FIYTA Precision Technology Co., Ltd.
2023 Semi-annual
Financial Report
August 23, 2023
1
I. Auditors’ Report
Has the semi-annual report been audited
No
II. Financial Statements
The currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA Precision Technology Co., Ltd.
June 30, 2023
In CNY
Items June 30, 2023 January 01, 2023
Current assets:
Monetary capital 519,368,795.12. 313,747,463.64
Settlement reserve
Inter-bank lending
Transactional financial assets
Derivative financial assets
Notes receivable 14,629,298.90. 32,214,912.10
Accounts receivable 399,576,267.99 305,290,959.68
Financing with accounts receivable
Advance payment 8,005,894.20. 8,039,794.97
Receivable premium
Reinsurance accounts receivable
Reserve for reinsurance contract
receivable
Other receivables 57,386,850.68. 56,918,019.48
Including: Interest receivable
Dividends receivable
Redemptory monetary capital for sale
Inventories 2,085,380,802.48 2,141,320,373.67
Contract assets
Held-for-sale assets
Non-current assets due within a year
Other current assets 39,308,621.80. 66,339,505.32
Total current assets 3,123,656,531.17. 2,923,871,028.86
Non-current assets:
Loan issuing and advance in cash
Equity investment
Other debt investment
Long term accounts receivable
Long-term equity investments 56,484,605.25 58,182,086.90
Investment in other equity instruments 85,000.00.
Other non-current financial assets
Investment-oriented real estate 367,140,251.89 374,979,494.71
Fixed assets 356,142,836.23 364,628,765.17
Construction-in-progress
Productive biological asset
Oil and Gas Assets
Use right assets 87,234,100.50. 110,330,512.03
Intangible assets 31,559,015.75. 33,200,218.63
Development expenses
Goodwill
Long term expenses to be apportioned 124,953,334.60. 144,488,452.18
Deferred income tax asset 92,102,693.23. 95,784,611.94
Other non-current assets 12,604,532.04 11,593,741.57
2
Total non-current assets 1,128,221,369.49. 1,193,272,883.13
Total assets 4,251,877,900.66. 4,117,143,911.99
Current liabilities:
Short term borrowings 390,273,749.99. 290,237,111.11
Borrowings from central bank
Loans from other banks
Transactional financial liabilities
Derivative financial liabilities
Notes payable 2,000,600.00
Accounts payable 191,488,208.83. 170,589,456.67
Advance Receipts 9,945,161.72 16,960,128.83
Contract liabilities 19,287,771.81. 16,844,437.47
Money from sale of the repurchased
financial assets
Deposits taking and interbank placement
Acting trading securities
Income from securities underwriting on
commission
Payroll payable to the employees 111,187,240.92 136,587,939.38
Taxes payable 73,848,183.25. 60,770,168.30
Other payables 129,167,556.82. 165,060,122.58
Including: interest payable
Dividends payable 2,889,585.48 6,324,013.97
Service charge and commission payable
Payable reinsurance
Held-for-sale liabilities
Non-current liabilities due within a year 57,351,473.17. 71,546,316.16
Other current liabilities 2,146,851.31 1,686,806.01
Total current liabilities 984,696,197.82. 932,283,086.51
Non-current liabilities:
Reserve for insurance contract
Long-term borrowings
Bonds payable
Including: preferred shares
Perpetual bond
Lease liabilities 30,745,380.62. 41,642,561.58
Long-term accounts payable
Long term payroll payable to employees
Estimated liabilities
Deferred income 1,295,926.80. 1,295,926.80
Deferred income tax liability 5,441,648.89 5,498,844.95
Other non-current liabilities
Total non-current liabilities 37,482,956.31. 48,437,333.33
Total liabilities 1,022,179,154.13. 980,720,419.84
Owner’s equity:
Capital stock 417,627,960.00. 417,627,960.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital reserve 1,003,354,306.96. 1,007,086,643.48
Less: shares in stock 47,129,717.65. 50,759,806.16
Other comprehensive income 15,144,598.96 5,739,589.89
Special reserve 2,747,263.00. 2,012,064.91
Surplus reserve 275,010,401.50. 275,010,401.50
Reserve against general risks
Retained earnings 1,562,943,933.76. 1,479,706,638.53
Total owners’ equity attributable to the parent
3,229,698,746.53. 3,136,423,492.15
company
3
Minority shareholders’ equity
Total owner’s equity 3,229,698,746.53. 3,136,423,492.15
Total liabilities and owners’ equity 4,251,877,900.66. 4,117,143,911.99
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
2. Balance Sheet (Parent Company)
In CNY
Items June 30, 2023 January 01, 2023
Current assets:
Monetary capital 413,234,945.06. 274,691,023.16
Transactional financial assets
Derivative financial assets
Notes receivable
Accounts receivable 9,527,390.87 603,216.03
Financing with accounts receivable
Advance payment
Other receivables 667,253,750.44. 839,782,543.07
Including: Interest receivable
Dividends receivable
Inventories
Contract assets
Held-for-sale assets
Non-current assets due within a year
Other current assets 12,544,185.27. 14,107,604.63
Total current assets 1,102,560,271.64. 1,129,184,386.89
Non-current assets:
Equity investment
Other debt investment
Long term accounts receivable
Long-term equity investments 1,546,969,980.93 1,552,310,486.50
Investment in other equity instruments 85,000.00.
Other non-current financial assets
Investment-oriented real estate 299,208,476.85 305,676,084.09
Fixed assets 205,123,588.08 209,495,642.59
Construction-in-progress
Productive biological asset
Oil and Gas Assets
Use right assets
Intangible assets 22,808,397.38. 23,522,355.93
Development expenses
Goodwill
Long term expenses to be apportioned 6,440,459.33. 8,240,653.62
Deferred income tax asset 712,027.80. 1,904,597.73
Other non-current assets 5,530,288.43 2,051,932.75
Total non-current assets 2,086,793,218.80. 2,103,286,753.21
Total assets 3,189,353,490.44. 3,232,471,140.10
Current liabilities:
Short term borrowings 390,273,749.99. 290,237,111.11
Transactional financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 4,256,200.53. 1,048,201.41
Advance Receipts 9,945,161.72 16,960,128.83
Contract liabilities
Payroll payable to employees 24,918,704.24 27,139,007.97
4
Taxes payable 7,843,400.85. 778,299.01
Other payables 239,551,661.30. 299,198,966.56
Including: interest payable
Dividends payable 2,889,585.48 6,324,013.97
Held-for-sale liabilities
Non-current liabilities due within a year
Other current liabilities
Total current liabilities 676,788,878.63. 635,361,714.89
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: preferred shares
Perpetual bond
Lease liabilities
Long-term accounts payable
Long term payroll payable to employees
Estimated liabilities
Deferred income 1,295,926.80. 1,295,926.80
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities 1,295,926.80. 1,295,926.80
Total liabilities 678,084,805.43. 636,657,641.69
Owner’s equity:
Capital stock 417,627,960.00. 417,627,960.00
Other equity instruments
Including: preferred shares
Perpetual bond
Capital reserve 1,006,232,802.77. 1,010,917,776.19
Less: shares in stock 47,129,717.65. 50,759,806.16
Other comprehensive income
Special reserve
Surplus Reserve 275,010,401.50. 275,010,401.50
Retained earnings 859,527,238.39. 943,017,166.88
Total owner’s equity 2,511,268,685.01. 2,595,813,498.41
Total liabilities and owners’ equity 3,189,353,490.44. 3,232,471,140.10
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
3. Consolidated Profit Statement
In CNY
Items The first half year of 2023 The first half year of 2022
I. Turnover 2,364,505,262.56. 2,183,570,749.11
Including: operating income 2,364,505,262.56. 2,183,570,749.11
Interest income
Earned insurance premium
Service charge and commission
income
II. Total operating costs 2,129,534,984.07 2,019,291,580.02
Including: Operating costs 1,512,527,481.83. 1,373,664,560.41
Interest payment
Service charge and commission
payment
Surrender Value
5
Compensation expenses, net
Provision of reserve for insurance
liabilities, net
Payment of policy dividend
Reinsurance expenses
Taxes and surcharges 15,762,456.07. 14,201,193.33
Sales costs 456,273,629.20 477,806,040.76
Administrative expenses 104,621,729.61 116,715,664.69
R & D expenditures 28,161,470.54 25,026,713.85
Financial expenses 12,188,216.82 11,877,406.98
Where: Interest cost 6,690,859.35. 9,731,247.68
Interest income 2,432,180.03 1,981,825.39
Plus: Other income 6,691,609.41. 13,369,782.95
Investment income (loss is stated with -1,697,481.65. 2,462,626.52
“-”)
Including: return on investment in -1,697,481.65. 2,462,626.52
associate and joint venture
Gain from the
derecognition of the financial assets
measured at amortised cost
Exchange income (loss stated with “-
“)
Net exposure hedge income (loss
stated with “-“)
Income from change of fair value (loss
is stated with “-”)
Loss from impairment of credit (loss is 4,333,947.62. 1,848.85
stated with “-”)
Loss from impairment of assets (loss -348,218.69.
