FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
FIYTA Precision Technology Co., Ltd.
2019 Annual Report
March, 2020
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 1 Important Notice, Table of Contents and Definition
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby individually and
collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm
that there are neither material omissions nor errors which would render any statement misleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the accounting
department (treasurer) hereby confirm the authenticity and completeness of the financial report enclosed in this Annual
Report.
All the directors attended the board meeting for reviewing the Annual Report.
Any perspective description, such as the future plan, development strategy, etc. involved in the Annual Report shall not
constitute the Company’s substantial commitment to the investors and the investors should please pay attention to their
investment risks.
In this report, the Company has described in detail the existing macro-economic risks as well as operation risks. Investors
are advised to refer to the contents concerning risk factors possibly to be confronted with and the countermeasures in
the Company's future development prospect in Section 4 Discussion and Analysis of the Management
The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: With the total
capital stock as at the date of record as the base, the Company would distribute cash dividend at the rate of CNY 2 for
every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to the whole
shareholders and shall capitalize no reserve.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Table of Contents
Section 1 Important Notice, Table of Contents and Definition
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Chapter 4 Discussion and Analysis of the Operation
Section 5 Significant Events
Section 6 Change of Shares and Particulars about Shareholders
Section 7 About the Preferred Shares
Section 8 About the Convertible Bonds
Section 9 Directors, Supervisors, Senior Executives and Employees
Chapter 10 Corporate Governance
Section 11 Bond Related Information
Section 12 Financial Report
Section 13 Documents Available for Inspection
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Definitions
Refers
Terms to be defined Definition
to
Refers
This Company, the Company or FIYTA FIYTA Precision Technology Co., 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
Precision Technology Co. Shenzhen FIYTA Precision Technology Co., Ltd.
to
Refers
Science & Technology Development 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
CMPO China Merchants Property Operation & Service Co., Ltd.
to
Refers
Rainbow Ltd. Rainbow Department Store Co., Ltd.
to
Refers
Shennan Circuit Shennan Circuit Co., Ltd.
to
Refers
AVIC Property AVIC Property Management Co., Ltd.
to
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 2 Company Profile and Financial Highlights
I. Company Information
Short form of the stock FIYTA and FIYTA B Stock Code 000026 and 200026
Short form of the stock after
FIYTA
the change (if any)
Stock Exchange Listed with Shenzhen Stock Exchange
Company Name in Chinese FIYTA Precision Technology Co., Ltd.
Abbreviation of the
飞亚达公司
Company Name in Chinese
Company name in English
FIYTA Precision Technology Co., Ltd.
(if any)
Abbreviation of the
Company name in English FIYTA
(if any)
Legal Representative Huang Yongfeng
Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the
518057
Registered Address
Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the
518057
Registered 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 Pan Bo Zhang Yong
18th Floor, FIYTA Technology Building, 20th Floor, FIYTA Technology Building,
Liaison Address Gaoxin S. Road One, Nanshan District, Gaoxin S. Road One, Nanshan District,
Shenzhen Shenzhen
Tel. 0755-86013669 0755-86013669
Fax 0755-83348369 0755-83348369
Email investor@fiyta.com.cn investor@fiyta.com.cn
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
III. Information Disclosure and Place where the Regular Reports are Prepared
Name of the media chosen by the Company for
Securities Times and Hong Kong Commercial Daily
disclosing information
Internet Web Site Designated by China Securities
Regulatory Commission for Publishing the annual www.cninfo.com.cn
report:
Place where the Company’s Annual Report was
The Company's Strategic Operation Department
prepared and is placed for inquiry
IV. Changes in Registration
Organization Code 91440300192189783K
Changes in principal business activities
No change
since listing (if any)
Changes in the controlling shareholder
No change
over the past years (if any)
V. Other Relevant Information
The CPAs appointed by the Company
Name of the CPAs Grant Thornton LLP
Office address 5/F, SciTech Building, No.22 JianGuoMenWai Avenue, Chaoyang District, Beijing
Names of the CPAs as the
Dong Xu, Meng Junfeng
authorized signatories
The sponsor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
The financial advisor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
VI. Summary of Accounting/Financial Data
Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years?
No
Increase/decrease in the
2019 2018 reporting year over the 2017
previous year
Turnover in CNY 3,704,210,734.90 3,400,450,599.90 8.93% 3,345,809,703.98
Net profit attributable to the Company’s
215,909,014.15 183,835,095.29 17.45% 140,216,258.28
shareholders, in CNY
Net profit attributable to the Company’s
shareholders less the non-recurring 199,678,661.09 162,758,061.00 22.68% 123,918,527.75
items, in CNY
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Net cash flows arising from operating
444,820,768.61 331,627,789.62 34.13% 564,954,561.97
activities, in CNY
Basic earnings per share (CNY/share) 0.4943 0.4190 17.97% 0.3196
Diluted earnings per share
0.4943 0.4190 17.97% 0.3196
(CNY/share)
Return on equity, weighted average
8.21% 7.30% 0.91% 5.79%
(%)
Increase/decrease of the
end of the reporting year
End of 2019 End of 2018 End of 2017
over the end of the
previous year
Total assets, in CNY 3,760,923,285.37 3,599,691,650.26 4.48% 3,579,789,692.90
Net assets attributable to the
Company’s shareholders (owner’s
2,654,533,766.99 2,570,134,782.90 3.28% 2,467,967,361.20
equity attributable to the Company’s
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
Turnover 893,389,751.73 891,646,268.50 954,666,662.24 964,508,052.43
Net profit attributable to the Company’s
64,359,084.46 59,136,376.44 55,235,304.48 37,178,248.77
shareholders
Net profit less the non-recurring
profit/loss attributable to the 61,517,359.28 52,109,787.41 55,447,049.05 30,604,465.35
Company’s shareholders
Net cash flows arising from operating
10,730,388.47 148,284,261.90 145,713,264.14 140,092,854.10
activities
Are the above financial indicators or their totals significantly different from the financial indicators disclosed by the
Company in the quarterly and semi-annual reports?
No
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
IX. Extraordinary items and amount
In CNY
Items Amount in 2019 Amount in 2018 Amount in 2017 Note
Gain/loss from disposal of non-current assets,
including the part offset from the provision for -926,118.60 -180,302.24 7,321,993.36
impairment of assets.
The government subsidies included in the
profits and losses of the current period
( (excluding government grants which are closely 18,428,906.18 19,375,618.48 17,508,255.98
related to the Company’s business and conform
with the national standard amount or quantity)
Reversal of the impairment provision
for receivables and contract assets which have 7,533,121.86 1,903,056.74
been tested individually for impairment
Other non-operating income and expenses other
3,353,916.43 792,842.56 1,238,972.99
than the aforesaid items
Less: Amount affected by the income tax 4,626,350.95 6,444,246.37 8,669,699.37
Amount affected by the minority
3,004,849.17
shareholders (after tax)
Total 16,230,353.06 21,077,034.29 16,297,730.53 --
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
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 3 Business Summary
I. Main business the Company operated in the reporting period
(1) Principal Business and Operation Model
FIYTA is engaged in main business of watch brand management and brand watch retails. In respect of the technological
nature, it belongs to precision technology industry. Depending on its accumulated technology and industrial advantages in
the high-end precision technology field, the Company is also actively exploring business growth opportunities in new fields
such as precision technology and smart watches.
(2) Development Status of the Industry and the Company's Position Therein
Watches bear both characteristics of precision technology and fashion: high-end watchmaking is supported by precision
technology, material technology and craftsmanship as the core. In addition, it is necessary to meet consumers' demands
for brands, aesthetics and artistic and cultural connotation. The global watch industry has developed for more than two
hundred years, and it has a long history. Technological innovation and design creativity have always pushed the brand
forward.
Globally, the high-end luxury watch market is mainly controlled by the Swiss watch brands, which are mainly concentrated
in brand groups such as Swatch, Richemont, LVMH and Kering. In addition, independent brands such as Patek, Philippe
and Rolex also have great influence. In the medium and low end market, it is mainly composed of partial Swiss watch
brands, Japanese brands, fashion brands and home-made brands, with fashion style and classic style as the main
direction. In recent years, smart watches have developed rapidly, and have won the favor of tech-savvy and sports-savvy
citizens.
According to the "China Luxury Consumption Report 2019" released by McKinsey China, Chinese’s luxury consumption
last year at home and abroad reached CNY 770 billion, accounting for one-third of global luxury consumption. From 2012
to 2018, more than half of the growth in the global luxury market came from China. Based on the Swiss export market
statistics, Mainland China ranked the third; Hong Kong has ranked the first for a long time, which shows that Chinese
people still mainly consume foreign-made watches, and the domestic market has great potential for growth. According to
an estimate made by the Chinese Academy of Industry Economy Research, the home-made watch market size is about
CNY 70 billion.
The Brand "FIYTA" is one of China's most well-known watch brands that have grown up under the market economy after
China’s reform and opening-up, and its sales scale has always been at the forefront of the market. The Company has
always practiced the original intention of building an international watch brand, relying on the precision manufacture
technology, brand influence and channel deep ploughing in the aviation industry, and continued to innovate and
breakthrough. The Brand "FIYTA" is one of the world's three major space watch brands. In 2017, the brand was selected
in the "Made in China" brand plan by the Ministry of Commerce; "FIYTA won the "China Grand Awards for Industry" in
2018, and was honorably put on the "70 Top Brands for the 70th Anniversary of the Founding of New China" list in 2019,
and honorably won the "People's Ingenuity Brand Award 2019".
At the same time, the Company introduced Swiss watches to the domestic market earlier, and met the diversified
demands of consumers for watch brands through the HARMONY watch retail business channel. After more than two
decades’ development, Harmony World Watches has been operating brand watch retail business in more than 60 cities
across the country and has nearly 200 chain stores. It has established aboundant brand resources and good operating
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
ability, and its market share ranks domestically forefront in the watch retail industry.
II. Significant Movements in Prime Assets
1. Significant Movements in Prime Assets
Inapplicable
2. Major Overseas Assets
Inapplicable
III. Analysis on Core Competitiveness
I. Adhering to Brand Leadership and Enjoying Rich Experience in Brand Management
Since its establishment, FIYTA has always adhered to the brand leadership and has taken it as its own duty to create
outstanding domestic brands. It has achieved a number of firsts in brand building in the industry, marketing
communications, product design, etc. and has a solid brand operation foundation. In the 1990s, with the CCTV news
broadcast announcing "FIYTA Telling Time for you", the Company successfully established the popularity and influence of
the FIYTA Brand in China; the Company actively promoted the development of globalization and by participating in the
preparation of international standards ,entered BASELWORLD etc., strengthen exchanges and interactions with
outstanding Swiss brands, played an active role on the world watch stage, and persistently increased global influence.
II. Construction of Deep Ploughed Channel and Creating Excellent Channel Management Ability
FIYTA persistently constructed the deep ploughed channel, and provided a continuous source of power for brand
development with high-quality channels and refined operation capability. The Company has formed a global sales network
with the domestic market as its core, and FIYTA brand channels have been distributed in more than 30 countries and
regions around the world, with more than 3,000 business outlets; Harmony World Watches has deeply ploughed and
upgraded its retail services channels, and has established strategic cooperative relations with domestic high-end
shopping malls and department store chain entities; in recent years, the Company has also made great efforts to promote
the expansion of e-commerce channels and achieved full coverage of cooperation on mainstream e-commerce platforms.
The Company has always devoted itself to building the ability of outstanding channel operation, powerful team, excellent
services, and providing customers with the best consumption experience in all aspects. The “Three-Level Marketing”,
“Perfect Sales”, “Outstanding Operation” etc. have already been deposited as the core base work logic of channel
operation. At the same time, the Company is accelerating digital construction, actively embracing the development of the
times and keeping up with changes in consumer spending habits.
III. Building the Advantages of the Leading Core technology Based on Precision Technology
Relying on the precision manufacturing technology, material technology and talent advantages of the aviation industry,
FIYTA is continuously committed to building the strength of precision technology; has successively built advanced R & D,
production technology and manufacturing technology platforms, and has established R & D and production bases in
Shenzhen and Switzerland respectively; and has established professional watchmaking capabilities, including
self-made driving units of watches and key components manufacturing, space watch research and development and
high-end watchmaking techniques, etc., and achieved continuous breakthroughs in research and development and
application of new materials, new processes and new technologies. Up to now, the Company has 2 national high-tech
enterprises, a national enterprise technology center and a national industrial design center, and is a national technology
innovation demonstration enterprise, has been granted 446 patents, including 4 honorable mentions of the Chinese
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
patents, 1 gold award of China Design and 4 honorable mentions of China design; the Company has taken lead in
preparation of up to 55% of the national watch industry standards and has actively participated in preparation of the
international industrial standards and took lead and participated in preparation of many international standards.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Chapter 4 Discussion and Analysis of the Operation
I. General
In 2019, the growth of domestic retail consumption slowed down and was clearly differentiated. Domestic brands
encountered pressure from consumer upgrading, channel upgrading, and smart wears, etc. Facing the challenges, the
Company took “cost reduction and efficiency improvement” and “innovation and development” as its main line, calmly
responded to the downward pressure on the market, and jointly promoted continuous breakthroughs in operating
performance to further enhance its competitiveness. In the reporting period, the Company realized revenue amounting to
CNY 3,704.2107 million with year-on-year growth of 8.93% and realized total profit amounting to CNY 276.2336 million
with a year-on-year growth of 19.48%. The Company once again achieved a historical record in revenue and total profit.
During the reporting period, the Company carried out the following key work.
I. Making solid progress in improving quality and efficiency, and achieving further breakthrough in high-quality
development
During the reporting period, the Company focused on strengthening cost control, lean supply chain construction, and so
on to solidly promote cost reduction and efficiency, continued to optimize the organization's operating model, and actively
promoted the construction of driving power mechanism and full coverage. Thanks to the implementation of various tasks
to improve quality and efficiency, the Company has continuously improved its efficiency is assets, operation, personnel,
and organization. During the reporting period, the Company's inventory turnover rate reached 1.23 times, an increase of
0.13 times over the same period last year; the core channel yield increased by more than 10% year-on-year, and per
capita profit increased by more than 20% year-on-year. While continuing to make breakthrough in high-quality
development, the Company has further strengthened its organizational capabilities.
II. Promoting the Reshaping of the Brand "FIYTA" and Further Enhancing Brand Influence
During the reporting period, the Brand “FIYTA” followed the trend of consumption upgrading, continued to focus on
customer demand, concentrated itself on professional watchmaking, refined aesthetics and Chinese culture, strengthened
the brand's core DNA, and actively promoted the brand reshaping around the "Brand Power, Product Power, and Channel
Power" . The reporting period was the 9th consecutive year when the Brand “FIYTA” participated in BASELWORLD. The
Company continued to exhibit a number of heavyweight new products in the same hall with the internationally renowned
brands in Hall 1; also successfully held the "FIYTA" Time Medal Brand Ceremony to further convey the professional
watchmaking spirit and independent aesthetic design brand concept to consumers and partners, continued to deduct the
artistic exploration of "Flying", and interpreted the extraordinary spiritual outlook of making progress; launched in
succession new products such as the “Master Series” Dunhuang-themed wristwatch, “Mach series” "J-20" joint limitation
edition watch, "Attack-11" joint design wristwatch, Heartstring Series, and “Good Character” Series, etc. which have been
really loved by consumers. In 2019, the Brand “FIYTA” was also the only watch brand listed on the "70 Brands at the 70th
Anniversary of the Founding of New China" and won the "People's Ingenuity Brand Award 2019". The brand has been
continuously improved in the industry status and brand influence.
III. Further Strengthening Investment in R & D and design, and Continuing to Build Technological Hard Power
During the reporting period, the Company further increased investment in R&D technology around the design and
development of its own driving units, manufacture of key components, R & D and application of new materials, and the
construction of high-end watchmaking processes, enhanced core technology advantages, and shortened the gap with the
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
global advanced level. In 2019, the Company continued to make breakthroughs in independent R & D of the driving units
and application of new materials, launched in succession three self-developed driving units, and realized batch application
of such new materials as Grade-5 titanium, Damask steel, etc. The Company applied for 37 patents throughout the year,
including 26 invention and utility model patents, and took a lead or participated in the formulation and revision of 4 national
and industry standards. The company was identified as the "National Intellectual Property Advantageous Demonstration
Enterprise in 2019".
IV. Consolidating Channel Advantages and Continuing to Promote Channel Upgrading and Efficiency
Improvement
During the reporting period, the Company continued to promote the adjustment and upgrading of watch retail channels
and the enhancement of efficiency. The Company actively promoted own brand retail channels to be stationed in shopping
malls, “HARMONY” seized the growth opportunities of domestic medium and high-end watch brands at the price of over
CNY 10,000, continued to strengthen the core business district layout, enhanced excellent operations and the single store
output, average customer unit price, sales gross profit rates have steadily increased. Meanwhile, the Company is also
rapidly promoting the pilot application of digital retail solutions to accelerate the digitization of stores, membership,
merchandise and management.
V. Cultivating New Growth Points, and Continuing to Maintain Rapid Growth of New Businesses
During the reporting period, the Company continued to promote the development of precision technology business and
the exploration of smart watch business, relying on the precision technology advantages accumulated by professional
watchmaking and a relatively mature industrial foundation. In 2019, the Company continued deep ploughing of the core
market of precision technology business, opened business cooperation with leading companies in various industries, and
its operating income increased by 29% year-on-year; the Company continued to invest resources to accelerate the smart
watch business layout. The "Jeep" brand smart watches and professional teams jointly promoted iterative product
development and technology upgrading. The Company launched three new products, including smart whole realm F02,
F02 ESIM version and strong battery life A01, of which the ESIM version has become first smart watches officially certified
by China Unicom, and has laid a technological advantage in the field of communications. The Company has continued to
maintain quick growth in smart watch business. The Company continued to maintain a quick growth in its smart watch
business.
Movement of the Major Financial Items in 2019:
Balance sheet items
Ending Opening Variation
Items Cause of the movement
balance balance proportion
Increase of the net flow-in mainly from
Monetary capital 316,668,565.09 164,828,059.97 92.12%
operating activities.
Increase of the receivables arising from
Notes receivable 10,596,431.31 7,051,846.85 50.26% growth of the precision technology
business scale.
Mainly due to the construction-in-process
Construction-in-process - 12,041,126.00 -100.00%
converted into fixed assets.
Mainly due to the increase of the payments
Advance receipts: 23,433,463.57 16,459,445.00 42.37% received and influence of partial
outstanding receivables.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Mainly due to the influence from the
Taxes payable 24,064,803.00 55,923,171.92 -56.97% increase of procurements and the tax policy
at the end of the year.
Mainly due to the increase of the equity
incentive money payable to employees,
Other payables 119,616,721.63 71,819,930.30 66.55%
refurbishment deposit and the down
payment for lease.
Other comprehensive Mainly due to movement of the translation
-940,209.09 -5,442,139.78 82.72%
income balance of foreign currency statements
Profit Statement Items
Amount Amount
incurred in incurred in the Variation
Items Cause of the movement
the reporting previous proportion
period period
Return on Mainly due to the influence from the profit increase
1,787,907.10 1,001,545.06 78.51%
Investment of Shanghai Watch Industry in the current year.
Loss from
Mainly due to the influence from the implementation
impairment of -16,640,961.07 0 Inapplicable
of the new financial instrument standards.
credit
Mainly due to the decrease of the provision for the
Loss from price falling of inventories and influence from the
impairment of -4,295,134.47 -3,264,956.18 31.55% presentation caused by the implementation of the
assets new financial instrument standards in the current
year.
Income from Mainly due to the loss arising from the disposal of
disposal of -926,118.60 -181,302.24 -410.81% the auxiliary facilities and equipment of Xi’an FIYTA
assets Building in the current year.
mainly due to increase of the compensation
Non-operating
4,754,105.30 1,446,357.53 228.70% received by some “HARMONY” stores in the
income
reporting year.
Non-operating Mainly due to increase of the loss arising from
1,400,188.87 652,514.97 114.58%
expenditures adjustment of partial stores.
Cash Flow Statement Items
Amount Amount
incurred in the incurred in the Variation
Items Cause of the movement
reporting previous proportion
period period
Mainly due to the increase of the
Other operation activity related
93,832,379.85 49,628,593.69 89.07% property margin received in the
cash receipts
current year.
Mainly due to increase of the
Net cash flows arising from
444,820,768.61 331,627,789.62 34.13% recoveries arising from the sales
operating activities
growth in the current year and at
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
the same time decrease of the
tax payment.
Net cash received from disposal Mainly due to increase of the
of fixed assets, intangible assets 626,107.64 53,280.03 1075.13% fixed assets disposed in the
and other long-term assets current year.
Mainly due to decrease of
repayment of the bank loans
Net cash flow arising from
-126,755,283.74 -207,831,024.31 39.01% over the same period of the
capital-raising activities
previous year in the current
year.
Influence of the change of
Mainly due to the influence of
exchange rate on the cash and 468,366.93 702,253.60 -33.31%
the change of exchange rate.
cash equivalent
Mainly due to net flow-in of
operating activities and at the
same time decrease of
Net increase of cash and cash
152,470,505.12 -22,324,831.35 782.96% repayment of the bank loans
equivalents
over the same period of the
previous year in the current
year.
Mainly due to net flow-in of
operating activities and at the
same time decrease of
Ending balance of cash and cash
315,093,565.09 162,623,059.97 93.76% repayment of the bank loans
equivalents
over the same period of the
previous year in the current
year.
II. Analysis on the Principal Business
2. Revenue and Costs
(1) Composition of Revenues
In CNY
2019 2018
Year-on-year
Proportion in the Proportion in the
Amount Amount increase/decrease
revenue revenue
Total operating
3,704,210,734.90 100% 3,400,450,599.90 100% 8.93%
revenue
Based on sectors
Watches 3,463,608,966.45 93.50% 3,193,280,311.30 93.91% 8.47%
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Precision
technology 91,341,945.34 2.47% 70,742,449.85 2.08% 29.12%
business
Leases 132,005,033.07 3.56% 118,323,969.04 3.48% 11.56%
Others 17,254,790.04 0.47% 18,103,869.71 0.53% -4.69%
Based on products
Watch brand
1,110,678,489.04 29.98% 1,102,309,603.80 32.42% 0.76%
business
Watch retail and
2,352,930,477.41 63.52% 2,090,970,707.50 61.49% 12.53%
services
Precision
technology 91,341,945.34 2.47% 70,742,449.85 2.08% 29.12%
business
Leases 132,005,033.07 3.56% 118,323,969.04 3.48% 11.56%
Others 17,254,790.04 0.47% 18,103,869.71 0.53% -4.69%
Based on regions
South China 1,823,927,995.51 49.24% 1,536,911,140.58 45.20% 18.67%
Northwest China 586,521,631.97 15.83% 588,628,213.03 17.31% -0.36%
Northeast China 204,386,707.45 5.52% 249,884,958.89 7.35% -18.21%
East China 502,541,659.80 13.57% 439,292,101.70 12.92% 14.40%
Northeast China 230,662,172.16 6.23% 269,671,243.83 7.93% -14.47%
Southwest China 356,170,568.01 9.62% 316,062,941.87 9.29% 12.69%
(2) Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating Profit
In CNY
Year-on-year Year-on-year
Year-on-year
increase/decrea increase/decrea
increase/decrea
Operating se of operating se of gross
Operating cost Gross profit rate se of operating
revenue revenue over profit rate over
costs over the
the previous the previous
previous year
year year
Based on sectors
3,463,608,966.4 2,109,978,800.4
Watches 39.08% 8.47% 10.41% -1.08%
5 5
Precision
technology 91,341,945.34 73,717,603.23 19.29% 29.12% 24.03% 3.30%
business
16
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Leases 132,005,033.07 28,178,169.64 78.65% 11.56% 25.38% -2.36%
Others 17,254,790.04 5,333,158.72 69.09% -4.69% 490.00% -25.92%
Based on products
Watch brand 1,110,678,489.0
330,952,343.65 70.20% 0.76% -0.95% 0.51%
business 4
Watch retail and 2,352,930,477.4 1,779,026,456.8
24.39% 12.53% 12.82% -0.20%
services 1 0
Precision
technology 91,341,945.34 73,717,603.23 19.29% 29.12% 24.03% 3.30%
business
Leases 132,005,033.07 28,178,169.64 78.65% 11.56% 25.38% -2.36%
Others 17,254,790.04 5,333,158.72 69.09% -4.69% 490.00% -25.92%
Based on regions
1,823,927,995.5 1,097,057,005.3
South China 39.85% 18.67% 25.29% -3.18%
0 1
Northwest
586,521,631.97 340,309,728.35 41.98% -0.36% -3.72% 2.03%
China
Northeast China 204,386,707.45 118,165,568.05 42.19% -18.21% -13.85% -2.92%
East China 502,541,659.80 280,319,276.42 44.22% 14.40% 6.99% 3.86%
Northeast
230,662,172.16 163,383,316.18 29.17% -14.47% -12.90% -1.27%
China
Southwest
356,170,568.01 217,972,837.73 38.80% 12.69% 22.46% -4.88%
China
While adjustment of the statistical caliber for the principal business data took place in the reporting period, the principal
business data with the statistical caliber adjusted at the end of the reporting period in the latest year.
Inapplicable
(3) Is the physical sales income greater than the service income
Yes
Classified based Year-on-year
Items In CNY 2019 2018
on sectors increase/decrease
Sales volume pcs 1,027,428 1,032,886 -0.53%
Brand watches Output pcs 783,328 1,085,929 -27.87%
Inventory pcs 1,092,662 1,326,997 -17.66%
Note to the cause of the year-on-year movement of the relevant data by over 30%
Inapplicable
17
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(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
Classified 2019 2018 Year-on-year
based on Items Proportion in Proportion in increase/decrea
Amount Amount
sectors operating costs operating costs se
Goods 1,779,026,456.8 1,576,862,763.4
80.24% 79.09% 12.82%
purchase cost 0 3
Raw materials 299,121,692.67 13.49% 298,467,328.86 14.97% 0.22%
Labor costs 25,707,020.23 1.16% 25,602,142.25 1.28% 0.41%
Depreciation
Watches 920,871.70 0.04% 1,124,500.75 0.06% -18.11%
expense
Water and
463,093.67 0.02% 582,727.38 0.03% -20.53%
electricity fees
Rent 474,202.58 0.02% 2,100,422.82 0.11% -77.42%
Others 4,265,462.80 0.19% 6,258,567.16 0.31% -31.85%
Raw materials 53,786,506.65 2.43% 39,129,570.45 1.96% 37.46%
Labor costs 13,444,932.42 0.61% 12,770,838.35 0.64% 5.28%
Depreciation
Precision 1,478,005.14 0.07% 1,440,723.29 0.07% 2.59%
expense
technology
Water and
business 760,873.00 0.03% 1,443,140.38 0.07% -47.28%
electricity fees
Rent 11,389.02 0.00% 275,118.68 0.01% -95.86%
Others 4,235,897.00 0.19% 4,373,549.85 0.22% -3.15%
Depreciation
14,296,604.24 0.64% 13,170,394.47 0.66% 8.55%
expense
Leases
Labor costs 3,012,991.57 0.14% 2,983,488.04 0.15% 0.99%
Others 10,868,573.83 0.49% 6,320,565.41 0.32% 71.96%
Others Purchase cost 5,333,158.72 0.24% 903,932.64 0.05% 490.00%
In CNY
Classified 2019 2018 Year-on-year
based on Items Proportion in Proportion in increase/decrea
Amount Amount
products operating costs operating costs se
18
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Raw materials 299,121,692.67 13.49% 298,467,328.86 14.97% 0.22%
Labor costs 25,707,020.23 1.16% 25,602,142.25 1.28% 0.41%
Depreciation
920,871.70 0.04% 1,124,500.75 0.06% -18.11%
Watch brand expense
business Water and
463,093.67 0.02% 582,727.38 0.03% -20.53%
electricity fees
Rent 474,202.58 0.02% 2,100,422.82 0.11% -77.42%
Others 4,265,462.80 0.19% 6,258,567.16 0.31% -31.85%
Watch retail and Goods 1,779,026,456.8 1,576,862,763.4
80.24% 79.09% 12.82%
services purchase cost 0 3
Raw materials 53,786,506.65 2.43% 39,129,570.45 1.96% 37.46%
Labor costs 13,444,932.42 0.61% 12,770,838.35 0.64% 5.28%
Depreciation
Precision 1,478,005.14 0.07% 1,440,723.29 0.07% 2.59%
expense
technology
Water and
business 760,873.00 0.03% 1,443,140.38 0.07% -47.28%
electricity fees
Rent 11,389.02 0.00% 275,118.68 0.01% -95.86%
Others 4,235,897.00 0.19% 4,373,549.85 0.22% -3.15%
Depreciation
14,296,604.24 0.64% 13,170,394.47 0.66% 8.55%
expense
Leases
Labor costs 3,012,991.57 0.14% 2,983,488.04 0.15% 0.99%
Others 10,868,573.83 0.49% 6,320,565.41 0.32% 71.96%
Others Purchase cost 5,333,158.72 0.24% 903,932.64 0.05% 490.00%
Note
Inapplicable
(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 530,793,966.40
19
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Proportion of the total sales to the top five customers
14.33%
in the total sales of the year
Proportion of the total sales to the related parties in
1.99%
the top five customers in the total sales of the year
Information of the top 5 customers
No. Customers Sales (in CNY) Proportion in the total sales of the year
1 No. 1 209,811,676.89 5.66%
2 No. 2 89,619,644.27 2.42%
3 No. 3 82,366,986.57 2.22%
4 No. 4 75,354,578.53 2.03%
5 No. 5 73,641,080.14 1.99%
Total -- 530,793,966.40 14.33%
Other Information about the major customers
Inapplicable
Major suppliers
Total amount of purchase from top five suppliers, in
1,541,389,456.67
CNY
Proportion of the purchase amount from the top five
68.84%
suppliers in the Company’s total purchase amount
Proportion of the purchase amount from the related
parties in the top five suppliers in the Company’s 0.00%
total purchase amount
Information about the top 5 suppliers
Proportion in the total purchases of the
No. Suppliers Purchase amount, in CNY
year (%)
1 No. 1 719,330,483.52 32.12%
2 No. 2 376,061,627.53 16.79%
3 No. 3 185,872,844.80 8.30%
4 No. 4 149,488,963.15 6.68%
5 No. 5 110,635,537.67 4.94%
Total -- 1,541,389,456.67 68.84%
Other information about the major suppliers
Inapplicable
3. Expenses
In CNY
20
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Year-on-year
2019 2018 increase/decreas Note to significant changes
e
Sales costs 865,792,078.61 856,970,173.10 1.03% Inapplicable
Administrative
240,619,989.04 219,162,525.85 9.79% Inapplicable
expenses
Financial expenses 32,815,277.57 35,916,240.16 -8.63% Inapplicable
R & D expenditures 45,057,740.25 47,350,342.82 -4.84% Inapplicable
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 and professional capacity construction of precision technology. The Company continuously increased
investment in personnel, equipment, raw materials, 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 made a
number of scientific research achievements.
In 2019, the Company’s total investment in R & D amounted to CNY 45,057,740.25, taking 1.70% of the net assets as
audited in the most recent period and taking 1.22% of the operation revenue as audited in the most recent period. During
the reporting period, the Company applied for 37 patents, of which 26 were patents of invention and utility models and was
recognized as a “National Intellectual Property Advantageous and Demonstration Enterprise in 2019”. As of the end of
2019, the Company has won 4 honorable mentions of China Invention Patent , 1 gold award of China Design and 6
honorable mentions of China Design; lead and participated in formulation and revision of 4 national and industry
standards, and issued 5 national standards and 4 industry standards formulated or revised by the Company as a leader or
a participant.
Investment in R & D
2019 2018 Variation proportion
Number of R & D staff
55 47 17.02%
(persons)
Proportion of R & D staff in
1.10% 0.91% 0.19%
total employees
Amount of investment in R &
45,057,740.25 47,350,342.82 -4.84%
D, in CNY
Proportion of investment in R
1.22% 1.39% -0.17%
& 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 0.00% 0.00% 0.00%
total investment in R & D
Cause(s) of significant change of the total investment in R & D in the operating revenue
Inapplicable
21
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
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
Year-on-year
Items 2019 2018
increase/decrease
Subtotal of cash flow in from
4,157,510,367.81 3,864,826,375.05 7.57%
operating activity
Subtotal of cash flow out
3,712,689,599.20 3,533,198,585.43 5.08%
from operating activity
Net cash flows arising from
444,820,768.61 331,627,789.62 34.13%
operating activities
Subtotal of cash flow in from
626,107.64 53,280.03 1,075.13%
investment activity
Subtotal of cash flow out
166,689,454.32 146,877,130.29 13.49%
from investment activity
Net cash flows arising from
-166,063,346.68 -146,823,850.26 13.10%
investment activities
Subtotal of cash flow in from
718,848,326.76 741,192,340.23 -3.01%
fund raising activity
Sub-total cash flow paid for
845,603,610.50 949,023,364.54 -10.90%
financing activities
Net cash flow arising from
-126,755,283.74 -207,831,024.31 -39.01%
capital-raising activities
Net increase of cash and
152,470,505.12 -22,324,831.35 782.96%
cash equivalents
Note to the major influencing factors for the significant change in the relevant year-on-year data
1. Net cash flow arising from operating activities amounting to CNY 444,820,768.61 was mainly due to increase of the
recovered receivables brought about from revenue growth in the reporting year; and in addition, the tax payment
decreased due to the tax rate deduction; 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 amounted to CNY -166,063,346.68 in the reporting year, while it was
CNY -146,823,850.26 in the same period of the previous year, increased by increased by CNY 19,239,496.42. It was
mainly due to increase of the renewed investment in stores and counters in the reporting year over the same period of the
previous year.
3. Net cash flow arising from investment activities amounted to CNY -126,755,283.74 in the reporting year, while it was
22
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
CNY -207,831,024.31 in the same period of the previous year, decreased by increased by CNY 81,075,740.57. It was
mainly due to increase of the bank loans, the equity incentice payment received and the payment for B-shares buy-back.
4. The net increase in cash and cash equivalents in the reporting year was RMB 152,470,505.12, which was mainly due to
the increase in sales income in the reporting year and the increase of operating cash inflows brought by the current tax
policy.
Note to the cause of significant difference between the net cash flow arising from the Company's business activities and
the net profit of the reporting year during the reporting period.
Inapplicable
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
End of 2019 Beginning of 2019 Increase/d
Note to significant
Proportion in Proportion in ecrease in
Amount Amount changes
total assets total assets proportion
Monetary fund 316,668,565.09 8.42% 164,828,059.97 4.58% 3.84% Inapplicable
Accounts
397,471,106.98 10.57% 370,545,656.61 10.29% 0.28% Inapplicable
receivable
1,808,820,089. 1,782,306,301.7
Inventories 48.11% 49.51% -1.40% Inapplicable
92 0
Investment-orie
407,503,307.24 10.84% 377,319,433.03 10.48% 0.36% Inapplicable
nted real estate
Long-term
equity 46,423,837.85 1.23% 44,881,063.15 1.25% -0.02% Inapplicable
investment
Fixed assets 363,997,098.94 9.68% 425,649,562.85 11.82% -2.14% Inapplicable
Construction-in-
0.00 0.00% 12,041,126.00 0.33% -0.33% Inapplicable
process
Short term loans 567,908,833.21 15.11% 547,118,452.97 15.20% -0.09% Inapplicable
Long-term
4,321,680.00 0.11% 4,517,110.00 0.13% -0.02% Inapplicable
borrowings
2. Assets and liabilities measured based on fair value
Inapplicable
23
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
3. Restriction on rights in the assets ended the reporting period
A property owned by Switzerland based Montres Chouriet SA with net value of CNY 14,303,281.92 was used as a
collateral for the overseas long term loan amounting to CNY 4,321,680.00.
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
Cause
Accumu Earning of the
lative s failure in
Industry Amount amount accumul arriving
Is it an
involved invested actually atively at the Date of Disclos
Way of investm Project Predicte
Project by the during invested Capital realized planned disclosu ure
investm ent in progres d
name investm the by the source by the progres re (if index (if
ent fixed s earning
ent reportin end of end of s and any) any)
assets?
project g period the the predicte
reportin reportin d
g period g period earning
s
FIYTA
Watch F521 http://w
Self-ow March
Building Self-buil compre 1,538,8 13,579, 100.00 Inapplic ww.cnin
Yes ned 0.00 0.00 10,
supporti t hensive 69.57 995.57 % able fo.com.
capital 2017
ng retail cn/
works
1,538,8 13,579,
Total -- -- -- -- -- 0.00 0.00 -- -- --
69.57 995.57
24
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Note: The 13th session of the Eighth Board of Directors reviewed and approved the proposal for increase of the
investment in the construction project of FIYTA Watch R&D and Manufacture Center by CNY 34.0509 million. For the
detail, refer to Announcement of the Resolution of the 13th Session of the Eighth Board of Directors 2017-003. Ended the
reporting period, the accumulative amount of investment in the project was CNY 13.5799 million.
4. Financial assets investment
(1) Portfolio investment
Inapplicable
(2) Investment in derivatives
Inapplicable
5. Application of the raised capital
Inapplicable
VI. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
2. Sales of Significant Equity
Inapplicable
VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit
by over 10%.
In CNY
Company Compan Main Registered Operating
Total assets Net assets Turnover Net profit
name y type businesses capital profit
Purchase &
Shenzhen sale and
Harmony repairing
World Subsidia service of 600,000,00 1,623,987,67 805,951,349. 2,392,437,23 134,785,193. 101,671,961.
Watches ries watches 0 2.56 68 9.57 44 28
Center Co., and
Ltd. component
s
25
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Design, R
& D and
sales of
FIYTA Sales Subsidia 450,000,00 576,676,896. 404,471,429. 996,867,641.
watches 3,573,262.01 1,221,729.19
Co., Ltd. ries 0 21 53 17
and
component
s & parts
Manufactur
Shenzhen e and
FIYTA production
Subsidia 254,579,034. 106,651,495. 307,732,689. 31,748,219.7 29,488,676.3
Precision of watches 10,000,000
ry 20 44 14 1 6
Technology and
Co., Ltd. component
s
Production
and
Shenzhen
machining
FIYTA
Subsidia of 99,019,753.8 77,342,234.0 130,557,299. 11,023,085.0 10,361,038.3
Technology 10,000,000
ry sophisticat 0 6 76 5 7
Developme
ed
nt Co., Ltd.
component
s and parts
Trading of
FIYTA watches
(Hong Subsidia and 137,737,52 254,914,114. 182,699,439. 118,849,208. 11,819,796.8
9,987,282.65
Kong) ry accessorie 0 17 44 03 2
Limited s and
investment
Design, R
& D and
Shiyuehui
sales of
Boutique Subsidia 27,020,978.1 -3,988,745.9 13,986,701.4 -1,982,917.3
watches 5,000,000 -196,647.46
(Shenzhen) ry 7 8 6 1
and
Co., Ltd.
component
s & parts
Purchase &
Liaoning
sale of
Hengdarui
Subsidia watches 139,696,558. 41,352,198.3
Commerce 51,000,000 9,018,870.04 1,718,936.53 1,289,204.26
ry and 87 1
& Trade
component
Co., Ltd.
s & parts
26
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Harbin Purchase &
Harmony sale of
World Subsidia watches
500,000 3,691,064.55 3,677,292.18 4,004,580.34 75,288.34 44,880.75
Watch ry and
Distribution component
Co., Ltd. s & parts
Design, R
& D and
Emile
sales of
Chouriet Subsidia 126,875,780. 63,589,446.6 94,330,651.0
watches 41,355,200 779,924.42 581,630.22
(Shenzhen) ry 95 1 6
and
Limited
component
s & parts
Production
Shanghai Mutual and sales
Watch sharehol of watches 130,653,631. 107,992,125. 101,660,357.
