 191,847,232.65
Less: shares in stock
Specialized reserve
Surplus reserve 115,946,088.88 115,946,088.88 115,946,088.88 115,946,088.88
General provision for risk
Retained earnings 200,976,561.50 122,493,676.25 158,577,089.84 105,762,490.87
Cumulative translation
adjustments
-894,896.61 -879,943.60
Total owner’s equity
attributable to the parent
company
757,192,985.42 679,604,996.78 714,808,466.77 662,873,811.40
Minority shareholders’ equity 20,434,166.59 20,411,058.30
Total owners’ equity 777,627,152.01 679,604,996.78 735,219,525.07 662,873,811.40
Total liabilities and owners’
equity
1,639,985,004.37 1,380,695,134.52 1,523,936,983.79 1,323,177,459.65
Legal Representative: Wu Guangquan Chief Financial Officer: Li Dehua
Manager of the Accounting Dept: Hu Xinglong29
Statement of Profit
Prepared by: SHENZHEN FIYTA HOLDINGS LTD. January to June, 2010 In RMB
Amount in the report year Amount in the previous year
Items
Consolidated Parent company: Consolidated Parent company:
I. Total business income 810,811,910.82 151,312,416.02 572,693,689.88 128,489,078.35
Including: business income 810,811,910.82 151,312,416.02 572,693,689.88 128,489,078.35
Interest income
Earned premium
Service charge and
commission income
II. Total operating cost 766,060,715.61 154,668,313.10 540,485,453.82 128,762,852.69
Including: operating costs 565,307,056.65 69,292,155.00 381,222,611.23 57,435,195.94
Interest payment
Service charge and
commission payment
Surrender value
Compensation pay-out,
net
Provision of reserve for
insurance contract, net
Payment of Policy
Dividends
Reinsurance expenses
Business Taxes and
Surcharge
3,079,780.59 2,134,996.13 2,891,247.87 2,142,692.02
Sales expenses 113,555,280.39 51,090,854.22 85,428,355.39 37,873,358.67
Administrative expenses 62,246,359.77 24,653,838.38 48,433,196.51 21,945,915.95
Financial expenses 21,459,989.06 7,496,469.37 20,777,386.61 9,356,090.11
Loss from impairment of
assets
412,249.15 9,600.00 9,600.00
Add: Income from change of
fair value (loss is stated with
“-“)
Investment income (loss
is stated with “-“)
13,758,953.80 179,622.59 179,622.59
Including: income
from investment in associates
and joint ventures
179,622.59 179,622.59
Exchange income (loss is
stated with “-“)
III. Operating Profit (loss is
stated with “-“)
44,751,195.21 10,403,056.72 32,387,858.65 -94,151.7530
Plus: Non-operating income 7,835,555.48 7,743,869.98 2,161,886.01 2,050,430.86
Less: Non-operating
expenses
629,373.96 569,408.84 29,237.57 22,809.31
Including: Loss from
disposal of non-current assets
47,206.42 17,527.99 0.00
IV. Total profit (total loss is
stated with “-“)
51,957,376.73 17,577,517.86 34,520,507.09 1,933,469.80
Less: Income tax expense 9,530,853.27 846,332.48 6,914,069.18 350,794.44
V. Net Profit (loss is stated with
“-“)
42,426,523.46 16,731,185.38 27,606,437.91 1,582,675.36
Net profit attributable to
the parent company’s owner
42,399,471.66 16,731,185.38 27,167,061.42 1,582,675.36
Minority shareholders’
equity
27,051.80 0.00 439,376.49
VI. Earnings per share:
(I) Basic earnings per
share
0.171 0.109
(II) Diluted earnings per
share
0.171 0.109
VII. Other comprehensive
income
-18,896.52 3,350,001.33
VIII. Total comprehensive
income
42,407,626.94 16,731,185.38 30,956,439.24 1,582,675.36
Total comprehensive
income attributable to the
owner of the parent company
42,384,518.65 16,731,185.38 30,517,062.75 1,582,675.36
Total comprehensive
income attributable to minority
shareholders
23,108.29 439,376.49
Legal Representative: Wu Guangquan Chief Financial Officer: Li Dehua
Manager of the Accounting Dept: Hu Xinglong31
Cash Flow Statement
Prepared by: SHENZHEN FIYTA HOLDINGS LTD. January to June, 2010 In RMB
Amount in the report year Amount in the previous year
Items
Consolidated Parent company: Consolidated Parent company:
I. Net cash flows arising from
operating activities
Cash received from sales
of goods and supply of labor
909,639,385.70 168,545,107.96 631,586,117.34 127,026,357.07
Net increase of customers’
deposit and due from banks
Net increase of borrowings
from the central bank
Net increase of borrowings
from other financial institutions
Cash received from former
insurance contract premium
Net cash received from
reinsurance business
Net increase of insurance
reserve and investment
Net increase from disposal
of transactional financial asset
Cash received from
interest, service charge and
commission
Net increase of borrowings
Net increase of fund from
repurchases
Rebated taxes received 623,119.27 623,119.27
Other operation activity
related cash receipts
7,265,097.91 2,305,225.60 2,083,806.62 51,783,802.20
Subtotal of cash flow in
from operating activity
917,527,602.88 171,473,452.83 633,669,923.96 178,810,159.27
Cash paid for purchase of
goods and reception of labor
services
696,249,537.70 61,942,930.99 389,016,240.25 36,169,645.43
Net increase of loans and
advances to customers
Net increase of due from
central bank and due from
banks
Cash for the former
insurance contract indemnity32
payment
Cash paid for interest,
service charge and
commission
Cash paid for insurance
policy dividend
Cash paid to and for staff 88,324,162.19 36,783,697.63 68,729,730.94 30,958,505.75
Taxes paid 44,399,281.37 11,607,073.29 33,861,350.05 12,637,102.31
Other business related
cash payments
87,678,936.47 68,508,807.83 61,731,865.72 29,145,701.03
Subtotal of cash flow out
from operating activity
916,651,917.73 178,842,509.74 553,339,186.96 108,910,954.52
Net cash flow from
operating activities
875,685.15 -7,369,056.91 80,330,737.00 69,899,204.75
II. Cash flows arising from
investment activities:
Cash received from
recovery of investment
Cash received from
investment income
11,400,000.00
Net amount of cash
received from disposal of fixed
assets, intangible assets and
other long term assets
15,051,800.00 15,051,700.00 136,700.00 135,000.00
Net cash received from
disposal of subsidiaries and
other operating units
Other investment related
cash receipts
Subtotal of cash flow in
from investment activity
15,051,800.00 26,451,700.00 136,700.00 135,000.00
Cash paid for
construction/purchase of fixed
assets, intangible assets and
other long term assets
29,375,134.72 1,713,022.00 17,879,527.03 1,639,160.00
Cash paid for investment 7,924,500.00
Net increase of
hypothecated loans
Net cash received from
payment by subsidiaries and
other operating units
Other investment related
cash payments
Subtotal of cash flow out
from investment activity
37,299,634.72 1,713,022.00 17,879,527.03 1,639,160.0033
Net cash flow arising
from investment activities
-22,247,834.72 24,738,678.00 -17,742,827.03 -1,504,160.00
III. Cash flows arising from
fund raising activities:
Cash received from
absorption of investment
Incl.: Cash received from
subsidiaries’ absorption of
minority shareholders’
investment
Cash received from
borrowings
386,548,610.00 345,000,000.00 335,000,000.00 335,000,000.00
Cash received from bond
issuing
Other fund-raising related
cash receipts
Subtotal of cash flow in
from fund raising activity
386,548,610.00 345,000,000.00 335,000,000.00 335,000,000.00
Cash paid for liabilities
repayment
335,000,000.00 335,000,000.00 385,000,000.00 385,000,000.00
Cash paid for
dividend/profit distribution or
repayment of interest
16,473,470.97 14,770,376.67 17,757,859.52 17,295,359.52
Including: Dividend and
profit paid by subsidiaries to
minority shareholders
Other fund-raising related
cash payments
1,000,000.00 1,000,000.00
Subtotal of cash flow out
from fund raising activity
352,473,470.97 350,770,376.67 402,757,859.52 402,295,359.52
Net cash flow arising
from fund-raising activities
34,075,139.03 -5,770,376.67 -67,757,859.52 -67,295,359.52
IV. Influence from change of
exchange rate upon cash and
cash equivalents
-42,908.38
V. Net increase of cash and
cash equivalents
12,660,081.08 11,599,244.42 -5,169,949.55 1,099,685.23
Plus: Balance of cash and
cash equivalents at the
beginning of the period
95,701,580.19 46,560,890.55 108,233,795.73 54,938,436.99
VI. Balance of cash and cash
equivalents at the end of the
period
108,361,661.27 58,160,134.97 103,063,846.18 56,038,122.22
Legal Representative: Wu Guangquan Chief Financial Officer: Li Dehua
Manager of the Accounting Dept: Hu Xinglong34
Statement of Changes in Owner’s Equity
(1) Consolidated Statement of Changes in Owner’s Equity
Prepared by: SHENZHEN FIYTA HOLDINGS LTD. Semi-annual Period of 2010 In RMB
Amount in the report year Amount of Previous Year
Owner’s equity attributable to the parent company Owner’s equity attributable to the parent company
Items
Paid up
capital
(or
capital
stock)
Capital
reserve
Less:
shares
in stock
Speciali
zed
reserve
Surplus
reserve
General
provisio
n for risk
Retaine
d
earning
s
Others
Minority
shareho
lders’
equity
Total
owners’
equity
Paid up
capital
(or
capital
stock)
Capital
reserve
Less:
shares
in stock
Speciali
zed
reserve
Surplus
reserve
General
provisio
n for risk
Retaine
d
earning
s
Others
Minority
shareho
lders’
equity
Total
owners’
equity
I. Ending balance of the
previous year
249,317,
999.00
191,847,
232.65
115,946,
088.88
158,577,
089.84
-879,943
.60
20,411,0
58.30
735,219,
525.07
249,317,
999.00
193,081,
632.65
109,362,
340.60
120,025,
397.75
-863,824
.15
8,569,19
0.85
679,492,
736.70
Plus: Change in accounting
policy
Correction of previous errors
Others
II. Opening balance of the report
year
249,317,
999.00
191,847,
232.65
115,946,
088.88
158,577,
089.84
-879,943
.60
20,411,0
58.30
735,219,
525.07
249,317,
999.00
193,081,
632.65
109,362,
340.60
120,025,
397.75
-863,824
.15
8,569,19
0.85
679,492,
736.70
III. Decrease/increase of the
report year (decrease is stated
with “-“)
42,554,8
14.83
-14,953.
01
23,108.2
9
42,562,9
70.11
-1,234,4
00.00
6,583,74
8.28
38,551,6
92.09
-16,119.
45
11,841,8
67.45
55,726,7
88.37
(I) Net profit
42,554,8
14.83
27,051.8
0
42,581,8
66.63
70,067,2
40.27
683,292.
80
70,750,5
33.07
(II) Other comprehensive
income
-14,953.
01
-3,943.5
1
-18,896.
52
-1,234,4
00.00
-16,119.
45
-1,129.2
1
-1,251,6
48.66
Subtotal of the above (I) and 42,554,8 -14,953. 23,108.2 42,562,9 -1,234,4 70,067,2 -16,119. 682,163. 69,498,835
(II) 14.83 01 9 70.11 00.00 40.27 45 59 84.41
(III) Owners’ input and
decrease of capital
11,348,3
88.00
11,348,3
88.00
1. Capital invested by the
owners
11,348,3
88.00
11,348,3
88.00
2. Amount of payment for
shares charged to owners’
equity
3. Others
(IV) Retained earnings
6,583,74
8.28
-31,515,
548.18
-188,684
.14
-25,120,
484.04
1. Provision of surplus
reserve
6,583,74
8.28
-6,583,7
48.28
2. Provision of general risk
reserve
3. Distribution to the
owners (or shareholders)
-24,931,
799.90
-188,684
.14
-25,120,
484.04
4. Others
(V) Internal carry-over of
owners’ equity
1. Conversion of capital
reserve into capital (or capital
stock)
2. Conversion of surplus
reserve into capital (or capital
stock)
3. Loss made up with
surplus reserve36
4. Others
(VI) Specialized reserve
1. Provision in the report
period
2. Applied in the report
period
IV. Ending balance of the report
year
249,317,
999.00
191,847,
232.65
115,946,
088.88
201,131,
904.67
-894,896
.61
20,434,1
66.59
777,782,
495.18
249,317,
999.00
191,847,
232.65
115,946,
088.88
158,577,
089.84
-879,943
.60
20,411,0
58.30
735,219,
525.0737
(2)Statement of Change in Owner’s Equity of the Parent Company
Prepared by: SHENZHEN FIYTA HOLDINGS LTD. Semi-annual Period of 2010 In RMB
Amount in the report year Amount of Previous Year
Items
Paid up
capital (or
capital
stock)
Capital
reserve
Less:
shares in
stock
Specialize
d reserve
Surplus
reserve
General
provision
for risk
Retained
earnings
Total
owners’
equity
Paid up
capital (or
capital
stock)
Capital
reserve
Less:
shares in
stock
Specialize
d reserve
Surplus
reserve
General
provision
for risk
Retained
earnings
Total
owners’
equity
I. Ending balance of the
previous year
249,317,99
9.00
191,847,23
2.65
115,946,08
8.88
105,762,49
0.87
662,873,81
1.40
249,317,99
9.00
193,081,63
2.65
109,362,34
0.60
71,440,556.
21
623,202,52
8.46
Plus: Change in accounting
policy
Correction of previous errors
Others
II. Opening balance of the report
year
249,317,99
9.00
191,847,23
2.65
115,946,08
8.88
105,762,49
0.87
662,873,81
1.40
249,317,99
9.00
193,081,63
2.65
109,362,34
0.60
71,440,556.
21
623,202,52
8.46
III. Decrease/increase of the
report year (decrease is stated
with “-“)
16,731,185.
38
16,731,185.
38
-1,234,400.
00
6,583,748.2
8
34,321,934.
66
39,671,282.
94
(I) Net profit
16,731,185.
38
16,731,185.
38
65,837,482.
84
65,837,482.
84
(II) Other comprehensive
income
-1,234,400.
00
-1,234,400.
00
Subtotal of the above (I) and
(II)
16,731,185.
38
16,731,185.
38
-1,234,400.
00
65,837,482.
84
64,603,082.
84
(III) Owners’ input and38
decrease of capital
1. Capital invested by the
owners
2. Amount of payment for
shares charged to owners’
equity
3. Others
(IV) Retained earnings
6,583,748.2
8
-31,515,54
8.18
-24,931,79
9.90
1. Provision of surplus
reserve
6,583,748.2
8
-6,583,748.
28
2. Provision of general risk
reserve
3. Distribution to the
owners (or shareholders)
-24,931,79
9.90
-24,931,79
9.90
4. Others
(V) Internal carry-over of
owners’ equity
1. Conversion of capital
reserve into capital (or capital
stock)
2. Conversion of surplus
reserve into capital (or capital
stock)
3. Loss made up with
surplus reserve
4. Others
(VI) Specialized reserve39
1. Provision in the report
period
2. Applied in the report
period
IV. Ending balance of the report
year
249,317,99
9.00
191,847,23
2.65
115,946,08
8.88
122,493,67
6.25
679,604,99
6.78
249,317,99
9.00
191,847,23
2.65
115,946,08
8.88
105,762,49
0.87
662,873,81
1.40SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
13
Notes to Financial Report
I. About the Company
Shenzhen Fiyta Holdings Ltd. (hereinafter referred to as the Company) was reorganized,
incorporated and renamed from Shenzhen Fiyta Timer Industry Company on December 25 1992 with
approval by the General Office of Shenzhen Municipal People’s Government with Document SHEN
FU BAN FU [1992] No. 1259 and with China National Aero-Technology Import & Export Corporation
Shenzhen Industry & Trade Center (which was renamed as China National Aero-Technology
Corporation Shenzhen afterward) as the sponsor.
On March 10, 1993, the Company, with approval by the People’s Bank of China Shenzhen Special
Economic Zone Branch [SHEN REN YIN FU ZI (1993) No. 070], isued publically domestic Renminbi
based common shares (A-shares) and Renminbi based special shares (B-shares). In accordance
with the Approval Document of Shenzhen Municipal Securities Regulatory Office SHEN ZHENG BAN
FU [1993] No. 20 and the Approval Document of Shenzhen Stock Exchange SHEN ZHENG SHI ZI
(1993) No. 16, the Company’s A-shares and B-shares were all listed with Shenzhen Stock Exchange
for trading commencing from June 3, 1993.
On January 30, 1997, with approval by Shenzhen Municipal Administration for Industry and
Commerce, the Company was renamed as Shenzhen Fiyta Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between China National
Aero-Technology Corporation Shenzhen (CATIC Shenzhen Corporation) and CATIC SHENZHEN
HOLDINGS LIMITED ( which was later on renamed as Shenzhen CATIC Group Co., Ltd. (hereinafter
referred to as CATIC Group), CATIC Shenzhen Corporation assigned assigned 72.36 million
corporate shares (taking 52.24% of the Company’s total shares) to CATIC Group. From then on, the
Company’s controlling shareholder turned to be CATIC Group from CATIC Shenzhen Corporation.
On October 26, 2007, the Company implemented the equity separation reform, according to which
the shareholder of the Company’s non-negotiable shares would pay shares to the whole
shareholders of negotiable shares registered on the equity record day as designated in the equity
separation reform plan at the rate of 3.1 shares for every 10 shares held by them while the
Company’s total 249,317,999 shares remained unchanged. So far, after the equity separation
reform, the proportion of the Company’s shares held by CATIC Group reduced from 52.24% to
44.69%.
On February 29, 2008, the Company’s enterprise corporate business licence
The principal business activities of the Company and its subsidiaries are: production and sales of
various pointer type quartz watches and units, spares and parts, various timing apparatus, processing
and wholesale of K gold watches and ornament watches (for production site, separate application
should be submitted); domestic trade, materials supply and sales (excluding the commodities for
exclusive operation, exclusive control and monopoly); property management and lease.
self-managed import and export, design and construction; import and export business (implemented
according to Document SHEN MAO GUAN DENG ZHENG ZI NO. 2007-072). The Company’s legal
representative is Wu Guangquan. The Company’s office address is FIYTA Technology Building,
Gaoxin S. Road One, Nanshan District, Shenzhen.
The Company has established the Shareholders’ General Meeting, the Board of Directors, the
Supervisory Committee, the Audit Committee, the Strategy Committee and the Normination,
Remuneration and Assessment Committee as the governance organs.
The Company has also established such function departments as the Comprehensive Administration
Department, Human Resource Department, Finance Department, Audit Department, SecuritiesSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
14
Department, Property Department, Sales Department, Research & Development Department,
Innovation and Design Department.
II. Basis for Preparation of Accounting Statements
The Company’s financial statements are prepared with the assumption of continuous operation and
according to the actually incurred transactions and matters. According to the Enterprise Accounting
Standards – Basic Standards and 38 Specific Accounting Standards promulgated by the Ministry of
Finance in February 2006 as well as the successively published application guides, interpretation and
other relevant regulations (hereinafter all referred to as the Enterprise Accounting Standards).
III. Declaration of Compliance with the Accounting Standards for Enterprises
The financial statements prepared in the report period comply with the enterprise accounting
standards, have truly and entirely reflected the Company’s financial status as at June 30, 2010, the
operation results, cash flow, and other relevant information of January to June, 2010.