is stated with “-”)
Income from disposal of assets (loss -76,689.73. -816,021.16
is stated with “-“)
III. Operating Profit (loss is stated with “-“) 244,221,664.14. 178,949,187.56
Plus: Non-operating income 596,523.83. 208,587.88
Less: Non-operating expenses 291,601.18. 825,897.36
IV. Total profit (total loss is stated with “-”) 244,526,586.79. 178,331,878.08
Less: Income tax expense 57,131,519.56. 37,639,093.79
V. Net Profit (net loss is stated with “-“) 187,395,067.23. 140,692,784.29
(I) Classification based on operation
sustainability
1. Net Profit from sustainable operation
187,395,067.23. 140,692,784.29
(net loss is stated with “-”)
2. Net Profit from termination of
operation (net loss is stated with “-”)
(II) Classification by ownership
1.Net profit attributable to the parent
company’s shareholder (net loss is stated 187,395,067.23. 140,692,784.29
with “-”)
2. Minority shareholders’ gain/loss (net
loss is stated with “-”)
VI. Net of other comprehensive income after
9,405,009.07. 424,855.72
tax
Net of other comprehensive income after
tax attributable to the parent company’s 9,405,009.07. 424,855.72
owner
(I) Other comprehensive income which
cannot be re-classified into gain and loss
1. Remeasurement of the change
amount in the defined benefit plan
2. Other comprehensive income
which cannot be converted into gain and loss
based on the equity method
3. Movement of the fair value of the
investment in other equity instruments
4. Movement of the fair value of the
Company’s own credit risk
5. Others
(II) Other comprehensive income which
9,405,009.07. 424,855.72
shall be re-classified into gain and loss
6
1. Other comprehensive income
which can be converted into gain and loss
based on the equity method
2. Movement of the fair value of the
investment in other debt instruments
3. Amount of the reclassified financial
assets counted to the other comprehensive
income
4. Provision for impairment of the
credit of the other creditor's right investment
5. Reserve for cash flow hedge
6. Conversion difference in foreign
9,405,009.07. 424,855.72
currency statements
7. Others
Net amount of other comprehensive
income after tax attributable to minority
shareholders
VII. Total comprehensive income 196,800,076.30. 141,117,640.01
Total comprehensive income attributable
196,800,076.30. 141,117,640.01
to the parent company’s owner
Total comprehensive income attributable
to minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.4517. 0.3351
(II) Diluted earnings per share 0.4517. 0.3351
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
4. Statement of Profit, Parent Company
In CNY
Items The first half year of 2023 The first half year of 2022
I. Operating revenue 92,042,875.14. 91,642,614.69
Less: Operating cost 22,121,058.14. 19,190,036.95
Taxes and surcharges 3,858,296.21. 3,830,748.17
Sales costs 510,613.70 630,681.48
Administrative expenses 29,511,087.70 32,867,677.72
R & D expenditures 5,986,203.21 9,134,485.17
Financial expenses -103,859.98 -613,920.42
Where: Interest cost 1,476,552.70. 1,770,519.63
Interest income 1,953,770.61 1,830,268.89
Plus: Other income 753,278.99. 587,709.30
Investment income (loss is stated with -1,697,481.65 2,462,626.52
“-”)
Including: return on investment in -1,697,481.65 2,462,626.52
associate and joint venture
Gain from the derecognition
of the financial assets measured at
amortised cost (loss is stated with “-”)
Net exposure hedge income (loss
stated with “-“)
Income from change of fair value (loss
is stated with “-”)
Loss from impairment of credit (loss is -362,763.81 -186,946.13
stated with “-”)
Loss from impairment of assets (loss
is stated with “-”)
Income from disposal of assets (loss -37,783.55 -13,335.34
is stated with “-“)
II. Operating Profit (loss is stated with “-“) 28,814,726.14 29,452,959.97
Plus: Non-operating income 8,037.20 104,980.99
Less: Non-operating expenses 837.18 3,084.22
III. Total profit (total loss is stated with “-“) 28,821,926.16 29,554,856.74
Less: Income tax expense 8,154,082.65 6,788,603.54
IV. Net Profit (net loss is stated with “-“) 20,667,843.51 22,766,253.20
(I) Net Profit from sustainable operation 20,667,843.51 22,766,253.20
7
(net loss is stated with “-”)
(II) Net Profit from termination of operation
(net loss is stated with “-”)
V. Net of other comprehensive income after
tax
(I) Other comprehensive income which
cannot be re-classified into the gain and loss
1. Remeasurement of the change
amount in the defined benefit plan
2. Other comprehensive income
which cannot be converted into gain and loss
based on the equity method
3. Movement of the fair value of the
investment in other equity instruments
4. Movement of the fair value of the
Company’s own credit risk
5. Others
(II) Other comprehensive income which
shall be re-classified into gain and loss
1. Other comprehensive income
which can be converted into gain and loss
based on the equity method
2. Movement of the fair value of the
investment in other debt instruments
3. Amount of the reclassified financial
assets counted to the other comprehensive
income
4. Provision for impairment of the
credit of the other creditor's right investment
5. Reserve for cash flow hedge
6. Conversion difference in foreign
currency statements
7. Others
VI. Total comprehensive income 20,667,843.51 22,766,253.20
VII. Earnings per share:
(I)Basic earnings per share
(II)Diluted earnings per share
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
5. Consolidated Cash Flow Statement
In CNY
Items The first half year of 2023 The first half year of 2022
I. Cash flows arising from operating
activities:
Cash received from sales of goods and
2,544,494,031.57 2,393,028,123.16
supply of services
Net increase of customers’ deposit and
due from banks
Net increase of borrowings from the
central bank
Net increase of borrowings from other
financial institutions
Cash received from the premium of the
original insurance contract
Net cash received from the reinsurance
business
Net increase of the reserve from policy
holders and investment
Cash received from interest, service
charge and commission
Net increase of loan from other banks
Net increase of fund from repurchase
business
Net cash received from securities trading
on commission
Rebated taxes received 850,371.86 4,558,409.98
Other operation activity related cash 37,298,851.19 37,580,077.51
8
receipts
Subtotal of cash flow in from operating
2,582,643,254.62 2,435,166,610.65
activity
Cash paid for purchase of goods and 1,584,272,785.87 1,500,723,327.63
reception of labor services
Net increase of loans and advances to
customers
Net increase of due from central bank and
due from other banks
Cash from payment for settlement of the
original insurance contract
Net increase of the lending capital
Cash paid for interest, service charge and
commission
Cash for payment of policy dividend
Cash paid to and for staff 336,029,420.86 367,134,428.28
Taxes paid 135,231,581.42 133,532,633.53
Other business activity related cash
182,449,622.85 155,389,957.61
payments
Subtotal of cash flow out from operating
2,237,983,411.00 2,156,780,347.05
activity
Net cash flows arising from operating
344,659,843.62 278,386,263.60
activities
II. Cash flow arising from investment
activities:
Cash received from recovery of
investment
Cash received from investment income
Net cash from disposal of fixed
assets,intangible assets and recovery of 3,545.41 119,998.33
other long term assets
Net cash received from disposal of
subsidiaries and other operating units
Other investment activity related cash
receipts
Subtotal of cash flow in from investment
3,545.41 119,998.33
activity
Cash paid for purchase/construction of
fixed assets, Intangible assets and other 36,273,631.65 53,962,036.53
long term assets
Cash paid for investment
Net increase of the pledged loan
Net cash paid for acquisition of
subsidiaries and other operation units
Other investment activity related cash
payments
Subtotal of cash flow out from investment
36,273,631.65 53,962,036.53
activity
Net cash flow arising from investment
-36,270,086.24 -53,842,038.20
activities:
III. Cash flow arising from fund-raising
activities:
Cash received from absorbing investment
Incl.: Cash received from the subsidiaries’
absorption of minority shareholders’
investment
Cash received from loans 250,000,000.00 705,155,704.29
Other financing activity related cash
receipts
Subtotal of cash flow in from fund raising
250,000,000.00 705,155,704.29
activity
Cash paid for debt repayment 150,000,000.00 500,174,365.00
Cash paid for dividend/profit distribution or 110,259,489.52 129,988,270.60
repayment of interest
Including: Dividend and profit paid by the
subsidiaries to minority shareholders
Other financing activity related cash
92,370,343.32 116,704,112.45
payments
Sub-total cash flow paid for financing
352,629,832.84 746,866,748.05
activities
Net cash flow arising from fund-raising
-102,629,832.84 -41,711,043.76
activities
IV. Change of exchange rate influencing the
-138,593.06 786,011.77
cash and cash equivalent
9
V. Net increase of cash and cash equivalents 205,621,331.48 183,619,193.41
Plus: Opening balance of cash and cash
313,747,463.64 210,254,737.14
equivalents
VI. Ending balance of cash and cash
519,368,795.12 393,873,930.55
equivalents
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
6. Cash Flow Statement, Parent Company
In CNY
Items The first half year of 2023 The first half year of 2022
I. Cash flows arising from operating activities
Cash received from sales of goods and
84,192,699.46 83,213,751.44
supply of services
Rebated taxes received 7,647.56
Other operation activity related cash
2,141,372,420.70 2,152,559,822.69
receipts
Subtotal of cash flow in from operating
2,225,565,120.16 2,235,781,221.69
activity
Cash paid for purchase of goods and
reception of labor services
Cash paid to and for staff 29,190,598.81 31,495,381.68
Taxes paid 5,480,282.08 8,848,751.02
Other business activity related cash
2,002,201,028.42 2,023,994,609.32
payments
Subtotal of cash flow out from operating
2,036,871,909.31 2,064,338,742.02
activity
Net cash flows arising from operating
188,693,210.85 171,442,479.67
activities
II. Cash flow arising from investment
activities:
Cash received from recovery of
investment
Cash received from investment income
Net cash from disposal of fixed
assets,intangible assets and recovery of 200.00 3,973,162.69
other long term assets
Net cash received from disposal of
subsidiaries and other operating units
Other investment activity related cash
receipts
Subtotal of cash flow in from investment
200.00 3,973,162.69
activity
Cash paid for purchase/construction of
fixed assets, Intangible assets and other 4,515,871.59 2,196,743.47
long term assets
Cash paid for investment
Net cash paid for acquisition of
subsidiaries and other operation units
Other investment activity related cash
payments
Subtotal of cash flow out from investment
4,515,871.59 2,196,743.47
activity
Net cash flow arising from investment
-4,515,671.59 1,776,419.22
activities:
III. Cash flow arising from fund-raising
activities:
Cash received from absorbing investment
Cash received from loans 250,000,000.00 690,000,000.00
Other financing activity related cash
receipts
Subtotal of cash flow in from fund raising
250,000,000.00 690,000,000.00
activity
Cash paid for debt repayment 150,000,000.00 500,000,000.00
Cash paid for dividend/profit distribution or
110,259,489.52 129,931,071.56
repayment of interest
Other financing activity related cash
35,483,644.86 53,318,818.77
payments
Sub-total cash flow paid for financing
295,743,134.38 683,249,890.33
activities
10
Net cash flow arising from fund-raising
-45,743,134.38 6,750,109.67
activities
IV. Change of exchange rate influencing the
109,517.02 323,297.27
cash and cash equivalent
V. Net increase of cash and cash equivalents 138,543,921.90 180,292,305.83
Plus: Opening balance of cash and cash
274,691,023.16 171,022,392.92
equivalents
VI. Ending balance of cash and cash
413,234,945.06 351,314,698.75
equivalents
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
7. Consolidated Statement of Changes in Owner’s Equity
Amount in the reporting period
In CNY
The first half year of 2023
Owners’ equity attributable to the parent company
Minor
Other equity instruments Other Provi ity Total
Items Capit Less: comp Speci Surpl sion Retai share owne
Capit Prefe
Perp al treas rehen al us for ned Other Sub- holde r’s
al rred Other
etual reser ury sive reser Reser gener earni s total rs’ equity
stock share s
bond ve stock incom ve ve al ngs equity
s e risks
1,007 1,479 3,136 3,136
I. Ending 417,6 50,75 5,739 2,012 275,0
,086, ,706, ,423, ,423,
balance of the 27,96 9,806 ,589. ,064. 10,40
643.4 638.5 492.1 492.1
previous year 0.00 .16 89 91 1.50
8 3 5 5
Plus: Change in
accounting
policy
Correction of
previous errors
Consolidation of
enterprises
under the
common control
Others
1,007 1,479 3,136 3,136
II. Opening 417,6 50,75 5,739 2,012 275,0
,086, ,706, ,423, ,423,
balance of the 27,96 9,806 ,589. ,064. 10,40
643.4 638.5 492.1 492.1
reporting year 0.00 .16 89 91 1.50
8 3 5 5
III. - -
Decrease/increa 9,405 83,23 93,27 93,27
3,732 3,630 735,1
se of the report ,009. 7,295 5,254 5,254
,336. ,088. 98.09
year (decrease 07 .23 .38 .38
52 51
is stated with “-“)
(I) Total 9,405 187,3 196,8 196,8
comprehensive ,009. 95,06 00,07 00,07
income 07 7.23 6.30 6.30
(II) Owners’ - -
- -
input and 3,732 3,630
102,2 102,2
decrease of ,336. ,088.
