FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
FIYTA HOLDINGS LTD.
2018 Annual Report
February, 2019
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 1 Important Notice, Table of Contents and Definition
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby
individually and collectively accept responsibility for the correctness, accuracy and completeness of the
contents of this report and confirm that there are neither material omissions nor errors which would render any
statement misleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the
accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report
enclosed in this Annual Report.
All the directors attended the board meeting for reviewing the Annual Report.
Any perspective description, such as the future plan, development strategy, etc. involved in the Annual Report
shall not constitute the Company’s substantial commitment to the investors and the investors should please pay
attention to their investment risks.
In this report, the Company has described in detail the existing macro-economic risks as well as operation risks.
Investors are advised to refer to the contents concerning risk factors possibly to be confronted with and the
countermeasures in the Company's future development prospect in Section 4 Discussion and Analysis of the
Management
The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: With
the Company’s total share capital of 438,744,881 shares as the base, the Company would distribute cash
dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for
every 10 shares (with tax inclusive) to the whole shareholders and capitalize no capital reserve to the whole
shareholders.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Table of Contents
Section 1 Important Notice, Table of Contents and Definitions
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Section 4 Discussion and Analysis of the Management
Section 5 Significant Events
Section 6 Changes in Shares and Particulars about the Shareholders
Section 7 About the Preferred Shares
Section 8 Directors, Supervisors, Officers and Employees
Section 9 Corporate Governance
Section 10 Bond Related Information
Section 11 Financial Report
Section 12 List of Documents Available for Inspection
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Definitions
Refers
Terms to be defined Definition
to
Refers
This Company, the Company or FIYTA FIYTA HOLDINGS LTD.
to
Refers
AVIC Aviation Industry Corporation of China, Ltd.
to
Refers
AVIC International AVIC International Holding Corporation
to
Refers
AVIC International Shenzhen AVIC International Shenzhen Co., Ltd.
to
Refers
AVIC IHL AVIC International Holding Limited
to
Refers
The Sales Co. FIYTA Sales Co., Ltd.
to
Refers
Harmony Shenzhen Harmony World Watches Center Co., Ltd.
to
Refers
the Manufacture Co. Shenzhen FIYTA Sophisticated Timepieces Manufacture Co., Ltd.
to
Refers
the Technology Co. Shenzhen FIYTA Technology Development Co., Ltd.
to
Refers
the Hong Kong Co. FIYTA (Hong Kong) Limited
to
Refers
SHIYUEHUI Shiyuehui Boutique (Shenzhen) Co., Ltd.
to
Refers
Hengdarui Liaoning Hengdarui Commerce & Trade Co., Ltd.
to
Refers
Harbin Co. Harbin Harmony World Watch Distribution Co., Ltd.
to
Refers
AVIC SUNDA AVIC SUNDA Co., Ltd.
to
Refers
Rainbow Ltd. Rainbow Department Store Co., Ltd.
to
Refers
Shennan Circuit Shennan Circuit Co., Ltd.
to
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Refers
AVIC Property AVIC Property Management Co., Ltd.
to
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 2 Company Profile and Financial Highlights
I. Company Information
Short form of the stock FIYTA A, FIYTA B Stock Codes: 000026 and 200026
Stock Exchange Listed with Shenzhen Stock Exchange
Company Name in Chinese FIYTA HOLDINGS LTD.
Abbreviation of the Company Name
飞亚达公司
in Chinese
Company name in English (if any) FIYTA HOLDINGS LTD.
Abbreviation of the Company name
FIYTA
in English (if any)
Legal Representative Huang Yongfeng
Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Registered
518057
Address
Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Registered
518057
Address
Website: www.fiytagroup.com
E-mail: investor@fiyta.com.cn
II. Liaison Persons and Communication Information
Secretary of the Board Securities Affairs Representative
Name Lu Wanjun Zhang Yong
20th Floor, FIYTA Technology Building, Gaoxin S. 20th Floor, FIYTA Technology Building, Gaoxin S.
Liaison Address
Road One, Nanshan District, Shenzhen Road One, Nanshan District, Shenzhen
Tel. 0755-86013669 0755-86013669
Fax 0755-83348369 0755-83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
III. Information Disclosure and Place where the Regular Reports are Prepared
Name of the media selected by the Company for disclosing
Securities Times and Hong Kong Commercial Daily
information
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Internet Web Site Designated by China Securities Regulatory
www.cninfo.com.cn
Commission for Publishing the annual report:
Place where the Company’s Annual Report was prepared and is
The Company's Strategic Operation Department
placed for inquiry
IV. Changes in Registration
Organization Code 91440300192189783K
Changes in principal business activities since listing (if
No change
any)
Changes in the controlling shareholder over the past
No change
years (if any)
V. Other Relevant Information
The CPAs appointed by the Company
Name of the CPAs Ruihua Certified Public Accountants (Special General Partnership)
Office address 9th Floor, Taiping Financial Building, Futian District, Shenzhen
Names of the CPAs as the authorized
Wang Yuqiao and Liu Xin
signatories
The sponsor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
The financial advisor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
VI. Summary of Accounting/Financial Data
Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years
No
Increase/Decrease of the
2018 2017 reporting year over the 2016
previous year
Revenue in CNY 3,400,450,599.90 3,345,809,703.98 1.63% 2,993,864,561.43
Net profit attributable to the Company’s
183,835,095.29 140,216,258.28 31.11% 110,662,681.59
shareholders, in CNY
Net profit attributable to the Company’s
shareholders less the non-recurring items, 162,758,061.00 123,918,527.75 31.34% 97,200,540.64
in CNY
Net cash flows arising from operating
331,627,789.62 564,954,561.97 -41.30% 455,759,094.15
activities, in CNY
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Basic earning per share (CNY/share) 0.4190 0.3196 31.10% 0.2522
Diluted earning per share (CNY/share) 0.4190 0.3196 31.10% 0.2522
Return on equity, weighted average 7.30% 5.79% 1.51% 4.74%
Increase/Decrease of the
end of the reporting year
End of 2018 End of 2017 End of 2016
over the end of the
previous year
Total assets (in CNY) 3,599,691,650.26 3,579,789,692.90 0.56% 4,004,897,562.72
Net profit attributable to the Company’s
2,570,134,782.90 2,467,967,361.20 4.14% 2,371,370,535.17
shareholders, in CNY
VII. Discrepancy in accounting data between IAS and CAS
1. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s
shareholders respectively according to the IAS and the CAS.
Inapplicable
2. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s
shareholders according to both the IAS and the CAS
Inapplicable
VIII. Financial Data Summary based on Quarters
In CNY
The first quarter The second quarter The third quarter The fourth quarter
Operating revenue 851,815,980.69 844,075,452.03 868,796,654.10 835,762,513.08
Net profit attributable to the Company’s
59,518,000.75 52,849,920.69 50,293,172.83 21,174,001.02
shareholders
Net profit less the non-recurring profit/loss
54,825,312.90 44,934,058.26 48,421,717.55 14,576,972.29
attributable to the Company’s shareholders
Net cash flows arising from operating
67,632,201.86 157,040,072.23 65,916,200.63 41,039,314.90
activities
Does there exist any significant difference between the above financial indicators or their sum total and the corresponding
financial indicators as disclosed by the Company in its quarterly reports or semi-annual report
No
IX. Extraordinary items and amount
In CNY
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Items Amount in 2018 Amount in 2017 Amount in 2016 Notes
It was mainly the income
Gain/loss from disposal of non-current assets, including
from disposal of the
the part offset from the provision for impairment of -180,302.24 7,321,993.36 -660,129.92
non-operating real estate
assets.
of Station 68 Ltd. in 2017.
Government subsidies included in current
profit or loss, other than on-going government
subsidies
which are closely related to the Company’s normal 19,375,618.48 17,508,255.98 17,234,482.25
operation, meet the requirements of
government
policies and are subject to certain limits and conditions.
Reversal of the impairment provision for
7,533,121.86 1,903,056.74 0.00
receivables which are tested individually for impairment
Other non-operating income and expenses apart from
792,842.56 1,238,972.99 935,294.98
the aforesaid items
Less: Amount affected by the income tax 6,444,246.37 8,669,699.37 4,047,506.36
Amount affecting the minority shareholders’ equity
3,004,849.17 0.00
(after tax)
Total 21,077,034.29 16,297,730.53 13,462,140.95 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring
gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it
is necessary to explain the reason.
Inapplicable
Section 3 Business Summary
I. Principal Businesses in the Reporting Period
(1) Principal Business and Operation Model
FIYTA concentrates itself in watch industry, takes the brand strategy as the guidance, integrates watch R & D, design,
manufacture, sales and services, and has formed two core businesses - watch brand management and watch retail and
services. The Company possesses its proprietary watch brands, including FIYTA, Emile Chouriet, JONAS&VERUS and
licenced cooperative brands - JEEP and BEIJING, which have different styles and can satisfy segmentized market
demands; has watch retail and service brands - HARMONY and BRAND GALLERY, which cover the nationwide market
and satisfy high and medium and fashion consumption demands.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(2) Development Status of Watch Industry and the Company's Position in the Industry
Modern watch industry is an advanced manufacture with high precision machinery integrated with information technology
and is a special highly sophisticated and accurate time-keeping product. Watch is also a consumer product with aesthetic
and fashion character and cultural connotation, as well as high quality consumer goods with outstanding brand value.
Under a favorable trend of the people’s pursuance for better life and consumption upgrading, watch industry, which
integrates high-end sophisticated manufacture and brand aesthetics, enjoys a good development prospect.
In 2018, under the background that the macro economy held pressure and the consumption market was weak in growth,
the Company conducted in-depth study on the consumption demand and fashion trend in its brand management business,
worked hard on breakthrough and innovation in technology, process and product design and constantly improved the
product quality and continuously satisfied the customers’ demand. Meanwhile, in light of the segmented market, the
Company continued to increase the input in multi-brand strategical planning, channel construction, marketing and
promotion, etc, continuously enrich the brand connotation and build brands with differentiation. During the reporting period,
the Company constantly maintained powerful competition superiority with it brand businesses in the domestic watch
market of which FIYTA Brand further took the leading position in the industry in terms of its influence. In respect of retail
services, the Company seized the opportunity of sales recovery of medium- and high-end brands, positively adjusted the
shop brand structure and channel layout, continuously developed the medium- and high-end quality channels, kept doing
a good job in service quality improvement and arrangement of the technical service network. During the reporting period,
the Company's superiority in retail service business competition was further consolidated; where Harmony World Watch
kept the leading position in the industry in terms of sales size and channel arrangement. The Company created again a
new historical record in annual revenue and total profit and kept advancing towards the vision of “becoming a leading
internationalized watch brand enterprise”.
II. Significant Changes in the Prime Assets
1. Significant Changes in the Prime Assets
Inapplicable
2. Prime Assets Abroad
Inapplicable
III. Analysis on Core Competitiveness
I. Unique Business Layout of “Watch Brand Management + Watch Retail Services” in the Industry
Incorporated in 1987, FIYTA experienced over three decades’ accumulation and innovation breakthrough, constructed the
brand management business with FIYTA Brand as the core and watch retail business with Harmony as the core and the
two businesses supplemented each other and developed in a coordinated way; both take the leading position in the
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
domestic market at present. The unique business layout of “Watch Brand Management + Watch Retail Services” have
provided a guarantee for the Company's sustainable development and “becoming a leading internationalized watch brand
enterprise”.
II. Profound Brand Management Experience and Clear Setmented Market Positioning
With reference to the experience of brand management experience of various world watches distributed by HARMONY
retail business as well as its own FIYTA Brand molding experience, the Company took a lead in constructing multi-brand
tribe with watch brands of FIYTA, Emile Chouriet, JONAS&VERUS, JEEP and BEIJING as the key brands, constantly
constructed brand identities of professional watch manufacture, classic and elegance, young fashion, intelligence and
outdoors, oriental aethetics, etc. These brands have become the leading brands in the segmented market.
III. National Watch Base and First Class Product Design Ability
The Company is a national technological innovation demonstration enterprise, national industrial design center and
national technology certification center for enterprises, and an organization integrating and implementing the standards
for informationization and industrialization by the Ministry of Industry and Information Technology. All its subordinative
manufacturers are national hi-tech enterprises; has constructed its professional watch manufacture ability in respect of
driving unit manufacture, space watch development, high-end watch manufacture teniques, etc. Meanwhile, the Company
has kept a leading position in the industry in terms of product quality and creative design ability.
IV. High Quality Brand, Channel Resources and Nationwide Retail Service Network
In watch retail business with HARMONY as the core, the Company has established close cooperative relationship with a
great many world top brands and mainstream brands, including Omega, Breguet, Blancpain, Glashutte Original, Jaquet
Droz, Longines, Tissot, etc. subordinate to Swatch Group; Rolex and TUDOR subordinate to Rolex; A.LANGE &
SOHNE,JAEGER LE-COULTRE,CARTIER,PIAGET, IWC, etc. subordinate to Richemont Group; GIRARD PERREGAUX
and ULYSSE NARDIN subordinate to Kering Group; as well as such independent brands as CHOPARD, Bucherer,
BREITLING, etc. The Company has also established strategic cooperative relationship with various high grade shopping
malls, such as MIXC as well as various high grade department stores in China, possesses top quality brands and channel
resources in the industry. The Company has established nationwide watch retail service network.
V. Profound Management Experience and Sustainable Talents Reserve
The Company constantly enhanced construction of the “Brand People” team, continuously improved the profession and
comprehensive qualification of the team, actively created a team atmosphere of progressiveness, struggle, continuous
improvement and devotion to work. The major members of the management and business backbones of the Company
have been engaged in watch industry for long time and have rich experience in brand management and channel operation,
enjoy good professional qualification and have profound understanding of watch industry. In addition, the Company has
established long term and stable enterprise-school cooperative relationship with various famous colleges and universities
in China. The Company is able to continuously and steadily obtain a great number of high quality professionals and infuse
new blood for the Company's development. The Company has continued to hold the honorable title of “Yearly Best
Employer” granted by Internal Association of Human Resources and CHINACHR.COM successively for 12 years.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 4 Discussion and Analysis of the Management
I. General
In China, the domestic economy slowed down in growth, the Sino-US trade conflict was full of complications, the
consumption market demand was bearish, and the watch industry was confronted with serious market pressure. During
the reporting period, the Company focused on value creation, spared in effort in carrying forward refined management and
specialized operation, exerted itself on upgrading the brand identity and customer services, improved the operation
efficiency; under the situation of relatively weak market, the Company still realized continuous increase of profit. In 2018,
the Company realized revenue amounting to CNY 3400.4506 million with year-on-year growth of 1.63% and realized total
profit amounting to CNY 231.1969 million with a year-on-year growth of 21.87%; realized net profit amounting to CNY
183.8351 million with a year-on-year growth of 31.11%. The Company has once again achieved a historical record in
operation performance.
During the reporting period, the Company carried out the following key work.
I. Putting forth effort in promoting upgrading of FIYTA Brand and continuously supporting quick development of
various brands
FIYTA Brand closely followed the trend of upgrading consumption and the customers’ consumption demand of
“quality-orientation and personalization” and carried forward in depth upgrading of the brands based on products,
marketing and channels, etc. In 2018, FIYTA Brand adhered to the spirit of being specialized in watch making, insisted on
independent aesthetic design, launched “FENGZHI”, “SOLO” Series, etc. and enriched the serial products of “QUORRA’S
CORD”, “CLOVER”, etc. Meanwhile, for the purpose of satisfying the customers’ demand on high quality and
customization, the Company announced a high-end customized designer brand - MOONYANG at Basellworld; for the
purpose of complying with the life style of rejuvenation and intelligence of consumers, the Company enhanced the
digitalized new media marketing; for the purpose of pressing close to the change of customers’ consumption scene,
vigorously developing the channels of brand flagship store and shopping center and the proportion of sales in shopping
center was continuously increasing. In 2018, in light of FIYTA Brand's outstanding performance in specialized watch
making and innovative design, FIYTA Brand Space Watch series and the application project were rewarded with a number
of “the Fifth China Industrial Award” and many models of FIYTA Brand were rewarded with principal industrial awards,
including “2018 China Design Red Star Award”, “Honorable Mention of China Design” and “Governor Cup Industrial
Design Award”, “Shenzhen Gift”, etc. During the reporting period, the Company complied with consumers’ consumption
demand of personalization and diversification, continued to reinforce the influence of the brands of “Emile Chouriet”,
“ JONAS&VERUS”, “JEEP” and“BEIJING”, improved the competition superiority on the segmented market; the proportion
of sales of multiple brands exceeded 25% of the total of the watch brand management business and still kept quick
development.
II. Continuing to optimize the watch retail service network and constantly upgrading customer service quality
Harmony World Watch Center firmly grasped the opportunity of revived growth of medium- and high-end watches,
deepened strategic cooperation with Swatch, Rolex, Richemont, Kering, etc. and individual watch makers, acquired more
high quality international brand resources; and at the same time, kept carrying forward the work of channel upgrading and
development of key medium- and high-end channels. In 2018, the unit price of Harmony world watch customers was
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
significantly improved and the channels were further concentrated on medium- and high-end. So far, Harmony World
Watch Center has 190 channels of famous brand watches of medium- and high-end. At the same time, for the purpose of
satisfying customers’ new demand of consuming online international brands, Harmony accelerated layout of online
channels by uniting international brands; based on the existing brands, including Oris, Titoni, which have been authorized
for online sale, Harmony has opened Carl F.Bucherer Brand JD official flagship store and TISSOT Brand T-Mall Franchise
Store. For the purpose of continuously improving customer service quality and sharing the huge space of famous brand
watch inventory market, Harmony continued to develop technical service business. In 2018, Harmony and Swatch Group
jointly opened the first brand comprehensive after-sale service center. Now the said technical service center has 150
channels. In the reporting period, the Company continued to carry forward upgrading of BRAND GALLERY operation and
channel development work, has possessed 150 BRAND GALLERY famous brANd channels based on medium end and
fashion and the channel influence has been further improved.
III. Enthusiastically Making Layout of New Businesses and Starting Intelligent Retail in a Cooperative Way
Based on the quick growth of smart watch market, the Company speeded up layout of smart watch business and
promoted business innovation. In 2018, FIYTA Brand launched the first pointer type aerobic capacity smart watch -
JOYUP series and JEEP Brand launched smart all-realm watch； where, the Company achieved innovative breakthrough
in the field of heavy smart watch by JEEP Brand smart watch, in which the Company applied QUALCOMM radio
technology and created 4G all-net independent communication with the functions of sports, navigation, payment, etc. It
enjoys first mover advantage in terms of functions and technology in the industry, has received good response in market
sales and more than 10,000 units were sold in three months after coming into the market.
In light of the new development trend of intelligent retail, for the purpose of bring the superiority of the Company's retail
network and profound medium- and high-end member resource into better play, in 2018, the Company, centering the trend
of customers’ experience, improvement of operation efficiency and whole-channel integration development, etc, started
the intelligent retail project with cooperation of OC&C, an international consulting institution.
IV. Insisting on Independent Science & Technology Innovation and Consolidating the Core Technology Power
In 2018, the Company brought the advantage of the watch manufacture bases in Shenzhen and Switzerland into good
play, integrated domestic and foreign resources, constantly increased investment in the field of key technologies, including
the driving units of mechanical watches, research on application of new materials, space watch and smart watches, kept
enhancing its leading position of independent innovation in China watch brands, achieved quite a number of scientific
research results and achieved great progress in partial key technology R & D of driving units, materials, etc. In 2018, the
Company accumulatively applied for 57 patents, including 15 invention and utility model patents. Relying on the
accumulation in aspects of innovation mechanism, innovation ability and innovation talents, the Company was elected a
national consumer goods standardization demonstration base and a post-doctorial innovation practice base in Shenzhen.
V. Focusing on Creation of Enterprise Values and Carrying forward Refined Operation Management
In 2018, the Company focused on value creation and spared no effort in carrying forward refined operation management.
In the brand management business, the Company actively adjusted the business and organization structure, compressed
the management levels, vigorously carried forward cost and expenditure control, further improved the organization
efficiency, removed low efficiency and loss-making shops with firm determination, and effectively controlled the operation
cost; in the retail service business, the Company brought the advantage of channel size into play, carried out sales
discount and improved comparable unit shop output. As a result, the gross profit of Harmony world watch business
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
increased by 1.96% and comparable unit shop output grew by 4%. In 2018, the Company, with the help of scientific
management tools, systematically solved the key and tough problems existing in the operation management, continuously
carried forward process optimization and construction of precise supply chain, further optimized the inventory structure,
with the total amount dropped by CNY 38.2204 million over the year beginning and interest-bearing liabilities dropped by
CNY 88.8778 million over the year beginning.
VI. Carrying forward Construction of the Incentive Mechanism and Culture and Further Improving Organization
Vitality
For the purpose adapting itself to the change of the market environment and customers, the Company insisted on the
enterprise spirit of inheritance and innovation and established and released the new cultural system. In addition, the
Company practiced A-share restrictive stock incentive program with a valid term of 5 years (Phase I) and granted 4.224
million A-share restrictive stock to 128 backbone employees. By means of construction of the new culture system and
long-term incentive mechanism, the Company further improved the vitality of the organization, supported the new turn of
development strategy in landing and arrival of various operation objectives.
Movement of the Major Financial Items in 2018:
Increase/
Statement Items 2018 2017 Note to the movement
Decrease (%)
Balance sheet items
It was mainly due to decrease of advance payment for
Advance payments 13,666,816.33 24,663,314.53 -44.59%
goods at the end of the reporting period
It was mainly due to increase of the deposit in security and
Other receivables 45,870,582.26 34,990,539.09 31.09% cash deposit at the end of the reporting period over the
year beginning.
It was mainly due to increase of the input VAT to be offset
Other current assets 73,703,312.24 24,616,815.21 199.40%
at the end of the reporting period over the year beginning.
It was mainly due to bank loan at the end of the reporting
Interest payable 772,351.26 1,464,729.11 -47.27% period and the corresponding decrease of the interest
payable at the end of the reporting period.
Non-current liabilities It was mainly due to that the long-term loan due within a
347,470.00 35,000,000.00 -99.01%
due within a year year was repaid at the end of the reporting period.
It was mainly due to that the special-purpose loan for the
Long-term borrowings 4,517,110.00 79,870,353.00 -94.34% watch industry base in Guangming New Zone was repaid
in the reporting year.
It was mainly due to that the partial government subsidy to
Deferred income 3,672,855.36 5,904,000.00 -37.79% be recognized at the year beginning was recognized as
other income during the reporting year.
Profit Statement Items
It was mainly due to that as the bank loan decreased in the
Interest cost 27,552,558.81 41,825,035.34 -34.12% reporting year and the payment for interest cost decreased
correspondingly.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
It was mainly due to decrease of the provision for price
Loss from impairment of
3,264,956.18 62,427,499.61 -94.77% falling of inventories in the reporting year over the same
assets
period of the previous year.
The income from disposal of assets in the same period of
the previous year was mainly the income from disposal of
Income from disposal of
-181,302.24 7,321,993.36 -102.48% the non-operating real estate of Station 68 Ltd., one of the
assets
Company's solely-funded subsidiaries, and there existed
no such case in the reporting year.
Cash Flow Statement Items
It was mainly due to increase of the rebated input VAT in
Rebated taxes received 4,793,245.20 886,252.20 440.84% the reporting year over the same period of the previous
year.
Net cash from disposal
of fixed assets and It was mainly the income from disposal of the
intangible asset and 53,280.03 10,678,135.25 -99.50% non-operating real estate of Station 68 Ltd. in the same
recovery of other long period of the previous year.
term assets
II. Analysis on Principal Businesses
1. General
Refer to “I. General” of “Discussion and Analysis of Business Conditions”
2. Income and Costs
(1) Composition of operating revenue
In CNY
2018 2017
Year-on-year
Proportion in the Proportion in the
Amount Amount increase/decrease
operating revenue operating revenue
Total operating revenue 3,400,450,599.90 100% 3,345,809,703.98 100% 1.63%
Sectors
Watches 3,193,280,311.30 93.91% 3,182,377,477.24 95.12% 0.34%
Sophisticated
70,742,449.85 2.08% 34,886,779.43 1.04% 102.78%
manufacture
Leases 118,323,969.04 3.48% 109,451,504.76 3.27% 8.11%
Others 18,103,869.71 0.53% 19,093,942.55 0.57% -5.19%
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2018 2017
Year-on-year
Proportion in the Proportion in the
Amount Amount increase/decrease
operating revenue operating revenue
Products
Watch retail and services 2,090,970,707.50 61.49% 2,039,729,647.67 60.96% 2.51%
Watch brand business 1,102,309,603.80 32.42% 1,142,647,829.57 34.15% -3.53%
Sophisticated
70,742,449.85 2.08% 34,886,779.43 1.04% 102.78%
manufacture
Leases 118,323,969.04 3.48% 109,451,504.76 3.27% 8.11%
Others 18,103,869.71 0.53% 19,093,942.55 0.57% -5.19%
Regions
South China 1,536,911,140.58 45.20% 1,490,763,984.16 44.56% 3.10%
Northwest China 588,628,213.03 17.31% 546,462,280.48 16.33% 7.72%
Northeast China 249,884,958.89 7.35% 270,574,447.95 8.09% -7.65%
East China 439,292,101.70 12.92% 422,998,372.46 12.64% 3.85%
Northeast China 269,671,243.83 7.93% 285,363,830.58 8.53% -5.50%
Southwest China 316,062,941.87 9.29% 329,646,788.35 9.85% -4.12%
(2) Sector, product or region which takes over 10% of the Company's operation revenue or
operation profit
In CNY
Year-on-year
Year-on-year Year-on-year
increase/decrease of
increase/decrease of increase/decrease of
operating revenue
Operating revenue Operating cost Gross profit rate operating cost over gross profit rate over
over the same
the same period of the same period of
period of previous
previous year previous year
year
Sectors
Watches 3,193,280,311.30 1,910,998,452.65 40.16% 0.34% -1.18% 0.92%
Sophisticated
70,742,449.85 59,432,940.99 15.99% 102.78% 89.07% 6.09%
manufacture
Leases 118,323,969.04 22,474,447.92 81.01% 8.11% 26.37% -2.74%
Others 18,103,869.71 903,932.64 95.01% -5.19% -75.55% 14.37%
Products
Watch retail and
2,090,970,707.50 1,576,862,763.43 24.59% 2.51% -0.65% 2.40%
services
16
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Watch brand
1,102,309,603.80 334,135,689.22 69.69% -3.53% -3.57% 0.01%
business
Sophisticated
70,742,449.85 59,432,940.99 15.99% 102.78% 89.07% 6.09%
manufacture
Leases 118,323,969.04 22,474,447.92 81.01% 8.11% 26.37% -2.74%
Others 18,103,869.71 903,932.64 95.01% -5.19% -75.55% 14.37%
Regions
South China 1,536,911,140.58 875,599,755.20 43.03% 3.10% 2.64% 0.25%
Northwest China 588,628,213.03 353,457,194.81 39.95% 7.72% 7.23% 0.27%
Northeast China 249,884,958.89 137,166,812.45 45.11% -7.65% -10.46% 1.72%
East China 439,292,101.70 262,001,509.80 40.36% 3.85% 1.29% 1.51%
Northeast China 269,671,243.83 187,589,738.67 30.44% -5.50% -7.03% 1.15%
Southwest China 316,062,941.87 177,994,763.27 43.68% -4.12% -6.49% 1.43%
As the calculation specification of the Company’s principal business data underwent adjustment during the reporting
period, the principal business data of the past year were the data based on that after the specification adjustment at the
end of the reporting year.
Year-on-year
Year-on-year Year-on-year
increase/decrease of
increase/decrease of increase/decrease of
operating revenue
Operating revenue Operating cost Gross profit rate operating cost over gross profit rate over
over the same
the same period of the same period of
period of previous
previous year previous year
year
Sectors
Watches 3,182,377,477.24 1,933,734,832.90 39.20% 12.71% 11.96% 0.40%
Sophisticated
34,886,779.43 31,434,866.13 9.90% -11.77% 11.22% -18.62%
manufacture
Leases 109,451,504.76 17,785,254.56 83.80% 2.31% 31.31% -3.59%
Others 19,093,942.55 3,697,637.98 80.60% -19.78% -4.85% -3.04%
Products
Watch retail and
2,039,729,647.67 1,587,232,279.88 22.20% 12.73% 10.87% 1.31%
services
Watch brand
1,142,647,829.57 346,502,553.02 69.70% 12.68% 17.28% -1.19%
business
Sophisticated
34,886,779.43 31,434,866.13 9.90% -11.77% 11.22% -18.62%
manufacture
Leases 109,451,504.76 17,785,254.56 83.80% 2.31% 31.31% -3.59%
Others 19,093,942.55 3,697,637.98 80.60% -19.78% -4.85% -3.04%
17
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Regions
South China 1,490,763,984.16 853,045,559.52 42.80% 23.43% 24.62% -0.55%
Northwest China 546,462,280.48 329,631,915.00 39.70% 3.31% 0.75% 1.53%
Northeast China 270,574,447.95 153,182,543.86 43.40% -2.17% -3.33% 0.68%
East China 422,998,372.46 258,663,712.98 38.80% 7.68% 9.00% -0.74%
Northeast China 285,363,830.58 201,782,412.95 29.30% 1.46% 5.02% -2.40%
Southwest China 329,646,788.35 190,346,447.25 42.30% 7.56% 9.90% -1.23%
Reason of the change of the specifications
The Company reclassified and adjusted the disclosing specifications based on different sectors, products and regions
according to the practical conditions of business operation and requirements of segmented management. The relevant
data of the reporting period of the previous year underwent adjustment according to the same specifications; where the
specifications based on sectors and products have been adjusted from the original classification based on business
management plate into classification based on business attribution categories; the specifications for classification based
on regions have been adjusted from the original classification based on the location of branch companies into the
classification based on the location of shops.
(3) Is the physical sales income greater than the service income
Yes
Classified based on Year-on-year
Items In CNY 2018 2017
sectors increase/decrease
Sales volume pcs 1,032,886 1,169,341 -12.00%
Brand watches Output pcs 1,085,929 1,443,902 -25.00%
Inventory pcs 1,326,997 1,273,954 4.00%
Note to the cause of the year-on-year movement of the relevant data by over 30%
Inapplicable
(4) Implementation of Important Sale Contracts Concluded at the End of the Reporting Period
Inapplicable
(5) Composition of Operating Costs
Classified based on sectors and products
In CNY
2018 2017
Classified based on Year-on-year
Items Proportion in the Proportion in the
sectors Amount Amount increase/decrease
operating costs operating costs
Watches Goods purchase 1,576,862,763.43 79.09% 1,587,232,279.88 79.89% -0.65%
18
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2018 2017
Classified based on Year-on-year
Items Proportion in the Proportion in the
sectors Amount Amount increase/decrease
operating costs operating costs
cost
Raw materials 298,467,328.86 14.97% 318,023,289.64 16.01% -6.15%
Labor costs 25,602,142.25 1.28% 23,200,389.66 1.17% 10.35%
Depreciation
1,124,500.75 0.06% 1,025,084.88 0.05% 9.70%
expense
Water and electricity
582,727.38 0.03% 462,540.76 0.02% 25.98%
fees
Rent 2,100,422.82 0.11% 466,825.54 0.02% 349.94%
Others 6,258,567.16 0.31% 3,324,422.53 0.17% 88.26%
Raw materials 39,129,570.45 1.96% 13,450,268.43 0.68% 190.92%
Labor costs 12,770,838.35 0.64% 10,882,923.92 0.55% 17.35%
Depreciation
1,440,723.29 0.07% 1,511,974.62 0.08% -4.71%
Sophisticated expense
manufacture Water and electricity
1,443,140.38 0.07% 1,204,598.61 0.06% 19.80%
fees
Rent 275,118.68 0.01% 125,227.28 0.01% 119.70%
Others 4,373,549.85 0.22% 4,259,873.27 0.21% 2.67%
Depreciation
13,170,394.47 0.66% 10,568,722.86 0.53% 24.62%
expense
Leases
Labor costs 2,983,488.04 0.15% 2,992,768.29 0.15% -0.31%
Others 6,320,565.41 0.32% 4,223,763.41 0.21% 49.64%
Others Purchase cost 903,932.64 0.05% 3,697,637.98 0.19% -75.55%
In CNY
2018 2017
Classified based on Year-on-year
Items Proportion in the Proportion in the
products Amount Amount increase/decrease
operating costs operating costs
Watch retail and Goods purchase
1,576,862,763.43 79.09% 1,587,232,279.88 79.89% -0.65%
services cost
Raw materials 298,467,328.86 14.97% 318,023,289.64 16.01% -6.15%
Labor costs 25,602,142.25 1.28% 23,200,389.66 1.17% 10.35%
Watch brand Depreciation
1,124,500.75 0.06% 1,025,084.88 0.05% 9.70%
business expense
Water and electricity
582,727.38 0.03% 462,540.76 0.02% 25.98%
fees
19
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2018 2017
Classified based on Year-on-year
Items Proportion in the Proportion in the
products Amount Amount increase/decrease
operating costs operating costs
Rent 2,100,422.82 0.11% 466,825.54 0.02% 349.94%
Others 6,258,567.16 0.31% 3,324,422.53 0.17% 88.26%
Raw materials 39,129,570.45 1.96% 13,450,268.43 0.68% 190.92%
Labor costs 12,770,838.35 0.64% 10,882,923.92 0.55% 17.35%
Depreciation
1,440,723.29 0.07% 1,511,974.62 0.08% -4.71%
Sophisticated expense
manufacture Water and electricity
1,443,140.38 0.07% 1,204,598.61 0.06% 19.80%
fees
Rent 275,118.68 0.01% 125,227.28 0.01% 119.70%
Others 4,373,549.85 0.22% 4,259,873.27 0.21% 2.67%
Depreciation
13,170,394.47 0.66% 10,568,722.86 0.53% 24.62%
expense
Leases
Labor costs 2,983,488.04 0.15% 2,992,768.29 0.15% -0.31%
Others 6,320,565.41 0.32% 4,223,763.41 0.21% 49.64%
Others Purchase cost 903,932.64 0.05% 3,697,637.98 0.19% -75.55%
(6) Is there any change in the consolidation scope in the reporting period
No
(7) Is there any significant change or adjustment related situation taken place in the Company’s
business, products or services in the reporting period
Inapplicable
(8) Major sales customers and major suppliers
Information about the major sales customers
Total sales to the top five customers, in CNY 466,297,023.36
Proportion of the total sales to the top five customers in the total sales of
13.72%
the year,
Proportion of the sales volume to the top five customers in the total sales
2.11%
to the related parties in the year
Note: The customers controlled by the same actual controller should be presented after consolidation except that actually
controlled by the same state-owned assets management institution.
Information of the top 5 customers
20
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Serial No. Customers Sales (in CNY) Proportion in the total sales of the year
1 China Resources (Shenzhen) Co., Ltd 143,815,196.14 4.23%
2 VIP.COM 106,605,479.95 3.14%
3 China Resources (Shenyang) Real Estate Co., Ltd. 73,398,392.21 2.16%
4 Yongan Department Store Co., Ltd. 70,713,098.56 2.08%
5 Rainbow Department Store Co., Ltd. 71,764,856.50 2.11%
Total -- 466,297,023.36 13.72%
Other Information about the major customers
Inapplicable
Major suppliers
Total amount of purchase from top five suppliers, in CNY 1,214,053,934.87
Proportion of the purchase amount from the top five suppliers in the
61.06%
Company’s total purchase amount
Proportion of purchase amount from the top 5 suppliers in the total
0.00%
purchase amount from the related parties in the year
Note: The suppliers controlled by the same actual controller should be presented after consolidation except that actually
controlled by the same state-owned assets management institution.
Information about the top 5 suppliers
Serial No. Suppliers Purchase amount, in CNY Proportion in the total purchases of the year (%)
1 SMH Swiss Watch Trading (Shanghai) Co., Ltd. 603,264,969.67 30.34%
2 Ningbo Shangheng Watches Co., Ltd. 280,192,821.62 14.09%
3 Rolex (Guangzhou) Ltd. 178,191,143.82 8.96%
4 Lifeng Commerce Co., Ltd. 93,139,200.03 4.68%
5 SMH Business Services (Shanghai) Pty Ltd. 59,265,799.73 2.98%
Total -- 1,214,053,934.87 61.06%
Other information about the major suppliers
Inapplicable
3. Expenses
In CNY
Year-on-year
2018 2017 Note to significant changes
increase/decrease
Sales costs 856,970,173.10 811,437,932.01 5.61% Inapplicable
Administrative expenses 224,796,280.12 190,589,582.24 14.99% Inapplicable
Financial expenses 35,916,240.16 49,186,742.91 -26.98% Inapplicable
R & D expenditures 47,350,342.82 49,453,899.35 -4.25% Inapplicable
21
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
4. Investment in R & D
Investment in R & D was mainly for consolidating the Company's leading position in self-dependent innovation in China's
watch brands. The Company continuously increased investment in personnel, equipment, research budget, etc. for such
key technology fields as space watches, driving units of mechanical watches, industrial design, smart watches, research
on application of new materials, etc., and had created a number of scientific research achievements. In 2018, the
Company’s total investment in R & D amounted to CNY 47,350,342.82, taking 1.84% of the net assets as audited in the
most recent period and taking 1.39% of the operation revenue as audited in the most recent period. In 2018, the Company
applied for 57 patents, of which 15 were patents of invention and utility models. By virtue of the accumulation in innovation
mechanism, innovation ability, innovative talents and innovation achievements, etc., in addition to the existing titles of
"National Certified Enterprise Technology Center", "National Industrial Design Center", "National Technology Innovation
Demonstration Enterprise", the Company has been elected an national consumer goods standardization demonstration
base and a post-doctarial innovation practice base in Shenzhen.
Summary of Investment in R & D
2018 2017 Proportion of movements
Number of R & D staff (persons) 47 45 4.44%
Proportion of R & D staff in total
0.91% 0.84% 0.07%
employees
Amount of investment in R & D,
47,350,342.82 49,453,899.35 -4.25%
in CNY
Proportion of investment in R &
1.39% 1.48% -0.09%
D in operating revenue
Amount of capitalized
0.00 0.00 0.00%
investment in R & D (in CNY)
Proportion of capitalized
investment in R & D in the total 0.00% 0.00% 0.00%
investment in R & D
Cause(s) of significant change of the total investment in R & D in the operating revenue
Inapplicable
Note to the cause of significant change in the capitalization rate of investment in R & D and note to the reasonability
Inapplicable
5. Cash Flow
In CNY
Items 2018 2017 Year-on-year increase/decrease
Subtotal of cash flow in from
3,864,826,375.05 3,849,407,740.68 0.40%
operating activity
Subtotal of cash flow out from 3,533,198,585.43 3,284,453,178.71 7.57%
22
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
operating activity
Net cash flows arising from
331,627,789.62 564,954,561.97 -41.30%
operating activities
Subtotal of cash flow in from
53,280.03 10,448,081.56 -99.49%
investment activity
Subtotal of cash flow out from
146,877,130.29 136,914,522.99 7.28%
investment activity
Net cash flows arising from
-146,823,850.26 -126,466,441.43 16.10%
investment activities
Subtotal of cash flow in from
741,192,340.23 575,282,350.00 28.84%
fund raising activity
Sub-total cash flow paid for
949,023,364.54 1,255,793,728.74 -24.43%
financing activities
Net cash flows arising from
-207,831,024.31 -680,511,378.74 -69.46%
financing activities
Net increase of cash and cash
-22,324,831.35 -242,279,864.49 -90.79%
equivalents
Note to the major influence factors for the significant change in the relevant year-on-year data:
1. Net cash flow arising from operating activities amounting to CNY 331,627,789.62 was mainly due to increase of the
recovered receivables brought about from revenue growth in the reporting year; and in addition, the inventory size
effectively reduced at the year end by enhancing control over inventory; in the reporting year, the Company realized the
net cash flow from operating activities greater than the net profit of the Company.
2. Net cash flow arising from investment activities amounting to CNY -146,823,850.26, increased by CNY 20,357,408.83
over the same period of the previous year, was mainly due to increase of the renewed investment in shops and counters
in the reporting year over the same period of the previous year.
3. Net cash flow arising from financing activities amounting to CNY -207,831,024.31 in the reporting year was mainly due
to repayment of the bank loans and payment of dividends and interest, where the cash flow-out from repayment of the
interest-bearing liabilities amounted to CNY 91,140,868.40, payment of the dividends amounted to CNY 87,748,976.20
and payment of the loan interest amounted to CNY 28,941,179.71.
4. Net increase of cash and cash equivalent in the reporting year amounting to CNY -22,324,831.35 was mainly due to
repayment of partial bank loans with monetary capital in the reporting year and as a result the size of interest-bearing
liabilities was reduced at the end of the reporting year.
Cause(s) of significant difference in the net cash flow arising from the operating activities and the net profit in the reporting
year
Inapplicable
23
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
End of 2018 End of 2017 Propor
tion
Proportion
Proportion in increas Note to significant changes
Amount Amount in total
total assets ed/dec
assets
reased
Monetary fund 164,828,059.97 4.58% 187,152,891.32 5.23% -0.65% Inapplicable
Accounts receivable 370,545,656.61 10.29% 326,254,624.94 9.11% 1.18% Inapplicable
1,782,306,301.7
Inventories 49.51% 1,820,526,676.26 50.86% -1.35% Inapplicable
0
Investment real
377,319,433.03 10.48% 305,493,987.77 8.53% 1.95% Inapplicable
estate
Long-term equity
44,881,063.15 1.25% 43,879,518.09 1.23% 0.02% Inapplicable
investment
Fixed assets 425,649,562.85 11.82% 523,699,592.65 14.63% -2.81% Inapplicable
Construction-in-proc
12,041,126.00 0.33% 10,947,300.53 0.31% 0.02% Inapplicable
ess
Short term loans 547,118,452.97 15.20% 525,990,510.00 14.69% 0.51% Inapplicable
Long-term
4,517,110.00 0.13% 79,870,353.00 2.23% -2.10% Inapplicable
borrowings
2. Assets and liabilities measured based on fair value
Inapplicable
3. Restriction on rights in the assets ended the reporting period
A property owned by Switzerland based Montres Chouriet SA with net value of CNY 14,978,058.57 was used as a
collateral for the overseas long term loan amounting to CNY 4,517,110.00.
24
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
V. Investment
1. General
Inapplicable
2. Significant equity investment acquired in the reporting period
Inapplicable
3. Significant non-equity investment in process in the reporting period
In CNY
Accumul Cause of
Earnings
ative the
accumul
Amount amount failure in
Is it an Industry atively
invested actually arriving
Way of investme involved realized Date of Disclosur
Descripti during invested Capital Project Predicted at the
investme nt in by the by the disclosur e index
on the by the source progress earning planned
nt fixed investme end of e (if any) (if any)
reporting end of progress
assets? nt project the
period the and
reporting
reporting predicted
period
period earnings
The
supportin
g
engineeri
ng works
http://ww
at the Manufact 1,093,82 12,041,1 Self-raise Inapplica March
Self-built Yes 35.36% 0.00 0.00 w.cninfo.
watch ure 5.47 26.00 d capital ble 10, 2017
com.cn/
industry
base in
Guangmi
ng New
Zone
1,093,82 12,041,1
Total -- -- -- -- -- 0.00 0.00 -- -- --
5.47 26.00
4. Financial assets investment
(1) Portfolio investment
Inapplicable
25
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(2) Investment in derivatives
Inapplicable
5. Application of the raised capital
(1) General application of the raised capital
In CNY 10,000
Total raised Proportion
Total
Total capital of the total
Total accumulativ
accumulativ whose accumulativ Application Amount of
amount of e raised
e amount of application e raised and status the raised
raised capital Total raised
Year of Way of Total capital raised purpose capital of the capital idled
capital whose capital not
raising raising raised capital has been whose raised for more
used in the application yet used
used changed in application capital than 2
reporting purpose
accumulate the purpose unused years
period has been
d reporting has been
changed
period changed
Non-public
Inapplicabl
2015 issuing of 60,000 3,119.79 58,583.07 0 0 0.00% 0 0
e
A-shares
Total -- 60,000 3,119.79 58,583.07 0 0 0.00% 0 -- 0
Note to General Application of the Raised Capital
The Company held the 18th session of the Seventh Board of Directors and 2014 Annual General Meeting respectively on April 16, 2015 and June 17, 2015. The meetings
reviewed and approved the Proposal on the Plan for Non-public Issuing of A-shares to the Specified Investors, etc., according to which the Company planned to issue in a
non-public way A-shares to no more than 10 (with 10 inclusive) specified investors with the total raised capital not exceeding CNY 600 million, which would be applied for
four projects, including the project of launching new FIYTA watches and supplement the working capital. The application for non-public issuing of A-shares was reviewed
and approved by CSRC Securities Issuance Examination Committee (CSIEC) on October 30, 2015. On November 17, 2015, the Company received Official Reply to FIYTA
Holdings Ltd. on Approval for Non-public Issuing ( ZHENG JIAN XU KE [2015] No. 2588 which authorized the Company to issue no more than 46,911,649 new shares in
non-public way. The actual number of A-shares actually issued in the non-public issuing activity was 45,977,011 shares and the raised capital amounted to CNY 599 million.