IV. Principal Accounting Policies, Accounting Estimates and Errors of the Previous Period Adopted by
the Company
1. Accounting Period
The Company classifies accounting period into annual and semi-annual periods. A mid-term
accounting period refers a report period shorter than an entire fiscal year. The Company’s fiscal year
adopts the Gregorian calendar year, namely from January 1 to December 31 of a year.
2. Function currency for bookkeeping
Except the following subsidiaries: FIYTA (Hong Kong) Limited (FIYTA Hong Kong) and 68-Station
Limited (68-Station), one of FIYTA (Hong Kong) Limited’s subsidiaries, NATURE ART LIMITED and
PROTOP LTD., two entities controlled by 68-Station for special purpose which use Hong Kong Dollars
as function currency and FIYTA (Switzerland) which uses Swiss franc as the function currency, the
Company and its other subsidiaries all use Renminbi as the function currency of their bookkeeping.
3. Accounting treatment for enterprise consolidation
Enterprise consolidation consists of the consolidation of enterprises under the same control and that
not under the same control.
(1) Consolidation of Enterprises under the Same Control
The assets and liabilities acquired by the consolidator from the enterprise consolidation is measured
based on the book value of the consolidatee on the date of consolidation. The difference between the
book value of net asset and the book value of the valuable consideration (or total book value of the
issued shares) from the consolidation as paid obtained by the consolidating party is used to adjust the
capital reserve; in case the capital reserve is not enough to be offset, the retained earnings is
adjusted. The direct expenses incurred in enterprise consolidation to the consolidating party is
charged to the current gain and loss.
(2) Enterprise consolidation not under the same control
For the consolidation of enterprises not under the same control, the consolidation costs consist of the
fair value of the assets paid, liabilities incurred or assumed and the issued equity based securities for
the purpose of acquisition of the control power over the purchasee and expenses directly in
connection with the consolidation on the acquisition day. For the enterprise consolidation realized
through several times of exchange transactions in steps, the consolidation cost becomes the sum of
the individual transaction costs. In case there is no specific provisions on the future event which may
affect the consolidation cost in the consolidation contract, on the acquisition day, if the estimated
future event may possibly happen and the amount affecting the consolidation cost can be reliably
measured, it is also charged to the consolidation cost. The distinguishable assets, liabilities or
contingent liabilities acquired from the purchasee in process of consolidation of the enterprise not
under the same control are measured based on the fair value on the acquisition day.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
15
The difference in amount of the consolidation cost greater than the fair value share of the
recognizable net asset is recognized as goodwill. In case the consolidation cost is less than the share
of the faire value of the purchasee’s distinguishable net assets, the Company first of all rechecks the
fair value of the purchasee’s various distinguishable assets, liabilities or contingent liabilities and
measurement of the consolidation costs. In case the consolidation cost is still smaller than the share
of the fair value of the purchasee’s distinguishable net assets acquired in the consolidation after the
recheck, its difference in amount is charged to the current gain and loss.
4. Preparation of Consolidated Financial Statements
(1) Determination of the Consolidation Range of Financial Statements
The consolidation range of consolidated financial statements is determined with control as the base.
Control refers to that the Company is able to decide the financial and operating policy of the investee,
the power against which the Company is able to obtain interest from the operation activities of the
investee. In case the Company’s investment in other organization takes over 50% (with 50%
exclusive) of the investee’s total vote-bearing capital or enjoys the actual control power despite that
the investment does not take over 50% of the investee’s total vote-bearing capital, the investee shal
be put into the consolidation range.
(2) Preparation of Consolidated Financial Statements
The consolidated financial statements are based on the financial statements of the parent company
and the subsidiaries in the consolidation scope and have been prepared according to other relevant
information, and adjustment of the long term equity investment in the subsidiaries according to the
equity method after offsetting the parent company’s equity based capital investment and the share in
the owner’s equity of the subsidiaries held by the parent company and significant transactions inside
the Company and the internal dealings. In case the accounting policy or fiscal term adopted by the
subsidiaries and the Company are not identical during the accounting period in preparation of the
consolidated financial statements, consolidation is made after necessary adjustment of the
subsidiaries’ financial statements in terms of the Company’s accounting policy or fiscal term. Or
subsidiaries are required to prepare separate financial statements according to the parent company’s
accounting policy and the accounting term.
In the report period, the parent company consolidate the increased subsidiaries due to the enterprises
under the same control. In preparation and consolidation of balance sheet, it is necessary adjust the
opening balance of the consolidated balance sheet. For consolidating the increased subsidiaries not
due to the enterprises under the same control, in preparation and consolidation of balance sheet, it is
unnecessary to adjust the opening balance of the consolidated balance sheet. For the subsidiaries
disposed in the report period, the Company did not adjust the opening balance of the balance sheet in
preparing its consolidated balance sheet.
For the increased subsidiaries through consolidation of the enterprises under the same control in the
report period, the parent company consolidates the income, expenses and profit to the consolidated
statement of profit of such subsidiaries from the beginning to the end of the period. For the increased
subsidiaries through consolidation of the enterprises not under the same control, the parent company
consolidates the income, expenses and profit to the consolidated statement of profit of such
subsidiaries from the date of acquisition of the subsidiaries to the end of the report period. For the
subsidiaries disposed in the report period, the parent company consolidates the income, expenses
and profit to the consolidated statement of profit of such subsidiaries from the beginning of the report
period to the date of disposal.
For the increased subsidiaries through consolidation of the enterprises under the same control in the
report period, the parent company consolidates the cash flow to the consolidated statement of cash
flow from the beginning to the end of the period. For the increased subsidiaries through consolidation
of the enterprises not under the same control, the parent company consolidates the cash flow to the
consolidated statement of cash flow of such subsidiaries from the date of acquisition of the
subsidiaries to the end of the report period. For the subsidiaries disposed in the report period, the
parent company consolidates the cash flow of such subsidiaries to the consolidated statement of
cash flow from the beginning of the report period to the date of disposal.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
16
5. Bookkeeping Basis and Measurement Attributes
The Company takes the actual basis as the bookkeeping basis in accounting and generally uses the
historical cost as the measurement attributes. When the determined amount of accounting key
elements complies with the requirements of the enterprise accounting standards, may be obtained
and reliably measured, the replacement cost, realizable net value, present value and fair value may
be used for measurement.
6. Recognition of Cash Equivalent
The Company’s cash and cash equivalents include cash on hand, deposits which may be used for
payment at any time and investment held by the Company with short term (usually due within three
months commencing from the date of purchase), high liquidity, easy to be turned into cash with given
amount and very small risk of change in value.
7. Transactions in Foreign Currency and Foreign Currency Translation
(1) Translation of Transactions in Foreign Currency
In initial recognition of translation in foreign currency when incurs, the translation into amount in
Renminbi based on the market exchange rate (which usually refers to the average of the foreign
exchange rate published by the People’s Bank of China on the very day of incurrence; however, the
foreign currency exchange business or transaction involved foreign currency exchange incurred in
the Company is converted into amount in Renminbi according to the exchange rate actually adopted.
(2) Translation of monetary items in foreign currency and non-monetary items in foreign currency
On the balance sheet day, the monetary items in foreign currency are translated based on the spot
rate on the balance sheet day. The exchange margin arising from the spot rate of the balance sheet
day and the spot rate at the time of initial recognition or the previous balance sheet day is charged to
the current gain and loss except the exchange margin arising from the borrowings in foreign currency
in connection with the assets in compliance with the capitalization conditions in purchase and
construction or production which should be capitalized according to the Enterprise Accounting
Standards No. 17 – Borrowing Expenses. For the foreign currency based non-monetary items
measured based on the historical cost, the conversion is made based on the spot exchange rate as of
the date of incurrence of the transaction with the amount of the function currency remaining
unchanged.
For the foreign exchange based non-monetary items measured based on the fair value, translation is
made based on the spot exchange rate as of the date of determination based on the fair value; the
discrepancy between the function currency amount for bookkeeping after translation and the original
function currency for bookkeeping is charged to the current gain and loss and is treated as the
change of fair value (including exchange rate change).
(3) Principle and Method of Translation for the Statements in Foreign Currency
The Company translates the financial statements expressed in foreign currency into financial
statements expressed in Renminbi according to the following provisions.
The assets and liabilities in the balance sheet have been translated based on the spot rate on the
balance sheet day. For the owner’s equity type items, except the item of “retained earnings”, the
other items are translated based on the spot exchange rate at the time of incurrence.
The income and expense items in the statement of profit are translated based on the spot rate on the
date of transaction. In disposal of overseas operations, the translation margin from the financial
statements in foreign currency in connection with the overseas operation is transferred into disposal
of the current gain and loss and the partial disposal is calculated based on the disposal proportion.
The conversion margin in the financial statements expressed in foreign currency produced from the
translation according to the aforesaid method is separately presented under the owner’s equity item
in the balance sheet.
The cash flow statement expressed in foreign currency is translated based on the spot exchange rate
on the date of cash flow incurrence. The amount affected by the change of exchange rate upon cashSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
17
is used as the adjustment item and is separately presented in the cash flow statement.
8. Financial instruments
(1) Basis for recognition of financial instruments
The basis for recognition of financial instruments: the Company has become a party to the financial
instrument contract.
(2) Classification of Financial Instruments
The financial assets possessed by the Company can be classified into four categories according to
the investment objective and economic nature: ① The financial asset which is measured based on
the fair value and whose change is charged t the current gain and loss, includes the transactional
financial asset and the financial asset which is designated as being measured based on the fair value
at the time of recognition and whose change is charged to the current gain and loss; ②
Held-to-maturity investment;③ Loan and accounts receivable.④ Available-for-sale financial assets.
Financial liabilities undertaken can be classified into two categories according to the economic nature:
① The financial liabilities measured based on the fair value and with the changes stated to the
current gain and loss include tradable financial liabilities and the financial liabilities measured based
on the fair value and with the changes stated to the current gain and loss; ② Other financial
liabilities;
(3) Measurement of Financial Instruments
① Financial assets or financial liabilities that are measured at fair value and their changes are
charged to current gain and loss
The fair value at the time of acquisition is used as the initially recognized amount (less the cash
dividend already announced but not yet distributed or the interest of debenture due for payment but
not yet received) and the relevant transaction expenses are charged to the current gain and loss. The
interest or cash obtained during the holding is recognized as income on investment; the change in the
fair value at the end of the period is charged to the current gain and loss.
At the time of disposal, the difference between the fair value and initially entered amount is
recognized as income on investment and the gain and loss from change of fair value is adjusted at
the same time.
② Held-to-maturity investments;
The fair value at the time of acquisition (less the interest of debenture due for payment but not yet
received) and the sum of the relevant transaction expenses are used as the initially recognized
amount.
Interest income is calculated and recognized according to the amortized cost and actual interest rate
during the holding period (in case the difference between the actual interest rate and nominal interest
rate is small, the nominal interest rate will prevail) and is charged to the return on investment. The
actual interest rate is determined at the time of acquisition and keeps unchanged during the predicted
existence or shorter applicable term. At the time of disposal, the difference between the price
obtained and the investment par value is charged to the return on investment.
③ Accounts receivable
For the receivable claims arising from the overseas sales of goods or overseas labor services
supplied and the claims held by the Company in other enterprises excluding the liability instruments
with quotation in the active market, including accounts receivable, notes receivable, other receivables
and long term receivables, etc., the Company takes the contract or agreement accounts receivable
from the purchasers as the initially recognized amount; those with financing nature are initially
recognized based on their present value. At the time of recovery or disposal, the margin between the
amount received and the book value of the account receivable is charged to the current gain and loss.
④ Available-for-sale financial assets
The sum of the fair value at the time of acquisition (less the cash dividend already announced butSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
18
not yet distributed or the interest of debenture due for payment but not yet received) and the relevant
transaction expenses is used as the initially recognized amount. The interest obtained during the
holding period or the cash dividend is recognized as the income on investment. At the end of the
period, it is measured based on the fair value and the change in the fair value is charged to the capital
reserve (other capital reserve). At the time of disposal, the difference between the payments as
obtained and the book value of financial assets is charged to the investment gain and loss;
meanwhile, the amount of the accumulated sum of the change in the fair value directly charged to the
owner’s equity corresponding to the disposed part is charged to the investment gain and loss.
⑤ Other financial liabilities
The sum of the fair value and the relevant transaction expenses is used as the initial recognized
amount. The successive measurement is conducted by means of amortized cost.
(4) Basis for Recognition of Transfer of Financial Assets and Measurement Method
When the financial assets incurred in the Company are transferred, if the substantial risks and
rewards from the ownership of the financial assets have been transferred to the transferee, the
recognition of the financial assets shall be terminated. In case the substantial risks and rewards from
the ownership of the financial assets have been retained, the recognition of the financial assets shall
not be terminated.
In judging whether transfer of the financial assets satisfies the conditions for termination of the
aforesaid financial assets, the principle of stressing the substantial more than the formality shall be
adopted. The Company classifies the transfer of financial assets into entire transfer and partial
transfer of financial assets.
When the entire transfer of the financial assets satisfies the conditions for termination of recognition,
the difference between the following two amounts is charged to the current gain and loss:
① Book value of the financial assets to be transferred;
② Sum of the valuable consideration received from transfer and accumulative amount of the fair
value change directly charged to the owner’s equity (the situation that the transferred financial assets
involved is available for sale of financial assets).
When transfer of partial financial assets satisfies the conditions of recognition of termination, the
entire book value of the financial assets to be transferred is amortized according to their respective
relative fair value between the part of termination recognition and the part not terminated (in such a
case, the service assets retained should be considered as part of the financial assets with the
recognition not terminated); the difference between the following two amounts is charged to the
current gain and loss;
① Terminating recognition of partial book value;
② Sum of the valuable consideration of the part with the recognition terminated and the
corresponding amount of the part with the recognition terminated in the changed accumulated
amount of the fair value originally charged to the owner’s equity (the situation that the financial asset
transferred is an available-for-sale financial asset). In case the transfer of a financial asset does not
satisfy termination of recognition, recognition of the financial asset shall continue and the valuable
consideration as received is recognized as a financial liability.
(5) Recognition of the fair value of financial assets
① For a financial asset or liability active in the market, its fair value is determined based on the
quotation of the active market. Quotation is determined based on the following principles:
A. In the active market, the quotation of the financial assets held or financial liabilities to be
undertaken by the Company is the current offer in the market; The quotation of the financial assets to
be purchased or financial liabilities already undertaken is the current demand in the market.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
19
B. In case there is no current offer or demand in financial asset and financial liability, the market
quotation of the latest transaction or the market quotation of the latest adjusted transaction is adopted
unless there exist significant evidence showing that the market qotation is not the fair value.
② For the financial asset or liability not existing in the active market, the fair value is determined by
means of value estimation technique.
(6) Impairment of Financial Assets
The Company checks the book value of the financial assets on the balance sheet day and provides
reserve for impairment when there is objective evidence showing that a financial asset has
experienced impairment. Objective evidence which shows impairment of financial assets incurred
refers to the items which actually incur after the initial recognition of fiancial assets, have influence
upon the future predicted cash flow of such financial assets while the enterprise can make reliable
measurement on such influence.
① Held-to-maturity investments
The held-to-maturity investment measured according to the amortized cost experiences impairment,
its book value is reduced to the present value (the original actual interest rate is used fro the discount
interest rate) of foreseeable future cash flow (excluding the future credit loss not yet incurred); the
reduced amount is recognized as the loss from impairment of assets and charged to the current gain
and loss.
② Accounts receivable
For the provision for doubtful account of accounts receivable, refer to Note IV.9 Accounts Receivable.
③ Available-for-sale financial assets
When the fair value of available-for-sale financial assets experiences big drop, or after
comprehensive consideration of various relevant elements, such dropping treand is predicted not to
be temporary, the loss from impairment is recognized based on the difference of the fair value lower
than the book value and provision for impairment is made. In recognition of the loss from impairment,
the accumulative loss formed from falling of the fair value which has originally been directly charged
to the owner’s equity is transferred out together and charged to the loss from impairment.
④ Miscellaneous
In the active market, in case there is no quotation available and its fair value while the equity
instrument investment whose fair value cannot be reliably measured or the derivative financial asset
which is linked with such equity and is delivered to that equity instrument for settlement experiences
impairment, the difference in amount between the book value of te equity instrument investment or
the derivative financial asset and the present value determined according to the then market earning
rate of the similar asset against the discount of the future cash flow is recognized as the loss from
impairment and charged to the current gain and loss. The equity instrument without quotation in the
active market whose fair value cannot be reliably measured shall be no longer reversed after
provision for impairment.
9. Accounts receivable
(1) Recognition of Doubtful accounts
The Company checks the book value of accounts receivable on the balance sheet day and provides
reserve for impairment in case there exist following objective evidences showing that accounts
receivable have experienced impairment. ① A debtor is involved in serious financial difficulty. ②
The debtor breaches the contract, such as breaching contract in payment of interest or the principal
or delaying the payment, etc. ③ Debtor may get bankrupt or conduct other financial reorganization;
④ Other objective basis shows impairment incurred in the account receivable.
(2) Provision for doubtful accounts
① Criteria for recognizing the reserve for bad debt of the accounts receivable with significant
individual amount and the way of provisionSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
20
The Company classifies an account receivable with single amount exceeding RMB 800,000 and other
receivable with single amount exceeding RMB 500,000 as account receivable with significant single
amount.
On the balance sheet day, the Company makes impairment test separately of the accounts receivable
with significant single amount. In case there is objective evidence showing that impairment has
incurred, loss from impairment is recognized based on the margin of the present value of the future
cash flow lower than the book value and reserve for doubtful account is provided.
② Basis of determining reserve for bad debt of the combined accounts receivable with insignificant
individual amount but bigger risk based on the credit risk characteristics after combination according
to the credit risk characteristics and the way of provision:
The Company classifies accounts receivable with the age exceeding 4 years as accounts receivable
with insignificant individual amount but with bigger risks after combination according to the credit risk
characteristics
On the balance sheet day, the Company makes impairment test separately over the accounts
receivable with insignificant individual amount but bigger risk according to the credit risk
characteristics. In case there is objective evidence showing that impairment has incurred, loss from
impairment is recognized based on the margin of the present value of the future cash flow lower than
its book value and the reserve for doubtful account is provided.
③ Basis for recognizing the reserve for doubtful account of the other accounts receivable with
insignificant individual amount and the way of provision
The Company accounts receivable as other insignicant accounts receivable except the accounts
receivable with significant individual amount and the accounts receivable with insignificant individual
amount but bigger risk according to the credit risk characteristics.
On the balance sheet day, the Company provides reserve for doubtful account of other insignificant
accounts receivable based on the percentage of the balance of the accounts receivable.
In addition, the Company does not provide reserve for doubtful accounts for the reserve due from the
employees, payment due from the subsidiaries in the consolidation range and the sales revenue from
the last settlement day of the supermarket to the balance sheet day in the accounts receivable.
Age
Proportion (%)
Within 1 year (including 1 year, the sane below)
5
1 to 2 years
10
2 to 3 years
30
Over 3 years
50SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
21
(3) Reversal of reserve for doubtful accounts
In case there is objective evidence showing that the value of the account receivable has been
recovered while it is objectively related with matters occurred after recognition of the loss, the
loss from impairment originally recognized can be reversed and is charged to the current gain and
loss. However, the book value of such reversal shall not exceed the amortized cost as at the date
of reversal of such account receivable for which it is assumed not provision for impairment was
made.