48.01 48.01
capital 52 51
1. Common - -
17,00
shares 17,00 17,00
7,830
contributed by 7,830 7,830
.70
the owner .70 .70
2. Capital
contributed by
other equity
instruments
holders
3. Amount of - -
16,90 16,90
payment for 3,729 20,63
8,317 8,317
shares counted ,602. 7,919
.10 .10
to owners’ equity 11 .21
- - -
4. Others 2,734 2,734 2,734
.41 .41 .41
- - -
(III) Profit 104,1 104,1 104,1
Distribution 57,77 57,77 57,77
2.00 2.00 2.00
1. Provision of
surplus reserve
2. Provision for
11
general risks
- - -
3. Distributions 104,1 104,1 104,1
to the owners (or 57,77 57,77 57,77
shareholders) 2.00 2.00 2.00
4. Others
(IV) Internal
carry-over of
owners’ equity
1. Capitalization
of capital
reserve (or
capital stock)
2. Capitalization
of surplus
reserve (or
capital stock)
3. Loss made up
for with surplus
reserve
4. Setting of the
amount involved
in the movement
of the beneficial
plan carried over
to the retained
earnings
5. Other
comprehensive
income carried-
over to the
retained
earnings
6. Others
(V) Special 735,1 735,1 735,1
reserve 98.09 98.09 98.09
1. Provision in 816,6 816,6 816,6
the reporting 18.92 18.92 18.92
period
- - -
2. Applied in the 81,42 81,42 81,42
reporting period 0.83 0.83 0.83
(VI) Others
1,003 1,562 3,229 3,229
IV. Ending 417,6 47,12 15,14 2,747 275,0
,354, ,943, ,698, ,698,
balance of the 27,96 9,717 4,598 ,263. 10,40
306.9 933.7 746.5 746.5
reporting period 0.00 .65 .96 00 1.50
6 6 3 3
Amount of the previous year
In CNY
The first half year of 2022
Owners’ equity attributable to the parent company
Minor
Other equity instruments Other Provi ity Total
Items Capit Less: comp Speci Surpl sion Retai share owne
Capit Prefe
Perp al treas rehen al us for ned Other Sub- holde r’s
al rred Other
etual reser ury sive reser Reser gener earni s total rs’ equity
stock share s
bond ve stock incom ve ve al ngs equity
s e risks
1,040 - 1,338 3,013 3,013
I. Ending 426,0 60,58 1,062 275,0
,908, 7,658 ,444, ,232, ,232,
balance of the 51,01 5,678 ,731. 10,40
194.1 ,346. 326.0 642.5 642.5
previous year 5.00 .92 13 1.50
3 40 9 3 3
Plus: Change in
accounting
policy
Correction of
previous errors
Consolidation of
enterprises
under the
common control
Others
1,040 - 1,338 3,013 3,013
II. Opening 426,0 60,58 1,062 275,0
,908, 7,658 ,444, ,232, ,232,
balance of the 51,01 5,678 ,731. 10,40
194.1 ,346. 326.0 642.5 642.5
reporting year 5.00 .92 13 1.50
3 40 9 3 3
III. - -
Decrease/increa 5,596 43,25 15,27
424,8 491,2 21,46 21,46
se of the report ,697. 5,975 3,644
55.72 46.44 9,531 9,531
year (decrease 49 .92 .89
.38 .38
is stated with “-“)
(I) Total 424,8 140,6 141,1 141,1
comprehensive 55.72 92,78 17,64 17,64
12
income 4.29 0.01 0.01
(II) Owners’ - -
5,596 43,25
input and 37,65 37,65
,697. 5,975
decrease of 9,278 9,278
49 .92
capital .43 .43
1. Common - -
50,25
shares 50,25 50,25
2,831
contributed by 2,831 2,831
.88
the owner .88 .88
2. Capital
contributed by
other equity
instruments
holders
3. Amount of -
5,611 12,60 12,60
payment for 6,996
,740. 8,596 8,596
shares counted ,855.
66 .62 .62
to owners’ equity 96
- - -
4. Others 15,04 15,04 15,04
3.17 3.17 3.17
- - -
(III) Profit 125,4 125,4 125,4
Distribution 19,13 19,13 19,13
9.40 9.40 9.40
1. Provision of
surplus reserve
2. Provision for
general risks
- - -
3. Distributions 125,4 125,4 125,4
to the owners (or 19,13 19,13 19,13
shareholders) 9.40 9.40 9.40
4. Others
(IV) Internal
carry-over of
owners’ equity
1. Capitalization
of capital
reserve (or
capital stock)
2. Capitalization
of surplus
reserve (or
capital stock)
3. Loss made up
for with surplus
reserve
4. Setting of the
amount involved
in the movement
of the beneficial
plan carried over
to the retained
earnings
5. Other
comprehensive
income carried-
over to the
retained
earnings
6. Others
(V) Special 491,2 491,2 491,2
reserve 46.44 46.44 46.44
1. Provision in 600,0 600,0 600,0
the reporting 00.00 00.00 00.00
period
- - -
2. Applied in the 108,7 108,7 108,7
reporting period 53.56 53.56 53.56
(VI) Others
1,046 - 1,353 2,991 2,991
IV. Ending 426,0 103,8 1,553 275,0
,504, 7,233 ,717, ,763, ,763,
balance of the 51,01 41,65 ,977. 10,40
891.6 ,490. 970.9 111.1 111.1
reporting period 5.00 4.84 57 1.50
2 68 8 5 5
13
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
8. Consolidated Statement of Changes in Owner’s Equity, Parent Company
Amount in the reporting period
In CNY
The first half year of 2023
Other equity instruments Other Retaine
Items Less: Total
Capital Preferre Capital compre Special Surplus d
Perpetu treasury Others owners’
stock d Others reserve hensive reserve Reserve earning
al bond stock equity
shares income s
I. Ending 1,010,9 2,595,8
417,627 50,759, 275,010 943,017
balance of the 17,776. 13,498.
,960.00 806.16 ,401.50 ,166.88
previous year 19 41
Plus: Change in
accounting
policy
Correction of
previous errors
Others
II. Opening 1,010,9 2,595,8
417,627 50,759, 275,010 943,017
balance of the 17,776. 13,498.
,960.00 806.16 ,401.50 ,166.88
reporting year 19 41
III.
Decrease/increa - - - -
se of the report 4,684,9 3,630,0 83,489, 84,544,
year (decrease 73.42 88.51 928.49 813.40
is stated with “-“)
(I) Total 20,667, 20,667,
comprehensive 843.51 843.51
income
(II) Owners’ - - -
input and 4,684,9 3,630,0 1,054,8
decrease of 73.42 88.51 84.91
capital
1. Common -
shares 17,007,
17,007,
contributed by 830.70
830.70
the owner
2. Capital
contributed by
other equity
instruments
holders
3. Amount of - -
payment for 15,955,
4,682,2 20,637,
shares counted 680.20
39.01 919.21
to owners’ equity
- -
4. Others 2,734.4 2,734.4
1 1
- -
(III) Profit 104,157 104,157
Distribution ,772.00 ,772.00
1. Provision of
surplus reserve
2. Distributions - -
to the owners (or 104,157 104,157
shareholders) ,772.00 ,772.00
3. Others
(IV) Internal
carry-over of
owners’ equity
1. Capitalization
of capital
reserve (or
capital stock)
2. Capitalization
of surplus
reserve (or
capital stock)
3. Loss made up
for with surplus
reserve
4. Setting of the
amount involved
in the movement
of the beneficial
14
plan carried over
to the retained
earnings
5. Other
comprehensive
income carried-
over to the
retained
earnings
6. Others
(V) Special
reserve
1. Provision in
the reporting
period
2. Applied in the
reporting period
(VI) Others
IV. Ending 1,006,2 2,511,2
417,627 47,129, 275,010 859,527
balance of the 32,802. 68,685.
,960.00 717.65 ,401.50 ,238.39
reporting period 77 01
Amount of the previous year
In CNY
The first half year of 2022
Other equity instruments Other Retaine
Items Less: Total
Capital Preferre Capital compre Special Surplus d
Perpetu treasury Others owners’
stock d Others reserve hensive reserve Reserve earning
al bond stock equity
shares income s
I. Ending 1,045,4 2,492,3
426,051 60,585, 275,010 806,441
balance of the 49,410. 66,802.
,015.00 678.92 ,401.50 ,654.46
previous year 67 71
Plus: Change in
accounting
policy
Correction of
previous errors
Others
II. Opening 1,045,4 2,492,3
426,051 60,585, 275,010 806,441
balance of the 49,410. 66,802.
,015.00 678.92 ,401.50 ,654.46
reporting year 67 71
III.
Decrease/increa - -
4,886,6 43,255,
se of the report 102,652 141,022
13.66 975.92
year (decrease ,886.20 ,248.46
is stated with “-“)
(I) Total 22,766, 22,766,
comprehensive 253.20 253.20
income
(II) Owners’ -
input and 4,886,6 43,255,
38,369,
decrease of 13.66 975.92
362.26
capital
1. Common -
shares 50,252,
50,252,
contributed by 831.88
831.88
the owner
2. Capital
contributed by
other equity
instruments
holders
3. Amount of -
payment for 4,901,6 11,898,
6,996,8
shares counted 56.83 512.79
55.96
to owners’ equity
- -
4. Others 15,043. 15,043.
17 17
- -
(III) Profit 125,419 125,419
Distribution ,139.40 ,139.40
1. Provision of
surplus reserve
2. Distributions - -
to the owners (or 125,419 125,419
shareholders) ,139.40 ,139.40
3. Others
(IV) Internal
carry-over of
owners’ equity
15
1. Capitalization
of capital
reserve (or
capital stock)
2. Capitalization
of surplus
reserve (or
capital stock)
3. Loss made up
for with surplus
reserve
4. Setting of the
amount involved
in the movement
of the beneficial
plan carried over
to the retained
earnings
5. Other
comprehensive
income carried-
over to the
retained
earnings
6. Others
(V) Special
reserve
1. Provision in
the reporting
period
2. Applied in the
reporting period
(VI) Others
IV. Ending 1,050,3 2,351,3
426,051 103,841 275,010 703,788
balance of the 36,024. 44,554.
,015.00 ,654.84 ,401.50 ,768.26
reporting period 33 25
Legal representative: Zhang Xuhua Chief Financial Officer: Song Yaoming
Person in charge of the Accounting Department: Tian Hui
III. Company Profile
1.Place of Registration, Organization Form and Address of the Head Office
FIYTA Precision Technology Co., Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259
issued by the General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time
Industrial Company by the promoter of China National Aero-Technology Import and Export Shenzhen Industry & Trade
Center (name changed to “China National Aero-Technology Shenzhen Co., Ltd” lately) on 25 December 1992. On 3 June
1993, the Company was listed on Shenzhen Stock Exchange. The Company holds business license with the Unified Social
Credit Code of 91440300192189783K.
After the distribution of bonus shares, placement of new shares, conversion to share capital, additional issuance of new
shares, and share repurchase and cancellation over the years, as of June 30, 2023, the Company has issued a total of
417,627,960 shares, with a registered capital of CNY 417,627,960. The Company’s registered address is FIYTA Technology
Building, Gaoxin S. Road One, Nanshan District, Shenzhen,China. Head office address: FIYTA Technology Building, Gaoxin
S. Road One, Nanshan District, Shenzhen, Guangdong Province; the Parent Company is AVIC International Holding Limited;
the Actual Controller is Aviation Industry Corporation of China Ltd.
2.Business Nature and Principal Business Activities
As of June 30, 2023, the principal business activities of the Company and its subsidiaries are: production and sales of
various pointer type mechanical watches, quartz watches and their driving units, spares and parts, various timing apparatus,
processing and wholesale of Karat gold ornament watches and smart watches; domestic trade, materials supply and sales
(excluding the commodities for exclusive operation, exclusive control and monopoly); property management and lease;
design service; self-run import & export business.