After deduction of the underwriting fee, the raised capital amounted to RMB 585 million. After deduction of the issuing costs, the net raised capital amounting to CNY583
million was remitted to the bank account designated by the Company on December 18, 2015. Grant Thornton Certified Public Accountants (Special General Partnership)
issued the Capital Verification Reports ZHI TONG YAN ZI (2015) No. 441ZC0653, ZHI TONG YAN ZI (2015) No. 441ZC0652 respectively for the raised capital. Up to now,
the capital raised from non-public issuing of A-shares is going to be applied for the originally designated application purpose and there exists no such a case that the
application purpose has been changed. The concerned follow-up commitments have been completed in implementation.
(2) Promised Projects with Raised Capital
In CNY 10,000
Has the Total Total Amount Amount Investme Date Result Has the Has
Promised investment
project promised investmen invested accumulat nt when the realized in predicted significant
projects and investment with
been investmen t after during the ively progress project the operation change
26
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
the over-raised capital changed t with adjustme reporting invested by the has reporting result taken
(including raised nt (1) period up to the end of the reached period been place in
partial capital end of the report the reached? the
change) report period predicted feasibility
period (2) (%) (3) = applicable of the
(2)/(1) status project?
Investment projects as promised
1. Project of Launching New Inapplicab
No 18,000 18,000 0 18,000 100.00% 0 No
FIYTA Watches le
2. FIYTA E-commerce
No 12,000 12,000 1,523.44 12,068.85 100.00% 2,511.51 Yes No
project
3. FIYTA Brand Marketing Inapplicab
No 10,000 10,000 0 10,000 100.00% 0 No
Promotion Project le
4. Technical Service
Website Construction No 5,000 5,000 1,572.87 5,022.62 100.00% 254.49 Yes No
Project
5. Replenishing working Inapplicab
No 15,000 15,000 23.48 13,491.6 89.94% 0 No
capital le
Subtotal of investment
-- 60,000 60,000 3,119.79 58,583.07 -- -- 2,766 -- --
projects as committed
Intended investment with the over-raised capital
Inapplicable
Subtotal of the intended
investment with the -- 0 0 0 0 -- -- 0 -- --
over-raised capital
Total -- 60,000 60,000 3,119.79 58,583.07 -- -- 2,766 -- --
Cause of failure to satisfy
the plan progress or
predicted revenue and the Inapplicable
cause (based on specific
project)
Note to the significant
change in the feasibility of a Inapplicable
project
Amount, application and
application progress of the Inapplicable
over-raised capital
Change of the site for
implementation of the Inapplicable
project invested with the
27
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
raised capital
Adjustment of the way of
implementation of the
Inapplicable
project invested with the
raised capital
Earlier investment in and The Company provided CNY 63.5839 million of the self-raised fund in the project to be invested with the raised capital. After the raised
replacement of the project capital was available for the project, according to the special auditor's report and the resolution of the Board of Directors and as agreed by
invested with the raised the sponsor, the raised capital was applied in the project respectively on January 20, 2016 and January 21, 2016 and the self-raised fund
capital as invested previously was replaced.
The idled raised capital
used to replenish working Inapplicable
capital for time being
Amount of the balance of
the raised capital incurred in
Inapplicable
project implementation and
the cause
Application and status of the
Ended December 31, 2018, the Company's raised fund had been used up.
raised capital unused
Application of the raised
capital and the issues
existing in the information Inapplicable
disclosure or other
information
Note: The accumulative investment with the raised capital amounted to CNY 585.8307 million while the net raise capital
as received amounted to CNY 582.9244 million. The balance between the two amounting to CNY 2.9063 million was due
to that 1) the Company had invested the net interest income amounting to CNY 0.9509 million arising from the account
deposit of the raised capital in the projects invested with the raised capital; 2) the Company paid the issuing expenses for
raising the capital amounting to CNY 1.9554 million from the own fund.
(3) Change of the Projects Invested with the Raised Capital
Inapplicable
VI. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
28
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2. Sales of Significant Equity
Inapplicable
VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit
by over 10%.
In CNY
Company Principal Registered Operating Operating
Company type Total assets Net assets Net profit
Names business capital revenue profit
Purchase &
Shenzhen
sale and
Harmony
repairing 1,525,299,380. 771,047,827.3 2,107,171,019. 117,994,574.0
World Watches Subsidiaries 600,000,000 92,675,275.97
service of 86 6 37 6
Center Co.,
watches and
Ltd.
components
Design, R & D
and sales of
FIYTA Sales 742,574,904.2 401,872,117.8 1,027,778,790.
Subsidiaries watches and 450,000,000 -13,350,224.65 -10,380,652.52
Co., Ltd. 7 8 49
components &
parts
Shenzhen
FIYTA Manufacture
Sophisticated and production 199,287,290.2 126,817,895.5 391,743,894.5
Subsidiaries 10,000,000 92,231,635.04 79,917,680.30
Timepieces of watches and 2 9 4
Manufacture components
Co., Ltd.
Shenzhen Production and
FIYTA machining of
107,109,049.7
Technology Subsidiaries sophisticated 10,000,000 93,175,666.69 66,854,230.98 7,673,840.30 7,552,309.14
0
Development components
Co., Ltd. and parts
Trading of
watches and
FIYTA (Hong 250,553,071.4 166,857,380.7 127,815,302.3
Subsidiaries accessories 137,737,520 -9,991,088.62 -13,926,872.13
Kong) Limited 6 2 7
and
investment
Shiyuehui Design, R & D
Boutique and sales of
Subsidiaries 5,000,000 20,074,338.88 -3,792,098.52 27,288,251.21 217,825.72 -252,234.02
(Shenzhen) watches and
Co., Ltd. components &
29
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
parts
Purchase &
Liaoning
sale of
Hengdarui 143,835,959.2
Subsidiaries watches and 51,000,000 40,062,997.77 9,111,983.83 1,220,621.29 914,215.97
Commerce & 6
components &
Trade Co., Ltd.
parts
Harbin Purchase &
Harmony sale of
World Watch Subsidiaries watches and 500,000 14,804,401.11 3,632,411.43 38,734,268.74 196,739.56 66,430.83
Distribution components &
Co., Ltd. parts
Design, R & D
Emile Chouriet and sales of
126,442,604.1 107,143,080.3
(Shenzhen) Subsidiaries watches and 41,355,200 62,866,037.60 1,885,427.05 1,361,927.90
9 3
Limited components &
parts
Production and
Shanghai Mutual sales of
115,360,493.1 104,526,575.6
Watch Industry shareholding watches and 15,350,000 97,282,978.95 4,487,189.00 4,006,180.22
7 9
Co., Ltd. company components &
parts
Subsidiaries acquired and disposed in the reporting period
Inapplicable
Note to the principal mutual shareholding companies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Development Prospect
I. Development Trend of the Industry
In 2019, the situation that the domestic economic growth may further slow down and there may exist uncertainty in the
consumer market shall become “the new normal”; superposition of such technologies as Internet of Things, AI,
communication, etc. shall further promote transformation of the commercial ecology and watch industry shall still be
confronted with various challenges. On the other hand, however, in the long run, benefited by growth of the people's
disposable income, rise of middle class and rise of high quality consumption demand, the medium- and high-end
consumer goods shall enter the fast traffic lane of development. The favorable policies, such as the preferential policies of
adjustment of customs duties, tax reduction, to be introduced, shall be expectable to speed up this progress. In addition,
with rise of China's comprehensive strength, consumers’ recognition of excellent home-made brands and the products
which can be better integrated in China's traditional culture shall be quickly raised. In a word, in 2019, the Chinese
30
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
consumer market shall breed and prompt more development opportunities. The domestic watch market shall present a
situation of general stability with constant growth of the medium- and high-end market.
II. Development Strategy
The Company takes “to create quality life” as its mission, focuses on watch business, insists on brand strategy and
persists in innovation and development, and devotes itself to build the Company into a “leading internationalized watch
brand enterprise” and create satisfactory value return for its shareholders.
III. Key Work in 2019
In 2019, the Company shall, centering on lean operation of the two principal core businesses - watch brand management
and watch retail services, ensure stable growth of the Company's business performances. The key work is summarized as
follows:
1. Comply with the consumption upgrading trend, continue to carry forward the brand upgrading work with FIYTA Brad as
the core, speed up development of the brands, including FIYTA, Emile Chouriet, JONAS&VERUS, JEEP, BEIJING, etc.,
consolidate the competition superiority and improve the segmented market share and brand influence.
2. Seize the growth opportunity of medium- and high-end brands, carry forward channel upgrading with Harmony as the
core and service upgrading, speed up optimization and development of the watch retail services of HARMONY and
BRAND GALLERY, continuously improve the channel operation efficiency, stabilize the position of HARMONY in the
industry and improve the channel influence of BRAND GALLERY.
3. Quickly integrate modern information technology, speed up promoton of whole-channel integration development and
intelligent retail work and construct “Big Data” of brand operation management.
4. Continue to explore integration of the Internet of Things, AI technology and communication technology with modern
watch industry and speed up business innovation development of smart watches, etc.
IV. Capital Necessary for Future Development
According to the Company's business development plan and financial budget planning in 2019 and for the purpose of
satisfying the demand on investment and operation capital and at the same time timely seizing the development
opportunity possibly brought about from the market change, the Company plans to apply for financing credit line with
amount not exceeding CNY 900 million by various means, including credit, guarantee, loan to subsidiaries, mortgage, etc.
in 2019.
V. Risks Possibly to be Confronted with
1. In 2019, it is not optimistic for growth of macro-economy and the consumption confidence is still in process of recovery,
which may cause the consumers to be more cautious in shopping, and consumer discretionary industry may be
confronted with growth pressure.
2. Young consumer group's demand tends to be personalized and diversified and it is more difficult to focus what brands
consumers may choose. The industrial competition and fighting for seizing consumers among various brands shall
become more fierce.
3. Great change may take place in off-line shopping environment due to quick development of shopping center and it
31
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
would be more difficult to guide flow for off-line sales channels; online costs and expenses increase constantly and the
performance of online channels may be affected.
4. There exists big difference in product features, operation model and investment between smart watches and traditional
watches. The Company shall be required to have higher resources integration capability, investment in key technologies
and talents reserve.
X. Statement of Such Activities as Reception of Survey, Communications, Interview,
etc.
1. Registration Form of the Activities, such as Reception of Survey, Communications, Interviews,
etc. in the Reporting Period
Reception time Way of reception Types of visitors received Index of basic information of survey
http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForS
January 11, 2018 Field survey Institution
zse.do?stockcode=000026
http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForS
January 23, 2018 Field survey Institution
zse.do?stockcode=000026
http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForS
March 22, 2018 Field survey Institution
zse.do?stockcode=000026
http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForS
October 23, 2018 Field survey Institution
zse.do?stockcode=000026
Number of reception 4
Number of institutions received 25
Number of persons received 28
Number of other visitors received 0
Is there any important information disclosed, revealed or leaked
No
to the public?
32
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 5 Significant Events
I. Profit Distribution for Common Stock and Conversion of Capital Reserve into Share Capital
Preparation, Implementation or Adjustment of the Policy for Common Stock Profit Distribution, Especially the Policy for
Cash Dividend Distribution
The Company's 2017 Profit Distribution Plan was reviewed and approved at the 24th session of the Eighth Board of
Directors held on March 8, 2018 and 2017 Annual General Meeting held on June 21, 2018. It was resolved that with the
Company’s total share capital of 438,744,881 shares as at December 31, 2017 as the base, the Company would distribute
cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every
10 shares (with tax inclusive) to the whole shareholders and capitalize no capital reserve to the whole shareholders. The
implementation of the profit distribution plan was finished on August 1, 2018. For the detail, refer to the Announcement on
Implementation of the Profit Distribution for Year 2017 (2018-014).
Special Note to Cash Dividend Distribution Policy
Does it comply with the Articles of Association or the
Yes
resolution of the General Meeting?
Are the profit distribution criteria and proportions definite
Yes
and clear?
Are the relevant decision-making process and
Yes
mechanism complete?
Do independent directors do their best in performing their
Yes
duties and bring their duties into due play?
Do minority shareholders have opportunity to make full
expression of their opinions and appeal? Have their Yes
lawful rights and interests been fully protected?
In case of adjustment or variation of the cash dividend
distribution policy, do the conditions and procedures Inapplicable
comply with the regulations and transparent?
The profit distribution plan or proposal and the preplan or proposal of conversion of the capital reserve into share capital in
the past three years (with the reporting period inclusive):
According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared
specific cash dividend distribution plan after the Board of Directors and the Shareholders’ General Meeting have reviewed
strictly according to the requirements. In the past three years, the Company has well implemented the cash dividend
distribution policy, fully asked for the independent directors’ opinions, effectively ensured the minority shareholders’ benefit
and made timely and accurate disclosure in its annual report and the relevant media.
Profit Distribution Plan in 2016: With the total share capital of 438,744,881 shares as at December 31, 2016 as the base,
the Company is going to distribute to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
33
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Profit Distribution Plan in 2017: With the total share capital of 438,744,881 shares as at December 31, 2017 as the base,
the Company is going to distribute to the whole shareholders cash dividend at CNY 2.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
Profit Distribution Plan in 2018: With the total share capital of 438,744,881 shares as at December 31, 2018 as the base,
the Company is going to distribute to the whole shareholders cash dividend at CNY 2.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
The accumulative amount of cash dividend distributed in the past three years took 151.39% of the annual average net
profit in the past three years, which complies with the rules and regulations.
Statement of cash dividends distributed in the past three years (with the reporting period inclusive)
In CNY
Proportion of the Ratio of the total
cash dividend amount of cash
Net profit
Ratio of the net distributed in dividend
attributable to the Amount of cash
profit attributable other way(s) in (including other
Company’s dividend Total amount of
Amount of Cash to the Company’s the net profit way(s)) in the net
Year of Dividend shareholders in distributed in cash dividend
Dividend shareholders attributable to the profit attributable
Distribution the consolidated other way(s) (including other
(including tax) taken in the Company’s to the Company’s
statements of the (such as shares way(s))
consolidated shareholders of shareholders of
year of dividend repurchased)
statements ordinary shares in ordinary shares in
distribution
the consolidated the consolidated
statements statements
2018 87,748,976.20 183,835,095.29 47.73% 0.00 0.00% 87,748,976.20 47.73%
2017 87,748,976.20 140,216,258.28 62.58% 0.00 0.00% 87,748,976.20 62.58%
2016 43,874,488.10 110,662,681.59 39.65% 0.00 0.00% 43,874,488.10 39.65%
In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders of ordinary
shares were positive but no common stock cash dividend distribution proposal has been put forward.
Inapplicable
II. Preplan for Profit Distribution and Conversion of Capital Reserve into Share Capital in the Reporting Period
Bonus shares distributed at the rate of ___ (share) for every 10
0
shares
Dividend distributed at the rate of CNY___ for every 10 shares
2.00
(with tax inclusive)
Number of shares converted for every 10 shares (shares) 0
Share capital base for the dividend distribution preplan (shares) 438,744,881
Total cash dividend distributed (with tax inclusive) 87,748,976.20
34
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Amount of cash dividend distributed in other way(s) (such as
0.00
shares repurchased)
Total amount of cash dividend (including other way(s)) 87,748,976.20
Profit available for distribution (CNY) 683,798,086.83
Proportion of the cash dividend in the total profit available for
100%
distribution (%)
Cash Dividend Distribution for the Reporting Year
Others
Detailed information for profit distribution or conversion of capital reserve into share capital preplan
The Company's 2018 Profit Distribution Plan was reviewed and approved at the 6th session of the Ninth Board of Directors held on March 13, 2019 and brought to 2018
Annual General Meeting for review. It was planned that with the Company’s total share capital of 438,744,881 shares as at December 31, 2018 as the base, the Company
would distribute cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to
the whole shareholders and capitalize no capital reserve to the whole shareholders. The profit distribution plan is subject to review and approval of the General Meeting
before implementation.
III. Implementation of Commitments
1. Commitments finished in implementation by the Company, shareholders, actual controller,
acquirer, directors, supervisors, senior executives or other related parties in the reporting period
and commitments unfinished in implementation at the end of the reporting period
Commitment Commitment Commitment Implementation
Commitments Promiser Description
type time deadline status
Commitment for Equity Separation Reform
Commitments in the acquisition report or the
written report on change of equity
Commitment made at the time of asset
reorganization
Commitment made at IPO or re-financing
Equity incentive commitment
The said
Huang directors and
Yongfeng, Chen senior
Libin, Lu executives
Commitment for
Other commitments to the minority Bingqiang, Lu increased December 16, Completed in
sales restriction 6 months
shareholders Wanjun, Liu holding of the 2017 implementation
on shares
Xiaoming, Pan Company's
Bo, Li Ming, shares and
Chen Zhuo committed that
within six
35
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
months of the
increase they
shall not reduce
the holding size
initiatively, shall
not be engaged
in any inside
trading, trading
the shares
during sensitive
period or short
swing trading.
Has the commitment been timely implemented Yes
If the commitment has not been implemented at
the end of the reporting period, it is necessary
Inapplicable
to explain the specific reason of failure in
implementation and the future work plan.
2. There existed profit anticipation for the Company’s assets or projects while the reporting period was still
within the duration of the profit anticipation. The Company made explanation on whether the assets or projects
reached the anticipated profit and the cause
Inapplicable
IV. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties
Inapplicable
V. Explanation of the Board of Directors, the Supervisory Committee and Independent Directors (if any) on the
“Qualified Auditor’s Report” issued by the CPAs in the Reporting Period
Inapplicable
VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and Accounting Method in
Comparison with the Financial Report of the Previous Year
Inapplicable
VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period Necessary to be Restated
Retrospectively
Inapplicable
36
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
VIII. Explanation on the Changes in the Scope of the Consolidated Statements in Comparison with the Financial
Report of the Previous Year
Inapplicable
IX. Engagement/Disengagement of CPAs
CPAs currently engaged by the Company
Ruihua Certified Public Accountants (Special General
Name of the domestic CPAs
Partnership)
Successive years of the domestic CPAs offering auditing
3
services
Name of the certified public accountants from the
Wang Yuqiao and Liu Xin
domestic CPAs
Successive years of the domestic CPAs offering auditing
3
services
Has the CPAs been changed for the reporting period?
No
Employment of CPAs, financial consultant or sponsor for auditing the internal control
The 24th Session of the Eighth Board of Directors held on March 8, 2018 and 2017 Annual General Meeting held on June
21, 2018 reviewed and approved the Proposal for Payment of the Auditing Fee of Year 2017 and Engagement of the CPAs
as the Auditor of Year 2018, and decided to renew Ruihua Certified Public Accountants (Special General Partnership) as
the Company's Auditor for auditing the Company's 2018 Financial Report and Internal Control for a term of one year.
During the reporting period, the Company paid the audit fee amounting to CNY 700,000.00 to Ruihua Certified Public
Accountants (Special General Partnership) for auditing the financial report and CNY 300,000.00 for auditing the internal
control.
X. Listing Suspension or Delisting Possibly to be Confronted with after Disclosure of the Annual Report
Inapplicable
XI. Matters concerning Bankruptcy Reorganization
Inapplicable
XII. Significant Lawsuits and Arbitrations
Inapplicable
XIII. Penalty and Rectification
Inapplicable
37
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
XIV. Integrity of the Company and its Controlling Shareholder and Actual Controller
Inapplicable
XV. Implementation of the Company’s Equity Incentive Plan, Employee Stock Ownership Plan or other Employee
Incentive Measures
The 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 decided to start 2018 A-Share Restrictive Stock Incentive Program (Phase I), which was later on
reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company
eventually granted 4.224 million restrictive A-shares to 128 persons eligible for the incentive。 For the detail, refer to the
relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on
January 12, 2019.
This part of A-share restrictive stock was all granted and registered for listing by January 31, 2019.
XVI. Significant Related Transactions
1. Related Transactions Related with Day-to-Day Operations
Inapplicable
2. Related transactions concerning acquisition and sales of assets or equity
Inapplicable
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current Associated Rights of Credit and Liabilities
Inapplicable
5. Other Significant Related Transactions
The 4th session of the Ninth Board of Directors held on December 25, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 reviewed and approved the Proposal for Conclusion of the Financial Service Agreement with
AVIC Finance Co., Ltd., and decided to terminate the original agreement with AVIC Finance Co., Ltd. and conclude a new
Finance Service Agreement. For the detail, refer to the Announcement on the Resolution of the 4th Session of the Ninth
Board of Directors No. 2018-029, Announcement on the Conclusion of the Financial Service Agreement with AVIC
Finance Co., Ltd. - Related Transaction No. 2018-031 and Announcement of the Resolution of 2019 1st Extraordinary
General Meeting No. 2019-008).
Inquiry on the website for disclosing the provisional report concerning significant related transactions
38
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Description of the provisional
Date of disclosure Disclosure website
announcements
Announcement on the Resolution of the
4th Session of the Ninth Board of December 27, 2018 www.cninfo.com.cn
Directors, 2018-029
Announcement on the Financial Service
Agreement with AVIC Finance Co., Ltd. a December 27, 2018 www.cninfo.com.cn
Related Transaction, 2018-031
Announcement on Resolution of 2019
1st Extraordinary General Meeting January 12, 2019 www.cninfo.com.cn
2019-008
XVII. Important Contracts and Implementation
1. Custody, Contacting and Leases
(1) Custody
Inapplicable
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
2. Significant Guarantees
(1) Guarantees
In CNY 10,000
Outward guarantees Offered by the Company and its Subsidiaries (excluding guarantee to the subsidiaries)
Date of the
Guarante
announceme Implemen
Guarantee Actual amount Type of Guarantee e to
Names of Guarantees nt on the Date of occurrence tation
line of guarantee guarantee period related
guarantee status
party?
line
Inapplicable
Total amount of outward guarantee Total amount of outward
0 0
approved in the report period (A1) guarantee actually incurred in the
39
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
report period (A2)
Total amount of outward guarantee already Total ending balance of outward
approved at the end of the report period 0 guarantee at the end of the report 0
(A3) period (A4)
Guarantee to the subsidiaries
Date of the
Guarante
announcem Implement
Guarantee Actual amount Type of Guarantee e to
Names of Guarantees ent on the Date of occurrence ation
line of guarantee guarantee period related
guarantee status
party?
line
Guarantee
March 10, December 30,
Harmony 20,000 8,000 with joint 1 year No No
2018 2018
responsibility
Guarantee
March 10,
the Hong Kong Co. 7,016.8 April 26, 2018 2,631.3 with joint 1 year No No
2018
responsibility
Guarantee
March 10, September 10,
the Hong Kong Co. 3,508.4 348.67 with joint 1 year No No
2018 2018
responsibility
Guarantee
March 10,
the Hong Kong Co. 0 October 15, 2018 557.86 with joint 1 year No No
2018
responsibility
Guarantee
March 10, November 13,
the Hong Kong Co. 0 418.4 with joint 1 year No No
2018 2018
responsibility
Guarantee
March 10, November 27,
the Hong Kong Co. 0 263.13 with joint 1 year No No
2018 2018
responsibility
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
30,525.2 subsidiaries actually incurred in 12,219.36
approved in the reporting period (B1)
the reporting period (B2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee
approved at the end of the reporting period 30,525.2 to the subsidiaries at the end of 12,219.36
(B3) the reporting period (B4)
Guarantee among the subsidiaries
Date of the
Guarante
announcem Implemen
Guarantee Actual amount Type of Guarantee e to
Names of Guarantees ent on the Date of occurrence tation
line of guarantee guarantee period related
guarantee status
party?
line
40
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Inapplicable
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
0 subsidiaries actually incurred in 0
approved in the reporting period (C1)
the reporting period (C2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee
approved at the end of the reporting period 0 to the subsidiaries at the end of 0
(C3) the reporting period (C4)
Total amount of guarantees (i.e. Total of the previous three major items)
Total amount of outward
Total guarantee quota to the subsidiaries
30,525.2 guarantee actually incurred in the 12,219.36
approved in the reporting period (A1)
report period (A2)
Total amount of guarantees already Total ending balance of
approved at the end of the report period 30,525.2 guarantees at the end of the 12,219.36
(A3) report period (A4)
Proportion of the actual guarantees in the Company’s net assets (namely A4+B4 +
4.75%
C4)
Including:
Amount of guarantees offered to the shareholders, actual controller and its related
0
parties (D)
Amount of guarantee for liabilities directly or indirectly offered to the guarantees with
0
the asset-liability ratio exceeding 70% (E)
Guarantee with total amount exceeding 50% of the net assets (F) 0
Total amount of the aforesaid three guarantees (D+E+F) 0
For the guarantee not yet due, guarantee responsibility incurred in the reporting
Inapplicable
period or description of the possible related discharge duty (if any)
Note to the outward guarantee against the established procedures (if any) Inapplicable
Description of the guarantee with complex method
Inapplicable
(2) Outward guarantee against regulations
Inapplicable
3. Entrusting a Third Party to Manage the Cash Assets
(1) Finance Management on Commission
Inapplicable
41
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(2) Entrusted Loan
Inapplicable
4. Other Important Contracts
Inapplicable
XVIII Social Responsibilities
1. Implementation of social responsibilities
"The Social Responsibility Report " was published on www.cninfo.com.cn on March 15, 2019.
2. Implementation of the social responsibility of precise poverty relief
During the reporting period of half a year, the Company had neither precise poverty relief work nor follow-up precise
poverty relief plan necessary to be carried out.
3. Environmental Protection
Does the Company or any of its subsidiaries belong to a key pollutant discharging unit as announced to the public by the
environmental protection authority?
Yes
Description
Distribution Pollutant Total
Name of the of the major Number of Total
Way of of the Discharging Discharge discharge Over-dischar
Company or pollutants or discharging discharge
discharging discharging concentration Standards in volume ging
its Subsidiary specific outlets volume
outlets Force verified
pollutant
Shanghai At the port of
Nickel and Intermittent Nickel:0.1;
Watch effluent Nickel﹤ 2640 3960
chromium and 1 chromium:0. None
Industry Co., treatment 0.01, tons/year tons/year
effluent interruption 3
Ltd. equipment
Construction and operation of the pollution prevention and control facilities
Shanghai Watch Co., Ltd. reconstructed the clean production facility in 2016 and added 2 sets of equipment in 2018 for
the purpose of ensuring discharging of nickel and chromium effluent to comply with the Emission Standard of Pollutants
for Electroplating during 2018. So far, the facility has been running normally and has never over-discharged the pollutants;
and has now networked the platform of the local environmental protection authority.
Environmental impact assessment on construction projects and other environmental protection administrative licensing
In 2018 Yangpu District Environmental Protection Bureau of Shanghai organized and held the Clean Production Auditing
and Assessment Seminar of Shanghai Watch Co., Ltd. where the company's clean production work was assessed,
audited and approved.
42
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Shanghai Watch Co., Ltd.has passed the pollution discharge verification organized by Yangpu District Environmental
Protection Bureau of Shanghai with the Notice of Pollution Discharging Verification No.: YANG HUAN JIAN HUAN JIAN
FEI HE ZI [2007] No. 05363;
In accordance with the provisions of Shanghai Environmental Protection Bureau, the Company is going to apply for the
pollutant discharging licence before the end of 2019. At present, the company is making the relevant preparation work for
application for the pollutant discharging licence.
Contingency Plan for Emergent Environmental Incidents
Shanghai Watch Co., Ltd. prepared the Emergency Response Plan against Emergent Environmental Incidents and
regularly organizes training and exercise every year. The aforesaid plan has been approved and filed for record by
Yangpu District Environmental Protection Bureau of Shanghai and has been published on the Environmental Information
Disclosure Platform of Enterprises and Institutions of Shanghai.
Environment Self-Monitoring Program
Yangpu District Environmental Protection Bureau of Shanghai conducts supervision once every quarter. The company
entrusts Shanghai Light Industry Environment Protection and Pressure Vessel Monitoring General Station, a competent
independent agent, to conduct the monitoring every year. The company is itself equipped with monitoring instruments and
conducts self-monitoring at least 4 times every month.
Other environment information necessary to be disclosed
The company has disclosed the concerned information on the Environmental Information Disclosure Platform of
Enterprises and Institutions of Shanghai according to the requirements of the local environmental protection authorities.
Website: http://xxgk.eic.sh.cn
Other information in connection with the environmental protection
None
XIX. Notes to Other Significant Events
1. Amendment of the Articles of Association
The 26th Session of the Eighth Board of Directors held on August 21, 2018 and 2018 2nd Extraordinary General Meeting
held on September 11, 2018 reviewed and approved the Proposal on Amendment of the Articles of Association. For the
detail, refer to the Announcement on the Resolution of the 26th Session of the Eighth Board of Directors No. 2018-015,
the Announcement on the Resolution of 2018 2nd Extraordinary General Meeting No. 2018-021 and the Proposal on
Amendment of the Articles of Association disclosed on the Securities Times, Hong Kong Commercial Daily and
www.cninfo.com.cn.
2. Election for the New Board of Directors and the New Supervisory Committee
The 26th Session of the Eighth Board of Directors held on August 21, 2018 and 2018 2nd Extraordinary General Meeting
held on September 11, 2018 reviewed and approved the Proposal on Election for the New Board of Directors and
Nomination of on-independent Director Candidates and the Proposal on Election for the New Board of Directors and
43
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Nomination of Independent Director Candidates. Mr. Huang Yongfeng, Mr. Wang Mingchuan, Mr. Fu Debin, Mr. Xiao
Zhanglin, Mr. Wang Bo, Mr. Chen Libin were elected non-independent directors of the Ninth Board of Directors; Mr. Wang
Jianxin, Mr. Zhong Hongming and Mr. Tang Xiaofei were elected independent directors of the Ninth Board of Directors. For
the detail, refer to the Announcement on the Resolution of the 26th Session of the Eighth Board of Directors No. 2018-015,
the Announcement on the Resolution of 2018 2nd Extraordinary General Meeting No. 2018-021 disclosed on the
Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
The 19th Session of the Supervisory Committee held on August 21, 2018 and 2018 2nd Extraordinary General Meeting
held on September 11, 2018 reviewed and approved the Proposal on Election for the New Supervisory Board; Mr. Wang
Baoying was elected non-staff supervisor of the Ninth Supervisory Committee. For the detail, refer to the Announcement
on the Resolution of the Ninth Supervisory Committee No. 2018-016 and the Announcement on the Resolution of 2018
2nd Extraordinary General Meeting No. 2018-021 disclosed on the Securities Times, Hong Kong Commercial Daily and
www.cninfo.com.cn.
2018 Staff Representative Congress held on August 30, 2018 reviewed and approved the Proposal on Election of the
Staff Representative Supervisors of the Ninth Supervisory Committee; Madam Sheng Qing and Mr. Zou Zhixiang were
elected staff representative supervisors the Ninth Supervisory Committee. For the detail, refer to the Announcement on
the Resolution of the Staff Representative Congress No. 2018-019 disclosed on the Securities Times, Hong Kong
Commercial Daily and www.cninfo.com.cn.
XX. Significant Events of the Company's Subsidiaries
Inapplicable
44
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 6 Change of Shares and Particulars about Shareholders
I. Change of Shares
1. Change of Shares
In shares
Before the change Increase / Decrease (+/ -) After the change
Shares
New Bonus converted
Quantity Proportion Others Sub-total Quantity Proportion
issuing shares from
reserve
I. Restricted shares 380,513 0.09% 0 380,513 0.09%
1. Shares held by the state 0 0.00% 0 0 0.00%
2. State corporate shares 0 0.00% 0 0 0.00%
3. Other domestic shares 380,513 0.09% 0 380,513 0.09%
Including: Domestic corporate
0 0.00% 0 0 0.00%
shares
Shares held by domestic
380,513 0.09% 0 380,513 0.09%
natural persons
4、Foreign invested shares 0 0.00% 0 0 0.00%
Including: Foreign corporate shares 0 0.00% 0 0 0.00%
Shares held by foreign
0 0.00% 0 0 0.00%
natural persons
438,364,3 438,364,3
II. Unrestricted shares 99.91% 0 99.91%
68 68
356,716,3 356,716,3
1. CNY ordinary shares 81.30% 0 81.30%
68 68
2. Foreign invested shares listed in 81,648,00 81,648,00
18.61% 0 18.61%
Mainland China 0 0
3、Foreign invested shares listed
0 0.00% 0 0 0.00%
abroad
4. Miscelleneous 0 0.00% 0 0 0.00%
438,744,8 438,744,8
III. Total shares 100.00% 0 100.00%
81 81
Cause of the change of shares
Inapplicable
45
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Approval of Change of the Shares
Inapplicable
Transfer of the Shares Changed
Inapplicable
Progress of implementation of the stock repurchase
Inapplicable
Progress of implementation of reduction of the holding size of the shares repurchased by centralized bidding
Inapplicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value
per share attributable to the common stockholders in the past year and the latest period
Inapplicable
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
The 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 decided to start 2018 A-Share Restrictive Stock Incentive Program (Phase I), which was later on
reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company
eventually granted 4.224 million restrictive A-shares to 128 persons eligible for the incentive。 The date of granting this
part of restrictive shares was January 11, 2019 (The lock-up period of these restrictive shares was two years commencing
from the date of granting) . By January 30 2019, the work of granting the shares and registration for listing was completed.
After the share granting, the Company's total capital stock increased to 442,968,881 shares.
2. Change of the Restricted Shares
Inapplicable
II. Issuing and Listing
1. Issuing of securities (with preferred stock exclusive) in the reporting period
Inapplicable
2. Note to changes of the company’s total shares and the structure of shareholders as well as the structure of
assets and liabilities
Inapplicable
3. Existing Employee Shares
Inapplicable
46
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
III. Shareholders and Actual Controlling Shareholder
1. Number of Shareholders and Shareholding
In shares
Total preference
shareholders with
Total preference
Total common the voting power
shareholders with the
Total common shareholders at the recovered at the
voting power
shareholders at end of the month end of the month
31,855 31,352 recovered at the end 0 0
the end of the before the date of before the day of
of the reporting period
reporting period disclosing the disclosing the
(if any) (Refer to Note
annual report Annual Report (if
8)
any) (Refer to Note
8)
Shares held by the shareholders holding over 5% shares or the top ten shareholders
Number Pledging or freezing
of shares Increase/ Number
Quantity of
Sharehold held at decrease of the
Name of the Nature of the unrestricte
ing the end of in the restricted
Shareholder shareholder d shares Status of the shares Quantity
proportion the reporting shares
held
reporting period held
period
AVIC International 162,977,3 162,977,32
State corporate 37.15% 0 0
Holding Limited 27 7
Chongqing
International Trust Co., Domestic natural 18,389,22
4.19% 6,904,000 0 18,389,227
Ltd. - YUXIN No. 2 persons 7
Trust
Domestic natural 12,703,96 12,703,96
Mo Jiadong 2.90% 0 12,703,968
persons 8 8
Domestic natural 11,069,72
#Yang Zugui 2.52% 1,568,758 0 11,069,727
persons 7
National Social
Security Fund 114 State corporate 2.20% 9,657,744 0 0 9,657,744
Portfolio
Xizang Investment
State corporate 1.13% 4,976,551 0 0 4,976,551
Co., Ltd.
MANULIFE TEDA Domestic
Fund－ Minsheng non-state-owned 1.12% 4,893,559 0 0 4,893,559
Bank－MANULIFE corporate
47
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
TEDA Value Growth
Oriented Additional
Issue No. 351 Assets
Management Program
Shenzhen Heli Domestic
Fengyuan Commerce non-state-owned 0.62% 2,704,000 -596,000 0 2,704,000
& Trade Co., Ltd. corporate
Shenzhen Rongliyuan Domestic
Commercial non-state-owned 0.37% 1,630,500 1,030,500 0 1,630,500
Information Co., Ltd. corporate
China Construction
Bank Co., Ltd. -
INVESCO GREAT Domestic
-1,531,10
WALL Quantized non-state-owned 0.31% 1,376,533 0 1,376,533
0
Selected Stock Type corporate
Securities Investment
Fund
About the fact that a strategic investor or
ordinary corporate became one of the top ten
Inapplicable
shareholders due to placement of new shares (if
any) (Refer to Note 3)
Explanation on associated relationship or
Inapplicable
consistent action of the above shareholders
Shares held by top 10 shareholders of unrestricted shares
Share type
Name of the Shareholder Quantity of unrestricted shares held at the end of the reporting period
Share type Quantity
CNY ordinary
AVIC International Holding Limited 162,977,327 162,977,327
shares
Chongqing International Trust Co., Ltd. - YUXIN CNY ordinary
18,389,227 18,389,227
No. 2 Trust shares
CNY ordinary
Mo Jiadong 12,703,968 12,703,968
shares
CNY ordinary
#Yang Zugui 11,069,727 11,069,727
shares
CNY ordinary
National Social Security Fund 114 Portfolio 9,657,744 9,657,744
shares
CNY ordinary
Xizang Investment Co., Ltd. 4,976,551 4,976,551
shares
MANULIFE TEDA Fund－ Minsheng Bank－ CNY ordinary
4,893,559 4,893,559
MANULIFE TEDA Value Growth Oriented shares
48
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Additional Issue No. 351 Assets Management
Program
Shenzhen Heli Fengyuan Commerce & Trade CNY ordinary
2,704,000 2,704,000
Co., Ltd. shares
Shenzhen Rongliyuan Commercial Information CNY ordinary
1,630,500 1,630,500
Co., Ltd. shares
China Construction Bank Co., Ltd. - INVESCO
CNY ordinary
GREAT WALL Quantized Selected Stock Type 1,376,533 1,376,533
shares
Securities Investment Fund
Explanation to the associated relationship or
consistent action among the top 10
shareholders of non-restricted negotiable shares
Inapplicable
and that between the top 10 shareholders of
non-restricted negotiable shares and top 10
shareholders.
Note to the top 10 shareholders involved in
margin financing & securities lending (if any) Inapplicable
(Refer to Note 4)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
repurchase during the reporting period?
No
2. Controlling Shareholder
Nature of the controlling shareholder: State-owned shareholding directly under the central government
Type of the controlling shareholder: corporate
Legal Representative
Name of the Controlling Shareholder Date of incorporation Organization Code Leading business activities
/Leader
Investing and initiating entities
(separate application is to be
submitted for a specific project);
domestic commerce, supply and
AVIC International Holding Limited Liu Hongde June 20, 1997 91440300279351229A sales of goods and materials
(excluding the goods for exclusive
sale, under special control and
monopolized goods); import and
export.
Equity in other domestic and foreign
AVIC International Holding Limited holds 22.35% equity in AVIC Sunda Holding Company Limited (AVIC SUNDA 000043); 14.24%
listed companies held by the
equity in Tianma Micro-electronics Co., Ltd. (SHEN TIANMA A 000050); 69.74% equity in Shennan Circuits Co.,Ltd. (Shennan
controlling shareholder by means of
Circuits 002916); and 73.87% equity in AVIC International Maritime Holdings Limited (a Singapore listed company, O2I).
control and mutual shareholding in
49
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
the reporting period.
Change of the controlling shareholder in the reporting period
Inapplicable
3. Actual Controller and its Concerted Parties
Nature of the actual controller: State-owned assets regulatory agency directly under the central government
Type of the actual controller: corporate
Legal
Date of
Name of the Actual Controller Representative Organization Code Leading business activities
incorporation
/Leader
Import & export; warehousing;
investment and management of
industry, hotel, property, real
estate; development, sales and
repairing service of new energy
AVIC International Holding equipment; exhibition; transfer of
Liu Hongde April 12, 1983 911100001000009992
Corporation technology and technical
services in connection with the
aforesaid businesses; dispatch
contract workers to implement
overseas engineering works;
sales of poisonable chemicals.
Equity in other domestic and
foreign listed companies
AVIC International holds 8.40% equity in Tianma Micro-electronics Co., Ltd. (SHEN TIANMA A 000050).
controlled by the actual
controller in the reporting period
Change of the actual controller in the reporting period
Inapplicable
Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller
50
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
State-owned Assets Supervision and Administration
Commission of the State Council
100%
National Council for Beijing Putuo Hanhua Aviation Industry AVIC CCB Aviation Industry
Social Security Fund Investment Management Corporation of China Equity Investment (Tianjin) Co.,
14.31% 14.31% 62.52% 8.86%
AVIC International Holding Corporation
100%
AVIC International Shenzhen Company Limited
37.50%
33.93%
AVIC International Holdings Corporation
37.15%
Fiyta Holdings Ltd.
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. Other Corporate Shareholder Holding over 10% of the Company’s Shares
Inapplicable
5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the Reorganizing
Party and other Committing Party
Inapplicable
51
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 7 About the Preferred Shares
Inapplicable
Section 8 Directors, Supervisors, Senior Executives and Employees
I. Change in Shares Held by Directors, Supervisors and Senior Executives
Number of
Sharehold Sharehold Number of
shares
ing ing shares
held at the Other
Starting Expiry increased decreased held at
Office beginning increase/d
Name Title Gender Age date of date of in the in the end of the
Status of the ecrease
tenure tenure reporting reporting reporting
reporting (shares)
period period period
period
(shares) (shares) (shares)
(shares)
Huang
Chairman In office Male 45 Septembe Septembe 80,000 0 0 0 80,000
Yongfeng
r 11, 2018 r 11, 2021
Wang
Mingchua Director In office Male 53 Septembe Septembe 0 0 0 0 0
n r 11, 2018 r 11, 2021
Fu Debin Director In office Male 42 Septembe Septembe 0 0 0 0 0
r 11, 2018 r 11, 2021
Xiao
Director In office Male 43 Septembe Septembe 0 0 0 0 0
Zhanglin
r 11, 2018 r 11, 2021
Wang Bo Director In office Male 40 Septembe Septembe 0 0 0 0 0
r 11, 2018 r 11, 2021
Chen Director &
In office Male 55 Septembe Septembe 80,000 0 0 0 80,000
Libin GM
r 11, 2018 r 11, 2021
Independ
Wang
ent In office Male 49 Septembe Septembe 0 0 0 0 0
Jianxin
director r 11, 2018 r 11, 2021
Zhong Independ In office Male 44 0 0 0 0 0
52
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Hongming ent Septembe Septembe
director r 11, 2018 r 11, 2021
Independ
Tang
ent In office Male 45 Septembe Septembe 0 0 0 0 0
Xiaofei
director r 11, 2018 r 11, 2021
Chairman
of the
Wang Superviso
In office Male 55 Septembe Septembe 0 0 0 0 0
Baoying ry
r 11, 2018 r 11, 2021
Committe
e
Sheng Superviso
In office Female 43 Septembe Septembe 0 0 0 0 0
Qing r
r 11, 2018 r 11, 2021
Zou Superviso
In office Male 35 Septembe Septembe 0 0 0 0 0
Zhixiang r
r 11, 2018 r 11, 2021
Lu Deputy October October
In office Male 58 96,311 0 0 0 96,311
Bingqiang GM 08, 2018 08, 2021
Deputy
GM and
Lu October October
Secretary In office Male 52 50,000 0 0 0 50,000
Wanjun 08, 2018 08, 2021
of the
Board
Liu Deputy October October
In office Male 48 50,000 0 0 0 50,000
Xiaoming GM 08, 2018 08, 2021
Deputy October October
Pan Bo In office Male 43 50,000 0 0 0 50,000
GM 08, 2018 08, 2021
Deputy October October
Li Ming In office Male 46 50,040 0 0 0 50,040
GM 08, 2018 08, 2021
Chief
Chen October October
Accounta In office Male 43 51,000 0 0 0 51,000
Zhuo 08, 2018 08, 2021
nt
Zhang Independ
August
Hongguan ent Retired Male 63 Septembe 0 0 0 0 0
31, 2015
g director r 11, 2018
Independ
Zhang August
ent Retired Male 53 Septembe 0 0 0 0 0
Shunwen 31, 2015
director r 11, 2018
Wang Yan Independ Retired Male 62 August 0 0 0 0 0
53
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
ent 31, 2015 Septembe
director r 11, 2018
Wang Superviso October
Retired Male 39 Septembe 0 0 0 0 0
Jingqi r 14, 2016
r 11, 2018
Total -- -- -- -- -- -- 507,351 0 0 0 507,351
II. Personnel Change in Directors, Supervisors and Senior Executives
Name Office Taken Type Date: Cause
Elected independent director of the Ninth Board of Directors at the 26th
Independent Appointment & September 11,
Wang Jianxin Session of the Eighth Board of Directors and 2018 2nd Extraordinary
director removal 2018
General Meeting.