15,350,000 8,268,038.55 6,171,098.80
Industry ding and 79 18 29
Co., Ltd. company component
s & parts
Acquisition and disposal of subsidiaries in the reporting period
Inapplicable
Note to the principal mutual shareholding companies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Expectation on future development of company
I. Development trend of the industry
Looking forward to the future, innovation-driven, high-quality, brand and personalization shall continue to lead the
mainstream of watch consumption, consumer capacity expansion, technology upgrading, the rise of made-in-China and
China's smart manufacturing shall also accelerate the development of watch industry. The symbolization presentation of
the quality living of consumers shall further occupy the mind of consumers, and the growth prospects are expectable;
fashion products and smart watches will further develop and evolve, and continue to win the favor of specific consumer
groups; compared with Swiss brands, although domestic brands still have significant gap in professional watchmaking
and brand influence, they also have great potential and prospects. On the one hand, they shall benefit from the
continuous improvement of China's quality manufacture capacity and level driven by technology and innovation; on the
one hand, made-in-China and Chinese brands incorporated with more Chinese culture shall further demonstrate "cultural
confidence" and further win the favor of Chinese and global consumers. In addition, the Internet has brought about
changes in commercial ecology and models. New retail formats and new way of play shall also provide more and more
direct motivation for consumption. In view of the above judgment, the Company is constantly optimistic about the
development of the industry as well as the long-term development prospects of the Company's watch brand business and
27
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
famous brand watch retail business.
The Company has achieved continuous growth in operating scale and profitability in the past three years, and 2020 shall
be a year full of expectations. However, the novel coronavirus outbreak at the beginning of the year produced a serious
impact on the market. The Company has actively taken various measures to respond and further promoted the change of
business model and the growth of team capabilities. The Company is expecting the business to be recovered to the
normal operating level in the second quarter; however there still exist uncertain factors, and the Company shall pay close
attention to them and respond.
II. Development Strategy
For more than 30 years, the Company has always focused on the watch business. Relying on aviation precision
manufacture and technology innovation, the professional watchmaking ability with high-end precision technology as its
core has become an important kernel of the differentiated competitiveness of the Brand “FIYTA”. The Company takes the
"inheritance of ‘serving the country with aviation’ and implement the" big country brand "strategy as the goal of the whole
Company's common struggle for a long period of time. The Company has continuouly taken the improvement of its
high-end precision manufacture capability and enhancement of technology innovation as the base, increased investment
in R&D technology, strengthened independent driving core design and development, key component manufacture,
material R&D and application, high-end watchmaking technology, digitalization and other professional capacity building,
formed the advantages of core technology, and comprehensively strengthened brand power, product power, and channel
power as the core comprehensive and differentiated competitiom to realize the transformation and upgrading of brand
business. At the same time, the Company will also accelerate the development of precision technology business and
smart wear business based on the core capability of precision technology, cultivate new business growth points, and
promote the Company's overall business to transform and upgrade towards high-end precision technology.
III. Key Work in 2020
1. Continuing to take "brand power, product power, channel power" as the core to strengthen the advantage of
competition
In 2020, the Company shall continue to make solid efforts in product planning, terminal image, marketing methods, traffic
conversion and customer service, create distinctive characteristics of the brand, and strengthen "brand influence";
continue to optimize the whole process of product R & D, design, technology, quality, and supply chain, and strengthen
"product competitiveness"; focus on promoting the adjustment of channel structure and the improvement of store
operation ability, promote the station of high-quality channels in shopping malls, etc., empower first-line store operations,
strengthen refined operations, and practically improve "channel connectivity".
2. Strengthening Investment in Precision Technology and Constructing Hard Core Strength
In 2020, the Company shall continue to increase investment in R & D and design, continue to improve the Company's
technology level, and achieve technology breakthroughs in key areas such as independent driving unit design and
development, manufacture of key components, R&D of new materials, and building high-end watchmaking process
capability, and consolidate the Company's core competitive advantages, gradually narrow the gap with Swiss advanced
watchmaking technology, and provide sustainable driving force for the brand and the Company's sustainable
development.
3. Embracing the Development of the Times and Accelerating Digital Transformation
28
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
In 2020, the Company shall continue to accelerate the digital transformation of its core business. The Company shall
quickly create a customer-centered digital operation system, promote the digitalization of members, products, stores, and
management, and use membership operations as an important support for brand building, product development, and
channel operations; use digitalization to promote operational excellence and provide customers with better quality
products and services. At the same time, the Company shall accelerate embracement of various new retail forms such as
"live webcasting" in the Internet era. With the help of information technology, it will continue to innovate retail models and
service models, and actively promote the establishment of a full-scenario, highly efficient retail and service network.
4. Accelerating Innovation Drive and Actively Cultivating New Growth Points
In 2020, the Company shall continue to rely on precision technology as its core watchmaking technology and industrial
foundation, and inject more resources and energy to accelerate the cultivation of new growth points. The Company shall
continue to promote precision technology business to accelerate technological upgrading, make deep ploughing of the
core market and cover new target market areas; the “Jeep” brand smart watch business will be based on customer
demand research, strengthen product technology development, and continue to introduce products with more products
with technology advanced superiority, gradually increase the scale and build influence in the industry.
IV. Capital Necessary for Future Development
According to the Company's business development plan and financial budget planning in 2020 and for the purpose of
satisfying the demand on investment and operation capital and at the same time timely seizing the development
opportunity possibly brought about from the market change, the Company plans to apply for financing credit line with
amount not exceeding CNY 1.2 billion by various means, including credit, guarantee, loan to subsidiaries, mortgage, etc.
in 2020.
V. Risks Possibly to be Confronted with
1. The sudden outbreak of COVID-19 in early 2020 shall have a serious negative impact on the industry. Facing the
epidemic, the Company has quickly adjusted its operating strategy, adhered to the value creation orientation,
implemented multiple measures, practiced limit cost control and strengthened cash flow management. During the
epidemic, the Company has promoted whole-staff marketing, actively established direct linkage with customers through
WeChat and live broadcast, and increased investment in e-commerce channels to minimize market impact. The Company
has also actively organized epidemic prevention and control, proactively communicates with supply chain and business
partners, strives for support from all parties, helps each other, and overcomes difficulties together. The Company, as an
organization affiliated to AVIC and acting as the representative of all AVIC subsidiries, donated CNY 50 million to Hubei
Province, and sent 39 medical team members to undertake social responsibilities. Starting from March, as the stores have
returned to work, the market has also gradually got recovered. It is expected that the business shall be recovered to the
normal operating level in the second quarter; however there still exist uncertain factors, and the Company shall pay close
attention to them and respond.
2. With the rapid development of information technology and the rise of the Internet economy, change in the retail format
shall be intensified, and channel competition for consumers shall become more intense. The Company shall continue to
strengthen research on consumer shopping psychology and shopping behavior, accelerate digital transformation and
omni-channel construction, and actively explore new models such as "live webcasting".
3. Smart wear is currently at a stage of rapid development. With the rapid development and deep application of 5G,
29
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
flexible display, and the Internet of Things technology, the functions of smart wear products will become more and more
abundant in the future, and the application scenarios will become more diversified. The Company firmly believes in the
importance of traditional watches to the customers, and has also accelerated the exploration and development of smart
watch business.
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
Index of Basic Information on the
Reception time Way of reception Types of Visitors Received
Investigation and Survey
http://irm.cninfo.com.cn/ircs/company
June 19, 2019 Field survey Institution /companyDetail?stockcode=000026&
orgId=gssz0000026
http://irm.cninfo.com.cn/ircs/company
December 23, 2019 Field survey Institution /companyDetail?stockcode=000026&
orgId=gssz0000026
http://irm.cninfo.com.cn/ircs/company
December 24, 2019 Field survey Institution /companyDetail?stockcode=000026&
orgId=gssz0000026
Number of reception 3
Number of institutions received 16
Number of persons received 17
Number of other visitors received 0
Is there any important information disclosed,
No
revealed or leaked to the public?
30
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 5 Significant Events
I. Profit Distribution for Common Stock and Conversion of Capital Reserve into Share Capital
Preparation, Implementation or Adjustment of the Policy for Common Stock Profit Distribution, Especially the Policy for
Cash Dividend Distribution in the Reporting Period
The Company's 2018 Profit Distribution Plan was reviewed and approved at the 6th session of the Ninth Board of
Directors held on March 13, 2019 and 2018 Annual General Meeting held on , June 19, 2019. It was resolved 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.
In view of the impact of the completion of the granting of A-share restricted stock and the repurchase of domestically listed
foreign shares (B shares), the final implementation plan for the 2018 annual equity distribution is: based on the number of
the Company's allocable number of shares being 436,968,881, the Company would distribute cash dividend to all
shareholders at the rate of CNY 2.008128 for every 10 shares (with tax inclusive) , 0 bonus shares and would not convert
any capital reserve into capital.
The implementation of the profit distribution plan was finished on August 14, 2019. For the detail, refer to the
Announcement on Implementation of the Profit Distribution for Year 2018 (2019-040).
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 dividend distribution standard and proportions
Yes
explicit and clear?
Are the relevant decision-making procedures and
Yes
mechanism complete?
Have the independent directors done their duties and
Yes
brought their role into full play?
Do minority shareholders have opportunity to fully express
their opinions and claims? Has their legal interest been fully Yes
protected?
In case the cash dividend distribution policy has been
adjusted or altered, do the conditions and procedures Inapplicable
comply with the law and are they transparent?
The profit distribution plan or proposal and the preplan or proposal of conversion of the capital reserve into share capital in
the past three years (with the reporting period inclusive):
According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared
specific cash dividend distribution plan after the Board of Directors and the Shareholders’ General Meeting have reviewed
31
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
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 2017: With the total share capital of 438,744,881 shares as at December 31, 2017 as the base,
the Company distributed to the whole shareholders cash dividend at CNY 2.00 for every 10 shares (with tax inclusive), 0
bonus share for every 10 shares; converted no reserve into share capital.
Profit Distribution Plan in 2018: With the total share capital of 438,744,881 shares as at December 31, 2018 as the base,
the Company distributed to the whole shareholders cash dividend at CNY 2.00 for every 10 shares (with tax inclusive), 0
bonus share for every 10 shares; converted no reserve into share capital.
(1) As of the date of application for equity distribution, the Company implemented 2018 A-share restricted stock incentive
plan (the first phase), and granted 4,224,000 A-share restricted shares to 128 incentive objects. Upon completion of the
granting and registration for listing, the Company’s share capital increased to 442,968,881 shares.
(2) The Company has repurchased 6,000,000 shares of domestically listed foreign shares (B shares) through the special
account for repurchase. According to the relevant provisions of the Implementation Rules of Shenzhen Stock Exchange
on Repurchase of Shares by Listed Companies, the Company’s repurchased shares in the special account would not be
qualified for participating in this equity distribution.
In view of the above reasons, the base of the shares available for distribution in the Company's equity distribution in
2018 can be adjusted to 436,968,881 shares. According to the relevant provisions of the Main Board Information
Disclosure Memorandum of Shenzhen Stock Exchange No. 1-Issues Related to Regular Report Disclosure, in compliance
with the principle of the total amount of cash dividends remaining unchanged, the Company's final implementation plan for
the 2018 annual equity distribution is: based on the Company's distributable shares of 436,968,881 shares, the Company
would distribute to all shareholders at CNY 2.008128 in cash (including tax) for every 10 shares, 0 bonus shares and
would convert no public reserve into capital.
Profit Distribution Plan in 2019: As of the disclosure date, the Company's total share capital was 442,968,881 shares, and
the Company's total capital base for profit distribution would not exceed 442,968,881 shares in maximum.
(1) According to the Company's "Proposal on the Repurchase of the Company's Partial Domestically Listed Foreign
Shares (B Shares)", the Company would, within the validity period stipulated in the repurchase program (April 23, 2019 to
April 23, 2020), continuously implement the B share repurchase. It is expected that by the time of implementing the profit
distribution plan, the Company's repurchase period would expire and the cancellation of the repurchased shares would be
completed. At that time, the total share capital base would decrease.
(2) According to the “Proposal for Repurchase and Cancellation of the Partially Restricted Shares Involved in 2018 A
Share Restricted Stock Incentive Plan (Phase 1)” approved at the 15th and 16th Sessions of the Ninth Board of Directors,
the Company is going to repurchase and cancel a total of 67,000 A-share restricted shares that have been granted with
the restriction not released to the three former original incentive objects who have left the Company in the 2018 A-share
32
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
restricted stock incentive plan (Phase 1). This matter needs to be submitted to the Company's General Meeting for
consideration and implementation. It is expected that by the time the profit distribution plan is implemented, the Company
has completed the relevant repurchase cancellation procedures, at which time the total share capital base will be reduced.
In the event of subsequent departure of other incentive objects, the Company shall conduct repurchase-cancellation in
accordance with regulations, and the Company's total share capital shall be reduced.
For these reasons, with the total capital stock as at the date of record as the base, the Company would distribute cash
dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), with the total cash dividend to be distributed not
exceeding CNY 88,593,776.2 , and no bonus share to the whole shareholders and would capitalize no reserve.
(3) According to the "Implementation Rules of Shenzhen Stock Exchange on the Repurchase of Shares by Listed
Companies", if a listed company has repurchased the shares by means of centralized competitive bidding with the
consideration in cash, the amount paid for the repurchase in the very year shall be deemed as cash dividends which shall
be put in the calculation based on the relevant proportion of cash dividends for the year. By the end of the reporting period,
the Company accumulatively repurchased 10,010,000 shares of the Company’s own stock by means of the centralized
competitive bidding through its special securities account for repurchase, has already paid total amount of
HK$ 60,289,369.30 (excluding the stamp duty, commission and other trading costs equal to CNY 53,524,330.10). This
amount of money shall be included in the cash dividend distribution in 2019.
The accumulative amount of cash dividend distributed in the past three years took 176.93% 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
Ratio of the
Proportion of
total amount
the cash
of cash
Net profit dividend
dividend
attributable to Ratio of the distributed in
(including
the net profit Amount of other way(s)
other way(s))
Company’s attributable to cash dividend in the net Total amount
Amount of in the net
Year of shareholders the distributed in profit of cash
Cash profit
Dividend in the Company’s other way(s) attributable to dividend
Dividend attributable to
Distribution consolidated shareholders (such as the (including
(including tax) the
statements of taken in the shares Company’s other way(s))
Company’s
the year of consolidated repurchased) shareholders
shareholders
dividend statements of ordinary
of ordinary
distribution shares in the
shares in the
consolidated
consolidated
statements
statements
88,593,776.2 215,909,014. 53,524,330.1 142,118,106.3
2019 41.03% 24.79% 65.82%
0 15 0 0
33
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
87,748,976.2 183,835,095. 87,748,976.2
2018 47.73% 0.00 0.00% 47.73%
0 29 0
87,748,976.2 140,216,258. 87,748,976.2
2017 62.58% 0.00 0.00% 62.58%
0 28 0
In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders of ordinary
shares were positive but no common stock cash dividend distribution proposal has been put forward.
Inapplicable
II. Profit Distribution and Conversion of Capital Reserve into Share Capital in the Reporting Period
Bonus shares distributed at the rate of ___
0
(share) for every 10 shares
Dividend distributed at the rate of CNY___ for
2
every 10 shares (with tax inclusive)
Number of shares converted for every 10
0
shares (shares)
Share capital base for the dividend distribution Based on the total number of shares on the date of record when the
preplan (shares) profit distribution plan is implemented in the future
Total cash dividend distributed (with tax
88,593,776.20
inclusive)
Amount of cash dividend distributed in other
53,524,330.10
way(s) (such as shares repurchased)
Total amount of cash dividend (including other
142,118,106.30
way(s))
Profit available for distribution (CNY) 710,223,150.82
Proportion of the cash dividend in the total
100%
profit available for distribution (%)
Cash Dividend Distribution for the Reporting Year
Others
Detailed information for profit distribution or conversion of capital reserve into share capital preplan
34
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
The Company's 2019 Profit Distribution Plan was reviewed and approved at the 16th session of the Ninth Board of
Directors held on March 18, 2020 and is going to be brought to 2019 Annual General Meeting for review. It was planned
that with the Company’s total share capital as at the date of record for future implementation of the profit distribution plan
as the base, the Company shall distribute cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive)
with the total cash dividend not exceeding CNY 88,593,776.2, distribute bonus share at the rate of 0 share for every 10
shares to the whole shareholders and capitalize no reserve into capital. The reasons are as follows:
(1) According to the Company's "Proposal on the Repurchase of the Company's Partial Domestically Listed Foreign
Shares (B Shares)", the Company would, within the validity period stipulated in the repurchase program (April 23, 2019
to April 23, 2020), continuously implement the B share repurchase. It is expected that by the time of implementing the
profit distribution plan, the Company's repurchase period would expire and the cancellation of the repurchased shares
would be completed. At that time, the total share capital base would decrease.
(2) According to the “Proposal for Repurchase and Cancellation of the Partially Restricted Shares Involved in 2018 A
Share Restricted Stock Incentive Plan (Phase 1)” approved at the 15th and 16th Sessions of the Ninth Board of
Directors, the Company is going to repurchase and cancel a total of 67,000 A-share restricted shares that have been
granted with the restriction not released to the three former original incentive objects who have left the Company in the
2018 A-share restricted stock incentive plan (Phase 1). This matter needs to be submitted to the Company's General
Meeting for consideration and implementation. It is expected that by the time the profit distribution plan is implemented,
the Company has completed the relevant repurchase cancellation procedures, at which time the total share capital base
will be reduced. In the event of subsequent departure of other incentive objects, the Company shall conduct
repurchase-cancellation in accordance with regulations, and the Company's total share capital shall be reduced.
The profit distribution plan is subject to review and approval of the General Meeting before implementation.
III. Implementation of Commitments
1. Commitments finished in implementation by the Company, shareholders, actual controller, acquirer, directors,
supervisors, senior executives or other related parties in the reporting period and commitments unfinished in
implementation at the end of the reporting period
Inapplicable
2. There existed profit anticipation for the Company’s assets or projects while the reporting period was still within the
duration of the profit anticipation. The Company made explanation on whether the assets or projects reached the
anticipated profit and the cause
Inapplicable
IV. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties
Inapplicable
V. Explanation of the Board of Directors, the Supervisory Committee and Independent Directors (if any) on the
“Qualified Auditor’s Report” issued by the CPAs in the Reporting Period
Inapplicable
VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and Accounting Method in
Comparison with the Financial Report of the Previous Year
The Ministry of Finance issued a series of new standards for financial instruments on March 31, 2017 and May 2, 2017,
35
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
and required domestic listed companies to take effect from January 1, 2019. According to the regulations, the Company
would implement the aforesaid new rules and make change of the corresponding accounting policies. However, this would
produce no significant impact on the Company's current and previous net profit, total assets and net assets. For details,
please refer to the “Announcement on Change of the Accounting Policies 2019-026” disclosed by the Company on the
Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn/ on April 23, 2019.
On April 30, 2019, the Ministry of Finance promulgated the “Circular on Amending and Issuing the General Corporate
Financial Statement Templates for the Year 2019” (CAI KUAI [2019] No. 6) (hereinafter referred to as the “Amendment
Circular”), according to which general corporate financial statement templates should be amended and non-financial
enterprises are required to implement the Accounting Standards for Business Enterprises to compile the 2019 interim
financial statements and annual financial statements, as well as financial statements for subsequent periods, in
accordance with the requirements of the Accounting Standards for Business Enterprises and the Amendment Circular.
According to the regulations, the Company would implement the aforesaid new rules and make change of the
corresponding accounting policies. However, this would produce no significant impact on the Company's current and
previous net profit, total assets and net assets. For details, please refer to the “Announcement on Change of the
Accounting Policies 2019-044” disclosed by the Company on the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn/ on August 15, 2019.
VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period Necessary to be Restated
Retrospectively
Inapplicable
VIII. Explanation on the Changes in the Scope of the Consolidated Statements in Comparison with the Financial
Report of the Previous Year
Inapplicable
IX. Engagement/Disengagement of CPAs
CPAs currently engaged by the Company
Name of the domestic CPAs Grant Thornton LLP
Remuneration to the domestic CPAs (in CNY 10,000) 110
Successive years of the domestic CPAs offering auditing
1
services
Name of the certified public accountants from the domestic
Dong Xu, Meng Junfeng
CPAs
Successive years of the domestic CPAs offering auditing
1
services
Has the CPAs been changed for the reporting period?
Yes
Has the CPAs been replaced during the auditing?
No
36
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Have the examination and approval procedures been implemented in replacing the CPAs
Yes
Detailed explanation on the replacement/change of the CPAs
The 12th session of the Ninth Board of Directors held on October 16, 2019 and the 3rd Extraordinary General Meeting in
2019 held on December 30, 2019 reviewed and approved the Proposal on the Replacement of the Accounting Firm,
according to which the Company would appoint Grant Thornton LLP as the Company’s auditor of the Financial Report
2019 and the internal control auditor to replace Ruihua Certified Public Accountants LLP for a term of one year. For details,
please refer to the “Announcement on the Change of the CPAs 2019-055” disclosed by the Company on the Securities
Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn/ on October 18, 2019.
Employment of CPAs, financial consultant or sponsor for auditing the internal control
During the reporting period, the Company paid the audit fee amounting to CNY 700,000.00 for auditing the financial report
and CNY 300,000.00 for auditing the internal control to Ruihua Certified Public Accountants LLP,
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
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 restricted stock was all granted and registered for listing by January 30, 2019.
As three original incentive objects of the above incentive plan, namely Wu Yue (27,000 shares granted), Yang Shuzhi
(20,000 shares granted), Lin Yichao (20,000 shares granted) have resigned, according to the 2018 A-Share Restricted
Stock Incentive Plan (Phase I) (Draft Revision), they have no longer met the incentive conditions. The 15th session of
37
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
the Ninth Board of Directors held on January 10, 2020 and the 16th Session of the Board of Directors held on March 18,
2020 reviewed and approved the "Proposal on the Repurchase and Cancellation of Partial Restricted Shares in the 2018
A-Share Restricted Stock Incentive Plan (Phase I), according to which the Company was going to repurchase and cancell
67,000 A-share restricted shares held by the aforesaid three incentive objects, already granted but not yet lifted. The said
repurchase proposal is still necessary to be submitted to the General Meeting for approval before implementation.
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
Does there exist non-operating current associated rights of credit and liabilities
No
5. Other Significant Related Transactions
The 6th session of the Ninth Board of Directors held on March 13, 2019 and 2018 Annual General Meeting held on June
19, 2019 reviewed and approved the Proposal on Prediction of Regular Related Transactions in 2019. For the detail, refer
to the Announcement on the Resolution of the 6th Session of the Ninth Board of Directors No. 2019-012, the
Announcement on the Resolution of 2018 Annual General Meeting No. 2019-036 and the Announcement on the
Prediction of the Regular Related Transactions in 2019 No. 2019-014. During the reporting period, the cumulative
transaction amount of the Company's related transactions related to its daily operations was within the expected range of
the year.
Inquiry on the website for disclosing the provisional report concerning significant related transactions
Description of the provisional announcements Date of disclosure Disclosure website
Announcement on the Resolution of the 6th Session of the
March 15, 2019 www.cninfo.com.cn
Ninth Board of Directors, 2019-012
Announcement of the Prediction of the Regular Related
March 15, 2019 www.cninfo.com.cn
Transactions in 2019, 2019-012
Announcement on the Resolution of 2018 Annual General
Thursday, June 20, 2019 www.cninfo.com.cn
Meeting, 2019-036
XVII. Important Contracts and Implementation
1. Custody, Contacting and Leases
38
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(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
Guarantee to
announcement Actual amount of Type of Implementati
Names of Guarantees Guarantee line Date of occurrence Guarantee period related
on the guarantee guarantee on status
party?
guarantee line
Inapplicable
Total amount of outward guarantee
Total amount of outward guarantee approved
0 actually incurred in the report period 0
in the report period (A1)
(A2)
Total ending balance of outward
Total amount of outward guarantee already
0 guarantee at the end of the report 0
approved at the end of the report period (A3)
period (A4)
Guarantee to the subsidiaries
Date of the
Guarantee to
announcement Actual amount of Type of Implementati
Names of Guarantees Guarantee line Date of occurrence Guarantee period related
on the guarantee guarantee on status
party?
guarantee line
Monday, December Guarantee with
Harmony March 15, 2019 20,000 10,000 1 year No No
30, 2019 joint responsibility
Saturday, April 20, Guarantee with
the Hong Kong Co. March 15, 2019 1,701.98 1 year No No
2019 joint responsibility
Thursday, August 22, Guarantee with
the Hong Kong Co. March 15, 2019 360.14 1 year No No
2019 joint responsibility
3,583.12
Monday, September Guarantee with
the Hong Kong Co. March 15, 2019 360.14 1 year No No
23, 2019 joint responsibility
Thursday, October 31, Guarantee with
the Hong Kong Co. March 15, 2019 288.11 1 year No No
2019 joint responsibility
39
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
23,583.12 subsidiaries actually incurred in the 12,710.37
approved in the reporting period (B1)
reporting period (B2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee to
approved at the end of the reporting period 23,583.12 the subsidiaries at the end of the 12,710.37
(B3) reporting period (B4)
Guarantee among the subsidiaries
Date of the
Guarantee to
announcement Actual amount of Implementati
Names of Guarantees Guarantee line Date of occurrence Type of guarantee Guarantee period related
on the guarantee on status
party?
guarantee line
Inapplicable
Total amount of guarantee to the
Total guarantee quota to the subsidiaries
0 subsidiaries actually incurred in the 0
approved in the reporting period (C1)
reporting period (C2)
Total guarantee quota to the subsidiaries Total balance of actual guarantee to
approved at the end of the reporting period 0 the subsidiaries at the end of the 0
(C3) reporting period (C4)
Total amount of guarantees (i.e. Total of the previous three major items)
Total amount of outward guarantee
Total guarantee quota to the subsidiaries
23,583.12 actually incurred in the report period 12,710.37
approved in the reporting period (A1)
(A2)
Total amount of guarantees already approved Total ending balance of guarantees
23,583.12 12,710.37
at the end of the report period (A3) at the end of the report period (A4)
Proportion of the actual guarantees in the Company’s net assets (namely A4+B4 + C4) 4.79%
where
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 the
0
asset-liability ratio exceeding 70% (E)
Guarantee with total amount exceeding 50% of the net assets (F) 0
Total amount of the aforesaid three guarantees (D+E+F) 0
For the guarantee not yet due, guarantee responsibility incurred in the reporting period
Inapplicable
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
40
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(2) Outward guarantee against regulations
Inapplicable
3. Entrusting a Third Party to Manage the Cash Assets
(1) Finance Management on Commission
Inapplicable
(2) Entrusted Loan
Inapplicable
4. Other Important Contracts
Inapplicable
XVIII Social Responsibilities
1. Implementation of social responsibilities
"The Social Responsibility Report " was already published on www.cninfo.com.cn on March 20, 2020.
2. Implementation of the social responsibility of precise poverty relief
During the reporting period of half a year, the Company had neither precise poverty relief work nor follow-up precise
poverty relief plan necessary to be carried out.
3. Environmental Protection
Does the Company or any of its subsidiaries belong to a key pollutant discharging unit as announced to the public by the
environmental protection authority?
Yes
Description of
Pollutant
Name of the the major Number of Distribution of
Way of Discharging Discharge Total discharge Total discharge Over-dischargin
Company or its pollutants or discharging the discharging
discharging concentration Standards in volume volume verified g
Subsidiary specific outlets outlets
Force
pollutant
At the port of
Shanghai Watch Nickel and Nickel ﹤ 0.01,
Intermittent and effluent Nickel:0.1;
Industry Co., chromium 1 chromium ﹤ 2640 tons/year 3960 tons/year None
interruption treatment chromium:0.3
Ltd. effluent 0.01
equipment
Construction and operation of the pollution prevention and control facilities
Shanghai Watch Co., Ltd. reconstructed the clean production facility in 2016 and added 2 sets of equipment in 2018 for
the purpose of ensuring discharging of nickel and chromium effluent to comply with the Emission Standard of Pollutants
for Electroplating during 2018. Up to now, the facility has been operating normally and its emission has never exceeded
the limit as specified by the standard. The Company's online monitoring terminal has been docked with the government
monitoring platform for timely testing. It complies with the standard in terms of emission factors.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Environmental impact assessment on construction projects and other environmental protection administrative
licensing
In 2018 Yangpu District Environmental Protection Bureau of Shanghai organized and held the Clean Production Auditing
and Assessment Seminar of Shanghai Watch Co., Ltd. where the company's clean production work was assessed,
audited and approved. Shanghai Watch Co., Ltd. has passed the pollution discharge verification organized by Yangpu
District Environmental Protection Bureau of Shanghai and has received the Pollutant Discharge Permit issued by the
said authority.
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 name: http://xxgk.eic.sh.cn.
Other information in connection with the environmental protection
None
XIX. Notes to Other Significant Events
1. Change the Company Name and the Abbreviation of A-share Securities
The 14th Session of the Ninth Board of Directors held on December 9, 2019 and the 3rd Extraordinary General Meeting
2019 held on December 30, 2019 reviewed and approved the Proposal on Change of the Company Name to FIYTA
Precision Technology Co., Ltd. and the abbreviation of its A-share securities to FIYTA. For the detail, refer to the
"Announcement on Resolutions of the 14th Session of the Ninth Board of Directors 2019-062" and "Announcement on
Resolutions of the 3rd Extraordinary General Meeting 2019-066” and" Announcement on Change of the Company Name
and the Abbreviation of A-share Securities 2020-006" disclosed in the Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn.
2. Change of the Controlling Shareholder’s Equity
On October 2, 2019, the Company received a notice from AVIC International Holdings Limited, the Company’s controlling
shareholder, according to which AVIC International Holding Corporation, AVIC International Shenzhen Company Limited
42
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
and AVIC International Holdings Limited were going to be merged. Up to now, the implementation of the acquisition and
merger has not been completed. After the completion of the merger, AVIC International will directly hold 162,977,327
shares of the Company (taking 36.79% of the total shares of the Company) and become the Company's controlling
shareholder. The ultimate actual controller of the Company remains unchanged. For details of the progress, refer to the
Announcement on Changes in the Controlling Shareholder’s Equity 2019-049, the Summary of Acquisition Report
2019-050, and the Announcement on the Application of the Actual Controller for Prolonging the Reply to the Exemption
Offer Acquisition Feed-back Opinions 2020-002 and the Announcement on the Application of AVIC International Holding
Corporation for the Reply to the Exemption Offer Acquisition Feed-back Opinions 2020-008 “ disclosed on the Securities
Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
3. Amendment of the Articles of Association
The 6th Session of the Ninth Board of Directors held by the Company on March 13, 2019, the 9th Session of the Ninth
Board of Directors held on June 6, 2019, and the 13th Session of the Ninth Board of Directors held on November 19, 2019,
the 14th Session of the Ninth Board of Directors held on December 9, 2019, the 2018 Annual General Meeting held on
June 19, 2019, and 2019 3rd Extraordinary General Meeting held on December 30, 2019 respectively reviewed and
approved the "Proposal on Amendment of the Articles of Association". For the detail, refer to the relevant announcements
disclosed in the Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn.
4. Matters concerning Repurchase of the Company’s Partial Domestically Listed Foreign Shares (B Shares)
The 7th session of the Ninth Board of Directors held on April 4, 2019 and 2019 2nd Extraordinary General Meeting held on
April 23, 2019, reviewed and approved the “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares
(B-shares) in the Company, and subsequently the Company disclosed the repurchase report and published a series of
announcements on the progress in accordance with relevant regulations. For detail of the above, please refer to the
relevant announcements disclosed by the Company in the Securities Times, Hong Kong Commercial Daily and
www.cninfo.com.cn.
5. Appointment of Directors, Supervisors and Senior Executives
2019 1st Staff Representative Congress held on April 12, 2019 reviewed and approved the Proposal on Election of the
Staff Representative Supervisor of the Ninth Supervisory Committee; Mr. Fang Jiasheng was elected the staff
representative supervisor of the Ninth Supervisory Committee. For the detail, refer to the Announcement on the
Resolution of the Staff Representative Congress No. 2019-021 disclosed on the Securities Times, Hong Kong
Commercial Daily and www.cninfo.com.cn.
The 11th session of the Ninth Board of Directors held on September 29, 2019 reviewed and approved the Proposal on
Appointment of Deputy GMs of the Company; Mr. Tang Haiyuan and Mr. Xu Chuangyue were appointed as deputy GMs of
the Company. For the detail, refer to the Announcement on the Resolution of the 11th session of the Ninth Board of
Directors No. 2019-047 disclosed on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
The 13th session of the Ninth Board of Directors held on November 19, 2019 reviewed and approved the Proposal on the
Change of the Secretary of the Board, and Mr. Pan Bo was appointed as the Secretary of the Board. For the detail, refer
to the Announcement on the Resolution of the 13th session of the Ninth Board of Directors No. 2019-059 disclosed on the
Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
43
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
XX. Significant Events of the Company's Subsidiaries
Inapplicable
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
Proportio New Bonus converte Proportio
Quantity Others Sub-total Quantity
n issuing shares d from n
reserve
4,224,00 4,224,00 4,604,51
I. Restricted shares 380,513 0.09% 1.04%
0 0 3
1. Shares held by the state 0 0.00% 0 0 0 0.00%
2. State corporate shares 0 0.00% 0 0 0 0.00%
4,224,00 4,224,00 4,604,51
3. Other domestic shares 380,513 0.09% 1.04%
0 0 3
Including: Domestic
0 0.00% 0 0 0 0.00%
corporate shares
Shares held by 4,224,00 4,224,00 4,604,51
380,513 0.09% 1.04%
domestic natural persons 0 0 3
4、Foreign invested shares 0 0.00% 0 0 0 0.00%
Including: Foreign
0 0.00% 0 0 0 0.00%
corporate shares
Shares held by
0 0.00% 0 0 0 0.00%
foreign natural persons
438,364, 438,364,
II. Unrestricted shares 99.91% 0 0 98.96%
368 368
356,716, 356,716,
1. CNY ordinary shares 81.30% 0 0 80.53%
368 368
2. Foreign invested shares 81,648,0 81,648,0
18.61% 0 0 18.43%
listed in Mainland China 00 00
44
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
3. Foreign invested shares
0 0.00% 0 0 0 0.00%
listed abroad
4. Others 0 0.00% 0 0 0 0.00%
438,744, 4,224,00 4,224,00 442,968,
III. Total shares 100.00% 100.00%
881 0 0 881
Cause of the change of shares
During the reporting period, the Company finished awarding the A-share restricted stock as specified in its stock incentive
program (Phase I) and registering the same for listing. Upon completion of the share awarding, the Company's total
capital stock increased to 442,968,881 shares.
Approval of Change of the Shares
The 3rd session of the Ninth Board of Directors and 2019 1st Extraordinary General Meeting held respectively on
November 12, 2018 and January 11, 2019 decided to start 2018 A-Share Restricted Stock Incentive Program (Phase I).
The 5th session of the Ninth Board of Directors held on January 11, 2019 decided to award 4.224 million A-share
restricted shares to 128 persons eligible for the incentive.
Transfer of the Shares Changed
The persons eligible for the incentive in the Company's 2018 A-Share Restricted Stock Incentive Program (Phase I) have
handled the procedures for registration with China Securities Depository and Clearing Corporation Limited (CSDC)
Shenzhen Office.
The 6th session of the Ninth Board of Directors held on March 13, 2019 reviewed and approved the Proposal for
Amendment of the Articles of Association, according to which the Company’s registered capital has been changed from
CNY438,744,881 into CNY 442,968,881.
Progress of implementation of the stock repurchase
The 7th session of the Ninth Board of Directors held on April 4, 2019 and 2019 2nd Extraordinary General Meeting held on
April 23, 2019, reviewed and approved the “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares in
the Company (B-shares), and subsequently the Company disclosed the repurchase report and published a series of
announcements on the progress in accordance with relevant regulations. For detail of the above, please refer to the
relevant announcements disclosed by the Company in the Securities Times, Hong Kong Commercial Daily and
www.cninfo.com.cn.
As of the end of the reporting period, the Company repurchased 10,010,000 shares in the Company by way of centralized
bidding, accounting for 2.26% of the Company's total capital stock; the highest transaction price of the repurchased
shares was HK$6.29 per share, and the lowest transaction price was HK$5.71/share, the total amount paid has been
HK$60,289,369.30 (excluding stamp duty, commission, etc.) The Company’s repurchase of the shares was in compliance
with the relevant laws and regulations and in line with the Company's established repurchase program.
Progress of implementation of reduction of the holding size of the shares repurchased by centralized bidding
Inapplicable
45
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value
per share attributable to the common stockholders in the past year and the latest period
During the reporting period, the Company finished awarding the 2018 A-share Restricted Stock Incentive Program (Phase
I); and the earnings per share and return on equity at the end of the reporting period were calculated by weighted average.