As of July 5, 2023, the business nature and principal business activities of the Company and its subsidiaries have changed
to: sales of watches; manufacturing of watches and timing instruments; sales of watches and timing instruments; wholesale
of jewelry; retail of jewelry; manufacturing of smart wearables; sales of smart wearables; property management; lease of
non residential real estate; professional design services; import and export of goods; sales of household appliances; sales
of satellite mobile communication terminals.
3. Approval for the Financial Statements for Issuing
The financial statements were approved and issued by the Board of Directors dated August 21, 2023.
16
There were 12 subsidiaries consolidated in the financial statements during the reporting period. For the detail, refer to Note
IX. "Equity in Other Entities".
The entities included in the scope of the consolidated financial statements in the reporting period remain unchanged
compared with the previous period. For details please refer to Note VIII “Changes of the consolidation scope”.
IV. Basis for preparation of the financial statements
1. Preparation Basis
The Company makes recognitions and measurements according to the actual transactions and events in the light of the
"Accounting Standards for Business Enterprises - Basic Standards" promulgated by the Ministry of Finance and specific
accounting standards, guidelines for the application of accounting standards for enterprises, interpretations of accounting
standards for enterprises and other relevant regulations (hereinafter collectively referred to as the "Accounting Standards
for Enterprises"); on this basis, prepares the financial statements with consideration of the relevant provisions of the China
Securities Regulatory Commission - " Preparation Rules for Information Disclosure by Companies Offering Securities to the
Public No. 15—General Provisions on Financial Reports (2014 Revision).
2. Operation on Going Concern Basis
The Company has assessed its going-concern ability for 12 months from the end of the reporting period, and has not found
any matters or circumstances that may lead to significant doubts about the going-concern ability. As a result, the financial
statements of the Company have been prepared on going concern basis.
V. Important accounting policies and accounting estimates
Presentation on specific accounting policies and accounting estimates:
1. The Company makes specific accounting policies and estimates according to its nature of business and accounting
policies and estimates mainly include: method of estimated credit loss accrual (Note V. 11, Note V. 12 and Note V. 14),
measurement of inventory (Note V. 15), depreciation of investment property and fixed asset and amortization of intangible
asset (Note V. 23, Note V. 24 and Note V. 30), revenue (Note V. 39) etc.
2. Based on historical experience and other factors, including reasonable expectations for future events, the Company
continuously evaluates the important estimates and key assumptions used. If material changes to following accounting
estimate and key assumption incurred, material impact would happened to the carrying value of the Company’s assets and
liabilities in coming accounting year：
(1) Provision for bad debt of accounts receivable and other receivables It is necessary to describe that the management
estimates impairment loss provision to accounts receivable and other receivables based on the judgments to estimated
credit loss of accounts receivable and other receivables. If any events occurred that indicated the Company may not be able
to recover the balance amount, estimation is needed in provision accrual. If the expected number is different with the
estimated figure, the difference will affect the carrying value of accounts receivable and other receivables and the impairment
loss expenses in corresponding accounting period.
(2) Impairment of inventory. The Company recognizes provision for obsolete inventories based on the excess of
the cost of inventory over its net realizable value. In determining the net realizable value of inventories, the management
uses significant judgments to estimate the selling price, cost to finish manufacturing, and selling expenses and associated
taxes. If the management revises estimated selling price and cost to finish manufacturing and selling expenses, the NAV
estimation would be affected and the difference would have an effect to the inventory provision.
(3) Estimation of long-term asset impairment. When evaluating whether there is impairment to long-term asset, the
management mainly considers the following: (1) whether the events affect the asset impairment have already incurred; (2)
whether the discounted cash flow from continue usage of the asset or disposal is lower than its carrying amount; and (3)
whether major assumption used in estimating the future cash flow is appropriate.
Changes to related assumption adopted in determining impairment such as profitability, discounting rate and growth rate
may have material impact to the present value used in impairment test and result in impairment to above mentioned long-
term assets.
(4) Depreciation and amortization. The estimated residual value and useful life of investment property, fixed asset and
intangible asset that used by the Company are based on historical actual useful life and actual residual value of assets with
similar nature or functions. In the process of using such assets, estimated useful life and residual value may vary depending
on the economic environment, technological environment and other environment that the assets located. If there is difference
between the expectation and previous estimation, proper adjustments will be made by the management.
17
(5) Share-based payments The management makes best estimation based on up-to-date number of employees who have
exercisable shares and adjusting the number of exercisable equity instrument on each balance sheet date in the vesting
period. If there is difference between current year exercisable employee and previous estimation, proper adjustments will
be made by the management.
(6) Deferred income tax asset. Deferred income tax asset of taxable losses shall be recognized to the extent that there will
have sufficient taxable income to offset. This involves significant judgments to estimate the timing and amount of future
taxable profit and taking into consideration of tax planning so as to determine the amount of deferred tax asset.
(7) Income tax. It should be described that the final tax treatment of many transaction and events are with uncertainty in the
normal course of operation. Significant judgments necessary to be made when calculating the income tax. If there is
difference between the final discretion and the amount recorded in books, the difference will affect the amount of tax in the
period of final discretion.
1. Statement on complying with the accounting standards for business enterprise
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, the
results of operations and the cash flows for reporting period 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 refer to the period from purchasing assets for process to realizing cash or cash equivalent. The
Company’s operating cycle is 12 months which is also used as standard to determine the liquidity of asset and liabilities.
4. Recording Currency
The Company and its domestic subsidiaries use Renminbi (CNY) as the function currency for book keeping. FIYTA Hong
Kong Co., Ltd., one of the Company's overseas subsidiaries, one of the subsidiaries of FIYTA HK (hereinafter referred to
as “Station-68”) has determined Hong Kong Dollars as its recording currency for accounting in accordance with the
currencies available in its major economic environment where it is operated. Montres Chouriet SA, one of the subsidiaries
of FIYTA Hong Kong, determines Swiss Franc as its recording currency for accounting in accordance with the currencies
available in its major economic environment where it is operated and Swiss France is converted into Renminbi in
preparing its financial statements. The currency the Company takes in preparation of these financial statements is
Renminbi.
5. The accounting treatment on consolidation of the enterprises under the same control and not under the same
control
1. If a business combination is achieved through multiple steps, of which the terms, condition and economical
effect is in line with one or more criteria as followed, the multiple transactions shall be dealt with as one-basket
transaction.
(1) the transactions were entered into at the same time or by considering each other’s influence;
(2) a complete business result can only be achieved by combining all these transactions together;
(3) the performing of one transaction is depended on at least one other transaction;
(4) a transaction is not economical if it is considered stand along but it will become economical if it is considered in
combination with other transactions.
2. Business combination involving entities under common control
The assets and liabilities obtained by the Company in a business merger are measured at the carrying amount of the merged
party's assets and liabilities (including goodwill formed by the eventual controller's acquisition of the merged party) on the
merger date in the eventual controller’s consolidated financial statements. 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.
18
If there is contingent consideration and provision or assets are required to be recognized, the difference between the
provision or assets and the contingent consideration shall adjust the capital reserve, with any excess adjusted against
retained earnings.
If business combinations involving entities under common control achieved in stages that involves multiple transactions
belongs to one-basket transaction, all transactions shall be dealt with as one transaction. If not, the accounting treatment is
as follows: Initial investment cost is the acquirer’s share of the carrying amount of the net assets of the acquiree in the
consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial
investment cost and the sum of carrying amount of investment prior to combination date and carrying amount of new
considerations paid for the combination at the combination date is adjusted to capital reserve (share premium) . If the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. 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.
3. Business combination involving entities not under common control
The purchase date refers to the date that the Company actually acquired control over the acquire i.e. the date when the
control over the acquiree’s net assets or decision of business operation has been transferred to the Company. If the
Company fulfills the following conditions at the same time, it is considered that the control has been transferred:
① the contract or agreement of business combination has been approved by internal power department;
② related matters has been approved by state supervisory authorities, if needed;
③ procedures of asset transfer has been completed;
④ the Company has been made majority of payments and has the ability and plan to make the residual payments;
⑤ the Company is in substances acquired the business and operating policies and enjoyed corresponding interests and
undertaking risks of the acquire.
On the purchase date, assets transferred, liabilities incurred or assumed as the consideration paid shall be measured at fair
value. The difference between the fair value and carrying amount shall be charged to current period profit or loss.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is recognized as goodwill, and subsequently measured on the basis of its cost less accumulated impairment
provisions. Where the combination cost is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognized in profit or loss for the current period after reassessment.
If business combinations involving entities not under common control achieved in stages that involves multiple transactions
belong to one-basket transaction, all the transactions shall be treated as one. Otherwise, if the equity investment held before
the combination date is accounted for by the equity method, the sum of the book value of the equity investment of the
acquiree held before the acquisition date and the new investment cost on the acquisition date shall be regarded as the initial
investment cost of the investment; Other comprehensive income recognized by the equity investment held before the
acquisition date due to accounting by the equity method shall be accounted for on the same basis as the investee's direct
disposal of the relevant assets or liabilities when the investment is disposed of. If the equity investment held before the
combination date is accounted for by the recognition and measurement standards of financial instruments, the sum of the
fair value of the equity investment on the combination date plus the new investment cost shall be regarded as the initial
investment cost on the combination date. The difference between the fair value and book value of the originally held equity
and the accumulated changes in fair value originally included in other comprehensive income should be fully transferred to
the current return on investment on the combination date.
4.Transaction costs for business combination
The overhead for the business combination, including the expenses for audit, legal services, valuation advisory, and other
administrative expenses, are recorded in profit or loss for the current period when incurred. The transaction costs of equity
or debt securities issued as the considerations of business combination are included in the initial recognition amount of the
equity or debt securities.
6. Method of preparing consolidated financial statements
1. Scope of consolidation
19
The scope of consolidated financial statements is based on control. All subsidiaries (including standalone entity that
controlled by the Company) are all included in the scope of consolidation.
2.Procedures of consolidation
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and
its subsidiaries and other relevant information. The whole enterprise is considered as one accounting body when preparing
consolidated financial statement and reflect the whole group’s financial position, performance and cash flow according to
unified accounting policies based on accounting standards.
All subsidiaries that are included in the scope of consolidation adopt same accounting policies, and accounting period.If
there are differences, the subsidiaries shall adjust its policies and accounting period accordingly.
When preparing consolidated financial statements, the accounting policies and accounting periods of the subsidiaries should
be consistent with those established by the Company, and all significant intra-group balances and transactions are
eliminated. If the treatment based on enterprise group angle is different with the angle from subsidiaries’, it shall be treated
based on enterprise group angle.
The shares belonging to minority shareholders in the owner's equity, current net profit and loss, and current comprehensive
income of subsidiaries are separately presented under the owner's equity in the consolidated balance sheet, net profit in the
consolidated income statement, and total comprehensive income item. If the current loss shared by the minority
shareholders of a subsidiary exceeds the share of the minority shareholders in the initial owner's equity of the subsidiary,
the balance formed shall still offset the minority shareholders' equity.
For subsidiaries acquired through business combinations under the common control, adjustments are made to their financial
statements based on the carrying amount of their assets and liabilities (including goodwill formed by the eventual controller’s
acquisition of the subsidiary) in the eventual controller's financial statements.
Where a subsidiary or business has been acquired through a business combination not involving enterprises under common
control in the reporting period, the financial statements of subsidiaries shall be adjusted on the basis of fair value of
identifiable net assets on purchase date.