10. Inventories
(1) Classification
Inventories are divided into raw materials, easily-consumed products with low value, packing
materials, commodities in stock and work-in-process.
(2) Valuation of Inventories Acquired and Delivered
Inventories are valuated based on the actual cost at the time of acquisition. Inventory costs include
purchase cost, processing cost and other costs. The inventories are valuated based on the weighted
average method (inventories of FIYTA watches) or specific identification method (world famous watches
in stock) at the time of receiving and delivery.
(3) Recognition and provision of reserve for price falling of inventories
On the balance sheet day, inventories are measured based on the lower of the cost and the net
realizable value.
The net realizable value of the inventories refers to the amount of the estimated sales price of the
inventory less the estimated sales costs to incur at the time of completion, sales expenses and
relevant taxes. Including:
① For the inventories in stock directly for sale, including finished products, commodities and
materials for sale, etc., their realizable net value is determined based on the amount of the estimated
sales prices of such inventories less the estimated sales expenses and relevant taxes.
②For the material inventories necessary to be processed, their realizable net value is the amount of
the estimated sales price of the finished products as produced less the estimated costs to occur up to
the time of completion, estimated sales expenses and relevant taxes in process of normal production
and operation.
The Company provides the reserve for price falling of inventories based on the classification of
models for the self-made FIYTA watch inventories.
For the world famous watches under distribution, the Company provides reserve for price falling of
inventories on individual basis.
On the balance sheet day, in case the cost of the inventories is higher than the realizable net value,
reserve for price falling of inventories is provided and charged to the current gain and loss. The
elements influencing the value of the previously deduced inventory value have disappeared; the
amount as reduced has been recovered; the amount of provision for impairment of inventories
previously made has been reversed and the reversed amount has been charged to the current gain
and loss.
(4) The stock-taking system for inventories is based on the perpetual stock system.
(5) Amortization of low-value consumption goods and packing materials
Low-value consumption articles and packing materials are amortized in lump sum at the time of
requisition.
11. Long-term equity investmentSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
22
(1) Determination of the initial cost of long term equity investment
For consolidation of enterprises under the same control, the share of the book value of the owners’
equity of the consolidatee on the consolidation day is used as the initial investment cost of the long
term equity investment. For the long term equity investment acquired through consolidation of the
enterprises not under the same control, initial measurement is made based on the determined
consolidation costs. For the long term equity investment acquired by other means, the initial
investment cost is made by classification of different ways of acquisition and based on the actually
paid cash, fair value of the equity based security as issued, or the value as specified in the investment
contract or agreement. Initial investment costs include the expenses, taxes and other necessary
expenditures directly connected with the long term equity investment as acquired.
For the long term equity investment acquired through consolidation of enterprises under the same
control, the share of the book value of the owners’ equity of the consolidatee on the consolidation day
is used as the initial investment cost of the long term equity investment. Difference between the
initial investment cost of long term equity investment and the book value of the consolidation valuable
consideration (or the total book value of the issued shares) is used to adjust the capital reserve; in
case the capital reserve is not enough to be offset, the retained earnings is adjusted. Various direct
expenses incurred to the consolidator during the enterrise consolidation are charged to the current
gain and loss at the time of incurrence; the service charges, commissions etc. in bond issuing or other
liability payment for the enterprise consolidation are charged to the initially measured amount of the
issued bonds and other liabilities; service charges, commissions, etc. incurred to the equity based
securities issued in enterprise consolidation are used to offset the equity based security premium
income; or offset the retained earnings in case the preminium income is not enough for offsetting.
For the long term equity investment acquired through consolidation of enterprises not under the same
control, the consolidation costs as determined on the acquisition day is used as the initial investment
cost of the long term equity investment; the consolidation costs are the fair value of the assets paid for,
the liabilities incurred or borne acquisition of the control power over the party acquired on the
acquisition day as well as various direct expenses incurred for the enterprise consolidation. For the
enterprise consolidation realized through several times of exchange transactions in steps, the
consolidation cost becomes the sum of the individual transaction costs. In case there is no specific
provisions on the future event which may affect the consolidation cost in the consolidation contract,
on the acquisition day, if the estimated future event may possibly happen and the amount affecting
the consolidation cost can be reliably measured, it is also charged to the consolidation cost. Service
charges, commissions, etc. paid for the bonds issued or other liabilities assumed for the consolidation,
are charged to the amount initially measured for the issued bonds and other liabilities. Such expenses
as service charge, commissions, etc. incurred for issuing equity based securities in process of
consolidation are used to offset the premium income of the equity based securities; and further offset
the retained earnings in case the premium income is not sufficient for offsetting. For the long term
equity investment acquired by payment in cash, the purchase price actually paid is taken as the initial
investment cost. Initial investment costs include the expenses, taxes and other necessary
expenditures directly connected with the long term equity investment as acquired.
(2) Follow-up measurement of the long term equity investment and recognition of the return on
investment
① For a long term equity investment in which the Company can exercise control over the
investee but does not have common control over or significant influence upon the it and there is no
quotation in the active market and the fair value cannot be reliably measured, the Company adopts
the cost method for calculation.
The long term equity investment calculated based on the cost method is price according to the
initial investment cost. For the additional or recovery investment, cost of long term equity investment
is adjusted. The cash dividend or profit announced by the investee for distribution is recognized as
the current investment income.
② The long term investment which has common control over or significant influence upon the
investee, the equity method is used for calculation. When the initial investment cost of the long termSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
23
equity investment is greater than the share of the fair value of the distinguishable net assets in the
investee enjoyable at the time of investment, the initial investment cost of the long term equity
investment shall be adjusted. In case the initial cost of long term equity investment is smaller than the
fair value based share in the investee’s recognizable net assets enjoyable by the Company, the
balance shall be charged to the current gain and loss and at the same time long term equity
investment cost shall be adjusted. After the Company has acquired the long term equity investment,
the gain and loss of the investment is recognized and the book value of the long term equity
investment is adjusted according to the share of the net gain or loss realized by the investee
enjoyable or shareable.
The Company reduces the book value of the long term equity investment based on the profit declared
for distribution by the investee or the part of the cash dividend distributable to the Company. In
determining the net loss incurred to an investee, the minimum decrease of the book value of long
term equity inestment and the long term equity which has substantially composed net investment in
the investee is reduced to zero with the extra loss the Company has obligation to assume exclusive.
In case of the net profit realized by the investee in the afterwards period, the Company shall restore
the recognition of the share of profit enjoyable after the amount enjoyable has made up for the
unrecognized loss.
The Company takes the fair value of various recognizable assets, etc. of the investee at the time of
investment as the base in recognizing the share of the net gain and loss of the investee enjoayable;
and recognizes the net profit of the investee after the adjustment according to the Company’s
accounting policy and fiscal year with the gain and loss of the internal transactions incurred between
the associate and joint venture attributable to Company according to the shareholding proportion
offset (however, if the loss from the internal transaction belongs to the loss from the impairment of the
assets, it should be recognized with full amount).
For the long term equity investment in the associates and joint ventures already held before the initial
implementation of the enterprise accounting standards, if there exists debit balance of the equity
investment in connection with the investment, it is even necessary to take off the debit balance of the
equity investment originally amortized based on the remaining time according to the straight-line
method.
For the other changes of an investee except the net gain and loss, the Company adjusts the book
value of the long term equity investment and charges it to the owner’s equity. At the time of disposing
that investment, the Company transfers the part originally charged to the owner’s equity at the time of
investment (which only refers to the part charged to the capital reerve) to the current gain and loss
based on the corresponding proportion.
(3) Basis for determining the joint control over and significant influence upon an investee
① The basis for determining the joint control includes: the production and operation activities of a
joint venture which cannot be controlled alone by any party to the joint venture; the decision
concerning the joint venture’s basic operation activities needs unanimous consent of each party to the
joint venture, etc.
② Basis for determining significant influence mainly includes: when the Company directly holds or
indirectly holds through its subsidiary over 20% (with 20% inclusive) but lower than 50% of the
vote-bearing shares in an investee, it shall be determined that the Company has significant influence
upon the investee unless there is explicit evidence showing that the Company is not allowed to be
involved in decision making of the investee’s production and operation in such a case and shall not
form significant influence upon it.
(4) Method for impairment testing and provision of reserve for impairment
The Company judges there exists any sign of impairment possibly incurred in the long term equity
investment according the following information. If there exists the sign of impairment, the Company
shall estimates its recoverable amount and makes impairment test.
① The market price of long term equity investment falls greatly in the current period and the fallingSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
24
rate is significantly higher than the predicted falling due to pass of time or normal application.
② The environment of economy, technology or law in which the Company’ operation is involved, and
the market where the long term equity investment is involved experiences currently or is going to
experience in the near future so that it produces unfavorable influence upon the Company;
③ The market interest rate or other market investment return rate has been improved in the current
period so that the discount rate of the present value of the future cash flow estimated by the Company
in calculating the long term equity investment which causes great drop of the recoverable amount of
the long term equity investment;
④ The long term equity investment has already or is going to be left unused, terminated for
application or disposed ahead of time according to the plan;
⑤ The evidence in the Company’s internal report shows that the economic performance of long
equity investment has been or shall be lower than the expected. For instance, the net cash flow or the
realized operation profit (or loss) of the long term equity investment is far lower (or higher) than the
predicted amount;
⑥ Other sign that proves that long term equity investment may have experience impairment.
The recoverable amount is the higher of the net amount of the fair value of the long term equity
investment less the disposal expenses and the present value of the predicted future cash flow of the
long term equity investment. The Company takes individual long term equity investment as the base
to estimate its recoverable amount. In case it is difficult to estimate the recoverable amount of
individual long term equity investment, the recoverable amount of long term investment is determined
with the asset group attributable to the long term equity investment as the base. Recognition of asset
group is based on the evidence whether the principal cash flow in produced from asset group is
independent from cash flow in of other asset or asset group.
When the recoverable amount of the asset group attributable to the individual long term term equity
investment or long term equity investments is lower than its book value, the Company reduces its
book value to the recoverable amount and the reduced amount is charged to the current gain and
loss; meanwhile, reserve for impairment of the corresponding long term equity investment is
provided.
Loss from impairment of long term equity investment which once is confired shall not be carried back
in the afterwards fiscal periods.
12. Investment based real estate
The Company’s investment based real estate is the buildings for lease purpose.
The Company makes follow-up measurement of the investment based real estate by means of cost
method and its depreciation policy is identical to the depreciation policy of the same or similar types of
fixed assets.
The Company judges there exists any sign of impairment possibly incurred in the investment based
real estate according to the following information. If there exists the sign of impairment, the Company
shall estimate its recoverable amount and makes impairment test.
① The market price of the investment based real estate falls greatly in the current period and the
falling rate is significantly higher than the predicted falling due to pass of time or normal application.
② The environment of economy, technology or law in which the Company’ operation is involved, and
the market where the investment based real estate is involved experiences currently or is going to
experience in the near future so that it produces unfavorable influence upon the Company;SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
25
③ The market interest rate or other market investment return rate has been improved in the current
period so that so that the discount rate of the present value of the future cash flow estimated by the
Company in calculating the investment based real estate which causes great drop of the recoverable
amount of the investment based real estate.
④ There is evidence showing that the investment based real estate has been obsolete or out-of-date
or its physical part has been damaged.
⑤ The investment based real estate has already or is going to be left unused, terminated for
application or disposed ahead of time according to the plan;
⑥ The evidence in the Company’s internal report shows that the economic performance of
investment based real estate has been or shall be lower than the expected. For instance, the net cash
flow or the realized operation profit (or loss) of the investment based real estate is far lower (or higher)
than the predicted amount;
⑦ Other sign that proves that the investment based real estate may have experience impairment.
The recoverable amount is the higher of the net amount of the fair value of the investment based real
estate less the disposal expenses and the present value of the predicted future cash flow of the
investment based real estate. The Company takes individual the investment based real estate as the
base to estimate its recoverable amount. In case it is difficult to estimate the recoverable amount of
individual the investment based real estate, the recoverable amount of the investment based real
estate is determined with the asset group attributable to the investment based real estate as the base.
Recognition of asset group is based on the evidence whether the principal cash flow in produced from
asset group is independent from cash flow in of other asset or asset group.
When the recoverable amount of the individual investment based real estate or the asset group
attributable to the investment based real estate is lower than its book value, reduce its book value to
the recoverable amount; the reduced amount is charged to the current gain and loss; meanwhile, the
reserve for impairment of the corresponding the investment based real estate is provided. Loss from
impairment of the investment based real estate, once confirmed, shall not be reversed in the following
fiscal period.
13. Fixed assets
(1) Conditions for fixed asset recognition
Fixed assets refer to tangible assets used for producing commodities, providing labor services,
leasing, operation or management with service life exceeding one fiscal year. A fixed asset cannot be
recognized until the following conditions are satisfied: ① The economic benefit in connection with
the fixed asset may very likely flow into the enterprise; ② The cost of the fixed asset can be reliably
measured.
(2) Classification and Depreciation of Fixed Assets
Fixed assets are depreciated based on the average method over the specified years. The service life,
predicted residual ratio and annual depreciation ratio of various fixed assets are as follows:
Assets Service life Estimated
residual ratio (%)
Annual
depreciation
rate (%)
Housing and buildings
20 to 35
years
5 2.7-4.8
Machines & equipment
10 years 5-10 9-9.5
Motor vehicles
5 years 5 19
Electronic equipment
5 years 5 19SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
26
Other equipment
5 years 5 19
For a fixed asset for which provision for impairment has been made, depreciation is made based on
the amount of the cost of the fixed asset less the predicted net residual value after the depreciation
and impairment have been provided and the residual service life. For a fixed asset whose predicted
usable status has reached and for which the completion settlement has not yet been handled, the
cost is determined according to the estimated value and depreciation is provided; at the end of each
year, the Company re-checks its fixed assets in terms of their service life, predicted net residual value
and way of depreciation and make necessary adjustment.
(3) Impairment test and provision for impairment of fixed assets
The Company judges if there exists any sign of impairment of fixed assets on the balance sheet date
according to the following information. In case impairment does exist, the Company shall estimate the
recoverable amount and conducts impairment test.
① The market price of the assets drops by a big margin and the falling percentage is significantly
higher than the predicted with the progress of time and normal application.
② Great change takes place in the environments where the Company’s business premises is located
in terms of economy, technology or law and the market where the fixed asset is located in the current
period or in the near future which causes unfavorable influence upon the Company;
③ The market interest rate or investment return rate in other market has increased in the current
period which influences the discount rate of the present value of the predicted future cash flow of the
Company’s assets which causes the recoverable amount of the fixed asset drops by a big margin;
④ There is evidence showing that the fixed asset has been obsolete or substantially damaged;
⑤ A fixed asset has been or shall be idled, terminated for application or is planned to be disposed
ahead of the plan;
⑥ Evidence of the Company’s internal report shows that the economic result of a fixed asset has
been lower or shall be lower than that expected, for instance the net cash flow created by the fixed
asset or operation profit (or loss) realized is much lower (or higher) than the predicted amount, etc.;
⑦ Other evidence shows that a fixed asset has possibly shown the sign of impairment.
The recoverable amount is determined based on the higher of the net amount of the fair value of the
fixed asset less the expense of disposal and the present value of the predicted future cash flow of the
fixed asset. The Company takes individual fixed asset as the base to estimate its recoverable amount.
In case the Company finds it difficult to estimate the recoverable amount of individual fixed asset, the
recoverable amount of the asset group is determined with the asset group attributable to that fixed
asset as the base. Determination of asset group is based on whether the principal cash flow-in
produced by the asset group being independent on the cash flow-in of other asset or asset group.
When the recoverable amount of individual fixed asset or the asset group attributable to fixed asset is
lower than its book value, reduce the book value of the asset to the recoverable amount; the reduced
amount is recognized as the loss from impairment of the asset and charged to the current gain and
loss; meanwhile, the provision for impairment of the corresponding fixed asset is made. Loss from
impairment of a fixed asset, once confirmed, shall not be reversed in the following fiscal period.
14. Intangible Assets
(1) Initial Measurement of Intangible AssetsSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
27
Intangible assets are initially measured based on the cost. Costs of a purchased intangible asset
include purchase price, relevant taxes and duties, and other expenses directly arising from that the
asset reaches the designated application. In case the purchase cost of an intangible asset exceeds
postponed payment of normal credit conditions and is of financing nature substantially, the cost of the
intangible asset is determined based o the present value of purchase cost. The difference in amount
between the costs actually paid and the present value of the purchase payment is charged to the
current gain and loss within the credit term except the amount which can be capitalized in the
Accounting Standards for Enterprises No. 17 – Borrowing Expenses.
For an intangible asset independently developed, its costs include the total expenses incurred from
the time when intangible asset has satisfied the determined provision to the time it has reached the
predicted purpose. The expenditure which has been capitalized in the previous period shall no longer
be adjusted.
(2) Follow-up Measurement of Intangible Assets
The Company analyzes and judges the service life at the time of acquisition of intangible asset. An
intangible asset determines the service life based on the term in which it may bring about economic
benefit to the Company; an intangible asset which cannot predict the service life based on the term in
which it may bring about economic benefit to the Company is an intangible asset with indefinite
service life.
For an intangible asset possessed or controlled by the Company with rights originated from contract
or other statutory right, its service life is based on the term not exceeding the contract based right or
other statutory right; in case contract based right or other statutory right is renewed in due time
resulted from contract renewal and there is evidence showing that no big cost is necessary during the
renewal period, the renewal term shall be taken to the service life; In case there is no service life
specified in the contract or other statutory document, the service life of an intangible asset is
determined with reference to the historical experience or by engaging expert to make appraisal, etc.
In case the term in which the intangible asset may bring about benefit to the Company still cannot be
determined by the aforesaid methods, the Company shall take the intangible asset as one with
unidentified service life.
For an intangible asset with limited service life, the amount necessary to be amortized is reasonably
amortized systematically and reasonably within the service life. The Company uses the straight-line
method to amortize in installments with 5 years each over the predicted service life commencing from
the very month of acquisition. The amount of an intangible asset necessary to be amortized is the
amount of its cost less the predicted residual value. For an intangible asset for which reserve for
impairment has been provided, it is also necessary to deduct the accumulated amount of the reserve
for impairment of intangible assets already provided. The amount of amortization of intangible asset is
charged to the current gain and loss. The intangible asset with unidentified service life would not be
amortized.
The Company rechecks the service life of intangible assets with limited service life and the
amortization method at the end of each year and make adjustment when necessary.
The Company should re-check the service life of the intangible assets with the service life unidentified
in each fiscal period. If there is evidence showing that service life is definite, accounting treatment is
made according to the policy concerning the aforesaid intangible asset with definite service life.
(3) Expenditures for Research and Development
The expenditures for the Company’s internal research and development projects are divided into
expenditure of research stage and that of development stage. The expenditures for the research
stage refers to the payments incurred to the Company in the innovative and planned survey for the
purpose of acquiring and understanding the new knowledge of science or technology. The expenses
incurred in the research stage of the internal research and development project are charged to the
current gain and loss at the time of incurrence.
The expenditures incurred in the research stage refer to the expenses in process of applying theSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
28
research achievements or other knowledge in some plan or design for the purpose of producing new
or substantially improved materials, devices, products, etc. The expenditures at the development
stage cannot be capitalized until the following conditions are satisfied at the same time, namely:
① It is technically feasible to finish such intangible assets so as to make it useable or sellable;
② Having the intention to finish, use or sell such intangible assets;
③ The ways of intangible assets to produce economic benefit, including being able to prove that
there exists market for the products produced by using such intangible assets or there exists market
for intangible asset itself; in case intangible asset shall be used internally, it can be proved useful.