Net return on equity, weighted Earnings per share
average (%)
Basic earnings per share (CNY/share) Diluted earnings per share (CNY/share)
2019 2018 2019 2018 2019 2018
8.21% 7.30% 0.4943 0.4190 0.4943 0.4190
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
Inapplicable
2. Change of the Restricted Shares
In shares
Number of Number of Number of Number of
restricted restricted restricted restricted Date of
Names of the Cause of
shares at the shares shares relieved shares at the relieving the
Shareholders restriction
beginning of the increased in the in the reporting end of the restriction
reporting period reporting period period reporting period
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Huang Yongfeng 60,000 100,000 0 160,000 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
46
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Chen Libin 60,000 100,000 0 160,000 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
To be unlocked
subject to the
Locked shares conditions of
Lu Bingqiang 72,233 24,078 0 96,311 for senior the locked
executives shares for
senior
executives
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Lu Wanjun 37,500 80,000 0 117,500 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Liu Xiaoming 37,500 80,000 0 117,500 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
47
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Pan Bo 37,500 80,000 0 117,500 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Li Ming 37,530 80,000 0 117,530 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
To be unlocked
subject to the
conditions of
Locked shares
the locked
for senior
shares for
executives and
senior
Chen Zhuo 38,250 80,000 0 118,250 restricted
executives and
shares as the
the measures
granted locked
for the
shares
Company’s
equity incentive
management
48
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
To be unlocked
subject to the
Restricted conditions as
shares as the specified in the
Tang Haiyuan 0 60,000 0 60,000
granted locked measures for
shares the Company’s
equity incentive
management
To be unlocked
subject to the
Restricted conditions as
shares as the specified in the
Xu Chuangyue 0 50,000 0 50,000
granted locked measures for
shares the Company’s
equity incentive
management
To be unlocked
Other persons subject to the
eligible for the Restricted conditions as
incentive of shares as the specified in the
0 3,514,000 0 3,514,000
A-share restricted granted locked measures for
stock (119 shares the Company’s
persons) equity incentive
management
Total 380,513 4,248,078 0 4,628,591 -- --
II. Issuing and Listing
1. Issuing of securities (with preferred stock exclusive) in the reporting period
Description of Quantity
Issuing price
the stock and its Issuing approved for Expiry date of
Issuing date (or interest Date of listing
derivative quantity listing for trading
rate)
securities trading
Stock category
A-share ordinary January 11, January 30,
4.40 4,224,000
shares 2019 2019
Convertible corporate bonds, convertible corporate bonds for separate transactions, debentures
Other derivative securities
Issuing of securities (with preferred stock exclusive) in the reporting period
The 3rd session of the Ninth Board of Directors and 2019 1st Extraordinary General Meeting held respectively on
November 12, 2018 and January 11, 2019 decided to start 2018 A-Share Restricted Stock Incentive Program (Phase I),
49
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
which was later on reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019,
and the Company eventually granted 4.224 million restricted A-shares to 128 persons eligible for the incentive. The
granting date of this part of the restricted stock was January 11, 2019; on January 30, 2019, the granting was completed
and the stock was registered for listing. For the detail, refer to the Announcement on the Completion of Granting the
Restricted A-Shares according to the Incentive Program (Phase I) No. 2019-009 disclosed in the Securities Times, Hong
Kong Commercial Daily and www.cninfo.com.
2. Note to changes of the company’s total shares and the structure of shareholders as well as the structure of
assets and liabilities
During the reporting period, the persons eligible for the incentive in the Company's 2018 A-Share Restricted Stock
Incentive Program (Phase I) have handled the procedures for registration with China Securities Depository and Clearing
Corporation Limited (CSDC) Shenzhen Office. The Company’s total shares have changed from 438,744,881 shares to
442,968,881 shares.
3. Existing Employee Shares
Inapplicable
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
43,540 39,155 recovered at the end 0 0
the end of the before the date before the day of
of the reporting
reporting period of disclosing the disclosing the
period (if any) (Refer
annual report Annual Report (if
to Note 8)
any) (Refer to Note
8)
Shares held by the shareholders holding over 5% shares or the top ten shareholders
Number of Pledging or freezing
Increase/d Number of
shares
Shareholdi ecrease in the Quantity of
Names of the Nature of the held at the
ng the restricted unrestricted Status of the
Shareholders shareholder end of the Quantity
proportion reporting shares shares held shares
reporting
period held
period
AVIC International 162,977,3 162,977,32
State corporate 36.79% 0 0
Holding Limited 27 7
Domestic natural 15,023,40
#Yang Zugui 3.39% -2,990,100 0 15,023,406
person 6
50
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Basic Endowment
State-owned legal
Insurance Fund 0.43% 1,882,800 1,882,800 0 1,882,800
person
Portfolio 1005
Domestic natural
Huang Haitang 0.36% 1,610,000 1,610,000 0 1,610,000
person
Domestic natural
Na Zhizhong 0.34% 1,495,000 1,495,000 0 1,495,000
person
High-Flyer Asset
Management
Domestic
(Zhejiang) Co., Ltd.
non-state-owned 0.26% 1,149,993 1,149,993 0 1,149,993
- High-Flyer Quant
legal person
Qingxi No. 2
Private-equity Fund
Domestic natural
# Liang Lu 0.23% 1,030,700 1,030,700 0 1,030,700
person
Domestic natural
Zhang Linling 0.23% 1,000,000 1,000,000 0 1,000,000
person
Industrial and
Commercial Bank of
China Co., Ltd. -
HUITIANFU Domestic
Technology non-state-owned 0.18% 811,600 811,600 0 811,600
Innovation Flexible legal person
Configuration Mixed
Securities Investment
Fund
Domestic natural
Liang Shaoyun 0.18% 781,312 0 0 781,312
person
About the fact that a strategic investor or
ordinary corporate became one of the top
Inapplicable
ten shareholders due to placement of new
shares (if any) (Refer to Note 3)
Explanation on associated relationship or
consistent action of the above Inapplicable
shareholders
Shares held by top 10 shareholders of unrestricted shares
Quantity of unrestricted shares held at the end of the Share type
Names of the Shareholders
reporting period Share type Quantity
CNY ordinary
AVIC International Holding Limited 162,977,327 162,977,327
shares
51
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
CNY ordinary
#Yang Zugui 15,023,406 15,023,406
shares
Basic Endowment Insurance Fund CNY ordinary
1,882,800 1,882,800
Portfolio 1005 shares
CNY ordinary
Huang Haitang 1,610,000 1,610,000
shares
CNY ordinary
Na Zhizhong 1,495,000 1,495,000
shares
High-Flyer Asset Management (Zhejiang)
CNY ordinary
Co., Ltd. - High-Flyer Quant Qingxi No. 2 1,149,993 1,149,993
shares
Private-equity Fund
CNY ordinary
# Liang Lu 1,030,700 1,030,700
shares
CNY ordinary
Zhang Linling 1,000,000 1,000,000
shares
Industrial and Commercial Bank of China
Co., Ltd. - HUITIANFU Technology CNY ordinary
811,600 811,600
Innovation Flexible Configuration Mixed shares
Securities Investment Fund
CNY ordinary
Liang Shaoyun 781,312 781,312
shares
Explanation to the associated relationship
or consistent action among the top 10
shareholders of non-restricted negotiable
Inapplicable
shares and that between the top 10
shareholders of non-restricted negotiable
shares and top 10 shareholders.
Note to the top 10 shareholders involved in
margin financing & securities lending (if Inapplicable
any) (Refer to Note 4)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
repurchase during the reporting period?
No
2. Controlling Shareholder
Nature of the controlling shareholder: State-owned shareholding directly under the central government
Type of the controlling shareholder: corporate
52
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Legal
Name of the Controlling Leading business
Representative Date of incorporation Organization Code
Shareholder activities
/Leader
Investment in industries
(specific projects are
subject to application for
approval); domestic
trade, material supply
AVIC International Holding
Liu Hongde June 20, 1997 91440300279351229A and distribution (with
Limited
commodities for
exclusive operation,
exclusive control and
monopoly exclusive);
import and export.
Equity in other domestic
and foreign listed
companies held by the AVIC International holds 14.24% equity in Tianma Micro-electronics Co., Ltd. (SHEN
controlling shareholder by TIANMA A 000050) and 69.05% equity in Shennan Circuits Company Limited (SHENNAN
means of control and CIRCUITS 002916).
mutual shareholding in the
reporting period.
Change of the controlling shareholder in the reporting period
Inapplicable
3. Actual Controller and its Concerted Parties
Nature of the actual controller: State-owned assets regulatory agency directly under the central government
Type of the actual controller: corporate
Legal
Date of
Name of the Actual Controller Representative Organization Code Leading business activities
incorporation
/Leader
53
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Import & export;
warehousing; investment and
management of industry,
hotel, property, real estate
industry; development, sales
and maintenance of new
AVIC International Holding 91110000100000999 energy equipment;
Liu Hongde April 12, 1983
Corporation 2 exhibitions; technology
transfer and technical
services related to the above
businesses; dispatching
contract workers required for
overseas projects; sales of
precursor chemicals.
Equity in other domestic and
foreign listed companies AVIC International holds 37.50% equity in AVIC International Holdings Limited
controlled by the actual (0161.HK) and 8.40% equity in Tianma Micro-electronics Co., Ltd. (SHEN TIANMA A
controller in the reporting 000050).
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
54
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
State-owned Assets Supervision and Administration
Commission of the State Council
100%
AVIC CCB Aviation Industry Equity Investment (Tianjin)
Aviation Industry Corporation of China
Co., Ltd.
91.14% 8.86%
AVIC International Holding Corporation
100%
AVIC International Shenzhen Company Limited
37.50% 33.93%
AVIC International Holdings Limited
36.79%
FIYTA Precision Technology Co., Ltd.
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. Other Corporate Shareholder Holding over 10% of the Company’s Shares
Inapplicable
5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the Reorganizing
Party and other Committing Party
Inapplicable
55
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 7 About the Preferred Shares
Inapplicable
56
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 8 About the Convertible Bonds
Inapplicable
57
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 9 Directors, Supervisors, Senior Executives and Employees
I. Change in Shares Held by Directors, Supervisors and Senior Executives
Number of
Number of
shares held Shareholding Shareholding
Other shares held
at the increased in decreased in
Starting date Expiry date increase/decr at end of the
Name Title Office Status Gender Age beginning of the reporting the reporting
of tenure of tenure ease reporting
the reporting period period
(shares) period
period (shares) (shares)
(shares)
(shares)
Huang September September
Chairman In office Male 46 80,000 100,000 0 0 180,000
Yongfeng 11, 2018 11, 2021
Wang September September
Director In office Male 54 0 0 0 0 0
Mingchuan 11, 2018 11, 2021
September September
Fu Debin Director In office Male 43 0 0 0 0 0
11, 2018 11, 2021
Xiao September September
Director In office Male 44 0 0 0 0 0
Zhanglin 11, 2018 11, 2021
September September
Wang Bo Director In office Male 41 0 0 0 0 0
11, 2018 11, 2021
Director & September September
Chen Libin In office Male 56 80,000 100,000 0 0 180,000
GM 11, 2018 11, 2021
Independent September September
Wang Jianxin In office Male 50 0 0 0 0 0
director 11, 2018 11, 2021
Zhong Independent September September
In office Male 45 0 0 0 0 0
Hongming director 11, 2018 11, 2021
Independent September September
Tang Xiaofei In office Male 46 0 0 0 0 0
director 11, 2018 11, 2021
Chairman of
Wang the September September
In office Male 56 0 0 0 0 0
Baoying Supervisory 11, 2018 11, 2021
Committee
September September
Sheng Qing Supervisor In office Female 44 0 0 0 0 0
11, 2018 11, 2021
Fang April 12, September
Supervisor In office Male 33 0 0 0 0 0
Jiasheng 2019 11, 2021
October 08, October 08,
Lu Wanjun Deputy GM In office Male 53 50,000 80,000 0 0 130,000
2018 2021
58
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
October 08, October 08,
Liu Xiaoming Deputy GM In office Male 49 50,000 80,000 0 0 130,000
2018 2021
Deputy GM
and October 08, October 08,
Pan Bo In office Male 44 50,000 80,000 0 0 130,000
Secretary of 2018 2021
the Board
October 08, October 08,
Li Ming Deputy GM In office Male 47 50,040 80,000 0 0 130,040
2018 2021
Chief October 08, October 08,
Chen Zhuo In office Male 44 51,000 80,000 0 0 131,000
Accountant 2018 2021
Tang September October 08,
Deputy GM In office Male 47 0 60,000 0 0 60,000
Haiyuan 29, 2019 2021
Xu September October 08,
Deputy GM In office Male 41 0 50,000 0 0 50,000
Chuangyue 29, 2019 2021
September April 10,
Zou Zhixiang Supervisor Retired Male 36 0 0 0 0 0
11, 2018 2019
October 08, October 08,
Lu Bingqiang Deputy GM Retired Male 59 96,311 0 0 0 96,311
2018 2019
Total -- -- -- -- -- -- 507,351 710,000 0 0 1,217,351
II. Personnel Change in Directors, Supervisors and Senior Executives
Name Office Taken Type Date: Cause
Appointment & Elected a staff representative supervisor at 2019 1st Staff Representative
Fang Jiasheng Supervisor April 12, 2019
removal Congress.
Appointment & Reviewed and approved at 11th Session of the Ninth Board of Directors, he
Tang Haiyuan Deputy GM September 29, 2019
removal was appointed as a deputy GM of the Company.
Appointment & Reviewed and approved at 11th Session of the Ninth Board of Directors, he
Xu Chuangyue Deputy GM September 29, 2019
removal was appointed as a deputy GM of the Company.
Appointment & Reviewed and approved at 13th Session of the Ninth Board of Directors, he
Pan Bo Secretary of the Board November 19, 2019
removal was appointed as the Secretary of the Board of the Company.
He resigned the office of staff representative supervisor of the Ninth
Zou Zhixiang Supervisor Retired April 10, 2019
Supervisory Committee due to personal reason.
Lu Bingqiang Deputy GM dismissal October 08, 2019 He resigned the office of a deputy GM of the Company due to job change.
He resigned the office of the Secretary of the Board of the Company due to
Lu Wanjun Secretary of the Board dismissal November 18, 2019
job change.
III. Profile of Senior Executives
Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office
59
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
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.
Mr. Wang Mingchuan, born in December 1966, senior accountant, master of management engineering of Tongji University,
and EMBA of China Europe International Business School. He is a director of the Company, deputy GM, chief accountant
and director of 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 and a director of AVIC Sunda Holding Company Limited.
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 AVIC International Shenzhen Co., Ltd., 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, the supervisor of the planning and operation department of AVIC International Shenzhen Co., Ltd., the
secretary of AVIC International Holding Corporation, a director of Shennan Circuits Co., Ltd, a director of Rainbow
Department Store Co., Ltd., a director of AVIC East China Optoelectronics 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. 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
Tianma Microelectronics Co., Ltd.and a director of AVIC Sunda Holding Company Limited.
Mr. Wang Bo, born in July, 1979, MBA of Renmin University of China. He is a director 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. Mr. Wang
used to be the manager and controller of the HR department of AVIC Real Estate Co., Ltd. And deputy supervisor of the
HR department of AVIC International Holding Corporation.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
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 AVIC International Shenzhen Co., Ltd.
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, PhD of law and post-doctor. Mr.
Zhong is an associate research fellow of Law Research Institute of Sichuan Academy of Social Sciences and concurrently
a director of China Securities Law Research Council, an independent director of Mango Excellent Media Co., Ltd. and
DAGANG Holding Group 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. 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
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.
Ms. Sheng Qing, born in April, 1976, accountant, bachelor of international accounting specialization of Jiangxi University
of Finance and Economics, master of organization and HR management of the University of Hong Kong. She is the
manager of the discipline inspection, supervision and audit department of the Company. She used to be a supervisor of
the Eighth Supervisory Committee, assistant to manager, deputy manager and manager of HR department and senior
business manager of the audit department of the Company.
Mr. Fang Jiasheng, born in December, 1987, accountant and bachelor of financial management of South China Normal
University. He is now the assistant to the manager of the descipline inspection, audit and law department of the Company.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
He used to be the assistant to the manager of the financial department, senior financial manager, finan cial manager and
financial supervisor.
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 of the Company. He used to be the assistant to the GM
of the Company, executive deputy GM and deputy GM, the assistant to the GM and concurrently the manager of the
financial department of Shenzhen Harmony World Watches Center Co., Ltd.
Mr. Liu Xiaoming, born in 1971, engineer, economist, bachelor of mechanical engineering of Beijing University of
Aeronautics & Astronautics, and EMBA of China Europe International Business School. He is a deputy GM of the
Company, 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, engineer, bachelor of electromechanical engineering of Beijing University of Aeronautics
& Astronautics, and EMBA of China Europe International Business School. Mr. Pan is a deputy GM, the Secretary of the
Board and the GM of the Brand Project Department of the Company. 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, senior accountant, bachelor of accounting of Central University of Finance and
Economics, MBA of Wuhan University and EMBA of China Europe International Business School. He is the chief
accountant of the Company. Mr. Chen used to be a supervisor and the assistant to the GM of the Company, the manager
of the strategy and information department, deputy manager of the strategy and information department and securities
affairs representative of the Company, a deputy GM, the assistant to the GM and the manager of the financial information
department of FIYTA Sales Co., Ltd.
Mr. Tang Haiyuan, born in February, 1973, senior engineer, bachelor of plastic molding technology and equipment of Hefei
University of Technology, and EMBA of China Europe International Business School. He is a deputy GM of the Company
and the GM of Shenzhen FIYTA Technology Development Co., Ltd. Mr. Tang used to work for Shenzhen FIYTA
Sophisticated Timepieces Manufacture Co., Ltd., taking the offices of the GM, a deputy GM, the assistant to the GM, and
the manager of its product quality department, manager and deputy manager of the engineering and technical department;
also work for Shenzhen FIYTA Technology Development Co., Ltd., taking offices of the assistant to the GM and the
manager of the technical department.
Mr. Xu Chuangyue, born in November, 1979, bachelor of international economics and trading of Beijing Wuzi University
and EMBA of China Europe International Business School. He is now a deputy GM of the Company. Mr.Xu used to work in
FIYTA Sales Co., Ltd. taking the office of a deputy GM, in Shiyuehui Boutique (Shenzhen) Co., Ltd., taking the offices of
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
the GM, the assistant to GM of the sales department, the manager of the market department, the manager of Xi'an Branch
and the business manager of Beijing Branch.
Office taking in shareholder companies
Titles Does he/she
Names of the engaged in receive
Starting date Expiry date of
persons in Names of the Shareholders the remuneration or
of tenure tenure
office shareholder allowance from
s the shareholder
Deputy GM
Wang January 23,
AVIC International Shenzhen Co., Ltd. and Chief Yes
Mingchuan 2017
Accountant
Head of the
Fu Debin AVIC International Holding Corporation July 01, 2016 Yes
HR Dept.
Company February 05,
Xiao Zhanglin AVIC International Holding Limited Yes
secretary 2018
Head of the
Wang Bo AVIC International Shenzhen Co., Ltd. April 25, 2017 Yes
HR Dept.
Special
Wang Baoying AVIC International Shenzhen Co., Ltd. commission April 11, 2017 Yes
er
Explanation
on the office
taking in Inapplicable
shareholder
companies
Office taking in other organizations
Does he/she
Titles
receive
Names of the engaged in
Starting date Expiry date of remuneration or
persons in Names of other organizations the other
of tenure tenure allowance from
office organization
other
s
organizations
December 01,
Wang Jianxin Shine Wing Certified Public Accountants Partner Yes
2006
Associate
Zhong Law Research Institute of Sichuan November 24,
research Yes
Hongming Academy of Social Sciences 2017
fellow
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Business School of Southwest Jiaotong Doctorial September 1,
Tang Xiaofei Yes
University tutor 2008
Business School of Southwest Jiaotong December 1,
Tang Xiaofei Professor Yes
University 2011
Explanation
on the office
Inapplicable
taking in other
organizations
Punishment imposed by the securities regulatory authority on the directors, supervisors and senior executives both in
office and having left their posts in the reporting period.
Inapplicable
IV. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis for determining the remuneration and actual payment to directors, supervisors and
senior executive to directors, supervisors and senior executives:
The Company practiced the annual salary system for its directors and senior executives. The annual salary structure
consists of the basic annual salary and performance based annual salary. The assessment of senior executives is
conducted according to the Measures for Administration of the Remuneration to Senior Executives.
Remuneration to Directors, Supervisors and Senior Executives during the Reporting Period
In CNY 10,000
Is the
Total pretax
remuneration
remuneration
Name Title Gender Age Office Status from one of the
received from
Company's
the Company
related parties
Huang
Chairman Male 46 In office 197.92 No
Yongfeng
Wang
Director Male 54 In office 0 Yes
Mingchuan
Fu Debin Director Male 43 In office 0 Yes
Xiao Zhanglin Director Male 44 In office 0 Yes
Wang Bo Director Male 41 In office 0 Yes
Chen Libin Director & GM Male 56 In office 170.98 No
Independent
Wang Jianxin Male 50 In office 9 No
director
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Zhong Independent
Male 45 In office 9 No
Hongming director
Independent
Tang Xiaofei Male 46 In office 9 No
director
Chairman of the
Wang Baoying Supervisory Male 56 In office 0 Yes
Committee
Sheng Qing Supervisor Female 44 In office 88.93 No
Fang Jiasheng Supervisor Male 33 In office 36 No
Lu Wanjun Deputy GM Male 53 In office 159.44 No
Liu Xiaoming Deputy GM Male 49 In office 182.52 No
Deputy GM and
Pan Bo Secretary of the Male 44 In office 162.15 No
Board
Li Ming Deputy GM Male 47 In office 164.44 No
Chief
Chen Zhuo Male 44 In office 164.44 No
Accountant
Tang Haiyuan Deputy GM Male 47 In office 161.52 No
Xu Chuangyue Deputy GM Male 41 In office 99.81 No
Zou Zhixiang Supervisor Male 36 Retired 14.91 No
Lu Bingqiang Deputy GM Male 59 Retired 154.44 No
Total -- -- -- -- 1,784.5 --
Equity incentive to directors and senior executives of the Company during the reporting period
In shares
Strike price
and the Quantity of Quantity of
Market price Quantity of
Number of Number of number of restricted Quantity of restricted Price of the
at the end restricted
vested striked striked shares held the locked shares restricted
of the shares held
shares shares shares at the shares in newly shares
Name Title reporting at the end
during the during the during the beginning of the granted granted
period of the
reporting reporting reporting the reporting during the (CNY/share
(CNY/share reporting
period period period reporting period reporting )
) period
(CNY/share period period
)
Huang
Chairman 0 0 0 11.09 0 0 100,000 4.40 100,000
Yongfeng
Director &
Chen Libin 0 0 0 11.09 0 0 100,000 4.40 100,000
GM
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Lu Wanjun Deputy GM 0 0 0 11.09 0 0 80,000 4.40 80,000
Liu
Deputy GM 0 0 0 11.09 0 0 80,000 4.40 80,000
Xiaoming
Deputy GM
and
Pan Bo 0 0 0 11.09 0 0 80,000 4.40 80,000
Secretary of
the Board
Li Ming Deputy GM 0 0 0 11.09 0 0 80,000 4.40 80,000
Chief
Chen Zhuo 0 0 0 11.09 0 0 80,000 4.40 80,000
Accountant
Tang
Deputy GM 0 0 0 11.09 0 0 60,000 4.40 60,000
Haiyuan
Xu
Deputy GM 0 0 0 11.09 0 0 50,000 4.40 50,000
Chuangyue
Total -- 0 0 -- -- 0 0 710,000 -- 710,000
Granting of the A-share restricted stock to aforesaid persons was completed on January 11, 2019. , and it is still in the
Remarks (if any)
lockup period (two years) according to the regulations.
V. Employees
1. Number, Job Composition and Education Background of Employees
Number of employees working for the parent company 146
Number of employees working for the major subsidiaries 4,848
Total employees on active duty 4,994
Total employees receiving remuneration in the reporting
4,994
period
Number of the retired employees for whom the parent
company and the major subsidiaries need to share the 0
pension
Job Composition
Job Composition Categories Number of persons involved in the job composition
Production 335
Sales 3,763
Technical 364
Financial 119
Administrative 413
Total 4,994
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Education background
Education levels Number of persons
Master's degree or higher 72
Undergraduate 731
Junior college 1,232
Below junior college 2,959
Total 4,994
2. Remuneration Policy for Staff
FIYTA's remuneration policy follows hierarchical management, budget control, performance-orientation, efficiency priority,
fairness, positive incentives, and long-term principles. The Company has established a remuneration system with the
assessment based annual salary system for medium and senior executives, performance-based salary systems for basic
staff, and the production & performance jointly related payroll systems for production operators in accordance with the
national laws, regulations and policies. The following administrative measures have been taken in implementation of the
remuneration policy.
Classification and grading management: The Company has established a differentiated, standardized, and
market-oriented salary framework system that matches the job sequence and job level according to the
professional/occupational development system of employees.
Total budget management: According to the strategic layout of the Company's development, with comprehensive
consideration of factors such as hard labor cost growth, market salary level, labor cost profit margins, total profit, and per
capita profit growth, etc., the Company controls total salary and has achieved the management goal of benefit-orientation,
positive incentive, classification management and adjusted distribution.
Focusing on value creation, value evaluation, and value sharing management: The Company has established a
performance evaluation and evaluation system that is consistent with strategic development goal, with economic value
and social value as the main body, and closely link it with employees’ compensation, having formed a salary distribution
mechanism with decrease of the employees’ payroll correspondingly linked with the decrease of the enterprise revenue
and employees’ personal performance and tilting towards the key value positions.
3. Training Program
(I) Organized learning, talent training, and ecological cycle development
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
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 supporting development of the front-line professional talent
development. 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.
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(II) Construction of a Talent Team of Front-line Talents, Experts and Leaders
In terms of front-line talent training, taking business managers and shopping guide positions as the starting point, and
focusing on "operational excellence" and "excellent sales" for terminal-output product-oriented training programs,
gradually creating learning programs with FIYTA characteristics. In terms of professional talent training, the Company has
promoted various talent training systems of the Company through the projects such as the "craftsman reservoir" and Lean
Six Sigma training, etc. With regard to the training of echelon management talents, through the design of echelon
training projects such as the three-year run-up plan for newcomers, the training of medium and senior management
personnel, and the training of potential talents, the Company's management echelon talent construction work will be
consolidated to help the Company become a learning organization with strong vitality.
4. Labor Outsourcing
Inapplicable
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Chapter 10 Corporate Governance
I. General
In year 2019, the Company kept improving the Company’s corporate governance structure strictly according to the PRC
Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission concerning
governance of listed companies, and tried to enhance construction of modern enterprise system, upgraded the level of
regulatory operation of the Company. As a result, there was no discrepancy between the situation of the Company’s
corporate governance and the regulatory documents of China Securities Regulatory Commission concerning governance
of listed companies.
The Company established and improved relatively standardized corporate governance structure and rules of procedures
strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of Association of the
Company, formed a decision-making and operation management system with the Shareholders’ Meeting, the Board of
Directors, the Supervisory Committee and the management of the Company as the principal structure. They implemented
their respective duties according to the PRC Company Law and the Articles of Association.
The General Meeting is the Company’s supreme organ and has the power of deciding the Company’s operation policy
and investment plan, reviewing and approving the Company’s annual financial budget scheme, settlement scheme, profit
distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makes
resolution on increase and decrease of the Company’s registered capital, issuing bond, etc., election and replacement of
directors, non-staff supervisors and decision on their remuneration and way of payment.
The Board of Directors is the Company’s decision-making organ, takes charge of implementing the decisions made by the
Shareholders’ General Meeting, assumes responsibility to the Shareholders’ General Meeting and reports the work to it.
Within the authorization from the General Meeting, decides the Company’s external investment, acquisition and sales of
assets, assets pledge, external guarantee, related transactions, etc., decides establishment of the Company’s internal
management organs, engagement and disengagement of the Company’s general manager, the Board secretary and
other senior executives, etc. The Board of Directors consists of nine directors, including three independent directors. The
Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit
Committee and Nomination, Emolument and Assessment Committee.
The Supervisory Committee is the Company’s supervisory organ in charge of supervising the directors, managers and
other senior executives in performing duties according to the law and proposes dismissal of any director or senior
executive who breaches the law, the administrative rules and regulations, the Articles of Association or resolutions of the
General Meeting. The Supervisory Committee consists of three supervisors including 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 Precision Technology Co., Ltd. 2019 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
Sessions Meeting type attendance of the Meeting date Date of disclosure Disclosure index
investors
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
2019 1st
Extraordinary http://www.cninfo.c
Extraordinary 40.01% January 11, 2019 January 12, 2019
General Meeting om.cn/
General Meeting
2019 2nd
Extraordinary http://www.cninfo.c
Extraordinary 37.40% April 23, 2019 April 24, 2019
General Meeting om.cn/
General Meeting
2018 Annual Annual general http://www.cninfo.c
38.22% June 19, 2019 June 20, 2019
general meeting meeting om.cn/
2019 3rd
Extraordinary December 30, December 31, http://www.cninfo.c
Extraordinary 41.23%
General Meeting 2019 2019 om.cn/
General 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 Failure to
Number of
Board meetings Number of personally Number of
attendances of
Names of which should be Number of Spot Meetings Number of attend board attendance of
board meeting
independent director be attended in Attendances Attended by absence meetings the General
by
the reporting Communication successively Meeting
representative
period twice
Wang Jianxin 10 2 8 0 0 No 4
Zhong Hongming 10 2 8 0 0 No 0
Tang Xiaofei 10 2 8 0 0 No 0
Note to failure to attend the board meeting successively twice
Inapplicable
2. Objection of independent directors on some relevant issues
Have the independent directors proposed any objection on the relevant issues of the Company
No
3. Other Note to Duty Performance of Independent Directors
Have the independent directors' recommendations to the Company been accepted
No
The independent directors' recommendations to the Company been accepted or explain the reason if any
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
recommendation has not been accepted
Inapplicable
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 2019 on March 13, 2019. The
meeting reviewed and approved the Work Report of the Board of Directors of Year 2018 and the Profit Distribution for Year
2018; the second meeting of the Strategy Committee for year 2019 was held on December 9, 2019. The meeting
reviewed and approved the proposal for the planned change of the company name and the abbreviation of A-share.
Summary Report on Performances of the Audit Committee of the Board of Directors:
In accordance with the Rules on the Contents 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 2019. The following is the summary of the performances of the Audit Committee and the work of Grant
Thornton LLP (hereinafter referred to as the “CPAs”):
1. Determination of the Overall Audit Plan
On December 2, 2019, the Audit Committee reviewed the Report of FIYTA on Arrangement of the Audit Work of 2019
submitted by the CPAs and determined the time schedule of the audit work of 2019.
2. Supervision of the Audit Work
On December 6, 2019, the CPAs formally entered the Company and 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 January 20, 2020, the Audit Committee
reviewed the Report on the Progress of the Audit Work of 2019 submitted by the CPAs.
3. 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 January 20, 2020, 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 2019 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, 2019, and approved to carry out the audit work for year 2019
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
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
and other relevant laws and regulations. It has basically reflected the Company’s internal control construction work ended
December 31, 2019 and approved to prepare the Self-Assessment Report on the Internal Control on this basis and carry
out the internal control audit work in 2019.
4. Preliminary Auditor’s Opinions after Reviewing the Financial and Accounting Statements
On March 16, 2020, 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, 2019 and approved 2019 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, 2019 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 2019
Annual Report as scheduled.
5. Summary Work after the Formal Report
On March 13, 2020, 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 2020 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 2019. In the opinion of the Audit Committee, Grant Thornton LLP, 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 2019
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
73
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
of Directors
During 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. 2019 1st
session of the Committees of Nomination, Remuneration and Assessment held on January 11, 2019 reviewed and
approved the proposals on the adjustment of the name list of the incentive objects of the initial granting and the number
involved in the initial granting and the proposal of granting restricted shares to the incentive objects in the Company’s
2018 A-share restricted stock incentive plan (Phase I); 2019 2nd session of the Committees of Nomination, Remuneration
and Assessment held on March 13, 2019 reviewed and approved the proposal on finalizing the remuneration to the
directors and senior executives in year 2018; 2018 3rd session of the Committee of Nomination, Remuneration and
Assessment held on September 29, 2019 reviewed and approved the proposal on the appointment of deputy GMs; 2018
4th session of the Committee of Nomination, Remuneration and Assessment held on November 19, 2019 reviewed and
approved the proposal on the replacement of the Secretary of the Board.
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
In order to give full play to and mobilize the enthusiasm and creativity of the Company's senior executives, to better
improve the Company's operating ability, economic benefit and ensure the realization of the Company's strategic goals,
based on the establishment of an incentive and constraint mechanism compatible with the modern enterprise system,
relying on balanced score card strategy management instrument, which decomposes the Company's strategy to various
departments and positions through the balanced scorecard to determine the performance indicators and action plans of
senior executives, and conduct strategic review and assessment on a quarterly basis, based on the results of the
assessment and performance completion determine the total salary and whether to renew their offices.
The assessment of the annual salary to the GM is conducted in accordance with the assessment measures formulated by
the shareholder organization, and the assessment basis is mainly based on a series of indicator systems formulated
based on the balanced scorecard. The assessment of other senior executives of the Company was conducted in
accordance with the indicators in the balanced scorecard formulated at the beginning of the year, and job description was
conducted at the end of the year.
(2) Incentive to Senior Executives
The 3rd session of the Ninth Board of Directors and 2019 1st Extraordinary General Meeting held respectively on
November 12, 2018 and January 11, 2019 decided to start 2018 A-Share Restricted 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 restricted A-shares to 128 persons eligible for the incentive, including 7
directors and senior executives, with total 600,00 shares of A-share restricted stock, taking 0.14% of the Company's total
capital stock with the detail as follows:
74
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Name Title Quantity of Equity received Equity received
restricted shares Proportion in the total Proportion in the total
received (in 10,000 quantity granted (%) capital stock (%)
shares)
Huang Yongfeng Chairman 10 2.37% 0.02%
Chen Libin Director & GM 10 2.37% 0.02%
Lu Wanjun Deputy GM 8 1.89% 0.02%
Liu Xiaoming Deputy GM 8 1.89% 0.02%
Pan Bo Deputy GM and Secretary of 8 1.89% 0.02%
the Board
Li Ming Deputy GM 8 1.89% 0.02%
Chen Zhuo Chief Accountant 8 1.89% 0.02%
Other core management, business, professional 362.4 85.81% 0.83%
and technical backbones
(121 persons)
Total (128 persons) 422.4 100% 0.97%
The price of this part of restricted shares granted was CNY 4.40/share; the granting date was January 11, 2019 (The
lock-up period of these restricted 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.
Reviewed and approved at the 11th Session of the Ninth Board of Directors, Mr. Tang Haiyuan (holding 60,000 shares of
the Company’s A-share restricted stock) and Mr. Xu Chuangyue (holding 50,000 shares of the Company’s A-share
restricted stock) were appointed as deputy GMs of the Company
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
March 20, 2020
internal control assessment report
Index of disclosure of the full text of the
www.cninfo.com.cn
internal control assessment report
Proportion of the total assets of the
organizations involved in the
assessment in the total assets of the 100.00%
Company’s consolidated financial
statements
75
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Proportion of the operation revenue of
the entitled involved in the assessment
in the total operation revenue of the 100.00%
Company’s consolidated financial
statements
Criteria for affirming the defects
Categories Financial report Non-financial Report
① seriously violating the PRC laws,
administrative regulations and
normative documents; ② "decision
on major issues, important officer
appointment and/or removal and
① The defect involving fraud of the arrangement of important projects as
directors, supervisors and senior well as application of big sum of fund
executives;② correction of the financial have not undergone collective
statements already published;③ the decision-making procedures; ③
CPA found that there existed serious serious running off of officers and
misstatement in the financial statements technicians of the key positions; ④
Qualitative criteria
of the reporting period while the internal there is no system control available
control failed to find the misstatement in for the Company’s production and
process of operation;④ the Company's operation practice or the system no
auditing committee and supervision and longer works; ⑤ the internal control
audit department conducted ineffective for information disclosure no longer
supervision of the internal control. works, having caused the Company
censured publicly by the regulatory
authority; ⑥the results of the internal
control assessments, especially the
material defects or important defects
have not been rectified.
① Material defects：Misstatement≥
① Material defects：Misstatement≥ 5%
5% of the pre-tax profit；② Important
of the pre-tax profit；② Important
defects：1% of profit before tax ≤
defects：1% of profit before tax ≤
Quantitative criterion Misstatement＜5% of profit before
Misstatement＜5% of profit before tax;
tax; ③ Common defects：
③ Common defects：Misstatement＜1%
Misstatement＜1% of profit before
of profit before tax.
tax.
Number of material defects in the
0
financial statements (pcs)
Number of material defects in the
0
non-financial statements (pcs)
Number of important defects in the
0
financial report (pcs)
76
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Number of important defects in the
0
financial report (pcs)
X. Internal Control Audit Report
Deliberation Opinions in the Internal Control Audit Report
In our opinion, the Company maintained effective internal control on the financial report in all material aspects according
to the Basic Regulations for Enterprise Internal Control and the relevant provisions ended December 31, 2019.
Disclosure of the internal control
Disclosed
audit report
Date of disclosing the full text of
the internal control assessment March 20, 2020
report
Index of disclosing the full text of
www.cninfo.com.cn
the internal control audit report
Type of the onions in the internal
Standard unqualified auditor’s report
control audit report
Are there any material defects in
No
the non-financial report
Has the CPAs issued a qualified auditor’s report of internal control
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors
Yes
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FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 11 Bond Related Information
Did there exist any company bonds which were issued to the public and listed with the stock exchange for trading and was
due by the date when the Annual Report was approved for issuing or failed to be fully cashed by the end of the reporting
period.
No
78
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Section 12 Financial Report
Auditor’s Report
GTCNSZ(2020)NO.110ZA3105
To the Shareholders of FIYTA Precision Technology Co., Ltd.:
Opinion
We have audited the financial statements of FIYTA Precision Technology Co., Ltd. (“FIYTA
Ltd.” or the “Company”), which comprise the consolidated and Company balance sheets as
at 31 December 2019, and the consolidated and Company income statements,
consolidated and Company cash flow statements and consolidated and Company
statements of changes in shareholders’ equity for the year then ended, and notes to the
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated and Company financial positions of FIYTA Ltd. as at 31 December 2019,
and their financial performance and its their cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the
FIYTA Ltd. and have fulfilled our other ethical responsibilities in accordance with the Code of
Ethics for Chinese Certified Public Accountants. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
1
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
1. Existence of inventory and its net realizable value
Refer to Note III 12 and Note V 6 for detailed information.
(1) Description
As at 31 December 2019, the book balance, provision for decline in value, and carrying
amount of inventory were RMB1,892.03 million, RMB83.21 million and RMB1,808.82 million
respectively.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and other branded
watches, the main inventory of FIYTA Ltd are finished watches and watch
components. The inventories are distributed in stores, regional warehouses, resellers’
warehouses and the Company’s warehouses which caused difficulty in inventory
physical observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net realizable
value (NRV) at balance sheet date. Where the cost of an inventory exceeds its NRV,
the difference is recognized as provision for decline in value. The determination of
NRV involves significant judgment and estimates by the Management.
Inventory value is significant to the Company’s assets and it requires significant judgement
by the Management, as a result, we identified existence of inventory and its net realizable
value as key audit matters.
(2) How our audit addressed the key audit matter
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls of procument and payment, production and storage, and the
provision for decline in value of inventory;
(ii) Understanding and evaluating the appropriateness of the Company’s policy in
provision for decline in value;
(iii) Understanding and inquiring the locations of inventory storage, measurement method
of inventory so as to determining the scope of inventory physical observation;
(iv) Discussing physical inventory count status with the Management and attending the
physical inventory count and conducting observation and test count on site to check
the quantity of the inventories and observe their condition. Circulating confirmations
and inspecting contracts, goods delivery notes and account statements for those
inventories not in the scope of physical observation and stored in reseller's
warehouses;
2
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(v) Obtaining the ageing report of inventory and taking into consideration of inventory
condition in order to perform analytical review on the ageing, and analyze the
reasonableness of provision for decline in value together with ;
(vi) Reviewing and evaluating the appropriateness of significant estimates made by the
Management in determining the NRV of inventory;
(vii) Obtaining the calculation of provision for decline in value of inventory, reviewing
whether the provision was made in compliance with relevant accounting policies and
performing recalculation of provision. Checking the movements of prior year’s
provision and analyzing whether the provision was adequately accrued in prior
period.