(1) Addition of subsidiaries or business operation
Where a subsidiary or business has been acquired through a business combination involving enterprises under common
control in the reporting period, the subsidiary or business is deemed to be included in the consolidated financial statements
from the date they are controlled by the ultimate controlling party. Their operating results and cash flows are included in the
consolidated income statement and consolidated cash flow statement respectively from the date they are controlled by the
ultimate controlling party.
If the Company can exert control over the investee under common control because of addition of investment, adjustments
shall be made as if all the combining party are at the current condition in the angle of ultimate controlled party. Equity
investment held before acquired control, profit or loss, other comprehensive income and other net asset changes that have
already recognized between the later of acquiring original equity and the date under common control, and combination date
shall offset opening retained earnings or current period profit or loss respectively.
In the reporting period, if there is subsidiary or business addition involving entities not under common control, no adjustments
shall be made to the consolidated balance sheet. The revenue, expenses and profit from the purchasing date to period end
shall be included in consolidated income statement. The cash flows from the purchasing date to period end shall be included
in consolidated cash flow statement.
If it is possible to exercise control over an investee not under the common control due to additional investment or other
reasons, the Company remeasures the equity of the investee held before the purchase date based on its fair value on the
purchase date, and the difference between the fair value and its book value is included in the current return on investment.
Changes related to equity method such as other comprehensive income and other equity changes beside net profit, other
comprehensive income and profit distribution shall be transferred to current period investment gain.
(2) Disposal of subsidiaries
1) General disposal method
In the reporting period, if the Company disposed a subsidiary or business, the subsidiary’s revenue, expenses, profit and
cash flows from the beginning of the period to the disposal date would be included in consolidated financial statements; the
cash flow of the subsidiary or business from the beginning of the period to the date of disposal is included in the consolidated
cash flow statement.
When the control right to the investee is lost due to disposal of partial equity investment or other reasons, the Company
remeasures residual equity investment after the disposal at its fair value on the date of losing the control right. The difference
between the sum of the consideration acquired from disposal of equity and the fair value of residual equity minus the portion
of net assets of the original subsidiary as continually calculated from the date of purchase or date of combination at the
original shareholding ratio and the goodwill is included in the investment income in the current period of losing the control
20
right. A gain or loss is recognized in the current period and is calculated by the aggregate of consideration received in
disposal and the fair value of remaining part of the equity investment deducting the share of net assets in proportion to
previous shareholding percentage in the former subsidiary since acquisition date and the goodwill.
2) Disposal of subsidiary through multiple steps
In the event that the Company losses control over a subsidiary through multiple transactions, if one or more conditions below
are fulfilled, it shall be treated as one-basket transaction:
A. the transactions were entered into at the same time or by considering each other’s influence;
B. a complete business result can only be achieved by combining all these transactions together;
C. the performing of one transaction is depended on at least one other transaction;
D. a transaction is not economical if it is considered stand along but it will become economical if it is considered in
combination with other transactions.
If the various transactions disposing the investment on the subsidiary's equity until losing control power are package deals,
various transactions undergo accounting treatment as a transaction of disposing the subsidiary and losing control power;
however, before losing control power, the difference between every disposal amount and the share of the subsidiary's net
assets enjoyed corresponding to disposal of investment is recognized as other comprehensive income in the consolidated
financial statements, and is included in the current profit and loss corresponding to loss of control power.
If dispose of the equity investment in the subsidiary until the loss of control does not belong to one-basket transaction, before
the loss of control, the accounting treatment shall be carried out in accordance with the relevant policies for partial disposal
of the equity investment in the subsidiary without losing control; when the control is lost, accounting treatment shall be
carried out according to the general treatment method of disposal of subsidiaries.
(3) Purchase of the minority shareholders’ equity of subsidiaries
The difference between the long term equity investment newly acquired resulted from purchase of minority equity and the
share of the net asset continuously calculated commencing from the date of purchase (or date of consolidation) enjoyable
by the subsidiary shall be used to adjust the capital stock premium in the capital reserve. In case the capital stock premium
in the capital reserve is not enough for writing-down, the retained earnings shall be adjusted.
(4) Partial disposal of equity investment in subsidiary without loss of control
The difference between the disposal income obtained from the partial disposal of the long-term equity investment in a
subsidiary without loss of control and the corresponding portion of the subsidiary's net assets calculated from the acquisition
date or the combination date corresponding to the disposal of the long-term equity investment is used to adjust the share
premium in the capital reserve in the consolidated balance sheet, and adjust the retained earnings if the capital stock
premium in the capital reserve is insufficient to offset.
7. Classification of joint venture arrangements and accounting treatment method of joint management
1. Classification of Joint Venture Arrangement
The Company classifies joint venture arrangements into joint operations and joint ventures based on the structure, legal
form, terms and conditions in the arrangement, and other related facts.
Joint operations means joint arrangement that does not realized through independent entity. Joint arrangement that realized
through independent entity is normally recognized as joint venture but it also can be classified as joint operation if clear
evidence showed that one of the following condition is met:
(1) The legal form of an joint arrangement showed that the joint parties enjoyed rights over related assets and undertake
liability respectively.
(2) The contract showed that the joint parties enjoyed rights over related assets and undertake liability respectively.
(3) Other facts and situation indicated that the joint parties enjoyed rights over related assets and undertake liability
respectively. If the joint venture party enjoys substantially all of the output associated with the joint arrangement, and the
settlement of the liabilities in the arrangement continues to depend on the joint venture party's support.
2. Accounting treatment to joint operation
The Company confirms the following items related to the Company in the portion of interests in joint operation, and conducts
accounting treatment in accordance with the relevant accounting standards for enterprises:
(1) to recognize the assets held separately, and recognize the assets held jointly by their shares;
(2) to recognize the liabilities borne individually and the liabilities borne jointly according to their share;
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(3) to recognize the income generated from the sale of its share of joint management output;
(4) to recognize the income generated by the joint operation from the sale of output according to its portion;
(5) to recognize the expenses incurred separately, and recognize the expenses incurred in joint management according to
their share.
Before the Company delivers or sells assets to the joint operation (except the assets constituting business), or the joint
operation sells such assets to a third party, the Company only confirms the parts in the profit and loss arising from such
transaction and belonging to other participants of the joint operation. If occurrence of such assets is in conformity with the
impairment loss as stated in the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets, the Company
fully confirms the loss;
Before the Company sells an asset in the joint operation, etc. (except the assets constituting business) to a third party, the
Company only confirms the part in the profit and loss arising from such transaction and belonging to other participants of
the joint operation. If occurrence of purchase of an asset is in conformity with the impairment loss as stated in the Accounting
Standards for Business Enterprises No. 8 - Impairment of Assets, the Company fully recognizes this part of loss based on
the portion the Company should take.
The Company does not enjoy joint control to joint operation. If the Company enjoys joint operation’s asset and undertaking
related liabilities, the accounting treatment is the same. Otherwise, it shall be accounted for based on accounting standards.
8. Cash and cash equivalents
The term “cash” refers to cash on hand and deposits that are readily available for payment in preparation of the cash flow
statement. The term “cash equivalents” refers to short-term (generally due within 3 months from the purchase date) and
highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of change in value.
9. Foreign currency transactions and translation of foreign currency statements
1. Foreign Currency Transactions
In the initial recognition of foreign currency transactions, the spot exchange rate on the transaction date is used as the rate
to translate the foreign currency amount into Renminbi for bookkeeping.
On the date of balance sheet, the foreign currency monetary items are translated based on the spot rate as at the date of
balance sheet and the balance of exchange arising therefrom is counted to the current gains and losses except the balance
of exchange arising from the special foreign currency borrowings in connection with the assets satisfying the capitalization
conditions which is treated based on the principle of capitalization of borrowing expenses The foreign currency non-monetary
items measured at historical cost shall still be translated at the spot exchange rate on the date of transaction, without change
of the amount of the functional currency for bookkeeping.
The non-monetary items in foreign currency measured at fair value are translated at the exchange rate on the date of
recognizing fair value, and the difference between the amount in bookkeeping base currency and the previous amount in
bookkeeping base currency after translated is treated as change of fair value (including change of exchange rate) and
included in the current profits and losses or recognized as other comprehensive incomes.
2. Translation of Foreign Currency Financial Statements
The asset and liability items in the balance sheet are translated by means of the spot rate of the balance sheet; all the other
owner's equity type items, with the exception of "retained earnings" item, are translated by means of the spot rate of the day
when the transaction takes place. The items of incomes and expenses in the profit statement are translated at the current
average exchange rate on the transaction occurring date. The foreign currency financial statement translation difference
arising from the above conversion is counted to the other comprehensive income.
In disposal of overseas business, the translation difference of the foreign currency financial statements related to the foreign
business listed in other comprehensive income items in the balance sheet is transferred from the other comprehensive
income items to the current profit and loss; in case the proportion of the equity in the overseas business held by the Company
drops due to disposal of partial equity investment or other reason but the control power over the overseas business has not
lost, the translation difference of the foreign currency statements in connection with the disposed part of the overseas
business shall be attributable to the minority shareholders’ equity instead of being transferred into the current profit and loss.
When the disposal of overseas operation is involved with the partial equity of a joint venture or a cooperative enterprise, the
translated difference of foreign currency statements related to the overseas operation is transferred at the ratio of disposing
the overseas operation into the current profits and losses from disposal.
10. Financial instruments
A financial asset or financial liability is recognized when the Company becomes a party of financial instrument contract.
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The effective interest rate method refers to the method for calculating the amortized cost of financial assets or financial
liabilities and apportioning the interest income or interest expense of each period into each accounting period.
Effective interest rate refers to such interest rate with which the future cash flow of any financial asset or financial liability
in the expected period of existence is discounted to the current book value of such financial asset or financial liability. When
determining the effective interest rate, the future cash flow shall be predicted on the basis of taking into account all the
contractual stipulations (Such as prepayment, rollover, call option or other similar options) concerning the financial asset or
financial liability, but the future credit losses shall not be taken into account.
Amortized cost of financial assets or financial liabilities is the initial recognition amount deduct principal and add or less
accumulated amortization to the difference between initial recognition and the amount at maturity and less accumulated loss
provision (for financial assets only).
1.Classification, confirmation and measurement of financial assets
Financial assets are classified into the following three categories depending on the Company’s business mode of managing
financial assets and cash flow characteristics of financial assets:
A. Financial assets measured at amortized cost.
B. Financial asset that is measured at fair value and whose change is included in other comprehensive income.
C. The financial asset measured at fair values with the change counted to the current profit and loss.
Financial assets are measured at their fair value at the time of initial recognition, but if the accounts receivable or notes
receivable generated from the sale of commodities or provision of services do not contain significant financing elements or
the financing elements not exceeding one year are not considered, the initial measurement shall be made according to the
transaction price.
For the financial assets measured at fair value with the change counted to the current profits and losses, the relevant
transaction expenses are directly included in the current profit and loss; the relevant transaction expenses for other
categories of financial assets are counted to the amount of the initial recognition.
The subsequent measurement of financial assets depends on their classification, and all affected relevant financial assets
shall be reclassified if and only if the Company changes its business model for managing financial assets.
1) Classified as financial assets measured based on the amortized cost
According to the contractual terms of the financial asset， the cash flow created on the specific date is exclusively for
payment of the principal and the interest based on the outstanding amount of the principal，while if the business model of
managing the financial asset is to take the collection of contractual cash flow as the goal, the Company shall classify the
financial asset as a financial asset measured at amortized cost. Such financial assets include monetary fund, notes
receivable, accounts receivable and other receivables.