④ There is sufficient support in terms of technology, financial resource and other resources so as to
fulfill the development of intangible asset and have the ability to use or sell such intangible assets;
⑤ The expenses attributable to the development stage of such intangible assets can be reliably
measured.
The expenditures not satisfying the aforesaid conditions are charged to the current gain and loss at
the time of incurrence.
(4) Impairment test and provision for impairment of fixed assets
The Company judges if there exists any sign of impairment of the intangible assets with limited
service life on the balance sheet day according to the following information. In case impairment does
exist, the Company shall estimate the recoverable amount and conducts impairment test. For the
intangible assets with indefinite service life, impairment test is conducted every year regardless
whether any sign of impairment exists.
① The market price of intangible asset drops by a big margin and the falling percentage is
significantly higher than the predicted with the progress of time and normal application;
② Great change takes place in the environments where the Company’s business premises is located
in terms of economy, technology or law and the market where the intangible asset is located in the
current period or in the near future which causes unfavorable influence upon the Company;
③ The market interest rate or investment return rate in other market has increased in the current
period which influences the discount rate of the present value of the predicted future cash flow of the
Company’s intangible assets which causes the recoverable amount of the intangible asset drops by a
big margin;
④ There is evidence showing that the intangible asset has been obsolete or substantially damaged;
⑤ An intangible asset has been or shall be idled, terminated for application or is planned to be
disposed ahead of the plan;
⑥ Evidence of the Company’s internal report shows that the economic result of an intangible asset
has been lower or shall be lower than that expected, for instance the net cash flow created by an
intangible asset or operation profit (or loss) realized is much lower (or higher) than the predicted
amount, etc.;
⑦ Other evidence shows that an intangible asset has possibly shown the sign of impairment.
The recoverable amount is determined based on the higher of the net amount of the fair value of the
intangible asset less the expense of disposal and the present value of the predicted future cash flow
of the intangible asset. The Company takes individual intangible asset as the base to estimate its
recoverable amount. In case the Company finds it difficult to estimate the recoverable amount of
individual intangible asset, the recoverable amount of the asset group is determined with the assetSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
29
group attributable to that intangible asset as the base. Determination of asset group is based on
whether the principal cash flow-in produced by the asset group being independent on the cash flow-in
of other asset or asset group.
When the recoverable amount of individual intangible asset or the asset group attributable to
intangible asset is lower than its book value, reduce the book value of the asset to the recoverable
amount; the reduced amount is recognized as the loss from impairment of the asset and charged to
the current gain and loss; meanwhile, the provision for impairment of the corresponding intangible
asset is made. Loss from impairment of an intangible asset, once confirmed, shall not be reversed in
the following fiscal period.
15. Long-term expenses to be apportioned
Long-term expenses to be apportioned are various expenses already incurred but to be borne in the
report period and future periods with apportioning term of over one year (with one year exclusive).
Long term expenses to be apportioned are entered based on the actual expenses and are amortized
based on the straight-line method within the beneficial period of the item which is usually 2 – 5 years.
16. Predicted liabilities
(1) Principle of recognizing the predicted liabilities
The business in connection with such contingencies as external guarantee, unsettled lawsuit or
arbitration, product quality assurance, staff lay-off plan, loss contract, obligation of reorganization,
obligation of discarding fixed asset, etc. is recognized as liability in compliance with the following
conditions:
① Such obligation is a present obligation the Company should assume;
② Implementation of such obligation may possibly cause economic loss of the enterprise;
③ The amount involved in such obligation can be reliably counted.
(2) Measurement of Predicted Liabilities
It is predicted that the initial measurement is conducted according to the best estimated amount
necessary to be paid in implementing the current obligation, with the such elements as the risks in
connection with the contingent events, uncertainty and currency time value, etc. being taken into
comprehensive consideration. If the money has significant time value, the best estimated amount is
determined after the discount of the concerned future cash flow out. On each balance sheet day, the
book value of the predicted liabilities is rechecked. In case there is conclusive evidence showing that
such book value cannot reflect the current best estimated amount, adjustment is made according to
the current best estimation against the book value.
17. Income
(1) Recognition of Income from Sales of Commodities
The come from sales of commodities is recognized on the following bases:
① when the significant risks and rewards of ownership have been transferred to the buyer;
② The Company maintains neither managerial involvement to the degree usually associated with
ownership, nor effective control over the goods sold;
③ The amount involved can be reliably measured;
④ The relevant economic benefit can highly probably flow into the Company;
⑤ The relevant costs incurred or to incur can be reliably measured.
(2) Recognition of Income from Supply of Labor Services
The result of transaction of supplying labor services on the balance sheet day can be reliablySHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
30
estimated and the income from supply of labor service is recognized based on the percentage of
service completion. The Company determined the work progress of the labor service supply
according to the measurement of the completed work.
The Company treats the results of labor service transaction which cannot be reliably estimated on the
balance sheet day respectively according to the following conditions:
① In case the labor service costs already incurred are predicted to be compensable, the income from
supply of labor service is recognized according to the labor service costs already incurred and the
labor service costs are carried over based on the same amount;
② In case the labor costs already incurred are predicted to be unable to get compensated, the labor
costs already incurred shall be charged to the current gain and loss and not labor income shall be
recognized.
(3) Recognition of Income from use right of the assigned asset
① Principle for recognition of income from use right of the assigned asset
Income from the use right of the assigned asset includes interest income, income from use fee, etc.
and shall not be recognized until the following conditions are satisfied at the same time:
A. Economic benefit in connection with the transaction can flow into the Company.
B. The amount of the income can be reliably measured.
② Specific Recognition Method
A. The amount of interest income is determined according to the time when others use the monetary
asset of the Company and calculated according to the actual interest rate.
B. Amount of income from the use fee is determined through calculation of the charging time as
specified in the relevant contract or agreement and method.
C. The amount of income from lease of property. Realization of lease income is confirmed according
to the lease date (with consideration of the rental-free period, rental-free period) and lease amount as
specified in the lease contract or agreement when the relevant rent has been received or collection
evidence has been received.
18. Government subsidies
The government subsidy can be divided into the government subsidy in connection with asset and
that in connection with income.
(1) Conditions for recognition of government subsidy
Government subsidy is recognized when the following conditions are all satisfied:
① The Company can satisfy the conditions for governmental subsidy;
② The Company is able to receive government subsidy.
(2) Measurement of government subsidy
① The government subsidy is measured based on the amount received or receivable if it is monetary
asset. The government subsidy is measured based on the fair value if it is a non-monetary asset;
when the fair value cannot be obtained, it is measured based on the nominated amount (RMB 1).
② Asset related government subsidy is recognized as deferred income, is distributed in average over
the service life of the related assets and charged to the current gain and loss. However, the
government subsidy measured based on the nominal amount is directly charged to the current gain
and loss. the income related governmental subsidy is disposed separately according to the specificSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
31
conditions: that used for compensate the Company’s relevant expense or loss in the future is
recognized as deferred income and charged to the current gain and loss during the period for
recognition of the relevant expenses; that used to compensate the Company’s relevant expenses or
loss already incurred is directly charged to the current gain and loss.
③ The recognized government subsidy which needs to be refunded is handled separately according
to different conditions: in case there exists concerned deferred income, it is used to offset the balance
of the concerned deferred income and the excessive part is charged to the current gain and loss. If
there is no deferred income concerned , it shall be directly charged to the current gain and loss.
19. Deferred income tax asset/deferred income tax liability
The Company provides the deferred income tax by means of the balance sheet approach according
to the provisional discrepancy between the book value of the asset and liabilities on the balance sheet
day and the taxation basis as well as provisional discrepancy arising from the margin between the
book value of the items which have not been taken as asset and liability but their taxation basis may
be determined according to the tax law.
(1) Recognition of Deferred Income Tax Assets
For the offsetable provisional discrepancy, the offsetable loss which may be carried over to the future
years and taxes offset down, the Company recognizes the deferred income tax asset arising
therefrom with offsetable provisional discrepancy which may be possibly used to offset, the offestable
loss and the future taxable income with the tax offset down as the limitation.
① In case the offsetable provisional discrepancy arises from the following transactions: such
transaction is not an enterprise consolidation while the transaction shall neither influence the
accounting profit nor taxable income or offsetable loss at the time of occurrence.
② For the offsetable provisional discrepancy in connection with the investment of subsidiaries, joint
ventures and associates, the corresponding deferred income tax asset is recognized if the following
condition is satisfied: The provisional discrepancy may be reversed with high possibility in the
foreseeable future while the taxable income used for offset the offsetable provisional discrepancy with
high possibility.
(2) Recognition of Deferred Income Tax Liabilities
The provisional discrepancy of various payable taxes is the basis for recognizing the deferred income
tax liability, provided that:
① The taxable provisional discrepancy arises from the following transactions:
A. Initial recognition of goodwill:
B. Initial recognition of assets or liabilities arising from the transactions with the following
characteristics: such a transaction is not enterprise consolidation while the transaction shall affect
neither the accounting profit nor taxable income or offsetable loss at the time of occurrence.
② For the taxable provisional discrepancy in connection with investment in any subsidiary, joint
venture or associate, the reversal time of such provisional discrepancy can be controlled while such
provisional discrepancy cannot be possibly reversed in the foreseeable future.
20. Lease
(1) Criteria for recognition of financing lease and operating lease
Financing lease is recognized in case a lease complies with one or more of the following criteria:
① Upon expiry of a lease term, the ownership of the leased asset is transferred to the lessee.
② Lessee has the option to purchase the leased asset and purchase price as ordered is predicted to
be far lower than the fair value of the leased asset in exercising the option; therefore on the date ofSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
32
starting lease, it may be reasonably determined that the Company may exercise such option.
③ Even if the ownership of the asset is not to be transferred, the lease term shall take majority of the
service life of the leased asset (which usually refers to 75% or higher).
④ The present value of the lessee’s minimum lease payment on the date of startingteh lease is
almost equal to the fair value of the leased asset on the date of starting lease (which usually refers to
90% or higher). The present value of the lessor’s minimum lease income on the date of starting the
lease is almost equal to the fair value of the asset on the date of starting the lease;
⑤ Leased asset with special nature can only be used by the Company (or lessee) without big
improvement.
Operating lease refers to the leases other than financing lease. The Company’s leases refer to the
operational lease.
(2) Major Accounting Treatment of Operating Lease
The rental involved in the operating lease is recognized as the current gain and loss by the lessor and
lessee in different periods within the lease period. The initial direct expenses incurred to the lessor
and lessee are charged to the current gain and loss. Contingent rental is charged to the current gain
and loss when it actually incurs.
V. Taxes
1. Value-added tax
The Company and its subsidiaries are general VAT payers and the taxable VAT is the balance of the
current output VAT less the offsetable input VAT and the output VAT rate is 17%.
2. Business Tax
The Company and its subsidiaries pays business tax at the rate of 5% of the housing rental income,
income from offering labor service and the income from use of the assigned assets.
3. Consumption tax
For the imported or self-made high-grade watches, the Company and its subsidiaries pay
consumption tax based on 20% of the taxation base.
4. City maintenance construction tax and education surcharge
Except the Company and its subsidiaries located in Shenzhen that pay city maintenance &
construction tax based on 1% of the turnover tax and education surcharge at 3% in Shenzhen
according to the Regulations on Several Issues in Connection with Taxation Policy in Shenzhen
Special Economic Zone (Document of Shenzhen Municipal People’s Government SHEN FU [1988]
No. 232), the branches and subsidiaries located outside Shenzhen pay the respective taxes at the
rates as specified by the local authorities.
5. Enterprise Income Tax
The Company and its Subsidiaries Income tax rate
of the report year
Income tax rate
of the previous
year
The Company (Note ①) and (Note⑤) 22% 20%
Shenzhen Harmony World Watches Center Co., Ltd. (Harmony)
(Note ①)
22% 20%SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
33
Shenzhen FIYTA Sophisticated Timepieces Manufacture Co., Ltd. (the
Manufacture Co.) (Note②) (Note ⑤)
15% 15%
Shenzhen World Watches Center Co., Ltd. (World Watches
Center) (Note ①)
22% 20%
FIYTA Hong Kong Limited (Note③) 16.5% 16.5%
68-Station Limited (Note ③) 16.5% -
Liangya Limited (Note ③) 16.5% -
Baoding Limited (Note ③) 16.5% 16.5%
Emile Chouriet (Shenzhen) Co., Ltd. 25% -
Montres Chouriet (Swiss Company) 30% 30%
Shenzhen FIYTA Science & Technology Co., Ltd. (FIYTA Science
& Technology) (Note ④)
25% -
Shenzhen Xiangji Trade Co., Ltd. (Trade Co.) (Note ④) 25% -
Xi’an Chengheng Industrial Co., Ltd. (Xi’an Chengheng) (Note
④)
25% 25%
Beijing Henglianda Timepieces Co., Ltd. (Henglianda) (Note ④) 25% 25%
Kunming Lishan Department Store Co., Ltd. (Lishan Department
Store) (Note ④)
25% 25%
Harbin World Watches Distribution Co., Ltd. (Harbin Co.) (Note
④)
25% 25%
Note ①: In accordance with the Circular of the State Council on Implementation of the Transitional
Preferential Policy of Enterprise Income Tax GUO FA (2007) No. 39 promulgated by the State Council
on December 26, 2007, the enterprises previously enjoying the enterprise income tax at rate of 15%
would implement the rate of 22% in 2010. Such companies’ place of registration is Shenzhen and the
applicable rate for the current year is 22%.
Note ②: In accordance with the Notice of Nanshan District Local Taxation Bureau, Shenzhen on
Registration for Tax Exemption SHEN DI SHUI JIAN NAN BEI GAO ZI [2009] No. 091026,
commencing from January 1, 2009, the Company would enjoy low rate taxation policy for hi-tech
enterprises necessary of key support from the central government and the enterprise income tax rate
is 15% for a term from January 2009 to December 2011.
Note ③: The company’s place of registration is Hong Kong and it applies the local profit tax of Hong
Kong. In the report year, the applicable tax rate is 16.50%.
Note ④: In accordance with PRC Enterprise Income Tax Law, commencing from January 1, 2008,
the rate of enterprise income tax of residents is 25%.
Note ⑤: In accordance with the Circular of the State Administration of Taxation on Issuing the
Measures on Administration of Pre-tax Deduction of the Enterprise Research and Development
Budget (Trial) GUO SHUI FA [2008] No. 116 on December 10, 2008, the Company’s and the
Manufacture Company’s research and development budget for developing new technology, new
products and new process may enjoy 50% additional deduction as research and development budget
in addition to deduction based on actual incurrence according to the provisions concerned if such
budget has not formed intangible asset which should be charged to the current gain and loss.
6. Real estate tax
According to Article 5 of the Circular of Shenzhen Local Tax Bureau on Printing and Issuing theSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
34
Questions and Answers on a Number of Policies on Use of Real Estate Tax and Vehicle and Vessel
Use Tax, a production operator should pay real estate tax based on 70% of the cost of the real estate
at the tax rate of 1.2%. For the properties located in Shenzhen, the Company pays the real estate tax
according to the tax rate as specified in the aforesaid circular. For the properties located in other cities,
the real estate tax is paid based on the rates specified by the respective local authorities.
VI. Enterprise Consolidation and Consolidated Financial Statements
1. Subsidiaries
(1) Subsidiaries Acquired through Establishment or Investment
in RMB 10,000
Subsidiaries
Company
type
Registered
place
Business type
Registered
capital: RMB
10,000
Business Scope
Actual
amount of
contribution
at the end of
the report
period
Balance of
other items
substantially
composing
net
investment
in the
subsidiaries
Harmony
company with
limited liability
Shenzhen Commerce 30,000(RMB)
purchase, sales and
repair services of
timepieces and
components
29,850(RMB) -
Manufacture Co.
company with
limited liability
Shenzhen Manufacture 1,000(RMB)
Producing various
clocks and watches,
movements, spares
and parts,
sophisticated
timepieces, and
repairing
1,000(RMB) -
World Watches
Center (Note
①)
company with
limited liability
Shenzhen Commerce 280(RMB)
High grade clocks
and watches,
glasses, ornaments,
gifts, general
merchandise and
handicrafts
(excluding gold and
silver jewelry
140(RMB) -
FIYTA Hong
Kong Limited
(Note②)
company with
limited liability
Hong
Kong
Commerce 2,000(HKD)- - 2,000(HKD) -
68-Station
Limited (Note ③)
company with
limited liability
Hong
Kong
Commerce 380(HKD) - 300(HKD) -
Xi’an
Chengheng
company with
limited liability
Xi’an
commerce,
catering,
recreation
1,000(RMB)
Domestic trade
(except the business
under monopoly),
timepieces sales,
repairing and
after-sale service,
hotel management,
1,000(RMB) -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
35
property
management, real
estate development,
real estate agency,
property lease,
accommodation,
catering service,
teahouse service,
pastries processing
and sales
Harbin Co.
company with
limited liability
Harbin Commerce 50(RMB)
Purchase and sales
of timepieces and
parts; timepiece
repairing
50(RMB) -
Henglianda
(Note④)
company with
limited liability
Beijing Commerce 3,000(RMB)
Sales of timepieces,
accessories and
repairing service
1,500(RMB) -
FIYTA Science
& Technology
(Note⑤ )
company with
limited liability
Shenzhen Manufacture
1,000(RMB
R&D, production and
sales of timepieces,
production,
machining, sales and
technical
development of
sophisticated parts.
1,000(RMB) -
Trade Co. (Note
⑥)
company with
limited liability
Shenzhen Commerce 500(RMB)
Sales of timepieces,
gifts, relevant
information
consulting and other
domestic trade
500(RMB)
(continued)
In RMB
Subsidiaries
Shareh
olding
proporti
on (%)
Proporti
on of
voting
power
(%)
Consolid
ated
(Y/N)
Minority
shareholders’
interests
Amount of in
minority
shareholder’s
equity used for
offsetting minority
shareholders’
gain/loss
Balance of the owner’s
equity of the parent
company offsetting the
loss shared by minority
shareholders in the
report period exceeding
the share enjoyed in the
owner’s equity at year
beginning
Harmony 99.50 99.50 Yes 18,157,357.47 - -
Manufacture Co. 100.00 100.00 Yes - -
World Watches
Center
50.00 50.00 Yes 1,400,000.00 - -
FIYTA Hong Kong
Limited
100.00 100.00 Yes 876,809.12 - -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
36
68-Station Limited 60% 60% Yes - - -
Xi’an Chengheng 100.00 100.00 Yes - - -
Harbin Co. 100.00 100.00 Yes - - -
Henglianda 50.00 50.00 Yes - -
FIYTA Science &
Technology
100.00 100.00 Yes - - -
Trade Co. 100.00 100.00 Yes - - -
Emile Chouriet
(Shenzhen) Co., Ltd.
(Note ①)
100.00 100.00 Yes
Note ①: It was established by FIYTA Hong Kong Limited, one of the Company’s subsidiaries with
investment of HK$ 5,000,000 on April 26, 2010.