(viii) Tracing samples of large purchases in current period to their corresponding contracts
and tax invoices, and inspecting their purchase requisition form and goods receipt
notes.
Based on audit work conducted above, we believe that the presentation and disclosure of
inventory and the judgment on NRV made by the management is supportable.
2. Revenue recognition
Refer to Note III 25 and Note V 33 for detailed information.
(1) Description
In 2019, the Company’s income from main business was RMB3,686.96 million The
Company’s revenue mainly comes from sales of FIYTA brand watches and distribution of
other branded watches. Except for small amount of sales by direct sales and consignment
sales of FIYTA brand watches, most of the sales of FIYTA brand watches and other branded
watches are sold through shops in department store and on-line shops. Refer to Note III 25
for accounting policy relating to revenue recognition.
Operating revenue represents major line item in income statement and is main source of
profit, the accuracy and completeness of revenue recognition have significant impact to the
Company’s profit, as a result, we identified revenue recognition as a key audit matter.
(2) How our audit addressed the key audit matter
(i) Understanding, evaluating and testing the design and operating effectiveness of
internal controls relating to revenue recognition;
(ii) Obtaining and understanding accounting policies relating to revenue recognition, and
reviewing whether the policies are complied with the accounting standards and are
consistently adopted.
(iii) Selecting samples from current year’s transaction record, and tracing them to
supporting documents such as contract, tax invoice and goods dispatch note;
3
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
(iv) In connection with audit of accounts receivable, selecting major customers and
confirming corresponding sales in current year and year end balance;
(v) Conducting cut-off test to revenue recognized before and after the balance sheet date
to evaluate whether the revenue was recorded in appropriate accounting period;
Based on audit work conducted above, we believe that the Company’s revenue recognition
is in conformity to its revenue recognition policy.
Other Information
The management of FIYTA Ltd are responsible for the Other Information. The Other
Information comprises all of the information included in the Company’s 2019 annual report
other than the financial statements and our auditors’ report thereon.
Our opinion expressed on the financial statements does not cover the Other Information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other
Information and, in doing so, consider whether the Other Information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this Other Information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Management and those Charged with Governance for the
Financial Statements
The management 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 for the design, implementation and maintenance of such internal
controls as the Management determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the Management
either intend to liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Those who charged with governance is responsible for overseeing the Company’s financial
reporting process.
4
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with China
Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Management.
4. Conclude on the appropriateness of the Management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required, according to China Standards on Auditing, to draw attention in our
auditors’ report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditors’ report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
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
5
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Grant Thornton Auditor's signature and
China Beijing stamp
(Engagement partner)
Auditor's signature and stamp
18 March 2020
6
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated and Company Balance Sheet
as at 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
As at 31/12/2019 As at 31/12/2018
Item Note
Consolidated Company Consolidated Company
Current assets:
Cash at bank and on hand V. 1 316,668,565.09 270,673,346.02 164,828,059.97 137,175,466.27
Bills receivable V. 2 10,596,431.31 - 7,051,846.85 -
Accounts receivable V. 3 397,471,106.98 2,848,025.39 370,545,656.61 737,636.38
Prepayments V. 4 10,847,962.28 - 13,666,816.33 -
Other receivables V. 5 47,239,844.58 783,647,732.22 45,870,582.26 870,739,378.37
including: interests receivables - - - -
dividend receivables - - - -
Inventories V.6 1,808,820,089.92 - 1,782,306,301.70 -
Assets held for sale - - - -
Non-current assets due within one year - - - -
Other current assets V. 7 68,858,096.74 12,380,243.67 73,703,312.24 10,081,272.94
Total current assets 2,660,502,096.90 1,069,549,347.30 2,457,972,575.96 1,018,733,753.96
Non-current assets:
Available-for-sale financial assets V. 8 85,000.00 85,000.00
Long-term equity investments V. 9 46,423,837.85 1,380,895,239.27 44,881,063.15 1,376,129,654.08
Other equity instrument investments V. 10 85,000.00 85,000.00
Investment properties V. 11 407,503,307.24 329,970,083.18 377,319,433.03 297,042,937.87
Fixed assets V. 12 363,997,098.94 238,594,698.50 425,649,562.85 297,517,472.81
Construction in progress V. 13 - - 12,041,126.00 12,041,126.00
Intangible assets V. 14 38,711,821.26 30,925,974.54 43,545,477.61 35,337,052.82
Development costs - - - -
Goodwill - - - -
Long-term deferred expenses V. 15 152,587,491.33 12,106,759.98 128,572,545.15 4,500,638.97
Deferred tax assets V. 16 83,739,383.37 1,125,840.75 100,675,706.09 952,857.33
Other non-current assets V. 17 7,373,248.48 4,707,236.86 8,949,160.42 4,493,971.35
Total non-current assets 1,100,421,188.47 1,998,410,833.08 1,141,719,074.30 2,028,100,711.23
Total assets 3,760,923,285.37 3,067,960,180.38 3,599,691,650.26 3,046,834,465.19
7
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated and Company Balance Sheet (continued)
as at 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
As at 31/12/2019 As at 31/12/2018
Item Note
Consolidated Company Consolidated Company
Current liabilities:
Short-term loans V. 18 567,908,833.21 540,650,622.50 547,118,452.97 505,000,000.00
Bills payable - - - -
Accounts payable V. 19 279,772,787.37 12,952,934.93 259,913,612.34 52,324,191.98
Advances from customers V. 20 23,433,463.57 3,434,407.04 16,459,445.00 1,636,520.02
Employee benefits payable V. 21 82,602,845.67 19,019,554.57 69,779,037.83 11,589,634.34
Taxes payable V. 22 24,064,803.00 1,713,130.68 55,923,171.92 943,919.26
Other payables V. 23 119,616,721.63 82,631,590.46 71,819,930.30 57,997,397.28
including: interests payables - - 772,351.26 685,419.80
dividend payables 848,233.27 848,233.27 - -
Liabilities held for sale - - - -
Non-current liabilities due within one
V. 24 360,140.00 - 347,470.00 -
year
Other current liabilities - - - -
Total current liabilities 1,097,759,594.45 660,402,240.18 1,021,361,120.36 629,491,662.88
Non-current liabilities:
Long-term loans V. 25 4,321,680.00 - 4,517,110.00 -
Provisions - - - -
Deferred income V. 26 3,046,090.60 3,046,090.60 3,672,855.36 3,672,855.36
Deferred tax liabilities V. 16 1,256,242.49 - - -
Other non-current liabilities - - - -
Total non-current liabilities 8,624,013.09 3,046,090.60 8,189,965.36 3,672,855.36
Total liabilities 1,106,383,607.54 663,448,330.78 1,029,551,085.72 633,164,518.24
Shareholder's equity:
Share capital V. 27 442,968,881.00 442,968,881.00 438,744,881.00 438,744,881.00
Capital reserve V. 28 1,081,230,215.32 1,086,885,756.42 1,062,455,644.22 1,068,111,185.32
Less: treasury shares V. 29 71,267,118.78 71,267,118.78 - -
Other comprehensive income V.30 -940,209.09 - -5,442,139.78 -
Specific reserve - - - -
Surplus reserve V. 31 235,701,180.14 235,701,180.14 223,015,793.80 223,015,793.80
Retained earnings V. 32 966,840,818.40 710,223,150.82 851,360,603.66 683,798,086.83
Total equity attributable to shareholders
2,654,533,766.99 2,404,511,849.60 2,570,134,782.90 2,413,669,946.95
of the Company
Non-controlling interests 5,910.84 - 5,781.64 -
Total shareholders' equity 2,654,539,677.83 2,404,511,849.60 2,570,140,564.54 2,413,669,946.95
Total liabilities and shareholders'
3,760,923,285.37 3,067,960,180.38 3,599,691,650.26 3,046,834,465.19
equity
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
8
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated and Company Income Statement
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019 Year ended 31/12/2018
Item Note
Consolidated Company Consolidated Company
I.Operating income V.33 3,704,210,734.90 140,511,246.61 3,400,450,599.90 130,901,823.99
Less:operating costs V.33 2,217,207,732.04 21,776,539.35 1,993,809,774.20 19,010,293.07
Taxes and surcharges V.34 28,192,789.55 4,623,611.23 33,769,344.40 4,340,938.33
Selling and distribution expenses V.35 865,792,078.61 1,130,383.07 856,970,173.10 -
General and administrative expenses V.36 240,619,989.04 84,134,946.30 219,162,525.85 62,841,044.26
Research and development expenses V.37 45,057,740.25 17,580,327.66 47,350,342.82 24,155,557.54
Financial expenses V.38 32,815,277.57 7,037,707.90 35,916,240.16 9,231,733.69
Including: Interest expenses 23,975,351.93 8,393,727.80 27,552,558.81 10,189,512.00
Interest income 1,956,316.52 1,696,829.44 2,269,447.05 1,756,834.88
Add: Other income V.39 18,428,906.18 9,066,722.30 19,375,618.48 7,689,684.27
Investment income ("-" for losses) V.40 1,787,907.10 114,542,774.70 1,001,545.06 144,001,545.06
Including: Income from investment in associates and joint ventures
1,787,907.10 1,542,774.70 1,001,545.06 1,001,545.06
("-" for losses)
Gain from de-recognition of financial assets measured at amortized
- -
costs ("-" for losses)
Gain from net exposure hedging ("-" for losses) - -
Gain from fair value changes ("-" for losses) - - - -
Credit impairment losses ("-" for losses) V.41 -16,640,961.07 -100,882.96
Asset impairment losses ("-" for losses) V.42 -4,295,134.48 - -3,264,956.18 -46,068.70
Gains from assets disposal ("-" for losses) V.43 -926,118.60 -537,935.27 -181,302.24 -51,942.13
II.Operating profit ("-" for losses) 272,879,726.97 127,198,409.87 230,403,104.49 162,915,475.60
Add: Non-operating income V.44 4,754,105.30 88,886.65 1,446,357.53 38,080.00
Less: Non-operating expenses V.45 1,400,188.87 210,174.24 652,514.97 446,782.97
III.Profit before income tax ("-" for losses) 276,233,643.40 127,077,122.28 231,196,947.05 162,506,772.63
Less: Income tax expenses V.46 60,324,629.25 223,258.88 47,361,851.76 405,968.14
IV.Net profit for the year ("-" for net losses) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
(1) Classification according to operation continuity
Including: Net profit from continuing operations ("-" for net loss) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
Net profit from discontinued operations ("-" for net loss) - - - -
(2) Classification according to attibute
Including: Shareholders of the company ("-" for net loss) 215,909,014.15 126,853,863.40 183,835,095.29 162,100,804.49
Non-controlling interests ("-" for net loss)
V.Other comprehensive income, net of tax 4,502,059.89 - 6,081,568.47 -
Other comprehensive income (net of tax) attributable to shareholders of
4,501,930.69 - 6,081,302.61 -
the company
A.Items that will not be reclassified to profit or loss - - - -
B. Items that may be reclassified to profit or loss 4,501,930.69 - 6,081,302.61 -
a.Share of other comprehensive income of the equity method
- - - -
investments
b. Gains or losses arising from changes in fair value of other debt
- -
instrument investments
c. Gains or losses arising from changes in fair value of available-for-
- -
sale financial assets
d. Amount included in other comprehensive due to reclassification of
- -
financial assets
e. Gain or losses arising from reclassification of held-to-maturiey
- -
investments to available-for-sale financial assets
f.Translation differences arising from translation of foreign currency
4,501,930.69 - 6,081,302.61 -
financial statements
g. Others - - - -
Other comprehensive income (net of tax) attributable to non-controlling
129.20 - 265.86 -
interests
VI.Total comprehensive income for the year 220,411,074.04 126,853,863.40 189,916,663.76 162,100,804.49
Attributable to: Shareholders of the company 220,410,944.84 126,853,863.40 189,916,397.90 162,100,804.49
Non-controlling interests 129.20 - 265.86 -
VII.Earnings per share:
(1) Basic earnings per share 0.4943 0.4190
(2)Diluted earnings per share 0.4943 0.4190
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
9
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated and Company Cash Flow Statement
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019 Year ended 31/12/2018
Item Note
Consolidated Company Consolidated Company
I.Cash flows from operating activities
Cash received from sales of goods and rendering of services 4,058,167,395.57 129,299,543.07 3,810,404,536.16 116,016,128.07
Cash received from refund of taxes 5,510,592.39 301,416.23 4,793,245.20 -
Cash received from other operating activities V.47 93,832,379.85 3,935,449,332.96 49,628,593.69 3,085,141,911.13
Subtotal of cash inflows from operating activities 4,157,510,367.81 4,065,050,292.26 3,864,826,375.05 3,201,158,039.20
Cash paid for purchasing goods and services 2,398,294,588.87 - 2,189,921,981.01 300,000.00
Cash paid to and for employees 584,435,566.86 74,123,969.83 583,417,253.40 58,785,131.65
Cash paid for tax and surcharges 241,905,980.66 12,227,836.75 305,622,391.83 10,909,143.22
Cash paid for other operating activities V.47 488,053,462.81 3,807,983,200.74 454,236,959.19 3,050,352,344.19
Subtotal of cash outflows in operating activities 3,712,689,599.20 3,894,335,007.32 3,533,198,585.43 3,120,346,619.06
Net cash flows from operating activities 444,820,768.61 170,715,284.94 331,627,789.62 80,811,420.14
II. Cash flows from investing activities
Cash received from disposal of investments - - - -
Cash received from returns on investments - 113,000,000.00 - 143,000,000.00
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets
626,107.64 134,060.00 53,280.03 1,430.00
Net cash received from disposal of subsidiaries and other business units - - - -
Cash received from other investing activities - - - -
Subtotal of cash inflows from investing activities 626,107.64 113,134,060.00 53,280.03 143,001,430.00
Cash paid to acquire fixed assets, intangible assets and other long-term
assets
166,689,454.32 40,173,154.98 146,877,130.29 27,763,546.06
Cash paid to acquire investments - - - -
Net cash paid to acquire subsidiaries and other business units - - - -
Cash paid for other investing activities - - - -
Subtotal of cash outflows in investing activities 166,689,454.32 40,173,154.98 146,877,130.29 27,763,546.06
Net cash flows from investing activities -166,063,346.68 72,960,905.02 -146,823,850.26 115,237,883.94
III. Cash flows from financing activities：
Cash received from capital contributions 18,585,600.00 18,585,600.00 - -
Including: Cash received from capital contributions by non-controlling
intetests of subsidiaries
- - - -
Cash received from loans 700,262,726.76 670,000,000.00 741,192,340.23 700,000,000.00
Cash received from other financing activities - - - -
Sub-total of cash inflows from financing activities 718,848,326.76 688,585,600.00 741,192,340.23 700,000,000.00
Cash repayments of borrowings 681,461,355.87 635,000,000.00 832,333,208.63 774,861,928.00
Cash paid for dividends and profits distribution and interests 111,024,929.61 110,048,303.96 116,690,155.91 115,249,277.23
Including: Cash payments for dividends or profit to non-controlling intetests
of subsidiaries
- - - -
Cash paid for other financing activities V.47 53,117,325.02 53,117,325.02 - -
Sub-total of cash outflows in financing activities 845,603,610.50 798,165,628.98 949,023,364.54 890,111,205.23
Net cash flows from financing activities -126,755,283.74 -109,580,028.98 -207,831,024.31 -190,111,205.23
IV. Effect of foreign exchange rate changes on cash and cash equivalents 468,366.93 31,718.77 702,253.60 73,422.99
V. Net increase in cash and cash equivalents 152,470,505.12 134,127,879.75 -22,324,831.35 6,011,521.84
Add: cash and cash equivalents at beginning of year 162,623,059.97 134,970,466.27 184,947,891.32 128,958,944.43
VI.Cash and cash equivalent at end of year V.48 315,093,565.09 269,098,346.02 162,623,059.97 134,970,466.27
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
10
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Total shareholders’ equity attributable to shareholders of the parent company
Item Non-
Other
Less: treasury Specific controlling Total
Share capital Capital reserve comprehensive Surplus reserve Retained earnings
shares reserve interests
income
I. Balance at the end of prior year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
Add：Changes in accounting policies - - - - - - - - -
Correction of prior period errors - - - - - - - - -
Business combination involving enterprises under common control - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
III.Changes in equity during the year( "- "for decrease) 4,224,000.00 18,774,571.10 71,267,118.78 4,501,930.69 - 12,685,386.34 115,480,214.74 129.20 84,399,113.29
(I)Total comprehensive income - - - 4,501,930.69 - - 215,909,014.15 129.20 220,411,074.04
(II)Shareholders' contributions and decrease of capital 4,224,000.00 18,774,571.10 71,267,118.78 - - - - - -48,268,547.68
1.Contribution by ordinary shareholders 4,224,000.00 14,361,600.00 71,267,118.78 - - - - - -52,681,518.78
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - 4,440,625.91 - - - - - - 4,440,625.91
4. Others - -27,654.81 - - - - - - -27,654.81
(III) Appropriation of profits - - - - - 12,685,386.34 -100,428,799.41 - -87,743,413.07
1. Appropriation for surplus reserves - - - - - 12,685,386.34 -12,685,386.34 - -
2. Accrual of general risk reserve - - - - - - - - -
3. Distributions to shareholders - - - - - - -87,743,413.07 - -87,743,413.07
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - - -
6. Others - - - - - - - - -
(V)Specific Reserve - - - - - - - - -
1. Appropriation during the year - - - - - - - - -
2.Utilisation during the year - - - - - - - - -
(VI)Others - - - - - - - - -
IV.Balance at end of current year 442,968,881.00 1,081,230,215.32 71,267,118.78 -940,209.09 - 235,701,180.14 966,840,818.40 5,910.84 2,654,539,677.83
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
11
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2018
Total shareholders’ equity attributable to shareholders of the parent company
Item Non-
Other
Less: treasury Specific controlling Total
Share capital Capital reserve comprehensive Surplus reserve Retained earnings
shares reserve interests
income
I. Balance at the end of prior year 438,744,881.00 1,062,455,644.22 - -11,523,442.39 - 206,805,713.35 771,484,565.02 5,515.78 2,467,972,876.98
Add：Changes in accounting policies - - - - - - - - -
Correction of prior period errors - - - - - - - - -
Business combination involving enterprises under common control - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,062,455,644.22 - -11,523,442.39 - 206,805,713.35 771,484,565.02 5,515.78 2,467,972,876.98
III.Changes in equity during the year( "- "for decrease) - - - 6,081,302.61 - 16,210,080.45 79,876,038.64 265.86 102,167,687.56
(I)Total comprehensive income - - - 6,081,302.61 - - 183,835,095.29 265.86 189,916,663.76
(II)Shareholders' contributions and decrease of capital - - - - - - - - -
1.Contribution by ordinary shareholders - - - - - - - - -
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - - -
4. Others - - - - - - - - -
(III) Appropriation of profits - - - - - 16,210,080.45 -103,959,056.65 - -87,748,976.20
1. Appropriation for surplus reserves - - - - - 16,210,080.45 -16,210,080.45 - -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,748,976.20 - -87,748,976.20
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - - -
6. Others - - - - - - - - -
(V)Specific Reserve - - - - - - - - -
1. Appropriation during the year - - - - - - - - -
2.Utilisation during the year - - - - - - - - -
(VI)Others - - - - - - - - -
IV.Balance at end of current year 438,744,881.00 1,062,455,644.22 - -5,442,139.78 - 223,015,793.80 851,360,603.66 5,781.64 2,570,140,564.54
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
12
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2019
Other
Item Less: treasury Specific
Share capital Capital reserve comprehensive Surplus reserve Retained earnings Total
shares reserve
income
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
Add：Changes in accounting policies - - - - - - - -
Correction of prior period errors - - - - - - - -
Others - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
III.Changes in equity during the year( "- "for decrease) 4,224,000.00 18,774,571.10 71,267,118.78 - - 12,685,386.34 26,425,063.99 -9,158,097.35
(I)Total comprehensive income - - - - - - 126,853,863.40 126,853,863.40
(II)Shareholders' contributions and decrease of capital 4,224,000.00 18,774,571.10 71,267,118.78 - - - - -48,268,547.68
1.Contribution by ordinary shareholders 4,224,000.00 14,361,600.00 71,267,118.78 - - - - -52,681,518.78
2. Other equity holders’ contribution - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - 4,440,625.91 - - - - - 4,440,625.91
4. Others - -27,654.81 - - - - - -27,654.81
(III) Appropriation of profits - - - - - 12,685,386.34 -100,428,799.41 -87,743,413.07
1. Appropriation for surplus reserves - - - - - 12,685,386.34 -12,685,386.34 -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,743,413.07 -87,743,413.07
4. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - -
6. Others - - - - - - - -
(V)Specific Reserve - - - - - - - -
1. Appropriation during the year - - - - - - - -
2.Utilisation during the year - - - - - - - -
(VI)Others - - - - - - - -
IV.Balance at end of current year 442,968,881.00 1,086,885,756.42 71,267,118.78 - - 235,701,180.14 710,223,150.82 2,404,511,849.60
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
13
FIYTA Precision Technology Co., Ltd. 2019 Annual Report, Full Text
Statement of Changes in Shareholders’ Equity
For the year ended 31 December 2019
Prepared by: FIYTA Precision Technology Co., Ltd. Expressed in RMB
Year ended 31/12/2018
Less: Other
Item Specific Retained
Share capital Capital reserve treasury comprehensive Surplus reserve Total
reserve earnings
shares income
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 - - - 206,805,713.35 625,656,338.99 2,339,318,118.66
Add：Changes in accounting policies - - - - - - - -
Correction of prior period errors - - - - - - - -
Others - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,068,111,185.32 - - - 206,805,713.35 625,656,338.99 2,339,318,118.66
III.Changes in equity during the year( "- "for decrease) - - - - - 16,210,080.45 58,141,747.84 74,351,828.29
(I)Total comprehensive income - - - - - - 162,100,804.49 162,100,804.49
(II)Shareholders' contributions and decrease of capital - - - - - - - -
1.Contribution by ordinary shareholders - - - - - - - -
2. Other equity holders’ contribution - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - -
4. Others - - - - - - - -
(III) Appropriation of profits - - - - - 16,210,080.45 -103,959,056.65 -87,748,976.20
1. Appropriation for surplus reserves - - - - - 16,210,080.45 -16,210,080.45 -
2. Accrual of general risk reserve - - - - - - - -
3. Distributions to shareholders - - - - - - -87,748,976.20 -87,748,976.20
4. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Share capital increased by capital reserves transfer - - - - - - - -
2.Share capital increased by surplus reserves transfer - - - - - - - -
3.Transfer of surplus reserve to offset losses - - - - - - - -
4. Retained earnings transferred from movements of defined benefit plan - - - - - - - -
5. Other comprehensive income transferred to retained earning - - - - - - - -
6. Others - - - - - - - -
(V)Specific Reserve - - - - - - - -
1. Appropriation during the year - - - - - - - -
2.Utilisation during the year - - - - - - - -
(VI)Others - - - - - - - -
IV.Balance at end of current year 438,744,881.00 1,068,111,185.32 - - - 223,015,793.80 683,798,086.83 2,413,669,946.95
Legal representative: The person in charge of accounting affairs: The head of the accounting department:
14
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Notes to the Financial Statements
I. Company status
1. Company’s profile
FIYTA Precision Technology Co., Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259 issued by the
General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time Industrial Company by the
promoter of China National Aero-Technology Import and Export Shenzhen Industry & Trade Center (name changed to “China National
Aero-Technology Shenzhen Co., Ltd” lately) on 25 December 1992, and the name changed to “Shenzhen FIYTA Holdings Limited”. The
headquarters is located at FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District, Shenzhen, Guangdong Province.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen Special Economic Zone
Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special shares (B shares) publicly on 10 March 1993. On
3 June 1993, both the Company’s A shares and B shares were listed and traded on Shenzhen Stock Exchange pursuant to the approval of
Shen Zheng Ban Fu[1993]20 issued by Shenzhen Securities Regulatory Office and Shen Zheng Shi Zi (1993)16 issued by Shenzhen
Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of Shenzhen Municipal
Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company") transferred 72,360,000 corporate
shares (accounting for 52.24% of the Company's total share capital) to Shenzhen China Aviation Group Company Limited (previously
known as "Shenzhen China Aviation Industry Company Limited", hereinafter referred to as "China National Aviation Group") according to
share transfer agreement signed by both parties. As a result, the Company’s controlling shareholder changed from CATIC Shenzhen
Company to China National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the prerequisite of maintaining the Company's total of
249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1 shares per 10 tradable shares to all the
tradable share shareholders registered on registration date designated by the split-share reform program. At that point, after the reform,
the shares held by China National Aviation Group reduced 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 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
16
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Industry and Commerce. On 8 April 2011, the Company increased its share capital by 4 shares for every 10 shares by capitalizing the
capital reserve on the basis of total shares of 280,548,479 as at 31 December 2010. Total shares of the Company changed to 392,767,870
shares after the increase.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of non-public offering of stocks of
Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the approval of State-owned Assets Supervision and Administration
Commission of the State Council (SASAC) “Reply of non-public offering of stocks of Shenzhen FIYTA Holdings Limited”
(SASAC(2015)415), the Company was approved to issue not more than 46,911,649 ordinary shares (A shares) through non-public offering.
After the completion of the non-public offering of shares on 22 December 2015, the Company’s registered capital was increased to
RMB438,744,881.00 and the equity capital of the Company held by China National Aviation Group reduced to 37.15%.
On 4 January 2019, pursuant to the approval by “Reply to approval of Implementation of First Phase of Restricted Share Incentive plan of
FIYTA (Group) Holding Ltd.” (GuoZi KaoFen [2018] No. 936) issued by SASAC, and approved by the board of directors and shareholder’s
general meeting, the Company implemented the incentive plan. On 11 January 2019, the restricted share incentive plan (first phase)
granted a total of 4,224,000 restricted A-shares to 128 incentive individuals. As a result, the Company’s registered capital increased to
RMB442,968,881.00 and the equity capital held by China National Aviation Group decreased to 36.79%.
As of 31 December 2019, total outstanding shares issued by the Company was 442,968,881 shares. Refer to Note V. 27 “Share capital” for
details.
According to the “Proposal of Change the Company’s name and initials for A share stock” approved by the 3rd extraordinary shareholder’s
meeting in 2019, and upon examination and approval by Shenzhen Administration for Industry and Commerce, the Company’s name was
changed from “FIYTA (Group) Co., Ltd. to “FIYTA Precision Technology Co., Ltd.” since 9 January 2020.
Corporate governance established by the Company includes General Meeting of Shareholders, Board of Directors, Board of Supervisors,
Strategy Committee, Audit Committee, and Nomination, Remuneration and Evaluation Committee. The Company’s functional departments
include Administration, Party Affairs, Inspection and Audit, Finance, Human Resources, Strategy and Operating, Data and Information, and
Property Management departments.
The business scope of the Company and its subsidiaries (collectively as “the Group”) mainly includes: producing and selling of analogue
indication mechanical watches, quartz watches and its movements, components, various timing devices, processing and wholesaling karat
gold jewellery watches, intelligent watches; domestic commercial and material supply and distributing business (excluding goods under
exclusive operational rights, special control and exclusive sales); property management and leasing; providing design service; research,
design, production, sales and technical support for precise watches and components; import and export business (according to Shen Mao
Guan Deng Zheng Zi No.2007-072). The legal representative of the Company is Huang Yongfeng.
The financial statements have been approved and authorised for issue by the 16th meeting of the 9th Board of Directors on 18 March 2020.
2. Scope of consolidation
There are 11 subsidiaries that are included in the Company’s scope of consolidation for year 2019, see Note VII “Interests in other entities”
for detail. No changes in scope of consolidation in 2019.
17
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
II. Basis of preparation
The financial statement is prepared in accordance with the requirements of Accounting Standards for Business Enterprises and associated
application guidance, illustrations to the standards and related pronouncements (collectively known as “Accounting Standards for Business
Enterprises” or “CAS”). These financial statements also comply with the disclosure requirements of “Regulation on the Preparation of
Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial Reports” (revised in 2014)
issued by China Securities Regulatory Commission (CSRC).
The financial statements of the Company have been prepared on going concern basis.
Accrual basis is adopted for the Group’s accounting activity. Except for some financial instruments, the financial statements are measured
using historical cost. In case of impairment occurred on assets, provisions for impairment are provided for in accordance with related
regulations.
III. Significant accounting policies and accounting estimates
Based on actual business characteristics, the Group determined fixed asset depreciation, intangible assets amortization and revenue
recognition policies. Refer to Note III 15, Note III 18 and Note III 25 for specific accounting policies.
1. Statement of compliance with 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 2019, the results of
operations and the cash flows for the year then ended of the Company.
2. Accounting period
The accounting period of the Company is the calendar year, i.e. from 1 January to 31 December of each year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording currency.
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 Group’s financial statements is Renminbi.
5. Accounting treatment for business combinations involving entities under common control and not under common control
(1) Business combination involving entities under common control
For a business combination involving enterprises under common control, the assets acquired and liabilities assumed are measured based
on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date, except for
18
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
adjustments due to different accounting policies. The difference between the carrying amount of the net assets acquired and the
consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the capital reserve,
with any excess adjusted against retained earnings.
Business combinations involving entities under common control achieved in stages that involves multiple transactions
In the separate financial statements, initial investment cost is the acquirer’s share of the carrying amount of the net assets of the acquiree
in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial
investment cost and the sum of carrying amount of investment prior to combination date and carrying amount of new considerations paid
for the combination at the combination date is adjusted to capital reserve (share premium). If the capital reserve is not sufficient to absorb
the difference, any excess is adjusted against retained earnings.
In the consolidated financial statements, assets acquired and liabilities assumed by acquirer in a business combination are measured at
their carrying amount as recorded in the consolidated financial statements of the ultimate controlling party at the combination date, except
for adjustments due to different accounting policies. The difference between the carrying amount of the net assets acquired and the sum of
carrying amount of investment prior to combination date and carrying amount of new considerations paid for the combination at the
combination date is adjusted to capital reserve (share premium). If the capital reserve is not sufficient to absorb the difference, any excess
is adjusted against retained earnings. The profit or loss, other comprehensive income and changes in other owner’s equity recognized by
the acquirer during the period from the later of initial investment date and the date that the acquirer and acquiree both under common
ultimate control to the combination date are offset the opening retained earnings or profit for loss for the current period in the comparative
statements.
(2) Business combinations involving entities not under common control
For business combinations involving enterprises not under common control, the consideration costs include acquisition-date fair value of
assets transferred, liabilities incurred or assumed and equity securities issued by the acquirer in exchange for control of the acquiree. At
the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are measured at their fair value. The acquiree’s
identifiable asset, liabilities and contingent liabilities, are recognised at their acquisition-date fair value.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is
recognised as goodwill, and subsequently measured on the basis of its cost less accumulated impairment provisions. Where the
combination cost is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised in
profit or loss for the current period after reassessment.
Business combinations involving entities not under common control achieved in stages that involves multiple transactions
In the separate financial statements, the initial investment cost is the sum of the carrying amount of equity investment of the acquiree held
prior to the acquisition date and additional investment cost at the acquisition date. When the previously-held equity investment which was
19
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
accounted for under the equity method before the acquisition date, any other comprehensive income previously recognized is not adjusted
on acquisition date. When the investment is disposed of in later date, the amount that was recognized in other comprehensive income is
recognized on the same basis as would be required if the investee had disposed directly of the related assets or liabilities. The owners’
equity recognized as the changes of the investee’s other owners’ equity except for net profit or loss, other comprehensive income and
profit distribution, are transferred to profit or loss for the current period when disposing the investment. When the previously-held equity
investment which was measured at fair value before the acquisition date, the accumulated changes in fair value included in other
comprehensive income is transferred to profit or loss for the current period upon commencement of the cost method.
In the consolidated financial statements, the combination cost is the sum of the consideration paid at the acquisition date and the fair value
of equity investment of the acquiree held prior to the acquisition date. The cost of equity investment of the acquiree held prior to the
acquisition date is re-measured at the fair value at the acquisition date, the difference between the fair value and carrying value is
recognized as profit or loss for the current period. Other comprehensive income and changes of other owners’ equity from the equity
interest held in the acquiree prior to the acquisition date are transferred to profit or loss for the current period, except for other
comprehensive income resulted in the change of net liabilities or assets in the investee’s re-measurement of defined benefit plan.
(3) Transaction costs for business combination
The overhead for the business combination, including the expenses for audit, legal services, valuation advisory, and other administrative
expenses, are recorded in profit or loss for the current period when incurred. The transaction costs of equity or debt securities issued as
the considerations of business combination are included in the initial recognition amount of the equity or debt securities.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
The scope of consolidated financial statements is based on control. Control exists when the Company has power over the investee;
exposure, or rights to variable returns from its involvement with the investee and has the ability to affect its returns through its power over
the investee. A subsidiary is an entity that is controlled by the Company (including enterprise, a portion of an investee as a deemed
separate component, and structured entity controlled by the enterprise).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant information. When preparing consolidated financial statements, the accounting policies and accounting
periods of the subsidiaries should be consistent with those established by the Company, and all significant intra-group balances and
transactions are eliminated.
Where a subsidiary or business has been acquired through a business combination involving enterprises under common control in the
reporting period, the subsidiary or business is deemed to be included in the consolidated financial statements from the date they are
controlled by the ultimate controlling party. Their operating results and cash flows are included in the consolidated income statement and
consolidated cash flow statement respectively from the date they are controlled by the ultimate controlling party.
Where a subsidiary or business has been acquired through a business combination not involving enterprises under common control in the
20
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
reporting period, the operating results and cash flow of the subsidiary or business after the acquisition date are included in the
consolidated income statement and consolidated cash flow statement respectively.
The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-controlling interests and presented separately in
the consolidated balance sheet within shareholders’ equity. The portion of net profit or loss of subsidiaries for the period attributable to
non-controlling interests is presented separately in the consolidated income statement below the “net profit” line item. When the amount of
loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders’ share
of the opening owners’ equity of the subsidiary, the excess is still allocated against the non-controlling interests.
(3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a portion of an
interest in a subsidiary without a change in control, the transaction is treated as equity transaction, and the book value of shareholder’s
equity attributed to the Company and to the non-controlling interest is adjusted to reflect the change in the Company’s interest in the
subsidiaries. The difference between the proportion interests of the subsidiary’s net assets being acquired or disposed and the amount of
the consideration paid or received is adjusted to the capital reserve in the consolidated balance sheet, with any excess adjusted to
retained earnings.
(4) Losing control over the subsidiary
When the Company loses control over a subsidiary because of disposing part of equity investment or other reasons, the remaining part of
the equity investment is re-measured at fair value at the date when the control is lost. A gain or loss is recognised in the current period and
is calculated by the aggregate of consideration received in disposal and the fair value of remaining part of the equity investment deducting
the share of net assets in proportion to previous shareholding percentage in the former subsidiary since acquisition date and the goodwill.
Other comprehensive income related to the former subsidiary is transferred to profit or loss when the control is lost, except for the
comprehensive income arising from the movement of net liabilities or assets in the former subsidiary’s re-measurement of defined benefit
plan.
7. Joint arrangement classification and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies joint arrangements into joint
operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relating to
the arrangement.
The Company recognizes the following items relating to its interest in a joint operation, and account for them in accordance with relevant
accounting standards:
A、its solely-held assets, and its share of any assets held jointly;
B、its solely-assumed liabilities, and its share of any liabilities assumed jointly;
C、its revenue from the sale of its share of the output arising from the joint operation;
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
D、its share of the revenue from the sale of the output by the joint operation; and
E、its solely-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the joint investors have rights to the net assets of the arrangement.
The Company adopts equity method under long-term equity investment in accounting for its investment in joint venture.
8. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term, highly liquid
investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency financial statements
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company, using the exchange rates prevailing at the dates
of the transactions.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date. The
resulting exchange differences between the spot exchange rate on balance sheet date and the spot exchange rate on initial recognition or
on the previous balance sheet date are recognised in profit or loss. Non-monetary items that are measured at historical cost in foreign
currencies are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair value
in foreign currencies are translated using the exchange rate at the date the fair value is determined. The resulting exchange differences
are recognised in profit or loss.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets and liabilities of foreign operation are
translated to Renminbi at the spot exchange rate at the balance sheet date. Equity items, excluding “retained earnings”, are translated to
Renminbi at the spot exchange rates at the transaction dates.
Income and expenses of foreign operation are translated to Renminbi at the spot exchange rates.
Cash flow statement of foreign operation is translated to Renminbi at the spot exchange rates [the rates determined under a systematic
and rational method that approximate the spot exchange rates] at the cash flow occurrence dates. Effect of foreign exchange rate changes
on cash and cash equivalents is presented separately as “Effect of foreign exchange rate changes on cash and cash equivalents” in the
cash flow statement.
The resulting translation differences are recognised in other comprehensive income in shareholders’ equity of balance sheet.
The translation differences accumulated in shareholders’ equity with respect to a foreign operation are transferred to profit or loss in the
period when the foreign operation is disposed.
10. Financial instruments
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or an equity instrument of other
parties.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognised when the Group becomes one party of financial instrument contracts.
If one of the following conditions is met, the financial assets are terminated:
① The right of the contract to receive the cash flows of financial assets terminates
② The financial asset has been transferred, and is in accordance with the following conditions for derecognition.
If the obligations of financial liability have been discharged in total or in part, derecognize all or part of it. If the Group (debtor) makes an
agreement with the creditor to replace the current financial liability of assuming new financial liability which contract provisions are different
in substance, derecognize the current financial liability and meanwhile recognize as the new financial liability.
If the financial assets are traded in regular ways, they are recognised and derecognised at the transaction date.
(2) Classification and measurement of financial assets
Financial assets are classified into the following three categories depends on the Group’s business mode of managing financial assets and
cash flow characteristics of financial assets: financial assets measured at amortized cost, financial assets at fair value through other
comprehensive income and financial assets at fair value through profit or loss.
Financial assets measured at amortised cost
The Group shall classify financial assets that meet the following conditions and are not designated as financial assets at fair value through
profit or loss as financial assets measured at amortized cost:
The Group’s business model for managing the financial assets is to collect contractual cash flows;
The terms of the financial asset contract stipulate that cash flows generated on a specific date are only payments of principal and interest
based on the amount of outstanding principal.
After initial recognition, the real interest rate method is used to measure the amortized cost of such financial assets. Profits or losses
arising from financial assets measured at amortized costs and not part of any hedging relationship are included in current profits and
losses when the recognition is terminated, amortized or impaired according to the real interest rate.
Financial assets at fair value through other comprehensive income
The Group shall classify financial assets that meet the following conditions and are not designated as financial assets measured at fair
value and whose changes are recorded in current profits and losses as financial assets measured at fair value through other
comprehensive income:
The Group’s business model for managing the financial assets is both to collect contractual cash flows and to sell the financial assets;
The terms of the financial asset contract stipulate that cash flows generated on a specific date are only payments of principal and interest
based on the amount of outstanding principal.