The Company recognizes the interest income of such financial assets based on the effective interest rate method,
subsequent measurement is carried out at amortized cost, and the gain or loss arising from derecognition or modification
when impairment occurs, shall be included in the current profit and loss. Except for the following circumstances, the
Company calculates and determines interest income based on the book balance of financial assets multiplied by the actual
interest rate:
A. For purchased or originated credit-impaired financial assets, the Company calculates and determines the interest income
from the initial recognition based on the amortized cost of the financial assets and the credit-adjusted effective interest rate.
B. For purchased or originated financial assets without credit impairment but become credit-impaired in the subsequent
period, the Company calculates and determines the interest income based on the amortized cost and effective interest rate
of the financial asset in the subsequent period. If the financial instrument no longer has credit impairment due to the
improvement of its credit risk in the subsequent period, the Company calculates and determines the interest income by
multiplying the actual interest rate by the book balance of the financial asset.
2) Classified as financial asset that is measured at fair value and whose change is included in other comprehensive income.
According to the contractual terms of the financial asset，the cash flow created on the specific date is exclusively for payment
of the principal and the interest based on the outstanding amount of the principal; while if the business model for managing
the financial asset is aimed at both collecting contractual cash flow and selling the financial asset, the Company classifies
the financial asset as a financial asset measured at fair value whose change is included in other comprehensive income.
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The Company recognizes interest income of such financial assets by the effective interest rate method. Except for interest
income, impairment losses and exchange differences, which are recognized as profit or loss for the current period, other
changes in fair value are included in other comprehensive income. When the recognition of the said financial assets is
terminated, the accumulated gains or losses previously included in other comprehensive income are transferred out from
other comprehensive income and included in the current profit and loss.
Notes and accounts receivable measured at fair value whose change is included in other comprehensive income are
presented as receivables financing and other such financial assets are presented as other creditor's rights investments,
where other debt investments that mature within one year as of the balance sheet date are reported as non-current assets
that mature within one year, and other creditor's rights investments whose original maturity is within one year are presented
as other current assets.
3) Designated as financial asset measured at fair value and whose change is included in other comprehensive income.
At the initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial
assets at fair value through other comprehensive income on the basis of individual financial assets.
Changes in fair value of such financial assets are included in other comprehensive income, and no provision for impairment
is required. When the recognition of the said financial assets is terminated, the accumulated gains or losses previously
included in other comprehensive income are transferred out from other comprehensive income and included in the retained
earnings. During the period when the Company holds the investment in the equity instrument, when the Company's right to
receive dividends has been established, the economic benefits related to dividends are likely to flow into the Company, and
the amount of dividends can be measured reliably, dividend income is recognized and included in the current profit and loss.
The Company represents such financial assets under other equity instrument investment items.
An equity instrument investment that satisfies one of the following conditions is a financial asset measured at fair value and
its changes are included in the current profit and loss: the purpose of obtaining the financial asset is mainly for recent sales;
it is part of a centrally managed portfolio of identifiable financial assets and instruments at initial recognition, and there is
objective evidence that there is a short-term profit model in the near future; it is a derivative instrument (with a derivative
instrument that meets the definition of a financial guarantee contract and is designated as an effective hedging instrument
exclusive).
4) The financial asset measured at fair value with the change counted to the current profit and loss.
Financial assets that do not meet the criteria for classification as financial assets measured at amortized cost or at fair value
whose change is concluded in other comprehensive income, nor designated as financial assets measured at fair value
whose change is included in other comprehensive income are all classified as financial assets measured at fair value whose
change is included in the current profit and loss.
The Company makes subsequent measurement of these financial assets at fair value and their profit or loss formed due to
change of fair value and the dividends and interests related to such financial assets are included in the current profits and
losses.
The Company present the financial assets as financial asset held for trade, other non-current financial assets.
5) The financial asset designated for measurement at fair value with the change counted to the current profit and loss.
At initial recognition, in order to eliminate or significantly reduce the accounting mismatch can be eliminated or significantly
reduced, the Company may irrevocably designate the financial assets as that measured at fair value with the change counted
to the current profit and loss based on the individual financial assets.
If the hybrid contract includes one or more embedded derivatives and the main contract does not belong to the above
financial assets, the Company may designate the whole as a financial instrument that is measured at fair value through
profit or loss, except in the following cases:
A. Embedded derivatives do not materially change the cash flow of a hybrid contract.
B. When it is first determined whether a similar hybrid contract requires a spin-off, there is little need for analysis to make it
clear that the embedded derivatives it contains should not be split. If the prepayment right of the embedded loan allows the
holder to repay the loan in advance with an amount close to the amortized cost, the prepayment right does not need to be
split.
The Company makes subsequent measurement of these financial assets at fair value and their profit or loss formed due to
change of fair value and the dividends and interests related to such financial assets are included in the current profits and
losses.
The Company present the financial assets as financial asset held for trade, other non-current financial assets.
2. Classification, recognition and measurement of financial liabilities
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The Company categorizes such financial instruments or their components as financial liabilities or equity instrument at the
initial recognition based on the contract terms for issuing such financial instruments and economical nature they have
reflected rather than solely on its legal form with the combination of the definition of financial liabilities and equity instrument.
In the initial recognition, financial liabilities are classified as the financial liabilities that are measured at fair value and whose
change is included in the current profits and losses, other financial liabilities and derivative instrument designated as effective
hedging instrument.
Financial liabilities are measured at fair value at the initial recognition time. For financial liabilities that are measured at fair
value and which change is included in the current profits and losses, the relevant transaction expenses are directly included
in the current profits and losses; for other financial liabilities, relevant transaction expenses are included in the initially
recognized amount.
The successive measurement of financial liabilities depends on their classification:
1) The financial liabilities designated for measurement at fair value with the change counted to the current profit and loss.
Such financial liabilities include financial liabilities held for trade (including the derivative instruments belonging to financial
liabilities) and the financial liabilities measured at fair value with the change counted to the current profits and losses directly
designated at the initial recognition.
The Company classifies financial liabilities that meet one of the following conditions: the purpose of assuming the relevant
financial liabilities is mainly for recent sale or repurchase; if they belong to part of the portfolio of identifiable financial
instruments under concentrated management, and objective evidences showing that the Company has recently adopted
short-term profit making mode; they belong to a derivative instrument, except the derivative instruments designated as and
being effective hedging instruments with the derivative instruments in compliance with financial guarantee contract excluded.
Financial liabilities held for trade (including the derivative instruments belonging to financial liabilities) are measured at fair
value subsequently and all fair value changes except for hedging accounting shall be included in current period profit or loss.
At initial recognition, in order to provide more relevant accounting information, the Company classifies financial liabilities that
meet one of the following conditions as financial liabilities designated at fair value through profit or loss (the designation
cannot be revoked once it is made) :
A. accounting mismatches can be eliminated or significantly reduced.
B. according to the corporate risk management or investment strategy specified in the formal written documents, the financial
liability portfolio or the financial asset and financial liability portfolio is managed and performance evaluated on the basis of
fair value, and reported to key management personnel within the Company on this basis.
When the Company initially recognizes a financial liability and designates it at fair value through profit or loss according to
stipulations of standards, the changes in the fair value of the financial liability arising from changes in the company’s own
credit risk are included in other comprehensive income, and other changes in fair value are recognized in profit or loss for
the period. However, if the accounting causes or expands the accounting mismatch in profit or loss, the entire gain or loss
of the financial liability (including the affected amount from changes in the company’s own credit risk) is included in the
current profit or loss.
2) Other financial liabilities
Except for the following items, the Company classifies financial liabilities as financial liabilities measured at amortized cost.
The effective interest method is adopted for such financial liabilities, and the subsequent measurement is carried out
according to the amortized cost, and the profit or losses arising from the derecognition or amortization are included in the
current profit and loss:
A. The financial liabilities designated for measurement at fair value with the change counted to the current profit and loss.
B. The transfer of financial assets does not meet the conditions for derecognition or financial liabilities arising from the
continued involvement in the transferred financial assets.
C. Financial guarantee contracts that are not in the first two categories of this article, and loan commitments granted at a
rate lower than market interest rates and that are not in the first category of this article.
A financial guarantee contract refers to a contract that requires the issuer to pay a specific amount to the contract holder
who has suffered losses when a specific debtor fails to repay the debt in accordance with the original or revised terms of
the liability instrument. For financial guarantee contracts that are not designated as financial liabilities measured at fair value
and whose changes are included in the current profit and loss, the initial recognition shall be carried out at the higher of the
provision for loss and the balance after deducting the accumulated amortization during the guarantee period from the initial
recognition amount.
3. Derecognition of financial assets and financial liabilities
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1) If a financial asset meets one of the following conditions, it shall be derecognized:
A. The contractual right to receive the cash flow of the financial asset is terminated.
B. The contractual right to receive the cash flow of the financial asset is terminated.
2) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or a part thereof) has been discharged, the financial liability (or such part of
financial liability) is derecognized.
When the Company and the lender sign an agreement to replace the original financial liability with a new financial liability,
and the new financial liability is substantially different from the original financial liability, the original financial liability is
derecognized and a new financial liability is recognized. The difference between the carrying amount and the consideration
paid (including the transferred non-cash assets or liabilities assumed) is recognized in profit or loss.
If the Company repurchases part of the financial liabilities, the carrying amount of the financial liabilities as a whole is
allocated based on the proportion of the fair value of the continuing recognition portion and the derecognition portion on the
repurchase date. The difference between the carrying amount assigned to the derecognition portion and the consideration
paid (including the transferred non-cash assets or liabilities assumed) shall be included in the current profit or loss.
4. Recognition basis and measurement method for transfer of financial assets
In the event of transfer of financial assets, the Company assesses the extent to which it retains the risks and rewards of
ownership of the financial assets and treats them in the following cases:
(1) If almost all risks and rewards of ownership of financial assets are transferred, the financial assets are derecognized and
the rights and obligations arising from or retained in the transfer are separately recognized as assets or liabilities.
(2) If almost all the risks and rewards of ownership of financial assets are retained, the financial assets shall continue to be
recognized
(3) If there is neither transfer nor retention of almost all risks and rewards of ownership of financial assets (i.e., other than
(1) and (2) of this article) , then depending on whether or not they retain control over financial assets:
A. If the control of the financial asset is not retained, the financial asset shall be derecognized, and the rights and obligations
arising or retained during the transfer shall be separately recognized as assets or liabilities.
B. If the control over the financial assets is retained, the relevant financial assets shall be continuously recognized according
to the degree of its continued involvement in the transferred financial assets, and the relevant liabilities shall be recognized
accordingly. The degree of continued involvement in the transferred financial assets refers to the degree to which the
Company undertakes the risks or rewards of changes in the value of the transferred financial assets.
When judging whether the transfer of financial assets meets the above conditions for derecognition of financial assets, the
principle of substance over form is adopted. The Company distinguishes the transfer of financial assets into overall transfer
and partial transfer of financial assets.
If the overall transfer of financial assets meets the conditions for termination of recognition, the difference between the
following two amounts shall be included in the current profit and loss:
A. The carrying amount of the transferred financial assets on the date of derecognition.
B. The sum of the consideration received in respect of the transfer of financial assets and the amount corresponding to the
derecognized portion in the accumulated changes in the fair value originally and directly recognized in other comprehensive
income (the financial assets involved in the transfer are measured at fair value through other comprehensive income).