② A subsidiary acquired through consolidation of an enterprise not under the same control
In RMB 10,000
Subsidiaries
Company
type
Registered
place
Business
type
Registered
capital
Business
Scope
Actual
amount of
contribution
at the end of
the report
period
Balance of
other items
substantially
composing
net
investment in
the
subsidiaries
Lishan Department
Store
company
with limited
liability
Kunming Commerce 500(RMB)
Domestic trade,
materials
supply and
sales
120(RMB) -
Montres Chouriet SA
(Swiss Company)
(Note ①)
company
with limited
liability
Switzerland Manufacture 25（CHF）
Watch
processing and
manufacture
900（HKD）
(continued)
In RMB
Subsidiaries
Shareholdin
g proportion
(%)
Proportio
n of
voting
power (%)
Consolidat
ed (Y/N)
Minority
shareholder
s’ interests
Amount of in
minority
shareholder’s
equity used for
offsetting
minority
shareholders’
gain/loss
Balance of the owner’s
equity of the parent
company offsetting the
loss shared by minority
shareholders in the
report period
exceeding the share
enjoyed in the owner’s
equity at year
beginning
Lishan Department
Store
100 100 Yes - - -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
37
Swiss Company 100 100 Yes - - -
Note ①: It was acquired by FIYTA Hong Kong Limited, one of the Company’s subsidiaries by 100%
equity at the price of HK$ 9,000,000 and the acquisition date was January 20, 2010.
2. Note to Change in the Consolidation Scope
In the report period, FIYTA Hong Kong Limited, one of the Company’s subsidiaries, invested and
established Emile Chouriet (Shenzhen) Co., Ltd. The amount of investment was HK$ 5 million and
the date of establishment was April 26, 2010. In addition, FIYTA Hong Kong Limited acquired 100%
equity of Montres Chouriet at price of HK$9 million. Therefore, in the report period, it put these two
companies into its consolidated statements.
3. Entities newly put in the consolidation and no longer put in the consolidation in the report period
(1) Subsidiaries newly put in the consolidation
Name
Net asset at end of the
report period (RMB)
Net profit in the report
year (RMB)
Swiss Company 7,904,990.22 665,020.91
Emile Chouriet (Shenzhen) Co., Ltd. 4,402,500.00 0.00
VII. Notes to the Consolidated Financial Statements
In the following notes (including the important notes to the parent company’s financial statements),
year beginning refers to January 1, 2010 and the end of the report period refers to June 30, 2010
unless there is otherwise notice. The same period fo the previous year refers to January to June,
2009. The report period refers to January to June, 2010.
1. Monetary fundsSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
38
2. Accounts receivable
(1) Presented based on types of accounts receivable
End of the report period
Items
Book Balance Proportion
(%)
Provision for
bad debts
Proportion
(%)
Account receivable with
significant single amount
118,991,486.29
62.65
12,494,399.69 28.48
Other receivables with
insignificant amount but
bigger risk of the
combination after
combination based on the
credit risk characteristics
31,198,320.19
16.43
29,451,322.89 67.13
Other receivables with
insignificant single amount 39,742,736.87 20.92 1,927,671.88 4.39
Total
189,932,543.35
100.00
43,873,394.46 100.00
(continued)
Year beginning
Items
Book Balance Proportion
(%)
Provision for
bad debts
Proportion
(%)
End of the report period
Year beginning
Items
Currency
Amount in
foreign
currency
Conversion
rate
Conversion in
RMB
Amount in
foreign
currency
Conversion
rate
Conversion in
RMB
Cash on
hand
RMB
375,535.89 1.00 375,535.89 274,189.07
1.00
274,189.07
HK$
3,614.81 0.87 3,153.56 10,857.09 0.88 9,559.67
US$
306.00 6.79 2,078.02 - 6.83 -
Euro
1,673.90 8.27 13,844.83 973.90 9.80 9,541.41
￡
110.00 10.21 1,123.48 110.00 10.98 1,207.58
S.Fr.
2,184.75 6.27 13,706.25 2,184.75 6.63 14,480.96
Sub-total
409,442.03 308,978.69
Bank
deposit
RMB
93,702,672.64 1.00 93,702,672.64 82,612,609.04 1.00 82,612,609.04
HK$
14,834,578.00 0.87 12,941,685.85 12,931,450.58 0.88 11,386,142.23
US$
137,213.47 6.79 931,802.95 202,242.51 6.83 1,380,952.31
S.Fr.
57,887.00 6.27 363,159.88
Sub-total
107,939,321.32 95,379,703.58
Other
Monetary
Funds
RMB
12,897.92 12,897.92
Total
108,361,661.27 95,701,580.19SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
39
Account receivable with
significant single amount 98,357,342.74 59.30 12,494,399.69 28.48
Other receivables with
insignificant amount but
bigger risk of the
combination after
combination based on the
credit risk characteristics
29,502,619.39 17.79 29,451,322.89 67.13
Other receivables with
insignificant single amount 37,995,594.99 22.91 1,927,671.88 4.39
Total 165,855,557.12 100.00 43,873,394.46 100.00
(2) Presented based on age of accounts receivable
End of the report period Year beginning
Book Balance Book Balance
Age
Amount
Proportio
n (%)
Provision for
bad debts Amount
Proportio
n (%)
Provision for
bad debts
Within a
year
146,695,994.98 77.24 1,634,703.99
122,905,915.88
74.10
1,634,703.99
1 to 2
years
209,058.02 0.11 8,141.13
51,026.68
0.03
8,141.13
2 to 3
years
1,272,251.62 0.67 625,331.13
1,231,095.55
0.74
625,331.13
Over 3
years
41,755,238.73 21.98 41,605,218.21
41,667,519.01
25.12
41,605,218.21
Total
189,932,543.35 100.00%
43,873,394.46
165,855,557.12
100.00
43,873,394.46
(3) In the ending balance of the accounts receivable, there was none due from the shareholder
holding over 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(4) Top Five Debtors of the Accounts Receivable
Company names Relationship Amount Years
Proportion in
the total of the
accounts
receivable(%)
INNER MONGOLIA MINZU
MARKET CO.,LTD.,
Non-Related
Party 3,625,300.82
Within a
year 1.91
Shanxi International Trade Center
Co., Ltd.
Non-Related
Party 3,427,249.14
Within a
year 1.80
Xi’am Golden Eagle International
Shopping Center Co., Ltd.
Non-Related
Party 3,168,753.37
Within a
year 1.67
Hunan Hepingtang Industrial Co.,
Ltd.
Non-Related
Party 2,619,060.35
Within a
year 1.38
Jiangxi Fortune Plaza Co., Ltd.
Non-Related
Party 2,447,977.44
Within a
year 1.29
Total
15,288,341.12 8.05SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
40
(5) Accounts due from related parties
Company names Relationship Amount
Proportion in the
total of the
accounts
receivable(%)
Rainbow
Supermarket
Controlled by the
actual controller 2,955,319.09
1.56
Aviation Industry
Corporation of China Eventual controller 67,125.00 -
AVIC International
Actual controller’s
parent company 337,953.00 0.18
Shennan Circuit
Controlled by the actual
controller 180,361.18 0.01
Total 3,540,758.27 1.75
3. Advance to Suppliers
(1) Advances to suppliers presented based on age
End of the report period Year beginning
Age
Amount
Proportion
(%)
Amount Proportion (%)
Within 1
year
10,694,769.00
98.29 9,455,441.76 98.13
1 to 2 years
186,600.00
1.71 180,060.00
-
2 to 3 years
-
- -
1.87
Total
10,881,369.00
100.00
9,635,501.76
100.00
(2) Top Five Receivers of Advances to Suppliers
Company names Relationship Amount Time Reason of unsettlement
Shenzhen Yuda Sophisticated
Machinery Co., Ltd.
Non-Related
Party 1,453,800.00 Within 1 year
Advance payment in
purchase
Shenzhen Youpin Decoration
Engineering Co., Ltd.
Non-Related
Party 1,387,500.00 Within 1 year
Payment for refurbishment
design
BEQ TIMEWEAR (FAR EAST)
LIMITED
Non-Related
Party 968,301.79 Within 1 year
Advance payment in
purchase
ACEWAY HOLDINGS LIMITED
Non-Related
Party 652,789.47 Within 1 year
Advance payment in
purchase
Nanshan District Baigao Show
Furniture Plant, Shenzhen
Non-Related
Party 495,000.00 Within 1 year
Payment for refurbishment
design
Total
4,957,391.26
(3) There was none paid in advance to the shareholders that hold more than 5%(including 5%) of the
Company’s vote-bearing shares in the advance to suppliers at the end of the report period.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
41
4. Other receivables
(1) Presented based on types of other receivables:
End of the report period
Items Book Balance Provision for bad debts
Amount Proportion
(%) Amount
Proportion
(%)
Other receivables with significant
individual amount
10,379,329.09
31.58 2,366,669.74 57.22
Other receivables with
insignificant amount but bigger
risk of the combination after
combination based on the credit
risk characteristics
1,480,064.11
4.50 1,477,064.11 35.33
Other receivables with
insignificant amount
21,008,541.99
63.92 337,239.28 7.45
Total
32,867,935.19
100.00 4,180,973.13 100.00
(continued)
Year beginning
Items Book Balance Provision for bad debts
Amount Proportion (%) Amount
Proportion
(%)
Other receivables with significant
individual amount
6,598,597.09 30.03 2,366,669.74 57.22
Other receivables with insignificant
amount but bigger risk of the
combination after combination
based on the credit risk
characteristics
1,477,064.11 6.73 1,477,064.11 35.33
Other receivables with insignificant
amount 13,894,290.04 63.24 337,239.28
7.45
Total
21,969,951.24 100.00 4,180,973.13 100.00
(2) Presented based on ages of other receivables:
End of the report period Year beginning
Book Balance Book Balance
Age
Amount
Proporti
on (%)
Provision for bad
debts Amount
Proportio
n (%)
Provision for bad
debts
Within 1
year
24,469,945.43
74.45 362,565.40
14,971,675.90
68.15
362,565.40
1 to 2 years
2,673,305.75
8.13 82,239.01
1,880,403.37
8.56
82,239.01
2 to 3 years
1,394,284.52
4.24 8,420.52
811,315.80
3.69
8,420.52SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
42
Over 3 years
4,330,399.49
13.18 3,727,748.20
4,306,556.17
19.60
3,727,748.20
Total
32,867,935.19 100 4,180,973.13
21,969,951.24 100.00
4,180,973.13
(3) In the accounts receivable at the end of the report period, there was none due from the
shareholder holding over 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(4) Top Five Receivers of the Other Receivables
Company names
Relationship
Amount Years
Proportion in the
total of the other
receivables (%)
Shenzhen Yuda Sophisticated
Machinery Co., Ltd.
Non-Relate
d Party
3,149,900.00
Within 1
year
9.58
China Resource (Shenzhen) Co.,
Ltd.
Non-Relate
d Party
1,652,340.00
Within 1
year
5.03
Shenzhen New Longtai Industrial
Co. Ltd.
Non-Relate
d Party
1,573,876.89
Within 1
year
4.79
Shenzhen Yitian Holiday World
Real Estate Development Co., Ltd.
Non-Relate
d Party
1,090,523.00
Within 1
year
3.32
China Merchants Securities Co.,
Ltd.
Non-Relate
d Party
1,000,000.00
Within 1
year
3.04
Total
8,466,639.89
25.76
(5) Accounts due from related parties
Company
names
Relationship Amount
Proportion in the total of the other
receivables (%)
Rainbow
Supermarket
Under the
same control
104,641.60
0.32
CATIC Property
Under the
same control
196,680.00
0.60
Total 301,321.60 0.92
5. Inventories
(1) Classification of Inventories
Items End of the report period
Balance Provision for price
falling
Book value
Raw materials 53,664,781.82 17,546,335.68 36,118,446.14
Products in process 5,215,803.20 - 5,215,803.20SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
43
Commodities in stock 800,572,559.02 11,347,721.84 789,224,837.18
Total 859,453,144.04 28,894,057.52 830,559,086.52
(continued)
Year beginning
Items
Balance
Provision for price
falling
Book value
Raw materials 51,636,069.77 17,546,335.68 34,089,734.09
Products in process 6,291,114.66 - 6,291,114.66
Commodities in stock 731,736,579.65 10,935,472.69 720,801,106.96
Total 789,663,764.08 28,481,808.37 761,181,955.71
(2) Provisions for impairment of inventories
Decrease in the report period
Items
Year beginning
Amount provided in
the report Period
Reversal
Amount
written
off
Total
End of the report
period
Raw materials
17,546,335.68
- - - 17,546,335.68
Commodities
in stock 10,935,472.69 412,249.15
- - - 11,347,721.84
Total
28,481,808.37 412,249.15 - - - 28,894,057.52
6. Other current assets
Items Description End of the report
period Year beginning
Rent Rent from shops 2,812,850.02 2,977,879.98
Others - 236,634.19
Total 2,812,850.02 3,214,514.17
7. Long-term equity investment
(1) Long-term equity investment classification
Items Year beginning
Increase in
the report year
Decrease in
the report year
End of the report
period
Investment in
subsidiaries
- - -
-
Investment to
associated companies
1,836,317.92
-
- 1,836,317.92
Other equity
investment
385,000.00
-
- 385,000.00
Less: Reserve for
impairment of
long-term equity
investments
300,000.00
-
- 300,000.00SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
44
Total
1,921,317.92
-
- 1,921,317.92
(2) Statement of Long Term Equity Investment
Investees
Accountin
g method
Initial
investment cost
Opening book
balance
Increase/D
ecrease
End of the report
period
Shenzhen Research Institute
of Northwest China Polytechnic
University
Equity
method 1,500,000.00 1,836,317.92 1,836,317.92
Xi’an Tangcheng Joint Stock
Co., Ltd.
Cost
method 85,000.00 85,000.00 85,000.00
Shenzhen CATIC Culture
Transmit Co., Ltd.
Cost
method 300,000.00 300,000.00 300,000.00
Total
2,221,317.92 2,221,317.92
(continued)
Investees
Holding
proportion
of the
shares in
the
investees
(%)
Holding
proportion of
the
vote-bearing
shares in the
investees
Note to
inconsistence of
holding
proportion of the
shares in the
investees with
voting power
Provision for
impairment
Provision for
impairment
in the report
period
Cash
dividend
in the
report
period
Shenzhen
Research
Institute of
Northwest China
Polytechnic
University
45.00
50.00
Equity
distribution
based on 50%
proportion
according to the
agreement of
the shareholders
- - -
Xi’an Tangcheng
Joint Stock Co.,
Ltd.
0.10
0.10
- - - -
Shenzhen
CATIC Culture
Transmit Co.,
Ltd.
15.00
15.00
- 300,000.00 - -
Total 300,000.00 - -
(3) Provision for impairment of long-term equity investments
Decrease in the report year
Investees
Year
beginning
Increase
in the
report
year
Revers
al Write-off Total
End of the
report periodSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
45
Decrease in the report year
Investees
Year
beginning
Increase
in the
report
year
Revers
al Write-off Total
End of the
report period
Shenzhen CATIC
Culture Transmit
Co., Ltd.
300,000.00 - - - - 300,000.00
Total 300,000.00 - - - - 300,000.00
8. Investment based real estate
(1) Statement of investment based real estate
Items Year beginning Increase in the
report year
Decrease in
the report year End of the report
period
Investment based real
estate measured
afterwards by means of
cost method
171,577,646.00 - 3,097,836.11
168,479,809.89
Less: Provision for
impairment of investment
based real estate
- - -
Total 171,577,646.00 - 3,097,836.11 168,479,809.89
(2) Investment based real estate measured based on costs
Investment based real estate measured afterwards by means of cost method
Items Year beginning Increase in the
report year
Decrease in
the report
year
End of the report
period
Cost
Housing and buildings 231,774,832.24 - - 231,774,832.24
Total
231,774,832.24 - - 231,774,832.24
Accumulative
depreciation
Housing and buildings
60,197,186.24 3,097,836.11 0.00 63,295,022.35
Total 60,197,186.24 3,097,836.11 0.00 63,295,022.35
Less: Provision for
impairment of investment
based real estate
- - - -
Net value
171,577,646.00 168,479,809.89
9. Fixed assets
(1) Fixed assets
Items Year beginning Increase in the
report year
Decrease in the
report year End of the report
period
CostSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
46
Items Year beginning Increase in the
report year
Decrease in the
report year End of the report
period
Housing and
buildings
250,631,310.58 0.00 12,705,556.02 237,925,754.56
Machines &
equipment
17,000,441.50 6650.49 0.00 17,007,091.99
Motor vehicles
10,340,273.59 63,000.00 218219 10,185,054.59
Electronic
equipment
15,651,023.49 894,945.06 474,816.59 16,071,151.96
Other equipment
33,789,924.36 1,984,749.64 5,444.14 35,769,229.86
Total
327,412,973.52 2,949,345.19 13,404,035.75 316,958,282.96
Accumulative
depreciation
Housing and
buildings
24,312,126.43 3,444,118.61 2,500,838.81 25,255,406.23
Machines &
equipment
7,605,544.84 373,493.68 0.00 7,979,038.52
Motor vehicles
7,044,907.33 390,758.31 207,590.55 7,228,075.09
Electronic
equipment
10,397,511.09 734,797.97 428,355.58 10,703,953.48
Other equipment
15,690,854.07 3,250,836.03 1,873.32 18,939,816.78
Total
65,050,943.76 8,194,004.60 3,138,658.26 70,106,290.10
Provision for
impairment
Housing and
buildings 2,600,000.00 - 2,600,000.00 -
Total
2,600,000.00 - 2,600,000.00 -
Book value
Housing and
buildings
223,719,184.15
- -
212,670,348.33
Machines &
equipment
9,394,896.66
- -
9,028,053.47
Motor vehicles
3,295,366.26
- -
2,956,979.50
Electronic
equipment
5,253,512.40
- -
5,367,198.48
Other equipment
18,099,070.29
- -
16,829,413.08
Total
259,762,029.76
- -
246,851,992.86
(2) Fixed assets leased through operational lease
Items
Cost at the end of the report
period
Remarks
Housing and buildings
198,194,983.97 -
Total
198,194,983.97 -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
47
(3) Fixed asset whose property title certificate has not been issued
Items
Cause of failure to get
the property title
certificate
Estimated time of
getting the property title
certificate
Book value
Premises of Harbin
Office
There existed defect
in ownership
[ Disclosed in 2009
Annual Report ]
unknown
408,132.96
Total
408,132.96
10. Intangible Assets
Items Year beginning
Increase in
the report year
Decrease in
the report year
End of the report
period
I. Total original book
value
15,448,434.36 28,791.55 - 15,477,225.91
Land use right 11,415,804.12 - - 11,415,804.12
Software system 2,068,330.82 - - 2,068,330.82
Trademark use right 1,964,299.42 28,791.55 - 1,993,090.97
II. Total accumulative
amortized amount
1,971,539.21 408,896.88 - 2,380,436.09
Land use right 745,494.36 172,037.16 - 917,531.52
Software system 326,786.24 208,552.08 - 535,338.32
Trademark use right 899,258.61 28,307.64 - 927,566.25
III. Total net book
value
13,476,895.15 - - 13,096,789.82
Land use right 10,670,309.76 - - 10,498,272.60
Software system 1,741,544.58 - - 1,532,992.50
Trademark use right 1,065,040.81 - 1,065,524.72
IV. Total provision for
impairment
- - -
-
Land use right
- - -
-
Software system - - - -
Trademark use right
- - -
-
V. Total Book Value 13,476,895.15 - - 13,096,789.82
Land use right 10,670,309.76 - - 10,498,272.60
Software system 1,741,544.58 - - 1,532,992.50
Trademark use right 1,065,040.81 - - 1,065,524.72
11. Goodwill
Statement of Goodwill
Investee or
matter
Year
beginning
Increase in
the report year
Decrease
in the
End of the
report period
Provision for
impairment atSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
48
forming the
goodwill
report year the end of the
report period
Lishan
Department
Store ①
1,735,756.48
-
-
1,735,756.48
1,735,756.48
Swiss
Company
(Note ②)
6,240,816.14 6,240,816.14
Total
1,735,756.48
6,240,816.14
-
7,976,572.62
1,735,756.48
Note ① HARMONY, one of the Company’s subsidiaries acquired 100% equity in Lishan Department
Store on March 31, 2008 with valuable consideration of RMB 1,200,000.00 and the fair value of the
recognizable net assets of Lishan Department Store on the acquisition day was RMB -535,756.48.