After initial recognition, financial assets are subsequently measured at fair value. Interest, impairment losses or gains and exchange gains
23
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
calculated by the effective interest rate method are recognised in profit or loss, while other gains or losses are recognised in other
comprehensive gains. When derecognized, the accumulated gains or losses previously recognised in other comprehensive gains are
transferred from other comprehensive gains and recorded in current profits and losses.
Financial assets at fair value through profit or loss
In addition to the above financial assets which are measured at amortized cost or at fair value through other comprehensive income, the
Group classifies all other financial assets as financial assets at fair value through profit or loss. When initial recognition, in order to
eliminate or significantly reduce accounting mismatches, the Group irrevocably designates some financial assets that should have been
measured at amortized cost or at fair value through other comprehensive gains as financial assets at fair value through profit or loss.
After initial recognition, the financial assets are subsequently measured at fair value, and the profits or losses (including interest and
dividend income) generated from which are recognised in profit or loss, unless the financial assets are part of the hedging relationship.
However, for non-tradable equity instrument investment, when initially recognized, the Group irrevocably designates them as financial
assets at fair value through other comprehensive gains. The designation is made on the basis of individual investment, and the relevant
investment conforms to the definition of equity instruments from the issuer’s point of view.
After initial recognition, financial assets are subsequently measured at fair value. Dividend income that meets the requirements is
recognised in profit and loss, and other gains or losses and changes in fair value are recognised in other comprehensive gains. When
derecognized, the accumulated gains or losses previously recognised in other comprehensive gains are transferred from other
comprehensive gains to retained earnings.
The business model of managing financial assets refers to how the group manages financial assets to generate cash flow. The business
model decides whether the source of cash flow of financial assets managed by the Group is to collect contract cash flow, sell financial
assets or both of them. Based on objective facts and the specific business objectives of financial assets management decided by key
managers, the Group determines the business model of financial assets management.
The Group evaluates the characteristics of the contract cash flow of financial assets to determine whether the contract cash flow generated
by the relevant financial assets on a specific date is only to pay principal and interest based on the amount of unpaid principal. Among
them, principal refers to the fair value of financial assets at the time of initial confirmation; interest includes the consideration of time value
of money, credit risk related to the amount of unpaid principal in a specific period, and other basic borrowing risks, costs and profits. In
addition, the Group evaluates the terms and conditions of the contracts that may lead to changes in the time distribution or amount of cash
flow in financial asset contracts to determine whether they meet the requirements of the above contract cash flow characteristics.
Only when the Group changes its business model of managing financial assets, all the financial assets affected shall be reclassified on the
first day of the first reporting period after the business model changes, otherwise, financial assets shall not be reclassified after initial
confirmation.
Financial assets are measured at fair value at initial recognition. For financial assets at fair value through profits and losses, the related
transaction costs are directly recognized through profits and losses, and the related transaction costs of other types of financial assets are
included in the initial recognition amounts.
24
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(3) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair value through profit or loss (FVTPL), and financial
liabilities measured at amortized cost. For financial liabilities not classified as at fair value through profit or loss, the transaction costs are
recognised in the initially recognised amount.
Financial liabilities at fair value through profits and losses
Financial liabilities at FVTPL include transaction financial liabilities and financial liabilities designated as at fair value through profit or loss
in the initial recognition. Such financial liabilities are subsequently measured at fair value, all gains and losses arising from changes in fair
value and dividend and interest expense relative to the financial liabilities are recognised in profit or loss for the current period.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost using the effective interest method; gains and losses arising from
derecognition or amortization is recognised in profit or loss for the current period.
Distinction between financial liabilities and equity instruments
The financial liability is the liability that meets one of following criteria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets or financial liabilities with other parties.
③ A contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be
obliged to deliver a variable number of the entity’s own equity instruments.
④ A derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed
number of the entity’s own equity instruments.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
If the group cannot unconditionally avoid fulfilling a contractual obligation by delivering cash or other financial assets, the contractual
obligation meets the definition of financial liability.
If a financial instrument must or are able to be settled by the group’s own equity instrument, the group should consider whether the group’s
equity instrument as the settlement instrument is a substitute of cash or other financial assets or the residual interest in the assets of an
entity after deducting all of its liabilities. If the former, the tool is the group’s financial liability; if the latter, the tool is the equity instrument of
the group.
(4) Fair value of financial instruments
Refer to Note III. 11 for determining the fair value of financial assets and financial liabilities.
(5) Impairment of financial assets
On the basis of expected credit losses, the Group performs impairment assessment on the following items and confirms the loss provision.
financial assets measured at amortized cost;
debt investments at fair value through other comprehensive income;
25
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Measurement of expected credit losses
The expected credit losses refer to the weighted average of the credit losses of financial instruments that are weighted by the risk of
default. Credit loss refers to the difference between all contractual cash flows receivable from the contract and all cash flows expected to
be received by the Group at the original effective interest rate, that is, the present value of all cash shortages.
The Group separately measures the expected credit losses of financial instruments at different stages. The credit risk on a financial
instrument has not increased significantly since initial recognition, which is in the first stage. The Group shall measure the loss allowance
for that financial instrument at an amount equal to 12-month expected credit losses. If the credit risk of financial instruments has increased
significantly since the initial recognition, but no credit impairment has occurred, which is in the second stage. The Group shall measure the
loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. If the financial instrument has occurred
credit impairment since initial recognition, which is in the third stage, and the Group shall measure the loss allowance for a financial
instrument at an amount equal to the lifetime expected credit losses.
For financial instruments with lower credit risk at the balance sheet date, the Group assumes that their credit risk has not increased
significantly since the initial recognition, and shall measure the loss allowance for that financial instrument at an amount equal to 12-month
expected credit losses.
The lifetime expected credit losses, refer to the expected credit losses caused by all possible defaults during the whole expected lifetime.
The 12-month expected credit losses, refer to the expected credit losses caused by all possible defaults during the 12-month after balance
sheet date (if the expected duration of financial instrument is less than 12 months, then for the expected duration), which is part of the
lifetime expected credit losses.
When measure the expected credit loss, the longest contract period (including the option of renewal) that the group needs to consider is
the longest contract period the enterprise facing credit risk.
For financial instruments in the first stages, second stages and with lower credit risk, the Group calculates interest income on the basis of
their book balances without deduction of impairment provisions and actual interest rates. For financial instruments in the third stage, the
Group calculates interest income according to their book balance minus the impairment provision and the actual interest rate.
For bills receivable, accounts receivable and contract assets, whether or not there are significant financing elements, the Group shall
always measure the loss allowance for them at an amount equal to the lifetime expected credit losses.
According to the characteristics of credit risk, the group divides and combines bills receivable and accounts receivable, contract assets and
leased receivables. On the basis of the combination, the group calculates the expected credit losses. The basis of determining the
combination is as follows:
A﹑ Bills receivable
Bill receivable group 1: Bank acceptance bills
Bill receivable group 2: Trade acceptance bills
B﹑ Accounts receivable
Accounts receivable group 1: Amount receivables of related parties
26
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Accounts receivable group 2: Amount receivables of other customers
For the accounts receivable and bills receivable divided into groups, the group, taking into consideration of historical credit losses, current
situation and forecast of future economic situation, prepares a comparison table between the ageing of accounts receivable and the
lifetime expected credit losses rate to calculate the expected credit losses.
Other receivables
According to the characteristics of credit risk, the group divides other receivables into group. On the basis of the combination, the group
calculates the expected credit losses. The basis of determining the combination is as follows:
Other receivables group 1: Receivables of down payment and guarantee
Other receivables group 2: Petty cash for employees
Other receivables group 3: Social security payment paid on-behalf of employees
Other receivables group 4: Receivables from related parties in scope of consolidation
Other receivables group 5: Others
For other receivables that divided into groups, the Group calculates the expected credit losses through the exposure on risk of default and
expected credit losses rate in the next 12 months or the lifetime of receivables.
Debt investments and other debt investments
For debt investments and other debt investments, the Group calculates the expected credit losses through risk of default and expected
credit losses rate in the next 12 months or the lifetime. according to the nature of the investment, the types of counterparty and risk
exposure.
Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet day with that on initial recognition day, the Group determines the
relative change of default risk of financial instruments during the expected life of financial instruments, to evaluate whether the credit risk of
financial instruments has increased significantly since the initial recognition.
To determine whether credit risk has increased significantly since the initial recognition., the Group considers reasonable and valid
information, including forward-looking information, that can be obtained without unnecessary additional costs or efforts. Information
considered by the Group includes:
The debtor can’t pay principal and interest on the expiration date of the contract;
Serious deterioration of external or internal credit ratings (if any) of financial instruments that have occurred or are expected to occur;
Serious deterioration of the debtor’s operating results that have occurred or are expected to occur;
Changes in the existing or anticipated technological, market, economic or legal environment will have a significant negative impact on the
debtor’s repayment capacity.
According to the nature of financial instruments, the Group evaluates whether credit risk has increased significantly on the basis of a single
financial instrument or a combination of financial instruments. When assessing on the basis of the combination of financial instruments, the
27
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Group can classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk rating.
Financial assets that have occurred credit impairment
On the balance sheet date, the Group assesses whether credit impairment has occurred in financial assets measured at amortized cost
and debt investments measured at fair value through other comprehensive income. When one or more events adversely affect the
expected future cash flow of a financial asset occur, the financial asset becomes a financial asset with credit impairment. Evidence of
credit impairment of financial assets includes the following observable information:
Significant financial difficulties occur to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;
For economic or contractual considerations related to the financial difficulties of the debtor, the Group grants concessions to the debtor
that will not be made under any other circumstances.
The debtor is probable to go bankrupt or undergo other financial restructuring.
Financial difficulties of issuer or debtor lead to the disappearance of financial assets active market.
Presentation of expected credit losses allowance
In order to reflect the changes happened to the credit risk of financial instruments since the initial recognition, the Group recalculates the
expected credit losses on each balance sheet day. The increase or reversal of the loss provision resulting therefrom is recognised as an
impairment loss or gain in the current profit or loss. For financial assets measured at amortized cost, loss provision offsets the carrying
amount of the financial assets shown on the balance sheet; for debt investments measured at fair value through other comprehensive
income, the Group recognizes its loss provision through other comprehensive income and does not offset the financial assets’ carrying
amount.
Write off
If the Group no longer reasonably expects that the financial assets contract cash flow can be recovered fully or partially, the financial
assets book balance will be reduced directly. Such reduction constitutes the derecognition of the financial assets. What usually occurs
when the Group determines that the debtor has no assets or sources of income to generate sufficient cash flows to pay the amount to be
reduced. However, in accordance with the Group’s procedures for recovering due payment, the financial assets reduced may still be
affected by enforcement activities.
If the reduced financial assets are recovered later, the returns as impairment losses shall be included in the profits and losses of the
recovery period.
(6) Transfer of financial assets
Transfer of financial assets refers to the transference or deliverance of financial assets to the other party (the transferee) other than the
issuer of financial assets.
The Group derecognizes a financial asset only if it transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee; the Group should not derecognize a financial asset if it retains substantially all the risks and rewards of ownership of the
financial asset.
28
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The Group neither transfers nor retains substantially all the risks and rewards of ownership, shows as the following circumstances: if the
Group has forgone control over the financial assets, derecognize the financial assets and verify the assets and liabilities; if the Group
retains its control of the financial asset, the financial asset is recognized to the extent of its continuing involvement in the transferred
financial asset and recognize an associated liability is recognized.
(7) Offsetting financial assets and financial liabilities
When the Group has the legal rights to offset the recognized financial assets and financial liabilities and is capable to carry it out, the
Group plans to settlement or realize the financial assets and pay off the financial liabilities in net amount, the financial assets and financial
liabilities shall be presented in the balance sheet at net amount. Except this, financial assets and financial liabilities shall be listed
separately in balance sheet and are not allowed to offset.
(8) Financial instruments that subject to foreign exchange rate volatility risks
Foreign exchange rate risk refers to risk of the fair value or future cash flows varies because of changes in foreign exchange. Foreign
exchange rate risk arises from financial instruments that denominated in foreign currencies other than the recording currency. The
overseas subsidiary of the Company mainly uses Hong Kong Dollar and Swiss Franc for settlement. The Company’s monetary assets and
liabilities that are denominated in foreign currencies are all subject to the impact of foreign exchange rate volatility.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
The Company measures related assets or liabilities at fair value assuming the assets or liabilities are exchanged in an orderly transaction
in the principal market; in the absence of a principal market, assuming the assets or liabilities are exchanged in an orderly transaction in
the most advantageous market. Principal market (or the most advantageous market) is the market that the Company can normally enter
into a transaction on measurement date. The Company adopts the presumptions that would be used by market participants in achieving
the maximized economic value of the assets or liabilities.
For financial assets or financial liabilities with active markets, the Company uses the quoted prices in active markets as their fair value.
Otherwise, the Company uses valuation technique to determine their fair value.
Fair value measurement of a non-financial asset takes into account market participants’ ability to generate economic benefits using the
asset in its best way or by selling it to another market participant that would best use the asset.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximizing the use of relevant observable inputs, and using unobservable inputs only if the observable inputs aren’t available or
impractical.
Fair value level for assets and liabilities measured or disclosed at fair value in the financial statements are determined according to the
significant lowest level input to the entire measurement: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Company can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within
29
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Level 1 that are observable for the assets or liabilities, either directly or indirectly; Level 3 inputs are unobservable inputs for the assets or
liabilities.
At the balance sheet date, the Company re-values assets and liabilities being measured at fair value continuously in the financial
statements to determine whether to change the levels of fair value measurement.
12. Inventories
(1) Classification
Inventories include raw materials, work in progress, and finished goods.
(2) Measurement method of cost of inventories
Inventories are initially measured at cost. Raw materials and finished goods are calculated using weighted average method (except for
branded watches) and specific identification method (for branded watches).
(3) Basis for determining the net realisable value and method for provision for obsolete inventories
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale and relevant taxes. The net realisable value is measured based on the verified evidences and
considerations for the purpose of holding inventories and the effect of post balance sheet events.
Any excess of the cost over the net realisable value of inventories is recognised as a provision for obsolete inventories, and is recognised
in profit or loss. The Company usually recognises provision for decline in value of inventories by a single (type, group) inventory item. If the
factors caused the value of inventory previously written-down have disappeared, the provision for decline in value of inventories previously
made is reversed.
(4) Inventory count system
The Company maintains a perpetual inventory system.
(5) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are charged to profit or loss when they are used.
13. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equity investments in joint ventures and associates. An
associate is an enterprise over which the Company has significant influence.
(1) Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combination involving enterprises under common control is
the Company’s share of the carrying amount of the subsidiary’s equity in the consolidated financial statements of the ultimate controlling
party at the combination date. For a long-term equity investment obtained through a business combination not involving enterprises under
common control, the initial cost is the combination cost.
A long-term equity investment acquired other than through a business combination: A long-term equity investment acquired other than
30
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
through a business combination is initially recognised at the amount of cash paid if the Company acquires the investment by cash, or at
the fair value of the equity securities issued if an investment is acquired by issuing equity securities.
(2) Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method. An investment in a joint venture or an associate is
accounted for using the equity method for subsequent measurement.
For a long-term equity investment which is accounted for using the cost method, Except for cash dividends or profit distributions declared
but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company recognises its
share of the cash dividends or profit distributions declared by the investee as investment income for the current period.
For a long-term equity investment which is accounted for using the equity method, where the initial cost of a long-term equity investment
exceeds the Company’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the investment is initially
recognised at cost. Where the initial investment cost is less than the Company’s interest in the fair value of the investee’s identifiable net
assets at the date of acquisition, the investment is initially recognised at the investor’s share of the fair value of the investee’s identifiable
net assets, and the difference is recognised in profit or loss.
Under the equity method, the Company recognises its share of the investee’s profit or loss and other comprehensive income as investment
income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. Once the
investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by the amount attributable to
the Company. Changes in the Company’s share of the investee’s owners’ equity, other than those arising from the investee’s net profit or
loss, other comprehensive income or profit distribution (referred to as “other changes in owners’ equity”), is recognised directly in the
Company’s equity, and the carrying amount of the investment is adjusted accordingly. In calculating its share of the investee’s net profits or
losses, other comprehensive income and other changes in owners’ equity, the Group recognises investment income and other
comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the
Group based on the fair value of the investee’s identifiable net assets at the date of acquisition.
When the Company becomes capable of exercising joint control or significant influence (but not control) over an investee due to additional
investment or other reasons, the Company uses the fair value of the previously-held equity investment, together with additional investment
cost, as the initial investment cost under the equity method. The difference between the fair value and carrying amount of the
previously-held equity investment, and the accumulated changes in fair value included in other comprehensive income, shall be transferred
to profit or loss for the current period upon commencement of the equity method.
When the Company can no longer exercise joint control of or significant influence over an investee due to partial disposal of the equity
investment or other reasons, the remaining equity investment shall be accounting for using Accounting Standard for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments, and the difference between the fair value and the carrying amount of the
remaining equity investment shall be charged to profit or loss for the current period at the date of the loss of joint control or significant
influence. Any other comprehensive income previously recognised under the equity method shall be accounted for on the same basis as
would have been required if the Company had directly disposed of the related assets or liabilities for the current period upon
discontinuation of the equity method. Other movement of owner’s equity related to original equity investment is transferred to profit or loss
31
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
for the current period.
When the Company can no longer exercise control over an investee due to partial disposal of the equity investment or other reasons, and
the remaining equity after disposal can exercise joint control of or significant influence over an investee, the remaining equity is adjusted as
using equity method from acquisition. When the remaining equity can no longer exercise joint control of or significant influence over an
investee, the remaining equity investment shall be accounted for using Accounting Standard for Business Enterprises No. 22-Recognition
and Measurement of Financial Instruments, and the difference between the fair value and the carrying amount of the remaining equity
investment shall be charged to profit or loss for the current period at the date of loss of control.
When the Company can no longer exercise control over an investee due to new capital injection by other investors, and the Company can
exercise joint control of or significant influence over an investee, the Company recognizes its share of the investee’s new added net assets
using new shareholding percentage. The difference between its new share of the investee’s new added net assets and its decreased
shareholding percentage of the original investment is recognized in profit or loss. And the Company adjusts to the equity method using the
new shareholding percentage as if it uses the equity method since it obtains the investment.
Unrealised profits and losses resulting from transactions between the Company and its associates or joint ventures are eliminated to the
extent of the Company’s interest in the associates or joint ventures. Unrealised losses resulting from transactions between the Company
and its associates or joint ventures are eliminated in the same way as unrealised gains but only to the extent that there is no impairment.
(3) Criteria for determining the existence of joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control. When assessing whether the Company can exercise joint control over an
investee, the Company first considers whether no single participant party is in a position to control the investee’s related activities
unilaterally, and then considers whether strategic decisions relating to the investee’s related activities require the unanimous consent of all
participant parties that sharing of control. All the parties, or a group of the parties, control the arrangement collectively when they must act
together to direct the relevant activities. When more than one combination of the parties can control an arrangement collectively, joint
control does not exist. A party that holds only protective rights does not have joint control of the arrangement.
Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or
joint control over those policies. When determining whether the Company can exercise significant influence over an investee, the effect of
potential voting rights (for example, warrants, share options and convertible bonds) held by the Company or other parties that are currently
exercisable or convertible shall be considered.
When the Company, directly or indirectly through subsidiaries, owns 20% of the investee (including 20%) or more but less than 50% of the
voting shares, it has significant influence over the investee unless there is clear evidence to show that in this case the Company cannot
participate in the production and business decisions of the investee, and cannot form a significant influence. When the Company owns less
than 20% of the voting shares, generally it does not have significant influence over the investee, unless there is clear evidence to show
that in this case the Company can participate in the production and business decisions of the investee so as to form a significant influence.
(4) Method of impairment testing and impairment provision
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
For investments in subsidiaries, associates and joint ventures, refer to Note III. 20 for the Company’s method of asset impairment.
14. Investment property
Investment properties are properties held either to earn rental income or for capital appreciation or for both. The Company’s investment
properties include leased land use rights, land use right held and provided for to transfer after appreciation and leased building and
construction.
Investment properties are initially measured at acquisition cost, and depreciated or amortized using the same policy as that for fixed assets
or intangible assets.
For the impairment of the investment properties accounted for using the cost model, refer to Note III.20.
Gains or losses arising from the sale, transfer, retirement or disposal of an item of investment property are determined as the difference
among the net disposal proceeds, the carrying amount of the item, related taxes and surcharges, and are recognised in profit or loss for
current period.
Depreciation method of investment property is the same as fixed assets. Refer to Note III. 15 for details.
15. Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Company for use in production of goods, use in supply of services, rental or for
administrative purposes with useful lives over one accounting year.
Fixed assets are only recognised when its related economic benefits are likely to flow to the Company and its cost can be reliably
measured.
Fixed asset is initially measured at cost.
(2) Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state of intended use, unless the fixed asset is classified
as held for sale. Not considering impairment provision, the estimated useful lives, residual value rates and depreciation rates of each class
of fixed assets are as follows:
Estimated useful life
Class Residual value rate % Depreciation rate %
(years)
Property and plant 20-35 5.00 4.80-2.70
Machinery and equipment 10 5.00-10.00 9.50-9.00
Electronic equipment 5 5.00 19.00
Motor vehicles 5 5.00 19.00
Others 5 5.00 19.00
For impaired fixed assets, cumulative amount of impairment provision is deducted in determining the depreciation rate.
(3) For the impairment of the fixed assets, please refer to Note III. 20.
33
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(4) Useful lives, estimated residual values and depreciation methods are reviewed at least at each year-end.
The Company adjusts the useful lives of fixed assets if their expected useful lives are different with the original estimates and adjusts the
estimated net residual values if they are different from the original estimates.
(5) Overhaul costs
Overhaul costs occurred in regular inspection are recognized in the cost if there is undoubted evidence to confirm that this part meets the
recognition criteria of fixed assets, otherwise, the overhaul costs are recognized in profit or loss for the current period. Depreciation is
provided during the period of regular overhaul.
16. Construction in progress
Construction in progress is recognized based on the actual construction cost, including all expenditures incurred for construction projects,
capitalised borrowing costs and any other costs directly attributable to bringing the asset to working condition for its intended use.
Construction in progress is transferred to fixed asset when it is ready for its intended use.
For the impairment of construction in progress, please refer to Note III. 20.
17. Borrowing costs
(1) Capitalisation criteria
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalised as part
of the cost of that asset. Other borrowing costs are expensed in profit or loss as incurred. The capitalisation of borrowing costs shall
commence only when the following criteria are met:
① capital expenditures have been incurred, including expenditures that have resulted in payment of cash, transfer of other assets or the
assumption of interest-bearing liabilities;
② borrowing costs have been incurred;
③ the activities that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalisation period
The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use, the
borrowing costs incurred thereafter are recognised in profit or loss for the current period.
Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted
abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
(3) Capitalisation rate of borrowing costs and calculation basis of capitalised amount
For interest expense actually incurred on specific borrowings, the eligible capitalised amount is the net amount of the borrowing costs after
deducting any investment income earned before some or all of the funds are used for expenditures on the qualifying asset. To the extent
that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company shall determine the
amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset, the capitalisation
rate shall be the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the
period, other than borrowings specifically for the purpose of obtaining a qualifying asset.
34
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
In the capitalisation period, exchange differences of specific borrowings in foreign currency shall be capitalised; exchange differences of
general borrowings in foreign currency is recognised in profit or loss for the current period.
18. Intangible assets
Intangible assets include software patent rights etc.
Intangible assets are stated at actual cost upon acquisition and the useful economic lives are determined at the point of acquisition.
When the useful life is finite, amortisation method shall reflect the pattern in which the asset’s economic benefits are expected to be
realised. If the pattern cannot be determined reliably, the straight-line method shall be used. An intangible asset with an indefinite
useful life shall not be amortised.
Amortisation method for intangible assets with finite useful lives is as follows:
Categories Useful life (years) Amortisation methods Remarks
Land use right 50 Straight-line method
Software system 5 Straight-line method
Brand usage right 5-10 Straight-line method
The Company shall review the useful life and amortisation method of an intangible asset with a finite useful life at least at each year end.
Changes of useful life and amortisation method shall be accounted for as a change in accounting estimate.
An intangible asset shall be derecognised in profit or loss when it is not expected to generate future economic benefits.
For the impairment of intangible assets, please refer to Note III. 20.
19. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure incurred during the research phase and
expenditure incurred during the development phase.
Expenditure during the research phase is expensed when incurred.
Expenditure during the development phase is capitalised if the product or process is technically and commercially feasible; the Company
intends to complete the development; the intangible asset can generate economic benefits, including there is evidence that the products
produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there
is evidence that there is usage for the intangible asset; there is sufficient support in terms of technology, financial resources and other
resources in order to complete the development and use or sell the intangible asset; and development costs can be measured reliably.
Other development expenditure is recognised as an expense in the period in which it is incurred.
Research and development projects of the Company will enter into the development phase when they meet the above conditions,
technical and economic feasibility research is finished and necessary approval of the project is obtained.
Capitalised expenditure on the development phase is presented as “development costs” in the balance sheet, and is transferred to
intangible assets when the project is completed to its intended use.
20. Impairment of assets
35
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The impairment of long-term equity investments in subsidiaries, associates and joint ventures, investment properties measured using a
cost model, fixed assets, construction in progress, and intangible assets (excluding inventories, investment property measured using a fair
value model, deferred tax assets and financial assets) is determined as follows:
At each balance sheet date, the Company determines whether there is any indication of impairment. If any indication exists, the
recoverable amount of the asset is estimated. In addition, the Company estimates the recoverable amounts of goodwill, intangible assets
with indefinite useful lives and intangible assets not ready for use at each year-end, irrespective of whether there is any indication of
impairment.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its present value of expected future cash flows. The
recoverable amount is estimated for each individual asset. If it is not possible to estimate the recoverable amount of each individual asset,
the Company determines the recoverable amount for the asset group to which the asset belongs. An asset group is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount. A provision for
impairment of the asset is recognised accordingly.
For goodwill impairment test, the carrying amount of goodwill arising from a business combination is allocated reasonably to the relevant
asset group since the acquisition date. If the carrying amount of goodwill is unable to be allocated to asset group, the carrying amount of
goodwill will be allocated to asset portfolio. Asset group or portfolio of asset group is asset group or portfolio of asset group which can be
benefit from synergies of a business combination and is not greater than the reportable segment of the Company.
In impairment testing, if impairment indication exists in asset group or portfolio of asset group containing allocated goodwill, impairment
test is first conducted for asset group or portfolio of asset group that does not contain goodwill, and corresponding recoverable amount is
estimated and any impairment loss is recognized. Then impairment test is conducted for asset group or portfolio of asset group
containing goodwill by comparing its carrying amount and its recoverable amount. If the recoverable amount is less than the carrying
amount, impairment loss of goodwill is recognized.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized using a straight-line method within the benefit period. For
long-term deferred expense that cannot bring benefit in future period, the Company recognized its amortised cost in profit or loss for the
current period.
22. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by
employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits. Benefits provided to the Company’s spouse, children, dependents,
family members of deceased employees or other beneficiaries are also part of the employee benefits.
36
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
According to liquidity, employee benefits are presented as “employee benefits payable” and “long-term employee benefits payable” on the
balance sheet.
(2) Short-term employee benefits
In the current period, the Company has accrued for the actual wages, bonuses, medical insurance for employees based on standard rate,
work injury insurance and maternity insurance and other social insurance and housing fund incurred and these are recognised as liabilities
and corresponding costs in the profit or loss. If these liabilities are not expected to be fully paid 12 months after the end of the reporting
period in which employee renders the service to the Company, and if the financial impact is significant, these liabilities shall be discounted
using the net present value method.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Defined contribution plans are
post-employment benefit plans under which an enterprise pays fixed contributions into a separate fund and will have no future obligations
to pay the contributions. Defined benefit plans are post-employment benefit plans other than defined contribution plans.
Defined contribution plans
Defined contribution plans include primary endowment insurance, unemployment insurance and enterprise annuity plan.
Besides basic pension insurance, the Company establishes corporate annuity plans in accordance with the related policies of corporate
pension regulations. Employees can join the pension plan voluntarily. The Company has no other significant commitment of employees’
social security.
The Company shall recognise, in the accounting period in which an employee provides service, the contribution payable to a defined
contribution plan as a liability, with a corresponding charge to the profit or loss for the current period or the cost of a relevant asset.
Defined benefit plan
At each balance sheet date, actuarial calculation and valuation shall be carried out by independent actuary for defined benefit plan to
determine the cost of welfare using estimated cumulative welfare unit method. Employee benefit cost resulted from the Group’s defined
benefit plan including the followings:
① Service cost, which includes service cost for current period, prior period and gain or losses on settlement. Service cost for
current period refers to the increase in amount of present value of liability of defined benefit plan resulted from service provided
by employees in current period. Service cost for prior period refers to changes in amount of present value of liability of defined
benefit plan related to prior period due to alteration of the plan.
② Net interest of defined benefit plan net liability or net asset include interest gain of plan asset, interest expenses of defined
benefit plan liability and interest affected by the upper limit of asset.
③ Changes due to re-measurement of defined benefit plan net liability or net asset
Unless other accounting standards allow or permit the employee welfare cost to be charged into asset cost, the Company shall charge the
item ① and ② above into current period profit or loss. Item ③ shall be included in other comprehensive income and will cannot be
recycled into profit or loss in later accounting periods and when the plan is terminated, the portion that previously recorded in other
37
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
comprehensive shall be transferred into retained earnings in all.
(4) Termination benefits
The Company provides for termination benefits to the employees and shall recognise an employee benefits liability for termination benefits,
with a corresponding charge to the profit or loss for the current period, at the earlier of the following dates: When the Company cannot
unilaterally withdraw the offer of the termination benefits because of an employment termination plan or a redundancy proposal; or when
the Company recognises the costs or expenses relating to a restructuring that involves the payment of the termination benefits.
When adopting employee internal retirement plan, the economic compensation before the official retirement date shall be included in as
termination benefits. The salary for internal retired employee and social security payments from the date when the employee ceases
service to the date of officially retired shall be charged to current profit or loss one-off. Economic compensation after official retirement shall
be dealt as post-employment benefits.
(5) Other long-term employee benefits
Other long-term employee benefits provided by the Company to the employees satisfied the conditions for classifying as a defined
contribution plan; those benefits shall be accounted for in accordance with the above requirements relating to defined contribution plan.
When the benefits satisfied a defined benefit plan, it shall be accounted for in accordance with the above requirements relating to defined
benefit plan, but the movement of net liabilities or assets in re-measurement of defined benefit plan shall be recorded in profit or loss for
the current period or cost of relevant assets.
23. Provisions
A provision is recognised for an obligation related to a contingency if all the following conditions are satisfied:
(1) the Company has a present obligation;
(2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be estimated reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining
to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate.
Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows. The
Company reviews the carrying amount of a provision at the balance sheet date and adjusts the carrying amount to the current best
estimate.
If all or part of the expenditure necessary for settling the provision is expected to be compensated by a third party, the amount of
compensation is separately recognized as an asset when it is basically certain to be received. The recognized compensation amount shall
not exceed the carrying amount of the provision.
24. Share-based payment
(1) Types of share-based payment
Share-based payments are divided into equity-settled share-based payments and cash-settled share-based payments.
38
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(2) Method of determining share-based payment
The Company determining the fair value of equity instruments such as share options granted which has active markets using public
quotation. If no active markets exist, option pricing model shall be used to determine its fair value. The following factors shall be considered
when selecting option pricing models: A. Exercising price of option, B. Valid period of option, C. Current price of the target share, D.
Share’s estimated volatility rate, E. estimated share dividend and F. risk-free interest rate during the valid period.
(3) Evidence of determining the best estimate of exercisable equity instruments
On each balance sheet date during the vesting period, the Company makes the best estimate based on the latest information on the
changes in the number of employees with vesting rights, and corrects the number of equity instruments that are expected to be exercised.
On the exercise date, the number of final estimated exercisable equity instrument shall be the same as actual exercisable equity
instrument.
(4) Accounting treatment for implementation, modifying and terminating of the share-based payment plan
Equity settled share-based payment is measured using fair value of equity instruments granted to employees. If the option can be
exercised immediately after the grant, the relevant costs or expenses are included in the grant date, and the capital reserve are increased
accordingly. If the option can only be exercised after completing the service within the vesting period or meeting the required performance
conditions, the amount of the fair value shall be charged to cost or expenses and capital reserve based on straight-line method during
the vesting period using the best estimate of the amount of exercisable equity instrument. No changes to related cost or expenses and
equity after the exercisable date.
The cash-settled share-based payment is measured at the fair value of the liabilities determined by the Company based on shares or other
equity instruments. If the right can be exercise immediately after the grant, the relevant costs or expenses are included in the grant date,
and the liabilities are increased accordingly. If the option can only be exercised after completing the service within the vesting period or
meeting the required performance conditions, the service obtained by the Company in current period shall be charged to profit or loss
based on fair value of the liabilities undertake by the Company, calculated on the basis of the best estimation of the exercisable option on
each balance sheet date of the vesting period. The liabilities shall be increased accordingly. The fair value of the liability is re-measured at
each balance sheet date and settlement date before the settlement of related liabilities, the changes are included in the current profit and
loss.
When the Group changes the share-based payment plan, if the modification increases the fair value of the granted equity instruments, the
increase in the fair value of the equity instruments is recognized accordingly. The increase in the fair value of equity instruments refers to
the difference between the fair value, measured on the modification date, of the equity instruments before and after the modification. If the
modification reduces the total fair value of the share-based payment or adopts other methods that are not in favour of employees, the
accounting treatment of it will not be changed, as if the modification never happened unless the Group cancelled part or all of the granted
equity instruments.
During the vesting period, if the granted equity instrument is cancelled, the Company shall treat the cancelled equity instrument as
accelerated exercise, and shall immediately charge the amount that should be recognized in the remaining vesting period into the current
39
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
profit and loss and adjusting the capital reserves at the same time. If the employee or other party can choose to meet the non-vesting
conditions but fails during the vesting period, the Group will treat it as a cancellation of the equity instrument.
25. Revenue
(1) General principle
①Sale of goods
Revenue is recognised when all the following conditions are satisfied: significant risks and rewards of ownership of goods have been
transferred to the buyer; the Company retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold; it is probable that the economic benefits will flow to the Company; and the revenue and costs can
be measured reliably.
②Rendering of services
Where the outcome of a transaction involving the rendering of services can be estimated reliably, revenue is recognised by reference to
the stage of completion.
The stage of completion is based on the proportion of costs incurred to date to the estimated total progress of work performed to the total
services to be performed.
Rendering of services can be estimated reliably when all the following conditions are satisfied:
A. The revenue can be measured reliably;
B. It is probable that the economic benefits will flow to the Company;
C. The stage of completion can be measured reliably;
D. The costs incurred and to be incurred in the transaction can be measured reliably.
Where the outcome cannot be estimated reliably, revenues are recognised to the extent of the costs incurred that are expected to be
recoverable, and an equivalent amount is charged to profit or loss as service cost; otherwise, the costs incurred are recognised in profit or
loss and no service revenue is recognised.
③Revenue from rendering usage rights
The revenue is recognized when the economic benefits related to transfer of the right to use assets can flow in and the amount of revenue
can be measured reliably.
(2) Specific revenue recognition method
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
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 、shop-in-shop and On-line shop. Detailed method of revenue recognition as follows:
40
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
① Direct sales to the customer
Under direct sales to the customer mode, the Company delivers products to customers and recognizes revenue after customer inspection
and acceptance.
② Exclusive shop
Under exclusive shop mode, the Company delivers products to customers and recognizes revenue after customer inspection, acceptance
and pay.
③ Shop-in-shop
Under shop-in-shop mode, the Company delivers products to customers, sales staff issues sales memo to retail customers and recognizes
sales revenue after customer inspection and acceptance and the department store collects the payment from the customer.
④On-line shop
Under on-line shop mode, the Company recognizes revenue when it delivers products to customer and the customer confirmed receiving
and the Company receives payment.
⑤Consignment sales
Under consignment sales mode, the Company receives the detail of the sales list from distributors and recognizes revenue while issuing
invoice to distributors.
26. Government grants
A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply with
the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government
grant is in the form of a transfer of a non-monetary asset, it is measured at fair value. If fair value cannot be reliably determined, it is
measured at a nominal amount of RMB 1.
Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase, construct
or otherwise acquire long-term assets. Government grants related to income are grants other than those related to assets.
For government grants with unspecified purpose, the amount of grants used to form a long-term asset is regarded as government grants
related to an asset, the remaining amount of grants is regarded as government grants related to income. If it is not possible to distinguish,
the amount of grants is treated as government grants related to income. A government grant related to an asset is offset against the
carrying amount of the related asset, or recognised as deferred income and amortised to profit or loss over the useful life of the related
asset on a reasonable and systematic manner. A grant that compensates the Group for expenses or losses already incurred is recognised
in profit or loss or offset against related expenses directly. A grant that compensates the Group for expenses or losses to be incurred in the
future is recognised as deferred income, and included in profit or loss or offset against related expenses in the periods in which the
expenses or losses are recognised.
A grant related to ordinary activities is recognised as other income or offset against related expenses based on the economic substance. A
grant not related to ordinary activities is recognised as non-operating income.
41
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
When a recognised government grant is reversed, carrying amount of the related asset is adjusted if the grant was initially recognized as
offset against the carrying amount of the related asset. If there is balance of relevant deferred income, it is offset against the carrying
amount of relevant deferred income. Any excess of the reversal to the carrying amount of deferred income is recognised in profit or loss for
the current period. For other circumstances, reversal is directly recognized in profit or loss for the current period.
27. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that
they relate to transactions or items recognised directly in equity and goodwill arising from a business combination.
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differences respectively, being the differences
between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in the following transactions:
(1) initial recognition of goodwill, or assets or liabilities in a transaction that is not a business combination and that affects neither
accounting profit nor taxable profit (or deductible loss);
(2) taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and the Company is able to
control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The Company recognises a deferred tax asset for deductible temporary differences, deductible losses and tax credits carried forward to
subsequent periods, to the extent that it is probable that future taxable profits will be available against which deductible temporary
differences, deductible losses and tax credits can be utilised, except for those incurred in the following transactions:
(1) a transaction that is not a business combination and that affects neither accounting profit nor taxable profit (or deductible loss);
(2) deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, the corresponding
deferred tax asset is recognized when both of the following conditions are satisfied: it is probable that the temporary difference will
reverse in the foreseeable future; and it is probable that taxable profits will be available in the future against which the temporary
difference can be utilized.
At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from the expected manner of
recovery or settlement of the carrying amount of the assets and liabilities, using tax rates enacted at the reporting date that are expected to
be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced to the extent that it is no longer
probable that the related tax benefits will be utilised. Such reduction is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.
28. Operating leases
The Company’s lease is operating lease
(1) As a lessor
Income derived from operating leases is recognized in profit or loss using the straight-line method over the lease term. Initial direct costs
42
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
are charged to profit or loss immediately.
(2) As a lessee
Rental payments under operating leases are recognized as part of the cost of another related asset or as expenses on a straight-line basis
over the lease term. Initial direct costs are charged to profit or loss immediately.