Elected independent director of the Ninth Board of Directors at the 26th
Independent Appointment & September 11,
Zhong Hongming Session of the Eighth Board of Directors and 2018 2nd Extraordinary
director removal 2018
General Meeting.
Elected independent director of the Ninth Board of Directors at the 26th
Independent Appointment & September 11,
Tang Xiaofei Session of the Eighth Board of Directors and 2018 2nd Extraordinary
director removal 2018
General Meeting.
Appointment & September 11, Elected staff supervisor of the Ninth Supervisory Committee at 2018 1st
Zou Zhixiang Supervisor
removal 2018 Staff Representative Congress.
Independent Retired upon expiry September 11,
Zhang Hongguang Retired upon expiry of the tenure of the Eighth Board of Directors
director of the tenure 2018
Independent Retired upon expiry September 11,
Zhang Shunwen Retired upon expiry of the tenure of the Eighth Board of Directors
director of the tenure 2018
Independent Retired upon expiry September 11,
Wang Yan Retired upon expiry of the tenure of the Eighth Board of Directors
director of the tenure 2018
Retired upon expiry September 11,
Wang Jingqi Supervisor Retired upon expiry of the tenure of the Eighth Supervisory Committee
of the tenure 2018
III. Profile of Senior Executives
Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office
Mr. Huang Yongfeng, born in May, 1974, senior engineer, master of management engineering of Beijing University of
Aeronautics & Astronautics, and EMBA of China Europe International Business School. He is now the Secretary of the
CPC Committee and Chairman of the Board of the Company. Mr. Huang used to be the chairman and general manager of
AVIC INTL Zhuhai Co., Ltd., assistant to the general manager of AVIC International Holding Corporation, deputy general
manager, assistant to the general manager, manager of the enterprise strategy and management department of AVIC
International Shenzhen Co., Ltd., director of AVIC Sunda Holding Company Limited, director of Rainbow Department
Store Co., Ltd., director of Tianma Microelectronics Co., Ltd. and chairman of Shenzhen Zhongshi Mechanical Equipment
Co., Ltd.
54
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Mr. Wang Mingchuan, born in December 1966, senior accountant, master of management engineering of Tongji University.
He is a director of the Company, deputy GM and chief accountant AVIC International Shenzhen Co., Ltd., a director of
Tianma Microelectronics Co., Ltd., a director of Rainbow Department Store Co., Ltd. and a director of Shennan Circuits
Co., Ltd. He used to be a financial supervisor of the financial division of Chengdu Engine Company, manager of the
financial department of Shenzhen Shenrong Engineering Plastic Company, manager of the comprehensive management
department and chief financial officer of Shenzhen CATIC Trading Co., Ltd., manager of the financial and audit
department, manager of the financial department and vice chief accountant of AVIC International Shenzhen Co., Ltd. and
chief of the financial department and vice chief accountant of AVIC International Holding Corporation.
Mr. Fu Debin, born in February 1977, master of engineering and doctor of engineering of Beijing University of Aeronautics
& Astronautics. He is a director in office of the Company and the head of H.R. department of AVIC International Holding
Corporation, a director of Tianma Microelectronics Co., Ltd. and a director of Shennan Circuits Co., Ltd. He used to be the
head of the administration and management department and deputy head of the management department of AVIC
International Holding Corporation, deputy director of the party policy office and deputy secretary of the general Party
branch of Power School of Beijing University of Aeronautics & Astronautics.
Mr. Xiao Zhanglin, born in January 1976, senior engineer, MBA of Shanghai Jiaotong University. He is a director in office
of the Company, company secretary of AVIC International Holding Limited, director of AVIC Sunda Holding Company
Limited, director of Shennan Circuits Co., Ltd. a director of Rainbow Department Store Co., Ltd., a director of Shenzhen
Aero Fasteners MFG Co., Ltd. Mr. Xiao used to be the chief of the retail and high-end consumer goods office, deputy
section chief of the strategy development department of AVIC International Holding Corporation and the assistant to the
section chief of the enterprise strategy and management department of AVIC International Shenzhen Co., Ltd., a director
of Shenzhen AVIC Commerce and Trade Co., Ltd. And a director of Tianma Microelectronics Co., Ltd.
Mr. Wang Bo, born in July, 1979, MBA of Renmin University of China. He is a director in office of the Company, section
chief of the HR department of AVIC International Shenzhen Co., Ltd., a director of Shennan Circuits Co., Ltd, a director of
Shenzhen Aero Fasteners MFG Co., Ltd., a director of Shenzhen Grand Skylight Hotel Management Company Limited
and a director of Shenzhen Shanghai Hotel. Mr. Wang used to be deputy section chief of the HR department of AVIC
International Holding Corporation, a director of AVIC INTL Guangzhou Co., Ltd., and a director of AVIC INTL Zhuhai Co.,
Ltd. and a director of Shenzhen AVIC Commerce and Trade Co., Ltd.
Mr. Chen Libin, born in June 1964, master of economics of the Party School of Guangdong Provincial CPC Committee
and EMBA of Sun Yat-Sen University. He is a director in office, Vice Secretary of the CPC Committee and the GM of the
Company. Mr. Chen used to be the deputy General Manager and Secretary of the Board of the Company, deputy section
chief and section chief of the Party’s affairs of the Party-masses Work Department and senior commissioner, deputy
manager and manager of the enterprise culture department of CATIC Shenzhen.
Mr. Wang Baoying, born in July, 1964, senior engineer at research fellow level, bachelor of Beijing University of
Aeronautics & Astronautics, EMBA of China Europe International Business School. He is the Chairman of the Supervisory
Committee, managing director of AVIC International Shenzhen Co., Ltd., the chairman of the supervisory committee of
Tianma Microelectronics Co., Ltd., the chairman of the supervisory committee of Rainbow Department Store Co., Ltd. and
the chairman of the supervisory committee of Shennan Circuits Co., Ltd. He used to be a director of the Company,
section-chief of AVIC Tianjin Aviation Electro-mechanical Co., Ltd., deputy GM of Shenzhen Rainbow Department Store
55
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Co., Ltd., first deputy GM of Shenzhen Nam Kwong (Group) Company Limited, manager of the enterprise strategy and
management department and assistant of the GM of CATIC Shenzhen, executive director of AVIC International Holding
Limited, managing director of Shenzhen AVIC Resources Co., Ltd., managing director of AVIC New Energy Development
Co., Ltd. and managing director of AVIC International Holding Corporation.
Ms. Sheng Qing, born in April, 1976, accountant, senior HR administrator,bachelor of international accounting
specialization of Jiangxi University of Finance and Economics, master of organization and HR management of the
University of Hong Kong. She is the manager of the discipline inspection, supervision and audit department of the
Company. She used to be a supervisor of the Eighth Supervisory Committee, manager of HR department and senior
business manager of the audit department of the Company.
Mr. Zou Zhixiang, born in March 1984, medium auditor, accountant and bachelor of financial management of Hunan
University. He is now an assistant to the manager of the descipline inspection, supervision and audit department of the
Company. Mr. Zou used to be the senior business manager of the audit department of the Company and the auditing
commissioner of the supervision and audit department of AVIC International Holding Limited.
Mr. Wang Jianxin, born in June, 1970, graduated from Zhongnan University of Economics and Law, a Chinese CPA. Mr.
Wang is a partner of ShineWing Certified Public Accountants (Special General Partnership) and independent director of
Chongqing Fuling Zhacai Group Co.,Ltd.
Mr. Zhong Hongming, born in January 1975, graduated from Renmin University of China, doctor of law. Mr. Zhong is an
associate research fellow of Law Research Institute of Sichuan Academy of Social Sciences, a researcher of the united
post-doctorial research center of Sichuan Academy of Social Sciences, a member of China Securities Law Research
Council, an independent director of Mango Excellent Media Co., Ltd. and Xian Dagang Road Machinery Co.,Ltd.
Mr. Tang Xiaofei, born in May, 1974, graduated from Southwest Jiaotong University, professor and doctorial tutor. Mr. Tang
is a professor and doctorial tutor of the Business School of Southwest Jiaotong University, director of Urban Brand
Strategy Research Institute of Southwest University of Finance and Economics, enjoying the title of Outstanding Talent of
the New Century granted by the Ministry of Education, Secretary-general and executive council member of the
International Brand Strategy Society, a council member of Chinese Association of Market Development, consultant of
APEX Ogilvy, expert consultant of brand development of Chengdu Municipal Government, expert of Chengdu Famous
Trademark Determination Board, executive director of CCTV WDY, independent director of Sichuan Languang
Development Co., Ltd.
Mr. Lu Bingqiang, born in December 1961, senior economist, bachelor of Guangzhou Jinan University. Mr. Lu is the
managing director of FIYTA (Hong Kong) Limited. Shenzhen Co., Ltd. He used to be the assistant to the GM and director
of the Company, and GM and chairman of Shenzhen Harmony World Watches Center Co., Ltd., the president secretary of
AVIC International Shenzhen Co., Ltd.
Mr. Lu Wanjun, born in February, 1967, accountant, EMBA of Sino-European International Management Institute. Mr. Lu is
the Secretary of Committee for Discipline Inspection, a deputy GM and the Secretary of the Board of the Company. He
used to be the assistant to the GM of the Company, executive deputy GM and deputy GM, the assistant to the GM and
concurrently the manager of the financial department of Shenzhen Harmony World Watches Center Co., Ltd.
56
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Mr. Liu Xiaoming, born in 1971, engineer, economist, bachelor of mechanical engineering of Beijing University of
Aeronautics & Astronautics, and EMBA of China Europe International Business School. He is a deputy GM of the
Company, the managing director of Shenzhen Harmony World Watches Center Co., Ltd. He used to be the assistant to
the GM of the Company, a deputy GM and the assistant to the GM of Shenzhen Harmony World Watches Center Co., Ltd.
Mr. Pan Bo, born in March, 1976, bachelor of electromechanical engineering of Beijing University of Aeronautics &
Astronautics, and EMBA of China Europe International Business School. He is now a deputy GM of the Company and the
managing director of FIYTA Sales Co., Ltd. Mr. Pan used to be the assistant to the GM of the Company, executive deputy
GM, deputy GM, the assistant to the GM, manager of the sales department, manager of the logistic department, manager
of the after-sale department, etc. of FIYTA Sales Co., Ltd.
Mr. Li Ming, born in September, 1973, bachelor of marketing of Zhongnan University of Economics and Law and EMBA of
China Europe International Business School. He is now a deputy GM of the Company. Mr. Li used to be the assistant to
the GM and chief HR officer of the Company, a deputy GM, the assistant to the GM and manger of the HR department of
Shenzhen Harmony World Watches Center Co., Ltd.; chief HR officer and the GM of the marketing center of China
Netcom Shenzhen; manager of big customer market planning of China Telecom Shenzhen.
Mr. Chen Zhuo, born in September 1976, accountant, MBA of Wuhan University, EMBA of China Europe International
Business School. He is the chief accountant of the Company. Mr. Chen used to be a supervisor, the assistant to the GM,
manager of the strategy and information department, deputy manager of the strategy and information department and
securities affairs representative of the Company, deputy GM and manager of the financial information department of
FIYTA Sales Co., Ltd.
Office taking in shareholder companies
Does he/she receive
Titles engaged
Names of the Starting date of Expiry date of remuneration or
Names of the Shareholders in the
persons in office tenure tenure allowance from the
shareholders
shareholder
Deputy GM
January 23,
Wang Mingchuan AVIC International Shenzhen Co., Ltd. and Chief Yes
2017
Accountant
Head of the HR
Fu Debin AVIC International Holding Corporation July 01, 2016 Yes
Dept.
Company February 05,
Xiao Zhanglin AVIC International Holding Limited Yes
secretary 2018
Head of the HR
Wang Bo AVIC International Shenzhen Co., Ltd. April 25, 2017 Yes
Dept.
Special
Wang Baoying AVIC International Shenzhen Co., Ltd. April 11, 2017 Yes
commissioner
Explanation on
the office taking in Inapplicable
shareholder
57
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
companies
Office taking in other organizations
Does he/she receive
Titles engaged
Names of the Starting date of remuneration or
Names of other organizations in the other Expiry date of tenure
persons in office tenure allowance from other
organizations
organizations
December 01,
Wang Jianxin Shine Wing Certified Public Accountants Partner Yes
2006
Law Research Institute of Sichuan Academy of Social Associate November 24,
Zhong Hongming Yes
Sciences research fellow 2017
Independent
Zhong Hongming Mango Excellent Media Co., Ltd. June 14, 2017 Yes
director
Independent October 27,
Zhong Hongming Xian Dagang Road Machinery Co.,Ltd. Yes
director 2017
September 01,
Tang Xiaofei Business School of Southwest Jiaotong University Doctorial tutor Yes
2008
December 01,
Tang Xiaofei Business School of Southwest Jiaotong University Professor Yes
2011
Explanation on
the office taking in
Inapplicable
other
organizations
Punishment imposed by the securities regulatory authority on the directors, supervisors and senior executives both in
office and having left their posts in the reporting period.
Inapplicable
IV. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis for determining the remuneration and actual payment to directors, supervisors and
senior executive to directors, supervisors and senior executives:
The Company practiced the annual salary system for its senior executives. The annual salary structure consists of the
basic annual salary and performance based annual salary;and performance based annual salary consists of financial
performance annual salary and non-financial performance annual salary. Where the assessment for the annual salary to
the Chairman is conducted according to the assessment measures concluded by the shareholder organization while the
assessment of senior executives is conducted according to the Measures for Administration of the Remuneration to
Senior Executives.
Remuneration to Directors, Supervisors and Senior Executives during the Reporting Period
In CNY 10,000
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Total pretax Is the remuneration
remuneration from one of the
Name Title Gender Age Office Status
received from the Company's related
Company parties
Huang Yongfeng Chairman Male 45 In office 102.25 No
Wang Mingchuan Director Male 53 In office 0 No
Fu Debin Director Male 42 In office 0 No
Xiao Zhanglin Director Male 43 In office 0 No
Wang Bo Director Male 40 In office 0 No
Chen Libin Director & GM Male 55 In office 153.02 No
Wang Jianxin Independent director Male 49 In office 3.48 No
Zhong Hongming Independent director Male 44 In office 3.48 No
Tang Xiaofei Independent director Male 45 In office 3.48 No
Chairman of the
Wang Baoying Supervisory Male 55 In office 0 No
Committee
Sheng Qing Supervisor Female 43 In office 101.43 No
Zou Zhixiang Supervisor Male 35 In office 31.76 No
Lu Bingqiang Deputy GM Male 58 In office 129.14 No
Deputy GM and
Lu Wanjun Secretary of the Male 52 In office 135.89 No
Board
Liu Xiaoming Deputy GM Male 48 In office 144.23 No
Pan Bo Deputy GM Male 43 In office 148.89 No
Li Ming Deputy GM Male 46 In office 135.89 No
Chen Zhuo Chief Accountant Male 43 In office 135.89 No
Zhang Hongguang Independent director Male 63 Retired 4.5 No
Zhang Shunwen Independent director Male 53 Retired 6.21 No
Wang Yan Independent director Male 62 Retired 6.21 No
Wang Jingqi Supervisor Male 39 Retired 66.56 No
Total -- -- -- -- 1,312.31 --
Equity incentive to directors and senior executives of the Company during the reporting period
Inapplicable
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
V. Employees
1. Number, Job Composition and Education Background of Employees
Number of employees working for the parent company 125
Number of employees working for the major subsidiaries 5,037
Total employees on active duty 5,162
Total employees receiving remuneration in the reporting period 5,162
Number of the retired employees for whom the parent company and the major
0
subsidiaries need to share the pension
Job Composition
Job Composition Categories Number of persons involved in the job composition
Production 339
Sales 3,842
Technical 352
Financial 148
Administrative 481
Total 5,162
Education background
Education levels Number of persons
Master's degree or higher 77
Undergraduate 774
Junior college 1,279
Below junior college 3,032
Total 5,162
2. Remuneration Policy for Staff
The Company’s remuneration policy is based on the principle of post value orientation, performance orientation, efficiency
priority, is based on the principle of strategy, market, performances and job value with consideration of fairness,
sustainable development and market orientation. The Company aims to establish a remuneration system which may
match the Company's strategy, comply with the Company's development strategy and correspond to the Company's
overall efficiency, can surely attract high quality talents, retain the key talents, activate the human resource and improve
the Company’s core competitiveness.
3. Training Program
The Company is concentrated on watch industry, insists on the principle of guiding various businesses with the brand
strategy, takes a broad view of the world and has established its vision of “becoming a leading internationalized watch
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
brand enterprise”. While speeding up development, the Company firmly believes that “to build brand is to integrate the
brand work and life style”, the core speciality of the organization and staff and the qualification of the staff as brand
personnel are the key elements determining the future development. For this purpose, in respect of employee training, the
Company has established FIYTA College and takes the college as an important base for popularizing and implementing
the enterprise culture, promoting practice of the strategy and molding brand people. Based on the college, the Company
constructs a training system of various talents, focuses on the echelon leadership,cultivating young generations, and
professional ability training of various key talents. Through the projects, such as reservoir of master craftsmen,sales
training, CSSGB training and medium and high-level leadership training, young general power camp, etc., carry forward
the construction of integrated talents cultivation system of the Company and assist the Company to become a learning
organization with powerful vitality.
4. Labor Outsourcing
Inapplicable
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 9 Corporate Governance
I. General
In year 2018, the Company kept improving the Company’s corporate governance structure strictly according to the PRC
Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission concerning
governance of listed companies, and tried to enhance construction of modern enterprise system, upgraded the level of
regulatory operation of the Company. As a result, there was no discrepancy between the situation of the Company’s
corporate governance and the regulatory documents of China Securities Regulatory Commission concerning governance
of listed companies.
The Company established and improved relatively standardized corporate governance structure and rules of procedures
strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of Association of the
Company, formed a decision-making and operation management system with the Shareholders’ Meeting, the Board of
Directors, the Supervisory Committee and the management of the Company as the principal structure. They implemented
their respective duties according to the PRC Company Law and the Articles of Association.
The General Meeting is the Company’s supreme organ and has the power of deciding the Company’s operation policy
and investment plan, reviewing and approving the Company’s annual financial budget scheme, settlement scheme, profit
distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makes
resolution on increase and decrease of the Company’s registered capital, issuing bond, etc., election and replacement of
directors, non-staff supervisors and decision on their remuneration and way of payment.
The Board of Directors is the Company’s decision-making organ, takes charge of implementing the decisions made by the
Shareholders’ General Meeting, assumes responsibility to the Shareholders’ General Meeting and reports the work to it.
Within the authorization from the General Meeting, decides the Company’s external investment, acquisition and sales of
assets, assets pledge, external guarantee, related transactions, etc., decides establishment of the Company’s internal
management organs, engagement and disengagement of the Company’s general manager, the Board secretary and
other senior executives, etc. The Board of Directors consists of nine directors, including three independent directors. The
Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit
Committee and Nomination, Emolument and Assessment Committee.
The Supervisory Committee is the Company’s supervisory organ in charge of supervising the directors, managers and
other senior executives in performing duties according to the law and proposes dismissal of any director or senior
executive who breaches the law, the administrative rules and regulations, the Articles of Association or the General
Meeting’s resolutions. The Supervisory Committee consists of three supervisors including two staff supervisors.
The management assumes responsibility to the Board of Directors and the General Manager takes full responsibility for
the Company’s routine operation and management and development under the leadership of the Board of Directors,
supervises the work of every functional department, assesses the work result of each functional department and
coordinate the relationship of all departments.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Does there exist any difference in compliance with the corporate governance, the PRC Company Law and the relevant
provisions of CSRC.
No
II. Independence in Business, Personnel, Assets, Organization, Finance, etc. from the Controlling Shareholders
The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder.
The Company has complete and independent business and the ability of autonomous operation.
Business. The Company is mainly engaged in timepiece businesses and has independent production, auxiliary production
system and complementary facilities, and possesses its own procurement and sales systems. There exists no competition
in the same sector between the Company and its controlling shareholder.
Personnel: The Company is completely independent in organization and has sound systems in labor, personnel and
salaries management. Except Mr. Wang Mingchuan, Mr. Fu Debin,Mr. Xiao Zhanglin and Mr. Wang Bo, the four directors,
and Mr. Wang Baoying, the chairman of the Supervisory Committee, none of other senior executives takes any concurrent
office in the shareholders and none of the financial staff works concurrently for any related parties.
Assets: The assets of the Company and its controlling shareholder are highly distinct. The Company enjoys the corporate
ownership over its assets and the assets are completely independent from its controlling shareholder. In addition, the
Company enjoys sole ownership of such trademarks as FIYTA, HARMONY, etc.
Organization: The Board of Directors, the Supervisory Committee and the other internal organs are well established and
work independently. There exist neither subordinate relations between the controlling shareholder/its functional
departments nor doing joint office work. The controlling shareholder enjoys its rights and undertakes the corresponding
obligations according to the law and has never been involved in any action which directly or indirectly interferes the
Company’s business activities surpassing the authority of the General Meeting.
Finance: The Company has established independent financial department, worked out sound and independent financial
and accounting system and financial management system and independently opened bank accounts. The controlling
shareholder has never interfered the Company in its financial and accounting activities.
III. Horizontal Competitions
Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings in the Reporting Period
1. General Meetings
Proportion of attendance
Sessions Meeting type Meeting date Date of disclosure Disclosure index
of the investors
2018 1st Extraordinary Extraordinary General http://www.cninfo.com.cn
7.37% January 16, 2018 January 17, 2018
General Meeting Meeting /
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2017 Annual general http://www.cninfo.com.cn
Annual general meeting 39.07% June 21, 2018 June 22, 2018
meeting /
2018 2nd Extraordinary Extraordinary General http://www.cninfo.com.cn
37.76% September 11, 2018 September 12, 2018
General Meeting Meeting /
2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting power
recovered.
Inapplicable
V. Duty Performance of Independent Directors in the Reporting Period
1. Attendance for Board Meetings and General Meetings
Attendance for Board Meetings and General Meetings
Number of Board Failure to
Number of Number of Number of
meetings which personally attend
Names of Number of Spot Meetings attendances of Number of attendance of
should be be board meetings
independent director Attendances Attended by board meeting absence the General
attended in the successively
Communication by representative Meeting
reporting period twice
Zhang Hongguang 3 2 1 0 0 No 0
Zhang Shunwen 3 2 1 0 0 No 3
Wang Yan 3 1 1 1 0 No 0
Wang Jianxin 4 1 3 0 0 No 1
Zhong Hongming 4 1 3 0 0 No 0
Tang Xiaofei 4 1 3 0 0 No 0
Note to failure to attend the board meeting successively twice
Inapplicable
2. Objection of independent directors on some relevant issues
Have the independent directors proposed any objection on the relevant issues of the Company
No
3. Other Note to Duty Performance of Independent Directors
Inapplicable
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
VI Duty Performance of Special Committees under the Board of Directors in the Reporting Period
Summary Report on Performances of the Strategy Committee of the Board of Directors
During the reporting period, the Strategy Committee performed its duties strictly according to the law and regulations, the
Articles of Association and the Rules for Implementation of the Strategy Committee of the Board of Directors, continued to
do research work on the strategic planning for the Company’s long term development and supervised the Company in
implementation of various strategies. The Strategy Committee held its first meeting of year 2018 on March 8, 2018. The
meeting reviewed and approved the Work Report of the Board of Directors of Year 2017 and the Profit Distribution for Year
2017; the second meeting of the Strategy Committee for year 2018 was held on November 12, 2018. The meeting
reviewed and approved 2018 A-Share Restrictive Stock Incentive Plan (Phase I) (Draft), etc.
Summary Report on Performances of the Audit Committee of the Board of Directors:
In accordance with the Rules on the Content and Format of Information Disclosure of Companies that Publicly Offer
Securities No. 2 (Contents and Format of Annual Reports) (Revision 2017) promulgated by China Securities Regulatory
Commission, the Basic Regulations on Enterprise Internal Control, Memorandum of Mainboard Information Disclosure No.
1 – Relevant Information to be Disclosed in the Regular Report promulgated by Shenzhen Stock Exchange and the
Company’s Enforcement Regulations of the Special Committees of the Board of Directors, the Audit Committee of the
Board of Directors carried out comprehensive examination of the Company's financial report and internal control audit
work of year 2018. The following is the summary of the performances of the Audit Committee and the work of Ruihua
Certified Public Accountants (Special General Partnership) (hereinafter referred to as the “CPAs”):
1. Collecting General Information of the Company in the Reporting Period and Reviewing the Financial Statements
Prepared by the Company and Progress of Internal Control Implementation
On February 1, 2019, the Audit Committee heard the management’s overall report on the production and operation and
progress of significant events during the reporting period and reviewed 2018 Financial and Accounting Statements
prepared by the Company and heard the progress of implementation of the Company’s internal control. In its opinion, the
data in the financial and accounting statements prepared by the Company basically reflected the financial position and
operation results of the Company as ended at December 31, 2018, and approved to carry out the audit work for year 2018
with the financial statements as the base. The internal control implementation work carried out by the Company has been
duly carried forward according to the Company Law, the Securities Law, Basic Standards for Enterprise Internal Control
and other relevant laws and regulations. It has basically reflected the Company’s internal control construction work ended
December 31, 2017 and approved to prepare the Self-Assessment Report on the Internal Control on this basis and carry
out the internal control audit work in 2018.
2. Determination of the Overall Audit Plan
On December 5, 2018, the Audit Committee reviewed the Report of FIYTA on Arrangement of the Audit Work of 2018
submitted by the CPAs and determined the time schedule of the audit work of 2018.
3. Supervision of the Audit Work
On December 26, 2018, the CPAs formally started the audit work. During the auditing, the Audit Committee frequently
urged the CPAs to complete the audit work according to the time schedule of audit so as to ensure timely disclosure of the
Company’s annual report and relevant documents. On February 1, 2019, the Audit Committee reviewed the Report on the
Progress of the Audit Work of 2018 submitted by the CPAs.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
4. Preliminary Auditor’s Opinions after Reviewing the Financial and Accounting Statements
On March 11, 2019, the CPAs issued a preliminary auditor’s opinions on the financial and accounting statements and
internal control assessment, and the Audit Committee once again reviewed the Company’s financial and accounting
statements and internal control assessment report as preliminarily audited by the CPAs. In the opinion of the Audit
Committee, these financial statements truly, accurately and completely reflected the financial position and operation result
of the Company ended December 31, 2018 and approved 2018 Annual Report and Summary prepared on the basis of
these statements. The said internal control assessment report has truly, accurately and entirely reflected the Company’s
achievement in internal control construction ended December 31, 2018 and approved to complete the internal control
assessment report and internal control audit report based on said report. Meanwhile, the audit committee demanded the
CPAs to complete the audit work according to the plan as soon as possible so as to ensure the Company to disclose 2017
Annual Report as scheduled.
5. Summary Work after the Formal Report
On March 13, 2019, the CPAs completed the auditing procedures as scheduled and issued a standard unqualified
auditor’s report and other relevant documents to the Audit Committee. The Audit Committee held 2019 1st Session of the
Audit Committee on the very day and concluded a resolution and submitted it to the Board of Directors for review; and at
the same time submitted the Summary Report on the Performances of the Audit Committee and the Audit Work of the
Certified Public Accountants in 2018. In the opinion of the Audit Committee, Ruihua Certified Public Accountants (Special
General Partnership), the domestic and international auditor engaged by the Company faithfully performed the duties in
process of offering audit performances according to the professional principle of independence, objectiveness and
fairness and did a good job in auditing 2018 Annual Accounting Statements and the internal control auditing.
6. CPAs’ Performance of Basic Principle of the Professional Ethics
(1) Independence
None of the staff from the CPAs worked for the Company; the CPAs received neither cash nor economic interest in any
other form from the Company other than the statutory audit fee. There existed neither direct or indirect mutual investment
between the CPAs and the Company nor close operation relationship; there existed no self-assessment on the
Company’s audit work and there existed no related relation between the member of the auditing team and the
Company’s decision makers; the CPAs and the auditing staff kept independence both in form and substance in the
auditing work and complied with the requirement on keeping independence as specified in the basic principle of the
professional ethics.
(2) Professional Competence
All the members of the auditing team possessed the professional knowledge and relevant professional qualification
certificates necessary for the auditing work, were competent for the auditing work and at the same time maintained
necessary attention and professional cautiousness.
Summary Report on Performance of the Committee of Nomination, Remuneration and Assessment of the Board
of Directors
In the reporting period, the Committee of Nomination, Remuneration and Assessment of the Board of Directors performed
its functions strictly according to the law and regulations, the Articles of Association and the Rules for Implementation of
the Committees of Nomination, Remuneration and Assessment of the Board of Directors. 2018 1st session of the
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Committees of Nomination, Remuneration and Assessment held on March 8, 2018 reviewed and approved the proposals
on emoluments to the senior executives for year 2017; 2018 2nd session of the Committees of Nomination,
Remuneration and Assessment held on August 21, 2018 reviewed and approved the proposal on election and nomination
of non-independent director candidates for the new Board of Directors and independent director candidates for the new
Board of Directors;2018 3rd session of the Committee of Nomination, Remuneration and Assessment held on October 8,
2018 reviewed and approved the proposal on election of the Chairman of the Board, appointment of the GM, deputy GMs,
chief accountant, the Board secretary, etc.; 2018 4th session of the Committee of Nomination, Remuneration and
Assessment held on November 12, 2018 reviewed and approved 2018 A-Share Restrictive Stock Long Term Incentive
Plan (Draft), 2018 A-Share Restrictive Stock Incentive Plan (Phase I) (Draft), etc.; 2018 5th session of the Committee of
Nomination, Remuneration and Assessment held on December 25, 2018 reviewed and approved 2018 A-Share
Restrictive Stock Long Term Incentive Plan (Revised Draft), 2018 A-Share Restrictive Stock Incentive Plan (Phase I)
(Revised Draft), etc.
VII. Work Summary of the Supervisory Committee
Did the Supervisory Committee find any risk existing in performing the supervision activities in the reporting period
No
VIII. Assessment and Incentive Mechanism for Senior Executives
(1) Assessment of Senior Executives
The 5th session of the Sixth Board of Directors held on September 18, 2009 reviewed and approved the Measures for
Management of Remuneration to Senior Executives. During the reporting period, the Company strictly implemented the
Measures for Management of Remuneration to Senior Executives.
(2) Incentive to Senior Executives
The 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting
held on January 11, 2019 decided to start 2018 A-Share Restrictive Stock Incentive Program (Phase I), which was later on
reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company
decided to grant 4.224 million restrictive A-shares to 128 persons eligible for the incentive, including 7 directors and senior
executives who were granted 600,000 restrictive A-shares, taking 0.14% of the Company's total capital stock with the
details as follows:
Name Title Quantity of restrictive shares Equity received Equity received
received (in 10,000 shares) Proportion in the total quantity Proportion in the total capital
granted (%) stock (%)
Huang Yongfeng Chairman 10 2.37% 0.02%
Chen Libin Director & GM 10 2.37% 0.02%
Lu Wanjun Deputy GM and 8 1.89% 0.02%
Secretary of the Board
Liu Xiaoming Deputy GM 8 1.89% 0.02%
Pan Bo Deputy GM 8 1.89% 0.02%
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Li Ming Deputy GM 8 1.89% 0.02%
Chen Zhuo Chief Accountant 8 1.89% 0.02%
Other core management, business, professional and technical backbones 362.4 85.81% 0.83%
(121 persons)
Total (128 persons) 422.4 100% 0.97%
The price of this part of restrictive shares granted was CNY 4.40/share; the granting date was January 11, 2019 (The
lock-up period of these restrictive shares was two years commencing from the date of granting) . By January 30 2019, the
work of granting the shares and registration for listing was completed.
IX. Internal Control
1. Particular case found involving material defects in the internal control during the reporting
period
No
2. Self-assessment Report of the Internal Control
Date of disclosing the full text of the internal control
March 15, 2019
assessment report
Index of disclosure of the full text of the internal control
www.cninfo.com.cn
assessment report
Proportion of the total assets of the organizations
involved in the assessment in the total assets of the 99.00%
Company’s consolidated financial statements
Proportion of the operation revenue of the entitled
involved in the assessment in the total operation
99.00%
revenue of the Company’s consolidated financial
statements
Criteria for affirming the defects
Categories Financial report Non-financial Report
(1) seriously violating the PRC laws, administrative
(1) The defect involving fraud of the directors,
regulations and normative documents; (2) "decision
supervisors and senior executives; (2) correction of the
on major issues, important officer appointment
financial statements already published; (3) The CPA
and/or removal and arrangement of important
found that there existed serious misstatement in the
projects as well as application of big sum of fund
Qualitative criteria financial statements of the reporting period while the
have not undergone collective decision-making
internal control failed to find the misstatement in process
procedures; (3) serious running off of officers and
of operation; (4) The Company's auditing committee and
technicians of the key positions; (4) there is no
supervision and audit department conducted ineffective
system control available for the Company’s
supervision of the internal control.
production and operation practice or the system no
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
longer works; (5) the internal control for information
disclosure no longer works, having caused the
Company censured publicly by the regulatory
authority; (6) the results of the internal control
assessments, especially the material defects or
important defects have not been rectified.
(1) Material defects：Misstatement≥ 5% of the
(1) Material defects：Misstatement≥ 5% of the pre-tax
pre-tax profit；(2)Important defects：1% of profit
profit；(2)Important defects：1% of profit before tax ≤
Quantitative criterion before tax ≤ Misstatement＜5% of profit before tax;
Misstatement＜5% of profit before tax; (3)Common
(3)Common defects：Misstatement＜1% of profit
defects：Misstatement＜1% of profit before tax.
before tax.
Number of material defects in the financial statements
0
(pcs)
Number of material defects in the non-financial
0
statements (pcs)
Number of important defects in the financial report
0
(pcs)
Number of important defects in the financial report
0
(pcs)
X. Internal Control Audit Report
Deliberation Opinions in the Internal Control Audit Report
In our opinion, FIYTA Holdings Limited maintained effective internal control on the financial report in all material aspect according to the Basic Regulations for Enterprise
Internal Control and the relevant provisions ended December 31, 2017.
Disclosure of the internal control audit report Disclosed
Date of disclosing the full text of the internal
March 15, 2019
control assessment report
Index of disclosing the full text of the internal
www.cninfo.com.cn
control audit report
Type of the onions in the internal control
Standard unqualified auditor’s report
audit report
Are there any material defects in the
No
non-financial report
Has the CPAs issued a qualified auditor’s report of internal control
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors
Yes
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Section 10 Bond Related Information
Did there exist any company bonds which were issued to the public and listed with the stock exchange for trading and was
due by the date when the Annual Report was approved for issuing or failed to be fully cashed by the end of the reporting
period.
Section 11 Financial report
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
通讯地址：北京市东城区永定门西滨河路 8 号院 7 号楼中海地产广场西塔 9 层
Postal Address:9/F,West Tower of China Overseas Property Plaza, Building 7,NO.8,Yongdingmen Xibinhe Road,
Dongcheng District, Beijing
邮政编码（Post Code）：100077
电话（Tel）：+86(10)88095588 传真（Fax）：+86(10)88091199
AUDITORS’ REPORT
Ruihua Shen Zi [2019] No. 01210010
To the Shareholders of FIYTA Holdings Ltd.:
I. Opinion
We have audited the financial statements of FIYTA Holdings Ltd. (“FIYTA Ltd.” or the “Company”),
which comprise the consolidated and the Company’s balance sheet as at 31 December 2018, the
consolidated and the Company’s income statement, the consolidated and the Company’s cash
flow statement for the year then ended and consolidated and the Company’s statement of
changes in shareholders’ equity, and notes to the financial statements.
In our opinion, the financial statements give a fair presentation of the consolidated and the
Company’s financial position of FIYTA Ltd. as at 31 December 2018, and of its consolidated and
the Company’s financial performance and its consolidated and the Company’s cash flows for the
year then ended in all material aspects in accordance with Accounting Standards for Business
Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities
under those standards are further described in the Auditors’ Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the FIYTA Ltd. in accordance
with the Code of Ethics for Chinese Certified Public Accountants, and we have fulfilled our other
ethical responsibilities in professional ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. Key audit matters that need to
communicate in our audit report are identified as follows:
1. Existence, valuation and allocation of inventories
(1) Description
As described in Note IV 11 and Note VI. 5 Inventory, the balance and provision of inventory were
RMB1,870,015,903.32 and RMB87,709,601.62 respectively. The carrying amount of inventory
was RMB1,782,306,301.70 as at 31 December 2018.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and branded watches, the
main inventory of FIYTA Ltd are finished watches and watch components. The inventories are
distributed in stores, regional warehouses, resellers’ warehouses and the Company’s
warehouses which increased the difficulty of stock observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net realizable value
(NRV) at balance sheet date. Where the cost of an inventory exceeds its NRV, the difference is
recognized as provision. The determination of NRV involves material management judgment and
estimates.
The inventories have significant impact to the Company’s assets, as a result, we identified
existence, valuation and allocation of inventories as a key audit matter.
(2) How our audit addressed the key audit matter
(i) Understanding, assessing and testing the design and operating effectiveness of internal
controls of purchase and payment, production and storage, and the accrual of inventory
provision;
(ii) Understanding and evaluating the appropriateness of the Company’s inventory provision
policy;
(iii) Understanding locations of inventory storage, accounting method of inventory and
determining the scope of inventory observation;
(iv) Discussing physical stocktaking status with the management and attending the physical
stocktaking to the locations and inventories within the scope of inventory observation and
conducting observation and test count on site;
(v) Performing alternative procedures of confirmation and inspecting contracts, goods delivery
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
notes and account statements for the inventories outside the scope of inventory observation and
stored in reseller's warehouses;
(vi) Obtaining schedule of inventory provision calculation, reviewing whether the provision was
made according to relating accounting policies and re-calculating the provision to evaluate the
accuracy of inventory provision;
(vii) Reviewing and evaluating the appropriateness of the material estimates made by the
management in determining the NRV of inventory;
(viii) Agreeing current period purchases in large amount to corresponding contract, tax invoice
and inspecting purchase requisition form and goods receipt notes etc...
2. Revenue recognition
(1) Description
The Company’s revenue mainly comes from sales of FIYTA brand watches and distribution of
branded watches. FIYTA brand watches and branded watches are mainly sold through shops in
department store except for minor direct sale and consignment sale. Refer to Note IV. 24 for
accounting policies relating to revenue recognition.
As described in Note VI. 30 Operating revenue and operating cost, the Company’s revenue from
main business was RMB3,382,346,730.19 in year 2018. Operating revenue represents major line
item in income statement and is main source of profit. Accuracy and completeness of revenue
recognition have significant impact to the Company’s profit, as a result, we identified revenue
recognition as a key audit matter.
(2) How our audit addressed the key audit matter
(i) Understanding, assessing and testing the design and operating effectiveness of internal
controls relating to revenue recognition;
(ii) Checking whether the condition, method and timing of revenue recognition is in conformance
with principle of Accounting Standards for Business Enterprises;
(iii) Selecting samples from current year’s transaction record, agreeing to supporting documents
such as contract, tax invoice and goods dispatch note etc… to evaluate occurrence of revenue
recognition;
(iv) In connection with audit of accounts receivable, selecting major customers and confirming
corresponding sales in current year to evaluate the completeness of revenue recognition;
(v) Conducting cut-off test to sales transactions before and after the balance sheet date to
evaluate whether the revenue was recorded in appropriate accounting period;
IV. Other Information
The management of FIYTA Ltd are responsible for the Other Information. The Other Information
comprises all of the information included in the Company’s 2018 annual report other than the
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
financial statements and our auditors’ report thereon.
Our opinion expressed on the financial statements does not cover the Other Information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other
Information and, in doing so, consider whether the Other Information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this Other Information, we are required to report that fact. We have nothing to report in this
regard.
V. Responsibilities of the Management and those Charged with Governance for the Financial
Statements
The management of the FIYTA Ltd (the “Management”) is responsible for the preparation of the
financial statements that give a fair view in accordance with Accounting Standards for Business
Enterprises and design, implementing and maintaining necessary internal controls to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Management either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to do
so.
Those who charged with governance is responsible for overseeing the Company’s financial
reporting process.
VI. Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with China Standards on Auditing will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
1. Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Management.
4. Conclude on the appropriateness of the Management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required, according to China Standards on Auditing, to draw attention in our auditors’ report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date
of our auditors’ report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within FIYTA Ltd to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current period
23
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Ruihua Certified Public Accountants Chinese CPA
(Special General Partnership) (Engagement Partner): ___________
Yuqiao Wang
Beijing, China Chinese CPA: ____________
Xin Liu
15 March, 2019
24
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Financial Statements
The currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA HOLDINGS LTD.
December 31, 2018
In CNY
Items Ending balance Opening balance
Current assets:
Monetary capital 164,828,059.97 187,152,891.32
Settlement reserve
Inter-bank lending
Financial assets which is measured based on
the fair value and whose movement is counted to the
current gain/loss
Derivative financial assets
Notes receivable and accounts receivable 377,597,503.46 335,948,508.62
Where: Notes receivable 7,051,846.85 9,693,883.68
Accounts receivable 370,545,656.61 326,254,624.94
Advance payments 13,666,816.33 24,663,314.53
Receivable premium
Reinsurance accounts receivable
Reserve for reinsurance contract receivable
Other receivables 45,870,582.26 34,990,539.09
Including: Interest receivable
Dividends receivable
Redemptory monetary capital for sale
Inventories 1,782,306,301.70 1,820,526,676.26
Held-for-sale assets
Non-current assets due within a year
Other current assets 73,703,312.24 24,616,815.21
Total current assets 2,457,972,575.96 2,427,898,745.03
Non-current assets:
Loan issuing and advance in cash
Available-for-sale financial assets 85,000.00 85,000.00
Held-to-due investments
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Long term accounts receivable
Long-term equity investment 44,881,063.15 43,879,518.09
Investment real estate 377,319,433.03 305,493,987.77
Fixed assets 425,649,562.85 523,699,592.65
Construction-in-process 12,041,126.00 10,947,300.53
Productive biological asset
Oil and gas assets
Intangible assets 43,545,477.61 44,223,280.21
Development expenses
Goodwill
Long-term expenses to be apportioned 128,572,545.15 109,409,785.49
Deferred income tax asset 100,675,706.09 105,905,944.80
Other non-current assets 8,949,160.42 8,246,538.33
Total non-current assets 1,141,719,074.30 1,151,890,947.87
Total assets 3,599,691,650.26 3,579,789,692.90
Current liabilities:
Short term borrowings 547,118,452.97 525,990,510.00
Borrowings from central bank
Deposits taking and interbank placement
Loans from other banks
Financial liabilities measured based on the fair
value and whose change was charged to the current
gain and loss.