HARMONY presented the margin amounting to RMB 1,735,756.48 in the consolidated financial
statements as “goodwill”. At the end of 2008, HARMONY made impairment test of the goodwill and
charged the loss from impairment of the goodwill lower than the recoverable amount totaling RMB
1,735,756.48 to the gain and loss of the year 2008.
Note ② FIYTA Hong Kong, one of the Company’s subsidiaries acquired 100% equity in the Swiss
Company on January 20, 2010 at price of HK$9,000.000.00. The fair value of the recognizable net
asset FIYTA Hong Kong converted the margin into RMB 6,240,816.14 and stated it as Goodwill in the
consolidated financial statements.
12. Long-term expenses to be apportioned
Items Year beginning Increase in the
report year Transfer out in
the year
Amount
amortized in the
report year
Year end
Cost for
making
special
counters
8,873,395.69 3,528,630.71 - 4,384,846.53 8,017,179.87
Refurbishment
46,095,757.68 18,848,434.35 - 12,502,884.00 52,441,308.03
Total
54,969,153.37 22,377,065.06 - 16,887,730.53 60,458,487.90
13. Deferred income tax assets/liabilities
(1) Deferred Income Tax Asset/Deferred Income Tax Liability Already Recognized
Items Year end Year beginning
Deferred income tax asset:
Provision for impairment of the assets 4,879,061.16 3,713,947.88
Profit unrealized in the internal
inventories 9,850,650.92 8,166,301.11
Deferred income 845,000.00 845,000.00
Sub-total 15,574,712.08 12,725,248.99
Deferred income tax liability
Change of the fair value of the
available-for-sale assets charged to - -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
49
the capital reserve
Long-term equity investment 116,716.30 106,989.94
Sub-total 116,716.30 106,989.94
(2) The provisional discrepancy corresponding to assets or liabilities arising from provisional
discrepancy.
Items Provisional discrepancy amount
Accounts receivable 2,825,319.52
Other receivables 485,224.93
Profit unrealized in the internal inventories 49,030,613.60
Price falling of inventories 15,213,208.52
Long-term equity investment 486,317.92
Deferred income 4,000,000.00
Total 71,554,366.57
14. Statement of Provisions for Impairment of Assets
Decrease in the report period
Items
Year beginning
Amount
provided
Amount carried
back
Amount
written off
Year end
I. Provision for bad debts
48,054,367.59 0.00 0.00 0.00 48,054,367.59
Incl: Accounts receivable
43,873,394.46 0.00 0.00 0.00 43,873,394.46
Other receivables
4,180,973.13 0.00 0.00 0.00
4,180,973.13
II. Provisions for price
falling of inventories 28,481,808.37 412,249.15 0.00 0.00 28,894,057.52
including: commodities in
stock 10,935,472.69 412,249.15 0.00 0.00 11,347,721.84
Raw materials
17,546,335.68 0.00 0.00 0.00 17,546,335.68
III. Provision for
impairment of long-term
equity investments 300,000.00 300,000.00
IV. Total provision for
impairment of fixed assets 2,600,000.00
2,600,000.00 0.00
Including: housing and
buildings (note) 2,600,000.00
2,600,000.00 0.00
V. Provision for impairment
of goodwill
1,735,756.48 1,735,756.48
Total
81,171,932.44 412,249.15 0.00 2,600,000.00 78,984,181.59
Note: Decrease of reserve for impairment of fixed assets by RMB 2,600,000.00 in the report period
was due to that the Company sold Sichuan Huashun Building and the reserve for impairment
previous provided was written off.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
50
15. Short-term Borrowing
Types of Borrowings Year end Year beginning
Secured borrowings 606,540,850.00 555,000,000.00
Total 606,540,850.00 555,000,000.00
Note: Of the short term borrowings at the end of the report period, RMB 505,000,000.00 was
guaranteed by CATIC Group for the Company; and RMB 68,540,850.00 was guaranteed by the Head
Office for its subsidiary.
16. Accounts Payable
(1) Statement of accounts payable
End of the report period Year beginning
Items
Amount Proportion (%) Amount Proportion (%)
Within 1 year 87,777,581.49 99.07% 81,398,928.43 98.52
1 to 2 years 26,742.16 0.03% 488,583.51 0.59
2 to 3 years 590,322.08 0.67% 519,571.54 0.63
Over 3 years 211,339.76 0.24% 211,339.76 0.26
Total 88,605,985.49 100.00% 82,618,423.24 100.00
(2) Of the accounts payable, there was none due to the shareholder holding 5% (with 5% inclusive) of the
Company’s vote-bearing shares or its related party.
17. Advance from customers
(1) Statement of advance from customers
End of the report period Year beginning
Items
Amount Proportion
(%)
Amount Proportion (%)
Within 1 year 3,026,408.61 100.00 2,012,363.70 100.00
1 to 2 years - - -
Total 3,026,408.61 100.00 2,012,363.70 100.00
(2) In the advance from customers, there was none from the shareholder holding 5% (with 5% inclusive)
of the Company’s vote-bearing shares.
18. Wages payable to employeesSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
51
Items Year beginning Increase in the
report year
Decrease in the
report year End of the report
period
Salaries, bonus, allowances,
subsidies 14,155,963.52 72,770,839.20 79,097,817.62 7,828,985.10
Staff’s welfare -4,457.53 2,639,568.33 2,633,538.57 1,572.23
Social security 301,155.32 7,314,530.07 7,614,530.07 1,155.32
Public reserve for housing 631,025.61 631,025.61 -
Trade union fund and staff
education fund 218,322.64 2,190,424.41 1,869,384.32 539,362.73
Compensation given due to
termination of the labor
service
830,000.00 830,000.00
Supplementation to
endowment insurance 836,677.37 836,677.37 -
Others 2,465.40 2,465.40 -
Total 15,503,449.35 86,383,064.99 92,685,438.96 9,201,075.38
19. Taxes payable
Taxes End of the report period Year beginning
Value-added tax 12,222,431.88 956,852.18
Consumption tax 73,504.26
Business tax 507,272.36 471,269.29
Tax for urban development and
maintenance
100,657.05 101,928.20
Business income tax 7,680,706.24 5,724,138.69
Individual income tax 825,299.70 285,390.75
Real estate tax 25,800.00 4,200.00
Land use tax - -
Educational Surcharge 39,155.62 63,846.75
Stamp duty 9,895.43 8,517.62
Dyke protection surcharge 42,337.12 113,129.86
Others 75,555.33 23,063.21
Total 21,529,110.73 7,825,840.81
20. Interest payableSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
52
Creditors End of the report period Year beginning
Bank loan interest payable 860,498.61 860,498.61
Total 860,498.61 860,498.61
21. Dividend payable
Investors
End of the report
period
Year
beginning
Cause of
dividend in
arrears
CATIC Shenzhen
Corporation
584,110.90 584,110.90
Provided but
unpaid
Total 584,110.90 584,110.90
22. Other payables
（1）Statement of other payables
End of the report period Year beginning
Items
Amount
Proportion
(%)
Amount Proportion (%)
Within 1 year
23,080,493.17 71.92 12,189,778.38 51.20
1 to 2 years
1,608,246.10 5.01 2,804,070.89 12.18
2 to 3 years
628,305.05 1.96 1,693,125.74 21.19
Over 3 years
6,776,052.02 21.11 6,338,477.89 15.43
Total
32,093,096.34 100.00 23,025,452.89 100.00
(2) Top Five Creditors of the Other Payables
Creditors
End of the report
period
Description
TITY LION LTD 4,402,500.00 Current accounts
Shenzhen Tencent Computer System Co., Ltd. 2,600,000.00 Rent deposit
Zhu Jin 500,000.00 Rent depositSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
53
Creditors
End of the report
period
Description
Kejin Biology Recognition (Shenzhen) Co.,
Ltd. 454,518.40 Rent deposit
Shenzhen YouLiFeng Self-help Kara OK
Recreation Supermarket Co., Ltd. 432,429.00 Rent deposit
(3) In the other payables at the end of the report period, there was none due to the shareholder holding 5%
(with 5% inclusive) of the Company’s vote-bearing shares.
(4) Accounts payable to the related parties
Items
End of the report
period
Year beginning
CATIC Building 8,227.10 8,227.10
CATIC Nanguang 3,354.90 3,354.90
CATIC Real Estate 85,800.00 85,800.00
Shenzhen CATIC City Property
Development Co., Ltd.
107,280.00
Shenzhen CATIC City
Development Co., Ltd.
107,280.00
Jiangnan Securities 150,000.00 150,000.00
Makway 64,602.00 50,246.00
Shenzhen CATIC Real Estate
Co., Ltd.
424,800.00
424,800.00
Rainbow Supermarket 60,000
Total
1,011,344.00
722,428.00
23. Other current liabilities
(1) Statement of other current liabilities
Items Year end Year beginning
Expenses allotted in advance 1,280,329.28
Total 1,280,329.28SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
54
(2) Statement of withholding expenses
Items
Reason of
carrying down
Year end Year beginning
Market expenses withheld
Provided but
unpaid
1,280,329.28
Total 1,280,329.28
24. Long-term Borrowings
(1) Classification of Long-term Borrowings
Items Year end Year beginning
Secured borrowings 90,000,000.00 90,000,000.00
Total
90,000,000.00
90,000,000.00
Note: For the long term loan at the end of the report period, Shenzhen CATIC Group offered
guarantee to the Company.
(2) Statement of Long Term Borrowings at the End of the Report Period
End of the Report Period Year beginning
Loan supplier
Date of
Start
Date of End
Interest
rate (%)
Currency
Amount in
foreign
currency
Amount in function
currency
Amount in
foreign
currency
Amount in function
currency
Development
Bank of China,
Shenzhen
Branch
2008-2-19 2011-2-18 7.56% RMB - - - -
Sales
Department of
Ningbo Bank
Shenzhen
Branch
2009-7-15 2012-6-28 4.86% RMB - 20,000,000.00 - 20,000,000.00
Sales
Department of
Ningbo Bank
Shenzhen
Branch
2009-9-3 2012-6-28 4.86% RMB - 20,000,000.00 - 20,000,000.00
Guangdong
Development
Bank
Shenzhen
Donghai
Sub-branch
2009-12-1 2012-12-1 4.86% RMB - 50,000,000.00 - 50,000,000.00SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
55
Total
90,000,000.00 90,000,000.00
25. Long term accounts payable
Unit Term
Ending
balance
Interest
rate %
Accrued
interest
Opening
Balance
Condition
for loan
Beijing
Harmony Co.
Long
term 3,500,000.00 5.31 92,925.00
3,500,000.00
Loan on
credit
Total 3,500,000.00 92,925.00
3,500,000.00
26. Other non-current liabilities
Items Description End of the report
period Year beginning
Deferred
income
Fund financed for construction of
enterprise technology center (Note ①)
2,400,000.00 2,400,000.00
Deferred
income
High precision and multi-function
machinery watch movement (Note ②)
2,200,000.00 2,200,000.00
Deferred
income
Synchronous budget for R & D and
standardization (Note ③)
50,000.00 50,000.00
Deferred
income
Fund for supporting implementation of
standardization strategy (Note③)
1,050,000.00 1,050,000.00
Deferred
income
Budget for the provincial and ministrial
IUR cooperation commissioner
project(Note④ ) 100,00.00
200,000.00
Deferred
income
Specialized financial support to
enterprises from Nanshan District against
the financial crisis (Note ⑤) 500,000.00
500,000.00
Total
6,300,000.00 6,400,000.00
Note ①: According to Document SHEN JING MAO FA [2002] No. 93, the Company’s technology
center has been expertised as an Enterprise Technology Center of Shenzhen and therefore it has
obtained a supporting fund amounting to RMB 3,000,000 for construction of the enterprise technology
center. The fund is used for purchasing equipment. The project was completed at the beginning of the
year and the amortization amount in the report year is RMB 600,000.
Note ②: It is the subsidy for high-precision multi-function mechanical watch unit project obtained
according to Document of Guangdong Province YUE CAI JIAO [2008] No. 2.
Note ③: It is the subsidy for implementation of the standardization strategy according to the Outline
for Implementation of Standardization Strategy in Shenzhen (2006 to 2010) Document of Shenzhen
City (SHEN FU [2007] No. 114).
Note ④: It is the specialized budget for the provincial and ministrial IUR cooperation commissioner
project according to Document YUE CAI JIAO [2009] No. 138.
Note ⑤: Where RMB 300,000 is the financial support fund obtained from the Company used for
development and application of the project of digitalized R & D sytem in the watch industry according
to the project contract of Specialized Financial Support to Enterprises from Nanshan District against
the Financial Crisis with Contract No. NAN KE ZHUAN 2009144 concluded with Nanshan District
Bureau of Science and Technology, Shenzhen. Where RMB 200,000 is the subsidy of intellectual
property obtained by the Company according to the Contract of 2009 Medium-sized and Small
Enterprise Supporting Program of Nanshan District with the Specialized Fund for Supporting
Enterprises against Financial Crisis – Invention Patent Technology Implementation Projects withSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
56
Contract No. NAN ZHI FA 2009-2-5 concluded with Nanshan District Bureau of Science and
Technology, Shenzhen.
27. Capital stock
Year beginning Increase/ Decrease (+ / -) of the report year End of the report
period
Items
Amount
Proportion
(%)
New
issuing
Bonus
shares
Shares
converted
from
reserve
Others Sub-tota
l Amount Proporti
on (%)
I. Restricted Shares
1. Shares held by the
state
- - - - - - -
2. State owned corporate
shares 111,415,501 44.69 - - - - -
111,415,50
1
44.6
9
3. Other domestic shares 35,524 0.01 - - - - - 35,524
0.0
1
Including: Domestic
corporate shares - - - - - - -
Domestic natural person
shares 35,524 0.01 - - - - - 35,524
0.0
1
4. Foreign shares - - - - - - - -
Including: Foreign
corporate shares - - - - - - - -
Overseas natural person
res - - - - - - - -
Total restricted shares 111,451,025 44.70 - - - - -
111,451,02
5 44.70
II. Unrestricted shares
1. RMB common shares 79,546,974 31.91 - - - - - 79,546,974 31.91
2. B shares 58,320,000 23.39 - - - - - 58,320,000 23.39
3. Foreign invested
shares listed out of
Mainland China
- - - - - - - -
4. Others - - - - - - - -
Total shares without sales
restriction 137,866,974 55.30 - - - - -
137,866,97
4 55.30
III. Total Shares 249,317,999 100.00 - - - - -
249,317,99
9 100.00
28. Capital reserve
Items Year beginning
Increase in the
report year
Decrease in the
report year
Year end
Capital stock
premium
177,354,784.00 - - 177,354,784.00
Other capital
public reserve
14,492,448.65 - - 14,492,448.65
Total 191,847,232.65 - - 191,847,232.65
29. Surplus reserve
Items Year beginning Increase in the
report year
Decrease in the
report year Year endSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
57
Items Year beginning Increase in the
report year
Decrease in the
report year Year end
Statutory surplus
reserve 53,961,194.88 - - 53,961,194.88
Discretionary
surplus reserve 61,984,894.00 - - 61,984,894.00
Total 115,946,088.88 - - 115,946,088.88
30. Retained Earnings
(1) Change of the retained earnings
Items Amount Provision or distribution
proportions
Before adjustment: Retained earnings at the
end of the previous period 158,577,089.84
Adjustment: Total of the retained earnings at
year beginning (amount adjusted up +, amount
adjusted down -)
-
Retained earnings at year beginning after
adjustment 158,577,089.84
Plus: Net profit attributable to the parent
company’s owner in the report year 42,399,471.66
Less: Allotting statutory surplus reserve
Dividends of common shares payable
Retained earnings at year end 200,976,561.50
31. Minority shareholders’ equity
Subsidiaries Year end Year beginning
Harmony 18,157,357.47 17,783,748.61
World Watches Center 1,400,000.00 1,400,000.00
FIYTA Hong Kong Limited 876,809.12 1,227,309.69
Total 20,434,166.59 20,411,058.30
32. Operation Income and Costs
(1) Operation income and costs
Items Amount in the report period
Amount of the same period of
the previous year
Income from principal business 804,875,634.44 568,990,789.56
Income from other businesses 5,936,276.38 3,702,900.32
Total operation income 810,811,910.82 572,693,689.88
Principal business cost 563,084,063.68 381,222,611.23SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
58
Items Amount in the report period
Amount of the same period of
the previous year
Other business cost 2,222,992.97 1,723,056.21
Total operation costs 565,307,056.65 382,945,667.44
(2) Principal Businesses Based on Products
Amount in the report period
Categories
Income from
principal business
Principal business
cost
Principal business
profit
Sales of famous brand watches
671,041,497.30
524,319,858.56 146,721,638.74
Sales of FIYTA watches
117,238,239.05
45,136,722.03 72,101,517.02
Property lease 33,123,632.35 10,155,217.35 22,968,415.00
Less: Internal related
transactions
16,527,734.26 16,527,734.26 -
Total
804,875,634.44
- 563,084,063.68 241,791,570.76
Amount of the same period of the previous year
Categories
Income from
principal business
Principal business
cost
Principal business
profit
Sales of famous brand watches 449,383,751.01 346,548,289.99 102,835,461.02
Sales of FIYTA watches 93,686,737.32 36,912,574.50 56,774,162.82
Property lease 30,723,302.93 8,554,293.37 22,169,009.56
Hotel 6,481,012.78 491,467.85 5,989,544.93
Less: Internal related transactions 11,284,014.48 11,284,014.48
Total
568,990,789.56
- 381,222,611.23 187,768,178.33
(4) Principal Businesses Based on Regions
Amount in the report period Amount of the same period of the previous
year
Regions
Income from
principal business Principal business
cost
Income from
principal business Principal
business cost
Northeast China 81,938,483.51 61,640,612.11 55,591,922.54 40,125,857.35SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
59
Amount in the report period Amount of the same period of the previous
year
Regions
Income from
principal business Principal business
cost
Income from
principal business Principal
business cost
North China 148,193,414.76 114,042,752.47 104,338,064.72 78,503,598.08
Northwest China 196,004,881.55 145,657,992.78 128,112,102.99 88,273,844.18
Southwest China 48,445,300.60 32,986,195.55 31,302,715.67 20,743,123.80
East China 88,846,654.19 64,290,037.42 64,540,849.18 45,110,864.82
South China 257,974,634.08 160,994,207.61 196,389,148.94 119,749,337.47
Total
821,403,368.70 579,611,797.94
580,274,804.04 392,506,625.71
Less: Amount
offset internally 16,527,734.26 16,527,734.26 11,284,014.48 11,284,014.48
Grant Total 804,875,634.44 563,084,063.68 568,990,789.56 381,222,611.23
(5) In the report period, the turnover from the top five customers was RMB 191,641,050.71, taking
23.81% of the Company’s total turnover.