29. Re-purchase of shares
Before written-off or transfer, the shares that the Company re-purchased are dealt as treasury shares. All expenses incurred for the
re-purchase are charged in the cost of treasury shares. Consideration and transaction expenses paid during the share re-purchase shall
decrease shareholder’s equity. No gain or losses shall be recognized during re-purchase, transfer or written-off of the Company’s shares.
If the treasury shares is transferred, the difference between amount actually received and the share’s carrying amount shall be charged to
capital reserve, if the capital reserve is not sufficient to offset, surplus reserve and retained earing shall be offset. If the treasury share is to
written-off, the share capital shall be decreased based on the face value of shares and the difference between the carrying amount and its
face value shall offset the capital reserve. If the capital reserve is not sufficient to offset, deducting surplus reserve and retained earnings.
30. Restricted share
Under the share option incentive plan, the Company grants restricted shares to the incentive individuals who will subscribe the shares first.
If the unlocking condition is not reached subsequently, the Company will re-purchase the shares according to the price previously agreed.
If the shares issued under the incentive plan has gone through capital increase filing procedures, the Company recognizes share capital
and capital reserve (share premium) based on consideration received from the employees and, at the same time, recognizes treasury
shares and other payables for the re-purchase obligation.
31. Significant accounting estimates and judgments
The Group gives continuous assessment of the reasonable expectations of future events and the critical accounting estimates and key
assumptions based on its historical experience and other factors. The critical accounting estimates and key assumptions that are likely to
lead to significant adjusted risks of the carrying amount of assets and liabilities for the next financial year are listed as follows:
Classification of financial assets
The Group’s major judgments in determining the classification of financial assets include the analysis of business models and the
characteristics of contract cash flows.
At the level of financial asset groups, the Group determines the business model for managing financial assets, taking into account factors
such as the way to evaluate and report financial assets performance to key managers, the risks affecting financial assets performance and
their management methods, and the way in which relevant business managers are paid.
In assessing whether the contract cash flow of financial assets is consistent with the basic lending arrangements, the Group has the
following judgments: whether the principal’s time distribution or amount may change during the lifetime for early repayment and other
reasons; whether the interest only includes the time value of money, credit risk, other basic lending risks and the consideration of cost and
profit. For example, does the amount of advance payment only reflect the unpaid principal and interest based on the unpaid principal, and
43
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
reasonable compensation paid for the early termination of the contract.
Measurement of Expected Credit Loss of Receivables
The Group calculates the expected credit losses of accounts receivable by default risk exposure and expected credit losses rate of
accounts receivable, and determines the expected credit losses rate based on default probability and default loss rate. In determining the
expected credit losses rate, the Group uses internal historical credit loss and other data, and adjusts the historical data with current
situation and forward-looking information. In considering forward-looking information, the indicators used by the Group include the risks of
economic downturn, external market environment, technological environment and changes in customer conditions. The Group regularly
monitors and reviews assumptions related to the calculation of expected credit losses.
Accrual of provision for obsolete inventories
The Group recognises provision for obsolete inventories based on the lower of cost of inventory and its net realisable value. In determining
the net realisable value of inventories, the management uses judgments to estimate the selling price, cost to complete production, selling
expenses and associated taxes.
Deferred income tax assets
Deferred tax assets relating to certain temporary differences and tax losses are recognised as management considers it is probable that
future taxable profit will be available against which the temporary differences or tax losses can be utilised. The management needs
significant judgment to estimate the time and extent of the future taxable profits and tax planning strategy to recognise the appropriate
amount of deferred income tax assets. Where the expectation is different from the original estimate of the future taxable profits, such
differences will impact the recognition of deferred tax assets and taxation in the years when the estimates are changed.
32. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
① New financial instrument standards
In 2017, the Ministry of Finance have issued “Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of
Financial Instruments (Revised)”,“Accounting Standards for Business Enterprises No. 23 - Finance Asset Transfer (Revised)”, “Accounting
Standards for Business Enterprises No.24 - Hedge Accounting(Revised)”, “Accounting Standards for Business Enterprises No.37 -
Financial Instruments Presentation (Revised)”(hereinafter referred to as the “New Financial Instruments Standards”). The Group has
implemented the New Financial Instruments Standards since 1 January 2019 after the approval of the board of directors, and adjusted the
relevant accounting policies. Refer to Note III. 10 for accounting policies after the adjustment.
According to the new financial instruments standards, financial assets are classified into the following three categories depends on the
Group’s business mode of managing financial assets and cash flow characteristics of financial assets: (1) financial assets measured at
amortized cost, (2) financial assets at fair value through other comprehensive income, and (3) financial assets at fair value through profit or
loss. For hybrid contract, if the main contract belongs to financial assets, the embedded derivative should not be separated from the hybrid
contract, and should be applied to the relevant standards in the corresponding classification of financial assets to as a whole.
Except for financial guarantee contract liabilities, the adoption of new financial instrument standards has no significant impact on the
44
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
accounting policy of the Group’s financial liabilities.
On 1 January 2019, the Group neither designated any financial assets or liabilities as financial assets or liabilities measured at fair value
through profits and losses, nor revoked its previous designation.
The New Financial Instruments Standards replaces the method of recognizing impairment provision according to actual impairment loss
stipulated in the original financial instrument standard with the method of “expected credit losses method”. The “expected credit losses
method” model requires continuous assessment of the credit risk of financial assets. Therefore, under the New Financial Instruments
Standards, the Group’s credit loss is recognised earlier than the original financial instrument standards.
On the basis of expected credit losses, the Group performs impairment assessment on the following items and recognises the loss
allowance.
Financial assets measured at amortized cost;
Debt investments at fair value through other comprehensive income;
In accordance with the provisions of the New Financial Instruments Standards, except in certain specific cases, the Group retrospectively
adjusts the classification and measurement of financial instruments (including impairment), and calculates the difference between the
original carrying value of financial instruments and the new carrying value on the date of implementation of the New Financial Instruments
Standards (i.e. 1 January 2019) into the retained earnings or other comprehensive earnings at the beginning of 2019. At the same time,
the Group did not adjust the comparative financial statements data.
45
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
On 1 January, 2019, the results of classification and measurement of financial assets in accordance with the previous financial instrument standards and the New Financial Instruments Standards are as follows:
Previous financial instrument standards New financial instrument standards
Item Categories Carrying value Item Categories Carrying value
Available-for-sale financial Other equity instrument Fair value through other comprehensive
Measured at cost (equity instrument) 85,000.00 85,000.00
assets investment income
Bill receivable Amortized cost 7,051,846.85
Bill receivable Amortized cost 7,051,846.85
Fair value through other comprehensive
Receivables financing -
income
Accounts receivable Amortized cost 370,545,656.61
Accounts receivable Amortized cost 370,545,656.61
Fair value through other comprehensive
Receivables financing -
income
Other current assets Amortized cost -
Other receivables Amortized cost 45,870,582.26
Other receivables Amortized cost 45,870,582.26
46
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
On 1 January 2019, the adjustment table of the financial instruments classification and carrying value, at the implementation of the New
Financial Instruments Standards, were as follows:
Pre-adjustment carrying Remeasurem Adjusted carrying value
Item Reclassification
value (31 December 2018 ent (January 1, 2019)
Assets:
Bill receivables 7,051,846.85 -- -- 7,051,846.85
Accounts receivables 370,545,656.61 -- -- 370,545,656.61
Other receivables 45,870,582.26 -- -- 45,870,582.26
Available-for-sale financial
85,000.00 -85,000.00 - -
assets
Other equity instrument
-- 85,000.00 - 85,000.00
investments
Shareholder’s equity
Capital reserve 1,062,455,644.22 -- -- 1,062,455,644.22
Other comprehensive
-5,442,139.78 -- -- -5,442,139.78
income
Surplus reserve 223,015,793.80 -- -- 223,015,793.80
Undistributed profit 851,360,603.66 -- -- 851,360,603.66
Minority interests 5,781.64 -- -- 5,781.64
The reconciliation of bad debt provision accrued by the Group at the end of 2018 based on previous financial instrument standards and
credit losses recognized at the beginning of 2019 based on New Financial Instruments Standards are presented as follows:
Pre-adjustment carrying Remeasuremen Adjusted carrying value
Category Reclassification
value (31 December 2018 t (January 1, 2019)
Bad debt provision for accounts
12,688,807.19 -- -- 12,688,807.19
receivable
Bad debt provision for other
10,037,542.11 -- -- 10,037,542.11
receivables
② Financial statements format
According to “the Announcement of the revision of general enterprise financial statements format for 2018” (Accounting [2018] No. 15)
47
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
issued by MOF, the Group revised the financial statement format as follows:
A﹑Balance sheet
Added line item of “financial assets held for sale”, “debt investment”, “other debt investment”, “other equity instrument investment”, “other
non-current financial asset” and “financial liability held for sale”. Deleted line item of “financial assets at fair value through profit or loss”,
“available-for-sale” financial assets, “held-to-maturity” financial assets and “financial liabilities at fair value through profit or loss”;
Divided “bills and accounts receivable” into “bills receivable” and “accounts receivable”;
Divided “bills and accounts payable” into “bills payable” and “accounts payable”;
Added “receivables financing” item.
B. Income statement
Added sub-item of “Gain from de-recognition of financial assets measured at amortized cost” under “investment gain” item.
Added “Gain from net exposure hedging” item.
Added “credit impairment loss” item. “Changes of re-measurement in net liabilities or net assets of defined benefit plans” is replaced by
“The amount of changes of re-measurement in defined benefit plans”. “Share of other comprehensive income to in the investee cannot be
reclassified into profit or loss under equity method” is changed to “other comprehensive income that cannot be transferred to profit or loss
under the equity method”. Added “Fair value changes in the entity’s own credit risk”. “Share of other comprehensive income in the investee
shall be reclassified into profit or loss under equity method” is changed to “Transfer of other comprehensive income into profits or losses
under equity method”. Added “fair value changes of other debt investment”, “Re other comprehensive income due to reclassification of
financial assets” and “credit impairment allowance of other debt investments”. Deleted “gain or losses from fair value changes of
available-for-sale financial assets and “gains from reclassification of held-to-maturity investment to available-for-sale financial asset”. “The
effective portion of gain or losses of cash flows hedge” is changed to “reserve of cash flows hedge”.
C. Statement of changes in shareholder’s equity
Under the “internal transfer of shareholders’ equity” line item, the original “Changes of re-measurement in net liabilities or net assets of
defined benefit plans” was changed to “Change in amount of defined benefit plans transfer to retained earnings”. Added “transfer of other
comprehensive income into retained earnings”.
The Group adjusted comparative figures for comparable periods in accordance with CaiKuai [2019] No. 6.
The revision of the financial statement format has no impact on the Group’s total assets, total liabilities, net profit and other comprehensive
income.
(2) Changes in accounting estimates
The Group has no significant changes in accounting estimates in current reporting period.
(3) Adjustement of beginning balance of financial statements on the first year adoption of the New Financial Instruments Standards
Because of the implementation of New Financial Instruments Standards, the Company reclassified the presentation of “available-for-sale”
line item to “other equity instrument investment” and the amount is RMB85,000. No changes to other financial statement line items.
48
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
IV. Taxation
1. Main types of taxes and corresponding tax rates
Tax type Tax basis Tax rate %
VAT (note (1)) Taxable revenue 16、13、10、9、6、5
Consumption tax Taxable income 20
Urban maintenance and construction tax Turnover tax payable 5、7
Original cost of property or rental
Property tax (note (2)) 1.2、12
income
Corporate income tax Taxable income Refer to Note (3) for details
Note (1): Value-added tax
Value-added tax rate originally applied to 16%, 10% when the Company have VAT taxable sales or import goods. According to
“Announcement of the Ministry of Finance and the State Administration of Taxation and General Administration of Customs Regarding
Policies of Deepening Reform of Value-added Tax” ((2019) No. 39), applicable tax rate adjusted to 13% and 9% respectively since 1 April
2019.
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 ①⑤) 25.00
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company) (Note ② 15.00
③)
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
Harbin Harmony World Watches Distribution Co., Ltd. (Harbin Company) (Note ⑤) 20.00
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
49
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
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, all of these entities can
enjoy a 75% super deduction on top of the R&D expenses that allowed to deduct before income tax during the period from 1 January 2018
to 31 December 2020.
Note ③:The Company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New Technology Enterprises
that Require Key Support from the State”.
Note ④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is 16.50% this year.
Note ⑤: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25% for residential enterprises
since 1 January 2008.
Note ⑥: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
Note ⑦ According to “Notice of Ministry of Finance and State Administration of Taxation on implementation of the Inclusive Income Tax
Deduction and Exemption Policies for Small Low-Profit Enterprises” (Cai Shui (2019) No.13), the portion of annual taxable income of small
low-profit enterprise that is below RMB1,000,000.00, it is not taxed at 25% and will be taxed at a rate of 20%.
2. Preferential treatment and corresponding approval
(1) According to 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.
(2) According to “Notice of Ministry of Finance and State Administration of Taxation in Extending Expiration Period of Utilizing Losses for
High-Tech Enterprises and Scientific Oriented Medium and Small Enterprises” (Cai Shui [2018] No. 76), unutilized losses incurred in
prior 5 years before obtaining the status of High and New Tech Enterprise can be carried forward and utilized in future years. The
longest period was extended from 5 years to 10 years.
V. Notes to the consolidated financial statements
1. Cash at bank and on hand
50
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
As at 31/12/2019 As at 31/12/2018
Item Foreign RMB Foreign
Exchange Exchange
currency currency RMB equivalent
rate rate
amount equivalent amount
Cash on hand： -- -- 229,258.38 -- -- 420,783.85
RMB -- -- 179,848.59 -- -- 393,789.09
HKD 2,018.63 0.8958 1,808.24 2,018.63 0.8762 1,768.72
USD 605.00 6.9762 4,220.60 105.00 6.8632 720.64
EUR 1,453.19 7.8749 11,443.74 1,041.45 7.8473 8,172.57
CHF 4,434.00 7.2028 31,937.21 2,350.25 6.9494 16,332.83
Cash at bank: -- -- 285,306,297.62 -- -- 160,135,454.62
RMB -- -- 255,981,925.11 -- -- 148,287,154.41
HKD 9,732,871.02 0.8887 8,649,900.97 3,644,178.41 0.8762 3,193,027.05
USD 2,558,762.50 6.9287 17,728,876.60 634,426.28 6.8632 4,354,194.44
EUR 59,904.49 7.9290 474,983.98 902.13 7.8473 7,079.28
CHF 343,007.02 7.2028 2,470,610.96 617,894.99 6.9494 4,293,999.44
Including: deposit in
-- -- 237,118,456.45 -- -- 128,255,699.54
finance company
RMB -- -- 237,118,456.45 -- -- 128,255,699.54
Other monetary funds: -- -- 31,133,009.09 -- -- 4,271,821.50
RMB -- -- 31,133,009.09 -- -- 4,271,821.50
Total -- -- 316,668,565.09 -- -- 164,828,059.97
Including: Total
-- -- 3,641,389.51 -- -- 9,192,653.31
overseas deposits
Details of other monetary funds:
Item 2019.12.31 2018.12.31
Security deposit for letter of guarantee 1,575,000.00 1,575,000.00
Balance in investment account 26,448,679.71 -
Others 3,109,329.38 2,696,821.50
Total 31,133,009.09 4,271,821.50
At the end of year, the Group does not have balance of cash or other monetary funds that are restricted because being pledged as security,
guaranteed or blocked frozen or overseas balances that have restriction on remittance back to the home country except for security
deposit for letter of guarantee mentioned above.
2. Bill receivables
51
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
2019.12.31 2018.12.31
Type
Carrying
Book value Provision Carrying amount Book value Provision
amount
Bank
acceptance 6,187,353.98 - 6,187,353.98 - - -
bills
Commercial
acceptance 4,626,260.06 217,182.73 4,409,077.33 7,051,846.85 - 7,051,846.85
bills
Total 10,813,614.04 217,182.73 10,596,431.31 7,051,846.85 - 7,051,846.85
Note:
(1) There is no pledge of notes at the end of the period.
(2) The is no endorsed bills that is not yet due at the end of the period.
(3) Bill receivable that transferred to receivables due to issuer’s default at the end of the period.
Type Amount transferred to accounts receivable
Commercial acceptance bills 300,000.00
(4) Classification based on method of accrual of bad debt provision.
2019.12.31 2019.01.01
Carrying
Book value Provision Book value Provision
Type amount
Carrying amount
Percentag ECL rate Percenta Amoun ECL
Amount Amount Amount
e (%) (%) ge (%) t rate (%)
Standalone
- - - - - - - - - -
accrual
Accrued based
10,813,614.04 100.00 217,182.73 2.01 10,596,431.31 7,051,846.85 100.00 - - 7,051,846.85
on group
including
Commercial
4,626,260.06 42.78 217,182.73 4.69 4,409,077.33 7,051,846.85 100.00 - - 7,051,846.85
acceptance bills
Bank
6,187,353.98 57.22 - - 6,187,353.98 - - - - -
acceptance bills
Total 10,813,614.04 100.00 217,182.73 2.01 10,596,431.31 7,051,846.85 100.00 - - 7,051,846.85
Bad debt provision accrued based on groups:
Item: Commercial acceptance bills
2019.12.31
Name
Bill receivables Bad debt provision ECL rate (%)
Within 1 year 4,626,260.06 217,182.73 4.69
(5) Status of accrual, retrieved or reversal of bad deb
Amount of bed debt provision
2018.12.31 -
52
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Adjustment for first implementation of new financial instrument standards
-
2019.01.01 -
Accrual 217,182.73
Reversal -
Written-off -
2019.12.31 217,182.73
3. Accounts receivable
(1) Presentation by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 412,028,202.94 368,270,203.02
1-2 years 9,278,600.90 10,632,348.03
2-3 years 1,196,515.64 3,091,413.67
Over 3 years 4,013,110.09 1,240,499.08
Subtotal 426,516,429.57 383,234,463.80
Less: provision for bad debt 29,045,322.59 12,688,807.19
Total 397,471,106.98 370,545,656.61
(2) Presentation by method of providing bad debt
2019.12.31
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment 24,140,377.57 5.66 17,562,041.15 72.75 6,578,336.42
individually
Collectively assessed for
impairment based on credit 402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
risk characteristics
Receivables from other
402,376,052.00 94.34 11,483,281.44 2.85 390,892,770.56
customers
Total 426,516,429.57 100.00 29,045,322.59 6.81 397,471,106.98
(continued)
2019.01.01
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment 1,799,519.78 0.47 1,799,519.78 100.00 -
individually
Collectively assessed for
impairment based on credit 381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
risk characteristics
53
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Receivables from other
381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
customers
Total 383,234,463.80 100.00 12,688,807.19 3.31 370,545,656.61
Specific bad debt provision provided
2019.12.31
Category
Book value Bad debt provision ECL rate (%) Reason
Receivables from other
24,140,377.57 17,562,041.15 72.75 Unable to recover
customers
Bad debt provision based on groups
Group: Receivables from other customers
2019.12.31
Category
Accounts receivable Bad debt provision ECL rate (%)
Within 1 year 398,474,804.41 11,042,487.31 2.77
1-2 years 3,639,298.75 269,502.55 7.41
2-3 years 122,592.64 31,935.38 26.05
Over 3 years 139,356.20 139,356.20 100.00
Total 402,376,052.00 11,483,281.44 2.85
Bad debt provision as of 31 December 2018:
2018.12.31
Category Percentage Bad debt Percentage of
Book value Carrying amount
(%) provision providing (%)
Individually significant and
1,702,371.94 0.44 1,702,371.94 100.00 -
assessed for impairment individually
Collectively assessed for
impairment based on credit risk
characteristics
Including: ageing group 189,655,491.08 49.49 10,889,287.41 5.74 178,766,203.67
Specific receivables group 191,779,452.94 50.04 - - 191,779,452.94
Subtotal of groups 381,434,944.02 99.53 10,889,287.41 2.85 370,545,656.61
Individually insignificant but
97,147.84 0.03 97,147.84 100.00 -
assessed for impairment individually
Total 383,234,463.80 100.00 12,688,807.19 3.31 370,545,656.61
(3) Addition, recovery or reversals of provision during the year:
54
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Bad debt provision
2018.12.31 12,688,807.19
Adjustment amount for the first implementation of the new financial instrument standards -
2019.01.01 12,688,807.19
Addition 16,613,020.51
Reversal 266,383.33
Written-off -
Others 9,878.22
2019.12.31 29,045,322.59
(4) There were no receivables that are written-off during the period.
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB108,313,007.08, accounted for 25.39% of total balance of
accounts receivable as of the period end. Corresponding bad debt provision accrued is RMB2,040,175.21.
4. Prepayments
(1) Presented by ageing
2019.12.31 2018.12.31
Ageing
Amount Percentage (%) Amount Percentage (%)
Within 1 year 10,221,061.48 94.23 12,886,273.93 94.29
1-2 years 284,733.40 2.62 - -
Over 2 years 342,167.40 3.15 780,542.40 5.71
Total 10,847,962.28 100.00 13,666,816.33 100.00
(2) Top 5 prepayment accounts as of period end
Total amount of prepayments to top five accounts amounts to RMB7,084,498.24, accounted for 65.31% of total balance of prepayments as
of the period end.
5. Other receivable
Item 2019.12.31 2018.12.31
Interest receivable - -
Dividends receivable - -
Other receivables 47,239,844.58 45,870,582.26
Total 47,239,844.58 45,870,582.26
(1) Other receivables
① Presented by ageing
55
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Ageing 2019.12.31 2018.12.31
Within 1 year 49,453,416.07 46,770,037.27
1-2 years 11,101.80 1,438,499.45
2-3 years 186,180.00 1,365,400.00
Over 3 years 7,933,538.12 6,334,187.65
Subtotal 57,584,235.99 55,908,124.37
Less: bad debt provision 10,344,391.41 10,037,542.11
Total 47,239,844.58 45,870,582.26
② Presented by nature
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Petty cash 2,147,617.27 - 2,147,617.27 2,478,447.48 - 2,478,447.48
Security deposit 45,014,657.70 3,093,646.11 41,921,011.59 38,091,767.87 3,201,718.39 34,890,049.48
Promotion
2,518,891.09 579,905.66 1,938,985.43 7,827,524.03 391,376.20 7,436,147.83
expense
Others 7,903,069.93 6,670,839.64 1,232,230.29 7,510,384.99 6,444,447.52 1,065,937.47
Total 57,584,235.99 10,344,391.41 47,239,844.58 55,908,124.37 10,037,542.11 45,870,582.26
③ Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in next
Category Book value Bad debt Provision Carrying amount Reason
12 month (%)
Individually significant and assessed
- - - -
for impairment individually
Collectively assessed for impairment
49,690,747.87 4.93 2,450,903.29 47,239,844.58
based on credit risk characteristics
Petty cash 2,147,617.27 - - 2,147,617.27
Security deposit 44,214,657.70 5.19 2,293,646.11 41,921,011.59
Social security payment on-behalf 526,453.88 - - 526,453.88
Others 2,802,019.02 5.61 157,257.18 2,644,761.84
Total 49,690,747.87 4.93 2,450,903.29 47,239,844.58
As of the period end, the Company does not have other receivables at the second stage.
Bad debt provision at the third stage as of the period end:
ECL rate of the Carrying
Category Book value life time Provision reason
receivables (%) amount
Individually significant and assessed
for impairment individually
Chances of recovery is
Beat Blattman Marketing 4,189,004.42 100.00 4,189,004.42 -
remote
56
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Chances of recovery is
Liberty Time Center GmbH 2,333,707.20 100.00 2,333,707.20 -
remote
China Resources (Chong Qing) Chances of recovery is
800,000.00 100.00 800,000.00 -
Industrial Co., Ltd. remote
Huaming Hang Co., Ltd. 480,000.00 100.00 480,000.00 - Unable to recover
Others 90,776.50 100.00 90,776.50 - Unable to recover
Total 7,893,488.12 100.00 7,893,488.12 - ——
Bad debt provision as of 31 December 2018:
2018.12.31
Category
Percentage Bad debt Percentage of
Book value Carrying amount
(%) provision providing (%)
Individually significant and assessed
7,093,237.65 12.69 7,093,237.65 100.00 -
for impairment individually
Collectively assessed for impairment
based on credit risk characteristics
Including: ageing group 45,771,039.24 81.87 2,378,904.46 5.20 43,392,134.78
Specific receivables group 2,478,447.48 4.43 - - 2,478,447.48
Subtotal of groups 48,249,486.72 86.30 2,378,904.46 4.93 45,870,582.26
Individually insignificant but assessed
565,400.00 1.01 565,400.00 100.00 -
for impairment individually
Total 55,908,124.37 100.00 10,037,542.11 17.95 45,870,582.26
④ Addition, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
Bad debt provision ECL for the life time ECL for the life time Total
ECL in next 12
of receivables (no of receivables
month
impairment yet) (impaired)
2018.12.31
2,378,904.46 - 7,658,637.65 10,037,542.11
Adjustment amount for the first
implementation of the new financial - - - -
instrument standards
2019.01.01 2,378,904.46 - 7,658,637.65 10,037,542.11
Current period
--transferred to 2nd stage - - - -
-- transferred to 3rd stage -5,376.50 - 5,376.50 -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
Accrued 132,893.73 - - 132,893.73
Reversed 55,752.57 - - 55,752.57
Realized - - - -
57
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Written-off - - - -
Other changes 234.17 - 229,473.97 229,708.14
Balance as of 2019.12.31 2,450,903.29 - 7,893,488.12 10,344,391.41
⑤ There was no other receivables that are written-off during the period.
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB23,576,874.51, accounted for 40.94% of total balance of
other receivable as of the period end. Corresponding bad debt provision accrued is RMB8,127,554.59.
6. Inventory
(1) Category
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Raw material 195,644,341.20 21,197,269.90 174,447,071.30 183,679,226.95 28,296,729.51 155,382,497.44
WIP 11,707,382.99 - 11,707,382.99 10,787,777.81 - 10,787,777.81
Stored
1,684,674,585.69 62,008,950.06 1,622,665,635.63 1,675,548,898.56 59,412,872.11 1,616,136,026.45
goods
Total 1,892,026,309.88 83,206,219.96 1,808,820,089.92 1,870,015,903.32 87,709,601.62 1,782,306,301.70
(2) Provision for inventory
Increase Decrease
Item 2019.01.01 2019.12.31
Accrual Others Reverse or realized Others
Raw material 28,296,729.51 1,727,018.41 321,750.41 9,148,228.43 - 21,197,269.90
Stored goods 59,412,872.11 2,568,116.07 27,961.88 - - 62,008,950.06
Total 87,709,601.62 4,295,134.48 349,712.29 9,148,228.43 - 83,206,219.96
Provision for inventory (continued)
Item Evidence of determine NRV and future selling cost Reason for reversal or realized
Estimated selling price less estimated cost to complete and
Raw material Disposed
selling and distribution expenses and associated taxes
Estimated selling price less estimated selling and distributing
Stored goods sold
expenses and associated taxes
7. Other current assets
58
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Item 2019.12.31 2018.12.31
VAT prepaid 4,255,892.19 7,272,789.77
Input VAT 47,626,820.11 45,171,658.90
Prepaid corporate income tax 1,313,954.49 7,846,471.11
Others 15,661,429.95 13,412,392.46
Total 68,858,096.74 73,703,312.24
8. Available-for-sale financial assets
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Available-for-sale financial
—— —— —— 385,000.00 300,000.00 85,000.00
asset
Measured at cost —— —— —— 385,000.00 300,000.00 85,000.00
59
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
9. Long-term equity investment
Changes during the period
Balance of
Investment gains Adjustment of impairment
Investee 2019.01.01 Changes Cash 2019.12.31
and losses other Impairment provision as
Addition/new Withdrawn in other dividend Others of period end
recognised by comprehensive provision
equity declared
equity method income
① Associate
Shanghai Watch Co., Ltd.
44,881,063.15 - - 1,542,774.70 - - - - - 46,423,837.85 -
(Shanghai Watch)
60
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
10. Other equity instrument investment
Item 2019.12.31 2018.12.31
Shenzhen Zhonghang Culture Co. Ltd - ——
Xi’an Tangcheng Limited 85,000.00 ——
Total 85,000.00 ——
Because the equity investment to Shenzhen Zhonghang Culture Co. Ltd and Xi’an Tangcheng Limited is based on long term holding for
strategic purpose, the Group designated them as fair value through other comprehensive income.
11. Investment properties
Item Property and plant
I. Original cost
1.2018.12.31 546,695,433.81
2.addition 57,191,213.54
(1) purchase -
(2) transferred from inventory/CIP 57,191,213.54
(3) increased due to business combination -
3.Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 603,886,647.35
II.Accumulated depreciation
1.2018.12.31 169,376,000.78
2.Addition 27,007,339.33
(1) accrual 13,704,422.70
(2) business combination -
(3) Others 13,302,916.63
3.Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 196,383,340.11
三、Impairment provision
1.2018.12.31 -
2.Increase -
(1) Accrual -
(2) Others -
61
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
3、Decrease -
(1) Disposal -
(2) Others -
4.2019.12.31 -
IV.Carrying amount
1.2019.12.31 407,503,307.24
2.2018.12.31 377,319,433.03
Note:
(1)Reason of the investment properties without the certificate for property right:
As of 31 December 2019, there was no investment property without the certificate for property right.
(2) Changes of purpose of property
During the reporting period, certain self-use property of the Group were changed to lease out and they were transferred from fixed assets to
investment properties measured at cost model.
12. Fixed assets
Item 2019.12.31 2018.12.31
Fixed asset 363,997,098.94 425,649,562.85
Fixed asset disposal - -
Total 363,997,098.94 425,649,562.85
(1) Fixed asset
①Status
Property and Transportation
Item Machinery Electronic devices Other equipment Total
buildings vehicles
I. Total cost
1.2018.12.31 458,621,315.96 80,799,655.00 15,572,717.72 44,137,536.41 58,422,164.62 657,553,389.71
2. Additions 11,735,172.54 9,191,908.86 763,979.65 2,859,430.11 4,194,666.50 28,745,157.66
(1) Purchasing 244,585.68 7,337,542.92 763,979.65 2,494,316.65 2,209,983.31 13,050,408.21
(2) Transfer from
9,887,489.97 1,023,760.56 - 347,820.61 1,860,829.46 13,119,900.60
construction in progress
(3) Increase due to business
- - - - - -
combination
(4) Others 1,603,096.89 830,605.38 - 17,292.85 123,853.73 2,574,848.85
3. Decrease 70,472,306.13 1,414,588.09 978,818.00 1,512,268.86 16,354,078.93 90,732,060.01
(1) Disposal or retired 13,281,092.59 1,414,588.09 978,818.00 1,512,268.86 16,354,078.93 33,540,846.47
(2) transferred into
57,191,213.54 - - - - 57,191,213.54
investment property
62
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
4.2019.12.31 399,884,182.37 88,576,975.77 15,357,879.37 45,484,697.66 46,262,752.19 595,566,487.36
II. Accumulated depreciation
1.2018.12.31 97,899,718.69 43,012,974.47 13,664,912.06 28,707,685.36 48,618,536.28 231,903,826.86
2.increase 14,553,080.62 7,430,970.23 747,205.85 4,846,289.12 4,122,796.00 31,700,341.82
(1) accrual 13,881,041.32 7,016,135.34 747,205.85 4,834,941.77 4,022,372.19 30,501,696.47
(2) others 672,039.30 414,834.89 - 11,347.35 100,423.81 1,198,645.35
3.Decrease 13,318,042.52 1,118,076.16 919,427.10 1,369,639.50 15,309,594.98 32,034,780.26
(1) disposal or retirement 15,125.89 1,118,076.16 919,427.10 1,369,639.50 15,309,594.98 18,731,863.63
(2) transferred into
13,302,916.63 - - - - 13,302,916.63
investment properties
4.2019.12.31 99,134,756.79 49,325,868.54 13,492,690.81 32,184,334.98 37,431,737.30 231,569,388.42
III. Impairment provision
1.2018.12.31 - - - - - -
2.Increase - - - - - -
(1) accrual - - - - - -
(2) others - - - - - -
3.Decrease - - - - - -
(1) disposal or retirement - - - - - -
(2) Others - - - - - -
4.2019.12.31 - - - - - -
IV.Carrying amount
1.2019.12.31 300,749,425.58 39,251,107.23 1,865,188.56 13,300,362.68 8,831,014.89 363,997,098.94
2.2018.12.31 360,721,597.27 37,786,680.53 1,907,805.66 15,429,851.05 9,803,628.34 425,649,562.85
Note:
①As of the period, fixed assets used to pledge for the Group’s loan amounted to RMB14,303,281.92.
②Fixed assets that do not have certificate for property right
Reason for not having certificate for property
Item Book value
rights
Office rooms of Harbin Branch 255,135.96 Issues relating to property right
13. Construction in progress
Item 2019.12.31 2018.12.31
Construction in progress - 12,041,126.00
Construction materials - -
63
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total - 12,041,126.00
(1) Construction in progress
①Details
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Clock & Watch base
in Guangming New
- - - 12,041,126.00 - 12,041,126.00
District auxiliary
projects
② Changes to major construction in progress projects
Rate of
Capitaliza Including: capitaliza
Transferred to Other
Name 2019.01.01 Addition tion of capitalized in tion in 2019.12.31
fixed asset decrease
interest current year current
year (%)
Clock & Watch base
in Guangming New
12,041,126.00 1,232,979.46 13,119,900.60 154,204.86 - - - -
District auxiliary
projects
Changes to major construction in progress projects(continued)：
Percentage of
Name budget investment to Progress Source of funding
budget (%)
Clock & Watch base in Guangming New
34,050,900.00 38.98% 100.00% Self-raised
District auxiliary projects
14. Intangible assets
Right to use
Item Land-use right Software system Total
trademarks
I. Total original cost
1.2018.12.31 34,933,822.40 23,887,215.08 10,093,308.61 68,914,346.09
2. Additions - 226,911.28 1,837,222.77 2,064,134.05
(1) Purchase - 226,911.28 1,837,222.77 2,064,134.05
(2) Internal R&D - - - -
(3) Increased due to business
- - - -
combination
(4) Others - - - -
3. Decreases - - - -
(1) Disposal - - - -
(2) Others - - - -
64
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
4.2019.12.31 34,933,822.40 24,114,126.36 11,930,531.38 70,978,480.14
II. Total accumulated amortization
1.2018.12.31 13,581,708.89 8,076,111.69 3,711,047.90 25,368,868.48
2. Additions 733,553.28 4,372,411.78 1,791,825.34 6,897,790.40
(1) Accrual 733,553.28 4,372,411.78 1,791,825.34 6,897,790.40
(2) others - - - -
3. Decreases - - - -
(1) Disposal - - - -
(2) other - - - -
4. 2019.12.31 14,315,262.17 12,448,523.47 5,502,873.24 32,266,658.88
III. Total impairment provision
1.2018.12.31 - - - -
2. Additions - - - -
(1) Accrual - - - -
(2) other - - - -
3.decrease - - - -
(1) disposal - - - -
(2) others - - - -
4.2019.12.31 - - - -
IV. Total carrying amount
1.2019.12.31 20,618,560.23 11,665,602.89 6,427,658.14 38,711,821.26
2.2018.12.31 21,352,113.51 15,811,103.39 6,382,260.71 43,545,477.61
15. Long-term deferred expenses
Decrease
Item 2018.12.31 Addition 2019.12.31
Amortized Others
Counter fabrication
49,305,000.11 42,163,751.28 49,506,803.50 - 41,961,947.89
expenses
Renovation expenses 74,651,287.13 66,284,944.54 45,670,030.81 - 95,266,200.86
Others 4,616,257.91 18,447,813.57 7,704,728.90 - 15,359,342.58
Total 128,572,545.15 126,896,509.39 102,881,563.21 - 152,587,491.33
16. Deferred income tax assets/Deferred income tax liabilities
(1) Detail of deferred income tax before offsetting
2019.12.31 2018.12.31
Item
Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences asset differences asset
Deferred tax asset:
Impairment provision 100,912,679.00 22,188,996.64 79,775,704.17 17,676,690.28
Unrealized profit for related party
179,676,673.34 44,654,504.04 272,840,911.63 67,717,517.83
transactions
65
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Deferred income 3,046,090.60 761,522.65 3,672,855.36 918,213.84
Deductible losses 50,678,682.32 12,074,057.61 61,529,125.81 14,363,284.14
Restricted shares 4,440,625.91 1,062,967.67 - -
Advertisement expenses that allowed
14,988,443.65 2,997,334.76 - -
to deduct in future years
Subtotal 353,743,194.82 83,739,383.37 417,818,596.97 100,675,706.09
Deferred tax liability
One-off deduction of fixed asset
8,374,949.93 1,256,242.49 - -
before Corporate income tax
Subtotal 8,374,949.93 1,256,242.49 - -
(2) Details of deductible temporary difference and deductible losses that does not recognize as deferred income tax asset
Item 2019.12.31 2018.12.31
Impairment provision 22,200,437.70 30,660,246.75
Deductible losses 64,205,351.75 65,181,936.05
Total 86,405,789.45 95,842,182.80
Note: Deductible losses of Swiss Company, which are subsidiaries of the Company, is not recognized as deferred income tax asset as it’s
uncertain that the companies can get sufficient taxable income in future. Hong Kong Company, a subsidiary of the Company, does not need to
recognize the deferred income tax assets for impairment provision according to the local tax policy.
(3) Deductible losses that are not recognized as deferred tax asset will due in the following years:
Year 2019.12.31 2018.12.31 Note
2019 —— -
2020 - -
2021 - -
2022 - 3,393,863.46
2023 2,417,279.16 7,798,677.32
2024 7,798,677.32 11,684,299.22
2025 11,684,299.22 18,449,678.50
2026 18,449,678.50 23,855,417.55
2027 23,855,417.55 -
2028 - -
2029 - -
2030 - ——
Total 64,205,351.75 65,181,936.05
17. Other non-current assets
Item 2019.12.31 2018.12.31
66
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Prepayment for construction and equipment 7,373,248.48 8,949,160.42
18. Short-term loans
Item 2019.12.31 2018.12.31
Guaranteed loans 37,271,502.38 187,118,452.97
Credit loans 530,637,330.83 360,000,000.00
Total 567,908,833.21 547,118,452.97
Refer to Note XII. 2 for details of guaranteed loans between parent companies and subsidiaries.