Derivative financial liabilities
Notes payable and accounts payable 259,913,612.34 263,256,495.65
Advances from customers 16,459,445.00 15,141,587.79
Funds from selling out and repurchasing
financial assets
Service charge and commission payable
Salaries payable to the employees 69,779,037.83 71,564,367.14
Taxes payable 55,923,171.92 55,857,236.59
Other payables 71,819,930.30 59,232,265.75
Including: interest payable 772,351.26 1,464,729.11
Dividends payable
Payable reinsurance
Reserve for insurance contract
Acting trading securities
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Income from securities underwriting on
commission
Held-for-sale liabilities
Non-current liabilities due within a year 347,470.00 35,000,000.00
Other current liabilities
Total current liabilities 1,021,361,120.36 1,026,042,462.92
Non-current liabilities:
Long-term borrowings 4,517,110.00 79,870,353.00
Bonds payable
Including: preferred shares
Perpetual bond
Long-term accounts payable
Long term accrued payroll
Predicted liabilities
Deferred income 3,672,855.36 5,904,000.00
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities 8,189,965.36 85,774,353.00
Total liabilities 1,029,551,085.72 1,111,816,815.92
Owner’s equity:
Capital Stock 438,744,881.00 438,744,881.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital Reserve 1,062,455,644.22 1,062,455,644.22
Less: shares in stock
Other comprehensive income -5,442,139.78 -11,523,442.39
Special reserve
Surplus Reserve 223,015,793.80 206,805,713.35
Reserve against general risks
Retained earnings 851,360,603.66 771,484,565.02
Total owners’ equity attributable to the parent company 2,570,134,782.90 2,467,967,361.20
Minority shareholders’ equity 5,781.64 5,515.78
Total owner’s equity 2,570,140,564.54 2,467,972,876.98
Total liabilities and owners’ equity 3,599,691,650.26 3,579,789,692.90
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Person in charge of the Accounting Department: Tian Hui
2. Balance Sheet (Parent Company)
In CNY
Items Ending balance Opening balance
Current assets:
Monetary capital 137,175,466.27 131,163,944.43
Financial assets which is measured based on the
fair value and whose movement is counted to the
current gain/loss
Derivative financial assets
Notes receivable and accounts receivable 737,636.38 6,832,006.11
Where: Notes receivable
Accounts receivable 737,636.38 6,832,006.11
Advance payments
Other receivables 870,739,378.37 831,952,437.86
Including: Interest receivable
Dividends receivable
Inventories
Held-for-sale assets
Non-current assets due within a year
Other current assets 10,081,272.94 9,089,170.12
Total current assets 1,018,733,753.96 979,037,558.52
Non-current assets:
Available-for-sale financial assets 85,000.00 85,000.00
Held-to-due investments
Long term accounts receivable
Long-term equity investment 1,376,129,654.08 1,375,128,109.02
Investment real estate 297,042,937.87 270,241,724.52
Fixed assets 297,517,472.81 340,765,873.45
Construction-in-process 12,041,126.00 10,947,300.53
Productive biological asset
Oil and gas assets
Intangible assets 35,337,052.82 36,932,963.95
Development expenses
Goodwill
Long-term expenses to be apportioned 4,500,638.97 4,418,287.94
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Deferred income tax asset 952,857.33 1,499,126.32
Other non-current assets 4,493,971.35 2,687,910.84
Total non-current assets 2,028,100,711.23 2,042,706,296.57
Total assets 3,046,834,465.19 3,021,743,855.09
Current liabilities:
Short term borrowings 505,000,000.00 470,000,000.00
Financial liabilities measured based on the fair
value and whose change was charged to the current
gain and loss.
Derivative financial liabilities
Notes payable and accounts payable 52,324,191.98 60,520,874.66
Advances from customers 1,636,520.02 4,212,930.07
Salaries payable to the employees 11,589,634.34 9,291,422.00
Taxes payable 943,919.26 1,038,481.26
Other payables 57,997,397.28 21,596,100.44
Including: interest payable 685,419.80 929,155.39
Dividends payable
Held-for-sale liabilities
Non-current liabilities due within a year 35,000,000.00
Other current liabilities
Total current liabilities 629,491,662.88 601,659,808.43
Non-current liabilities:
Long-term borrowings 74,861,928.00
Bonds payable
Including: preferred shares
Perpetual bond
Long-term accounts payable
Long term accrued payroll
Predicted liabilities
Deferred income 3,672,855.36 5,904,000.00
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities 3,672,855.36 80,765,928.00
Total liabilities 633,164,518.24 682,425,736.43
Owner’s equity:
Capital Stock 438,744,881.00 438,744,881.00
Other equity instruments
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Including: preferred shares
Perpetual bond
Capital Reserve 1,068,111,185.32 1,068,111,185.32
Less: shares in stock
Other comprehensive income
Special reserve
Surplus Reserve 223,015,793.80 206,805,713.35
Retained earnings 683,798,086.83 625,656,338.99
Total owner’s equity 2,413,669,946.95 2,339,318,118.66
Total liabilities and owners’ equity 3,046,834,465.19 3,021,743,855.09
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
3. Consolidated Profit Statement
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
I. Turnover 3,400,450,599.90 3,345,809,703.98
Including: operating income 3,400,450,599.90 3,345,809,703.98
Interest income
Earned insurance premium
Service charge and commission
income
II. Total operating costs 3,190,243,356.71 3,182,619,506.27
Including: Operating costs 1,993,809,774.20 1,986,652,591.57
Interest payment
Service charge and commission
payment
Surrender Value
Compensation expenses, net
Provision of reserve for insurance
contract, net
Payment of policy dividend
Reinsurance expenses
Taxes and surcharges 33,769,344.40 32,871,258.58
Sales costs 856,970,173.10 811,437,932.01
Administrative expenses 219,162,525.85 190,589,582.24
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
R & D expenditures 47,350,342.82 49,453,899.35
Financial expenses 35,916,240.16 49,186,742.91
Where: Interest cost 27,552,558.81 41,825,035.34
Interest income 2,269,447.05 2,915,602.99
Loss from impairment of assets 3,264,956.18 62,427,499.61
Plus: Other income 19,375,618.48 17,508,255.98
Investment income (loss is stated with
1,001,545.06 455,893.22
“-“)
Including: return on investment in
1,001,545.06 455,893.22
associate and joint venture
Income from change of fair value (loss
is stated with “-”)
Exchange income (loss stated with “-”)
Income from disposal of assets (loss
-181,302.24 7,321,993.36
stated with “-”)
III. Operating Profit (loss is stated with “-“) 230,403,104.49 188,476,340.27
Plus: Non-operating income 1,446,357.53 2,607,653.91
Less: Non-operating expenses 652,514.97 1,368,680.92
IV. Total profit (total loss is stated with “-”) 231,196,947.05 189,715,313.26
Less: Income tax expense 47,361,851.76 47,098,954.06
V. Net Profit (net loss is stated with “-“) 183,835,095.29 142,616,359.20
(I) Net Profit from sustainable operation (net
183,835,095.29 142,616,359.20
loss is stated with “-“)
(II) Net profit from termination of business
operation (net loss is stated with “-“)
Net profit attributable to the parent
183,835,095.29 140,216,258.28
company’s owner
Minority shareholders’ gain/loss 2,400,100.92
VI. Net of other comprehensive income after tax 6,081,568.47 -28,676.16
Net of other comprehensive income after tax
6,081,302.61 255,055.85
attributable to the parent company’s owner
(I) Other comprehensive income which
cannot be re-classified into gain and loss
1. Movement of the net liabilities and
net assets re-measured for setting the beneficial
plan
2. Other comprehensive income
which cannot be converted into gain and loss
based on the equity method
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(II) Other comprehensive income which shall
6,081,302.61 255,055.85
be re-classified into gain and loss
1. Other comprehensive income
which can be converted into gain and loss based
on the equity method
2. Gain/loss from change in the fair
value of the financial assets available for sale
3. Gain/loss from which the
held-to-maturity investment is re-classified as
available-for-sale financial assets
4. Valid part of the gain/loss from
cash flow hedge
5. Conversion difference in foreign
6,081,302.61 255,055.85
currency statements
6. Others
Net amount of other comprehensive income
265.86 -283,732.01
after tax attributable to minority shareholders
VII. Total comprehensive income 189,916,663.76 142,587,683.04
Total comprehensive income attributable to
189,916,397.90 140,471,314.13
the parent company’s owner
Total comprehensive income attributable to
265.86 2,116,368.91
minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.4190 0.3196
(II) Diluted earnings per share 0.4190 0.3196
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the
Accounting Department: Tian Hui
4. Statement of Profit, Parent Company
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
I. Revenue 130,901,823.99 117,746,387.79
Less: Operating cost 19,010,293.07 17,785,254.56
Taxes and surcharges 4,340,938.33 4,244,709.29
Sales costs 5,024,222.36
Administrative expenses 62,841,044.26 56,597,226.83
R & D expenditures 24,155,557.54 24,358,700.54
Financial expenses 9,231,733.69 11,051,564.46
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Where: Interest cost 10,189,512.00 12,432,288.90
Interest income 1,756,834.88 1,384,504.01
Loss from impairment of assets 46,068.70 62,283.14
Plus: Other income 7,689,684.27 11,482,400.00
Investment income (loss is stated with
144,001,545.06 117,455,893.22
“-“)
Including: return on investment in
1,001,545.06 455,893.22
associate and joint venture
Income from change of fair value (loss
is stated with “-”)
Income from disposal of assets (loss
-51,942.13 -54,661.87
stated with “-”)
II. Operating Profit (loss is stated with “-“) 162,915,475.60 127,506,057.96
Plus: Non-operating income 38,080.00 231,994.49
Less: Non-operating expenses 446,782.97 320,029.00
III. Total profit (total loss is stated with “-“) 162,506,772.63 127,418,023.45
Less: Income tax expense 405,968.14 -1,022,105.57
IV. Net Profit (net loss is stated with “-“) 162,100,804.49 128,440,129.02
(I) Net Profit from sustainable operation (net
162,100,804.49 128,440,129.02
loss is stated with “-“)
(II) Net profit from termination of business
operation (net loss is stated with “-“)
V. Net of other comprehensive income after tax
(I) Other comprehensive income which
cannot be re-classified into gain and loss
1. Movement of the net liabilities and
net assets re-measured for setting the beneficial
plan
2. Other comprehensive income
which cannot be converted into gain and loss
based on the equity method
(II) Other comprehensive income which shall
be re-classified into gain and loss
1. Other comprehensive income
which can be converted into gain and loss based
on the equity method
2. Gain/loss from change in the fair
value of the financial assets available for sale
3. Gain/loss from which the
held-to-maturity investment is re-classified as
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
available-for-sale financial assets
4. Valid part of the gain/loss from
cash flow hedge
5. Conversion difference in foreign
currency statements
6. Others
VI. Total comprehensive income 162,100,804.49 128,440,129.02
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
5. Consolidated Cash Flow Statement
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
I. Cash flows arising from operating activities
Cash received from sales of goods and
3,810,404,536.16 3,799,342,843.85
supply of labor service
Net increase of customers’ deposit and due
from banks
Net increase of borrowings from the central
bank
Net increase of borrowings from other
financial institutions
Cash received from the premium of the
original insurance contract
Net cash received from the reinsurance
business
Net increase of the reserve from policy
holders and investment
Net increase from disposal of financial
assets which is measured based on the fair value
and whose movement is counted to the current
gain/loss
Cash received from interest, service charge
and commission
Net increase of loan from other banks
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Net increase of fund from repurchase
business
Rebated taxes received 4,793,245.20 886,252.20
Other operation activity related cash receipts 49,628,593.69 49,178,644.63
Subtotal of cash flow in from operating activity 3,864,826,375.05 3,849,407,740.68
Cash paid for purchase of goods and
2,189,921,981.01 2,070,318,097.62
reception of labor services
Net increase of loans and advances to
customers
Net increase of due from central bank and
due from banks
Cash from payment for settlement of the
original insurance contract
Cash paid for interest, service charge and
commission
Cash for payment of policy dividend
Cash paid to and for staff 583,417,253.40 516,928,806.69
Taxes paid 305,622,391.83 285,279,057.38
Other business activity related cash
454,236,959.19 411,927,217.02
payments
Subtotal of cash flow out from operating activity 3,533,198,585.43 3,284,453,178.71
Net cash flow arising from operating activities 331,627,789.62 564,954,561.97
II. Cash flows arising from investment activities:
Cash received from recovery of investment
Cash received from investment income
Net cash from disposal of fixed
assets, ,intangible assets and recovery of other 53,280.03 10,678,135.25
long term assets
Net cash received from disposal of
-230,053.69
subsidiaries and other operating units
Other investment related cash receipts
Subtotal of cash flow in from investment activity 53,280.03 10,448,081.56
Cash paid for purchase/construction of fixed
assets, Intangible assets and other long term 146,877,130.29 136,914,522.99
assets
Cash paid for investment
Net increase of the pledged loan
Net cash paid for acquisition of subsidiaries
and other operation units
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Other investment related cash payments
Subtotal of cash flow out from investment activity 146,877,130.29 136,914,522.99
Net cash flows arising from investment activities -146,823,850.26 -126,466,441.43
III. Cash flows arising from fund raising activities
Cash received from absorbing investment
Incl.: Cash received from the subsidiaries’
absorption of minority shareholders’ investment
Cash received from loans 741,192,340.23 575,282,350.00
Cash received from bond issuing
Other fund-raising related cash receipts
Subtotal of cash flow in from fund raising activity 741,192,340.23 575,282,350.00
Cash paid for debt repayment 832,333,208.63 1,167,061,934.80
Cash paid for dividend/profit distribution or
116,690,155.91 85,355,204.78
repayment of interest
Including: Dividend and profit paid by the
subsidiaries to minority shareholders
Cash paid for other financing activities 3,376,589.16
Sub-total cash flow paid for financing activities 949,023,364.54 1,255,793,728.74
Net cash flows arising from fund raising activities -207,831,024.31 -680,511,378.74
IV. Change of exchange rate influencing the cash
702,253.60 -256,606.29
and cash equivalent
V. Net increase of cash and cash equivalents -22,324,831.35 -242,279,864.49
Plus: Opening balance of cash and cash
184,947,891.32 427,227,755.81
equivalents
VI. Ending balance of cash and cash equivalents 162,623,059.97 184,947,891.32
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
6. Cash Flow Statement, Parent Company
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
I. Cash flows arising from operating activities
Cash received from sales of goods and
116,016,128.07 118,206,419.70
supply of labor service
Rebated taxes received
Other operation activity related cash receipts 3,085,141,911.13 938,657,962.92
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Subtotal of cash flow in from operating activity 3,201,158,039.20 1,056,864,382.62
Cash paid for purchase of goods and
300,000.00
reception of labor services
Cash paid to and for staff 58,785,131.65 52,908,089.08
Taxes paid 10,909,143.22 13,645,601.66
Other business activity related cash
3,050,352,344.19 560,857,112.69
payments
Subtotal of cash flow out from operating activity 3,120,346,619.06 627,410,803.43
Net cash flow arising from operating activities 80,811,420.14 429,453,579.19
II. Cash flows arising from investment activities:
Cash received from recovery of investment
Cash received from investment income 143,000,000.00 117,000,000.00
Net cash from disposal of fixed assets,
intangible assets and recovery of other long term 1,430.00 30,112.00
assets
Net cash received from disposal of
subsidiaries and other operating units
Other investment related cash receipts
Subtotal of cash flow in from investment activity 143,001,430.00 117,030,112.00
Cash paid for purchase/construction of fixed
assets, Intangible assets and other long term 27,763,546.06 47,230,065.02
assets
Cash paid for investment
Net cash paid for acquisition of subsidiaries
114,299,236.67
and other operation units
Other investment related cash payments
Subtotal of cash flow out from investment activity 27,763,546.06 161,529,301.69
Net cash flows arising from investment activities 115,237,883.94 -44,499,189.69
III. Cash flows arising from fund raising activities
Cash received from absorbing investment
Cash received from loans 700,000,000.00 540,000,000.00
Cash received from bond issuing
Other fund-raising related cash receipts
Subtotal of cash flow in from fund raising activity 700,000,000.00 540,000,000.00
Cash paid for debt repayment 774,861,928.00 986,000,000.00
Cash paid for dividend/profit distribution or
115,249,277.23 79,277,672.20
repayment of interest
Cash paid for other financing activities
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Sub-total cash flow paid for financing activities 890,111,205.23 1,065,277,672.20
Net cash flows arising from fund raising activities -190,111,205.23 -525,277,672.20
IV. Change of exchange rate influencing the cash
73,422.99 -90,699.34
and cash equivalent
V. Net increase of cash and cash equivalents 6,011,521.84 -140,413,982.04
Plus: Opening balance of cash and cash
128,958,944.43 269,372,926.47
equivalents
VI. Ending balance of cash and cash equivalents 134,970,466.27 128,958,944.43
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
7. Consolidated Statement of Changes in Owner’s Equity
Amount in the reporting period
In CNY
Reporting period
Owners’ equity attributable to the parent company
Other equity instruments Reserv Minority
Other Retaine Total
Items shareho
Capit Prefe Capital Less: Surplus e
compre Special d owner’s
Perp lders’
al rred Other Reserv shares Reserv against
hensive reserve earning equity
etual equity
Stock share s e in stock e general
bond income s
s risks
438,7 1,062,4 2,467,9
I. Ending balance of -11,523, 206,805 771,484 5,515.7
44,88 55,644. 72,876.
the previous year 442.39 ,713.35 ,565.02 8
1.00 22 98
Plus: Change in
accounting policy
Correction
of previous errors
Consolidation of
enterprises under the
same control
Others
438,7 1,062,4 2,467,9
II. Opening balance of -11,523, 206,805 771,484 5,515.7
44,88 55,644. 72,876.
the reporting year 442.39 ,713.35 ,565.02 8
1.00 22 98
III. Decrease/increase 102,16
6,081,3 16,210, 79,876,
of the report year 265.86 7,687.5
02.61 080.45 038.64
(decrease is stated 6
38
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
with “-“)
(I) Total 189,91
6,081,3 183,835
comprehensive 265.86 6,663.7
02.61 ,095.29
income 6
(II) Owners’ input and
decrease of capital
1. Common shares
contributed by the
owner
2. Capital contributed
by other equity
instruments holders
3. Amount of payment
for shares credited to
owners’ equity
4. Others
-103,95
16,210, -87,748
(III) Profit Distribution 9,056.6
080.45 ,976.20
5
1. Provision of surplus 16,210, -16,210
reserve 080.45 ,080.45
2. Provision of
reserve against
general risks
3. 3. Distribution to
-87,748 -87,748
the owners (or
,976.20 ,976.20
shareholders)
4. Others
(IV) Internal
carry-over of owners’
equity
1. Conversion of
capital reserve into
capital (or capital
stock)
2. Conversion of
surplus reserve into
capital (or capital
stock)
3. Loss made up with
surplus reserve
4. Setting of the
amount involved in
39
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
the movement of the
beneficial plan carried
over to the retained
earnings
5. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
438,7 1,062,4 2,570,1
IV. Ending balance of -5,442, 223,015 851,360 5,781.6
44,88 55,644. 40,564.
the reporting period 139.78 ,793.80 ,603.66 4
1.00 22 54
Amount in the previous period
In CNY
Previous period
Owners’ equity attributable to the parent company
Other equity instruments Reserv Minority
Other Retaine Total
Items shareh
Capit Prefe Capital Less: Surplus e
compre Special d owner’s
Perp olders’
al rred Other Reserv shares Reserv against
hensive reserve earning equity
etual equity
Stock share s e in stock e general
bond income s
s risks
438,7 1,062,4 2,374,9
I. Ending balance of -11,778, 193,961 687,986 3,577,6
44,88 55,644. 48,189.
the previous year 498.24 ,700.45 ,807.74 54.56
1.00 22 73
Plus: Change in
accounting policy
Correction
of previous errors
Consolidation of
enterprises under the
same control
Others
438,7 1,062,4 2,374,9
II. Opening balance of -11,778, 193,961 687,986 3,577,6
44,88 55,644. 48,189.
the reporting year 498.24 ,700.45 ,807.74 54.56
1.00 22 73
III. Decrease/increase
of the report year 255,055 12,844, 83,497, -3,572, 93,024,
(decrease is stated .85 012.90 757.28 138.78 687.25
with “-“)
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(I) Total 142,58
255,055 140,216 2,116,3
comprehensive 7,683.0
.85 ,258.28 68.91
income 4
(II) Owners’ input and -5,688, -5,688,
decrease of capital 507.69 507.69
1. Common shares
contributed by the
owner
2.. Capital contributed
by other equity
instruments holders
3. Amount of payment
for shares credited to
owners’ equity
-5,688, -5,688,
4. Others
507.69 507.69
12,844, -56,718, -43,874
(III) Profit Distribution
012.90 501.00 ,488.10
1. Provision of surplus 12,844, -12,844,
reserve 012.90 012.90
2. Provision of
reserve against
general risks
3. Distribution to the
-43,874, -43,874
owners (or
488.10 ,488.10
shareholders)
4. Others
(IV) Internal
carry-over of owners’
equity
1. Conversion of
capital reserve into
capital (or capital
stock)
2. Conversion of
surplus reserve into
capital (or capital
stock)
3. Loss made up with
surplus reserve
4. Setting of the
amount involved in
the movement of the
41
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
beneficial plan carried
over to the retained
earnings
5. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
438,7 1,062,4 2,467,9
IV. Ending balance of -11,523, 206,805 771,484 5,515.7
44,88 55,644. 72,876.
the reporting period 442.39 ,713.35 ,565.02 8
1.00 22 98
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
8. Consolidated Statement of Changes in Owner’s Equity, Parent Company
Amount in the reporting period
In CNY
Reporting period
Other equity instruments Other Retaine
Less: Total
Items Capital Capital comprehe Special Surplus d
Preferre
Perpetu shares in owner’s
Stock d Others Reserve nsive reserve Reserve earning
al bond stock equity
shares income s
I. Ending balance of 438,744 1,068,111, 206,805,7 625,656 2,339,318
the previous year ,881.00 185.32 13.35 ,338.99 ,118.66
Plus: Change in
accounting policy
Correction
of previous errors
Others
II. Opening balance of 438,744 1,068,111, 206,805,7 625,656 2,339,318
the reporting year ,881.00 185.32 13.35 ,338.99 ,118.66
III. Decrease/increase
of the report year 16,210,08 58,141, 74,351,82
(decrease is stated 0.45 747.84 8.29
with “-“)
(I) Total 162,100 162,100,8
comprehensive ,804.49 04.49
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
income
(II) Owners’ input and
decrease of capital
1. Common shares
contributed by the
owner
2. Capital contributed
by other equity
instruments holders
3. Amount of payment
for shares credited to
owners’ equity
4. Others
-103,95
16,210,08 -87,748,9
(III) Profit Distribution 9,056.6
0.45 76.20
5
1. Provision of surplus 16,210,08 -16,210,
reserve 0.45 080.45
2. Distribution to the
-87,748, -87,748,9
owners (or
976.20 76.20
shareholders)
3. Others
(IV) Internal
carry-over of owners’
equity
1. Conversion of
capital reserve into
capital (or capital
stock)
2. Conversion of
surplus reserve into
capital (or capital
stock)
3. Loss made up with
surplus reserve
4. Setting of the
amount involved in
the movement of the
beneficial plan carried
over to the retained
earnings
5. Others
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
IV. Ending balance of 438,744 1,068,111, 223,015,7 683,798 2,413,669
the reporting period ,881.00 185.32 93.80 ,086.83 ,946.95
Amount in the previous period
In CNY
Previous period
Other equity instruments Other Retaine
Less: Total
Items Capital Capital comprehe Special Surplus d
Preferre
Perpetu shares in owner’s
Stock d Others Reserve nsive reserve Reserve earning
al bond stock equity
shares income s
I. Ending balance of 438,744 1,068,111, 193,961,7 553,934 2,254,752
the previous year ,881.00 185.32 00.45 ,710.97 ,477.74
Plus: Change in
accounting policy
Correction
of previous errors
Others
II. Opening balance of 438,744 1,068,111, 193,961,7 553,934 2,254,752
the reporting year ,881.00 185.32 00.45 ,710.97 ,477.74
III. Decrease/increase
of the report year 12,844,01 71,721, 84,565,64
(decrease is stated 2.90 628.02 0.92
with “-“)
(I) Total
128,440 128,440,1
comprehensive
,129.02 29.02
income
(II) Owners’ input and
decrease of capital
1. Common shares
contributed by the
owner
2. Capital contributed
by other equity
instruments holders
3. Amount of payment
for shares credited to
44
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
owners’ equity
4. Others
12,844,01 -56,718, -43,874,4
(III) Profit Distribution
2.90 501.00 88.10
1. Provision of surplus 12,844,01 -12,844,
reserve 2.90 012.90
2. Distribution to the
-43,874, -43,874,4
owners (or
488.10 88.10
shareholders)
3. Others
(IV) Internal
carry-over of owners’
equity
1. Conversion of
capital reserve into
capital (or capital
stock)
2. Conversion of
surplus reserve into
capital (or capital
stock)
3. Loss made up with
surplus reserve
4. Setting of the
amount involved in
the movement of the
beneficial plan carried
over to the retained
earnings
5. Others
(V) Special reserve
1. Provision in the
reporting period
2. Applied in the
reporting period
(VI) Others
IV. Ending balance of 438,744 1,068,111, 206,805,7 625,656 2,339,318
the reporting period ,881.00 185.32 13.35 ,338.99 ,118.66
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo
Person in charge of the Accounting Department: Tian Hui
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Notes to the Financial Statements
for the Year Ended 31 December 2018
(Expressed in RMB Yuan unless otherwise indicated)
I. Company status
FIYTA Holdings Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259 issued by
the General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time
Industrial Company by the promoter of China National Aero-Technology Import and Export Shenzhen Industry &
Trade Center (name changed to “China National Aero-Technology Shenzhen Co., Ltd” lately) on 25 December
1992, and the name changed to “Shenzhen FIYTA Holdings Limited”. The headquarters is located at FIYTA
Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District, Shenzhen, Guangdong Province.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen
Special Economic Zone Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special
shares (B shares) publicly on 10 March 1993. On 3 June 1993, both the Company’s A shares and B shares were
listed and traded on Shenzhen Stock Exchange pursuant to the approval of Shen Zheng Ban Fu[1993]20 issued
by Shenzhen Securities Regulatory Office and Shen Zheng Shi Zi (1993)16 issued by Shenzhen Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of
Shenzhen Municipal Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company") transferred
72,360,000 corporate shares (accounting for 52.24% of the Company's total share capital) to Shenzhen China
Aviation Group Company Limited (previously known as "Shenzhen China Aviation Industry Company Limited",
hereinafter referred to as "China National Aviation Group") according to share transfer agreement signed by both
parties. As a result, the Company’s controlling shareholder changed from CATIC Shenzhen Company to China
National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the premise of maintaining the
Company's total of 249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1
shares per 10 tradable shares to all the tradable share shareholders registered on option registration date
designated by the split-share reform program. At that point, after the reform, the shares held by China National
Aviation Group reduced to 44.69% from 52.24%.
On 29 February 2008, due to expanding the scope of business, the Company’s corporate business license was
altered from Shen Si Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen Municipal
Administration for Industry and Commerce.
With the approval of “Reply of China Securities Regulatory Commission (CSRC) to the Approval of Private
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Placement of Shenzhen FIYTA Holdings Limited” (Zheng Jian Xu Ke [2010]1703) and “Reply of State-owned
Assets Supervision and Administration Commission of the State Council (SASAC) on Issues in Private Placement
of Shenzhen FIYTA Holdings Limited” (SASAC (2010)430) in 2010, the Company is approved to issue not more
than 50,000,000 ordinary shares (A shares) by private placement. After the completion of the placement on 9
December 2010, the Company’s registered capital increased to RMB280,548,479.00 and the equity capital of the
Company held by China National Aviation Group reduced to 41.49%.
On 3 March 2011, the company name changed to FIYTA Holdings Limited with the approval of Shenzhen
Municipal Administration for Industry and Commerce.
On 8 April 2011, the Company increased its share capital by 4 shares for every 10 shares by capitalizing the
capital reserves on the basis of total shares of 280,548,479 as at 31 December 2010. Total shares of the
Company changed to 392,767,870 shares after the increase.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of
non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the approval
of State-owned Assets Supervision and Administration Commission of the State Council (SASAC) “Reply of
non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (SASAC(2015)415), the Company was
approved to issue not more than 46,911,649 ordinary shares (A shares) through non-public offering. After the
completion of the non-public offering of stocks on 22 December 2015, the Company’s registered capital was
increased to RMB438,744,881.00 and the equity capital of the Company held by China National Aviation Group
reduced to 37.15%.
As at 31 December 2018, the Company has accumulatively issued 438,744,881 shares in total (refer to Notes VI.
25 “Share capital” for detail).
Corporate governance institutions that were established by the Company include General Meeting of
Shareholders, Board of Directors, Board of Supervisors, Strategy Committee, Audit Committee, and Nomination,
Remuneration and Evaluation Committee. The Company’s functional departments include Administration, Party
Affairs, Discipline Inspection and Audit, Finance, Human Resources, Strategy and Operating, Data and
Information, Innovative Design Center, R&D, and Property Management departments.
The financial statements have been approved and authorised for issue by the Board of Directors of the Company
on 13 March 2019.
There are 11 subsidiaries that are included in the Company’s scope of consolidation for year 2018, see Note VIII
“Equity in other entities” for detail. Comparing with prior year, the status of changes in scope of consolidation is:
zero addition and one decrease. See Note VII “Changes in scope of consolidation” for detail.
The business scope of the Company and its subsidiaries mainly includes: producing and selling of analogue
indication mechanical watches, quartz watches and its movements, components, various timing devices,
processing and wholesaling karat gold jewellery watches, intelligent watches; domestic commercial and material
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
supply and distributing business (excluding goods under exclusive operational rights, special control and
exclusive sales); property management and leasing; providing design service. Import and export business of
self-design and construction; import and export business (according to Shen Mao Guan Deng Zheng Zi
No.2007-072).The legal representative of the Company is Huang Yongfeng.
II. Basis of preparation
The financial statements of the Company have been prepared based on going concern assumption and based on
actual transactions and events occurred. It is prepared in accordance with the requirements of “Accounting
Standards for Business Enterprises - Basic Standard” (promulgated under Decree No. 33 of the Ministry of
Finance and revised under Decree No. 76 of the Ministry of Finance) and 42 Specific Standards issued and
revised by the Ministry of Finance on and after 15 February 2006, and application guidance, illustrations to the
standards and related pronouncements (collectively known as “Accounting Standards for Business Enterprises”
or “CAS”). These financial statements also comply with the disclosure requirements of “Regulation on the
Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for
Financial Reports” (revised in 2014) issued by China Securities Regulatory Commission (CSRC).
According to Accounting Standards for Business Enterprises, accrual basis is adopted for the Company’s
accounting activity. Except for some financial instruments, the financial statements are measured using historical
cost. In case of impairment occurred on assets, provisions for impairment are provided for in accordance with
related rules.
III. Statement of compliance with corporate accounting standards
The financial statements of the Company have been prepared in accordance with the requirements of Accounting
Standards for Business Enterprises. These financial statements present truly and completely the financial position
as at 31 December 2018, the results of operations and the cash flows for the year then ended of the Company. In
addition, the financial statements of the Company comply with, in all material respects, the disclosure
requirements for financial statements and notes to the financial statements under “Regulation on the Preparation
of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial
Reports” as revised by CSRC in 2014.
IV. Significant accounting policies and estimates
The Company and each subsidiaries determines specific accounting policies and estimates for revenue
recognition, depreciation of fixed asset, amortization of intangible assets and R&D expenses according to the
characteristics of their production and operation and based on CAS. Refer to Notes IV. 24 “Revenue”, Note IV 15
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
“Fixed Asset”, Note IV 18 (1) “Intangible Asset” and Note IV 18 (2) “R&D Expenses” for detail. For explanation of
significant accounting judgement and estimate made by the management, refer to Note IV 30 “Significant
accounting judgement and estimate” for detail.
1. Accounting period
The accounting period of the Company includes accounting year and interim accounting period. An interim period
refers to a reporting period which is shorter than a full accounting year. The accounting year of the Company is the
calendar year, i.e. from 1 January to 31 December of each year.
2. Operating cycle
Normal operating cycle refer to the period start from purchasing asset for manufacturing until realization of cash or
cash equivalent. The operating cycle of the Company is 12 months, which is the basis for distinguishing liquidity of
assets and liabilities.
3. Recording currency
Renminbi (RMB) is the functional currency of the main economic environment in which the Company and its
domestic subsidiaries operate. The Company and its domestic subsidiaries adopt Renminbi as the recording
currency.
Except for the Swiss-based subsidiary Montres Chouriet SA (the “Swiss Company”) , which is a subsidiary of
FIYTA (Hong Kong) Limited (FIYTA Hong Kong), uses Swiss Franc as the recording currency according to the
main economic environment where the Swiss Company operated, all other subsidiaries outside the mainland
China, including FIYTA Hong Kong and its subsidiary Station 68 Limited (Station 68) use Hong Kong Dollar (HKD)
as the recording currency and translate to Renminbi when preparing financial statements.
The currency used in preparing the Company’s financial statements is Renminbi.
4. Accounting treatment for business combinations involving entities under common control and not
under common control
Business combination refers to transactions or events that combine two or more separate enterprises and form
one reporting entity. Business combinations are classified into business combinations involving enterprises under
common control and business combinations involving enterprises not under common control.
(1) Business combination involving entities under common control
If the enterprises involved in a combination are subject to control of the same party or parties both before and after
the combination, and that control is not temporary in nature, it is business combination under common control.
The party who obtains control over other participating enterprises on the combination date is the combining party,
and the other participating enterprises are combined parties in a business combination under common control.
Combination date means the date on which the combining party actually obtains control over the combined
parties.
49
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Assets and liabilities that the combining party obtained are measured using book value of the combined party’s
accounts on combination date. Difference between book value of net assets the combining party obtained and
book value of combination consideration paid (or the aggregate nominal amount of shares issued) is recognized
in capital reserve (share premium). If the capital reserve (share premium) is insufficient to offset, retained
earnings will be adjusted accordingly.
All direct expenses incurred by the acquirer in relation to the combination are included in the current profit or loss
at the time such expenses incurred.
(2) Business combinations involving entities not under common control
If the enterprises involved in a combination are not subject to control of the same party or parties both before and
after the combination, it is the business combination involving entities not under common control. The party who
obtains control over the other participating enterprises on acquisition date is the acquirer, and the other
participating enterprises are the acquiree in a business combination not under common control. The acquisition
date is the date on which the acquirer actually obtains the control over the acquirees.
As for business combinations involving enterprises not under common control, combination cost includes assets
paid, liabilities incurred or assumed, and the fair value of equity securities issued by the acquirer to obtain control
over the acquiree on the acquisition date. Fees for auditing, legal service, evaluation and consultation, and other
administrative expenses incurred for the combination are recognized in profit or loss in the period in which such
expenses incurred. Transaction costs incurred by the acquirer for issuing equity securities or debt securities as
combination consideration are recognized in initial recognition amount of equity securities or debt securities.
Contingent consideration, if any, is included in acquisition cost at its fair value on the acquisition date. If, within 12
months, new or further evidence revealed regarding conditions that already existed on acquisition date, the
contingent consideration required to be adjusted, adjusting the goodwill arising from the acquisition accordingly.
For acquisition that realized step by step through multiple transfer transactions, the equity of the acquiree held by
the acquirer before the acquisition date are re-measured using fair value on the acquisition date. Any difference
between the fair value and its carrying amount is recognized as investment income and transfer other
comprehensive income related to this part of equity to investment gain in the period where the acquisition date
falls. The acquisition cost is the aggregate of fair value of acquiree’s equity held by the acquirer before the
acquisition date and fair value of additional equity acquired on the acquisition date.
Acquisition cost incurred by the acquirer and identifiable net assets acquired in the acquisition are measured at
fair value on the acquisition date. If the acquisition cost is greater than the fair value of the part of identifiable net
assets acquired on the acquisition date, the difference is recognized as goodwill. If the acquisition cost is lesser
than the fair value of the part of identifiable net assets acquired on the acquisition date, review the fair value of
each identifiable asset, liability and contingent liability that acquired and the calculation of acquisition cost. If, after
the review, the acquisition cost is still lesser than the fair value of the part of identifiable net assets acquired, the
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
difference is recognized in profit or loss in corresponding period.
Deductible temporary differences that the acquirer obtained from the acquiree, which are not recognized on
acquisition date due to the conditions of recognition as deferred tax assets are not fulfilled, are recognized as
deferred tax assets and correspondingly deduct goodwill if new or further evidence shows, within 12 months after
the acquisition date, that relevant conditions exist on the acquisition date and it is probable that the economic
benefit arising from the deductible temporary differences on acquisition date can be realized. If the goodwill is
insufficient to the deduction, the excess part is recognized in profit or loss in corresponding period. Deferred tax
assets recognized in relation to acquisition that other than the circumstances mentioned above are recognized in
profit or loss in corresponding period.
For business combination involving entities not under common control that achieved in stages that involves
multiple transactions, judgement of whether a transaction belongs to “a basket transaction” requires to be carried
out in accordance with the “Notice of the Ministry of Finance on Circulating the Fifth Interpretation to Accounting
Standards for Business Enterprise” (Cai Kuai (2012) No. 19) and criteria of “a basket transaction” stated in clause
51 of “Accounting Standards for Business Enterprise No. 33 – Financial Statements Consolidation” (see Note IV 5
(2) for detail). If it is “a basket transaction”, the accounting treatment shall be referred to descriptions in above
paragraphs and Note IV 13 “Long-term equity investment”. If it isn’t “a basket transaction”, the accounting
treatment shall be differentiated for individual and consolidated financial statements.
In the individual financial statements, the initial investment cost is the sum of the carrying amount of equity
investment of the acquiree held prior to the acquisition date and the additional investment cost at the acquisition
date. When disposing an equity held prior the acquisition date that involving other comprehensive income, the
other comprehensive income shall be accounted for on the same basis as would have been required if the
investee had directly disposed of the related assets or liabilities (i.e. except for the portion resulted from changes
in re-measuring the acquiree’s net liability or net asset of a defined benefit plan according to equity method
accounting, the rest shall be recorded in current period investment gain).
In the consolidated financial statements, the cost of equity investment of the acquiree held prior to the acquisition
date is re-measured at the fair value on the acquisition date, the difference between the fair value and carrying
value is recognized as investment gain for the current period.
For an equity held prior the acquisition date that involving other comprehensive income, the other comprehensive
income shall be accounted for on the same basis as would have been required if the investee had directly
disposed of the related assets or liabilities (i.e. except for the portion resulted from changes in re-measuring the
acquiree’s net liability or net asset of a defined benefit plan according to equity method accounting, the rest shall
be recorded in current period investment gain).
5. Method of preparing consolidated financial statements
(1) Principles in determining the scope of the consolidation
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
The scope of consolidation is determined on the basis of control. Control refers to the right that the Company is
able to make decision on financial and operational policies of the invested company, and receiving benefits from
the business activities conducted by the invested company. The scope of the consolidation includes the Company
and all its subsidiaries. Subsidiary means enterprise or entity that is controlled by the Company.
The Company will re-evaluate the scope of consolidation once related facts and situation changes, which in turn
results in changes to key factors that define control.
(2) Method of preparing consolidated financial statements
The Group begins to include a subsidiary in the scope of consolidation from the date that the Company acquires
the net assets and effective control over the operation and business decisions of the subsidiary. A subsidiary is
excluded out of the scope of the Group’s consolidation from the date the Company losses effective control over it.
For subsidiary that is disposed, the operating performance and cash flows before the disposal date are properly
included in the consolidated income statement and consolidated cash flow statement. The opening balance of the
consolidated balance sheet is not adjusted if the disposal occurs in the same period. The business performance
and cash flows of the addition of subsidiary through combination involving entities not under common control after
the acquisition date have been properly included in the consolidated income statement and consolidated cash
flow statement, and no adjustments are made to the opening balance and comparative figures of the consolidated
financial statements. For addition of subsidiary through combination involving entities under common
control, the business performance and cash flows from the beginning of the period to the combination date are
properly included in the consolidated income statement and consolidated cash flow statement, and the opening
and comparative figures of the consolidated financial statements are adjusted at the same time.
If the accounting policies or accounting period adopted by the subsidiary are not in line with the Company,
necessary adjustments are made to the financial statements of the subsidiary according to the Company’s
accounting policies and period when preparing consolidated financial statements. If the subsidiary is acquired
through combinations involving entities not under common control, the adjustments are made based on the fair
value of its identifiable net assets on the acquisition date.
All material intra-group current account balances, transactions and unrealized profits are offset when preparing
the consolidated financial statements.
The part of subsidiary shareholders’ equity and current period net profit or loss that do not attribute to the
Company are presented separately under shareholders’ equity and net profit in consolidated financial statements
as minority shareholders’ equity and minority shareholders’ profit or loss respectively. Portion of subsidiaries’
current net profit or loss attributable to minority shareholder’s equity are presented under the title of “minority
shareholders’ profit or loss” under net profit in consolidated income statement. If subsidiary’s losses that
attributable to minority shareholders exceed the opening owners’ equity attributable to minority shareholders,
minority shareholders’ equity is deducted.
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If the Company losses control over a subsidiary due to partial disposal of equity investment or other reasons, the
remaining equity is measured at fair value on the date when the control lost. The difference between the sum of
consideration received for disposal of equity interest and the fair value of remaining equity interest less the net
assets attributable to the Company calculated continuously since the purchase date based on shareholding
percentage before disposal are recognized in investment gain in the period when the control lost. Other
comprehensive income related to equity investment in the subsidiary is transferred to investment gain at the time
control lost. The remaining equity interests are measured subsequently according to “CAS No. 2 – Long-term
Equity Investment” or “CAS No. 22 – Recognition and measurement of Financial Instrument”. See Note IV. 9
“Financial instrument” or Note IV. 13 “Long-term equity investment” for details.
If the Company losses control over a subsidiary step by step through multiple disposal transactions, judgment of
whether these transactions belong to “a basket transaction”. It’s typically considered to account the multiple
transaction as “a basket transaction” if the terms, conditions or economic effects of each of the transactions meet
one or more criteria list below:
a. The transactions are entered into at the same time or in contemplation of each other;
b. The transactions together can achieve a complete commercial effect;
c. The occurrence of one transaction is dependent on the occurrence of at least one other transaction;
d. One transaction is not economically justified, but it is economically justified when considered together with
other transactions.
If the transactions do not belong to a basket transaction, each transactions shall be accounted for as a disposal
transaction that does not resulted in loss of control (refer to Note IV. 13 (2) ④ for detail) and applicable principle
of loss of control over a subsidiary because of partial disposal of equity investment or other reason (refer to
previous paragraph). However, the difference between each consideration received for disposal and portion of net
asset related to the disposal shall be accounted as other comprehensive income in consolidated financial
statement and charged to profit or loss at the time control losses and in the period of loss of control.
6. Categorizing of joint arrangement and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies
joint arrangements into joint operations and joint ventures. A joint operation is a joint arrangement whereby the
joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint
venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement.
The Company adopts equity method to joint venture investment and accounted for in accordance with accounting
policies stated in Note IV 13 (2) ②“Long-term investment accounted for using equity method”.
As a party in a joint operation, the Company recognize the followings: asset held independently; liability
undertaken independently; the Company’s share of asset held commonly and liability undertaken commonly;
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revenue from selling output of the joint operation that enjoyed by the Company; revenue from selling output of the
joint operation based on the Company’s share; expenses incurred independently by the Company and common
expenses incurred and shall be borne by the Company according to its shares.
When the Company, as a party in a joint operation, invest or sell asset (the asset does not constitute business) to
the joint operation or purchase asset from the joint operation, the Company only recognize the portion of profit or
loss that attribute to other parties in the joint operation arises from the transaction before the asset is sold to third
party. If the asset impaired according to “CAS No. 8 – Asset impairment”, the Company recognize the loss in full if
the asset is invested or sold to the joint operation by the Company, or only recognize the portion attributable to the
Company should be recognized if the asset is purchased by the Company from the joint operation.
7. Determination of cash and cash equivalents
The Company's cash and cash equivalents include cash on hand, deposit that can be used for immediate
payment, and Company’s investments that are with characteristics of short term (generally matures in three
months from the date of purchase), highly liquid, readily convertible to known amount of cash, and with
insignificant risks of changes in value.