If the transfer of partial financial assets while the part to be transferred overally satisfy the conditions of derecognition, the
entire book value of the transferred financial asset shall, between the portion derecognized and the portion not derecognized
(in such a case, the retained service assets shall be deemed to be part of the continued recognition of financial assets), be
apportioned according to their respective relative fair value, and the difference between the amounts of the following 2 items
shall be included into the profits and losses of the current period :
A. The carrying amount of the portion derecognized on the date of derecognition.
B. The sum of the consideration received in respect of the derecognition of the financial assets and the amount
corresponding to the derecognized portion in the accumulated changes in the fair value originally and directly recognized in
other comprehensive income (the financial assets involved in the transfer are measured at fair value through other
comprehensive income).
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If the transfer of financial assets does not satisfy the conditions for termination of recognition, continue to recognize the
financial asset, and the received consideration is recognized as a financial liability.
5. The method of determining the fair value of financial assets and financial liabilities
For the financial assets or financial liabilities existing in the active market, the fair value is determined by the quotation in
the active market, unless there is a restricted period for the financial asset itself. For a financial asset with restricted sales
of the asset itself, it is determined according to the quotation in the active market after deducting the compensation amount
required by market participants for bearing the risk of not being able to sell the financial asset in the open market within a
specified period. The quotation in the active market includes the quotation that is readily and regularly available from
exchanges, dealers, brokers, industry groups, pricing agencies or regulators, etc. for the relevant assets or liabilities, and
are representative of actual and frequently occurring markets on an arm's length basis trade.
For the initially acquired or derived financial assets or assumed financial liabilities, the market transaction price is used as
the basis for determining their fair value.
For financial assets or financial liabilities not existing in the active market, the fair value is determined using valuation
techniques. At the time of valuation, the Bank adopts valuation techniques that are applicable under the current
circumstances and have sufficient data and other information to support, and the selection is consistent with the
characteristics of the assets or liabilities considered by market participants in the transactions of relevant assets or liabilities
and it takes priority to use the relevant observable input value as far as possible. When the relevant observable input value
cannot be obtained or it is not feasible to obtain, the unobservable input value is used.
6. Impairment of financial instruments
Based on the expected credit losses, the Company assesses the expected credit losses of the financial assets measured
at amortized cost and financial assets at fair value through other comprehensive income, lease receivables, contract assets,
loan commitment and financial liabilities that are not measured at fair value through profit or loss, and financial guarantee
contract etc., and makes impairment accounting and recognizes loss provisions.
Expected credit loss refers to the weighted average of the credit losses of financial instruments based on the risk of default.
Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cash flows
expected to be received by the Company discounted at the original effective interest rate, that is, the present value of all
cash shortages. Where, for the purchased or originated credit-impaired financial assets, the Company discounts based on
the credit-adjusted effective interest rate according to the credit of the financial assets.
For accounts receivable, contract assets, and lease receivables, the Company shall always measure the loss allowance for
them at an amount equal to the lifetime expected credit losses.
For financial assets that have been purchased or generated with credit impairment, loss provision is recognized only for the
cumulative changes in lifetime expected credit losses after the initial recognition on the balance sheet date. On each balance
sheet date, the amount of changes in lifetime expected credit losses is included in profit or loss as an impairment loss or
gain. Even if the lifetime expected credit loss determined on the balance sheet date is less than the expected credit loss
reflected in the estimated cash flow at the initial recognition, the positive change in expected credit loss is also recognized
as an impairment gain.
Except for the provision for loss of financial instruments in item (3) of this article, the Company assesses whether the credit
risk of the relevant financial instruments has increased significantly since the initial recognition on each balance sheet date,
and separately measures its loss provision, recognizes expected credit loss and its changes based on the following
circumstances：
A. If the credit risk of the financial instruments has increased significantly since the initial recognition, the loss provision is
measured at the amount equivalent to the lifetime expected credit loss of the financial instruments, regardless of whether
the basis the Company assesses the credit losses is on individual financial instrument or a combination of financial
instruments, and the increase or reversal of the loss provision resulting therefrom should be included in the current profit or
loss as an impairment loss or gain
B. If the credit risk of the financial instruments has not increased significantly since the initial recognition, the loss provision
is measured at the amount equivalent to the expected credit loss of the financial instruments in the next 12 months,
regardless of whether the basis the Company assesses the credit loss is on individual financial instrument or the combination
of financial instruments, and the increase or reversal of the loss provision resulting therefrom shall be included in the current
profit or loss as an impairment loss or gain.
C. For financial instruments in the third stage, the Company measures loss provision on the basis of life-time expected credit
loss and calculating interest income according to their book balance minus the impairment provision and the actual interest
rate.
Incremental or reversal of credit loss provision shall be included in current profit or loss as impairment loss or gain. Except
for financial asset at fair value through other comprehensive income, credit loss provision is to offset the carrying amount of
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financial assets. For financial assets at fair value through other comprehensive income, the credit loss provision is
recognized in other comprehensive income and will not offset the financial asset’s carrying amount in balance sheet.
In the previous fiscal period, the loss provision was measured at an amount equivalent to the expected credit loss during
the entire duration of the financial instrument, but on the current balance sheet date, the financial instrument is no longer in
a situation where the credit risk has significantly increased since the initial recognition; if, on the current balance sheet date,
the loss provision of the financial instrument was measured at the amount equivalent to the expected credit loss in the next
12 months, and the resulting loss provision was reversed as the impairment gain and included in the current profit and loss.
1) Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet date with that on initial recognition day, the Company
determines the relative change of default risk of financial instruments during the expected life of financial instruments, to
evaluate whether the credit risk of financial instruments has increased significantly since the initial recognition. For financial
guarantee contracts, when applying the provisions on impairment of financial instruments, the Company takes the date
when the Company becomes the party that has made the irrevocable commitment as the initial recognition date.
To determine whether credit risk has increased significantly since the initial recognition, factors considered by the Company
includes:
A. Whether there is serious deterioration of the debtor’s operating results that have occurred or are expected to occur;
B. Changes in the existing or anticipated technological, market, economic or technical environment will have a significant
negative impact on the debtor’s repayment capacity;
C. Whether there have been significant changes in the value of collateral used as collateral for the debt or the quality of
guarantees or credit enhancements provided by third parties that are expected to reduce the debtor's economic incentive to
repay within the contractual terms or affect the probability of default;
D. Whether the expected performance and repayment of debtor changes significantly;
E. Whether the Company changed the way of managing financial assets,etc.
On the balance sheet date, if the Company assesses that the financial instrument only has lower level of credit risk, the
Company assumes that the credit risk associated with the financial instrument does not increased after the initial recognition.
If the default rate of a financial instrument is low and the debtor’s ability to fulfill its cash flow liability is strong, the financial
instrument will be regarded with lower credit risk even if there will be adverse changed in economic and operating
environment in long-term which may not necessarily decrease the debtor’s ability of fulfilling its cash flow liabilities.
2) Financial assets with credit impairment already incurred
When one or more events that have an adverse effect on the expected future cash flow of a financial asset occur, the
financial asset becomes a financial asset that has been credit-impaired. Evidence of credit impairment of financial assets
includes the following observable information:
A. The issuer or debtor has experienced major financial difficulty;
B. The debtor has violated the contract, such as failure in or late payment of the interest or the principal;
C. The Creditor, out of economic or contractual considerations related to the debtor’s financial difficulties, gives the debtor
concessions that the Group shall never make under any other circumstances;
D. The debtor is likely to go bankrupt or carry out other financial restructuring;
E. The issuer or debtor’s financial difficulties caused the disappearance of the active market for the financial asset.
F. Purchase or originate a financial asset at a substantial discount that reflects the fact that a credit loss has occurred;
Credit-impairment of a financial asset may be caused by the combined action of multiple events, not necessarily by an
individually identifiable event.
3) Determining expected credit loss (ECL)
The Company evaluates ECL based on single or portfolio of financial instrument. When evaluating ECL, the Company
considers past events, current situation and future economic condition.
The Company categorizes financial instrument into different portfolios based on common credit risk characteristics. Common
credit risk characteristics includes: types of financial instruments, aging portfolio, settlement period, debtor’s industries etc.
Refer to accounting policies of financial instruments for standard for single evaluation and credit risk characteristics.
The Company uses the following way to determine the ECL of financial instruments:
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A. For financial assets, credit loss is the present value of difference between all contractual cash flows receivable from the
contract and all cash flows expected to be received by the Company.
B. For lease receivable, credit loss is the present value of difference between all contractual cash flows receivable from the
contract and all cash flows expected to be received by the Company.
C. For financial guarantee contract, credit loss is the present value of expected payment amount due to credit losses
happened to the owner of the contract and less any amount that the Company expected to receive from the contract owner,
debtor or other parties.
D. For financial assets that already impaired on balance sheet date but not impaired when purchasing, the credit loss is the
difference of carrying amount and present value of future cash flows discounted at original effective interest rate.
Factors that the Company measures ECL of financial instrument includes: assessing a series of possible results and to
determine a weighted average amount without bias; time value of money; information of past event, current situation and
future economic condition forecast that can be obtained without paying extra cost or efforts on balance sheet date.
4) Write off
The Company no longer reasonably expects that the contractual cash flow of the financial asset can be recovered wholly or
partially, it will directly write down the book balance of the financial asset. This write-down constitutes the derecognition of
related financial assets.
7. Offset of financial assets and financial liabilities
Financial assets and financial liabilities are presented in the balance sheet respectively and are not offset with each other.
However, the net value after offset is presented in the balance sheet when the following conditions are satisfied:
A. The Company has the legal right to offset the recognised amount and such right is exercisable;
B. The Company plans to settle by net amount or realize the financial assets and repay the financial liabilities at the same
time.
11. Notes receivable
For the determination method and accounting treatment method of the expected credit loss of the Company's notes
receivable, please refer to Note V. 10
If the Company has sufficient evidence to evaluate the ECL of notes receivable on single basis, it will be assessed on single
basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make judgment based on historical
loss experience, current situation and future economic situation, and classifying the bill receivable into different portfolios.
The basis for portfolios is determined as follows:
Portfolio
The basis for portfolios is determined as follows: Provision method
Description
Referencing historical impairment
Risk-free bank
The issuer has higher level of credit rating and no default in past and has experience and taking into consideration of
acceptance
strong ability to fulfill its contractual cash follow obligation current situation and estimation of future
portfolio
conditions
Provision based on the ECL checklist of
Business
Notes receivables with same aging have similar credit risk characteristics aging against the loss rate throughout the
acceptance note
duration
12. Accounts receivable
For the determination method and accounting treatment method of the expected credit loss of the Company's notes
receivable, please refer to Note V. 10
If the Company has sufficient evidence to evaluate the ECL of accounts receivable on single basis, it will be assessed on
single basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make judgment based on historical
loss experience, current situation and future economic situation, and classifying the accounts receivable into different
portfolios. The basis for portfolios is determined as follows:
The basis for portfolios is determined as
Portfolio Description Provision method
follows:
Account receivables for related parties in Referencing historical impairment experience and
Receivables for related parties in
scope of consolidation have similar credit risk taking into consideration of current situation and
scope of consolidation
characteristics estimation of future conditions
29
Accounts receivables from other Notes receivables with same aging have Provision based on the ECL checklist of aging against
parties similar credit risk characteristics the loss rate throughout the duration
13. Financing with accounts receivable
Inapplicable
14. Other receivables
Method for determination and accounting treatment of the expected credit loss of other receivables
Method for determination and accounting treatment of the expected credit loss of other receivables
For the determination method and accounting treatment method of the expected credit loss of the Company's notes
receivable, please refer to Note V. 10
If the Company has sufficient evidence to evaluate the ECL of other receivables on single basis, it will be assessed on single
basis.