19. Accounts payable
Item 2019.12.31 2018.12.31
Trade payables 254,887,129.91 188,957,240.00
Payables for material purchased 11,932,722.53 18,632,180.36
Payables for project 12,952,934.93 52,324,191.98
Total 279,772,787.37 259,913,612.34
20. Advances from customer
Item 2019.12.31 2018.12.31
Advances received for trade 19,999,056.53 14,822,924.98
Rental received 3,434,407.04 1,636,520.02
Total 23,433,463.57 16,459,445.00
21. Employee benefit payable
Item 2018.12.31 Accrued Decrease 2019.12.31
Short-term employee benefits 63,805,261.48 549,103,500.51 537,474,216.99 75,434,545.00
Post-employment benefits - defined
5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
contribution plans
Termination benefits - 3,627,507.77 3,526,718.62 100,789.15
(1) Other benefits due within one year - - - -
Total 69,779,037.83 597,259,374.70 584,435,566.86 82,602,845.67
(1) Short-term employee benefits
Item 2018.12.31 Accrued Decrease 2019.12.31
Salaries, bonus, allowances 63,306,958.06 493,200,688.43 481,587,869.68 74,919,776.81
Staff welfare - 10,123,091.04 10,123,091.04 -
Social insurances - 20,177,698.15 20,177,698.15 -
Including:1.Medical insurance - 17,960,886.79 17,960,886.79 -
2.Work-related injury insurance - 674,579.45 674,579.45 -
3.Maternity insurance - 1,542,231.91 1,542,231.91 -
67
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Housing Fund - 17,858,952.38 17,858,952.38 -
Labor union fees and education fee 498,303.42 7,743,070.51 7,726,605.74 514,768.19
Short-term paid absences - - - -
Short-term profit –sharing plan - - - -
Non-monetary benefits - - - -
Other short-term employee benefits - - - -
Total 63,805,261.48 549,103,500.51 537,474,216.99 75,434,545.00
(2) Defined contribution plans
Item 2018.12.31 Accrued Decrease 2019.12.31
Post-employment benefits 5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
Including: 1.Basic pension insurance 473,306.78 40,186,669.43 40,404,404.74 255,571.47
2.Unemployment insurance - 1,117,187.90 1,117,187.90 -
3.Annuity 5,500,469.57 3,224,509.09 1,913,038.61 6,811,940.05
4.Others - - - -
Total 5,973,776.35 44,528,366.42 43,434,631.25 7,067,511.52
22. Taxes payable
Taxes 2019.12.31 2018.12.31
VAT 6,929,833.12 32,344,121.18
Corporate income tax 15,512,840.60 21,599,264.54
Individual income tax 1,227,923.78 998,190.73
Urban maintenance and construction tax 91,612.52 321,914.01
Educational surcharges 65,887.11 229,955.09
Others 236,705.87 429,726.37
Total 24,064,803.00 55,923,171.92
23. Other payables
Item 2019.12.31 2018.12.31
Interests payable - 772,351.26
Dividends payable 848,233.27 -
Other payables 118,768,488.36 71,047,579.04
Total 119,616,721.63 71,819,930.30
(1) Interests payable
Item 2019.12.31 2018.12.31
Interests for short-term loan - 772,351.26
68
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(2) Dividends payable
Item 2019.12.31 2018.12.31
Dividends for ordinary shares 848,233.27 -
(3) Other payables
Item 2019.12.31 2018.12.31
Security deposit 45,114,205.97 22,954,307.95
Shop activity fund 16,636,771.40 17,461,589.65
Personal accounts payable 1,321,518.82 3,058,122.71
Decoration expenses 4,556,469.41 6,096,460.99
Repurchase liability for restricted shares 17,737,366.73 -
Other 33,402,156.03 21,477,097.74
Total 118,768,488.36 71,047,579.04
24. Non-current liabilities due within one year
Item 2019.12.31 2018.12.31
Long-term loan due within one year 360,140.00 347,470.00
(1) Long-term loan due within one year
Item 2019.12.31 2018.12.31
Long-term loan due within one year 360,140.00 347,470.00
See Note V.25 for type and amount of mortgaged assets.
25. Long-term loan
Item 2019.12.31 Interests rate 2018.12.31 Interests rate
Mortgage loans 4,681,820.00 3.00% 4,864,580.00 3.00%
Total 4,681,820.00 4,864,580.00
Less: Long-term loan due within one year 360,140.00 347,470.00
Total 4,321,680.00 4,517,110.00
As of 31 December 2019, the carrying amount of fixed assets used in mortgage for the Group’s loan amounted to RMB14,303,281.92.
26. Deferred income
Item 2018.12.31 Addition Decrease 2019.12.31 Reason
Criteria of recognizing
Government grant 3,672,855.36 - 626,764.76 3,046,090.60
gain is not reached
See Note XIV. 1 Government grant for details of government grants that are included in deferred income.
27. Share capital
69
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Movements (+、-)
Item 2018.12.31 Bonus 2019.12.31
Capitalization of
Newly issued Others subtotal
share capital reserves
Total shares 438,744,881 4,224,000 - - - 4,224,000 442,968,881
On 11 January 2019, the restricted share incentive plan (first phase) had granted a total of 4,224,000 restricted A-shares to 128 incentive
individuals. As a result, the Company’s registered capital increased by RMB4,224,000.00 and capital reserve increased by
RMB14,361,600.00. See Note V. 28 Capital reserve for detail.
28. Capital reserve
Item 2018.12.31 Increase Decrease 2019.12.31
Share premium 1,047,963,195.57 14,361,600.00 27,654.81 1,062,297,140.76
Other capital reserve 14,492,448.65 4,440,625.91 - 18,933,074.56
Total 1,062,455,644.22 18,802,225.91 27,654.81 1,081,230,215.32
Note:
(1) On 4 January 2019, pursuant to the examination and approval given by SASAC under “Reply to Examination and approval of
Implementation of First Phase of Restricted Share Incentive plan of FIYTA (Group) Holding Ltd.” (GuoZi KaoFen [2018] No. 936), and
approved by the board of directors and shareholder’s general meeting, the Company implemented the incentive plan. On 11 January 2019,
the restricted share incentive plan (first phase) had granted a total of 4,224,000 restricted A-shares to 128 incentive individuals. Total
consideration received from subscription of restricted shares was RMB18,585,600.00, of which RMB4,224,000.0 increased share capital of
the Company and RMB14,361,600.00 increased the capital reserve of the Company. At the same time the Company recognized restricted
share re-purchase liability as other payables of RMB18,585,600.00 and increased treasury shares of RMB18,585,600.00 accordingly. In
2019, the Group increased RMB4,440,625.91 in capital reserve and charged the amount to related cost or expenses in exchange of the
incentive individuals’ service.
(2) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board of Directors
and the 2nd extraordinary shareholder’s meeting of 2019, the Company repurchased B Shares of 10,010,000 in total as of 31 December
2019. Total consideration paid was RMB 53,524,330.10. Trading fee paid was RMB 27,654.81, which was deducted from capital reserve.
29. Treasury shares
Item 2018.12.31 Increase Decrease 2019.12.31
- 71,267,118.78 - 71,267,118.78
Treasury shares
Note:
(1) The Company repurchased B Shares of 10,010,000 in total as of 31 December 2019. Total consideration paid was RMB 53,524,330.10,
which increased the amount of treasury shares.
(2) As described in Note V. 28 Capital reserve (1), the Group recognized restricted shares re-purchase obligation and the treasury share
increased by RMB18,585,600.00 accordingly.
70
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(3) According to 2018 profit distribution proposal that had been passed on 2018 shareholder’s meeting on 19 June 2019, the Company
distributed cash dividend of RMB2.008128 (tax inclusive) for every 10 shares held by shareholders based on the total 436,968,881 shares.
A-share registration date was 9 August 2019. The Company granted total 4,224,000 A shares to employee on 11 January 2019. After
deducting 27,000 shares that cannot be exercised in future, the cash dividend of the rest of 4,197,000.00 shares deducted treasury shares
accordingly.
30. Other comprehensive income
Movements in 2019
L
e
s
s:
Less: recorded
in other ta
2018.12.31 comprehensive x Attribute to Attribute to 2019.12.31
Item
income in prior parent minority
Before tax
period and e company after shareholders
transferred to x tax after tax
profit or loss in p
current period e
n
s
e
s
I. Other comprehensive
income items which will
not be reclassified - - - - - - -
subsequently to profit
or loss
II. Other
comprehensive income
items which may be
reclassified
subsequently to profit
or loss
Including: translation
difference of foreign
-5,442,139.78 4,502,059.89 - - 4,501,930.69 129.20 -940,209.09
currency financial
statements
Total other
-5,442,139.78 4,502,059.89 - - 4,501,930.69 129.20 -940,209.09
comprehensive income
Note: Net-of-tax amount of other comprehensive income during the year 2019 is RMB4,502,059.89, in which net-of-tax amount of other
comprehensive income attributable to shareholders of the Company is RMB4,501,930.69, and net-of-tax amount of other comprehensive
income attributable to non-controlling interests is RMB129.20.
31. Surplus reserve
Item 2018.12.31 Increase Decrease 2019.12.31
Statutory surplus
161,030,899.80 12,685,386.34 - 173,716,286.14
reserve
Discretionary surplus
61,984,894.00 - - 61,984,894.00
reserve
Total 223,015,793.80 12,685,386.34 - 235,701,180.14
71
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Note: According to the Company Law and Articles of Association, the Company draws statutory surplus reserve at 10% of net profit. If the
statutory surplus reserve is over 50% of the Company’s registered capital, drawing of statutory surplus reserve will be stopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve. If approved, discretionary surplus reserve
can be used to make up for losses in previous years or increase share capital.
32. Undistributed profit
Item 2019 2018
Undistributed profit at the end of prior year before adjustments 851,360,603.66 771,484,565.02
Adjustments to undistributed profit at the beginning of year - -
Undistributed profit at the beginning of year after adjustment 851,360,603.66 771,484,565.02
Plus: Net profit attributable to the owner of the parent company for the
215,909,014.15 183,835,095.29
year
Less: statutory surplus reserve drawn 12,685,386.34 16,210,080.45
Dividends payable to ordinary shares 87,743,413.07 87,748,976.20
Undistributed profit at the end of year 966,840,818.40 851,360,603.66
Including: appropriation to surplus reserves made by the Company’s
10,229,847.23 9,410,363.47
subsidiaries attributable to the Company
33. Operating income and operating cost
2019 2018
Item
Operating income Operating cost Operating income Operating cost
Main business 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
Other business 17,254,790.04 5,333,158.72 18,103,869.71 903,932.64
Total 3,704,210,734.90 2,217,207,732.04 3,400,450,599.90 1,993,809,774.20
(1) Main business presented by industry
2019 2018
Industry
Operating income Operating cost Operating income Operating cost
Watch 3,463,608,966.45 2,109,978,800.45 3,193,280,311.30 1,910,998,452.65
Precision manufacturing 91,341,945.34 73,717,603.23 70,742,449.85 59,432,940.99
Lease 132,005,033.07 28,178,169.64 118,323,969.04 22,474,447.92
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
(2) Main business presented by product
2019 2018
Product
Operating income Operating cost Operating income Operating cost
Watch retail and service 2,352,930,477.41 1,779,026,456.80 2,090,970,707.50 1,576,862,763.43
72
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Branded watch retail 1,110,678,489.04 330,952,343.65 1,102,309,603.80 334,135,689.22
Precision manufacturing 91,341,945.34 73,717,603.23 70,742,449.85 59,432,940.99
Lease 132,005,033.07 28,178,169.64 118,323,969.04 22,474,447.92
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
(3) Main business presented by geographical area
2019 2018
Area
Operating income Operating cost Operating income Operating cost
Southern China 1,806,673,205.47 1,091,723,846.59 1,518,807,270.87 874,695,822.56
Northwest China 586,521,631.97 340,309,728.35 588,628,213.03 353,457,194.81
Northern China 204,386,707.45 118,165,568.05 249,884,958.89 137,166,812.45
Eastern China 502,541,659.80 280,319,276.42 439,292,101.70 262,001,509.80
North-east China 230,662,172.16 163,383,316.18 269,671,243.83 187,589,738.67
Southwest China 356,170,568.01 217,972,837.73 316,062,941.87 177,994,763.27
Total 3,686,955,944.86 2,211,874,573.32 3,382,346,730.19 1,992,905,841.56
34. Taxes and surcharges
Item 2019 2018
Urban maintenance and construction tax 11,435,460.45 14,746,181.35
Educational surcharge 4,891,150.79 6,338,803.59
Local educational surcharge 3,216,962.37 4,221,251.51
Property tax 4,037,914.43 3,858,983.33
Land use tax 391,201.52 387,741.44
Stamp duty 2,384,290.09 2,216,200.85
Others 1,835,809.90 2,000,182.33
Total 28,192,789.55 33,769,344.40
Note: The criteria of business taxes and surcharges accrued and paid refer to Note IV. Taxation.
35. Selling and distribution expenses
Item 2019 2018
Salary 359,640,526.77 351,918,381.60
Department store expense and rental 181,211,260.52 137,788,340.17
Market promotion expenses 155,102,618.44 186,814,362.00
Depreciation and amortization 92,468,987.37 91,887,577.80
Packaging expenses 11,125,541.27 17,013,895.11
Utilities and property management
19,283,177.10 18,464,692.62
expenses
73
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Shipping fees 14,689,427.89 12,444,864.89
Office expenses 5,827,092.35 10,934,189.89
Travel expenses 10,479,738.66 12,076,624.12
Entertainment expenses 4,549,777.07 5,035,117.75
Others 11,413,931.17 12,592,127.15
Total 865,792,078.61 856,970,173.10
36. Administration expenses
Item 2019 2018
Salary 170,242,331.00 160,762,765.81
Depreciation and amortization 30,001,693.96 23,465,976.86
Travel expenses 7,543,194.55 7,436,745.07
Office expenses 3,966,450.49 4,411,920.54
Agents fees 5,146,625.69 7,322,437.54
Rental and utilities 6,140,097.22 3,943,256.92
Others 17,579,596.13 11,819,423.11
Total 240,619,989.04 219,162,525.85
37. R&D expenses
Item 2019 2018
Salary 25,225,831.95 27,781,676.08
Material and mould 1,654,367.12 3,872,770.91
Sample fee 1,874,392.46 2,042,439.14
Depreciation and amortization 5,120,979.03 4,869,828.83
Technical cooperation fee 5,488,880.26 1,254,524.99
Others 5,693,289.43 7,529,102.87
Total 45,057,740.25 47,350,342.82
38. Financial expense
Item 2019 2018
Total interest expenses 23,975,351.93 27,552,558.81
Less: Interest capitalization - -
Interest income 1,956,316.52 2,269,447.05
Exchange gain -2,920.03 713,080.72
Bank charges 10,799,162.19 9,920,047.68
Total 32,815,277.57 35,916,240.16
39. Other income
74
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Asset or income
Item 2019 2018
related
Headquarters enterprise award 4,843,500.00 - income related
Corporate Research and Development Funding 3,156,000.00 1,890,000.00 income related
Special subsidy to promoting consuming 1,655,200.00 - income related
Economic development special fund of Guangming District to
support intellectual property right, standardization certification 1,033,000.00 - income related
project
Subsidy to support major enterprise to expanding production
1,000,000.00 - income related
and improving efficiency
Subsidy to support innovation development for business and
712,664.00 - income related
trading
Subsidy to support investment in R&D and domestic economic
669,545.00 1,268,000.00 income related
and trading exhibition
Special fund of Nanshan district to support self-innovation
718,600.00 2,246,200.00 income related
industry development
Examine intellectual property right using big data 500,000.00 - income related
Commission on IIT payment 469,005.01 - income related
Shenzhen Standard Special Fund 543,000.00 496,000.00 income related
Subsidy for SME to expanding market 387,940.49 - income related
Shenzhen Science and Technology Award 300,000.00 - income related
Expanding production and improving efficiency 300,000.00 - income related
State certified R&D center 293,147.06 488,578.43 income related
Subsidy to projects of economic development special fund 286,000.00 - income related
Subsidy for stabilizing job position 209,468.63 229,106.17 income related
Special fund for Shenzhen industrial designing 203,066.21 1,066,988.78 income related
Self-innovative industry development subsidy 200,000.00 - income related
The 20th Guangdong Provincial China Patent Award 150,000.00 - income related
Associated award to the 20th Guangdong Provincial China
150,000.00 - income related
Patent Award
Provincial industry and information special subsidy 130,551.49 137,615.17 income related
Basel watch fair subsidy 114,333.32 - income related
Maternity insurance 100,789.68 - income related
Nanshan Economic Promoting Bureau subsidy for SME 100,000.00 - income related
Promotion of human resource quality 100,000.00 100,000.00 income related
Subsidy to promoting international operating ability 31,163.00 60,000.00 income related
State level high and new technology certificate subsidy 30,000.00 - income related
Short term export credit insurance 20,200.00 57,605.00 income related
75
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Expanding domestic marketing from Shenzhen SME Affairs
14,670.00 - income related
Department
Subsidy for Disabled person 7,062.29 8,882.30 income related
Watch fair subsidy from Guangming District - 50,000.00 income related
Shenzhen Patent Award - 2,000.00 income related
Special fund for industry transformation and upgrading - 500,000.00 income related
Special fund for application of industry transformation and
- 4,480,000.00 income related
upgrading
Merging of industrialization and information - 400,000.00 income related
Domestic marketing expanding for example enterprise
- 128,920.00 income related
practicing innovation
Foreign trade subsidy for Basel watch fair - 779,907.74 income related
High and new tech enterprise in Baoan District - 30,000.00 income related
2nd International Brand Week Guangming Branch - 28,301.89 income related
18th China Appearance Designing Excellence award - 250,000.00 income related
Domestic innovation patent annual subscription fee subsidy - 2,000.00 income related
Import exhibition participating - 6,154.00 income related
Economic and trade commission service industry special
- 1,000,000.00 income related
development fund
Crystal Products Exhibition Special Funding - 103,267.00 income related
Corporate R&D Funding by Science and Technology
- 1,155,000.00 income related
Commission
Creating excellence and rating funding project by Economic
- 200,000.00 income related
Promotion Bureau, Nanshan District
Funding for Informatization and Industrialization Integration
- 100,000.00 income related
project by Economic Promotion Bureau, Nanshan District
Project funded by Commerce Circulation Industry - 360,800.00 income related
Patent subsidy by Shenzhen Municipal Market and Quality
- 10,000.00 income related
Supervision and Administration Committee, 2017
The 19th China Patent Award of the Market and Quality
- 330,000.00 income related
Committee
Funds on Enterprise Intellectual Property Management
- 200,000.00 income related
Standards Certification by Market Supervision Committee
Demonstration special fund, financial aid project in exhibition
industry, for small and micro enterprise entrepreneurship - 159,810.00 income related
innovation base
Watch exhibition subsidy of small and micro enterprises - 128,008.00 income related
Government exhibition industry special fund - 128,008.00 income related
China Light Industry Federation's international standards
- 16,000.00 income related
funding
16-26 batch special subsidy for Central Foreign Trade and
- 60,000.00 income related
Economic
76
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Government special subsidy fund for central foreign economic
- 114,466.00 income related
and trade projects
Key technology research and development project of DF101
- 480,000.00 income related
aircraft benchmark timing system
Development Special Fund for Independent Innovation
- 124,000.00 income related
Industry, Nanshan District
Total 18,428,906.18 19,375,618.48 ——
Note: Refer to Note XIV. 1 Government grant for detailed information.
40. Investment gain
Item 2019 2018
Gain from long-term equity investments accounted for using the equity
1,787,907.10 1,001,545.06
method
41. Credit impairment loss (“- “for loss)
Item 2019 2018
Bad debt for bill receivable -217,182.73 ——
Bad debt for accounts receivable -16,346,637.18 ——
Bad debt for other receivables -77,141.16 ——
Total -16,640,961.07 ——
42. Asset impairment loss (“-“ for loss)
Item 2019 2018
Bad debt loss —— 5,488,944.07
Inventory impairment loss -4,295,134.48 -8,753,900.25
Total -4,295,134.48 -3,264,956.18
43. Gains from assets disposal
Item 2019 2018
Gains from assets disposal (“-“ for loss) -926,118.60 -181,302.24
44. Non-operating income
Amount included in
non-recurring gains or losses
Item 2019 2018
for the year ended
31/12/2019
Gain from non-current asset scrap - 1,000.00 -
Compensation 2,700,000.00 - 2,700,000.00
Payables cannot be paid 275,162.46 2,810.50 275,162.46
Others 1,778,942.84 1,442,547.03 1,778,942.84
Total 4,754,105.30 1,446,357.53 4,754,105.30
45. Non-operating expenses
77
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Amount included in
Item 2019 2018 non-recurring gains or losses
for the year ended 31/12/2019
Fine 44,727.07 154,626.88 44,727.07
Donation 200,000.00 380,000.00 200,000.00
Others 1,155,461.80 117,888.09 1,155,461.80
Total 1,400,188.87 652,514.97 1,400,188.87
46. Income expenses
(1) Details of income expenses
Item 2019 2018
Current tax expense for the year based on tax law and
42,132,064.04 42,131,613.05
regulations
Changes in deferred tax assets/liabilities 18,192,565.21 5,230,238.71
Total 60,324,629.25 47,361,851.76
(2) Reconciliation between income tax expenses and accounting profit is as follows:
Item 2019 2018
Profits before tax 276,233,643.40 231,196,947.05
Income tax calculated based on statutory tax rate 69,058,410.86 57,799,236.76
Effect of different tax rates applied by subsidiaries -4,251,519.66 -12,360,815.15
Adjustment to income tax of previous years 965,521.61 413,122.52
Effect of gains or losses from joint ventures and associates
-385,693.68 -250,386.27
accounted for using the equity method
Effect of non-taxable income (use “- “for presentation) - -
Effect of non-deductible costs, expenses and losses 1,178,297.49 1,286,216.68
Effect on opening balance of deferred tax due to changes in tax
- -
rate
Effect of using the deductible temporary differences or deductible
losses for which no deferred tax asset was recognized in previous - -250,920.28
(use “-“ for presentation)
Effect of deductible temporary differences or deductible losses for
174,634.92 7,158,514.85
which no deferred tax asset was recognized this year
Effect of research and development expenses super deduction
-6,415,022.29 -6,433,117.35
(use “-“ for presentation)
Others - -
Income tax expenses 60,324,629.25 47,361,851.76
47. Notes to cash flow statement
(1) Cash received from other operating activities
78
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Item 2019 2018
Government grant 17,802,141.42 17,144,473.84
Promotion expenses 14,023,190.48 7,388,696.14
Security deposit 31,127,235.94 9,977,697.98
Interest income 1,956,316.52 2,269,447.05
Return of petty cash 3,817,075.69 4,066,408.69
Penalty 4,298,036.35 -
Legal action security 8,958,057.64 -
Others 11,850,325.81 8,781,869.99
Total 93,832,379.85 49,628,593.69
(2) Cash paid for other operating activities
Item 2019 2018
Current period expenses 478,806,783.39 415,838,192.35
Security deposit 4,393,654.88 19,915,997.96
Petty cash advanced to employee 734,763.81 5,131,463.98
Others 4,118,260.73 13,351,304.90
Total 488,053,462.81 454,236,959.19
(3) Cash paid for other financing activities
Item 2019 2018
Cash paid for re-purchase of shares 53,117,325.02 -
48. Supplement to cash flow statement
(1) Supplement to cash flow statement
Item 2019 2018
1、 Reconciliation of net profit/loss to cash flows from operating
activities：
Net profit 215,909,014.15 183,835,095.29
Add: Impairment for assets 4,295,134.48 3,264,956.18
Credit impairment loss 16,640,961.07 ——
Depreciation of fixed assets, and investment property 44,206,119.17 44,860,943.06
Intangible asset amortization 6,897,790.40 5,285,858.86
Amortization of long-term deferred expenses 102,881,563.21 88,256,496.82
Loss on disposal of fixed assets, intangible assets, and other
926,118.60 181,302.24
long-term assets (“-“ for gain)
79
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Loss on scrap of fixed assets (“-“ for gain) - -1,000.00
Loss on changes of fair value (“-“ for gain) - -
Financial expenses (“-“ for income) 23,975,351.93 27,552,558.81
Investment loss (“-“ for gain) -1,787,907.10 -1,001,545.06
Decrease in deferred tax assets (“-“ for increase) 16,936,322.72 5,230,238.71
Increase in deferred tax liabilities (“-“ for decrease) 1,256,242.49 -
Decrease in inventories (“-“ for increase) -30,808,922.70 30,900,223.04
Decrease in operating receivables (“-“ for increase) -41,745,826.01 -36,309,812.09
Increase in operating payables (“-“ for decrease) 85,238,806.20 -20,427,526.24
Others - -
Net cash flows from operating activities 444,820,768.61 331,627,789.62
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 315,093,565.09 162,623,059.97
Less: cash at beginning of year 162,623,059.97 184,947,891.32
Plus: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
Net increase in cash and cash equivalents 152,470,505.12 -22,324,831.35
(2) Cash and cash equivalents
Item 31/12/2019 31/12/2018
I. Cash 315,093,565.09 162,623,059.97
Incl. Cash on hand 229,258.38 420,783.85
Bank deposit available for immediate payment 285,306,297.62 160,135,454.62
Other monetary funds available for immediate payment 29,558,009.09 2,066,821.50
II. Cash equivalents - -
Including Bond investment due in three months - -
III. Cash and cash equivalents at the end of year 315,093,565.09 162,623,059.97
Including Restricted cash and cash equivalents for the Company and its
3,641,389.51 9,192,653.31
subsidiaries
49. Assets of restricted ownership or use rights
Item Carrying amount as at 31 Dec 2019 Reason
80
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Cash in banks 1,575,000.00 Security deposit for letter of guarantee
Fixed assets 14,303,281.92 Pledged
Total 15,878,281.92 ——
50. Monetary item denominated in foreign currency
(1) Monetary item denominated in foreign currency
Balance denominated in foreign Balance translated in RMB as at
Item Exchange rate
currency as at 31 Dec 2019 31 Dec 2019
Cash and bank balances
Including: HKD 9,734,889.65 0.8887 8,651,709.21
USD 2,559,367.50 6.9287 17,733,097.20
EUR 61,357.68 7.9277 486,427.72
CHF 347,441.02 7.2028 2,502,548.17
Accounts receivable
Including: HKD 2,178,760.46 0.89578 1,951,690.04
USD 4,054,616.59 6.9762 28,285,816.26
EUR 393,890.14 7.8155 3,078,448.39
CHF 3,602,942.07 7.2028 25,951,271.14
Other receivables
Including: HKD 138,711.23 0.89578 124,254.75
EUR 4,250.00 7.8155 33,215.88
CHF 905,580.00 7.2028 6,522,711.62
Short-term loan
Including: HKD 19,123,916.44 0.89578 17,130,821.87
CHF 1,406,035.62 7.2028 10,127,393.36
Accounts payable
Including: HKD 2,527,248.49 0.89578 2,263,858.65
CHF 305,396.81 7.2028 2,199,712.14
Non-current liability that due in one year
Including: CHF 50,000.00 7.2028 360,140.00
Long-term loan
Including: CHF 600,000.00 7.2028 4,321,680.00
(2) Overseas operational entity
For main business location and recording currency of important overseas operational entity, refer to Note III. 4.
81
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
VI. Changes to the scope of consolidation
In 2019, there was no changes to the scope of consolidation.
VII. Interests in other entities
1. Equity in subsidiary
Main Shareholding ratio%
Place of Nature of
Name of subsidiary business Ways acquired
registration business Direct Indirect
location
Establishment or
HARMONY Company Shenzhen Shenzhen Commerce 100.00 -
investment
Manufacturing Establishment or
Shenzhen Shenzhen Commerce 90.00 10.00
Company investment
Establishment or
FIYTA Hong Kong Hong Kong Hong Kong Commerce 100.00 -
investment
Establishment or
Station 68 Hong Kong Hong Kong Manufacture - 60.00
investment
Establishment or
Harbin Company Harbin Harbin Commerce 100.00 -
investment
Establishment or
Technology Company Shenzhen Shenzhen Commerce 100.00 -
investment
Establishment or
TEMPORAL Company Shenzhen Shenzhen Commerce 100.00 -
investment
Business
Emile Choureit combination
Shenzhen Shenzhen Commerce 100.00 -
Shenzhen Company under common
control
Business
combination not
FIYTA Sales Company Shenzhen Shenzhen Commerce 100.00 -
under common
control
Establishment or
Hengdarui Company Shenyang Shenyang Commerce 100.00 -
investment
Establishment or
Swiss Company Switzerland Switzerland Commerce - 100.00
investment
2. Equity in joint arrangement or associates
(1) Significant associates
Principal place Registration Business Shareholding ratio (%) Accounting treatment
Name
of business place nature Direct Indirect for associates
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method
(2) Principal financial information of significant associate company:
Item 2019.12.31 2018.12.31
Current assets 117,096,911.21 99,901,286.09
Non-current assets 13,556,720.58 15,459,207.08
Total assets 130,653,631.79 115,360,493.17
Current liabilities 22,661,506.61 10,833,917.48
Non-current liabilities 7,978,869.84 10,684,419.15
82
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total liabilities 30,640,376.45 21,518,336.63
Net assets 100,013,255.34 93,842,156.54
Including: minority shareholder’s interest - -
Owners’ equity attributable to parent 100,013,255.34 93,842,156.54
company
Owners’ equity attributable to parent company 25,003,313.84 23,460,539.14
Adjustment matters
- Goodwill - -
- Unrealized profit or losses from internal - -
transaction
- impairment provisions - -
- Others - -
Carrying value of investment to associates 46,423,837.85 44,881,063.15
Fair value of equity investment that has public
- -
quotation
Continued:
Item 2019 2018
Operating income 101,660,357.29 97,282,978.95
Net profit 6,171,098.80 4,006,180.22
Net profit from discontinued
- -
operation
Other comprehensive income - -
Total comprehensive income 6,171,098.80 4,006,180.22
Dividends received from
associated company during the - -
year
VIII. Risk management to financial instrument
Main financial instruments of the Company include cash at bank and in hand, bills receivable, accounts receivable, other receivables, other
equity instruments investment, accounts payable, other payables, short-term loans, non-current liabilities due within one year and
long-term loans. Details of financial instruments refer to related notes. The risks associated with these financial instruments and the risk
management policies adopted by the 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.
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
83
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
level to manage risk, supervise various risk reliably and timely and control risk within limited range.
Risks associated with the financial instrument mainly include credit risk, liquidity risk, market risk (including exchange rate risk, interest rate
risk and commodity price risk).
The board of director is responsible to plan and establish the Group’s risk management structure, make risk management policies and
related guidelines, and supervise the implementation of risk management. The Group has already made risk management risks to identify
and analyse risks that the Group face. These policies mentioned specific risks, covering market, credit risk and liquidity risk etc. The Group
regularly assesses market environment and the operation changes to determine if to make alteration to risk management policy and
systems. The Group’s risk management is implemented by Risk Management Committee according to the approval of the board of
directors. Risk Management Committee work closely with other business department of the Group to identify, evaluating and avoiding
certain risks. The Group’s internal audit department will audit the risk management control and procedures regularly and report the result to
audit committee of the Group.
The Group spreads risks through diverse investment and business lines, and through making risk management policy to reduce risks of
single industry, specific area and counterpart.
(1) Credit risks
Credit risk refers to risk associated with the default of contract obligation of a transaction counterparty.
The Group manages credit risk based category. Credit risks mainly arose from bank deposit, bills receivable, accounts receivable, and
other receivables.
The Group’s bank deposit mainly deposits in banks with good reputation and with higher credit rating. The Group anticipated that the bank
deposit does not have significant credit risk.
For bill receivable, accounts receivables and other receivables, the Group set related policies to control exposure of credit risks. The Group
evaluate client’s credit quality and set related credit period based on the client’s financial status, credit records and other factors such as
current market situation etc. The Group keep monitor the client’s credit record and for client with deteriorate credit records, the Group will
ensure the credit risk is under control in whole by means of written notice of payment collection, shorten or cancel credit period.
The Group’s debtor spread over different industry and area. The Group continued to assess the credit evaluation to receivables and
purchase credit guarantee insurance if necessary.
The biggest credit risk exposure of the Group is the carrying amount of each financial assets in the balance sheet. The Group also faces
credit risks because of providing financial guarantee. Refer to Note XII. 2 for details.
The amount of top 5 accounts receivable of the Group accounted for 25.39% (2018: 21.95%) of the Group’s total accounts receivables.
The amount of top 5 other receivable of the Group accounted for 40.94% (2018: 22.73%) of the Group’s total other receivables.
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligations associated with its financial liabilities that are settled
by delivering cash or other financial assets.
Regarding to the management of liquidity risk, the subsidiaries of the Group are responsible for cash flow forecast. The Group’s finance
84
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
center monitors cash and cash equivalents to meet operational needs at group level based on subsidiaries’ cash forecast. The Group set
up cash pool with major banks to arrange the Group’s cash and ensure that each subsidiary has sufficient cash reserve to fulfil payment
liability. Besides, the Group also signed facility agreement with banks to support the Group to fulfil liabilities fall due.
Operating cash were generated from daily operation and bank loan. As of 31 December 2019, the Group’s unused bank loan credit is
RMB1,970.39 million (2018: 1,981.03 million)
As at the period end, the financial liabilities of the Group at the reporting date are analysed by their maturity date as below at their
undiscounted contractual cash flows (in ten thousand RMB):
2019.12.31
Item Within 1
1-2 years 2-3 years Over 3 years Total
year
Financial liabilities:
Short-term loans 57,945.57 - - - 57,945.57
Accounts payable 27,977.28 - - - 27,977.28
Other payables 11,961.66 - - 84.82 12,046.48
Non-current liabilities due in one year 37.09 - - - 37.09
Long-term loans 12.97 11.89 441.62 - 466.48
Total financial liabilities 97,934.57 11.89 441.62 84.82 98,472.90
As at the beginning of the period, the financial liabilities of the Group at the reporting date are analysed by their maturity date as below at
their undiscounted contractual cash flows (in ten thousand RMB):
2018.12.31
Item
Within 1 year 1-2 years 2-3 years Over 3 years Total
Financial liabilities:
Short-term loans 56,116.70 - - - 56,116.70
Accounts payable 25,991.36 - - - 25,991.36
Other payables 7,181.99 - - - 7,181.99
Non-current liabilities due in one year 35.79 - - - 35.79
Long-term loans 13.55 47.26 46.22 391.01 498.04
Total financial liabilities 89,339.39 47.26 46.22 391.01 89,823.88
The financial liabilities disclosed above are based on cash flows that are not discounted and may differ from the carrying amount of the line
items.
(3) Market risk
Market risk includes interest rate risk and currency risk, refers to the risk that the fair value or future cash flow of a financial instrument will
be fluctuated due to the changes in market price.
Interest risk
85
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will be fluctuated due to the floating rate.
Interest rate risk arises from recognised interest-bearing financial instrument and unrecognised financial instrument (e.g. loan
commitments).
The Group’s interest rate risk arises from cash and cash equivalents, borrowings and interest-bearing liabilities. Financial liabilities issued
at floating rate expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rate expose the Group to fair value
interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing
market conditions and to maintain an appropriate combination of financial instruments at fixed rate and floating rate through regular
reviews and monitors.
The Group’s finance department continuously monitors the interest rate position of the Group. The Group did not enter into any interest
rate hedging arrangements. But the management is responsible to monitor the risks of interest rate and consider to hedge significant
interest risk if necessary. Increase in interest rates will increase the cost of new borrowing and the interest expenses with respect to the
Group’s outstanding floating rate interest-bearing borrowings, and therefore could have a material adverse effect on the Group’s financial
result. The management will make adjustments with reference to the latest market conditions. These adjustments may include enter into
interest swap agreement to mitigate its exposure to the interest rate risk.
Interest bearing financial instrument held by the Group are as follows (in ten thousand RMB):
Item 2019 2018
Fixed interest rate
Financial liability
Including: short term loans 48,710.37 54,711.85
Long term loans 468.18 486.46
Subtotal 49,178.55 55,198.31
Floating interest rate:
Financial liabilities
Including: short term loans 8,000.00 -
Total 57,178.55 55,198.31
As at 31 December 2019, it is estimated that a general increase or decrease 50 basis points in the borrowings with floating interest rates,
with all other variables held constant, the Group’s net profit and shareholder’s equity for the year will decrease or increase by
approximately RMB400 thousand (2018: no floating interest rate loan).
The financial instruments held by the Group at the reporting date expose the Group to fair value interest rate risk. This sensitivity analysis
as above has been determined assuming that the change in interest rates had occurred at the reporting date and arisen from the
recalculation of the above financial instrument issued at new interest rates. The non-derivative tools issued at floating interest rate held by
the Group at the reporting date expose the Group to cash flow interest rate risk. The effect to the net profit and shareholder’s equity
illustrated in the sensitivity analysis as above is arisen from the effect to the annual estimate amount of interest expenses or revenue at the
floating interest rate. The analysis is performed on the same basis for last year.
86
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Exchange rate risk
Exchange risk refers to the risk that the fair value or future cash flows of a financial instrument will be fluctuated due to the changes in
foreign currency rates. Foreign currency risk arises on financial instruments that are denominated in a currency other than the functional
currency in which they are measured.
The Group’s exchange risk mainly are financial position and cash flow that are affected by foreign exchange fluctuation. The Group’s major
operational activities are carried out in the PRC except for Swiss company which held currency of CHF and Hong Kong company which
uses HKD for settlement. But risks also exist for the Group’s asset and liability denominated in foreign currency and future foreign
exchange transaction.
The following table details the financial assets and liabilities held by the Group which denominated in foreign currencies and amounted to
RMB as at 31 December 2019 are as follows (in RMB ten thousands):
Liabilities denominated in foreign currency Asset denominated in foreign currency
Item
31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018
USD - - 4,601.89 907.81
HKD 1,939.47 3,160.74 1,072.77 872.08
CHF 1,700.89 1,852.08 3,497.65 1,189.40
EUR - - 359.81 31.75
Total 3,640.36 5,012.82 9,532.12 3,001.04
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.
As at 31 December 2019, for cash balances, bank loans and other financial instruments that denominated in foreign currency, if Renminbi
appreciate or depreciate of 5% to foreign currency (mainly USD, HKD and CHF) and other factors remain unchanged, the shareholder’s
equity and net profit will increase or decrease about RMB 2.9459 million (31 Dec 2018:1.0059 million.
2. Capital management
The objective of the Group’s capital risk management is to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to shareholders, return capital to
shareholders, issue new shares or disposes assets to reduce its liabilities.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net liabilities divided by total capital. As at 31
December 2019, the Group’s gearing ratio is 29.42% (31 December 2018: 28.60%).
IX. Fair value
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that
is significant to the entire fair value measurement. The levels are defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date for identical assets or
87
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
liabilities.
Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for underlying assets or liabilities.
Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
(1) Fair value of assets and liabilities measured at fair value
As at 31/12/2019, assets and liabilities measured at fair value are shown as follows:
Level 1 fair value Level 2 fair value Level 3 fair value
Item Total
measurement measurement measurement
I.Recurring fair value measurement
(I) other equity instrument investment - - 85,000.00 85,000.00
There have been no transfers between level 1 and level 2 and no transfer into or out of Level 3 during the year ended 31 December 2019.
(2) Fair values of assets and liabilities not measured at fair value
Financial assets and financial liabilities measured at amortized cost include: cash at bank and on hand, notes receivable, accounts
receivable, other receivables, short-term loans, accounts payable, other payables, long-term loans due within one year, and long-term
loans.
The difference between fair value and carrying amount of the above financial assets and liabilities that measured at cost is insignificant.