8. Foreign currency transactions and financial statements translation
(1) Translation of foreign currency transactions
Initial recognition of foreign currency transactions incurred by the Company are translated to recording currency
using the spot exchange rate at the trading date (usually refers to middle rate of foreign exchange rate on that day
published by the People's Bank of China). For foreign currency exchange transactions and transactions related to
foreign currency exchange, they are translated into recording currency using actual exchange rate.
(2) Translation of monetary items and non-monetary items denominated in foreign currencies
At the balance sheet date, monetary items denominated in foreign currencies are translated using the spot rate at
the balance sheet date. Translation differences arising from the translation are recognized in current profit or loss
except for: ① Capitalized exchange difference attributable to assets purchased or constructed, which can be
capitalized, using foreign currency specified loan; ② Exchange differences on hedging instruments used for
effective hedging of net investments in overseas operations (the difference is included in other comprehensive
income until the net investment is disposed of to be recognized as current gains and losses;③Amortized cost of
available for sale monetary items denominated in foreign currency. The exchange difference arose from the two
scenario mentioned above shall be treated under the principal of capitalizing of borrowing cost and charged to
other comprehensive income respectively.
In preparing of the consolidated financial statements involving overseas operations, if there is any
foreign-currency monetary item constituting substantially net investment in overseas operation, the exchange
difference arising from exchange rate variation is recognized in other comprehensive income and will be charged
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to profit or loss at the period the investment is disposed.
Non-monetary items denominated in foreign currencies that are measured using historical costs are still
measured using recording currency translated at the spot rate at transaction date. Non-monetary items
denominated in foreign currency which are measured using fair value are translated at spot rate of the day the fair
value is determined. The differences between amount of recording currency after the translation and the original
amount of recording currency are treated as changes in fair value (including exchange rate change) and are
recognized in current profit or loss or recognized in capital reserves as other comprehensive income.
(3) Translation of financial statements prepared in foreign currencies
In preparing of the consolidated financial statements involving overseas operations, if there is any
foreign-currency monetary item constituting substantially net investment in overseas operation, the exchange
difference arising from exchange rate variation is recognized as “translation difference” under owners’ equity in
balance sheet. In case of disposal of overseas operation, it is charged to the profit and loss of the period.
Financial statements of foreign businesses that denominated in foreign currencies are translated to financial
statements in RMB using following rules: asset and liability items in balance sheet are translated using the spot
rate on balance sheet date; except for “undistributed profit”, all other items in owners’ equity are translated using
the spot rate on the date the corresponding transactions occurred. Revenue and expenses items in income
statement are translated using the average rate on the transaction date. The undistributed profit at the beginning
of the year is the year-end balance translated at the prior year. The undistributed profit at the year-end is
presented using translated items in profit distribution. Difference between the translated assets and sum of
liabilities and owners’ equity is recognized in other comprehensive income as translation differences and is
presented separately under owners’ equity in balance sheet. When disposing overseas operations and losing
controls over the operations, relevant translation differences which are originally presented under owners’ equity
are charged to profit or loss entirely or proportionately according to percentage of disposal.
Cash flows denominated in foreign currency and cash flows of subsidiaries outside Mainland China are translated
using the average exchange rate on the date when cash flows occur. The amount of cash changes due to
exchange rate variations are recognized as adjustment item and presented in the cash flow statement separately.
The balance at the beginning of the year and amount actually incurred prior year are presented using figures in
prior year’s translated financial statements.
All foreign exchange translation difference of an oversea investment recorded under equity and attributable to the
shareholders of the parent company shall be charged to current period profit or loss when the Company losses
control over this oversea investment due to disposal of all equity owned or partial disposal or other reasons.
If the equity holding in an oversea investment decreased but still maintain control due to partial disposal or other
reasons, foreign exchange translation difference related to the part disposed shall be included as minority
shareholders’ interest and should not be charged to current period profit or loss. If the partial disposal is for
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oversea associate or joint ventured enterprise, foreign exchange difference related to the oversea operation shall
be charged to profit or loss when the disposal occurred based on the percentage disposed.
9. Financial instruments
A financial asset or financial liability is recognized when the Company becomes one party of financial instrument
contracts. Financial asset and financial liability are initially recognized at fair value. Transaction expenses for fair
value through profit or loss financial asset and liability shall be charged to the profit or loss directly. Transaction
expenses for financial asset and liability other than that shall be included in the initial recognition amount.
(1) Determination of fair values for financial assets and financial liabilities
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. If there is an active market for a financial instrument, the quoted price
in the active market shall be used to establish the fair value of the financial instruments. Quoted prices from an
active market are prices that are readily and regularly available from an exchange, broker, industry association or
pricing service agency etc… and represent prices used in actual market transactions on an arm’s length basis. If
no active market exists for a financial instrument, the Group establishes fair values by using valuation techniques.
Valuation techniques include using the prices quoted in latest market transactions between knowledgeable, willing
parties for reference, referencing to the current fair value of another instrument that is substantially the same in
nature, discounted cash flow method and option pricing model, etc...
(2) Classification, recognition and measurement of financial assets
Financial assets which are traded in conventional manner are recognized or derecognized on the transaction date.
On initial recognition, financial assets are classified into fair value through profit or loss financial assets,
held-to-maturity financial assets, loans and receivables, and available-for-sale financial assets.
1 Fair value through profit or loss financial asset
Fair value through profit or loss financial asset includes financial asset held for trade and designated upon initial
recognition as at fair value through profit or loss.
Financial asset meet one of the following criteria is categorized as financial asset held for trade: A. the purpose of
acquiring the financial asset is for selling in short-term; B. belongs to identifiable financial instrument portfolio that
is centralized managed and objective evidence proofed that the Company manages the portfolio in a manner to
make profit in short-term; C. belongs to derivative instrument except for derivative instruments that are designated
as effective hedging tools, financial guarantee contract or connected with equity instrument investment that do not
have quotation in an active market and that the fair value cannot be measured reliably and the settlement of
derivative instrument must involve delivery of this equity instrument.
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Financial asset can be recognized initially as designated fair value through profit or loss financial asset if one of
the following conditions is met: A. the designation can eliminate or reduce significantly the situation of
inconsistency in recognition or measurement of profit or loss caused by different measurement basis; B. the
official documents of the Company’s risk management or investment strategy state that the financial asset
portfolio or portfolio combines financial asset and financial liability that contains the financial asset are managed,
evaluated and reported to key management based on fair value.
Fair value through profit or loss financial asset is measured consequently using fair value. Profit or loss arose from
changes in fair value and dividend and interest income related to the asset are recorded in current period profit or
loss.
2 Held-to-maturity investment
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity dates that the Company has the positive intention and ability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method;
gains and losses arising from de-recognition, impairment or amortization is recognized in profit or loss for the
current period.
Effective interest rate method refers to the method that calculates amortized cost and interest income or expenses
for each period based on actual interest rate of a financial asset or financial liability (or a group of financial asset
or financial liability). Effective interest rate is the rate that used to discount future cash flows of a financial asset or
financial liability in its holding period or a shorter time applicable to its current book value.
When calculating effective interest, the Company estimates future cash flows (do not consider future credit loss)
based on all contractual terms of the financial asset or financial liability, and taking into consideration of expenses,
transaction fee and discount or premium, which consist part of the actual interest rate, that are paid to or received
from different parties of the financial asset or financial liability contract.
③Loan and receivables
Loan and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. The Company’s assets fall under this category include notes receivable, accounts receivable,
interest receivable, dividends receivable and other receivables etc…
Loan and receivables are subsequently measured at amortized cost using the effective interest method; gains
and losses arising from de-recognition, impairment or amortization is recognized in profit or loss for the current
period.
④Available-for-sale financial asset (AFS financial asset)
AFS financial assets are those non-derivative financial assets that are designated as available for sale and those
financial assets in addition to those above mentioned.
The cost of AFS debt instrument investment at period end is determined according to amortized cost, i.e. the initial
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recognized amount minus principal repaid plus or minus the accumulated amortization of difference between
initial recognized amount and amount at the maturity date, and minus impairment loss incurred. The cost of AFS
equity instrument at period end is the initial cost when it is acquired.
AFS financial assets are subsequently measured at fair value. Gain and losses arising from changes in fair value
of AFS financial assets (other than impairment losses and foreign exchange gains and losses resulted from
foreign currency monetary assets which are recognized in profit or loss for the current period) are recognized as
other comprehensive income, until the financial assets are derecognized, are transferred to profit or loss for the
current period. Equity instrument investment with no quoted price in active markets and with not reliably measured
fair value, and derivative financial assets for the equity instrument and settled by paying the equity instrument are
subsequently measured at cost.
Interest income and dividends related to the AFS financial assets are recognized as investment gain for the
current period.
(3) Impairment of financial assets
The Company assesses the carrying amount of financial assets at each balance sheet date other than those at
fair value through profit or loss, if there is objective evidence that financial assets are impaired, the Company
determines the amount of impairment loss.
The Company conducts impairment test on individually significant financial assets separately. Financial assets
that are not individually significant in amount are tested for impairment separately or grouped into different asset
portfolios based on similarity and correlation of the credit risk characteristics. Financial assets that are not
impaired after standalone impairment tests will be tested again by including it in a portfolio of financial assets with
similar credit risk characteristics. Financial assets that have been impaired in standalone test will not be tested
again by including it in a portfolio of financial assets with similar credit risk characteristics.
①Impairment to held-to-maturity, loan and receivables
The carrying amount of financial assets that are measured at cost or amortized cost shall be reduced to the
present value of estimated future cash flows. The amount reduced shall be recognized as impairment loss and
charged to current period profit or loss. If there is objective evidence shows that the value of the financial asset
recovered after impairment loss was recognized, and the recovery is connected with matters happened after the
recognition of impairment loss, the loss recognized previously could be reversed. The carrying amount after the
reversal shall not exceed the amortized cost at the reversal date as if there is no impairment before.
②Available-for-sale financial assets
It indicated that impairment incurred to the AFS financial asset if the air value decrease is judged as severe and
not temporary by considering all relevant factors.
If AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized
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directly in other comprehensive income are reversed and charged to profit or loss for the current period. The
reversed accumulated losses are the asset's initial acquisition costs after deducting amounts recovered and
amortized, current fair value and impairment losses previously recognized in profit or loss.
If, in a subsequent period, the fair value of financial assets increases and the increase can be related objectively
to an event occurring after the impairment was recognized, the previously recognized impairment losses can be
reversed. The reversal of impairment losses of AFS equity instruments are to be included in other comprehensive
income and the AFS debt instrument impairments are to be reversed through current period profit or loss.
The impairment for derivative financial asset that do not have quotation in an active market and that the fair value
cannot be measured reliably and the settlement of derivative instrument must involve delivery of this equity
instrument are not allowed to be reversed.
(4) Condition of recognition and measurement of transfer of financial assets
Financial asset is derecognized if one of the following conditions is satisfied: ①the contractual rights of receiving
cash flows from the financial asset is terminated; ② financial asset has been transferred, and substantially all
risks and reward associated with the ownership of the financial asset have been transferred to transferee; ③the
financial asset has been transferred. The enterprise neither transfers nor retains substantially all the risks and
rewards associated with the ownership of the financial asset, but it has not retained control over the financial
asset.
If the enterprise neither transfers nor retains substantially all the risks and rewards associated with the ownership
of a financial asset, and it retains control over the financial asset, it recognizes the financial asset to the extent of
its continuing involvement in the transferred financial asset and recognizing associated liability. The extent of
continuing involvement in the transferred asset is the extent to which the enterprise is exposed to risks of changes
in the value of the transferred asset.
For an entire transfer of a financial asset that satisfies the de-recognition criteria, the difference between the
carrying amount of the financial asset transferred and the sum of the consideration received from the transfer and
any cumulative gain or loss that had been recognized in other comprehensive income is recognized in current
profit or loss.
If a part of the transferred financial asset qualifies for de-recognition, the carrying amount of the transferred
financial asset in its entirety shall be allocated between the part that is derecognized and the remaining portion
proportionately based on the relative fair value of each part. The difference between the carrying amount
allocated to the part derecognized and the sum of the consideration received for the part derecognized and any
cumulative gain or loss attributable to it that had been recognized in other comprehensive income is recognized in
current profit or loss.
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For financial asset sold with recourse or endorsed, it needs to assure that almost all risk and rewards associated
with the financial asset have been transferred. If almost all risk and rewards associated with the financial asset
have been transferred to the recipient, the financial asset shall be de-recognized. If the Company retains almost
all risk and rewards associated with the financial asset, it shall not be de-recognized. If the Company neither
transfers nor retains almost all risk and rewards associated with the financial asset, judgment of whether the
Company retains control over the asset needs to be carried out and it shall be accounted for based on principals
stated in above paragraphs.
(5) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified in financial liabilities at fair value through profit or loss and
other financial liabilities. A financial liability is initially recognized at fair value. Transaction costs for financial
liability at fair value through profit or loss are charged to current profit or loss. Transaction costs for other financial
liabilities are included in their initial recognition amounts.
①Fair value through profit or loss financial liability
The condition of categorizing fair value through profit or loss financial liability and designated as fair value through
profit or loss financial liability is the same as fair value through profit or loss financial asset and designated fair
value through profit or loss asset.
Fair value through profit or loss financial liability is measured subsequently using fair value and gain or losses
resulted from changes in fair value and dividend or interest payment related to the financial liability shall be
charged to current period profit or loss.
②Other financial liability
Derivative financial liabilities, which connected with equity instrument without quotation in an active market and
that the fair value cannot be measured reliably and the settlement of such financial liabilities require delivery of the
equity instrument, are measured subsequently at cost. Other financial liabilities are measured at amortized cost
using effective interest rate method. Gain or losses arising from derecognizing or amortization are charged to
current profit or loss.
③Financial guarantee contract
Financial guarantee contracts that are not belong to financial liabilities designated as fair value and record
changes in profit or loss are initially recognized at fair value, and initially recognized at the determined amount in
accordance with the "CAS No. 13 - Contingencies" and the higher of the initial balance after deducting the
accumulated amortization according to the "CAS No. 14 - Income".
(6) De-recognition of financial liability
A financial liability or part of it can only be derecognized only when the present obligations are fully or partly
discharged. If an agreement between the Company (the debtor) and creditor indicates that the present financial
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liability are to be replaced with a new financial liability which has substantially different terms compare with the
present financial liability, the present financial liability is derecognized and the new financial liability is recognized.
When a financial liability is entirely or partly derecognized, the difference between the carrying amount of the
derecognized financial liability and the consideration paid (including any non-cash assets transferred or new
financial liabilities undertook) is charged to current profit or loss.
(7) Derivative instrument and embedded derivative instrument
Derivative financial instruments of the Company are initially measured at the fair value of the date a derivative
contract entered into and subsequently measured at their fair value. Gain or losses arising from changes in fair
value of derivative instrument that designated hedging instrument and highly effective are charged to profit or loss
based on hedging accounting. Any gains or losses arising from changes in fair value which do not meet the
requirements of hedge accounting are directly recognized to profit or loss for the current period.
For hybrid instrument with embedded derivative, where financial assets or liabilities not designated as fair value
through profit or loss, the economic features and risks of the embedded derivative are not closely related to that of
the host contract, and a similar instrument with the same terms as the embedded derivative would meet the
definition of a derivative, then embedded derivative is separated from hybrid instrument and accounted for as a
derivative. If embedded derivative is unable to measure separately either at acquisition or subsequently at
balance sheet date, hybrid instrument as a whole is designated as financial assets or liabilities at fair value
through profit or loss.
(8) Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities can be presented in the balance sheet using net figure after offsetting only
when the Group has the legal rights to offset the financial assets and liabilities that are already recognized and
plans to execute such rights, and the Group intends to settle corresponding financial assets and liabilities on net
basis or to realize the financial asset and settle the financial liability simultaneously. Other than situations
mentioned above, financial assets and liabilities are presented separately in balance sheet and cannot be offset.
(9) Equity Instrument
An equity instrument is a contract that evidences any residual interest in the assets of the Group after deducting
all of its liabilities. The equity instrument will increase the owners’ equity by deducting transaction costs from
consideration received for the issuance of the equity instrument.
All kinds of distributions to the owners of equity instrument (excluding stock dividends) decrease the owners’
equity. The Company does not recognize fair value changes of equity instrument.
10. Accounts receivable
Receivables include accounts receivable and other receivables.
(1) Recognition principle for bad debts provision
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The Company examines, at the balance sheet date, the carrying amounts of receivables and impairment
provision is recognized if following objective evidences that indicating impairment to receivables occurs: ①severe
financial difficulties of the debtor; ②a breach of contract by the debtor (such as a default or breach of contract in
interest or principle repayments); ③ it is probable that the debtor will be bankrupted or conduct other financial
reorganization; and ④other objective evidences indicating there is an impairment of the receivables.
(2) Method of recognizing bad debt provision
①Determination and providing bad debt provision for receivables which are individually significant in amount and
provided for bad debt individually
The Company identifies single accounts receivable item that above RMB800,000.00 (inclusive) and single other
receivable item that above RMB500,000.00 (inclusive) as receivables that individually significant in amount. The
Company conducts impairment test on individually significant receivables separately. Financial assets that are not
impaired after standalone impairment tests will be tested again by including it in a portfolio of financial assets with
similar credit risk characteristics. Receivables that have been impaired in standalone test will not be tested again
by including it in a portfolio of financial assets with similar credit risk characteristics.
②Determination of receivables that recognize bad debt provision under credit risk portfolio and bad debt provision
recognition.
A. Basis of determining portfolio with similar credit risk characteristics
Receivables that are not individually significant in amount and receivables that are individually significant in
amount but not impaired after individual impairment test are grouped into different asset portfolios based on
similarity and correlation of the credit risk characteristics. These credit risk characteristics reflect the ability of the
debtor to repay all amounts due according to terms of contracts related to the assets under test and are in
connection with estimation of future cash flows expected to be generated by these assets.
Basis of portfolio determination
Item Basis of portfolio determination
Portfolio of aging Based on aging of receivables
Receivables from petty cash advanced to employees, from subsidiaries of the Company
Portfolio of specific accounts and sales revenue between the last settlement date with the department store and the
balance sheet date
B. Recognizing bad debt provision based on credit risk portfolio
If the impairment test is carried out for a portfolio of assets, the amount of bad debt provision is recognized based
on the structure of the portfolio and similar credit risk characteristics (the ability of repayment by the debtor
according to contract terms) by assessing historical experience on assets impairment with similar credit risk
characteristics, current economic condition, and losses that are already exist in the portfolio.
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Method of recognizing bad debt provision for different portfolios
Item Method
Portfolio of aging Analyzing the aging of receivables
Portfolio of specific accounts No bad debt provision is recognized
a. Recognizing bad debt provision based on aging analysis method within the portfolio
Percentage of provision recognized for Percentage of provision recognized for
Aging
accounts receivable (%) other receivables (%)
Within 1 year (inclusive) 5 5
1-2 years (inclusive) 10 10
2-3 years (inclusive) 30 30
Above 3 years 50 50
b. Recognizing bad debt provision at a percentage based on balance within the portfolio
Percentage of provision recognized for Percentage of provision recognized for
Name of portfolio
accounts receivable (%) other receivables (%)
No bad debt provision is recognized as the risk of impairment does not exist according
Portfolio of specific accounts
to its credit risk characteristics
Based on historical experience, the Company’s receivables from petty cash advanced to employees, from
subsidiaries of the Company and sales revenue between the last settlement date of the same department store
and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no
bad debt provisions are provided for such receivables.
③Receivables that are insignificant in amount individually but recognize bad debt provision individually
The Company conducts impairment test to receivables that insignificant in amount individually but with the
following characteristics: receivables that involving dispute or legal case, arbitration with the other party; obvious
indicators show that it is probable that the debtor is unable to fulfil the repayment obligation. Standalone
impairment test is carried out for this kind of receivables. If any objective evidence indicate that the receivables
impaired, impairment losses are recognized based on the difference between the carrying amount and the
present value of estimated future cash flows. Bad debt provision is recognized accordingly.
(3) Reversal of bad debt provision
If, subsequent to the recognition of an impairment loss on a receivable, there are objective evidences of a
recovery in value of the receivable and the recovery is related objectively to events occurred after the impairment
was recognized, the impairment loss recognized previously is reversed and recognized in profit or loss. The
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carrying amount after the reversal shall not exceed the amortized cost of the receivable on the reversal date as if
there is no impairment previously.
Accounts receivable transferred by the Company to financial institutions without recourse, the difference between
transaction amount minus the carrying amount of receivable and related transaction taxes and fees is charged to
current period profit or loss.
11. Inventory
(1) Classification of inventory
Inventory mainly includes raw material, work-in-process and stored goods.
(2) Costing method of acquiring and delivering of inventory
The inventory is valued using actual cost when it is acquired. The cost of inventory includes cost of purchase,
manufacturing cost and other costs. Costing methods used for inventory usage and shipment include: weighted
average costing (except for branded watches), specific identification method (for stored goods of branded
watches).
(3) Determination of net realizable value of the inventory and method of recognizing impairment provision
Net realizable value (NRV) equals to estimated selling price less estimated costs of completion, estimated selling
costs and related taxes in the ordinary course of business. The determination of net realizable value of the
inventory is based on reliable evidence and taking into consideration of the intents of holding the inventory and
impacts of events after the balances sheet date. In particular: (a) the NRV of inventories that are available for sale
such as finished goods and materials held for trading are determined using the estimated selling price less
estimated selling expenses and related taxes if the business is in the ordinary course of operation; (b) the NRV of
materials that need to be processed are determined using estimated selling price of finished goods which is
manufactured from the material less estimated cost of completion, estimated selling expenses and related taxes if
the business is in the ordinary course of operation.
The Company recognizes inventory impairment provision for FIYTA brand watches based on models.
Impairment provisions for branded watches are recognized by specific item.
Impairment provisions for raw materials of FIYTA watches are recognized by categories based on terminal selling
status of FIYTA finished watches taking into considerations of the exchangeability of the spare parts and the
special usage of materials.
If, after the impairment provision is recognized, the influence conditions are no longer exist and as a result, the
NRV of the inventory is higher than its carrying amount, the impairment provision recognized previously can be
reversed. The amount reversed is to be recognized in current profit or loss.
(4) The inventory system is perpetual inventory system
(5) Amortization of low-value consumables and packaging material
The low-value consumables and packaging material are amortized using one-off method at the time it is used.
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12. Asset held for sale and disposal group
If the Company mainly recovers a non-current asset or disposal group by disposal (including non-monetary
transaction with commercial substance, the same below) rather than continuously usage. The asset is then
classified as assets held for sale. The following conditions are to be met at the same time: A non-current asset or
disposal group can be immediately sold under current conditions based on the practice of selling such assets or
disposal group in a similar transaction; the Company has already decided on the sales plan and has been
confirmed the purchase commitment; the sale is expected to be completed within one year. Among them, the
disposal group refers to a group of assets that are disposed of by the sale or other means together in a
transaction, and the liabilities directly related to these assets transferred in the transaction. The disposal group
belongs to the asset group or the asset group combination in accordance with "CAS No. 8 –Asset impairment" to
share the goodwill acquired in the business combination, the disposal group shall include the goodwill allocated to
the disposal group.
When the Company initially measures or re-measures the non-current assets held for sale and the disposal group
on the balance sheet date, if the book value is higher than the net amount after the fair value minus the selling
expenses, then the book value is reduced to the net amount after deducting the selling expenses from the fair
value shall be recognized as the asset impairment loss and recorded in the current profits and losses, and at the
same time, provision shall be made for the impairment of assets held for sale. For the disposal group, the
recognized impairment loss on assets is offset against the carrying amount of the goodwill in the disposal group,
and then reduced in proportion to the applicable "CAS No. 42 - Non-current Assets Held for Sale , Disposal Group
and Discontinued Operations" ("Held-for-Sale Standard") measurement requirements of the non-current assets of
the book value. On the subsequent balance sheet date, if the fair value minus the selling expenses increases, the
amount previously written-down should be restored and the applicable sale-for-sale criterion should be applied
after classification as held-for-sale category reversal of the amount of the asset impairment loss recognized in the
measurement of non-current assets shall be recorded into the profits and losses of the current period; and
according to the book value of the non-current assets held by the disposal group other than goodwill, the carrying
amount of the goodwill that has been offset against and the non-current assets subject to the measurement of the
held for sale criteria cannot be reversed .
Non-current assets held for sale or disposal of non-current assets in the disposal group are not subject to
depreciation or amortization. The interest on liabilities held in the disposal group for sale and other expenses are
continuously recognized.
Non-current assets or disposal group no longer meet the classified conditions for holding the sale category, the
Company will no longer be classified as held for sale or remove non-current assets from held-for-sale disposal
group, and shall be measured at the lower of the following: (1) The carrying amount before classification as held
for sale is adjusted according to the depreciation, amortization or impairment that should be recognized if it is not
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classified as held for sale; (2) recoverable amount.
13. Long-term equity investment
Long-term equity investment refers to equity investments where the Company has control, joint control or
significant influence over, an investee. Equity investment where the Company cannot control, joint control or
exercise significant influence over the investee, shall be accounted for as AFS financial asset or Fair value
through profit or loss financial asset, of which the accounting policies are stated in Note IV 9 “Financial
instrument”.
Joint control means jointly control of a certain business activity according to the agreement of contract. It exists
only when the agreement on important accounting and business policies that needs to be reached between
investors who share the control rights. Significant influence means participation in decision making to a
company’s finance and business policies, but could not control or jointly control with other parties to the policy
making.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving entities under common
control, the investment cost of the long-term equity investment is the attributable share of the carrying amount of
the shareholders' equity of the acquiree at the date of combination. The difference between the initial cost of the
long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of
the debts borne by the acquirer shall offset against the capital reserve. If the capital reserve is insufficient to
deduct, retained earnings shall be adjusted. If the consideration is paid by issuing equity securities, it shall, on the
date of acquisition, regard the share of the book value of the shareholder's equity of the acquiree on the
consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment.
The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the
initial cost of the long-term equity investment and total face value of the shares issued shall offset against the
capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities
of the combined party which respectively acquired through multiple transaction under the same control that
ultimately form into the combination of the enterprises under the common control, should be disposed according
whether belongs to a basket transaction. If it belongs to a basket transaction, each transaction shall be accounted
for by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the
date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise
on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity
investment, and as for the difference between the initial investment cost of the long-term equity investment and
sum of the book value of the long-term equity investment before the combination and the book value of the
consideration of the new payment that further required on the combination date, should adjust the capital reserve.
If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
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before the combination date which adopted the equity method for accounting, or the other comprehensive income
confirmed for the available-for-sale financial assets, should not have any accounting disposal for the moment.
For the long-term investment required acquired from the business combination involving entities not under
common control, the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the
liabilities incurred or assumed and the equity securities issued by the Company. The equity of the acquirees which
respectively acquired through multiple transactions that ultimately form into the combination of the entities under
common control, should be disposed according whether belongs to a basket transaction. If it belongs to a basket
transaction, each transaction would be accounted for by the Company as a transaction of acquiring the control
right. If it does not belong to a basket transaction, the sum of the book value of the original held equity investment
of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the
long-term equity investment that changed to be accounted by cost method. If the original held equity is calculated
by cost method, the other relevant comprehensive income would not have any accounting disposal for the
moment. If the original held equity investment is the financial assets available for sale, its difference between the
fair value and the book value as well as the accumulative changes of the fair value that include in the other
comprehensive income, should transfer into the current gains and losses.
Agent fees incurred by the acquirer for the business combination such as audit, legal service, and valuation and
consultation fees, and other related administration expenses are charged to current profit or loss at the time such
expenses incurred.
Equity investments that other than the kind originated from business combinations are measured at cost initially.
The investment cost differs based on ways of acquiring the long-term equity investment. It can be determined
based on cash consideration actually paid by the Company, fair value of equity securities issued by the Company,
value stimulated in investment contract or agreement reached, fair value or carrying amount of assets that is
exchanged in a non-monetary asset transfer transaction, or the fair value of the long-term equity investment itself.
Expenses that directly related to the acquisition of the long-term equity investment, taxes and other necessary
expenditure are included in the investment cost. Cost for long-term equity investment that has significant
influences over the investees because of addition of the investment or execute joint control, shall be accounted for
based on the sum of the fair value of the equity investment original held according to “CAS No.22 – Recognition
and Measurement of Financial Instrument” and the newly added investment cost.
(2) Subsequent measurement and recognition of gain or losses
Equity method is used for measurement of long-term equity investment if there is common control (except joint
operation) with or significant influence over the invested entity. Cost method is used for measurement of long-term
equity investment if there is control over the invested entity.
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①Long-term equity investments that are measured using cost method
Under cost method, long-term equity investment is measured at initial investment cost. Current period investment
gain or losses are recognized according to the cash dividend or profit distribution that is announced by the
invested entity, except for cash dividend or profit distribution that is already announced but not distributed which is
included in the consideration that actually paid.
②Long-term equity investments that are measured using equity method
If the initial investment cost of a long-term equity investment, which is measured using equity method, is greater
than the portion of fair value of the identifiable net assets of the invested entity attributable to the Company, the
initial investment cost of the long-term equity investment is not adjusted. Otherwise, the difference is charged to
current profit or loss, and the cost of long-term equity investment is adjusted accordingly.
When measured by adopting equity method, respectively recognize investment income and other comprehensive
income according to the net gains and losses as well as the portion of other comprehensive income which should
be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment;
corresponding reduce the book value of the long-term equity investment according to profits which be declared to
distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the
other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for
the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as
include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable
assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and
losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies adopted
by the investees is not accord with that of the Company, should be adjusted according to the accounting policies
of the Company and the financial statement of the investees during the accounting period and according which to
recognize the investment income as well as other comprehensive income. For the transaction happened between
the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into
business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group
according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the
basis. But the losses of the unrealized internal transaction happened between the Company and the investees
which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched
by the Company to the associated enterprises or the joint ventures if could form into business, the long-term
equity investment without control right which acquired by the investors, should regard the fair value of the
launched business as the initial investment cost the newly added long-term equity investment, and for the
difference between the initial investment cost and the book value of the launched business, should be included
into the current gains and losses with full amount. The assets sold by the Company to the associated enterprises
or the joint ventures if could form into business, the difference between the acquired consideration and the book
value of the business should be included in the current gains and losses with full amount. The assets purchased
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by the Company to the associated enterprises or the joint ventures if could form into business, should be
accounting disposed according to the CAS - No. 20 – “Business Combination”, and should be recognized gains or
losses related to the transaction with full amount.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity
investment and other long-term rights and interests which substantially form the net investment made to the
invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall
be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
For the long-term equity investment in the associates and joint ventures held by the Company for the first time
before the implementation of the new accounting standards, if there is a debit balance of the equity investment
related to the investment, the difference shall be amortized and charged to current profit or loss using straight line
method based on original remaining period.
③Purchasing minority equity
When preparing consolidated financial statements, the difference, resulted from addition of long-term equity
investment and shares of net assets calculated continuously since acquisition date (or combination date)
according to new shareholding, is adjusted to capital reserve. If the capital reserve is insufficient to offset,
adjusting retained earnings.
④Disposal of long-term equity investment
In consolidated financial statements, the parent company can dispose part of the long-term equity investment to a
subsidiary given that the parent does not lose control over the subsidiary. The difference between consideration
received for the disposal and the part of net assets disposed attributable to the parent is recognized in owners’
equity. If the parent company losses control over a subsidiary because of long-term equity investment disposal,
the accounting treatment shall refer to accounting policies stated in Note IV. 5 (2) – “Preparing consolidated
financial statements”.
For long-term equity investment disposal other than situations mentioned above, the difference of carrying
amount of disposed equity and the consideration actually received is charged to current profit or loss.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
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distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control
of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities
directly disposed by the investees and should be carried forward into the current gains and losses according to
the proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
If the Company lost control over the investee by disposing part of the equity investment and the remained equity
after disposal could execute joint control or significant influences over the investees, it should change to measure
by equity method when preparing the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired. If the remaining equity after disposal could
not execute joint control or significant influences on the investees, it should change the accounting disposal
according to the relevant regulations of the recognition and measurement standards of financial instrument, and
its difference between the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity method for
measurement or the recognition and measurement standards of financial instrument before the Company
acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the
accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of
them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
Of which, for the disposed remained equity which adopted the equity method for measurement, the other
comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the
disposed remained equity which changed to execute the accounting disposal according to the recognition and
measurement standards of financial instrument, the other comprehensive income and the other owners’ equity
should be charged to profit or loss in full.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
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equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.
The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until
lose the control right, if the above transactions belongs to the package deal, should execute the accounting
disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose
the control right, while the difference between each expenses of the disposal and the book value of the long-term
equity investment in accord with the disposed equity before losing the control right, should firstly be recognized as
other comprehensive income then be transferred into the current gains and losses of losing the control right along
until the time when lose it.
14. Investment property
Investment property is property held to earn rentals or for capital appreciation or both. It includes buildings that are
already leased out. Besides, for the vacant buildings held by the Company for the purpose of operating leases, if
the board of directors (or similar institution) makes a written resolution that expressly indicates that it will be used
for operating leases and the intention to keep no longer changes in the short-term, it also can serve as an
investment real estate.
An investment property is measured initially at cost. If it is probable that the benefit related to subsequent
expenditures incurred for an investment property will flow into the Company and that the cost can be measured
reliably, the expenditure is included in the cost of investment property. Other subsequent expenditures are
charged to profit or loss in the period in which they are incurred.
The Company adopts cost method for subsequent measurement to investment property. Depreciation or
amortization policy for investment properties are the same as the one for plants and buildings or land use rights.
Please refer to Note IV. 20 “Impairment of Long-term assets” for details of impairment test and impairment
provision recognition for investment property.
If the usage of a property changed from self-use to investment or vice versa, the carrying amount before change
shall be used as initial recognition amount after the change.
When the usage of the property changed from investment property to self-use property, the property is transferred
from investment property to fixed asset or intangible asset on the changing date. If the usage of the property
changes from self-use to earn rental or capital appreciation, the property is switched to investment property from
fixed asset or intangible asset. If it switched to investment property that measured using cost method, it is
recognized using the carrying amount before the switch. If it switched to investment property that measured using
fair value method, it is recognized using the fair value on the switching date.
The investment property is derecognized when it is disposed or ceased usage permanently and it is estimated
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that no benefit can be obtained from the disposal. Disposal income arising from selling, transfer, disposing and
damaging the investment property, less its carrying amount and taxes related to the disposal, is recognized in
profit or loss.
15. Fixed asset
(1) Recognition principles
Fixed assets refer to tangible assets that are held for the purpose of goods production, providing services, lease,
or for administrative purposes with useful life of more than one accounting year. Fixed asset is recognized only
when the economic benefit associated with the fixed asset is probable to flow into the Company and the cost can
be measured reliably. Fixed asset is recognized initially at cost by considering estimated disposal expenses.
(2) Depreciation method
The fixed asset is depreciated on straight-line basis over its estimated useful life from the next month after it
reached estimated useful condition. The useful lives, estimated residual ratios and annual depreciation rates for
each category of fixed assets are as follows:
Estimated net
Estimated useful lives Annual depreciation
Categories Method of depreciation residual value
(year) rates (%)
ratios (%)
Plants and buildings straight-line 20-35 5.00 2.70-4.80
Machinery equipment straight-line 10 5.00-10.00 9.00-9.50
Electronics devices straight-line 5 5.00 19.00
Transportation vehicles straight-line 5 5.00 19.00
Other equipments straight-line 5 5.00 19.00
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal, if the asset’s useful life is passed and in the
condition expected at the end of its useful life.
(3) Impairment test and impairment provision recognition for fixed asset
For impairment test and impairment provision recognition for fixed asset, please refer to Note IV. 20 “Impairment
of Long-term asset”.
(4) Recognition basis and pricing method of financing leased fixed assets
A financing lease is a lease that transfers all the risks and rewards incidental to the ownership of the asset in
substance and the ownership may or may not eventually be transferred. The depreciation accrued method of the
fixed assets rented out under financing leases using a same policy as its own fixed assets. If it is reasonably
certain that the ownership of the leased asset can be acquired when the lease term expires, depreciation is
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accrued over the useful life of the leased asset. If it cannot reasonably determine that the ownership of the leased
asset can be acquired when the lease term expires, the depreciation will be accrued in the shorter of lease term
and the useful life of leased asset.
(5) Others
Subsequent expenditure in relation to fixed asset is recognized in the cost of the fixed asset and derecognizing
the carrying amount of the part replaced if it is probable that the economic benefit related to the fixed asset will
flow in the entity and the cost can be measured reliably. Subsequent expenditures other than this are charged to
current profit or loss.
When a fixed asset is sold, transferred, retired or damaged, the disposal proceed net of the carrying amount and
related taxes is charged in profit or loss for the current period.
The Company conduct reviews to the useful life, estimated net residual rate and depreciation method at least at
each end of the accounting year. Any changes will be treated as changes in accounting estimates.
16. Construction in progress
Construction in progress is measured at actual project expenditure which includes construction expenditures,
capitalized borrowing costs before the project reaches estimated useful condition and other related expenses.
Construction in progress is transferred to fixed asset when the asset reaches its estimated useful condition.
For impairment test and impairment provision recognition for construction in progress, please refer to Note IV. 20
“Impairment of Long-term asset”.
17. Borrowing cost
Borrowing cost includes loan interest, associated expenses incurred in connection with the arrangement of
borrowings and exchange difference arising from foreign currency loans. Borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset can be capitalized starting from the
time the necessary acquisition or production for bringing the asset to its estimated useful or sellable condition
started, and given that the capital expenditure and borrowing cost have been incurred. The capitalization stops
when the asset reaches its estimated useful or sellable conditions. Other borrowing costs are charged to profit or
loss at the time they are incurred.
The interest expenses actually incurred current-period special borrowing less unused borrowing funds in bank
interest earned or investment income on the temporary investment of those funds, the above mentioned amount
shall be capitalized. The weighted average asset disbursement of general borrowing multiplies the capitalization
rate to determine the amount of capitalization based on the accumulative asset disbursements of special loans.
The capitalization rate is the weighted average interest rate of the general borrowing.
During the capitalization period, exchange differences on foreign currency borrowings are all capitalized;
Exchange differences on foreign currency borrowings are generally included into current profit or loss.
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The assets which have qualified condition of capitalization is the assets necessarily take a substantial period of
time after the acquisition, construction or production activities in order to achieve their intended use or sale of
fixed assets, investment property, inventories and other assets.
If the process of acquiring, constructing or producing of the assets that are capable for capitalization is interrupted
abnormally and the interruption lasts more than three months, the capitalization of borrowing costs shall be
suspended until the acquisition, construction or production resumes.
18. Intangible assets
(1) Intangible assets
An Intangible asset is the identifiable non-monetary asset without physical substances that is owned or controlled
by the Company.
An intangible asset is initially measured at its cost. Expenditures related to the intangible asset are included in its
cost if it is probable that the related economic benefit will flow into the Company and the cost can be measured
reliably. Other expenditures apart from this will be charged to profit or loss in corresponding period at the time it
incurred.
Land use right is generally accounted for as intangible asset. When the plants or buildings are constructed by the
Group, expenditures on the land use right and on the buildings shall be recognized as the intangible asset and the
fixed asset respectively. When the plants or buildings are purchased, the consideration paid shall be allocated
between the land use right and the buildings. If it can be allocated reasonably, recognize entirely as fixed assets.
An intangible asset with a finite useful life shall be amortized by using the straight-line method over its estimated
useful life when it is available for use. The depreciable amount of an intangible asset is its cost less estimated
residual value and impairment provision. An intangible asset with an indefinite useful life is not amortized.
Method of amortization for intangible asset with finite useful life is as follows:
Category Useful life (year) Method of amortization
Land use right 50 straight-line
Software 5 straight-line
Brand use right 5-10 straight-line
For an intangible asset with a finite useful life, its useful life and amortize method are reviewed at the end of
each accounting period. Any changes will be treated under changes in accounting estimates. Besides, the useful
life of the intangible assets with indefinite useful life will be reviewed at the end of each accounting period. If there
is evidence indicating that it is foreseeable that the period during which the economic benefit associated with the
asset would flow into the entity, its useful life will be estimated and the asset will be amortized in accordance to the
amortization policies applicable for an intangible asset with finite useful life.
(2) Research and development expenditure
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The Company’s expenditure on internal research and development projects are classified into expenditure
on the research phase and expenditure on the development phase.
Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred.
Expenditure on the development phase is capitalized and recognized as intangible asset only when all of the
following conditions are satisfied. Expenditures on the development phase, failing to meet the below conditions,
are recognized in profit or loss in the period it is incurred:
①The technical feasibility of completing the intangible asset so that it will be available for use or sale;
②The intention to complete the intangible asset and use or sell it;
③The intangible asset will generate economic benefits. Among other things, the Company can demonstrate the
existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset;
④The availability of adequate technical, financial and other resources to complete the development and the ability
to use or sell the intangible asset; and
⑤The expenditure attributable to the intangible asset during its development phase can be measured reliably.
Expenditures which cannot be divided into expenditures on research phase and expenditures on development
phase are charged entirely in current profit or loss.
(3) Impairment test and impairment provision recognition for intangible assets
For impairment test and impairment provision recognition for intangible asset, please refer to Note IV. 20
“Impairment of Long-term asset”.
19. Long-term deferred expenses
Long-term deferred expenses refer to expenditures which are incurred but shall be expensed over the beneficiary
period of more than one year. The Company’s long-term deferred expenses mainly include counter fabrication
and decoration expenses. Long-term deferred expenses shall be amortized on straight-line basis over its
beneficiary period.
20. Impairment of Long-term assets
The Company assesses, on balance sheet date, whether there are indicators for impairment to fixed assets,
construction in process, intangible assets with finite useful life, investment property measured at cost, and
long-term equity investment to subsidiaries, joint ventured companies and associated companies. If there are any
indictors of impairment, recoverable amount is estimated and impairment test is conducted. Impairment tests are
conducted each year to goodwill, intangible assets that with indefinite useful life and intangible assets that have
not reached its useful condition despite whether there is indicators of impairment.
If the recoverable amount of an asset is less than its carrying amount in the impairment test, provision for
impairment shall be made for the difference and recognized as an impairment loss. The recoverable amount of an
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asset is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be
derived from the asset. The fair value of an asset is determined according to the price in a sale agreement in an
arm’s length transaction. If there is no sale agreement but an active market for the asset, the fair value shall be
determined according to the current bid price. If there is no sale agreement or active market for the asset, the fair
value shall be based on the best information available. Costs of disposal include legal costs related to the disposal
of the asset, related taxes, cost of removing the asset and direct cost to bring the asset into its condition of sale.
The present value of expected future cash flows of an asset shall be determined by estimating the future cash
flows to be derived from continuing use of the asset and from its ultimate disposal and applying the appropriate
discount rate to those future cash flows. Provision for impairment shall be made and recognized on an individual
basis. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine
the recoverable amount of the asset group to which the asset belongs. An asset group is the minimum group of
assets which can generate cash flows independently.
When conducting impairment test on goodwill, which is presented separately in balance sheet, the carrying
amount of goodwill will be allocated to asset group or combination of asset group which are expected to enjoy
benefit from the synergy effect in a business combination. If the test results indicate that the recoverable amount
of the asset group or combination of asset group, which consist goodwill allocated, is lower than its carrying
amount, impairment loss is recognized accordingly. The impairment loss reduces the carrying amount of goodwill
that allocated to the asset group or combination of asset group. If the goodwill is insufficient to deduct, then
offsetting other assets within the asset group or combination of asset group proportionately based on the weight
of the carrying amount of assets other than goodwill in the asset group or combination of group.
Once an impairment loss is recognized, it shall not be reversed in subsequent periods.
21. Employee benefit
Employee benefit include short-term employee benefit, post-employment benefits and termination benefits.
Short-term benefit mainly includes employee salary, bonus, allowance, employee welfare, maternity insurance,
work injury insurance, housing fund, labor union fee, employee education fund and non-monetary welfare etc…
The Company recognize short-term benefit as liabilities through profit or loss or related cost of assets for the
financial year in which the employees render the related services. Non-monetary welfare is measured at fair
value.
Post-employment benefit mainly include basic endowment insurance, unemployment insurance and annuity etc…
Post-employment benefit plan includes defined contribution plans. Defined contribution plans are
post-employment benefit plans under which an entity pays fixed contributions into an escrow fund and the amount
shall be charged to cost of related asset or current period profit or loss.