33. Business Taxes and Surcharges
Items Amount in the report period Amount of the same period of the
previous year
Business tax
1,860,956.80 1,982,762.40
Consumption tax
26,688.89 19,553.76
Tax for urban development
and maintenance
367,191.29 309,968.60
Educational Surcharge
589,466.09 416,159.90
Others
235,477.52 162,803.21
Total
3,079,780.59 2,891,247.87
34. Financial expenses
Items Amount in the report period
Amount of the same period of the
previous year
Interest payment
16,902,537.11 18,063,885.15
Less: interest income 325,877.63 467,949.61
Plus: exchange losses 20,553.94
Less: Exchange gain 353,333.91 15,433.43
Financial service charge 5,245,738.42 3,176,330.56
Plus: Collateral charge for loans
Other payments -9,074.93 0.00SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
60
Items Amount in the report period
Amount of the same period of the
previous year
Total 21,459,989.06 20,777,386.61
35. Loss from impairment of assets
Items Amount in the report period Amount of the same period of the
previous year
Loss from bad debt
9,600.00
Loss from price falling of
inventories
412,249.15
Loss from impairment of goodwill
Total
412,249.15 9,600.00
36. Non-operating income
(1) Statement of non-operating income
Items Amount in the report period Amount of the same period of the
previous year
Income from disposal of
non-current assets 6,938,441.32
Including: Income from disposal
of fixed assets 6,938,441.32
Penalty income
273,756.40
Governmental Subsidies
720,000.00 100,000.00
Indemnity income
84,428.66 226,895.30
Others
92,685.50 1,561,234.31
Total
7,835,555.48 2,161,886.01
(2) Statement of Government Subsidies
Items Amount in the report period
Amount of the same period of the
previous yearSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
61
Amount
Including: the
amount charged
to the current
gain and loss
Amount
Including: the
amount charged
to the current
gain and loss
R & D expense - - 100,000.00 100,000.00
Funds for the project in
technology development program 150,000.00 150,000.00 - -
Special fund for development of
cultural industry 570,000.00 570,000.00 - -
Total 720,000.00 720,000.00 100,000.00 100,000.00
37. Non-operating expenses
Items Amount in the report period Amount of the same period of the
previous year
Loss from disposal of
non-current assets 47,206.42
Penalty payment
400.00
Donation payment
500,000.00
Others
81,767.54 29,237.57
Total
629,373.96 29,237.57
38. Income tax expense
Items Amount in the report period Amount of the same period of the
previous year
The income tax expense in the
report period calculated
according to the tax law and the
relevant provisions
12,370,589.99 6,255,492.28
Deferred income tax expense
-2,839,736.72 658,576.90
Total income tax expense
9,530,853.27 6,914,069.18
39. Basic earning per share and diluted earning per share
Report Year Previous Year
Profit in the report period
Basic earning
per share
(RMB/share)
Diluted earning
per share
(RMB/share)
Basic earning
per share
(RMB/share)
Diluted earning
per share
(RMB/share)
Net profit attributable to the
Company’s shareholders of
common shares
0.170 0.170 0.109 0.109SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
62
Net profit attributable to the
Company’s shareholders of
common shares after
deduction of the
non-recurring gain and loss
0.148 0.148 0.102 0.102
Note: The earnings per share is calculated as follows:
(I) Basic earnings per share =P0÷S
S= S0＋S1＋Si×Mi÷M0–- Sj×Mj÷M0-Sk
Where: P0 is the net profit attributable to the Company’s shareholders of common shares or the net
profit less the non-recurring gain and loss attributable to the shareholders of common shares. S is the
weighted average of ordinary shares issued externally; S0 is the total number of shares at the
beginning of the report period; S1 is the number of shares increased due to conversion of public
reserve into share capital or dividend distribution in the report period; Si is the number of newly
added shares from issuing new shares or shares converted from bonds in the report period; Sj is the
number of shares decreased due to repurchase in the report period; Sk is the number of shares
shrunk in the report period; M0 is the number of months in a report period; Mi is the accumulative
monthly amount from the next month of increasing shares to the end of the report period Mj is the
accumulative monthly amount from the next month of decreasing shares to the end of the report
period (2) Diluted earnings per share =P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+ weighted average
of the increased common shares, including warrant, share option, convertible bonds, etc.) where, P1
is the net profit attributable to the Company’s shareholders of common shares or the net profit
attributable to the Company’s shareholders of common shares less the non-recurring gain and loss
with consideration of the influences from the dilution based potential common shares and adjustment
according to the Enterprise Accounting Standards and the concerned regulations. In calculating the
diluted earnings per share, the Company should take into consideration the influence from all the
dilutive potential common shares upon P1 and weighted average and charge them in order of the
dilution levels from big to small to the diluted earnings per share until the diluted earnings per share to
the minimum.
40. Other comprehensive income
Items Amount in report year
Amount of the same
period of the previous
year
1. Amount of the profit (loss) arising from the
available-for-sale financial assets - 4,191,000.00
Less: Influence from the income tax arising from the
available-for-sale financial assets - -838,200.00
Net amount previously charged to the other
comprehensive income but transferred into the gain
and loss in the report period
- -
Sub-total - 3,352,800.00
2. Conversion margin of the financial statements in
foreign currency -18,896.52 -2,798.67
Less: Net amount from disposal of foreign business
and transferred to the current gain and loss - -
Sub-total -18,896.52 -2,798.67
Total -18,896.52 3,350,001.33
41. Notes to the Items on the Cash Flow StatementSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
63
(1) Other major items of cash received in connection with operation activities
Items Amount
Cash from the brand
4,024,872.31
Deposit in security 931,555.60
Government subsidy 720,000.00
Interest income 325,877.63
Total 6,002,305.54
(2) Other major items of cash paid in connection with operation activities
Items Amount
Rent 17,491,701.61
Advertisement 14,400,279.45
Market promotion 7,956,002.78
Payment to supermarkets 7,406,081.70
Research and development costs 6,024,669.14
Office expenses 3,626,309.50
Business travel 3,563,870.36
Water and electricity 3,050,636.97
Packaging 2,327,280.07
Transportation 2,248,782.35
Entertainment 1,910,082.87
Meeting expenses 1,209,157.20
Trade union budget 1,175,621.34
Insurance premium 807,980.90
Post and communications 582,882.31
Consultation costs 521,677.35
Donation payment 500,000.00
Exhibition fee 475,263.78
Security costs 198,921.80
Total 75,477,201.48
(4) Other fund raising related cash payments
Items Amount
Commission to securities brokers
1,000,000.00
Total
1,000,000.00
42. Additional Information to the Cash Flow StatementSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
64
(1) Information on adjustment of net profit into cash flow of operating activities
Items
Amount in report year
Amount of the
same period of the
previous year
1. Net cash flows arising from adjustment of net profit into
operating activities
Net profit 42,426,523.46 27,606,437.91
Plus: Provision for impairment of assets 412,249.15 -
Depreciation of fixed assets 11,291,840.71 11,178,292.64
Amortization of intangible assets 408,896.88 468,408.36
Long-term expenses to be apportioned 13,641,819.86 10,130,182.49
Loss from disposal of fixed assets, intangible assets and
other long term assets -6,891,234.90 -
Losses from rejection of fixed assets - -
Loss from change in the fair value - -
Financial expenses 16,902,537.11 18,063,885.15
Investment loss - -179,622.59
Decrease of deferred income tax -2,849,463.09 658,576.90
Increase of deferred income tax liability 9,726.36 846,212.17
Decrease of inventories -69,377,130.81 956,288.71
Decrease (less: increase) of operative items receivable -31,424,609.33 1,792,265.70
Increase (less: decrease) of operative items payable 26,470,146.56 8,809,810.05
Others - -
Net cash flow generated from operating activities 1,021,301.96 80,330,737.49
2. Investment and fund-raising activities with no cash
income and expenses involved
-
-
Capital converted from liabilities - -
Convertible company bonds due within a year - -
Fixed assets rented through financing - -
3. Net increase of cash and cash equivalents: -
Ending cash balance 108,507,278.08 103,063,846.18
Less: Opening cash balance 95,701,580.19 108,233,795.73SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
65
Items
Amount in report year
Amount of the
same period of the
previous year
Plus: Ending balance of cash equivalent -
Less: Opening balance of cash equivalent -
Net increase in cash and cash equivalents 12,805,697.89 -5,169,949.55
(2) Composition of cash and cash equivalents
Items
End of the report
period
Year beginning
I. Cash 108,361,661.27 95,701,580.19
Incl: Cash in hand 409,442.03 308,978.69
Bank deposit for payment at any time 107,939,321.32 95,379,703.58
Other monetary fund used for payment at any time 12,897.92 12,897.92
II. Cash equivalents -
Including: Bond investment due within three months -
III. Ending balance of cash and cash equivalents 108,361,661.27 95,701,580.19
Including: cash and cash equivalent restricted for application
by the parent company or subsidiaries of the Company - -
VIII. Related Parties and Related Transactions
1. About the Company’s Parent Company
Parent
Company
Connectivity
relations
Enterprise
type
Registered
place
Legal
representative:
Business type
Shenzhen
CATIC
Group
Parent
company
Joint-stock
company
with limited
liability
Shenzhen
Wu
Guangquan
Investing to set up
entities, domestic trade,
materials supply and
sales
(continued)
Parent
Company
Registered
capital
Proportion
of the
Company’s
shares
held by the
Proportion
of the
Company’s
vote-bearing
shares held
The Company’s
eventual
controller
Organization
CodeSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
66
parent
company
(%)
by the
parent
company
CATIC
Shenzhen
Group
678,909,090.00 44.69 44.69
China National
Aviation Industry
Group Co.
279351229
Note: The equity proportion in Shenzhen CATIC Group held by CATIC Shenzhen Corporation is
58.77%. CATIC Shenzhen Corporation is a solely fund subsidiary of AVIC International Holding
Corporation (AVIC International). AVIATION INDUSTRY CORPORATION OF CHINA directly holds
67.38% equity in AVIC International. Therefore, the Company’s eventual controller is AVIATION
INDUSTRY CORPORATION OF CHINA.
2. Subsidiaries
About the Company’s subsidiaries, refer to Note VI.7.
3. Associates
Investee
Enterpri
se type
Regis
tered
place
Legal
repre
sentat
ive:
Activities
Registered
capital
Proporti
on of
shares
held by
the
Compan
y (%)
Proportion of
the
Company’s
voting power
in the
investee (%)
Research
Institute of
Northwestern
Polytechnical
University
Institution
Shen
zhen
Zheng
Yongan
Education,
training,
scientific
research
3,000,000 45% 50%
4. The Company’s other related parties
Entity Names Relationship with the
Company Organization Code
Shenzhen CATIC Property Management
Co., Ltd. (CATIC Property)
under the same
control 19219400-5
Shenzhen CATIC Building Equipment Co.,
Ltd. (CATIC Building)
under the same
control 743201073
Rainbow Supermarket Co., Ltd. (Rainbow
Supermarket)
under the same
control 100377
SHENHANG Electronics Associate of a
controlled subsidiary -
Beijing HARMONY Associate of a
controlled subsidiary 10125553-9
Shenzhen CATIC Real Estate Development
Co., Ltd. (CATIC Real Estate)
under the same
control 279340845
Shenzhen Makway Cable TV Equipment
Co., Ltd. (Makway)
under the same
control 618810902
Jiangnan Securities Co., Ltd. (Jiangnan
Securities)
under the same
control 741986153SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
67
Entity Names Relationship with the
Company Organization Code
CATIC Hotel Co. under the same
control 76197033-5
Shenzhen CATIC Nanguang Elevator Co.,
Ltd.
(CATIC Nanguang)
under the same
control 192350741
Shenzhen CATIC Property Development
Co., Ltd.
under the same
control 676667833
Shenzhen CATIC City Development Co.,
Ltd.
under the same
control 192194005
CATIC Property Development Co., Ltd. under the same
control 661015568
CATIC Guanlan Real Estate Development
Co., Ltd.
under the same
control 763495945
CATIC Changtai Investment Development
Co., Ltd.
under the same
control 732047808
SHENNAN Circuit under the same
control 192195761
5. Related transactions
(1) Purchase and Sales of Goods and Supply and Acceptance of Labor Services
Amount in the report period
Amount in the same period of the
previous year
Related parties
Amount
Proportion of
the amount
in the
Company’s
total
transactions
of the same
type
Amount
Proportion of
the amount in
the Company’s
total
transactions of
the same type
A. Engineering
B. Property management
CATIC Property 868,158.64 100.00 818,474.99 100.00
C. Lease
CATIC Property
D. Payment for the franchised
counters in supermarkets
Rainbow Supermarket 6,264,615.83 3.71 3,139,091.66 3.67
E. Payment for contracting fee
SHENHANG ElectronicsSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
68
Amount in the report period
Amount in the same period of the
previous year
Related parties
Amount
Proportion of
the amount
in the
Company’s
total
transactions
of the same
type
Amount
Proportion of
the amount in
the Company’s
total
transactions of
the same type
F. Payment for hotel
management fee
CATIC Hotel Co. 129,620.29 100.00
Total 7,132,774.47 4,087,186.94
(2) Sales of Goods
Amount in the report period
Amount in the same period of the
previous year
Related parties
Amount
Proportion of
the amount
in the
Company’s
total
transactions
of the same
type (%)
Amount
Proportion of
the amount in
the Company’s
total
transactions of
the same type
(%)
AVIC International
772,118.80
0.10 820,338.03 0.88
Aviation Industry Corporation
119,217.95
0.02
SHENNAN Circuit
173,411.35
0.02
Total
1064748.10
0.14
820,338.03 0.88
(3) Supply of Lease
Amount in the report period Amount in the same period of the
previous year
Related parties
Amount
Proportion of
the amount in
the
Company’s
total
transactions of
the same type
(%)
Amount
Proportion of
the amount in
the Company’s
total
transactions of
the same type
(%)SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
69
Shenzhen CATIC Real Estate
Development Co., Ltd. 36,905.00 0.11 946,520.00 3.08
Shenzhen Makway Cable TV
Equipment Co., Ltd. 186,628.00 0.56 150,738.00 0.49
Shenzhen CATIC Property
Management Co., Ltd. 1,180,080.00 3.56 1,180,080.00 3.84
Jiangnan Securities Co., Ltd.
407,682.00 1.23 389,790.00 1.27
Shenzhen CATIC Real Estate Co.,
Ltd. 1,274,400.00 3.85 213,210.00 0.69
Shenzhen CATIC Property
Development Co., Ltd. 107,280.00 0.32
Shenzhen CATIC City Development
Co., Ltd. 107,280.00 0.32
CATIC Property Development Co.,
Ltd. 43,920.00 0.13
CATIC Guanlan Real Estate
Development Co., Ltd. 43,920.00 0.13
CATIC Changtai Investment
Development Co., Ltd. 51,301.00 0.15
Shenzhen CATIC Hotel Management
Co., Ltd. 1,750,000.00 5.28
Rainbow Supermarket Co., Ltd.
60,000.00 0.18
Total
5,249,396.00 15.85 2,880,338.00 9.38
(4) Other Significant Related Transactions
1. Guarantee for loans
End of the report period Year beginning
Related parties
Amount
Proportion of
the amount in
the Company’s
total
transactions of
the same type
(%)
Amount
Proportion of the
amount in the
Company’s total
transactions of
the same type
(%)
Guarantee offered by the
subsidiaries for the
Company
HARMONY 60,000,000.00 87.54 60,000,000.00 100.00
FIYTA 8,540,850.00 12.46
Sub-total 68,540,850.00 100.00 60,000,000.00 100.00
Acceptance of Guarantee
Shenzhen CATIC Group 860 ,000,000.00 100.00 880 ,000,000.00 100.00SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
70
Total 860 ,000,000.00 100.00 880 ,000,000.00 100.00
2. Lending and Borrowing with Related Parties
Related Parties Amount involved Note
Borrowing
Beijing HARMONY 7 ,000,000.00
The borrowing interest rate under the agreement is
5.31%
3. Balance of Receivables from and Payables to the Related Parties
Projects Related Parties
End of the report
period
Year beginning
Accounts receivable
Rainbow Supermarket 2,955,319.09 1,775,960.32
Aviation Industry
Corporation of China
67,125.00 292,131.00
CATIC International
Holdings
337,953.00 386,584.00
Shennan Circuit 180,361.18 -
Total 3,540,758.27 2,454,675.32
Accounts receivable -
Provision for doubtful
debts
Rainbow Supermarket 86,166.74 86,166.74
Total 86,166.74
Other receivables
Rainbow Supermarket 104,641.60 94,181.60
CATIC Property 196,680.00 -
Total 301,321.60 94,181.60
Total
-
Other payables
CATIC Building Co. 8,227.10 8,227.10
CATIC Nanguang 3,354.90 3,354.90
CATIC Real Estate 85,800.00 85,800.00
Jiangnan Securities 150,000.00 150,000.00
Rainbow Supermarket -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
71
60,000.00
Makway 64,602.00 50,246.00
Shenzhen CATIC Real
Estate Co., Ltd. 424,800.00 424,800.00
Shenzhen CATIC City
Property Development
Co., Ltd. 107,280.00
Shenzhen CATIC City
Development Co., Ltd. 107,280.00
Total 1,011,344.00 722,428.00
Dividends payable
CATIC Shenzhen
Corporation 584,110.90 584,110.90
Total 584,110.90 584,110.90
IX. Contingent events
In the report period, there was no contingent event necessary to be described.
X. Commitments
The minimum rental payment which shall be paid by the Company for the irrevocable operation lease
in the future years.
Remaining time of the lease term Minimum rental payment
Within 1 year (with 1 year inclusive) 1,766.29
Over 1 year but below 2 years (with 2 years
inclusive)
3,178.05
Over 2 years but below 3 years (with 3 years
inclusive)
2,737.45
Over 3 years 6,608.79
Total 14,290.58
Note: Commitment for irrevocable operation lease is mainly the rental payable by the Company to the
supermarket and franchised shops.
XII. Other Important Matters
1. Establishment of Emile Chouriet (Shenzhen) Co., Ltd.
In the report period, FIYTA Hong Kong Limited, one of the Company’s subsidiaries, invested and
established Emile Chouriet (Shenzhen) Co., Ltd. The amount of investment was HK$ 5 million, the
shareholding proportion was 100% and the date of establishment was April 26, 2010.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
72
2. Acquisition of the Swiss Company
The Company reviewed and approved the Proposal on Acquisition the of Equity in Montres Chouriet
SA at the 6th Meeting of the Sixth Board of Directors held on October 26, 2009. According to the
authorization of the Board of Directors, the Company invested RMB 9 milion and acquired 100%
equity in Montres Chouriet SA (the Swiss Company) and completed equity acquisition on January 20,
2010.
3. Sales of Sichuan Huashun Building
The Company reviewed and approved the Proposal for Authorizing the Company to Sell the Property
of Chengdu Huashun Building at the 6th meeting of the Sixth Board of Directors held on October 26,
2010. The Company sold the property by means of auction in public with hammer price of RMB
15.05 million. After deduction of the depreciation already provided, reserve for impairment and the
concerned taxes and commission, the net income was RMB 6.92 million.