X. Related party and related transaction
1. The parent company of the Company
Shareholding ratio of Ratio of vote right of
Registration
Name Type of business Registered capital parent company to parent company to
place
the Company % the Company%
Investment in industries,
China National
Shenzhen domestic trade, material 1,166,161,996 36.79 36.79
Aviation Group
supply and distribution
Note: CATIC Shenzhen Company holds 36.85% shareholding of China National Aviation Group. CATIC Shenzhen Company is a wholly
owned subsidiary of China Aero Space International Holdings Limited (CASI), and China Aviation Industry Corporation (AVIC) directly
holds 91.13% (ultimate beneficiary shares 91.897%) of the equity of CASI. Therefore, the ultimate controlling party of the Company is
AVIC.
2. Subsidiaries
Details of subsidiaries refer to Note VII.1.
3. Joint venture and association
Details of joint ventures and associates refer to NoteVII.2.
4. Other related parties
Name Relationship with the Company
Associate company of the
Shenzhen CATIC Property Management Limited (CATIC Property Management)
controlling shareholder
88
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Associate company of the
Shenzhen CATIC Building Equipment Co., Ltd. (CATIC Building Company)
controlling shareholder
Associate company of the
China Merchants Property Operation & Service Co., Ltd (China Merchants Property OS)
controlling shareholder
Associate company of the
CATIC Guanlan Property Development Co., Ltd. （CATIC Guanlan Property）
controlling shareholder
Associate company of the
Shenzhen CATIC Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Company)
controlling shareholder
Associate company of the
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment)
controlling shareholder
Ganzhou CATIC 9 Square Trading Co, Ltd (Ganzhou 9 Square Company) Associate company of the
controlling shareholder
Associate company of the
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company)
controlling shareholder
Associate company of the
Shenzhen AVIC Security Service Co., Ltd (AVIC Security Service)
controlling shareholder
Associate company of the
Shenzhen AVIC Property Asset Management Co., Ltd. (AVIC Property Asset Management)
controlling shareholder
Associate company of the
Jiujiang 9 Square Business Management Co., Ltd (Jiufang Business Management)
controlling shareholder
Associate company of the
Shenzhen CATIC Property Development Co., Ltd (CATIC Property)
controlling shareholder
Rainbow Department Store Co., Ltd. and its associated companies (Rainbow Department Store) Controlled by the same party
Shennan Circuits Co., Ltd. and its associated companies (Shennan Circuits) 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 Huacheng Real Estate Development Co, Ltd (CATIC Huacheng Company) Controlled by the same party
Shenzhen CATIC City Parking Management Co, Ltd (CATIC City Parking Management Company) Controlled by the same party
Shenzhen CATIC Technical Testing Institute (CATIC Technical Testing Institute) Controlled by the same party
Tianma Micro-electronics Co., Ltd. (Tianma) 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
CATIC Changtai Investment Development Co., Ltd. (CATIC Changtai Company) Controlled by the same party
AVIC Training Center Controlled by the same party
Shenzhen Grand Skylight Hotel Management Co., Ltd (Grand Skylight Hotel Management
Controlled by the same party
Company)
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Shenzhen CATIC Grand Skylight Hotel Co., Ltd (Grand Skylight Hotel) Controlled by the same party
89
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
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
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
Fang Jiasheng 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
Tang Haiyuan Key management member
Xu Chuangyue Key management member
Zou Zhixiang Key management member
Lu Bingqiang Key management member
5. Related party transactions
(1) Related purchase and sales
①Purchase good and receiving service
Related party Nature of transaction 2019 2018
CATIC Property
Property management 11,480,515.57 8,208,102.96
Management
Department store expenses/
Rainbow Department Store 5,646,879.21 5,865,816.91
Commodity purchase
AVIC Training Center Training fee 159,408.67 273,596.25
Shennan Circuits Material purchase - 29,914.50
Ganzhou 9 Square
Department store expense 185,711.09 177,372.93
Company
CATIC City Estate (Kunshan)
Department store expense 39,921.62 76,674.66
Company
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FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Jiufang Business
Department store expense 54,731.80 58,322.11
Management
AVIC Purchase of goods 415,077.98 -
AVIC Information Center Training expenses 1,603.77 -
Shanghai Watch Purchase of goods 6,048.24 -
Tianma Purchase of goods 969,091.14 -
CATIC Building Company Renovation 17,390.67 -
Maintenance and
Skytel Hotel 28,886.00 -
management fee
CATIC City Real Estate
Department store expense 76,275.91 -
Company
The pricing strategy for Group’s related transaction are based on market price.
② Sale of goods and providing services
Related party Nature of transaction 2019 2018
Rainbow Department Store Product and service 73,641,080.14 71,764,856.50
Grand Skylight Hotel
Sale of product - 5,982.91
Management Company
Ganzhou 9 Square
Product and service 93,750.40 960,563.85
Company
Sale of material and
Shennan Circuit 10,573,861.17 5,883,132.72
providing service
Gongqingcheng CATIC
Culture Investment Sale of product - 655,161.45
Company
CASI Sale of product - 10,215.52
CATIC City Real Estate
Sale of product - 4,051.28
Company
AVIC-INTL Project
Sale of product - 15,351.72
Engineering Company
CATIC Property Share of Utilities and
12,506,097.43 3,670,113.63
Management management fee
Grand Skylight Hotel Sale of product 140,867.25 -
Shanghai Watch Sale of product 4,821,299.97 -
AVIC Training Center Others 3,270.80 -
The pricing strategy for Group’s related transaction are based on market price.
(2) Related party lease
①The Company as a lessor
Recognized rental income in Recognized rental income in
Lessee Type of leased assets
current year prior year
Property
CATIC Property Management 3,972,425.13 3,327,785.46
China Merchants Property OS Property 1,887,345.86 1,813,948.87
91
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Skytel Hotel Property 2,793,650.79 4,190,476.18
CATIC City Investment) Property 271,560.56 364,293.91
AVIC Securities Company Property 1,280,028.55 1,231,342.83
Property
CATIC City Real Estate
304,781.46 342,330.05
Company
Rainbow Department Store Property 684,393.11 529,166.26
CATIC Huacheng Company Property 239,471.14 257,234.48
CATIC 9 Square Asset Mgmt Property
2,023,126.13 1,560,410.13
Company
AVIC Security Service Property 1,438,139.41 1,160,868.75
CATIC Guanlan Property Property 135,780.28 119,748.00
AVIC Property Asset Property
- 57,154.70
Management
Property
CATIC Property Management 272,692.07 165,612.56
CATIC City Parking Property
- 9,916.44
Management Company
The pricing strategy for Group’s related transaction are based on market price.
② The Company as lessee
Rental expenses charged in Rental expenses charged in
Lessor Type of leased assets
current year prior year
Ganzhou 9 Square Company Property 894,582.84 894,582.84
Kunshan Company Property 132,960.04 156,942.79
Jiufang Business Management Property 320,208.22 337,541.02
Property
CATIC City Real Estate Company 285,668.33 -
The pricing strategy for Group’s related transaction are based on market price.
(3) Related party funds lending
Related Party Amount starting date Expiring date Note
Borrowing:
AVIC Finance Company 150,000,000.00 2018-5-14 2019-5-14
AVIC Finance Company 50,000,000.00 2019-3-26 2020-3-26
AVIC Finance Company 100,000,000.00 2019-4-2 2020-4-2
AVIC Finance Company 60,000,000.00 2019-8-1 2019-10-25
AVIC Finance Company 60,000,000.00 2019-10-25 2020-10-25
Note: The Company paid interest to AVIC Finance Company up to RMB 6,980,130.55 during the year.
92
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(4) Remuneration to key management
The Company has 21 (including resigned) key management personnel in 2019, and 22 (including resigned) key management personnel in
2018. Information about remuneration is as follows:
Item 2019 2018
Remuneration to key management 17,845,000.00 13,123,100.00
(5) Other related party transactions
The year-end balance of the Company’s cash was RMB237,118,456.45, which was deposited with AVIC Finance Company. Interests
received from the deposit during the year were RMB362,818.00.
6. Receivables from and payables to related parties
(1) Receivables
2019.12.31 2018.12.31
Item Related party Carrying amount Bad debt provision Carrying amount Bad debt provision
Bill receivable
Shennan Circuit 2,263,719.32 - - -
Accounts
receivable
Rainbow
6,387,871.47 318,754.79 2,305,867.79 115,293.39
Department Store
Shennan Circuit 1,704,634.58 85,061.27 1,659,077.38 82,953.87
Ganzhou 9 Square
- - 4,000.00 200.00
Company
Gongqingcheng
CATIC Culture
- - 28,269.36 1,413.47
Investment
Company
Jiufang Business
- - 4,288.00 214.40
Management
AVIC Securities
- - 101,428.57 5,071.43
Company
CATIC City Real
- - 3.00 0.15
Estate Company
CATIC 9 Square
Asset Mgmt - - 33,331.01 1,666.55
Company
CATIC Guanlan
- - 8,315.43 415.77
Property
CATIC Property - - 148,915.46 7,445.77
93
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
CATIC Property
- - 0.52 0.03
Management
Shanghai Watch 140,000.00 6,986.00 - -
Other receivables
Rainbow
975,867.00 50,647.50 761,860.00 38,093.00
Department Store
CATIC Property
- - 10,100.00 505.00
Management
Ganzhou 9 Square
122,665.60 6,366.34 122,665.60 6,133.28
Company
Kunshan Company 32,000.00 1,660.80 50,400.00 2,520.00
Skytel Hotel - - 32,000.00 1,600.00
Gongqingcheng
CATIC Culture
- - 5,500.00 275.00
Investment
Company
Jiufang Business
50,000.00 2,595.00 50,000.00 2,500.00
Management
CATIC City Real
59,923.00 3,110.00 54,923.00 2,746.15
Estate Company
China National
11,101.80 576.18 11,101.80 555.09
Aviation Group
Prepayment:
Tianma 31,309.90 - - -
(2) Payables to related parties
Item Related party 2019.12.31 2018.12.31
Accounts payables:
CATIC Building Company 23,300.97 24,000.00
CATIC Property Management - 40,821.05
Tianma 3,415.84 -
Other payables: CATIC Property Management 1,237,403.65 1,131,164.13
CATIC Property 442,407.92 442,407.92
CATIC City Investment 309,732.00 309,732.00
AVIC Securities Company) 213,000.00 213,000.00
CATIC Building Company 54,691.44 116,960.23
CATIC City Real Estate
99,052.32 99,052.32
Company
94
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
CATIC Huacheng Company 73,819.68 73,819.68
CATIC Jiufang Asset Mgmt
378,483.84 378,483.84
Company
Rainbow Department Store 155,672.90 60,000.00
CATIC Changtai Company - 4,064.81
CATIC Property 51,014.88 51,014.88
CATIC Guanlan Property 25,401.60 25,401.60
AVIC Security Service 226,603.44 10,533.44
Ganzhou 9 Square Company - 3,446.22
Shennan Circuits - 150,000.00
Skytel Hotel 28,886.00 -
XI. Share-based payments
1. General information about share-based payments
Total equity instruments granted by the Company in current period 4,224,000
Total equity instruments exercised by the Company in current period 4,224,000
Total equity instruments voided in current period -
First phase restricted share exercise price:
Scope of outstanding share option exercise price and remaining contract term
RMB4.4/share, remaining term 48 months.
Scope of outstanding other equity instrument exercise price and remaining
Not applicable
contract term.
2. Equity settled share-based payment
Method of determining fair value of equity instrument on grant date Close price of share on grant date
Term of employee service, status of target completion,
Evidence to determine the number of exercisable equity instrument
and personal performance assessment
Reasons for significant difference between current period estimation and prior
NIL
period estimation.
Accumulated amount charged to capital reserve for equity settled share-based
18,802,225.91
payment
Total expenses for equity settled share-based payment recognized in current
4,440,625.91
period
XII. Commitment and contingency
1. Significant commitments
(1) Operating lease commitments
As at the balance sheet date, the total future minimum lease payments under non-cancellable operating leases were payable as follows:
95
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
The total future minimum lease payments under
2019.12.31 2018.12.31
non-cancellable operating leases
Within 1 year 69,420,770.36 54,382,100.37
1-2 years 40,749,688.35 28,501,337.58
2-3 years 15,620,420.28 12,406,400.37
After 3 years 11,333,148.34 9,533,027.43
Total 137,124,027.33 104,822,865.75
(2) Other commitments
As at 31 December 2019, the Group does not have other commitments that required to disclose.
2. Contingencies
(1) Contingent liabilities arising from guarantee provided to other entities and related financial effects.
As at 31 December 2019, the intra-Group guarantees is as followings (in RMB Ten thousands):
Guaranteed
Guarantee Guarantor Credit line granted Credit line used Period
matter
2018-7-1 to
FIYTA Hong Kong The Company Loan 3,583.12 2,710.37
2020-5-31
Loan 2018-12-17 to
FIYTA Hong Kong The Company 7,166.24 -
2020-11-12
HARMONY Loan 2018-12-4 to
The Company 30,000.00 1,000.00
Company 2020-3-8
HARMONY 2019-12-30 to
The Company Guarantee letter 10,000.00 10,000.00
Company 2020-12-29
Total —— —— 50,749.36 13,710.37 ——
(2) Other contingent liabilities
As at 31 December 2019, the Group does not have other contingent liabilities that required to disclose.
XIII. Post balance sheet date events
1. Profit appropriations after the balance sheet date
Profit distributions or dividends proposed Cash dividend of RMB2.00 (tax inclusive) for every 10 shar
es held
2. Other events after the balance sheet date
(1) Pursuant to “The Resolution of Plan of Re-purchase B Shares” which was approved on the 7th meeting of the 9th Board of Directors on
4 April 2019 and the 2nd extraordinary shareholder’s meeting of 2019 on 23 April 2019, the Company repurchased B Shares of 13,470,000
in total as of 18 March 2020, accounted for 3.04% of the Company’s total shares. The highest deal price was HKD6.56 and the lowest was
HKD5.71. Total consideration paid was HKD 81,883,172.32 (excluding stamp duty and commission).
(2) Since the outbreak of Novel Coronavirus Pneumonia in the beginning of 2020, the Company has actively responded and strictly
implemented various regulation and requirements pronounced by the China Communist Party and national government authorities at all
level for virus epidemic prevention and control in order achieve operation production while preventing the epidemic. In responding to the
outbreak of epidemic, the Company has quickly adjusted the operating strategies, promoted full marketing and increased investment in
96
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
e-commerce to minimize market impact.
The epidemic would have certain impact on the business operations and overall ecomonic operartion of the entire country and
consequently have impact to the Company’s merchandise retail and manufacturing businesses to a certain extent. The degree of impact is
uncertain as of now and is subjected to the development of epidemic prevention, duration of the epidemic and implementation of all kinds
of control measures. The Company will closely monitor, evaluate and actively address the impact of the epidemic to the Group’s financial
position, as well as the operating performance.
(3) Financing and guarantee after the balance sheet date
① On 18 March 2020, pursuant to approval by the 16th meeting the 9th Board of directors, the Company proposed to apply for financing
facility of no more than RMB1,200 million by means of credit, pledge and mortgage. The resolution is pending for approval by the
shareholder’s meeting.
②On 18 March 2020, pursuant to approval by the 16th meeting the 9th Board of directors, the Company proposed to provide guarantee
for the Company’s wholly-owned subsidiary to borrow from banks of no more than RMB1,000 million. The credit line is included in the
actual usage limit of RMB1,200 million mentioned above. The resolution is waiting approval from the shareholder’s meeting.
(4) As at 18 March 2020, the Group does not have other post-balance sheet events that requires to disclose.
XIV. Other Significant matters
1. Government grant
(1) Government grants recognized in deferred income, and subsequently measured using the gross presentation method
Presentation
Additions
As at Recognition in Other As at item Related to
Item Type during the
31/12/2018 profit and loss changes 31/12/2019 recognized in asset/income
year
profit and loss
Special fund for
Shenzhen
industrial design State treasury 933,011.22 - 203,066.21 - 729,945.01 Other income Asset related
industry
development (A)
Funding project
for construction
of National
State treasury 1,511,421.57 - 293,147.06 - 1,218,274.51 Other income Asset related
Enterprise
Technology
Center (B)
2017 Provincial
Specialized
Fund for
State treasury 1,162,384.83 - 130,551.49 - 1,031,833.34 Other income Income related
Industrial and
Information
Technology (C)
Special funds for
consumer goods
standards and State treasury 66,037.74 - - - 66,037.74 —— Income related
quality
improvement
Total —— 3,672,855.36 - 626,764.76 - 3,046,090.60 —— ——
97
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Note:
A. Special fund for Shenzhen industrial design industry development was obtained according to the Shen Jingmao Xinxi Jishu Zi (2013)
No. 227 - Operating Specification for Affirmation and Fund Plan of Shenzhen Industrial Design Center (Trial) which is jointly issued
by Economy, Trade and Information Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality.
B. Funding project for construction of Shenzhen Enterprise Technology Center was obtained according to the Notice for the 1st
Supportive Project in 2015 of Funding Project for Construction of Shenzhen Enterprise Technology Center which was issued by
Shenzhen Development and Reform Commission (Shen Jing Mao Xin Xi Yu[2015] No. 129).
C. According to the Notice of Guangdong Provincial Economic and Information Technology Commission on Doing a Good Job of
Applying for Provincial Special Projects in Production and Service Industry in 2017 (the Circular of the Ministry of Economic Affairs
and Information Technology of Guangdong Province and Guangdong Provincial Department of Finance) Guangdong Letter of
Manufacture [2016] No. 53) obtained provincial 2017 special funds for industrial and informatization.
(2) Government grants recognized in profit and loss using gross method
Recognised in profit Recognised in profit Presentation item
Related to
Item Type and loss for the year and loss for the year recognized in profit
asset/income
ended 31/12/2018 ended 31/12/2019 and loss
Headquarters enterprise
State treasury - 4,843,500.00 Other income Income related
award (A)
Corporate Research and
Development Funding State treasury 1,890,000.00 3,156,000.00 Other income Income related
(B)
Special subsidy to
promoting consuming State treasury - 1,655,200.00 Other income Income related
(C)
Economic development
special fund of
Guangming District to
support intellectual State treasury - 1,033,000.00 Other income Income related
property right,
standardization
certification project (D)
Subsidy to support
major enterprise to
expanding production State treasury - 1,000,000.00 Other income Income related
and improving efficiency
(E)
Subsidy to support
innovation development
State treasury - 712,664.00 Other income Income related
for business and trading
(F)
Subsidy to support
investment in R&D and
State treasury 1,268,000.00 669,545.00 Other income Income related
domestic economic and
trading exhibition (G)
Special fund of Nanshan
district to support
State treasury 2,246,200.00 718,600.00 Other income Income related
self-innovation industry
development (H)
Examine intellectual State treasury - 500,000.00 Other income Income related
property right using big
98
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
data (I)
Commission on IIT
State treasury - 469,005.01 Other income Income related
payment
Shenzhen Standard
State treasury 496,000.00 543,000.00 Other income Income related
Special Fund (J)
Subsidy for SME to
State treasury - 387,940.49 Other income Income related
expanding market (K)
Shenzhen Science and
State treasury - 300,000.00 Other income Income related
Technology Award (L)
Expanding production
and improving efficiency State treasury - 300,000.00 Other income Income related
(M)
Subsidy to projects of
economic development State treasury - 286,000.00 Other income Income related
special fund (N)
Subsidy for stabilizing
State treasury 229,106.17 209,468.63 Other income Income related
job position
Self-innovative industry
development subsidy State treasury - 200,000.00 Other income Income related
(O)
The 20th Guangdong
Provincial China Patent State treasury - 150,000.00 Other income Income related
Award (P)
Associated award to
The 20th Guangdong
State treasury - 150,000.00 Other income Income related
Provincial China Patent
Award (Q)
Basel watch fair subsidy State treasury - 114,333.32 Other income Income related
Maternity insurance State treasury - 100,789.68 Other income Income related
Nanshan Economic
Promoting Bureau State treasury - 100,000.00 Other income Income related
subsidy for SME (R)
Promotion of human
State treasury 100,000.00 100,000.00 Other income Income related
resource quality
Subsidy to promoting
international operating State treasury 60,000.00 31,163.00 Other income Income related
ability (S)
State level high and new
technology certificate State treasury - 30,000.00 Other income Income related
subsidy (T)
Short term export credit
State treasury 57,605.00 20,200.00 Other income Income related
insurance
Expanding domestic
marketing from
State treasury - 14,670.00 Other income Income related
Shenzhen SME Affairs
Department (V)
Subsidy for Disabled
State treasury 8,882.30 7,062.29 Other income Income related
person (W)
Watch fair subsidy from
State treasury 50,000.00 - Other income Income related
Guangming District
99
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Shenzhen Patent Award State treasury 2,000.00 - Other income Income related
Special fund for industry
transformation and State treasury 500,000.00 - Other income Income related
upgrading
Special fund for
application of industry
State treasury 4,480,000.00 - Other income Income related
transformation and
upgrading
Merging of
industrialization and State treasury 400,000.00 - Other income Income related
information
Domestic marketing
expanding for example
State treasury 128,920.00 - Other income Income related
enterprise practicing
innovation
Foreign trade subsidy
State treasury 779,907.74 - Other income Income related
for Basel watch fair
High and new tech
enterprise in Baoan State treasury 30,000.00 - Other income Income related
District
2nd International Brand
Week Guangming State treasury 28,301.89 - Other income Income related
Branch
18th China Appearance
Designing Excellence State treasury 250,000.00 - Other income Income related
award
Domestic innovation
patent annual State treasury 2,000.00 - Other income Income related
subscription fee subsidy
Import exhibition
State treasury 6,154.00 - Other income Income related
participating
Economic and trade
commission service
State treasury 1,000,000.00 - Other income Income related
industry special
development fund
Crystal Products
Exhibition Special State treasury 103,267.00 - Other income Income related
Funding
Corporate R&D Funding
by Science and State treasury 1,155,000.00 - Other income Income related
Technology Commission
Creating excellence and
rating funding project by
Economic Promotion State treasury 200,000.00 - Other income Income related
Bureau, Nanshan
District
Funding for
Informatization and
Industrialization
Integration project by State treasury 100,000.00 - Other income Income related
Economic Promotion
Bureau, Nanshan
District
100
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Project funded by
Commerce Circulation State treasury 360,800.00 - Other income Income related
Industry
Patent subsidy by
Shenzhen Municipal
Market and Quality
State treasury 10,000.00 - Other income Income related
Supervision and
Administration
Committee, 2017
The 19th China Patent
Award of the Market and State treasury 330,000.00 - Other income Income related
Quality Committee
Funds on Enterprise
Intellectual Property
Management Standards State treasury 200,000.00 - Other income Income related
Certification by Market
Supervision Committee
Demonstration special
fund, financial aid
project in exhibition
industry, for small and State treasury 159,810.00 - Other income Income related
micro enterprise
entrepreneurship
innovation base
Watch exhibition
subsidy of small and State treasury 128,008.00 - Other income Income related
micro enterprises
Government exhibition
State treasury 128,008.00 - Other income Income related
industry special fund
China Light Industry
Federation's
State treasury 16,000.00 - Other income Income related
international standards
funding
16-26 batch special
subsidy for Central
State treasury 60,000.00 - Other income Income related
Foreign Trade and
Economic
Government special
subsidy fund for central
State treasury 114,466.00 - Other income Income related
foreign economic and
trade projects
Key technology
research and
development project of
State treasury 480,000.00 - Other income Income related
DF101 aircraft
benchmark timing
system
Development Special
Fund for Independent
State treasury 124,000.00 - Other income Income related
Innovation Industry,
Nanshan District
Total —— 17,682,436.10 17,802,141.42 —— ——
Note:
A. It is the award granted by Development and Reform Commission of Shenzhen Municipality according to “Encourage Headquarters
101
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Enterprise Development” (Shen Fu Gui (2017) No. 7).
B. It is obtained according to “Measures to Promoting Science Innovation” (Shen fa (2016) No.7) and “Management Measures of
Shenzhen Science and Technology Research and Development Fund” issued by Shenzhen Finance Committee and Shenzhen
Science and Technology Innovation Committee.
C. It is received according to “Notice of Circulating Application Guidance of 2019 Promoting Consuming Supporting Plan” issued by
Shenzhen Bureau of Commerce (Shen Shangwu Shichang Zi (2019) NO. 202).
D. It is received according to “Notice of Circulating “Guangming Market Supervision and Management Bureau Regarding 2019
Economic Development Specific Fund to Support Intellectual, standardization Certificate Project” (Shen Shijian Guang (2019) No.
160)
E. It is subsidy received for 2019 enterprise expanding capacity and increase efficiency based on “Notice of Publicity Plans to Subsidy
2019 Enterprise Expanding Capacity and Increasing Efficiency” (Shen Gongxin Dianzi Zi (2019) No. 75) issued by Shenzhen
Industrial and Information Bureau.
F. It is received based on “Notice of Publicity of 2019 Support Projects of Commerce and Trading Innovation Development” issued by
Shenzhen Bureau of Commerce.
G. It is 2018 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.
H. It is received according to “Management Rules of Nanshan District Self-innovation Industrial Development Specific Fund (Trial)” and
“Nanshan District Details of Application of Human Resource Specific Fund under Self Innovation Industrial Development” (Shennan
Fubangui 92019) No.3).
I. It is received based on the following notices: “Notice of Circulating “Several Measures to Increase Enterprise Competitive Strength”
issued by Shenzhen Municipal Government (Shen Fa (2019) No. 8), “Notice of Circulating “Application Guideline of Supporting
Enterprise to Improve Competitive Strength”” (Shen Jingmao Xinxi Zi (2017) No. 37.
J. The 2017 Shenzhen Standard special funds obtained according to “The Publicity for the 2018 Construction of the Shenzhen
Standard Special Fund Standards Project” issued by Shenzhen Municipal Market and Quality Supervision and Management
Committee.
K. It is received according to “Notice of Publicity 2018 Supporting SME to Expanding Market Projects” issued by Shenzhen Bureau of
Commerce.
L. It is received based on “Shenzhen Science and Technology Award Management Method” (Shen Fu (2016) No. 87 and associated
application guidelines.
M. It is received in accordance with “Shenzhen Guangming New District Economic Development Specific Fund Management Method
and Associated Application Guidelines”.
N. It is received in accordance with “Notice of Receiving Application of 2019 Guangming District Economic Development Specific Fund
to Support Enterprise to Get Bigger and Stronger”.
102
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
O. It is received in accordance “Notice of Receiving Application the 3rd Batch 0f 2019 Human Resource Sub-fund Subsidy” issued by
Nanshan District Bureau of Human Resources.
P. Associated Patent award obtained from Shenzhen Market Supervision and Administration Bureau according to the “Decision on the
Award of the 20th China Patent Award” issued by the State Intellectual Property Office (Guo Zhi Fa Guan Zi [2018] No. 36).
Q. Patent award obtained in accordance with “Decision on the Award of the 20th China Patent Award” issued by the State Intellectual
Property Office (Guo Zhi Fa Guan Zi [2018] No. 36).
R. It is received from Nanshan District Government about enterprise that reached certain scale. For SME that first time reaches certain
scale, an award of 100 thousand to 500 thousand will granted. It is based on “Nanshan District 2018 Plan to Encourage SME to
Rapidly Grow”.
S. It is received based on “Notice on Application Guideline of Organizing and Implementing 2017 Central Foreign Economy and Trade
Development Fund”.
T. It is received based on “Notice of Subsidy to 2018 Enterprise Get State High and New Technology Certificate” (Shen Keji Chuagnxin
(2019) No. 160.
U. It is short-term export credit insurance subsidy received by “Application Guideline of Shenzhen Nanshan Self-innovation Industrial
Development Specific Fund Economic Development Sub-fund”.
V. 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).
W. It is received based on “Administration Measures for Disabled People Job Position Security Fund”.
2. De-registration of subsidiary
Station 68 is in process of de-registration. As of 31 December 2019, the cancellation is still in process.
3. Others
(1) 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 2019.
(2) On 2 October 2019, CASI signed merger agreement with CATIC Shenzhen and China National Aviation Group. According to the
agreement, CASI will absorb CATIC Shenzhen and China National Aviation Group and undertakes all their assets and liabilities. CATIC
Shenzhen and China National Aviation Group will be cancelled. After the merger, CASI will become the controlling shareholder of the
Company. As of 31 December 2019, the deal has not yet been completed.
103
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(3) According to the “Proposal of Change the Company’s name and initials for A share stock” approved by the 3rd extraordinary
shareholder’s meeting in 2019, and upon examination and approval by Shenzhen Administration for Industry and Commerce, the
Company’s name has been changed from “FIYTA (Group) Co., Ltd. to “FIYTA Precision Technology Co., Ltd.” since 9 January 2020.
XV. Notes to the Company’s financial statements
1. Accounts receivable
(1) Presented by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 2,997,921.46 776,459.35
Subtotal 2,997,921.46 776,459.35
Less: bad debt provision 149,896.07 38,822.97
Total 2,848,025.39 737,636.38
(2) Presentation by method of providing bad debt
2019.12.31
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment - - - - -
individually
Collectively assessed for
impairment based on credit
risk characteristics
Receivables from related
parties within scope of - - - - -
consolidation
Receivables from other
2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
customers
Total 2,997,921.46 100.00 149,896.07 5.00 2,848,025.39
(continued)
2019.01.01
Book value Bad debt provision
Category
Percentage Carrying amount
Amount Amount ECL rate (%)
(%)
Individually significant and
assessed for impairment - - - - -
individually
Collectively assessed for
impairment based on credit
risk characteristics
Receivables from related
parties within scope of - - - - -
consolidation
Receivables from other
776,459.35 100.00 38,822.97 5.00 737,636.38
customers
Total 776,459.35 100.00 38,822.97 5.00 737,636.38
Bad debt provision based on groups
104
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Group: Receivables from other customers
2019.12.31
Category
Accounts receivable Bad debt provision ECL rate (%)
Within 1 year 2,997,921.46 149,896.07 5.00
Bad debt provision as of 31 December 2018:
2018.12.31
Category Percentage Bad debt Percentage of
Book value Carrying amount
(%) provision provision (%)
Individually significant and assessed
- - - - -
for impairment individually
Collectively assessed for impairment
based on credit risk characteristics
Including: ageing group 776,459.35 100.00 38,822.97 5.00 737,636.38
Specific receivables group - - - - -
Subtotal of groups 776,459.35 100.00 38,822.97 5.00 737,636.38
Individually insignificant but
- - - - -
assessed for impairment individually
Total 776,459.35 100.00 38,822.97 5.00 737,636.38
(3) Addition, recovery or reversals of provision during the year:
Bad debt provision
2018.12.31 38,822.97
Adjustment amount for the first implementation of the new financial instrument standards -
2019.01.01 38,822.97
Addition 111,073.10
Reversal -
Written-off -
2019.12.31 149,896.07
(4) There were no receivables that are written-off during the period.
(5) Top five accounts receivable are analyzed as follows:
The total amount of receivables from top five accounts amounts to RMB2,983,039.56, accounted for 99.50% of total balance of accounts
receivable as of the period end. Corresponding bad debt provision accrued is RMB149,151.98.
2. Other receivables
Item 2019.12.31 2018.12.31
105
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Interest receivable - -
Dividends receivable - -
Other receivables 783,647,732.22 870,739,378.37
Total 783,647,732.22 870,739,378.37
(1) Other receivables
①Presented by ageing
Ageing 2019.12.31 2018.12.31
Within 1 year 673,518,552.61 870,591,025.37
1-2 years 109,992,510.47 208,054.00
2-3 years 186,180.00 -
Over 3 years 40,050.00 40,050.00
Subtotal 783,737,293.08 870,839,129.37
Less: bad debt provision 89,560.86 99,751.00
Total 783,647,732.22 870,739,378.37
②Presented by nature
2019.12.31 2018.12.31
Item
Book value Provision Carrying amount Book value Provision Carrying amount
Related party
783,005,800.85 - 783,005,800.85 868,980,990.06 - 868,980,990.06
balance
Security deposit 235,761.90 76,355.60 159,406.30 248,104.00 40,830.40 207,273.60
Petty cash - - - 431,623.24 - 431,623.24
Others 495,730.33 13,205.26 482,525.07 1,178,412.07 58,920.60 1,119,491.47
Total 783,737,293.08 89,560.86 783,647,732.22 870,839,129.37 99,751.00 870,739,378.37
③Status of bad debt provision
Bad debt provision at the first stage as of period end:
ECL rate in next
Category Book value Bad debt Provision Carrying amount Note
12 month (%)
Individually significant and assessed
- - - -
for impairment individually
Collectively assessed for impairment
based on credit risk characteristics
Petty cash - - - -
Security deposit 235,761.90 32.39 76,355.60 159,406.30
Social security payment on-behalf 242,726.90 - - 242,726.90
Receivables from related party that
783,005,800.85 - - 783,005,800.85
within consolidation scope
Other receivables 253,003.43 5.22 13,205.26 239,798.17
106
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Total 783,737,293.08 0.01 89,560.86 783,647,732.22
As of the period end, the Company does not have other receivables at the second stage.
As of the period end, the Company does not have other receivables at the third stage.
Bad debt provision as of 31 Dec2018:
2018.12.31
Category Percentage
Percentage
Book value Bad debt provision of providing Carrying amount
(%)
(%)
Individually significant and assessed
- - - - -
for impairment individually
Collectively assessed for impairment
based on credit risk characteristics
Including: ageing group 1,426,516.07 0.16 99,751.00 6.99 1,326,765.07
Specific receivables group 869,412,613.30 99.84 - - 869,412,613.30
Subtotal of groups 870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
Individually insignificant but assessed
- - - - -
for impairment individually
Total 870,839,129.37 100.00 99,751.00 0.01 870,739,378.37
④ Addition, recovery or reversals of provision during the year
1st stage 2nd stage 3rd stage
Bad debt provision ECL for the life time ECL for the life time Total
ECL in next 12
of receivables (no of receivables
month
impairment yet) (impaired)
2018.12.31
99,751.00 - - 99,751.00
Adjustment amount for the first
implementation of the new financial - - - -
instrument standards
2019.01.01 99,751.00 - - 99,751.00
Current period
--transferred to 2nd stage - - - -
-- transferred to 3rd stage - - - -
--Reversed to 2nd stage - - - -
--Reversed to 3rd stage - - - -
Accrued - - - -
Reversed 10,190.14 - - 10,190.14
Realized - - - -
Written-off - - - -
107
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Other changes - - - -
Balance as of 31 Dec 2019 89,560.86 - - 89,560.86
⑤There was no other receivables that are written-off during the period.
⑥ Top five other receivable are analyzed as follows:
The total amount of other receivables from top five accounts amounts to RMB783,005,800.85, accounted for99.91% of total balance of
other receivable as of the period end.
3. Long-term equity investment
2019.12.31 2018.12.31
Item Impairm
Impairment
Book value ent pro Carrying amount Book value Carrying amount
provision
vision
Investment to
1,334,471,401.42 - 1,334,471,401.42 1,331,248,590.93 - 1,331,248,590.93
subsidiaries
Investment to
46,423,837.85 - 46,423,837.85 44,881,063.15 - 44,881,063.15
associates
Total 1,380,895,239.27 - 1,380,895,239.27 1,376,129,654.08 - 1,376,129,654.08
(1) Investment in subsidiaries
Balance of
Investee 2018.12.31 Increase Decrease 2019.12.31 Provision
provision
HARMONY
601,307,200.00 1,231,561.04 - 602,538,761.04 - -
Company
Haerbin Company 2,184,484.39 - - 2,184,484.39 - -
Manufacturing 9,000,000.00 344,923.49 - 9,344,923.49 - -
Company
Technology 10,000,000.00 126,964.71 - 10,126,964.71 - -
Company
FIYTA Hong Kong 137,737,520.00 - - 137,737,520.00 - -
TEMPORAL 5,000,000.00 - - 5,000,000.00 - -
Company
FIYTA Sales 450,000,000.00 1,377,582.46 - 451,377,582.46 - -
Company
Hengdarui Company 36,867,843.96 - - 36,867,843.96 - -
Emile Choureit 79,151,542.58 141,778.79 - 79,293,321.37 - -
Shenzhen Company
Total 1,331,248,590.93 3,222,810.49 - 1,334,471,401.42 - -
108
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
(2) Investment in associates
Changes during the period
Balance of
Investment gains Adjustment of impairment
Investee 2019.01.01 Changes Cash 2019.12.31
and losses other Impairment provision as
Addition/new Withdrawn in other dividend Others of period end
confirmed by the comprehensive provision
equity declared
equity method income
① Associate
Shanghai Watch Co., Ltd.
44,881,063.15 - - 1,542,774.70 - - - - - 46,423,837.85 -
(Shanghai Watch)
109
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
4. Operating income and operating cost
2019 2018
Item
Operating income Operating cost Operating income Operating cost
Main business 140,511,246.61 21,776,539.35 130,886,023.99 19,010,293.07
Other business - - 15,800.00 -
Total 140,511,246.61 21,776,539.35 130,901,823.99 19,010,293.07
5. Investment gain
Item 2019 2018
Gain from long-term equity investments accounted for using the cost 113,000,000.00 143,000,000.00
method
Gain from long-term equity investments accounted for using the equity 1,542,774.70 1,001,545.06
method
Total 114,542,774.70 144,001,545.06
XVI. Supplimentary information
1、Details of non-recurring gain or loss for the year
Item 2019 Note
Disposal gain or loss of non-current assets -926,118.60
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
18,428,906.18
consecutive way, which closely related to the enterprise
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
110
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Profit and loss incurred contingent matters unrelated to normal
-
operating business
Except for effective hedging business related to normal
operating business, profit and loss from changes in fair value
incurred in financial assets and financial liabilities, and the -
investment gain from disposal of financial assets, financial
liabilities and available-for-sale financial assets
Gain from disposal of tradable financial asset financial
-
liabilities and debt investment
Impairment provision reversal of accounts receivable under
-
standalone impairment test
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of investment
-
property subsequently measured in fair value mode
Influence on current profit and loss caused by one-off
adjustment according to requirements of laws and regulations -
about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than the
3,353,916.43
above items
Profit and loss items pursuant to the definition of non-recurring
-
profit and loss
Subtotal 20,856,704.01
Effect of income tax of non-recurring profit or loss 4,626,350.95
Net amount of non0recurring profit or loss 16,230,353.06
Less: Effect of non-recurring profit or losses attributable to
-
minority shareholders (after tax)
attributable to shareholders of the parent company 16,230,353.06
2. Return on Equity (ROE) and Earnings per share (EPS)
EPS
Weighted average
Profit of the reporting period
ROE % Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of the
8.21 0.4943 0.4943
Company
Net profit attributable to ordinary shareholders of the
Company after deducting non-recurring profit or loss 7.60 0.4570 0.4570
111
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)
Section13 Documents Available for Inspection
I. Financial Statements signed by and under the seal of the legal representative, chief accountant and accounting
supervisors;
II. Original of the Auditors’ Report under the seal of the accounting firm and signed by and under the seals of
certified public accountants.
III. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities Times
and Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.
The Board of Directors
FIYTA Precision Technology Co., Ltd.
March 20, 2020
112