When the Company terminates the employment relationship with employees before the employment contracts
expire or provides compensation as an offer to encourage employees to accept voluntary redundancy, a provision
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shall be recognized at the date earlier of the Company cannot unilaterally withdraw from the termination plan or
the redundancy offer and the Company determined the reconstruction cost related with the payment of
termination benefit. Termination benefit shall be recognized as employee benefit payable and charged to the profit
or loss for the current accounting period. If the termination benefit cannot be paid within 12 month after the
balance sheet date, it shall be treated as long-term employee benefit.
The earlier retirement plan shall be accounted for in accordance with the accounting principles for compensation
for termination of employment. The salaries or wages and the social contributions to be paid for the employees
who retire before schedule from the date on which the employees stop rendering services to the Company to the
scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current
profit or loss if the recognition principles for provisions are satisfied.
If other long-term employee welfare provided by the Company meets the criteria of defined contribution plan, it
shall be accounted for according to defined contribution plan, otherwise, defined benefit plan accounting
treatment is applicable.
22. Provision
A provision is recognized when obligation related to contingencies satisfies following condition: (1) the obligation
is a present obligation of the Company; (2) it is probable that an outflow of economic benefits will be required to
settle the obligation; and (3) and the amount of the obligation can be measured reliably.
At the balance sheet date, a provision shall be initially measured at the best estimate of the expenditure required
to settle the related present obligation, taking the risks, uncertainties and time value of money that related to the
contingencies into consideration.
When all or part of the expenditure that needed for settling a provision is expected to be reimbursed by a third
party, the reimbursement shall be recognized as an asset separately only when it is virtually certain that
reimbursement will be received. The amount recognized for the reimbursement shall not exceed the carrying
amount of the estimated liability.
(1) Onerous contract
An onerous contract is a contract in which the aggregate cost required to fulfil the agreement is higher than the
economic benefit to be obtained from it. If the contract to be executed becomes an onerous contract, and the
obligation arising from the onerous contract meets the conditions for the recognition of the above-mentioned
provision, the portion of the contract's estimated loss that exceeds the recognized impairment loss (if any) of the
contracted asset is recognized as a provision.
(2) Restructuring obligations
For detailed and formal restructuring plans that have been publicly announced, if it meets the recognition
conditions of a liability mentioned above, a provision is determined based on the direct expenses related to the
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restructuring.
23. Share-based payment
(1) Accounting treatment of share-based payment
A share-based payment is a transaction that grants an equity instrument or assumes a liability determined on the
basis of an equity instrument in order to obtain services from employees or other parties. Share-based payments
are divided into equity-settled share-based payments and cash-settled share-based payments.
1 Equity-settled share-based payments
The equity-settled share-based payment in exchange for the services provided by the employee is measured at
the fair value of the equity instruments granted to employees at the grant date. If the option can only be exercised
after completing the service within the vesting period or meeting the required performance conditions, the amount
of the fair value shall be charged to cost or expenses based on straight-line method during the vesting period
using the best estimate of the amount of exercisable equity instrument. If the right can be exercised immediately
after the grant, the relevant costs or expenses are included in the grant date, and the capital reserve are
increased accordingly.
On each balance sheet date during the waiting period, the Company makes the best estimate based on the latest
information on the changes in the number of employees with vesting rights, and corrects the number of equity
instruments that are expected to be exercised. The impact of the above estimates is recognized in the current
related costs or expenses, and the capital reserve is adjusted accordingly.
Equity-settled share-based payments in exchange for other parties' services, if the fair value of other parties'
services can be reliably measured, is measured at the fair value of other services on the date of acquisition. If the
fair value cannot be measured reliably, it is measured at the fair value of the equity instrument on the acquisition
date, and is included in the relevant cost or expense, which increases the shareholders' equity accordingly.
②Cash-settled share-based payments
The cash-settled share-based payment is measured at the fair value of the liabilities determined by the Company
based on shares or other equity instruments. If the right can be exercise immediately after the grant, the relevant
costs or expenses are included in the grant date, and the liabilities are increased accordingly. If the option can
only be exercised after completing the service within the vesting period or meeting the required performance
conditions, the service obtained by the Company in current period shall be charged to profit or loss based on fair
value of the liabilities undertake by the Company, calculated on the basis of the best estimation of the exercisable
option on each balance sheet date of the vesting period. The liabilities shall be increased accordingly.
The fair value of the liability is re-measured at each balance sheet date and settlement date before the settlement
of related liabilities, the changes are included in the current profit and loss.
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(2) Modifying and terminating the relevant accounting treatment of the share-based payment plan
When the Company changes the share-based payment plan, if the modification increases the fair value of the
granted equity instruments, the increase in the fair value of the equity instruments is recognized accordingly. The
increase in the fair value of equity instruments refers to the difference between the fair value, measured on the
modification date, of the equity instruments before and after the modification. If the modification reduces the total
fair value of the share-based payment or adopts other methods that are not in favor of employees, the accounting
treatment of it will not be changed, as if the modification never happened unless the Company cancelled part or all
of the granted equity instruments.
During the vesting period, if the granted equity instrument is cancelled, the Company shall treat the cancelled
equity instrument as accelerated exercise, and shall immediately charge the amount that should be recognized in
the remaining vesting period into the current profit and loss and adjusting the capital reserves at the same time. If
the employee or other party can choose to meet the non-vesting conditions but fails during the vesting period, the
Company will treat it as a cancellation of the equity instrument.
(3) Accounting treatment involving share-based payment transactions between the Company and its
shareholders or actual controllers of the Company
In respect of the share-based payment transaction between the Company and its shareholders or actual
controllers of the Company, if one of the settlement company and the service recipient is in the Company, and the
other is outside the Company, the accounting treatment is carried out in the consolidated financial statements of
the Company according to the following rules:
1 If the settlement company settles with its own equity instrument, the share-based payment transaction shall
be treated as equity-settled share-based payment; otherwise, it shall be treated as a cash-settled share-based
payment.
If the settlement company is the investor of the service recipient, it shall recognized as the long-term equity
investment to the service recipient according to the fair value of the equity instrument at the grant date or the fair
value of the liability to be undertaken. The capital reserve (other capital reserve) or liabilities shall be recognized
at the same time.
2 If the service recipient does not have a settlement obligation or the equity instruments granted to its
employees are its own equity instruments, the share-based payment transaction shall be treated as equity-settled
share-based payment. If the enterprise that accepts service has the settlement obligation and the equity
instrument granted to employees are not its own equity instrument, the share payment transaction shall be treated
as a cash-settled share-based payment.
For share-based payment transactions occurred between companies within the Company, if the service recipient
and the settlement company are not the same entity, the recognition and subsequent measurement of the
share-based payment transaction in their individual financial statements shall be treated in accordance with
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principles above.
24. Revenue
(1) General principal
①Revenue from sale of goods
Revenue from the sale of goods shall be recognized only when all of the following conditions are satisfied: (a)
significant risk and rewards of ownership of the goods have been transferred to the buyer; (b) the seller retains
neither continuing managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold; (c)the amount of revenue can be measured reliably; (d) it is probable that the associated
economic benefits will flow to the seller, and (e) the associated costs incurred or to be incurred can be measured
reliably.
②Revenue from rendering of service
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction are recognized using the percentage of completion method on balance sheet date.
The percentage of completion is calculated based on the proportion of services performed to date to the total
volume of services to be performed.
The outcome of a transaction involving the rendering of services can be estimated reliably when all of the
following conditions are satisfied: (a) the amount of revenue can be measured reliably; (b) it is probable that the
associated economic benefits will flow to the entity: (c) the percentage of completion can be measured reliably;
and (d) the costs incurred and to be incurred for the transaction can be measured reliably.
When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue shall
be recognized to the extent of costs incurred and expected to be recovered. Costs of service provided are
charged to the current profit or loss as service costs. If the costs incurred are not expected to be recoverable, no
revenue is recognized.
③Revenue from rendering usage rights
The revenue is recognized on accrual basis and based on related contracts or agreements.
④Interest income
The interest income shall be calculated based on the tenure of the Company’s monetary funds used by others and
the actual interest rates used.
(2) Detailed method of revenue recognition
The watches sold by the Company includes two types, one is the self-manufactured FIYTA watch, the sales of
which is managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a
subsidiary of the Company. The other is brand watches, the sales of which are controlled by Shenzhen
HARMONY World Watch Center Co., Ltd., a subsidiary of the Company, and the Company act as agent
Regarding to sales modes, a portion of the sales of self-manufactured FIYTA watches is sold through direct sales
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to customer and consignment sales while most of the self-manufactured FIYTA watches and brand watches are
sold under two sales modes, namely exclusive shop and shop-in-shop. Detailed method of revenue recognition as
follows:
1 Direct sales to the customer
Under direct sales to the customer mode, the Company delivers products to customers and recognizes sales
income after customer inspection and acceptance.
2 Exclusive shop
Under exclusive shop mode, the Company delivers products to customers and recognizes sales income after
customer inspection, acceptance and pay.
③Shop-in-shop
Under shop-in-shop mode, the Company delivers products to customers, sales staff issues notes to retail
customers and recognizes sales revenue after customer inspection and acceptance and the department store
collects the payment from the customer.
④Consignment sales
Under consignment sales mode, the Company receives the detail of the sales list from distributors and recognizes
revenue while issuing invoice to distributors.
25. Government grants
Government grants are monetary assets or non-monetary assets obtained by the Company from the government
free of charge. It does not include capital contributions from the government as an owner. Government grants are
classified into government grants related to assets and government grants related to income. The Company
defines the government grants obtained for the acquisition or other formation of long-term assets as the
government grants related to the assets; the remaining government grants are defined as the government grants
related to income. If the government documents do not clearly define the object of subsidy, the subsidy shall be
divided into the government grant related to income and the government grant related to assets in the following
ways: (1) If the government document specifies the specific project for which the subsidy is targeted, the budget of
the project will be divided into the relative proportion of the expenditure amount of the assets and the expenses
included in the expenses, and the division ratio shall be reviewed on each balance sheet date and changed when
necessary; (2) If the government documents use only for general statement, and not specify a specific project, it
will be as income-related government grants. If a government grant is in form of monetary asset, it is measured at
the amount received or receivable. If a government grant is in the form of non-monetary asset, is measured at fair
value. If the fair value cannot be measured reliably, it is measured at a nominal amount and recognize directly in
the current profit or loss.
The Company usually confirms and measures government grants according to the actual amount received.
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However, when there is conclusive evidence that can meet the financial support policies and regulations related to
the conditions expected to be able to receive financial support funds for the end of the year, it will measure
according to the actual amount received. The government grants measured according to the receivable amount
shall meet the following conditions at the same time: (1) The amount of the grants receivable has been authorized
by the government department to issue the documents or can be reasonably measured according to the relevant
provisions of the formally promulgated financial capital management measures; (2) It is based on the financial
support items formally promulgated by the local finance department and proactively disclosed in accordance with
the provisions of the "Regulations Governing the Disclosure of Government Information" and the fiscal fund
management measures, and the management measures should be generalized (any eligible enterprises can
apply), rather than specifically for a specific company; (3) the relevant grant approval has been clearly committed
to the deadline for disbursement, and the disbursement of funds has corresponding budget as a guarantee, so
that it can reasonably ensure that it can be received within the prescribed time limit; (4) Other relevant conditions
(if any) that should be satisfied according to the Company and the specific circumstances of the grants.
A government grant related to asset is recognized as deferred income, and evenly amortized and charged to profit
or loss over its useful life. If a government grant related to income is used to compensate related expenses and
losses in subsequent periods, it is recognized as deferred income and charged to current profit or loss when
recognize the relevant cost and expense or loss. If it is used to compensate related expenses and losses that are
already incurred, it is charged to current profit or loss directly.
Government grants including assets-related parts and income-related parts at the same time should be treated
separately. If it is difficult to distinguish them, they will be classified as income-related government grants
completely.
The government grants related to the daily activities of the Company are included in other gain or offset the
related costs according to the essence of the economic business. The government grants that are not related to
the daily activities are included in the non-operating income and expenses.
If a government grant already recognized needs to be repaid, the carrying amount of related deferred income, if
any, is to be reduced. Any excess are charged to current profit or loss. If there is no deferred income, the
repayment is charged to current profit or loss directly.
26. Deferred tax asset / deferred tax liability
(1) Current period corporate income tax
At the balance sheet date, current income tax liabilities (or assets) for the current period and prior periods shall be
measured at the amount expected to be paid (refunded) according to the requirement of taxation laws. The
taxable income used to calculate current period income tax expenses is calculated by making corresponding
adjustments to current period profit before tax in accordance with relevant taxation regulations.
(2) Deferred tax asset and deferred tax liability
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Temporary differences can be recognized as deferred tax asset and deferred tax liability using balance sheet
liability method. Temporary differences arise from: the difference between the carrying amount and tax base of
certain assets and liabilities; the difference between the carrying amount and the tax base of an item which are not
recognized as assets and liabilities but its tax base can be determined according to relevant taxation laws.
A deferred tax liability shall not be recognized for the taxable temporary differences arising from the following
events: (a) the initial recognition of goodwill; (b) the initial recognition of an asset or liability in a transaction which
contains both of the following characteristics: (i) the transaction is not a business combination; (ii) at the time of
the transaction, it affects neither accounting profit nor taxable profit (or deductible loss). For taxable temporary
differences associated with investment in subsidiaries, associates and interests in jointly controlled enterprises, a
deferred tax liability shall not be recognized if both of the following conditions are satisfied: (a) the Company is
able to control the timing of the reversal of the temporary differences; and (b) it is probable that the temporary
difference will not reverse in the foreseeable future. Except for exceptions mentioned above, the Company
recognizes all other taxable temporary difference as deferred tax liability.
A deferred tax asset shall not be recognized for the deductible temporary differences associated with the initial
recognition of an asset or liability in a transaction which contains both of the following characteristics: (a) the
transaction is not a business combination; (b) at the time of the transaction, it affects neither accounting profit nor
taxable profit (or deductible loss). For deductible temporary differences associated with investment in subsidiaries,
associates and interests in jointly controlled enterprises, a deferred tax asset shall not be recognized if one of the
following conditions is satisfied: (a) it is probable that the temporary difference will not reverse in the foreseeable
future; and (b) taxable profits will not be available in the future, against which the temporary difference can be
utilized. Except for exceptions mentioned above, the Company recognizes deductible temporary difference as
deferred tax asset to the extent of the future taxable profit which is probably achieved by the Company.
A deferred tax asset shall be recognized for the carry forward of unused deductible losses and tax credits to the
extent that it is probable that future taxable profit will be available against which the deductible losses and tax
credits can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities shall be measured at the tax rates that
are expected to apply to the period when the asset is realized or the liability is settled, according to the
requirement of tax laws.
At the balance sheet date, the carrying amount of a deferred tax asset shall be reviewed. The Company shall
reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable
profit will be available in future periods to allow the benefit of the deferred tax asset to be utilized. Any such
reduction in amount shall be reversed to the extent that it becomes probable that sufficient taxable profit will be
available.
(3) Corporate income tax
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The corporate income tax includes current period income tax and deferred income tax.
The current income tax and deferred income tax shall be recognized in the current profit or loss except for: (a) the
income tax arising from events or transactions which are recognized in the comprehensive income or owners’
equity are recognized in the comprehensive income or owners’ equity accordingly; and (b) the income tax arising
from business combinations which are adjusted to the carrying amount of goodwill.
(4) Offsetting of income tax
When legal right to netting settlement is owned, net settlement or intent to acquire the assets and settle the
liabilities happen simultaneously, the Group had net current tax assets against current tax liabilities are netting
presentation after offset.
When the legal right to offset current tax assets against current tax liabilities is owned and the deferred tax assets
and deferred tax liabilities relate to the same taxation authority on the same taxable income levied by or related to
different taxable entities, but within the reverse period of significant amounts of deferred tax assets and liabilities
in each future period, and the tax payer's intention to offset current tax assets and liabilities or both to obtain
assets or repay debts, the deferred income tax and deferred tax assets and liabilities of the Group to netting
presentation after offset.
27. Leasing
A finance lease is a lease that transfers substantially all the risks and rewards associated with the ownership of an
asset. Title of the asset may or may not eventually be transferred. An operating lease is a lease other than a
finance lease.
(1) Accounting treatment for the Company as lessee under operating leases
Lease payments under an operating lease are recognized as cost of relevant assets or charged to profit or loss for
the current period on straight-line basis over the lease term. Initial direct costs incurred are charged to profit or
loss for the current period directly. Contingent rentals are charged to profit or loss in the period in which they are
actually incurred.
(2) Accounting treatment for the Company as lessor under operating leases
Lease receipts under an operating lease are recognized by the in the current profit or loss on a straight-line basis
over the lease term. Significant initial direct costs are capitalized when they are incurred, and are recognized in
profit or loss over the lease term on the basis on which the lease income is recognized. Insignificant initial direct
costs shall be charged to the current profit or loss directly. Contingent rentals are charged to profit or loss in the
period in which they are actually incurred.
(3) Accounting treatment for the Company as lessee under finance leases
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the
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present value of the minimum lease payments on the lease beginning date as the entering value in an account,
recognize the amount of the minimum lease payments as the entering value in an account of long-term account
payable, and treat the balance between the recorded amount of the leased asset and the long-term account
payable as unrecognized financing charges. Besides, the initial direct costs directly attributable to the leased item
incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset
value of the current period. The balance through deducting unrecognized financing charges from the minimum
lease payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to
calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and
losses of the current period in which they actually arise.
(4) Accounting treatment for the Company as lessor under finance leases
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on
the lease beginning date and the initial direct costs as the entering value in an account of the financing lease
values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of
the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their
present values shall be recognized as unrealized financing income. The balance through deducting unrealized
financing incomes from the finance lease accounts receivable shall be respectively stated in long-term claims and
long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to
calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and
losses of the current period in which they actually arise.
28. Other main accounting policies and estimates
Discontinued operation
Discontinued operation refer to the components that can be separated and disposed of or classified as held for
sale separately by one of the following conditions: ①The component represents an independent main business
or a separate main operation area; ② This component is part of a related plan to be disposed of by an
independent major business or a separate major operating area; ③ This component is a subsidiary acquired
exclusively for resale.
Refer to Note IV.12 "Description of Assets Held-for-Sale and Disposal Group" for details of accounting treatment
of discontinued operations.
29. Changes in main accounting policies and estimates
(1) Change of accounting policies
There was no changes of accounting policies of the Company in the reporting period.
(2) Changes of accounting estimates
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There was no changes of accounting estimate of the Company in the reporting period.
30. Significant accounting judgment and estimates
When adopting the accounting policies, the Company needs to make judgments, estimates and assumptions for
the carrying amount of items which are presented in financial statements and cannot be measured accurately due
to internal uncertainties of business. The judgments, estimates and assumptions that are made according to
historical experience of the management and with consideration of other relevant factors will have effects on the
reported amounts of revenue, expenses, assets as well as liabilities and the disclosure of contingent liabilities at
the balance sheet date. The uncertainties of these estimates will probably result in significant adjustments on the
carrying amounts of assets or liabilities which will be affected by those judgments, estimates and assumptions in
future accounting periods.
The judgments, estimates and assumptions are reviewed by the Company periodically on going concern basis. If
the changes in accounting estimates affect current period only, the amounts affected are recognized in current
period. If the change affects both current and future periods, the amounts affected are recognized in the current
accounting period as well as subsequent accounting periods.
At the balance sheet date, significant areas that require the Company to make judgments, estimates and
assumptions to the amounts of financial statements items are as follows:
(1) The classification of lease
According to the “CAS No. 21– Leasing”, the Company classifies leases as operating leases and finance leases.
When categorizing, management needs to make analysis and judgment on whether all the risks and rewards
associated with the ownership of the leased asset be transferred substantially to lessee, or whether the Company
took all the risks and rewards associated with the ownership of the leased assets substantially.
(2) Bad debt provision recognition
The allowance method is adopted by the Company to account for losses on bad debts in accordance with the
accounting policies for receivables. Impairment of accounts receivable is made based on estimation of its
recoverability, which requires the management to make judgments and estimates. The difference between the
actual outcome and the estimates will have effects on the carrying amounts of accounts receivable and on
provision or reversal of the provision for bad debts of the accounting period in which the estimates will be
changed.
(3) Provision for impairment of inventories
According to the accounting policies of inventories, it is measured at lower of cost and the net realizable value
(NRV). For inventory cost that is higher than its NRV and obsolete and slow moving inventory, impairment
provision shall be accrued. Evaluating the impairment of inventories needed the management level gain the valid
evidence and take full consideration of the purpose of inventories, influence of events after balance sheet date
and other factors, and then made relevant judgments and estimates. The actual amount and the difference of
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previous estimate would affect the book value of inventories and the accrual and reversal of provision.
(4) The impairment of available-for-sale financial assets
Whether an available-for-sale financial asset is impaired relies largely on the judgment and assumption of the
management, so as to decide whether recognized the impairment losses in the income statement. During the
process of making the judgment and assumption, the Company needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and business forecast in a short
period, including the industrial situation, technical reform, credit level, default rate and risk of counterparty.
(5) Impairment provision for long-term asset
At the balance sheet date, the Company judges whether there are indicators of impairment for non-current assets
other than financial assets. For an intangible asset with an indefinite useful life except for annually impairment test,
an impairment test will be conducted if there are any indicators of impairment occur. For non-current assets other
than financial assets, an impairment test shall be made if there are evidences indicating the carrying amounts
cannot be recovered in full amount.
An asset or asset group is impaired when its carrying amount is higher than its recoverable amount i.e. the higher
of its fair value less the disposal expenses and the present value of the estimated future cash flows.
The net amount of fair value less the disposal expenses are determined with reference to the quoted price of
similar assets in a sales agreement in an arm’s length transaction or an observable market price less incremental
costs directly attributable to disposal of the asset.
When estimating the present value of future cash flows, significant judgments are involved to the production
output, selling price, relevant business costs of the asset (or asset group) and the discount rate adopted in
calculating the present value. In estimating the recoverable amount, the Company will adopt all information
available, such as forecasts for the production output, the selling price and relevant business costs, which are
made according to reasonable and supportive assumptions.
The Company conducts impairment test to goodwill at least once a year. This requires estimating the present
value of future cash flows of asset group or combination of asset group to which goodwill has been allocated. In
estimating the present value of future cash flows, the Company needs estimate future cash flows generated from
the asset group or the combination of asset groups and choose appropriate discount rates.
(6) Depreciation and amortization
Taking the residual value into consideration, an investment property, fixed asset and intangible asset are
depreciated or amortized on a straight-line basis over its useful life. The Company reviews the useful life
periodically to determine the amount of depreciation or amortization which shall be recognized in each accounting
period. The useful life is determined according to historical experience of similar assets and technological
renovation estimated. The amount of depreciation or amortization shall be adjusted in future accounting periods if
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there are material changes in estimates made before.
(7) Deferred income tax asset
A deferred tax asset shall be recognized for the unused deductible losses to the extent that it is probable that
future taxable profit will be available against which the deductible losses can be utilized. Taking the taxation
planning into consideration, the management of the Company is required to make significant amount of
judgments to estimate the time and the amount of future taxable profit in order to determine the amount of
deferred income tax assets to be recognized.
(8) Corporate income tax
For some transactions in the Company’s ordinary course of business, uncertainties exist in their tax treatment and
calculation. An approval from the tax authority is needed to determine whether an item is deductible before tax. If
the final confirmation from the tax authority differs with the original estimation, the difference will have effects on
the current income tax and deferred income tax of the period in which the final confirmation is made by the tax
authority.
(9) Provision
The Company estimates and accrues related provision on its after-sale quality warranty commitment to customers
with respect to the goods sold, estimated onerous contract and penalty for delay in delivery based on contract
terms, current knowledge and historical experience. In case that the contingent event becomes a current
obligation and performance of the current obligation may be very likely to cause economic benefit flow out of the
Company, the Company recognizes provision based on the best estimates for fulfilling the related current
obligation. Recognition and measurement of contingent liability is largely depend on the management’s judgment.
In the course of making judgement, the Company need to evaluate factors of risk, uncertainty and time value of
money related to the contingent event.
The Company will make provision for after sale quality commitment for product sold, maintenance and
re-fabrication of product sold. When accruing the provision, it needs to consider the recent maintenance data
which may not be likely to reflect the future maintenance situations. Any increase or reduction of the provision may
possibly affect the profit or loss in future years.
V. Taxation
1. Main taxes and tax rates
Tax Tax rate
Output tax is calculated at 3%、5%、6%、10%、16% of taxable income and VAT
Value-added tax（Note（1））
is paid after offset the output tax with input tax allowed at current period
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Tax Tax rate
Consumption tax is applicable for imported or manufactured luxury watches with
Consumption tax
unit price above 10,000 (inclusive).
Urban maintenance and construction tax 5%、7% on the turnover tax actually paid
1.2% on the basis of 70% of the original cost of the property and 12% for rental
Property tax（Note（2））
income.
Corporate income tax See Note (3) for detail.
Note (1): Value-added tax
Value-added tax rate originally applied to 17%, 11% when the Company have VAT taxable sales or import goods.
According to “Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the
Value-Added Tax Rate”（with Cai Shui (2018) No. 32）, applicable tax rate adjusted to 16%,10% since May 1st,
2018
Other taxable income arising from the Company is calculated on the basis of the applicable tax rate.
Note (2): Property Tax
In accordance with Article 5 of “Notice to Publish “Reply to Issues Related to Property Tax and Vehicle and Vessel
Usage Tax””, Shen Di Shui Fa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased out by
manufacturing or business entity are taxed at 1.2% on the bases of 70% of the original cost of the property.
Properties of the Company that situated in Shenzhen are taxed according to this notice. Properties situated in
other cities are taxed according to local regulations.
Note (3): Corporate income tax
Name of entity subject to corporate income tax Applicable tax rate
The Company（Note ①②⑤） 25.00%
Shenzhen HARMONY World Watch Center Co., Ltd.（HARMONY Company）（Note ①
25.00%
⑤）
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company)（Note
15.00%
②③）
FIYTA Hong Kong（Note ④） 16.50%
Station 68（Note ④） 16.50%
Shenzhen FIYTA Technology Development Co., Ltd (Technology Company)（Note ②③） 15.00%
TEMPORAL (Shenzhen) Co., Ltd.（TEMPORAL Company）（Note ⑤） 25.00%
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Name of entity subject to corporate income tax Applicable tax rate
Harbin Harmony World Watches Distribution Co., Ltd. (Harbin Company)（Note ⑤） 25.00%
Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit Shenzhen Company) （Note ⑤） 25.00%
FIYTA Sales Co., Ltd (Sales Company)（Note ①⑤） 25.00%
Liaoning Hengdarui Commercial & Trade Co., Ltd (Hengdarui Company)（Note ⑤） 25.00%
Swiss Company（Note ⑥） 30.00%
Note ① :According to the regulations stated in Guo Shui Fa (2008) No. 28, “Interim Administration Method for
Levy of Corporate Income Tax to Enterprise that Operates Cross-regionally”, the head office of the Company and
its branch offices, the head office of HARMONY Company and its branch offices, and the head office of Sales
Company and its branch offices adopt tax submission method of “unified calculation, managing by classes,
pre-paid in its registered place, settlement in total, and adjustment by finance authorities” starting from 1 January
2008. Branch offices mentioned above share 50% of the enterprise income tax and prepay locally; and 50% will
be prepaid by the head offices mentioned above.
Note ② : According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of
Science on Improving the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui
(2018) No. 99), if the research and development costs, which were incurred for developing new technologies, new
products, and new processes by the Company, the Manufacturing Company and the Technology Company, are
not capitalized as intangible assets but charged to current profits and losses, the companies can enjoy a 75%
super deduction on top of the R&D expenses that allowed to deduct before income tax during the period from
January 1, 2018 to December 31, 2020.
Note ③:The company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New
Technology Enterprises that Require Key Support from the State”.
Note ④ : These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is
16.50% this year.
Note ⑤: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25% for
residential enterprises since 1 January 2008.
Note ⑥: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
2. Preferential treatment and corresponding approval
According to clause 2 in Shen Dishui Fa (2003) No. 676 “Notice of Forwarding State Administration of Taxation on
Policies Related to Property Tax and Urban Lan Usage Tax”, for newly constructed or purchased property by tax
payer, property tax is exempted for 3 years from the next month it is constructed or purchased. The property tax
for FIYTA Watch Building owned by the Company located in Shenzhen Guangming New District is exempted for 3
years from the next month when construction is completed.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
VI. Notes to the consolidated financial statements
Unless otherwise indicated, the beginning of the year for items (including notes for the Company’s financial
statements) list below refers to 1 January 2018 and the end of the year refers to 31 December 2018. Prior year
refers to year 2017 and current year refers to year 2018.
1. Cash and bank balances
Item 31 Dec 2018 1 Jan 2018
Cash on hand 420,783.85 414,210.14
Bank deposit 160,135,454.62 184,528,160.32
Other monetary funds 4,271,821.50 2,210,520.86
Total 164,828,059.97 187,152,891.32
Incl: deposit outside Mainland China 9,192,653.31 7,880,620.64
Note: Amount of RMB1,575,000.00 (RMB1,575,000.00 as at 31 Dec 2017) in other monetary funds is the security
deposit with Bank for issuing of unconditional and irrevocable letter of guarantee; amount of RMB630,000.00 was
judicial freeze due to the legal proceedings.
2. Note and accounts receivables
Item 31 Dec 2018 1 Jan 2018
Notes receivables 7,051,846.85 9,693,883.68
Accounts receivables 370,545,656.61 326,254,624.94
Total 377,597,503.46 335,948,508.62
(1) Notes receivable
①Notes receivable classification
Item 31 Dec 2018 1 Jan 2018
Banker's acceptance bill - 2,398,579.72
Commercial acceptance bill 7,051,846.85 7,295,303.96
Total 7,051,846.85 9,693,883.68
②There is no pledge of notes at the end of the period.
③Endorsed notes that is not yet due at the end of the period.
Item Amount derecognized at year end Amount not derecognized at year end
Banker's acceptance bill 1,294,584.13 -
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
④There is no notes receivable transferred to receivables due to issuer’s default at the end of the period.
(2) Accounts receivable
① Accounts receivables presented by types
31 Dec 2018
Book balance Bad debt provision
Types
Percentage Carrying amount
Amount Amount Percentage（%）
（%）
Receivables that are individually significant
in amount and provided for bad debt 1,702,371.94 0.44 1,702,371.94 100.00 -
separately
Receivables provided for bad debt by
381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
portfolio
Incl. Aging portfolio 189,655,491.08 49.49 10,889,287.41 5.74 178,766,203.67
Portfolio of specific accounts 191,779,452.94 50.04 - - 191,779,452.94
Receivables that are individually insignificant
in amount but provided for bad debt 97,147.84 0.03 97,147.84 100.00 -
separately
Total 383,234,463.80 100.00 12,688,807.19 3.31 370,545,656.61
(Continued)
1 Jan 2018
Book balance Bad debt provision
Types
Percentage Book Value
Amount Amount Percentage (%)
(%)
Receivables that are individually significant in
6,985,493.80 2.04 6,985,493.80 100.00 -
amount and provided for bad debt separately
Receivables provided for bad debt by
334,903,968.85 97.93 8,649,343.91 2.58 326,254,624.94
portfolio
Incl. Aging portfolio 160,056,201.19 46.80 8,649,343.91 5.40 151,406,857.28
Portfolio of specific accounts 174,847,767.66 51.13 - - 174,847,767.66
Receivables that are individually insignificant
in amount but provided for bad debt 97,147.84 0.03 97,147.84 100.00 -
separately
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
1 Jan 2018
Book balance Bad debt provision
Types
Percentage Book Value
Amount Amount Percentage (%)
(%)
Total 341,986,610.49 100.00 15,731,985.55 4.60 326,254,624.94
A. Year-end balance of receivables that are individually significant in amount and provided for bad debt
separately
31 Dec 2018
Accounts receivable
Accounts
（by company） Bad debt provision Percentage (%) Reason
receivable
Chances of recovering is
Ginwa Xi’an Qujiang Shopping Center
1,702,371.94 1,702,371.94 100.00 remote due to
Co., Ltd.
management condition
B. Amongst portfolio, accounts receivable that are provided for bad debt based on aging analysis
31 Dec 2018
Aging
Accounts receivable Bad debt provision Percentage (%)
Within 1 year 176,490,750.08 8,818,234.89 5.00
1~2 years 10,632,348.03 1,063,234.80 10.00
2~3 years 1,291,893.89 387,568.17 30.00
over 3 years 1,240,499.08 620,249.55 50.00
Total 189,655,491.08 10,889,287.41 5.74
C. Among the portfolio, accounts receivable that are provided for bad debt using other method
31 Dec 2018
Name of portfolio Account Percentage
Accounts receivable Bad debt provision
(%)
Portfolio of specific accounts 191,779,452.94 - -
Note: Based on historical experience, the Company’s receivables including petty cash receivable from employees,
accounts receivable from subsidiaries of the Company and sales revenue between the last settlement date of the
same department store and the balance sheet date are with high recoverability and low possibility of incurring bad
debt, as a result, no bad debt provisions are provided for such receivables.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
②Status of bad debt accrual, recovery or reversed in current year
In 2018, bad debt accrual is RMB4,506,633.93, and the amount of recovery or reversal of bad debt provision is
RMB7,549,812.29.
Incl. the amount of significant recovery or reversal of bad debt provision this year
Name of accounts The amount of recovery or reversal Recovery method
Ginwa Xinjiang Time Squire Shopping Center Co., Ltd 2,250,000.00 Bank deposit
Ginwa Xi’an Century Shopping Co., Ltd. 5,283,121.86 Bank deposit
Total 7,533,121.86 -
③No accounts receivable was written-off during the year
④Top 5 receivable accounts
The amount of top 5 receivables based on year-end receivable balance is RMB65,652,234.68, accounts for
17.13% of total receivables as at 31 Dec 2018. Corresponding bad debt provision is RMB602,002.24.
3. Prepayments
(1) Prepayments presented by aging
31 Dec 2018 1 Jan 2018
Account aging
Amount Percentage (%) Amount Percentage (%)
Within 1 year 12,886,273.93 94.29 20,284,829.30 82.25
1~2 years - - 2,034,407.41 8.25
2~3 years 780,542.40 5.71 2,344,077.82 9.50
Over 3 years - - - -
Total 13,666,816.33 100.00 24,663,314.53 100.00
(2) Top 5 prepayment accounts
The amount of top 5 prepayment accounts based on year-end balance is RMB9,393,700.19, accounts for 68.73%
of total prepayments as at 31 Dec 2018.
4. Other receivables
Item 31 Dec 2018 1 Jan 2018
Other receivables 45,870,582.26 34,990,539.09
(1) Other receivables
①Other receivables presented by types
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
31 Dec 2018
Types Book balance Bad debt provision
Carrying amount
Amount Percentage (%) Amount Percentage (%)
Other receivables that individually
significant in amount and provided for 7,093,237.65 12.69 7,093,237.65 100.00 -
bad debt separately
Other receivables provided for bad debt
48,249,486.72 86.30 2,378,904.46 4.93 45,870,582.26
by portfolio
Incl. Aging portfolio 45,771,039.24 81.87 2,378,904.46 5.20 43,392,134.78
Portfolio of specific accounts 2,478,447.48 4.43 - - 2,478,447.48
Other receivables that individually
insignificant in amount but provided for 565,400.00 1.01 565,400.00 100.00 -
bad debt separately
Total 55,908,124.37 100.00 10,037,542.11 17.95 45,870,582.26
(Continued)
1 Jan 2018
Book balance Bad debt provision
Types
Percentage Carrying amount
Amount Amount Percentage (%)
(%)
Other receivables that individually significant
in amount and provided for bad debt 6,847,372.68 15.23 6,847,372.68 100.00 -
separately
Other receivables provided for bad debt by
38,090,257.88 84.73 3,099,718.79 8.14 34,990,539.09
portfolio
Incl. Aging portfolio 33,690,435.20 74.94 3,099,718.79 9.20 30,590,716.41
Portfolio of specific accounts 4,399,822.68 9.79 - - 4,399,822.68
Other receivables that individually
insignificant in amount but provided for bad 20,000.00 0.04 20,000.00 100.00 -
debt separately
Total 44,957,630.56 100.00 9,967,091.47 22.17 34,990,539.09
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
A. Year-end balance of other receivables that are individually significant in amount and provided for bad debt
separately
31 Dec 2018
Accounts
Other receivable Bad debt provision Percentage (%) Reasons
The possibility of recovery
China Resources (Chong Qing) is remote due to the
800,000.00 800,000.00 100.00
Industrial Co., Ltd. termination of cooperative
project.
Business faces
Beat Blattman Marketing 4,041,632.05 4,041,632.05 100.00 bankruptcy, the possibility
of recovery is remote.
Business faces
Liberty Time Center GmbH 2,251,605.60 2,251,605.60 100.00 bankruptcy, the possibility
of recovery is remote.
Total 7,093,237.65 7,093,237.65 — —
B. Among the portfolio, other receivables that are provided for bad debt based on aging analysis
Ageing 31 Dec 2018
Other receivable Bad debt provision Percentage (%)
Within 1 year 44,291,589.79 2,214,579.51 5.00
1 to 2 years 1,438,499.45 143,849.95 10.00
2 to 3 years - - -
Over 3 years 40,950.00 20,475.00 50.00
Total 45,771,039.24 2,378,904.46 5.20
C. Among the portfolio, other receivables that are provided for bad debt using other methods
31 Dec 2018
Name of portfolio
Other receivable Bad debt provision Percentage (%)
Portfolio of specific accounts 2,478,447.48 - -
Note: Based on historical experience, the Company’s receivables from petty cash advanced to employees, from
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
subsidiaries of the Company and sales revenue between the last settlement date of the same department store
and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no
bad debt provisions are provided for such receivables.
②Among the portfolio, other receivables that are provided for bad debt using other methods
Nature 31 Dec 2018 1 Jan 2018
Employee petty cash 2,478,447.48 4,399,822.68
Down payment and deposit 38,091,767.87 30,200,936.65
Product promotion expenses 7,827,524.03 3,387,360.70
Others 7,510,384.99 6,969,510.53
Total 55,908,124.37 44,957,630.56
③Status of bad debt accrual, recovery or reversed in current year:
In 2018, bad debt accrual is RMB70,450.64. There was no recovery or reversal of bad debt provision this year.
④There was no other receivables actually written-off during this year
⑤Top 5 other receivable accounts
Percentage of
Balance of
Name of accounts Nature Amount Aging total other
provision
receivables (%)
Beat Blattman Marketing Trade receivables 4,041,632.05 Over 3 years 7.23 4,041,632.05
China Resources (Shenzhen) Co., Ltd Deposit 3,010,024.00 Within 1 year 5.38 150,501.20
Liberty Time Center GmbH Trade receivables 2,251,605.60 Over 3 years 4.03 2,251,605.60
Beijing Jingdong Century Trading Co., Deposit Within 1 year
1,906,697.76 3.41 95,334.89
Ltd.
China Resources Sun Hung Kai Real Deposit Within 1 year
1,497,003.00 2.68 74,850.15
Estate (Hangzhou) Co., Ltd.
Total —— 12,706,962.41 —— 22.73 6,613,923.89
5. Inventory
(1) Inventory classification
31 Dec 2018
Item
Book balance Provision Carrying amount
Raw material 183,679,226.95 28,296,729.51 155,382,497.44
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
31 Dec 2018
Item
Book balance Provision Carrying amount
Work-in-progress 10,787,777.81 - 10,787,777.81
Goods in stock 1,675,548,898.56 59,412,872.11 1,616,136,026.45
Total 1,870,015,903.32 87,709,601.62 1,782,306,301.70
(Continued)
1 Jan 2018
Item
Book balance Provision Carrying amount
Raw material 192,872,336.46 26,899,506.29 165,972,830.17
Work-in-progress 16,744,428.79 - 16,744,428.79
Goods in stock 1,708,413,402.70 70,603,985.40 1,637,809,417.30
Total 1,918,030,167.95 97,503,491.69 1,820,526,676.26
(2) Provision
Increase Decrease
Item 1 Jan 2018 31 Dec 2018
Accrual Others Reversed Others
Raw materials 26,899,506.29 3,625,562.93 - 2,228,339.71 - 28,296,729.51
Goods in stock 70,603,985.40 5,922,928.30 - 17,114,041.59 - 59,412,872.11
Total 97,503,491.69 9,548,491.23 - 19,342,381.30 - 87,709,601.62
(3) Reasons for accruing inventory impairment provision and the reason for reversal of provision or written-off
this year.
Reason for reversal of provision
Item Basis for recognizing provision Reasons for written-off
this year
Raw materials NRV is lower than cost － Disposed
Goods in stock NRV is lower than cost － Sales
6. Other current assets
Item 31 Dec 2018 1 Jan 2018
Deductible input tax of VAT 52,444,448.67 18,745,349.24
CIT prepaid 7,846,471.11 314,917.39
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 31 Dec 2018 1 Jan 2018
Others 13,412,392.46 5,556,548.58
Total 73,703,312.24 24,616,815.21
7. AFS financial assets
(1) Status of AFS financial assets
31 Dec 2018 1 Jan 2018
Item Impairment Carrying Impairment Carrying
Book balance Book balance
provision amount provision amount
AFS equity instrument 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
Incl: measured at cost 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
Total 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
(2) AFS financial assets measured at cost
Book balance Provision % of equity
Cash
Investee held in
1 Jan 2018 increase decrease 31 Dec 2018 1 Jan 2018 increase decrease 31 Dec 2018 dividend
investee
Shenzhen
Zhonghang
300,000.00 - - 300,000.00 300,000.00 - - 300,000.00 15.00 -
Culture Co.
Ltd
Xi’an
Tangcheng 85,000.00 - - 85,000.00 - - - - 0.10 -
Limited
Total 385,000.00 - - 385,000.00 300,000.00 - - 300,000.00 — -
(3) Movements of impairment provision for AFS financial asset
Types of AFS financial asset AFS equity instrument Total
Balance of impairment provision at the beginning of the year 300,000.00 300,000.00
Accrual in current year - -
Incl: transferred from other comprehensive income - -
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Decrease in current year - -
Incl: reversed due to fair value increases —— ——
Balance of impairment provision at the end of the year 300,000.00 300,000.00
8. Long-term equity investment
Changes during 2018
Investment gain Adjustment of other
Investee 1 Jan 2018 Changes of other
Addition Withdraw recognized under comprehensive
equity item
equity method income
I. Associated
company
Shanghai Watch Co., Ltd.
43,879,518.09 - - 1,001,545.06 - -
(Shanghai Watch)
(Continued)
Changes during 2018
Balance of impairment
Cash dividend
Investee Impairment 31 Dec 2018 provision as at 31 Dec
declared or profit Others
provision accrued 2018
distribution
I. Associated company
Shanghai Watch Co., Ltd.
- - - 44,881,063.15 -
(Shanghai Watch)
9. Investment property
(1) Details of investment property measured at cost
Item Property and buildings
I. Total original cost
1. Balance at the beginning of the year 449,153,501.16
2. Increased in current year 97,541,932.65
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item Property and buildings
(1) purchased -
(2) Transferred from fixed asset 97,541,932.65
(3) increased due to business combination -
3. Decreased in current year -
(1) Disposal -
(2) Other decrease -
4. Balance at the end of the year 546,695,433.81
II. Total accumulated depreciation and amortization
1. Balance at the beginning of the year 143,659,513.39
2. Increased in current year 25,716,487.39
(1) Accrual or amortization 13,170,394.47
(2) Transferred from fixed asset 12,546,092.92
3. Decreased in current year -
(1) Disposal -
(2) Other decrease -
4. Balance at the end of the year 169,376,000.78
III. Impairment provision
1. Balance at the beginning of the year -
2. Increased in current year -
(1) Accrual -
3. . Decreased in current year -
(1) Disposal -
(2) Other decrease -
4. Balance at the end of the year -
IV. Total book value
1. Book value at the end of the year 377,319,433.03
2. Book value at the beginning of the year 305,493,987.77
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(2) Reason of the investment property without the certificate for property right:
As of 31 December 2018, investment property without the certificate for property right did not exist.