XIII. Notes to the principal items on the parent company’s financial statements
1. Accounts receivable
(1) Categories of accounts receivable
End of the report period
Items
Book Balance Proportion
(%)
Provision for bad
debts
Proportion
(%)
Account receivable with
significant single amount
21,268,805.24 28.66 11,574,824.75 27.13
Other receivables with
insignificant amount but bigger
risk of the combination after
combination based on the credit
risk characteristics
31,225,556.22 42.07 29,451,322.89 69.03
Other receivables with
insignificant single amount
21,725,620.18 29.27 1,639,353.46 3.84
Total
74,219,981.64
100.00 42,665,501.10 100.00
(continued)
Year beginning
Items
Book Balance Proportion
(%)
Provision for bad
debts
Proportion
(%)
Account receivable with
significant single amount 12,161,331.00 15.58 11,574,824.75 27.13
Other receivables with
insignificant amount but bigger
risk of the combination after
combination based on the credit
risk characteristics
29,502,619.39 37.80 29,451,322.89 69.03
Other receivables with
insignificant single amount
36,390,140.11 46.62 1,639,353.46 3.84
Total
78,054,090.50 100.00 42,665,501.10 100.00
(2) Presented based on age of accounts receivableSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
73
Year end Year beginning
Book Balance Book Balance
Age
Amount
Proport
ion (%)
Provision for bad
debts Amount
Proporti
on (%)
Provision for
bad debts
Within 1
year
24,258,195.98 32.68
426,810.63
28,917,566.78
37.05
426,810.63
1 to 2
years
843,400.17 1.14
8,141.13
62,163.92
0.08
8,141.13
2 to 3
years
1,208,247.42 1.63
625,331.13
1,251,941.45
1.60
625,331.13
Over 3
years
47,910,138.07 64.55
41,605,218.21
47,822,418.35
61.27
41,605,218.21
Total
74,219,981.64 100.00
42,665,501.10
78,054,090.50
100.00
42,665,501.10
(3) Top Five Debtors of the Accounts Receivable
Company names
Relation
ship
Amount Years
Proportion in the
total of the
accounts
receivable(%)
Beijing Urban/Rural Trade
Center Co., Ltd.
Non-Related
Party 2,033,710.15
Over 3
years 2.74
Qingdao Handry
Timepieces, Glasses and
Jewelry Co.
Non-Related
Party 1,298,215.01
Over 3
years 2.74
Outlet Center
Non-Related
Party 1,173,012.51 Over 3 years 1.75
Timepieces and Sewing
Machine Wholesale Station
of Yingkou General
Merchandise Co.
Non-Related
Party 982,604.03 Over 3 years 1.58
Baotou Department Store
Co., Ltd., Inner Mongolia
Non-Related
Party 949,069.27 Over 3 years 1.32
Total 6,436,610.97 8.67
(4) Accounts due from related parties
Company names Relationship Amount
Proportion in the
total of the
accounts
receivable(%)
Rainbow Supermarket
Controlled by the actual
controller
403,046.56
0.54SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
74
Aviation Industry Corporation
of China
Eventual controller 67,125.00
0.09
AVIC International
Actual controller’s parent
company 337,953.00
0.46
Harmony Subsidiary 10,448,931.53 14.08
FIYTA Hong Kong Subsidiary 801,637.98 1.08
Total 11,257,056.07 16.25
2. Other receivables
(1) Other receivables presented based on categories
End of the report period
Items Book Balance Provision for bad debts
Amount Proportio
n (%) Amount
Proportion
(%)
Other receivables with
significant individual amount
346,225,659.01
96.76 2,247,211.59 59.23
Other receivables with
insignificant amount but bigger
risk of the combination after
combination based on the
credit risk characteristics
1,500,064.11
0.42 1,477,064.11 38.93
Other receivables with
insignificant amount
10,088,203.50
2.82 69,539.07 1.84
Total
357,813,926.62
100.00 3,793,814.77 100.00
(continued)
Year beginning
Items Book Balance Provision for bad debts
Amount
Proportio
n (%) Amount Proportion (%)
Other receivables with
significant individual amount
309,418,984.75 97.98 2,247,211.59 59.23
Other receivables with
insignificant amount but
bigger risk of the
combination after
combination based on the
credit risk characteristics
1,477,064.11 0.47 1,477,064.11 38.93
Other receivables with
insignificant amount
4,896,088.11 1.55 69,539.07 1.84
Total
315,792,136.97 100.00 3,793,814.77 100.00
(2) Presented based on age of accounts receivable
Age Year end Year beginningSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
75
Book Balance Book Balance
Amount
Proportio
n (%)
Provision for
bad debts Amount
Proport
ion (%)
Provision for
bad debts
Within 1
year
351,436,635.79
98.22
20,219.14
251,966,060.78
79.79
20,219.14
1 to 2
years
1,487,425.25
0.42
41,647.43
59,149,358.82
18.73
41,647.43
2 to 3
years
605,996.09
0.17
4,200.00
386,601.20
0.12
4,200.00
Over 3
years
4,283,869.49
1.20
3,727,748.20
4,290,116.17
1.36
3,727,748.20
Total
357,813,926.62
100.00
3,793,814.77
315,792,136.97
100.00
3,793,814.77
(3) In the ending balance of other receivables, there was none owed by the shareholder holding
over 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(4) Top Five Debtors of the Other Receivables
Company names
Relations
hip
Amount Years
Proportion in the
total of the
accounts
receivable(%)
Harmony 24,204,045.56 Within 1 year
Subsidiary
305,736,550.66 1 to 2 years
92.21
Shenzhen New Longtai Industrial
Co. Ltd.
Non-Related
Party
1,573,875.89 Over 3 years
0.44
Zhuangtu Commodities Trading
Center
Non-Related
Party
641,807.20 Over 3 years
0.18
Shenzhen Watch & Clock
Association
Non-Related
Party
630,550.00 Within 1 year
0.18
Shenzhen Heping Industrial Co.
Ltd.
Non-Related
Party
400,000.00 3 年以上
0.11
Total 333,186,829.31 100.00
(8) Accounts due from related parties
Company names
Relationship
Amount
Proportion in the
total of the other
receivables (%)
Harmony Subsidiary 329,940,596.22
92.21
Henglianda
Subsidiary
35,917.59
0.01
Xiangji Company
Subsidiary
132,429.96
0.04SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
76
FIYTA Hong Kong
Subsidiary
95,165.00
0.03
Rainbow Supermarket
Controlled by
the actual
controller
104,641.60
0.03
Total
330,308,750.37
92.31
3. Long-term equity investment
Investees Accounting
method Initial investment
cost Year beginning Increase/
Decrease End of the report
period
Harmony Cost method 298,500,000.00 298,500,000.00 298,500,000.00
Harbin Co. Cost method 125,000.00 125,000.00 125,000.00
World Watches Center Cost method 1,400,000.00 1,400,000.00 1,400,000.00
Manufacture Co. Cost method 9,000,000.00 9,000,000.00 9,000,000.00
FIYTA Hong Kong Limited Cost method 18,483,000.00 18,483,000.00 18,483,000.00
Xi’an Chengheng Cost method 10,000,000.00 10,000,000.00 10,000,000.00
Shenzhen Research
Institute of Northwest
China Polytechnic
University
Equity method
1,500,000.00 1,836,317.92 1,836,317.92
Xi’an Tangcheng Jo
Stock Co., Ltd. Cost method 85,000.00 85,000.00 85,000.00
Shenzhen CATIC Cultu
Transmit Co., Ltd. Cost method 300,000.00 -- --
FIYTA Science &
Technology Cost method 10,000,000.00 10,000,000.00 10,000,000.00
Trade Co. Cost method 5,000,000.00 5,000,000.00 5,000,000.00
Total 354,429,317.92 354,429,317.92
(continued)
Investees
Holding
proportion
of the
shares in
the
investees
(%)
Holding
proportion of
the
vote-bearing
shares in the
investees
Note to
inconsistence of
holding proportion
of the shares in
the investees with
voting power
Provisio
n for
impairm
ent
Provision
for
impairme
nt in the
report
period
Cash
dividend in
the report
period
Harmony 99.50 99.50 - - -
Harbin Co. 100.00 100.00 - - - -
World
Watches
Center
50.00 100.00
Another
shareholder
enjoys fixed
income but is not
involved in the
operation - - -
Manufacture
Co.
99.995 99.995 - -
13,758,953.
80
FIYTA Hong 100.00 100.00 - - - -SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
77
Investees
Holding
proportion
of the
shares in
the
investees
(%)
Holding
proportion of
the
vote-bearing
shares in the
investees
Note to
inconsistence of
holding proportion
of the shares in
the investees with
voting power
Provisio
n for
impairm
ent
Provision
for
impairme
nt in the
report
period
Cash
dividend in
the report
period
Kong
Limited
Xi’an
Chengheng
100.00 100.00 - - - -
Shenzhen
Research
Institute of
Northwest
China
Polytechn
ic
University
45.00 50.00
According to the
agreement, the
Company enjoys
dividend based on
50% equity
- - -
Xi’an
Tangcheng
Joint Stock
Co., Ltd.
0.10 0.10 - - - -
Shenzhen
CATIC
Culture
Transmit
Co., Ltd.
15.00 15.00 -
300,000.
00 - -
Total
300,000.
00 -
13,758,953.
80
4. Operating Income and Cost
(1) Operating Income and Cost
Items Amount in report year
Amount of the same period
of the previous year
Income from principal businesses 147,920,077.50 124,410,040.25
Income from other businesses 3,392,338.52 4,079,038.10
Total operating income 151,312,416.02 128,489,078.35
Principal business cost 66,051,538.00 53,825,023.51
Costs of other businesses 3,240,617.00 3,610,172.43
Total Operating Costs 69,292,155.00 57,435,195.94SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
78
(2) Income from principal businesses (based on sectors)
Amount in report year
Amount of the same period of the
Sectors previous year
Operating income Operating costs Operating
income
Operating costs
FIYTA consumer
goods
114,796,445.15 55,896,320.65 93,686,737.32 45,270,730.14
Lease of property
33,123,632.35 10,155,217.35 30,723,302.93 8,554,293.37
Sub-total
147,920,077.50 66,051,538.00 124,410,040.25 53,825,023.51
(3) Principal Business (based on regions)
Amount in report year
Amount of the same period of the
Regions previous year
Operating income Operating costs
Operating
income
Operating costs
Northeast China 12,618,069.27 6,965,750.25 11,371,411.96 6,576,983.33
North China 16,338,778.08 8,028,569.90 12,987,523.14 6,562,860.44
Northwest China 13,307,710.69 6,700,620.83 9,669,664.83 4,768,537.28
Southwest China 12,586,310.47 6,286,065.67 9,402,067.42 4,464,848.28
East China 17,746,755.11 8,972,805.70 15,333,896.87 7,748,530.96
South China 75,322,453.88 29,097,725.66 65,645,476.03 23,703,263.22
Total 147,920,077.50 66,051,538.00 124,410,040.25 53,825,023.51
(4) The turnover from the top five customers is RMB 19,903,836.50, taking 13.15% of the total sales
income.
5. Return on investment
(1) Statement of return on investment
Investees Amount in report
year
Amount of the same
period of the previous
year
Income from long term equity investment calculated based
on the cost method 13,758,953.80
Income from long term equity investment calculated based
on the equity method 179,622.59
Investment income arising from disposal of long term
equity investment -
Return on investment acquired during the period of
holding the available-for-sale financial assets
Return on investment acquired from the holding-for-sale
financial assets, etc. -
Total 13,758,953.80 179,622.59
(2) Return on investment from the long term equity investment according to the cost methodSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
79
Investees
Amount in report
year
Amount of the
same period of
the previous
year
Reason of
increase/decrease of the
report year over the
previous year
Manufacture Co. 13,758,953.80 Increase of distribution
Total 13,758,953.80
6. Supplementary Information to the Cash Flow Statement
(1) Information on adjustment of net profit into cash flow of operating activities
Items Amount in report year
Amount of the same
period of the previous
year
1. Net cash flows arising from adjustment of net profit
into operating activities
Net profit
16,731,185.38 1,582,675.36
Plus: Reserve for impairment of assets
Depreciation of fixed assets
9,649,031.96 9,574,644.53
Amortization of intangible assets
408,896.88 468,408.36
Long-term expenses to be apportioned
7,076,735.78 4,230,997.53
Loss from disposal of fixed assets, intangible assets and
other long term assets -6,920,913.33
Loss from scrapping of fixed assets (income is stated
with “-“)
Financial expenses (income is stated with “-“)
7,489,968.00 9,484,513.00
Investment loss (income is stated with “-“)
-13,758,953.80 -179,622.59
Decrease of deferred income tax asset (increase is
stated with “-“) 350,769.44
Increase of deferred income tax asset (Decrease is
stated with “-“) 9,726.36 838,200.00
Decrease of inventories (Increase is stated with “-“)
-17,640,073.04 7,393,274.51
Decrease of operative items receivable (Increase is
stated with “-“) -28,187,680.79 25,132,873.86
Increase of operative items payable (Decrease is stated
with “-“) 17,773,019.69 11,022,470.26
Others
Net cash flow generated from operating activities
-7,369,056.91 69,899,204.26
2. Significant investment and fund-raising activities with
no cash income and expenses involved
3. Net change in cash and cash equivalents:SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
80
Items Amount in report year
Amount of the same
period of the previous
year
Ending cash balance
58,160,134.97 56,038,121.73
Less: Opening cash balance
46,560,890.55 54,938,436.99
Plus: Ending balance of cash equivalent
- -
Less: Opening balance of cash equivalent
- -
Net increase in cash and cash equivalents
11,599,244.42 1,099,684.74
(2) Information about cash and cash equivalents
Items Amount in report year
Amount in the previous
year
I. Cash 58,160,134.97 46,560,890.55
Incl: Cash in hand 190,019.12 135,164.75
Bank deposit for payment at any time 57,957,217.93 46,412,827.88
Other monetary fund used for payment at any time 12,897.92 12,897.92
II. Cash equivalents -
Including: Bond investment due within three months
-
III. Ending balance of cash and cash equivalents 58,160,134.97 46,560,890.55
Including: cash and cash equivalent restricted for
application by the parent company or subsidiaries of the
Company
-
XV. Additional information
1. Schedule of non-recurring gain and loss in the report period
Items Amount Note
Gain/loss from disposal of non-current assets
6,891,234.90
Gain/loss from
cancellation of long term
investment and disposal
of fixed assets
Government subsidy charged to the current gain and loss
(except the governmental subsidies closely related with the
720,000.00
Government subsidySHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
81
Company’s business and enjoyable according to the unified
standard quota or fixed amount specified by the central
government).
Operating income and expenses other than the aforesaid items
-405,053.38
Sub-total 7,206,181.52
Amount affected by the income tax 1,581,498.85
Amount influencing minority shareholders’ equity (after tax)
Total
5,624,682.67
Note: The figure “+” in the item of non-recurring gain and loss indicates income and
revenue and “-“ indicates loss or expenditures.
2. Net assets-income ratio and earnings per share
Profit/per share
Profit in the report period Report period
Net
assets-income
ratio (weighted
average)
Basic earning per
share
Diluted earning per
share
Net profit attributable to the 2010 5.76% 0.17 0.17
Company’s shareholders of
common shares 2009 3.95% 0.109 0.109
Net profit attributable to 2010 5.00% 0.148 0.148
shareholders of common
shares after deduction 2009 3.70% 0.102 0.102
Note: (1) Weighted average net asset earning rate = P0/(E0＋NP÷2＋Ei×Mi÷M0–- Ej×Mj÷M0±
Ek×Mk÷M0)
Where P0 is the net profit attributable to the shareholders of common shares respectively
corresponding to the net profit attributable to the Company’s shareholders of common shares after
deduction of the non-recurring gain and loss. NP is the net profit attributable to the shareholders of
ordinary shares in the Company. E0 is the net profit at the beginning of a period attributable to the
shareholders of ordinary shares in the Company; Ei is the newly added net asset attributable to the
Company’s shareholders of ordinary shares arising from issuing of new shares or conversion of
debentures into shares; Ej is the net asset decreased from repurchase or cash dividend, etc. and
attributable to the Company’s shareholders of ordinary shares; M0 is the number of months in a
report period; Mi is the accumulated months from the next month after the new addition of net asset to
the end of a report period; Mi is the number of accumulative months from the next month after the
deduction of net assets to the end of a report period; Ek is the increase/decrease change arising from
other transaction or matters; Mk is the accumulated months from the next month after change in
increase/decrease of other net asset to the end of the report period.
(2) About the basic earnings and process of diluting earnings per share, refer to Note VII.39.
3. Note to the abnormalities of the items in the major accounting statements
(1) Balance Sheet ItemsSHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
82
The items in the major accounting statements with bigger change at the end of 2010 over the end of
2009 are analyzed as follows:
① The monetary fund increased by RMB 12.81 million over the year beginning, where the net cash
flow arising from the operation activities was RMB 1.02 million. The net cash flow arising from
investment activities was RMB –22.25 million, including costs for new shop refurbishment amounting
to RMB 29.38 million. The net cash flow arising from fund-raising activities was RMB 34.08 million,
including RMB 51.54 million of the increased short term borrowings and the interest paid to the bank,
etc. amounting to RMB 17.47 million.
② Increase of the advance to suppliers by RMB 6.52 million over the year beginning was mainly due
to increase of the advance payment.
③ Increase of accounts receivable by RMB 24.08 million over the year beginning was mainly due to
quick growth of the sales, which belonged to normal settlement time.
④ Inventories increased by RMB 69.38 million over the year beginning, where the inventories arising
from opening new shops and increase of brands in HARMONY increased by RMB 47.42 million; that
arising from developing new models and increase of new sales network for FIYTA watches increased
by RMB 19.40 million;
⑤ Increase of long term expenses to be apportioned by RMB 5.49 million over the year beginning
was mainly due to increase of costs of refurbishment of franchised shops.
⑥ Increase of short term borrowings by RMB 51.54 million over year beginning was mainly due to
increase of the borrowings of the Company’s subsidiaries by RMB 41.54 million and increase of the
borrowings of the head office of the Company by RMB 10 million.
⑦ Increase of the accounts payable by RMB 5.98 million over the year beginning was due to
increase of purchases.
⑧ Increase of the taxes payable by RMB 13.70 million was mainly due to increase of value-added
tax because of growth of sales.
The asset-liability rate at the end of the report period was 52.73%, while it was 51.76% at the end of
the previous year, increased by 0.97 percent.
(2) Items in Profit Statement
The items in the major accounting statements with bigger change in the report period over the end of
of the previous year are analyzed as follows:
① The operating revenue in the report period was RMB 810.81 million, a 41.58% growth over the
same period of the previous year. The growth was mainly due to the increase of the famous brand
watches by 48.19% and year-on-year growth of China made FIYTA watches by 25.14%.
② The amount of operation costs incurred amounting to RMB 565.31 million in the report year, a
growth of 47.62% over the previous year, was mainly due to growth of the income.
⑥ The non-operation income incurred in the report period amounted to RMB 7.84 million, a 262%
growth over the previous year. The growth was mainly due to the income from sales of Sichuan
Huashun Building amounting to RMB 6.92 million.
⑦ The amount of the non-operating expenditures in the report year was RMB 0.63 million, while it
was RMB 30,000 in the same period of the previous year, an increase by RMB 0.60 million.SHENZHEN FIYTA HOLDINGS LTD. Notes to the Financial Statements
83
⑧ The amount of income tax expenses incurred in the report year was RMB 9.53 million, a 37.85%
growth over the same period of the previous year. The growth was mainly due to the growth of the
total profit in the report year over the same period of the previous year and the increase of the income
tax rate of the Company’s subsidiaries and branches in the report year over the previous year from
22% to 20%.