(3) Changes of purpose of property
In July 2018, the Company leases out a property previously used itself. The property is transferred from fixed
asset to investment property and accounted for using cost method. The book value of it was RMB84,995,839.73
at the time changed.
10. Fixed asset
Item 31 Dec 2018 1 Jan 2018
Fixed asset 425,649,562.85 523,699,592.65
(1) Fixed asset
①Detail of fixed asset
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipments
I. Total cost
1.Balance at beginning
548,203,064.99 76,359,195.91 15,572,717.72 43,168,802.82 56,767,439.55 740,071,220.99
of year
2. Additions 7,960,183.62 4,481,681.31 - 3,481,827.98 3,127,468.34 19,051,161.25
(1)Purchasing 7,960,183.62 4,481,681.31 - 3,481,827.98 3,127,468.34 19,051,161.25
(2)Transfer from - - - - - -
construction in progress
(3)Increase due to - - - - - -
business combination
3. Decrease 97,541,932.65 41,222.22 - 2,513,094.39 1,472,743.27 101,568,992.53
(1)Disposal or retired - 41,222.22 - 2,513,094.39 1,472,743.27 4,027,059.88
(2) transferred into
97,541,932.65 - - - - 97,541,932.65
investment property
4.Balance at end of the
458,621,315.96 80,799,655.00 15,572,717.72 44,137,536.41 58,422,164.62 657,553,389.71
year
II. Accumulated
depreciation
1.Balance at beginning 94,955,404.27 36,106,695.76 12,805,115.03 25,960,630.90 46,543,782.38 216,371,628.34
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipments
of year
2. Increase 15,490,407.34 6,940,310.81 859,797.03 5,027,186.68 3,372,846.73 31,690,548.59
(1)Accrual 15,490,407.34 6,940,310.81 859,797.03 5,027,186.68 3,372,846.73 31,690,548.59
3. Decrease 12,546,092.92 34,032.10 - 2,280,132.22 1,298,092.83 16,158,350.07
(1)Disposal or retire - 34,032.10 - 2,280,132.22 1,298,092.83 3,612,257.15
(2)Transferred into
12,546,092.92 - - - - 12,546,092.92
investment property
4.Balance at end of the
97,899,718.69 43,012,974.47 13,664,912.06 28,707,685.36 48,618,536.28 231,903,826.86
year
III. Provision for
impairment
1.Balance at beginning - - - - - -
of the year
2. Additions - - - - - -
(1)Accrual - - - - - -
3. Decrease - - - - - -
(1)Disposal or retire - - - - - -
4.Balance at end of the - - - - - -
year
IV. Total book value
1.Balance at end of the
360,721,597.27 37,786,680.53 1,907,805.66 15,429,851.05 9,803,628.34 425,649,562.85
year
2.Balance at the
453,247,660.72 40,252,500.15 2,767,602.69 17,208,171.92 10,223,657.17 523,699,592.65
beginning of the year
②Fixed assets that do not have certificate for property right
Item Book value Reason for not having certificate for property rights
Office rooms for Harbin Branch 287,345.82 Defective in property right
Property for Zhengzhou Branch 6,138,196.00 Under application process
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
11. Construction in progress
Item 31 Dec 2018 1 Jan 2018
Construction in progress 12,041,126.00 10,947,300.53
(1) Construction in progress
①Details of construction in progress
31 Dec 2018 1 Jan 2018
Item Impairment Impairment
Book balance Carrying amount Book balance Carrying amount
provision provision
Clock & Watch base in
Guangming New District 12,041,126.00 - 12,041,126.00 10,947,300.53 - 10,947,300.53
auxiliary projects
②Changes for material construction-in-progress projects
Transferred to fixed
Project name Budget 31 Dec 2017 Increase asset in current Other decrease 31 Dec 2018
year
Clock & Watch base
in Guangming New
34,050,900.00 10,947,300.53 1,093,825.47 - - 12,041,126.00
District auxiliary
projects
(Continued)
Percentage of Rate of
Total capitalized Incl. capitalized in Source of
Project name investment to Progress (%) capitalization in
interest current year funding
budget (%) current year (%)
Clock & Watch base
in Guangming New
35.36 35.36 - - - Self-raised
District auxiliary
projects
12. Intangible assets
(1) Details of intangible assets
Item Land-use right Software system Right to use trademarks Total
I. Total original cost
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item Land-use right Software system Right to use trademarks Total
1.Balance at beginning of the
34,854,239.40 19,904,736.57 9,547,313.86 64,306,289.83
year
2. Additions 79,583.00 3,982,478.51 545,994.75 4,608,056.26
(1)Purchase 79,583.00 3,982,478.51 545,994.75 4,608,056.26
(2)Internal R&D - - - -
(3)Increased due to business
- - - -
combination
3. Decreases - - - -
(1)Disposal - - - -
4.Balance at end of the year 34,933,822.40 23,887,215.08 10,093,308.61 68,914,346.09
II. Total accumulated
amortization
1.Balance at beginning of the
9,887,164.24 6,951,113.14 3,244,732.24 20,083,009.62
year
2. Additions 3,694,544.65 1,124,998.55 466,315.66 5,285,858.86
(1)Accrual 3,694,544.65 1,124,998.55 466,315.66 5,285,858.86
3. Decreases - - - -
(1)Disposal - - - -
4.Balance at end of the year 13,581,708.89 8,076,111.69 3,711,047.90 25,368,868.48
III. Total impairment provision
1.Balance at beginning of the
- - - -
year
2. Additions - - - -
(1)Accrual - - - -
3. Decreases - - - -
(1)Disposal - - - -
4.Balance at end of the year - - - -
IV. Total book value
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item Land-use right Software system Right to use trademarks Total
1. Balance at end of the year 21,352,113.51 15,811,103.39 6,382,260.71 43,545,477.61
2. Balance at beginning of the
24,967,075.16 12,953,623.43 6,302,581.62 44,223,280.21
year
13. Long-term deferred expenses
Item 1 Jan 2018 Increase Amortization Other decrease 31 Dec 2018
Counter fabrication
49,334,415.56 49,200,596.00 49,230,011.46 - 49,305,000.10
expenses
Renovation expenses 58,392,053.11 50,885,181.89 34,625,947.87 - 74,651,287.13
Others 1,683,316.82 7,333,478.59 4,400,537.49 - 4,616,257.92
Total 109,409,785.49 107,419,256.48 88,256,496.82 - 128,572,545.15
14. Deferred income tax assets/Deferred income tax liabilities
(1) Detail of deferred income tax before offsetting
31 Dec 2018 1 Jan 2018
Item Deductible temporary Deductible temporary Deferred income tax
Deferred income tax asset
differences differences asset
Asset impairment provision 79,775,704.17 17,676,690.28 93,805,178.33 22,891,430.26
Unrealized profit for related party
272,840,911.63 67,717,517.83 309,982,920.90 76,608,130.54
transaction
Deferred income 3,672,855.36 918,213.84 5,904,000.00 1,476,000.00
Deductible loss 61,529,125.81 14,363,284.14 27,342,976.03 4,930,384.00
Total 417,818,596.97 100,675,706.09 437,035,075.26 105,905,944.80
(2) Details of unrecognized deferred income tax asset
Item 31 Dec 2018 1 Jan 2018
Impairment of assets 30,660,246.75 29,691,944.68
Deductible loss 65,181,936.05 41,326,518.50
Total 95,842,182.80 71,018,463.18
Note: Deductible losses of Swiss Company, which are subsidiaries of the Company, is not recognized as deferred
income tax asset as it’s uncertain that the companies can get sufficient taxable income in future.
Hong Kong Company, a subsidiary of the Company, does not need to recognize the deferred income tax assets
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
for impairment provision according to the local tax policy.
15. Other non-current asset
Item 31 Dec 2018 1 Jan 2018
Prepayment for project and equipment purchase 8,949,160.42 8,246,538.33
16. Short-term loan
(1) Short-term loan classification
Item 31 Dec 2018 1 Jan 2018
Guaranteed loan 187,118,452.97 120,990,510.00
Credit Loan 360,000,000.00 405,000,000.00
Total 547,118,452.97 525,990,510.00
(2) There are no overdue short-term loans.
(3) Refer to Note XIV. 2 for details of guaranteed loans between parent companies and subsidiaries.
17. Note and accounts payables
Item 31 Dec 2018 1 Jan 2018
Accounts payable 259,913,612.34 263,256,495.65
(1) Accounts payables
Item 31 Dec 2018 1 Jan 2018
Trade payables 188,957,240.00 197,139,603.70
Payables for material purchased 18,632,180.36 5,596,017.29
Payables for project 52,324,191.98 60,520,874.66
Total 259,913,612.34 263,256,495.65
18. Advances from customer
(1) Presentation of advances received
Item 31 Dec 2018 1 Jan 2018
Advances received for trade 14,822,924.98 10,928,657.72
Rental received 1,636,520.02 4,212,930.07
Total 16,459,445.00 15,141,587.79
19. Employee benefit payable
(1) Presentation of employee benefit payable
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 1 Jan 2018 Increase Decrease 31 Dec 2018
I. Short-term benefit 67,145,581.32 533,345,700.37 536,685,964.81 63,805,316.88
II. Post-employment welfare-defined
4,418,785.82 46,014,765.45 44,459,830.32 5,973,720.95
contribution plans
III. Dismissal welfare - 2,271,458.27 2,271,458.27 -
IV. Other welfare within one year - - - -
Total 71,564,367.14 581,631,924.09 583,417,253.40 69,779,037.83
(2) Short-term employee benefits
Item 1 Jan 2018 Increase Decrease 31 Dec 2018
1. Wages, bonuses and allowances 66,712,129.20 477,129,729.95 480,534,845.69 63,307,013.46
2. Employee Welfare - 9,959,168.00 9,959,168.00 -
3. Social insurance - 19,465,988.82 19,465,988.82 -
Incl.: (1) medical insurance - 17,305,121.22 17,305,121.22 -
(2) work-related injury insurance - 814,287.85 814,287.85 -
(3) maternity insurance - 1,346,579.75 1,346,579.75 -
4. Housing fund - 17,311,498.67 17,311,498.67 -
5. Expenditure for labor union and
433,452.12 9,479,314.93 9,414,463.63 498,303.42
employee training
6. Other short-term benefits - - - -
Total 67,145,581.32 533,345,700.37 536,685,964.81 63,805,316.88
(3) Defined contribution plans
Item 1 Jan 2018 Increase Decrease 31 Dec 2018
1. Endowment insurance 1,044.89 42,071,562.15 41,599,355.66 473,251.38
2. Unemployment insurance - 1,136,009.40 1,136,009.40 -
3. Enterprise annuity payment 4,417,740.93 2,807,193.90 1,724,465.26 5,500,469.57
Total 4,418,785.82 46,014,765.45 44,459,830.32 5,973,720.95
20. Taxes payable
Item 31 Dec 2018 1 Jan 2018
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Item 31 Dec 2018 1 Jan 2018
Value added tax 32,344,121.18 28,234,436.08
Corporate income tax 21,599,264.54 24,051,749.74
Property tax 248,795.56 640,117.90
City maintenance & construction tax 321,914.01 948,001.89
Individual income tax 998,190.73 779,154.31
Educational surcharges 229,955.09 677,393.80
Others 180,930.81 526,382.87
Total 55,923,171.92 55,857,236.59
21. Other payables
Item 31 Dec 2018 1 Jan 2018
Interest payable 772,351.26 1,464,729.11
Other payables 71,047,579.04 57,767,536.64
Total 71,819,930.30 59,232,265.75
(1) Interest payable
Item 31 Dec 2018 1 Jan 2018
Interest payable for instalment long-term loan - 152,151.14
Interest payable for short-term loan 772,351.26 1,312,577.97
Total 772,351.26 1,464,729.11
(2) Other payables
①Other payables presented by nature
Item 31 Dec 2018 1 Jan 2018
Security deposit 22,954,307.95 23,026,920.95
Shop activity fund 17,461,589.65 15,096,271.16
Personal accounts payable 3,058,122.71 4,911,856.36
Decoration expenses 6,096,460.99 3,175,612.64
Down payment 612,659.73 1,132,084.26
Others 20,864,438.01 10,424,791.27
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Item 31 Dec 2018 1 Jan 2018
Total 71,047,579.04 57,767,536.64
②Significant other payables with aging over 1 year:
Item Balance as at 31 Dec 2018 Reasons for unpaid or unsettled
Shenzhen Tencent Computer System Co., Ltd. 4,693,429.16 within lease term
Shenzhen Zhongshen Commercial Property Service Co., Ltd. 903,166.80 within lease term
Oracle Research and Development Center (Shenzhen) Co.,
804,000.00 within lease term
Ltd.
Tropical Rainforest Restaurant, Nanshan District, Shenzhen 791,320.00 within lease term
Shenzhen Keman Medical Equipment Co., Ltd. 734,775.68 within lease term
China Merchants Bank Co., Ltd. Shenzhen Branch 654,532.30 within lease term
Beijing Yuante Technology Co., Ltd. Shenzhen Branch 519,007.36 within lease term
Shenzhen Beigaozhi Electronics Co., Ltd. 506,358.16 within lease term
AVIC Property Management Co., Ltd. 678,154.06 within lease term
Total 10,284,743.52 ——
22. Non-current liabilities that fall due within one year
Item 31 Dec 2018 1 Jan 2018
Long-term loans due within 1 year (Note VI. 23) 347,470.00 35,000,000.00
23. Long-term loan
Item 31 Dec 2018 1 Jan 2018
Pledge loans 4,864,580.00 5,008,425.00
Guaranteed loan - 109,861,928.00
Less: Long-term loan due within one year
347,470.00 35,000,000.00
(Note VI. 22)
Total 4,517,110.00 79,870,353.00
Note: (1) There is no overdue long-term loans.
(2) See Note VI.46 for type and amount of pledged assets.
(3) There is no guarantee in the balance of long-term loan.
(4) The interest rate for long-term loan is 3.00%.
24. Deferred income
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 1 Jan 2018 Increase Decrease 31 Dec 2018 Forming reasons
Income to be recognized in
Government grant 5,904,000.00 66,037.74 2,297,182.38 3,672,855.36
later periods
Incl: items involving government grant
Recognized in
Recognized in Other Related to
Subsidized project 1 Jan 2018 Increase non-operating 31 Dec 2018
other gains Changes assets/income
Income
Special fund for
Shenzhen industrial
design industry 2,000,000.00 - - 1,066,988.78 - 933,011.22 Asset related
development
(Note (1))
Funding project for
construction of
National Enterprise 2,000,000.00 - - 488,578.43 - 1,511,421.57 Asset related
Technology Center
(Note (2))
Researching
project for key
technique of
480,000.00 - - 480,000.00 - - Income related
benchmark timing
system of
DF101(Note (3))
2017 Nanshan
District
Independent
124,000.00 - - 124,000.00 - - Income related
Innovation Industry
Development
Special Fund
2017 Provincial
Specialized Fund
for Industrial and 1,300,000.00 - - 137,615.17 - 1,162,384.83 Income related
Information
Technology (Note
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Recognized in
Recognized in Other Related to
Subsidized project 1 Jan 2018 Increase non-operating 31 Dec 2018
other gains Changes assets/income
Income
(4))
Special funds for
consumer goods
standards and - 66,037.74 - - - 66,037.74 Income related
quality
improvement
Total 5,904,000.00 66,037.74 - 2,297,182.38 - 3,672,855.36 ——
Note (1): Special fund for Shenzhen industrial design industry development was obtained according to the Shen
Jingmao Xinxi Jishu Zi (2013) No. 227 - Operating Specification for Affirmation and Fund Plan of Shenzhen
Industrial Design Center (Trial) which is jointly issued by Economy, Trade and Information Commission of
Shenzhen Municipality and Finance Commission of Shenzhen Municipality.
Note (2)：Funding project for construction of Shenzhen Enterprise Technology Center was obtained according to
the Notice for the 1st Supportive Project in 2015 of Funding Project for Construction of Shenzhen Enterprise
Technology Center which was issued by Shenzhen Development and Reform Commission (Shen Jing Mao Xin Xi
Yu[2015] No. 129).
Note (3)：Special fund for university-industry cooperation in 2013 was obtained according to Yue Ke Gong Shi
[2014] No. 13 – Publicity about Projects which would be Supported by Special Fund of Comprehensive Strategic
Cooperation between Province and College and Special Fund of Province-Ministry University-Industry
Cooperation in 2013, issued by Guangdong Science and Technology Department.
Note (4): According to the Notice of Guangdong Provincial Economic and Information Technology Commission on
Doing a Good Job of Applying for Provincial Special Projects in Production and Service Industry in 2017 (the
Circular of the Ministry of Economic Affairs and Information Technology of Guangdong Province and Guangdong
Provincial Department of Finance) Guangdong Letter of Manufacture [2016] No. 53) obtained provincial 2017
special funds for industrial and informatization.
25. Share capital
Additions or reduction (+, -)
Capitalization
Item 1 Jan 2018 Issuance of Bonus 31 Dec 2018
of capital Others Subtotal
new share shares
reserves
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Additions or reduction (+, -)
Capitalization
Item 1 Jan 2018 Issuance of Bonus 31 Dec 2018
of capital Others Subtotal
new share shares
reserves
Total shares 438,744,881 - - - - - 438,744,881
26. Capital reserve
Item 1 Jan 2018 Increase Decrease 31 Dec 2018
Share premium 1,047,963,195.57 - - 1,047,963,195.57
Other capital reserves 14,492,448.65 - - 14,492,448.65
Total 1,062,455,644.22 - - 1,062,455,644.22
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27. Other comprehensive income
Movement
Less: recorded in other
Amount incurred before comprehensive income in
Item 1 Jan 2018 Less: Income tax Attribute to parent Attribute to minority 31 Dec 2018
income tax in current prior period and transferred
expenses company after tax shareholders after tax
period to profit or loss in current
period
I. Other comprehensive
income items which will not be
- - - - - - -
reclassified subsequently to
profit or loss
II. Other comprehensive
income items which will be
-11,523,442.39 6,081,568.47 - - 6,081,302.61 265.86 -5,442,139.78
reclassified subsequently to
profit or loss
Incl. translation difference of
foreign currency financial -11,523,442.39 6,081,568.47 - - 6,081,302.61 265.86 -5,442,139.78
statements
Total other comprehensive
-11,523,442.39 6,081,568.47 - - 6,081,302.61 265.86 -5,442,139.78
income
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28. Surplus reserve
Item 1 Jan 2018 Increase Decrease 31 Dec 2018
Statutory surplus reserve 144,820,819.35 16,210,080.45 - 161,030,899.80
Discretionary surplus reserve 61,984,894.00 - - 61,984,894.00
Total 206,805,713.35 16,210,080.45 - 223,015,793.80
Note: according to the Company Law and Articles of Association, the Company draws statutory surplus reserve at
10% of net profit. If the statutory surplus reserve is over 50% of the Company’s registered capital, drawing of
statutory surplus reserve stopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve. If approved,
discretionary surplus reserve can be used to make up for losses in previous years or increase share capital.
29. Undistributed profit
Item 2018 2017
Undistributed profit at the end of prior year before adjustments 771,484,565.02 687,986,807.74
Adjustments to undistributed profit at the beginning of year - -
Undistributed profit at the beginning of year after adjustment 771,484,565.02 687,986,807.74
Plus: Net profit attributable to the owner of the parent company for
183,835,095.29 140,216,258.28
the year
Less: statutory surplus reserve drawn 16,210,080.45 12,844,012.90
Dividends payable to ordinary shares 87,748,976.20 43,874,488.10
Undistributed profit at the end of year 851,360,603.66 771,484,565.02
Note: Information on distribution of dividend
Pursuant to the “Resolution of Equity Distribution for Year 2017” approved at the 2017 Annual General Meeting
held on 21 June 2018, the Company distributed to all shareholders cash dividend of RMB2.00 (tax inclusive) for
every 10 shares held based on total shares of 438,744,881 as at 31 December 2017. Total cash dividend
distributed was RMB87,748,976.20.
30. Operating revenue and operating cost
2018 2017
Item
Operating revenue Operating cost Operating revenue Operating cost
Revenue from main
3,382,346,730.19 1,992,905,841.56 3,326,715,761.43 1,982,954,953.59
business
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2018 2017
Item
Operating revenue Operating cost Operating revenue Operating cost
Revenue from other
18,103,869.71 903,932.64 19,093,942.55 3,697,637.98
business
Total 3,400,450,599.90 1,993,809,774.20 3,345,809,703.98 1,986,652,591.57
31. Tax and surcharges
Item 2018 2017
Urban maintenance and construction tax 14,746,181.35 14,218,262.08
Educational surcharge 6,338,803.59 6,122,809.94
Local educational surcharge 4,221,251.51 4,099,162.87
Property tax 3,858,983.33 4,057,806.73
Stamp duty 2,216,200.85 2,322,319.03
Land use tax 387,741.44 461,094.63
Consumption tax 56,184.87 68,144.07
Tax for usage of vehicle and ship 7,785.00 8,085.00
Others 1,936,212.46 1,513,574.23
Total 33,769,344.40 32,871,258.58
Note: The criteria of business taxes and surcharges accrued and paid refer to Note V. Taxation.
32. Selling and distribution expenses
Item 2018 2017
Salary 284,754,162.08 282,332,694.94
Employee welfare 5,639,512.33 5,021,378.47
Housing fund 11,646,901.18 10,766,215.15
Social insurance 45,976,594.63 40,320,843.22
Department store expense and rental 137,788,340.17 129,811,336.38
Market promotion expenses 186,814,362.00 177,352,152.54
Depreciation and amortization 91,323,930.38 90,339,654.46
Packaging expenses 17,013,895.11 13,166,738.72
Utilities and property management expenses 18,464,692.62 12,459,271.35
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 2018 2017
Shipping fees 12,444,864.89 11,637,994.76
Office expenses 10,934,189.89 6,953,441.44
Travel expenses 12,076,624.12 11,774,153.69
Others 22,092,103.70 19,502,056.89
Total 856,970,173.10 811,437,932.01
33. Administrative expenses
Item 2018 2017
Salary 132,152,678.81 116,005,739.67
Social insurance 11,333,830.56 13,262,398.74
Depreciation and amortization 23,465,976.86 20,786,423.56
Enterprise annuity 2,318,455.78 3,706,212.20
Union funds 4,967,113.07 2,748,390.12
Training fee 2,817,832.13 1,431,427.23
Travel expenses 7,436,745.07 5,917,863.79
Office expenses 4,411,920.54 4,896,447.32
Housing fund 4,217,069.96 4,134,079.62
Agents fees 2,397,253.16 2,632,061.65
Employee welfare 2,908,900.50 2,645,453.19
Others 20,734,749.41 12,423,085.15
Total 219,162,525.85 190,589,582.24
34. R & D expenses
Item 2018 2017
Salary 24,158,997.53 22,773,695.65
Employee welfare 466,603.29 301,488.36
Social insurance 2,270,552.06 1,560,336.14
Housing fund 705,146.39 747,618.62
Material cost 3,062,922.51 4,216,717.28
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 2018 2017
Sample fee 2,042,439.14 4,620,567.85
Processing fee 2,150,154.58 198,047.66
Depreciation and amortization 4,869,828.83 4,559,562.30
Technical cooperation fee 1,254,524.99 2,611,783.01
Others 6,369,173.50 7,864,082.48
Total 47,350,342.82 49,453,899.35
35. Finance expenses
Item 2018 2017
Interest expense 27,552,558.81 41,825,035.34
Less: Interest capitalization - -
Less: Interest income 2,269,447.05 2,915,602.99
Exchange gain or losses 713,080.72 1,082,289.43
Bank charges and others 9,920,047.68 9,195,021.13
Total 35,916,240.16 49,186,742.91
36. Impairment losses
Item 2018 2017
Bad debt loss -5,488,944.07 11,818,649.06
Inventory impairment loss 8,753,900.25 50,608,850.55
Total 3,264,956.18 62,427,499.61
37. Other gains
Amount included in current year’s
Item 2018 2017
non-recurring profit or loss
Government grant 19,375,618.48 17,508,255.98 19,375,618.48
For details of government grants, refer to Note VI. 48.
38. Investment gain
Item 2018 2017
Investment gain from the long-term equity investment measured by equity 1,001,545.06 455,893.22
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Item 2018 2017
method
39. Gain on disposal of assets
Amount included in current year’s
Item 2018 2017
non-recurring profit or loss
Total gain/loss on disposal of the
-181,302.24 7,321,993.36 -181,302.24
non-current assets
40. Non-operating income
Amount included in current year’s
Item 2018 2017
non-recurring profit or loss
Total gain on damage and retirement of
1,000.00 - 1,000.00
non-current assets
Clearing of payables that cannot be paid 2,810.50 2,256,661.00 2,810.50
Others 1,442,547.03 350,992.91 1,442,547.03
Total 1,446,357.53 2,607,653.91 1,446,357.53
41. Non-operating expenses
Amount included in non-recurring profit or
Item 2018 2017
loss in current year
Fines and late payment expenses 154,626.88 - 154,626.88
External donation 380,000.00 399,250.00 380,000.00
Others 117,888.09 969,430.92 117,888.09
Total 652,514.97 1,368,680.92 652,514.97
42. Income tax expenses
(1) Details of income taxes expenses
Item 2018 2017
Current income tax 42,131,613.05 57,825,323.60
Deferred income tax 5,230,238.71 -10,726,369.54
Total 47,361,851.76 47,098,954.06
(2) Reconciliation between income tax expenses and accounting profits is as follows:
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 2018
Profit before tax 231,196,947.05
Income tax expenses calculated at legal (or applicable) tax rate 57,799,236.76
Impact of different tax rate in certain subsidiaries -12,360,815.15
Adjustment for income tax in prior year 413,122.52
Income not subject to tax -250,386.27
Expenses not deductible for tax purposes 1,286,216.68
Taxation influence by using unrecognized deductible loss and deductible temporary difference
-250,920.28
of prior periods
Taxation influence of unrecognized deductible loss and deductible temporary difference 7,158,514.85
Effect of tax rate change on carrying amount of opening deferred income tax asset -
Effect of super deduction of R&D expenses -6,433,117.35
Income tax expenses 47,361,851.76
43. Other comprehensive income
Details of other comprehensive income refer to Note VI. 27.
44. Notes to cash flow statement
(1) Cash received from other operating activities
Item 2018 2017
Government grant 17,144,473.84 17,432,255.98
Product promotion fee 7,388,696.14 7,256,201.41
Security deposit 9,977,697.98 9,327,099.78
Interest income 2,269,447.05 2,915,602.99
Petty cash 4,066,408.69 4,615,494.88
Others 8,781,869.99 7,631,989.59
Total 49,628,593.69 49,178,644.63
(2) Cash paid for other operating activities
Item 2018 2017
Marketing promotion fee 158,123,421.13 116,083,360.98
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item 2018 2017
Rental 88,198,420.82 80,557,649.30
Departmental store expenses 27,617,954.29 40,296,610.32
Advertising fee 25,754,222.71 32,028,348.16
Travel expenses 16,716,869.03 15,287,674.97
R & D expenses 18,696,076.85 22,883,770.79
Office expenses 14,807,127.70 10,087,223.06
Transportation expenses 13,966,858.83 10,445,774.44
Exhibition expenses 7,794,285.04 10,686,979.91
Posting and telecommunication expenses 1,284,007.36 4,942,120.45
Business entertainment 3,881,281.50 5,909,392.82
Packaging expenses 2,123,627.83 1,010,445.61
Utilities 18,131,634.75 15,035,484.37
Petty cash 5,131,463.98 4,405,955.94
Agents fees 3,417,891.86 3,602,250.55
Conference expenses 1,856,933.80 3,477,562.92
Insurance expense 2,447,666.64 2,720,711.50
Security deposit 19,915,997.96 2,803,293.12
Vehicle expenses 1,296,416.06 2,110,291.06
Bank charges 9,723,496.15 9,036,367.69
Others 13,351,304.90 18,515,949.06
Total 454,236,959.19 411,927,217.02
45. Supplement to cash flow statement
(1) Supplement to Cash Flow Statement
Supplement 2018 2017
1. Reconciliation of net profit to cash flow from operating activities:
Net profit 183,835,095.29 142,616,359.20
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Supplement 2018 2017
Add: Impairment for assets 3,264,956.18 62,427,499.61
Depreciation of fixed assets, and gas assets, and productive biological 44,860,943.06
43,011,539.25
assets
Amortization of intangible assets 5,285,858.86 3,453,462.25
Amortization of long-term deferred expenses 88,256,496.82 92,532,517.56
Loss on disposal of fixed assets, intangible assets, and other long-term
181,302.24 -7,321,993.36
assets (“-“ for gain)
Loss on retirement of fixed assets (“-“ for gain) -1,000.00 -
Loss on changes of fair value (“-“ for gain) - -
Financial expenses (“-“ for income) 27,552,558.81 41,825,035.34
Investment loss (“-“ for gain) -1,001,545.06 -455,893.22
Decrease in deferred tax assets (“-“ for increase) 5,230,238.71 -10,726,369.54
Increase in deferred tax liabilities (“-“ for decrease) - -
Decrease in inventories (“-“ for increase) 30,900,223.04 126,768,439.60
Decrease in operating receivables (“-“ for increase) -36,309,812.09 -19,073,303.46
Increase in operating payables (“-“ for decrease) -20,427,526.24 89,897,268.74
Others - -
Net cash flows from operating activities 331,627,789.62 564,954,561.97
2. Significant investment or financing activities not involving cash:
Debts converted to capital - -
Convertible debts mature within one year - -
Fixed assets acquired under finance leases - -
3. Net changes in cash and cash equivalents:
Cash at end of year 162,623,059.97 184,947,891.32
Less: cash at beginning of year 184,947,891.32 427,227,755.81
Plus: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
Net increase in cash and cash equivalents -22,324,831.35 -242,279,864.49
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(2) Cash and cash equivalents
Item 31 Dec 2018 31 Dec 2017
I. Cash 162,623,059.97 184,947,891.32
Incl. Cash on hand 420,783.85 414,210.14
Bank deposit available for immediate payment 160,135,454.62 184,528,160.32
Other monetary funds available for immediate payment 2,066,821.50 5,520.86
II. Cash equivalents
Incl. Bond investment due in three months - -
III. Cash and cash equivalents at the end of year 162,623,059.97 184,947,891.32
Incl. Restricted cash and cash equivalents for the Company -
Note: Restricted cash and cash equivalents for the Company are not included in cash and cash equivalents
amounts.
46. Assets of restricted ownership or use rights
Amount as of 31 Dec
Item Restriction reason
2018
Security deposit of RMB1,575,000.00, judicial frozen fund of RMB
Currency funds 2,205,000.00
630,000.00.
Fixed assets 14,978,058.58 Guarantee
Total 17,183,058.58 —
47. Monetary item denominated in foreign currency
(1) Monetary item denominated in foreign currency
Balance denominated in
Balance translated in RMB as at
Item foreign currency as at 31 Exchange rate
31 Dec 2018
Dec 2018
Currency fund
Incl: USD 634,531.28 6.8632 4,354,915.08
HKD 3,646,197.04 0.8762 3,194,797.85
CHF 620,245.24 6.9494 4,310,332.27
EUR 1,943.58 7.8473 15,251.86
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Balance denominated in
Balance translated in RMB as at
Item foreign currency as at 31 Exchange rate
31 Dec 2018
Dec 2018
Accounts receivable
Incl: USD 688,191.90 6.8632 4,723,198.65
HKD 6,007,034.35 0.8762 5,263,363.50
EUR 34,266.75 7.8473 268,901.47
CHF 185,687.50 6.9494 1,290,416.71
Prepayments
Incl : CHF 681,143.82 6.9494 4,733,540.86
Other receivable
Incl: HKD 299,737.08 0.8762 262,629.63
EUR 4,250.00 7.8473 33,351.03
CHF 905,580.00 6.9494 6,293,237.65
Accounts payable
Incl: HKD 3,030,447.60 0.8762 2,655,278.19
Advances from customer
Incl: HKD 74,499.32 0.8762 65,276.30
Other payable
Incl: HKD 42,812.50 0.8762 37,512.31
CHF 65,094.65 6.9494 452,368.76
Short-term loan
Incl: HKD 33,000,000.00 0.8762 28,914,600.00
CHF 1,900,000.00 6.9494 13,203,860.00
Non-current liability that due in one year
Incl: CHF 50,000.00 6.9494 347,470.00
Long-term bank loan
Incl： CHF 650,000.00 6.9494 4,517,110.00
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(2) Overseas operational entity
For main business location and recording currency of important overseas operational entity, refer to Note IV. 3.
48. Government grant
(1) The status of the government grants
Accounting Amount included in current
Item Amount
subject profit or loss
2017 Shenzhen Standard Special Fund (Note(1)) 496,000.00 Other income 496,000.00
2017 Guangming District Watch Exhibition Funding 50,000.00 Other income 50,000.00
Science and Technology Commission 2017 Corporate
1,890,000.00 Other income 1,890,000.00
Research and Development Funding (Note (2))
2017 Shenzhen Patent Award 2,000.00 Other income 2,000.00
Special fund for industrial transformation and upgrading in
500,000.00 Other income 500,000.00
2018 (Note (3))
2018 annual industrial transformation and upgrading special
4,480,000.00 Other income 4,480,000.00
fund and innovation rewards (Note (4))
2018 Independent Innovation Industry Development Special
6,000.00 Other income 6,000.00
Fund, Nanshan District
Special Fund for the Development of Independent Innovation
479,200.00 Other income 479,200.00
Industry, Nanshan District, 2018 (Note (5))
Funding for Informatization and Industrialization Integration
400,000.00 Other income 400,000.00
project,2018 (Note(6))
Funding for the domestic market development of the
demonstration enterprise under Chinese Entrepreneurship 128,920.00 Other income 128,920.00
and Innovation Strategy in 2018
Basel Watch and Clock Exhibition International Trade
779,907.74 Other income 779,907.74
Development Fund(Note (7))
High-tech Enterprise Recognition Award, Baoan District 30,000.00 Other income 30,000.00
China Disabled Persons’ Federation subsidy 6,000.00 Other income 6,000.00
Export credit insurance 57,605.00 Other income 57,605.00
Activity fund for Guangming division during the Second
28,301.89 Other income 28,301.89
International Brand Week
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Accounting Amount included in current
Item Amount
subject profit or loss
The 18th China Design Excellence Award (Note (8)) 250,000.00 Other income 250,000.00
Special support fund for economic development in
208,000.00 Other income 208,000.00
Guangmign District (Note (9))
Standardization Strategy Funding, Guangming New District
600,000.00 Other income 600,000.00
(Note (9))
Convention and Exhibition Industry Financial Subsidy,
50,000.00 Other income 50,000.00
Guangming New District (Note (9))
Disabled care and medical insurance subsidy for the first half
2,882.30 Other income 2,882.30
of the year in 2018, GuangMing New district
R&D Funding, Guangming New District (Note (10)) 360,000.00 Other income 360,000.00
Exhibition Subsidy, Guangming New District (Note (10)) 50,000.00 Other income 50,000.00
Annual fee incentive for domestic patent invention 2,000.00 Other income 2,000.00
Government funds granted for admission to the China
6,154.00 Other income 6,154.00
International Import Expo
Special Fund for the Development of the Service Industry of
1,000,000.00 Other income 1,000,000.00
the Economic and Trade Commission (Note (11))
Crystal Products Exhibition Special Funding 103,267.00 Other income 103,267.00
Corporate R&D Funding by Science and Technology
1,155,000.00 Other income 1,155,000.00
Commission, 2017 (Note (12))
Creating excellence and rating funding project by Economic
200,000.00 Other income 200,000.00
Promotion Bureau, Nanshan District
Funding for Informatization and Industrialization Integration
100,000.00 Other income 100,000.00
project by Economic Promotion Bureau, Nanshan District
Special fund for independent innovation industry
development by Nanshan District Science and Technology 250,000.00 Other income 250,000.00
Commission
Project funded by Commerce Circulation Industry 360,800.00 Other income 360,800.00
Subsidy under Shenzhen Nanshan Finance Bureau
724,900.00 Other income 724,900.00
Headquarters Corporate Office Housing Support Project
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Accounting Amount included in current
Item Amount
subject profit or loss
(Note (13))
Commerce Circulation Industry Funding Project by Shenzhen
549,500.00 Other income 549,500.00
Nanshan District Finance Bureau (Note (13))
Commerce Circulation Industry Funding Project by Shenzhen
Nanshan District Economic Promotion Bureau 215,100.00 Other income 215,100.00
(Note (13))
Funding for the Talent Quality Improvement Project of the
Industrial Innovation Talents by the Human Resources 21,500.00 Other income 21,500.00
Bureau of Nanshan District, Shenzhen (Note (13))
Patent subsidy by Shenzhen Municipal Market and Quality
10,000.00 Other income 10,000.00
Supervision and Administration Committee, 2017
The 19th China Patent Award of the Market and Quality
330,000.00 Other income 330,000.00
Committee (Note (14))
Funds on Enterprise Intellectual Property Management
Standards Certification by Market Supervision Committee 200,000.00 Other income 200,000.00
(Note (15))
Subsidy for enhancing international operating capacity 60,000.00 Other income 60,000.00
Subsidy for keeping stable job positions 229,106.17 Other income 229,106.17
Demonstration special fund, financial aid project in exhibition
industry, for small and micro enterprise entrepreneurship 159,810.00 Other income 159,810.00
innovation base (Note(16))
Watch exhibition subsidy of small and micro enterprises 128,008.00 Other income 128,008.00
Government exhibition industry special fund 128,008.00 Other income 128,008.00
Government Talent Quality Improvement Project Subsidy 100,000.00 Other income 100,000.00
China Light Industry Federation's international standards
16,000.00 Other income 16,000.00
funding
16-26 batch special subsidy for Central Foreign Trade and
60,000.00 Other income 60,000.00
Economic
Government special subsidy fund for central foreign
114,466.00 Other income 114,466.00
economic and trade projects
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Accounting Amount included in current
Item Amount
subject profit or loss
Shenzhen Industrial Design Industry Development Special
2,000,000.00 Deferred income 1,066,988.78
Fund (Note VI. 24 note (1))
Nationally Recognized Enterprise Technology Center
2,000,000.00 Deferred income 488,578.43
Construction Funding Project (Note VI.24. note (2))
Key technology research and development project of DF101
480,000.00 Deferred income 480,000.00
aircraft benchmark timing system (Note VI. 24. note (3))
Development Special Fund for Independent Innovation
124,000.00 Deferred income 124,000.00
Industry, Nanshan District, 2017
2017 provincial industrial and information special funds (Note
1,300,000.00 Deferred income 137,615.17
VI.24. (note (4))
Special funds for consumer goods standards and quality
Deferred income -
improvement 66,037.74
Total 23,048,473.84 — 19,375,618.48
Note (1): The 2017 Shenzhen Standard special funds obtained according to “The Publicity for the 2017
Construction of the Shenzhen Standard Special Fund Standards Project” issued by Shenzhen Municipal Market
and Quality Supervision and Management Committee.
Note (2): The 2017 Shenzhen Enterprise Research and Development Funding obtained according to
“Management Measures of Shenzhen Science and Technology Research and Development Fund” issued by
Shenzhen Finance Committee and Shenzhen Science and Technology Innovation Committee (Shen Caike [2012]
No. 168).
Note (3): The special funds for industrial transformation and upgrading obtained according to the Notice of the
Shenzhen Economic and Trade and Informatization Commission on the “Application of 2018 Annual Industrial
Transformation and Upgrading Special Funds for Developing Industrial Zone of Community Joint-stock
Companies” (Shen Jingmao Xinxi Guihua Zi [ 2017] No. 243)
Note (4): The 2018 annual industrial transformation and upgrading special fund and innovation rewards obtained
according to the Notice issued by the Shenzhen Economic and Trade Information Commission, on the publicity of
projects to be funded by 2018 annual industrial transformation and upgrading of special fund (Shen Jingmao Xinxi
Xinxing Zi [ 2018] No. 208).
Note (5): Special Fund for the Development of Independent Innovation Industry, Nanshan District, obtained
according to the “Management Measures for Special Funds for Independent Innovation Industry Development in
Nanshan District (Trial)” (Shen Nan Fuban Gui [2018] No. 3).issued by the Office of the People's Government of
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Nanshan District, Shenzhen.
Note (6): Fund for Informatization and Industrialization Integration project obtained according to the “Shenzhen
City Industrial Transformation and Special Fund Management Measures” (Shen Caigui [2016] No. 9), issued by
Shenzhen Municipal Finance Committee and the Shenzhen Municipal Commission of Economy, Trade and
Information Technology.
Note (7): International Trade Development Fund granted by Shenzhen Municipal Government, obtained according
to the “Notice on the Relevant Work on the Special Fund for Foreign Economic and Trade Development in 2017”
issued by the Ministry of Commerce (Shang Caihan [2017] No. 314) and “Implementation Rules for the
Administration of Funds for Enhancing International Operational Capabilities of Less than US$65 Million” issued
by the Municipal Economic and Trade Information Committee and the Municipal Finance Committee (Shen
Jingmao Xinxi Yusuan Zi[2015] No. 180).
Note (8): Patent award obtained according to the “Decision on the Award of the 18th China Patent Award” issued
by the State Intellectual Property Office (Guo Zhi Fa Guan Zi [2016] No. 95).
Note (9): Project funding for the Economic Development Special Fund Standardization Strategic Project in the first
half of 2018, Guangming New District, the International Certification Project and activity support for economic and
trade exhibition funded by Economic Development Special Fund in Guangming District. Funds are obtained
according to the “Guangming New District Economic Development Special Fund Management Measures and
Supporting Implementation Rules” issued by the Shenzhen Guangming New District Management Committee
(Shen Guanggui [2017] No. 16)
Note (10): 2017 Guangming New District Economic Development Special Fund for R&D Investment and activity
support for Domestic Trade Exhibition obtained according to "Shenzhen Guangming New District Economic
Development Special Fund Management Measures and Supporting Implementation Rules" (Shen Guang Gui
[2017] No. 16) issued by Shenzhen Guangming New District Management Committee.
Note (11): The second batch of Shenzhen City e-commerce development special fund project award in 2018
obtained according to “Notice of the Municipal Economic and Trade Information Commission on the Public
Announcement of the Second Batch of Shenzhen E-Commerce Development Special Fund Projects” issued by
the Shenzhen Economic and Trade Information Commission (Shen Jingmao Xinxi Shengchan Zi [2018] No. 100)
Note (12): Subsequent subsidies for corporate research and development grants obtained according to the
"Shenzhen City-level Industry Special Funds Disbursement Operation Regulations" (Shen Caike [2010] No. 173)
and "Release of " (Shen Caike
[2012] No. 1) issued by Shenzhen Municipal Science and Technology Innovation Committee.
Note (13): Special funds for Nanshan district independent innovation industry development obtained according to
“Nanshan District Independent Innovation Industry Development Special Fund Management Measures (Trial)”
issued by the Office of the People's Government of Nanshan District, Shenzhen (Shennan Fuban Gui [2017] No.
2)
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Note (14): Patent award obtained according to “Notice of the Shenzhen Municipal Market and Quality Supervision
Commission on distributing the Fifth Guangdong Patent Award and the 19th China Patent Award for Guangdong
Province Intellectual Property Support A
Note(15): Fund for Enterprise Intellectual Property Management Standard Certification obtained according to
“Shenzhen Municipal People's Government of Shenzhen Municipality’s notice on Several Measures for Promoting
Scientific and Technological Innovation" issued by the Shenzhen Municipal Market and Quality Supervision and
Management Committee (Shenfa [2016] No. 7) and the Shenzhen Municipal People's Government of Shenzhen
Municipal Committee of the Communist Party of China Printing and Distributing the Notice on Several Measures
to Support Enterprises to Enhance Their Competitiveness (Shenfa [2016] No. 8)
Note (16): 2018 Small and Medium Enterprises Development Special Fund (Under “Innovation and
Entrepreneurship” Strategy), Enterprise Domestic Market Development Project Funding, obtained according to
the "Interim Measures for the Administration of Special Funds for the Development of Private and SMEs in
Shenzhen" issued by Shenzhen Municipal Commission of Economy, Trade and Information and Shenzhen
Municipal Finance Committee (Shen Jingmao Xinxi Gui [2017] No. 8), and “The Detailed Rules for the
Implementation of the Special Demonstration Fund for the Small and Medium Enterprise Entrepreneurship
Innovation Base in Shenzhen” issued by Shenzhen Economic and Trade and Information Commission (Shen
Jingmao Xinxi Zhongxiao Zi [2016] No. 217).
VII. Changes of consolidation scope
1. Changes of consolidation scope for other reasons
On 9 March, 2018, World Watches International obtained the company revocation announcement (No. 1554)
issued by the Hong Kong Companies Registry. At the end of the period, the Company did not include it in the
scope of consolidation.
VIII. Equity in other entities
1. Equity in subsidiaries
(1) Structure of enterprise group
Main Shareholding ratio%
Place of Nature of
Name of subsidiary business Ways acquired
registration business Direct Indirect
location
HARMONY Company Shenzhen Shenzhen Commerce 100.00 - Establishment or investment
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Main Shareholding ratio%
Place of Nature of
Name of subsidiary business Ways acquired
registration business Direct Indirect
location
Manufacturing Company Shenzhen Shenzhen Manufacture 90.00 10.00 Establishment or investment
FIYTA Hong Kong Hong Kong Hong Kong Commerce 100.00 - Establishment or investment
Station 68 Hong Kong Hong Kong Commerce - 60.00 Establishment or investment
Harbin Company Harbin Harbin Commerce 100.00 - Establishment or investment
Technology Company Shenzhen Shenzhen Manufacture 100.00 - Establishment or investment
TEMPORAL Company Shenzhen Shenzhen Commerce 100.00 - Establishment or investment
Emile Choureit Shenzhen
Shenzhen Shenzhen Commerce 100.00 - Establishment or investment
Company
FIYTA Sales Company Shenzhen Shenzhen Commerce 100.00 - Establishment or investment
Business combination under
Hengdarui Company Shenyang Shenyang Commerce 100.00 -
common control
Business combination not under
Swiss Company Switzerland Switzerland Commerce - 100.00
common control
2. Equity in joint arrangement or associates
(1) Significant associates
Principal place Registration Shareholding ratio (%) Accounting treatment
Name Business nature
of business place Direct Indirect for associates
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method
(2) Principal financial information of significant associate company:
Balance as of 31 Dec 2018 Balance as of 1 Jan 2018
Item
or 2018 or 2017
Current assets 99,901,286.09 88,035,307.16
Non-current assets 15,459,207.08 17,515,363.92
Total assets 115,360,493.17 105,550,671.08
Current liabilities 10,833,917.48 5,527,973.92
Non-current liabilities - -
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Balance as of 31 Dec 2018 Balance as of 1 Jan 2018
Item
or 2018 or 2017
Total liabilities 10,833,917.48 5,527,973.92
Minority shareholders’ interests - -
Owners’ equity attributable to parent company 104,526,575.69 100,022,697.16
Share of net assets calculated as shareholding
26,131,643.92 25,005,674.29
percentage
Adjustment matters
- Goodwill - -
- Unrealized profit or losses from internal transaction - -
- Others - -
Book value of investment to associates 44,881,063.15 43,879,518.09
Operating revenue 97,282,978.95 79,475,581.06
Net profit 4,006,180.22 1,823,572.89
Other comprehensive income - -
Total comprehensive income 4,006,180.22 1,823,572.89
Dividends received from associated company during
- -
the year
IX. Risk related to financial instruments
Main financial instruments of the Company include monetary fund, note and accounts receivable, other
receivables, available-for-sale financial assets, equity investment, note and accounts payable, other payables,
and loans etc. Details of financial instruments refer to related items in Note VI. The risks associated with these
financial instruments and the risk management policies adopted by the Company to mitigate these risks are
described below. The management of the Company manages and monitors these exposures to ensure that the
above risks are controlled in a limited extent.
The Company adopts sensitivity analysis technique to analyse the reasonability of risk variables, impact of
possible change on current profit and loss or shareholder’s equity. Since risk variables barely change in isolation,
and correlation between variables have significant impact on the final amount affected by one variable, the
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
following content is based on the assumption that each variable changes in isolation.
1. Risk management goals and policies
The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence of
financial risk to financial performance of the Company to the minimum and maximize the benefit of shareholders
and other equity investors. Based on the goal, the fundamental risk management policies of the Company are to
identify and analyse risks the Company faces, set proper acceptable risk level to manage risk, supervise various
risk reliably and timely and control risk within limited range.
(1) Market Risk
① Exchange rate risk
Exchange rate risk refers to the risk of loss caused by exchange rate change. The main exchange rate risk the
company undertakes is relevant to Hong Kong dollar and Swiss Franc. Except several subsidiaries which
purchase and sell with Hong Kong dollar and Swiss Franc, other major business transactions are settled in RMB.
On 31 December, 2018, except balance of following assets and liabilities shown in the table are in Hong Kong
dollar, Swiss Franc and US dollar, balance of other assets and liabilities of the company are in RMB. The
exchange rate risk due to these assets and liabilities with balance in foreign currency could have impact on the
financial performance of the Company.
Item Balance as of 31 Dec 2018 Balance as of 1 Jan 2018
Cash and bank balance 11,875,297.06 9,103,319.22
Note and accounts receivables 11,545,880.33 11,193,694.31
Prepayments 4,733,540.86 12,872,520.90
Other receivables 6,589,218.31 6,290,491.67
Note and accounts payables 2,655,278.19 1,330,403.14
Advances from customers 65,276.30 185,101.44
Other payables 489,881.07 794,190.64
Short-term loans 42,118,460.00 50,990,510.00
Non-current liabilities due within one year 347,470.00 -
Long-term loans 4,517,110.00 5,008,425.00
The Company closely monitors the impact of exchange rate changes on the Company's foreign exchange risk.
The Company has not taken any measures to avoid foreign exchange risks.
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Foreign exchange rate risk sensitivity analysis:
Foreign exchange rate risk sensitivity analysis assumption：all the hedges of the net investment in an overseas
operation and cash flow hedging are highly effective. Under this assumption, controlling other variables, the
pre-tax impact on current profit and shareholders’ equity due to reasonable change of exchange rate, are shown
as following.
2018 2017
Impact on Impact on
Item Fluctuation in exchange rate
Impact on profit shareholders’ Impact on profit shareholders’
equity equity
Appreciate against RMB by 593,764.85 593,764.85 455,165.96 455,165.96
Cash and bank 5%
balance Depreciate against RMB by -593,764.85 -593,764.85 -455,165.96 -455,165.96
5%
Appreciate against RMB by 577,294.02 577,294.02 559,684.72 559,684.72
Note and account s 5%
receivables Depreciate against RMB by -577,294.02 -577,294.02 -559,684.72 -559,684.72
5%
Appreciate against RMB by 236,677.04 236,677.04 643,626.05 643,626.05
5%
Prepayments
Depreciate against RMB by -236,677.04 -236,677.04 -643,626.05 -643,626.05
5%
Appreciate against RMB by 329,460.92 329,460.92 314,524.58 314,524.58
5%
Other receivables
Depreciate against RMB by -329,460.92 -329,460.92 -314,524.58 -314,524.58
5%
Appreciate against RMB by -132,763.91 -132,763.91 -66,520.16 -66,520.16
Note and accounts 5%
payables Depreciate against RMB by 132,763.91 132,763.91 66,520.16 66,520.16
5%
Advances from Appreciate against RMB by -3,263.82 -3,263.82 -9,255.07 -9,255.07
customer 5%
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
2018 2017
Impact on Impact on
Item Fluctuation in exchange rate
Impact on profit shareholders’ Impact on profit shareholders’
equity equity
Depreciate against RMB by 3,263.82 3,263.82 9,255.07 9,255.07
5%
Appreciate against RMB by -24,494.05 -24,494.05 -39,709.53 -39,709.53
5%
Other payables
Depreciate against RMB by 24,494.05 24,494.05 39,709.53 39,709.53
5%
Appreciate against RMB by -2,105,923.00 -2,105,923.00 -2,549,525.50 -2,549,525.50
5%
Short-term loans
Depreciate against RMB by 2,105,923.00 2,105,923.00 2,549,525.50 2,549,525.50
5%
Appreciate against RMB by -17,373.50 -17,373.50 - -
Non-current liabilities 5%
due within one year Depreciate against RMB by 17,373.50 17,373.50 - -
5%
Appreciate against RMB by -225,855.50 -225,855.50 -250,421.25 -250,421.25
5%
Long-term loans
Depreciate against RMB by 225,855.50 225,855.50 250,421.25 250,421.25
5%
②Interest risk-risk of change in cash flow
The risk of change in cash flow in the Company due to the change of interest rate is mainly relevant to floating
interest rate bank loans. The strategy of the Company is to maintain the floating rate of these loans.
Interest rate sensitivity analysis:
Interest rate sensitivity analysis is based on following assumption:
The income and expense of financial instruments with variable interest rate is influenced by change of market
interest rate
For fixed interest rate financial instruments measured by fair value, change of market interest rate only
influences the interest income and expense
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
For derivative financial instruments that designated as hedging instruments, change of market interest rate
influence the fair value and interest rate hedging is estimated to be highly effective
The change in fair value of derivative financial instruments and other financial assets and liabilities is
calculated with market interest rate on balance sheet date under discount cash flow method
On the basis of above assumptions, with other variables not changed, the pre-tax impact on current profit and
shareholders’ equity due to reasonable change of interest rate is as follows:
On December 31, 2018, the Company did not have a loan with floating interest rate (On 31 December 2017, if the
borrowing rate calculated with floating interest rate increases of decreases by 50 basis points, and other factors
remain unchanged, the net profit and shareholders’ equity was estimated to decrease or increase by around
RMB326,300 yuan)
③Other price risk.
Available-for-sale financial assets held by the Company are measured at cost on balance sheet date, so there is
no price risk to be disclosed
(2) Credit risk
The biggest credit risk exposure which possibly leads to financial loss of the Company on 31 December 2018 is
default of contract obligation of transaction counterparty, which may lead to the loss on financial assets of the
Company. Specifically, it includes the book balance of financial assets recognized in consolidated balance sheet
and the failure of not setting any guarantees to any other credit risks that the Company may bear.
To reduce credit risk, based on the financial status of debtor, external rating, guarantee possibility, credit record
gained from the third party and other factors including current market status and that the Company evaluates
credit qualification of debtor and set corresponding debt limit and credit period. The Company will regularly
supervise credit record of debtor. For debtor with bad credit record, the Company will ensure the whole credit risk
of the Company within controllable range in the forms of written reminder letter, reducing credit period and
cancelling credit period. Additionally, the Company examines the collection of receivables on every balance sheet
date to ensure sufficient provision for bad debts. Hence, the management of the Company suppose that the credit
risk undertaken by the Company has been reduced significantly.
The working capital of the Company is deposited in bank with high credit rating, so the credit risk of working
capital is low.
For amount of accounts receivable, the amount of top 5 accounts receivable accounts for 17.13% of total
accounts receivable of the Company. In other receivables, the amount of top 5 accounts receivable accounts for
22.73% of total other receivable of the Company.
(3) Liquidity risk
In managing liquidity risk, the Company keeps the cash and cash equivalents that the Company deems sufficient
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
and controls them to meet operating needs, reduce influence of cash liquidity fluctuation. The Company
management monitors the use of bank loans and ensures to comply with borrowing agreement.
The main source of capital is generated by the cash from Company’s business operations and bank loans. As at
31 December 2018, bank borrowing facility that the Company has not yet used is about RMB1,981,030,000(31
December 2017: RMB2,723,970,000).
The maturity of financial assets and financial liabilities held by the Company according to the undiscounted
remaining contractual obligations is as follows (Unit: in RMB ten thousands):
Item Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total
Financial assets:
Cash and bank balance 16,482.81 - - - 16,482.81
Note and accounts receivables 38,848.67 - - - 38,848.67
Incl: Notes receivable 705.18 - - - 705.18
Accounts receivable 38,143.49 - - - 38,143.49
Other receivables 4,824.95 - - - 4,824.95
Total financial assets 60,156.43 - - - 60,156.43
Financial liabilities:
Short-term loans 54,711.85 - - - 54,711.85
Note and accounts payables 25,991.36 - - - 25,991.36
Incl: Accounts payable 25,991.36 - - - 25,991.36
Other payables 7,181.99 - - - 7,181.99
Incl: Interest payable 77.23 - - - 77.23
Other payables 7,104.76 - - - 7,104.76
Non-current liabilities due in one
34.75 - - - 34.75
year
Long-term loan - 34.75 34.75 382.21 451.71
Financial guarantee 26,711.85 - - - 26,711.85
Total of financial liabilities 114,631.80 34.75 34.75 382.21 115,083.51
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Item Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total
and contingent liabilities
2. Transfer of financial assets
(1) Notes receivable that have been endorsed at the end of the year and have not expired on the balance sheet
date
Amount derecognized at the end of Amount not derecognized at the end of
Item
2018 2018
Banker's acceptance bill 1,294,584.13 -
X. Fair value
1. Financial assets and liabilities measured at fair value
On 31 December 2018, the Company did not have assets and liabilities measured at fair value.
2. Financial assets and liabilities not measured at fair value
The Company’s financial assets and financial liabilities measured at amortized cost mainly include: cash and bank
balances, note and accounts receivables, other receivables, short-term loans, note and accounts payables, other
payables, and long-term loans, etc…
The difference between the book value and fair value of financial assets and liabilities that are not measured at
fair value is small.
XI. Related party relationship and transactions
1. Details of the parent company of the Company
Shareholding ratio of
Registration Ratio of vote right of parent
Name Type of business Registered capital parent company to the
place company to the Company%
Company %
Investment in
industries, domestic
China National
Shenzhen trade, material 1,166,161,996 37.15 37.15
Aviation Group
supply and
distribution
Note: CATIC Shenzhen Company holds 33.93% shareholding of China National Aviation Group. CATIC Shenzhen
Company is a wholly owned subsidiary of China Aero Space International Holdings Limited (CASI), and China
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Aviation Industry Corporation (AVIC) directly holds 62.52% of the equity of CASI. Therefore, the ultimate
controlling party of the Company is AVIC.
2. Subsidiaries
Details of subsidiaries refer to Note VIII.1 “Equity in subsidiary”.
3. Joint venture and association
Details of joint ventures and associates refer to NoteVIII.2 “Equity in joint arrangement or joint venture”.
4. Other related parties
Name Relationship with the Company
Shenzhen CATIC Property Management Limited ( CATIC Property Management) Controlled by the same party
Shenzhen CATIC Building Equipment Co., Ltd. ( CATIC Building Company) Controlled by the same party
Rainbow Department Store Co., Ltd. (Rainbow Department Store ) Controlled by the same party
Shennan Circuits Co., Ltd. ( Shennan Circuits ) Controlled by the same party
CATIC Real Estate Company Controlled by the same party
AVIC Securities Co., Ltd. ( AVIC Securities Company) Controlled by the same party
Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) Controlled by the same party
Shenzhen CATIC City Real Estate Development Co., Ltd. ( CATIC City Real Estate Company) Controlled by the same party
Shenzhen CATIC City Development Co., Ltd. ( CATIC City Development Company) Controlled by the same party
CATIC Guanlan Property Development Co., Ltd. （CATIC Guanlan Property） Controlled by the same party
CATIC Changtai Investment Development Co., Ltd. (CATIC Changtai Company ) Controlled by the same party
Shenzhen CATIC Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Company) Controlled by the same party
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment) Controlled by the same party
AVIC Training Center Controlled by the same party
Ganzhou CATIC 9 Square Trading Co, Ltd (Ganzhou 9 Square Company) Controlled by the same party
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company) Controlled by the same party
Shenzhen CATIC Huacheng Real Estate Development Co, Ltd (CATIC Huacheng Company) Controlled by the same party
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Shenzhen AVIC Security Service Co., Ltd ( AVIC Security Service)） Controlled by the same party
Shenzhen AVIC Property Asset Management Co., Ltd.(AVIC Property Asset Management) Controlled by the same party
Jiujiang 9 Square Business Management Co., Ltd (Jiufang Business Management) Controlled by the same party
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Name Relationship with the Company
Shenzhen CATIC Grand Skylight Hotel Co., Ltd (Grand Skylight Hotel) Controlled by the same party
Shenzhen CATIC City Parking Management Co, Ltd (CATIC City Parking Management Company) Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd (Grand Skylight Hotel Management
Controlled by the same party
Company)
Shenzhen CATIC Technical Testing Institute ( CATIC Technical Testing Institute) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co., Ltd ( Gongqingcheng CATIC Culture Investment
Controlled by the same party
Company)
AVIC-INTL Project Engineering Co., Ltd (AVIC-INTL Project Engineering Company) Controlled by the same party
Shenzhen CATIC Property Development Co., Ltd (CATIC Property) Controlled by the same party
Jiujiang CIATIC City Real Estate Development Co., Ltd (Jiujiang CATIC Real Estate Company) Controlled by the same party
Huang Yongfeng Key management member
Wang Mingchuan Key management member
Fu Debin Key management member
Xiao Zhanglin Key management member
Wang Bo Key management member
Chen Libin Key management member
Wang Jianxin Key management member
Zhong Hongming Key management member
Tang Xiaofei Key management member
Wang Baoying Key management member
Sheng Qing Key management member
Zou Zhixiang Key management member
Lu Bingqiang Key management member
Lu Wanjun Key management member
Liu Xiaoming Key management member
Pan Bo Key management member
Li Ming Key management member
Chen Zhuo Key management member
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Name Relationship with the Company
Zhang Hongguang Key management member
Zhang Shunwen Key management member
Wang Yan Key management member
Wang Jingqi Key management member
5. Transactions with related parties
(1) Related transactions for the purchase and sale of goods, provision and receipt of services
①Purchasing goods and receiving services
Related party Type of transaction 2018 2017
CATIC Property Management Property management 8,208,102.96 8,243,916.72
Department store expenses/
Rainbow Department Store 5,865,816.91 5,868,872.26
Commodity purchase
AVIC Training Center Training 273,596.25 -
AVIC Technical Testing Institute Testing - 3,207.55
Shennan Circuits Material purchase 29,914.50 4,273.50
Ganzhou 9 Square Company Department store expenses 177,372.93 -
CATIC City Estate (Kunshan) Company Department store expenses 76,674.66 -
Jiufang Business Management Department store expenses 58,322.11 -
②Selling products and providing services
Related party Type of transaction 2018 2017
Rainbow Department Store Product sales and services 71,764,856.50 77,301,661.83
Grand Skylight Hotel Management
Product sales and services 5,982.91 6,837.60
Company
Ganzhou 9 Square Company Product sales and services 960,563.85 1,763,367.26
Shennan Circuits Material sales and services 5,883,132.72 3,810,125.07
Gongqingcheng CATIC Culture Investment Product sales
655,161.45 -
Company
AVIC-INTL Product sales 10,215.52 -
CATIC City Estate Company Product sales 4,051.28 -
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Related party Type of transaction 2018 2017
AVIC-INTL Project Engineering Company Product sales 15,351.72 -
(2) Lease between related party
①The Company as a lessor
Recognized rental income in Recognized rental income
Lessee Type of leased assets
current year in prior year
CATIC Property Management Property 6,997,899.09 6,761,603.07
Skytel Hotel Property 4,190,476.18 4,190,476.18
CATIC Real Estate Company Property 1,813,948.87 1,719,424.99
CATIC City Investment Property 364,293.91 1,154,505.27
AVIC Securities Company Property 1,231,342.83 1,182,657.15
CATIC City Real Estate Company Property 342,330.05 702,125.82
Rainbow Department Store Property 529,166.26 532,715.48
CATIC Huacheng Company Property 257,234.48 404,075.33
Jiufang Asset Mgmt Company Property 1,560,410.13 392,865.14
AVIC Security Service Property 1,160,868.75 618,958.25
CATIC Guanlan Property Property 119,748.00 98,012.11
AVIC Property Asset Management Property 57,154.70 132,279.06
CATIC City Development Company Property 2,428.57 27,131.52
CATIC Real Estate Company Property 165,612.56 -
CATIC City Parking Management Company Property 9,916.44 -
②The Company as a lessee
Rental expenses charged in Rental expenses charged in
Lessor Type of leased assets
current year prior year
Ganzhou 9 Square Company Property 894,582.84 1,053,882.06
CATIC Changtai Company Property - 244,255.29
CATIC City Estate (Kunshan) Company Property 156,942.79 211,572.02
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Jiufang Business Management Property 337,541.02 334,028.93
(3) Related party funds lending
Recognized interest
Related Party Amount Effective date Expiring date
expenses in current year
Borrowing:
AVIC Finance Company 150,000,000.00 2018-5-14 2019-5-14 3,805,804.17
(4) Benefit for key management members
Item 2018 2017
Remuneration for key management members 13,123,100.00 13,564,900.00
(5) Other related transactions
The year-end balance of the Company’s cash was RMB128,255,699.54, which was deposited with AVIC Finance
Company. Interests received from the deposit during the year were RMB365,094.51.
6. Receivables from and payables to related parties
(1) Receivables
31 Dec 2018 1 Jan 2018
Item Carrying amount Bad debt Carrying amount Bad debt
provision Provision
Accounts receivable:
Rainbow Department Store 2,305,867.79 115,293.39 1,782,356.36 89,117.82
Shennan Circuits 1,659,077.38 82,953.87 786,443.94 39,322.20
Ganzhou 9 Square Company 4,000.00 200.00 115,742.00 5,787.10
Gongqingcheng CATIC Culture Investment 28,269.36 1,413.47 - -
Jiufang Business Management Company 4,288.00 214.40 - -
AVIC Securities Company 101,428.57 5,071.43 - -
CATIC City Real Estate Company 3.00 0.15 - -
CATIC Jiufang Asset Mgmt Company 33,331.01 1,666.55 - -
CATIC Guanlan Property 8,315.43 415.77 - -
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31 Dec 2018 1 Jan 2018
Item Carrying amount Bad debt Carrying amount Bad debt
provision Provision
CATIC Real Estate Company 148,915.46 7,445.77 - -
CATIC Property Management 0.52 0.03 - -
Total: 4,293,496.52 214,674.83 2,684,542.30 134,227.12
Notes receivable:
Shennan Circuits - - 2,398,579.72 -
Total - - 2,398,579.72 -
Other receivables:
Rainbow Department Store 761,860.00 38,093.00 832,774.30 41,638.72
CATIC Property Management 10,100.00 505.00 100.00 5.00
Ganzhou 9 Square Company 122,665.60 6,133.28 122,665.60 6,133.28
Jiujiang CATIC Estate Company - - 50,000.00 2,500.00
CATIC City Estate (Kunshan) Company 50,400.00 2,520.00 35,000.00 1,750.00
Grand Skylight Hotel 32,000.00 1,600.00 32,000.00 1,600.00
AVIC Training Center - - 150,000.00 7,500.00
CATIC Building Company - - 126,598.73 6,329.94
Gongqingcheng CATIC Culture Investment 5,500.00 275.00 - -
Jiufang Business Management 50,000.00 2,500.00 - -
CATIC Real Estate Company 54,923.00 2,746.15 - -
AVIC-INTL 11,101.80 555.09 - -
Total 1,098,550.40 54,927.52 1,349,138.63 67,456.94
(2) Payables
Item 31 Dec 2018 1 Jan 2018
Accounts Payable：
CATIC Building Company 24,000.00 24,000.00
CATIC Property Management 40,821.05 40,821.05
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Item 31 Dec 2018 1 Jan 2018
Total 64,821.05 64,821.05
Advances from customers:
CATIC Real Estate Company - 148,915.46
CATIC Guanlan Property - 8,315.43
CATIC Jiufang Asset Mgmt Company - 33,331.01
AVIC Securities Company - 101,428.57
Total - 291,990.47
Other payables:
CATIC Property Management 1,131,164.13 472,032.00
CATIC Real Estate Company 442,407.92 442,407.92
CATIC City Investment Company 309,732.00 309,732.00
AVIC Securities Company 213,000.00 213,000.00
CATIC Building Company 116,960.23 89,289.47
CATIC City Real Estate Company 99,052.32 99,052.32
CATIC Huacheng Company 73,819.68 73,819.68
CATIC Jiufang Asset Mgmt Company 378,483.84 66,666.60
Rainbow Department Store 60,000.00 60,000.00
CATIC City Development Company - 5,100.00
CATIC Changtai Company 4,064.81 4,064.81
CATIC Real Estate Company 51,014.88 -
CATIC Guanlan Property 25,401.60 -
AVIC Security Service 10,533.44 -
Ganzhou 9 Square Company 3,446.22 -
Shennan Circuits 150,000.00 -
Total 3,069,081.07 1,835,164.80
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XII. Commitments and contingencies
1. Significant commitments
(1) Operating lease commitment
As of the balance sheet date, the irrevocable operating lease contracts signed by the Company are as follows:
Item 31 Dec 2018 1 Jan 2018
Minimum lease payment for irrevocable operating lease:
The 1st year after the balance sheet date 54,382,100.37 29,799,099.00
The 2nd year after the balance sheet date 28,501,337.58 14,570,632.00
The 3rd year after the balance sheet date 12,406,400.37 7,533,388.00
Years in arrears 9,533,027.43 1,121,206.00
Total 104,822,865.75 53,024,325.00
(2) Other commitments
As of 31 December, 2018, the Company has no commitment that shall be disclosed.
2. Contingencies
(1) Contingent liabilities and financial influence formed by providing liability guarantee to other units
Refer to Note XIV. 2 for details of guarantee between parent company and subsidiaries.
(2) Other contingent liabilities and its financial influence
As of 31 December 2018, there is no other contingency that shall be disclosed by the Company.
XIII. Post balance sheet date events
1. Restricted stock incentive plan
In 2018, the Company implemented a restricted stock incentive plan (the “Incentive Plan”) to motivate and reward
individuals who contribute to the Company's operations. Incentives include company’s directors, senior
management, middle management, core technical staff and senior management and core backbone of
subsidiaries.
On 11 January, 2019, after the first extraordinary general meeting of 2019 and the fifth meeting of the ninth board
of directors, the Company intends to grant 4,224,000 A-share restricted shares to 128 incentive individuals at a
price of RMB4.40 per share. As of 11 January, 2019 (grant date), the actual number of individual received the
grant was 128, and a total of 4,224,000 restricted stocks were granted. The total amount of subscriptions received
by the incentive individuals was RMB18,585,600.00, of which RMB4,224,000.00 increased share capital and
RMB14,361,600.00 was included in capital reserve (share premium).
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
The incentive program is valid for 5 years (60 months), including a lock-up period of 2 years (24 months) and an
unlock period of 3 years (36 months).
2. Profit distribution
The resolution of 2018 profit distribution proposal has been passed on the 6th Board Meeting of the 9th Board of
Directors on 13 March 2019. It proposed to distribute cash dividend of RMB2.00 (tax inclusive) for every 10
shares held by shareholders based on the total 438,744,881 shares as at 31 December 2018. Cash dividend that
proposed to be distributed amounts to RMB87,748,976.20, no bonus shares and no capitalization of reserves.
The proposal is subject to approval from Annual General Shareholders’ Meeting.
3. Impact of the implementation of the new accounting standards from 1 January, 2019
On 31 March, 2017, the Ministry of Finance issued the "Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments (Revised in 2017)" (Caikuai [2017] No. 7) and
"Accounting Standards for Business Enterprises No. 23" Transfer of Financial Assets (Revised in 2017) (Caikuai
[2017] No. 8), "Accounting Standards for Business Enterprises No. 24 - Hedge Accounting (Revised in 2017)"
(Caikuai [2017] No. 9), and issued the “Accounting Standards for Business Enterprises No. 37 – Financial
Instruments Presentation (Revised in 2017)” (Caikuai [2017] No. 14) in 2 May, 2017, (the above-mentioned
standards are collectively referred to as the “New Financial Instruments Standards”), and the domestic list
companies shall adopt the new guidelines from 1 January, 2019. The Company will implement the above New
Financial Instruments Standards from 1 January, 2019, and will change the relevant accounting policies in
accordance with the New Financial Instrument Standards.
The following are the main contents of the accounting policy changes that will be involved:
All financial assets currently recognized shall be subsequently measured at amortised cost or fair value under the
New Financial Instrument Standards.
On the implementation date of the New Financial Instrument Standards, the business model of managing financial
assets is evaluated based on the facts and circumstances of the Company on the day, and the contractual cash
flow characteristics on the financial assets are evaluated based on the facts and circumstances at the initial
confirmation of the financial assets. Financial assets are classified into three categories: measured at amortised
cost, fair value through other comprehensive income, and fair value through profit or loss. When fair value through
other comprehensive income equity instrument is derecognised, the accumulated gain or loss previously
recognised in other comprehensive income shall be transferred from other comprehensive income to retained
earnings, but not included in current profit and loss.
Under the New Financial Instrument Standard, the Company adopts expected credit losses model to make
provision and recognize impairment of credit losses for financial assets measured at amortized cost, debt
instrument investments measured at fair value through other comprehensive income, lease receivables, contract
assets and the financial guarantee contract.
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
4. Other significant non-adjusting events after balance sheet date
(1) On 13 March, 2019, approved by the 6th meeting of the 9th Board of Directors of the Company, the Company
intends to apply credit facility for no more than RMB900,000,000 from banks in various ways including credit,
guarantee and mortgage in 2019. The above-mentioned proposal of the total credit line of the bank is subject to
the approval of the general meeting of the Company.
(2) On 13 March, 2019, approved by the 6th meeting of the 9th Board of Directors of the Company, the Company
intends to apply for a guarantee loan of not exceeding RMB 600,000,000 for the wholly owned subsidiary at
relevant banks in 2019. The line of credit is included in the actual line of bank loans applied by the Company in
2019, which is RMB 900,000,000. The above guarantee amount is subject to the approval of the general meeting
of the Company.
XIV. Other significant events
1. Deregistration of subsidiary
Station 68 Company is going through the deregistration procedure and has not finished until 31 December 2018
2. Guarantee situation
In 2018, the Company and China Merchants Bank Co., Ltd. Shenzhen Branch signed a credit facility agreement
with a credit limit of RMB200,000,000. The Company's subsidiary, Harmony Company, provided guarantee, and
the guarantee method is joint liability guarantee. The guarantee period is from the date of the guarantee
agreement (2 July, 2018) to each debt maturity date under the credit agreement plus three years. The agreement
credit limit is valid from 18 June, 2018 to 17 June, 2019. As of 31 December, 2018, the total balance of loans
under the credit agreement was RMB110,000,000.
In May 2018, the Company and China Agricultural Bank of China Shenzhen Central Branch signed a
comprehensive credit facility agreement with a credit limit of RMB200,000,000 (can be used in form of bank loan,
bank guarantee etc…). The credit limit is valid from 21 May 2018 to 21 May 2019. As of 31 Dec 2018, balance of
bank loans under this facility was RMB10,000,000. In November 2018, the Company applied to open a
RMB80,000,000 performance guarantee letter with joint liability. The beneficiaries of the performance guarantee
letter are suppliers of HARMONY Company, one of the Company’s subsidiary. The valid period of the
performance guarantee letter is from 30 December 2018 to 29 December 2019.
In July 2018, the Company's subsidiary, FIYTA Hong Kong Co., Ltd. and China Trust Commercial Bank Co., Ltd.
signed a credit line contract with a credit limit of HKD 40,000,000. The guarantee is provided by the Company, and
the expiration date of the guarantee is 31 May, 2020. The contract maturity date is 31 May, 2020. As of December
31, 2018, the total loan balance under the credit agreement is HKD18,070,000.
In December 2018, the Company's subsidiary, FIYTA Hong Kong Co., Ltd. and Nanyang Commercial Bank (China)
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Co., Ltd. Shenzhen Branch signed a credit line agreement with a credit limit of HKD80,000,000. The Company
provided guarantee, and the guarantee method was joint liability guarantee. The term of guarantee shall be two
years from the date of expiration of the repayment period of the principal claim. The credit facility is valid from 17
December, 2018 to 12 November, 2020. As of December 31, 2018, the total loan balance under the credit
agreement is HKD 30,000,000.
In December 2018, the Company signed a comprehensive financing contract with China Construction Bank Co.,
Ltd. Shenzhen Branch with a credit limit of RMB300,000,000. The Company's subsidiary, Harmony Company,
provided guarantee, and the guarantee method is joint liability guarantee. The guarantee period starts from the
date of the single credit extension and ends three years after the maturity of the debt. The contract credit facility is
valid from 4 December, 2018 to 8 March, 2020. As of 31 December, 2018, the total loan balance under the credit
agreement is RMB35,000,000.
3. Others
The proposal about acquiring wholly-owned sub-subsidiary Montres Chouriet SA has been passed in the 16th
Board Meeting of the eighth Board of Directors on 2 June 2017. The Company is going to acquire 100% share of
Swiss Company, owned by the subsidiary of the Company, FIYTA Hong Kong. The consideration of CHF12 million
was made on the basis of audited net asset as at 31 December 2016. The acquisition has not been finalized as of
31 December 2018.
XV. Notes to the Company’s financial statements
1．Note and accounts receivables
Item 31 Dec 2018 1 Jan 2018
Accounts receivable 737,636.38 6,832,006.11
(1) Accounts receivable
①Accounts receivable presented by categories:
31 Dec 2018
Category Book balance Provision for bad debts Carrying
Amount Percentage% Amount Percentage% amount
Receivables that are individually significant in - - - - -
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
31 Dec 2018
Category Book balance Provision for bad debts Carrying
Amount Percentage% Amount Percentage% amount
amount and provided for bad debt
separately
Receivables provided for bad debt by portfolio 776,459.35 100.00 38,822.97 5.00 737,636.38
Incl：Portfolio of aging 776,459.35 100.00 38,822.97 5.00 737,636.38
Portfolio of specific accounts - - - - -
Receivables that are individually insignificant
in amount but provided for bad debt - - - - -
separately
Total 776,459.35 100.00 38,822.97 5.00 737,636.38
(Continued)
1 Jan 2018
Category Book balance Provision for bad debt Carrying
Amount Percentage% Amount Provision rate % amount
Receivables that are individually significant in
amount and provided for bad debt - - - - -
separately
Receivables provided for bad debt by portfolio 6,871,446.35 100.00 39,440.24 0.57 6,832,006.11
Incl：Portfolio of aging 788,804.75 11.48 39,440.24 5.00 749,364.51
Portfolio of specific accounts 6,082,641.60 88.52 - - 6,082,641.60
Receivables that are individually insignificant
in amount but provided for bad debt - - - - -
separately
Total 6,871,446.35 100.00 39,440.24 0.57 6,832,006.11
A. Accounts receivable that are provided for bad debt based on aging analysis in aging portfolio:
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
1 Jan 2018
Aging
Amount Provision Provision Rate (%)
Within one year 776,459.35 38,822.97 5.00
② Bad debt provisions accrued, received or reversed in the current period
The amount of Bad debt provision accrued in current year is RMB16,073.16; The amount of the reversal of bad
debt provision in current year is RMB16,690.43.
③ Top 5 accounts receivable as at the year end
The amount of top 5 receivables based on year-end receivable balance is RMB776,458.78, accounts for
100% of total receivables as at 31 Dec 2018. Corresponding bad debt provision is RMB38,822.93.
2． Other receivables
Item 31 Dec 2018 1 Jan 2018
Other receivables 870,739,378.37 831,952,437.86
(1) Other receivable
①Other receivables disclosed by categories:
31 Dec 2018
Category Book balance Provision for bad debt Carrying amount
Amount Percentage % Amount Provision rate %
Other receivables that are individually
significant in amount and provided for bad - - - - -
debt separately
Other receivables provided for bad debt by
870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
portfolio
Incl：Portfolio of aging 1,426,516.07 0.16 99,751.00 6.99 1,326,765.07
Portfolio of specific accounts 869,412,613.30 99.84 - - 869,412,613.30
Receivables that are individually
insignificant in amount but provided for - - - - -
bad debt separately
Total 870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(Continued)
Category 1 Jan 2018
Book balance Provision for bad debt Carrying amount
Amount Percentage % Amount Provision rate %
Other receivables that are individually
significant in amount and provided for bad - - - - -
debt separately
Other receivables provided for bad debt by
832,005,502.89 100.00 53,065.03 0.01 831,952,437.86
portfolio
Incl：Portfolio of aging 727,550.50 0.09 53,065.03 7.29 674,485.47
Portfolio of specific accounts 831,277,952.39 99.91 - - 831,277,952.39
Receivables that are individually
insignificant in amount but provided for bad - - - - -
debt separately
Total 832,005,502.89 100.00 53,065.03 0.01 831,952,437.86
A. Other receivables that are provided for bad debt based on aging analysis:
31 Dec 2018
Aging
Other receivable Provision Provision rate (%)
Within 1 year 1,178,412.07 58,920.60 5.00
1-2 years 208,054.00 20,805.40 10.00
2-3 years - - -
Above 3 years 40,050.00 20,025.00 50.00
Total 1,426,516.07 99,751.00 6.99
B. Other receivables that are provided for bad debt based on other methods:
31 Dec 2018
Portfolio of specific accounts
Other receivable Provision Provision rate%
petty cash advanced to
431,623.24 - -
employees
Subsidiary funds within the 868,980,990.06 - -
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
31 Dec 2018
Portfolio of specific accounts
Other receivable Provision Provision rate%
scope of consolidation
Total 869,412,613.30 - -
Note: Based on historical experience, the Company’s receivables from petty cash advanced to employees,
subsidiary funds within the scope of consolidation and sales revenue between the last settlement date of the
same department store and the balance sheet date are with high recoverability and low possibility of incurring bad
debt, as a result, no bad debt provisions are provided for such receivables.
②Other receivables classified by nature
The nature of receivables 31 Dec 2018 1 Jan 2018
Related party balances within consolidated scope 868,980,990.06 831,217,702.17
Petty cash 431,623.24 60,250.22
Security deposit 248,104.00 352,131.00
Others 1,178,412.07 375,419.50
Total 870,839,129.37 832,005,502.89
③Bad debt provision accrued, received or reversed in the current period
The amount of Bad debt provision accrued is RMB46,685.97 in current year. There is no received or reversed of
bad debt provision in current year.
④The top 5 other receivable accounts as at the year end
Percentage in total closing Provision for
Company name Nature Balance Aging balance of other bad and
receivables (%) doubtful debts
TEMPORAL Company Inter-group movement 20,819,991.24 Within 1 year 2.39 -
FIYTA Sales Company Inter-group movement 229,966,446.75 Within 1 year 26.41 -
HARMONY Company Inter-group movement 488,575,998.73 Within 1 year 56.10 -
Hengdarui Company Inter-group movement 100,860,500.00 Within 1 year 11.58 -
Emile Choureit Shenzhen Inter-group movement
28,758,053.34 Within 1 year 3.30 -
Company
Total — 868,980,990.06 — 99.78 -
3． Long-term equity investments
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FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
(1) Types of long-term equity investment
31 Dec 2018 1 Jan 2018
Item
Book balance Provision Carrying amount Book balance Provision Carrying amount
Investment in
1,331,248,590.93 1,331,248,590.93 1,331,248,590.93 - 1,331,248,590.93
subsidiaries
Investment to
associated and
44,881,063.15 - 44,881,063.15 43,879,518.09 - 43,879,518.09
joint venture
companies
Total 1,376,129,654.08 1,376,129,654.08 1,375,128,109.02 - 1,375,128,109.02
(2) Investment in subsidiaries
Balance of
Provision
provision as
Invested units 1 Jan 2018 Increase Decrease 31 Dec 2018 accrued in
at 31 Dec
2018
2018
HARMONY Company 601,307,200.00 - - 601,307,200.00 - -
Harbin Company 2,184,484.39 - - 2,184,484.39 - -
Manufacturing Company 9,000,000.00 - - 9,000,000.00 - -
Technology Company 10,000,000.00 - - 10,000,000.00 - -
FIYTA Hong Kong 137,737,520.00 - - 137,737,520.00 - -
TEMPORAL Company 5,000,000.00 - - 5,000,000.00 - -
FIYTA Sales Company 450,000,000.00 - - 450,000,000.00 - -
Hengdarui Company 36,867,843.96 - - 36,867,843.96 - -
Emile Choureit Shenzhen 79,151,542.58 - - 79,151,542.58 - -
Company
Total 1,331,248,590.93 - - 1,331,248,590.93 - -
(3) Investment to associates and joint venture companies
Invested units 1 Jan 2018 Changes in 2018
129
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Investment Adjustment of
income/loss other Changes of
Addition Withdraw
recognized under the comprehensive other equity
equity method income
Associates
Shanghai Watch 43,879,518.09 - - 1,001,545.06 - -
(Continued)
Changes in 2018
Balance of
Cash dividend or
Invested units Provision for 31 Dec 2018 provision at 31 Dec
profit announced to Other
impairment 2018
be issued
Associates
Shanghai Watch - - - 44,881,063.15 -
4． Operating revenue and operating cost
2018 2017
Item
Revenue Cost Revenue Revenue
Main businesses 130,886,023.99 19,010,293.07 117,673,738.22 17,785,254.56
Other businesses 15,800.00 - 72,649.57 -
Total 130,901,823.99 19,010,293.07 117,746,387.79 17,785,254.56
5． Investment income
Item 2018 2017
Investment income from long-term equity investment measured by cost
143,000,000.00 117,000,000.00
method
Investment income from long-term equity investment measured by
1,001,545.06 455,893.22
equity method
Total 144,001,545.06 117,455,893.22
130
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
XVI. Supplementary information
1． Details of non-recurring gain or loss for the year
Item Amount Note
Disposal gain or loss of non-current assets -180,302.24
Overridden approval, or without official approval document, or incidental tax return or
-
exemption
Government grants included in current profit or loss (except for the fixed or quantitative
government grants, enjoyed in a consecutive way, which closely related to the enterprise 19,375,618.48
businesses and according to nation policies)
Charges for the possessions of funds collected from non-monetary enterprises -
Investment cost of subsidiaries, joint venture and cooperative enterprises less than the profit
-
incurred in identifiable net asset fair value of invested unit when investment
Profit and loss of non-monetary assets exchange -
Profit and loss from entrusting others to invest or manage assets -
Asset impairment provision accrued due to force majeure such as natural disasters -
Profit and loss of debt restructuring -
Enterprise restructuring expenses, such as expenses for arranging employees, integrating
-
cost
Profit and loss over fair value part accrued in transactions of unreasonable transaction price -
Current net profit and loss of subsidiaries from business combination under common control from the
-
opening period to combination date
Profit and loss incurred contingent matters unrelated to normal operating business -
Except for effective hedging business related to normal operating business, profit and loss
from changes in fair value incurred in financial assets and financial liabilities, and the
-
investment gain from disposal of financial assets, financial liabilities and available-for-sale
financial assets
Impairment provision reversal of accounts receivable under standalone impairment test 7,533,121.86
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of investment property subsequently measured in
-
fair value mode
Influence on current profit and loss caused by one-off adjustment according to requirements of -
131
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Item Amount Note
laws and regulations about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than the above items 792,842.56
Profit and loss items pursuant to the definition of non-recurring profit and loss -
Subtotal 27,521,280.66
Effect of income tax of non-recurring profit or loss 6,444,246.37
Effect of non-recurring profit or losses attributable to minority shareholders
-
(after tax)
Total 21,077,034.29
Note: “+” refer to gain or income and “-” means loss or expense.
The Company recognize non-recurring gain or loss according to “Interpretation Announcement to Information Disclosure of
Companies with Shares Offered Publicly No. 1 – Non-recurring gain or loss” (CSRC (2008) No. 43.)
2． Return on Equity (ROE) and Earnings per share (EPS)
Weighted average EPS
Profit of the reporting period
ROE % Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of the Company 7.30 0.4190 0.4190
Net profit attributable to ordinary shareholders of the Company
6.46 0.3710 0.3710
after deducting non-recurring profit or loss
Section 12 Documents Available for Inspection
I. Financial Statements signed by and under the seal of the legal representative, chief accountant and accounting
supervisors;
II. Original of the Auditors’ Report under the seal of the accounting firm and signed by and under the seals of certified
public accountants.
III. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities Times and
Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.
132
FIYTA HOLDINGS LTD. 2018 Annual Report, Full Text
Board of Directors of
FIYTA HOLDINGS LTD.
March 15, 2019
133