If there is not sufficient evidence to evaluate the ECL on single basis, the Company will make judgment based on historical
loss experience, current situation and future economic situation, and classifying the other receivables into different portfolios.
The basis for portfolios is determined as follows:
The basis for portfolios is determined as
Portfolio Description Provision method
follows:
The portfolio has similar credit risk
Receivables of down payment Provision based on the ECL checklist of aging against the
characteristics based on the business nature,
and guarantee loss rate throughout the duration
down payment and guarantee
Referencing historical impairment experience and taking
The portfolio has similar credit risk
Petty cash for employees into consideration of current situation and estimation of
characteristics based on the business nature
future conditions
Referencing historical impairment experience and taking
Social security payment paid on- The portfolio has similar credit risk
into consideration of current situation and estimation of
behalf of employees characteristics based on the business nature
future conditions
Account receivables for related parties in Referencing historical impairment experience and taking
Receivables for related parties in
scope of consolidation have similar credit risk into consideration of current situation and estimation of
scope of consolidation
characteristics future conditions
Notes receivables with same aging have Provision based on the ECL checklist of aging against the
Portfolio of other receivables
similar credit risk characteristics loss rate throughout the duration
15. Inventories
1. Classification of Inventories
The Company’s inventories refer to the finished products or commodities held for sale, products in process and the materials
and supplies consumed in process of production or rendering of services, etc. in the Company’s daily activities, which are
classified into three categories, including raw materials, products-in-process and commodity stocks. which are classified
into three categories, Inventories mainly include raw materials, products-in-process,finished products (commodity stocks),
etc.
2. Valuation method of inventories
When inventory is acquired, it is initially measured at cost, including procurement costs, processing costs and other costs.
Raw materials and merchandise inventory are priced respectively according to the weighted average (except for branded
watches), specific identification (for branded watches) at the time of delivery.
3. Basis for determining net realizable value of inventories and method for providing reserve for price falling of
inventories
After the inventory is thoroughly inspected at the end of the period, the provision shall be provided or adjusted at the lower
of the cost of the inventory and its net realizable value. The net realizable value of inventory of goods directly used for sale,
such as finished goods, stocked goods and materials for sale in the normal production and operation process, is determined
by the estimated selling price of the inventory minus the estimated selling expenses and related taxes; net realizable value
of inventory of materials that need to be processed is determined based on the estimated selling price of the finished
products produced minus the estimated cost till completion, estimated selling expenses and related taxes and fees in the
normal production and operation process; the net realizable value of the inventory held for the execution of a sales contract
or labour contract is calculated on the basis of the contract price. If the quantity of the inventory held exceeds the quantity
ordered by the sales contract, the net realizable value of the excess inventory is calculated based on the general sales price.
The provision is accrued according to the individual inventory project at the end of the period; but for a large number of
inventories with lower unit price, the provision is accrued according to the category of inventory; for those related to the
product series produced and sold in the same region, have the same or similar end use or purpose and that are difficult to
measure separately from other projects, they are combined for provision for inventory depreciation
30
If the influencing factors of the write-down of inventory value have disappeared, the amount of write down will be restored
and will be reversed within the amount of the provision for decline in value of the inventory that has been accrued. The
amount of the reversal is included in the current profit or loss
4.Inventory count system
The inventory system for the inventories is the perpetual inventory system
5. Amortization methods of low-value consumables and packaging materials
A. Low cost and short lived articles are amortized by once-writing-off method.
B. Packaging materials are amortized by once-writing-off method.
16. Contract assets
The Company has the right to receive the consideration for the transfer of goods to the customers. If the right depends on
factors other than the passage of time, it is recognized as a contract asset. If the Company has the right (only depends on
passage of time) to receive consideration from client, accounts receivable shall be recognized.
For the determination method and accounting treatment method of the expected credit loss of the Company's contract assets,
please refer to Note V. 10
17. Contract cost
1. Contract performance costs
If the cost incurred to fulfill the contract does not fall within the scope of other accounting standards for enterprises other
than the standards for revenue and meets the following conditions at the same time, the Company recognizes it as the
contract performance cost as an asset:
A. The cost is directly related to a current or anticipated contract, including direct labor, direct materials, manufacturing
expenses (or similar expenses), costs clearly borne by the customer, and other costs incurred solely due to the contract;
B. The cost has increased the resource the Company shall use to fulfill its performance obligation in the future.
C. The cost is expected to be recoverable.
The asset is presented in inventory or other non-current assets based on whether the amortization period at initial recognition
exceeds one normal operating cycle.
2. Contract acquisition cost
If the incremental cost incurred to the Company for obtaining the contract is expected to be recoverable, it is recognized as
an asset as the cost of obtaining the contract. The incremental cost refers to the cost that no cost may incur if the Company
does not obtain the contract (such as sales commission, etc.) If the amortization period does not exceed one year, it shall
be included in the current profit and loss when it incurs.
3. Amortization of contract cost
The above assets related to contract costs are recognized on the same basis as the income from goods or services related
to the asset, and are amortized at the time when the performance obligations are performed or in accordance with the
progress of the performance obligations, and are included in the current profit and loss.
4. Impairment of contract cost
For the above-mentioned assets related to contract costs, if the book value is higher than the difference between the
remaining consideration expected to be obtained by the Company due to the transfer of commodities related to the assets
and the estimated cost to incur for the transfer of the related commodities, the excess shall be provided for impairment , and
recognized as asset impairment loss.
After provision for the impairment, ff the factors of impairment in the previous period change afterward, so that the difference
of the above two items is higher than the book value of the asset, the original provision for asset impairment should be
reversed and included in the current profit and loss, but the book value of the asset after the reversal should not exceed the
book value of the asset on the reversal date if no provision for impairment is made.
18. Held-for-sale assets
Inapplicable
31
19. Equity investment
Inapplicable
20. Other equity investment
Inapplicable
21. Long term accounts receivable
Inapplicable
22. Long-term equity investments
1. Determination of the initial investment cost
A. For the long-term equity investment formed by business combination, the specific accounting policies are detailed in the
accounting treatment of business combination under common control and not under common control as set out in this Note
(6).
B. Long-term equity investment obtained by other means
For long-term equity investments obtained by paying cash, the actual purchase price paid shall be used as the initial
investment cost. The initial investment cost includes expenses directly related to the acquisition of long-term equity
investments, taxes and other necessary expenses.
The initial investment cost of the long-term equity investment obtained by issuing equity securities is the fair value of the
issued equity securities; the transaction cost incurred in the issuance or acquisition of its own equity instruments is deducted
from equity if it is directly attributable to equity transactions.
Under the premise that the non-monetary asset exchange has the commercial substance and the fair value of the assets
received or surrendered can be reliably measured, the initial investment cost of the long-term equity investment exchanged
for non-monetary assets is determined based on the fair value of the assets exchanged and relevant taxes payable, unless
there is conclusive evidence that the fair value of the assets transferred is more reliable; for the exchange of non-monetary
asset that does not meet the above premise, the initial investment cost of long-term equity investment is the carrying amount
of the assets exchanged and the related taxes and fees payable.
The initial investment cost of a long-term equity investment obtained through debt restructuring includes the fair value of the
waived debt, taxes that can be directly attributable to the asset and other costs.
2. Subsequent measurement and profit and loss recognition
A. Cost method
The long-term equity investment that the Company can control over the investee is accounted for using the cost method,
and the cost of the long-term equity investment is adjusted by adding or recovering the investment according to the initial
investment cost.
Except for the actual payment or the cash dividends or profits included in the consideration that have been announced but
not yet paid at the time of acquiring the investment, the Company recognizes the current investment income according to
its share of cash dividends or profits declared to be distributed by the investee.
B. Equity method
The Company’s long-term equity investments in associates and joint ventures are accounted for using the equity method,
and some of the equity investments in associates that are indirectly held by venture capital institutions, mutual funds, trust
companies or similar entities including investment-linked insurance funds are measured at fair value through profit or loss.
When the initial investment cost of a long-term equity investment is greater than the investment, the initial investment cost
of the long-term equity investment shall not be adjusted by the difference between the fair value of the identifiable net assets
of the investee; if the initial investment cost is less than the investment, the difference between the fair value of the identifiable
net assets of the investee should be included in the current profit or loss.
After the Company has acquired the long term equity investment, the net gains and losses realized by the investee and
the share of the other comprehensive income enjoyable or sharable should be respectively used to recognize the return on
investment and other comprehensive income and at the same time the book value of the long term equity investment is
adjusted; according to the profit announced for distribution by the investee or the part of the cash dividend enjoyable upon
calculation, the book value of the long term equity investment is reduced correspondingly. For other change in the net profit
and loss, other comprehensive income and owner's equity other than the profit distribution, the book value of the long term
equity investment is adjusted and counted to the capital reserve.
32
In determining the net profit and loss in the investee enjoyable, with the fair value of various identifiable assets, etc. in the
investee when the investment is acquired as the base, the net profit of the investee is recognized after adjustment. For the
transactions between the Company and its associates or joint ventures, the part calculated based on the proportion of the
unrealized internal transaction gains and losses attributable to the Company shall be offset and the gains and losses on the
investment shall be recognized on this basis.
When the Company recognizes the losses incurred by the investee that it should bear, it shall deal with it in the following
order: Firstly, offset the carrying amount of the long-term equity investment. Secondly, if the carrying amount of the long-
term equity investment is not enough to be offset, the investment loss will continue to be recognized to the extent of carrying
amount of other long-term equity that virtually constitutes a net investment in the investee, and the carrying amount of the
long-term receivables is offset. Finally, after the above-mentioned treatment, if the enterprise still bears additional obligations
in accordance with the investment contract or agreement, the projected liabilities are recognized according to the estimated
obligations and included in the current investment losses.
If the investee realizes profit in the future period, after deducting the unrecognized loss share, and the reduction of book
balance of the recognized projected liabilities and recovery of other long-term equity that virtually constitutes a net
investment in the investee and carrying amount of long-term equity investment as opposite to the order above, the Company
shall restore the investment income.
3. Conversion of accounting methods for long-term equity investment
1) Fair value measurement to equity method accounting
If the equity investment originally held by the Company that does not have control, joint control or significant influence on
the investee, which is accounted for according to the recognition and measurement criteria of financial instruments, can
exert significant influence on the investee or jointly control but does not constitute control over it due to additional investment
and otherwise, its initial investment cost shall be the sum of the fair value of the equity investment originally held in
accordance with the “Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial
Instruments” and new investment cost after being accounted for under the equity method.
If the initial investment cost accounted for under the equity method is less than the fair value share of the identifiable net
assets of the investee on the additional investment date determined by the new shareholding ratio after the additional
investment, the carrying amount of the long-term equity investment is adjusted and included in the current non-operating
income.
2) Fair value measurement or equity method accounting to cost method accounting
If the equity investment originally held by the Company, that does not have control, joint control or significant influence on
the investee and which is accounted for in accordance with the financial instrument recognition and measurement criteria,
or the long-term equity investment originally held in associates or joint venture, can exercise control over the investee not
under common control due to additional investment or otherwise, in the preparation of individual financial statements, the
sum of the carrying amount of the equity investment originally held plus the new investment cost shall be regarded as the
initial investment cost after being accounted for under the cost method.
The other comprehensive income recognized by the equity method in respect of the equity investment originally held before
the purchase date is accounted for on the same basis as the investee directly disposes of the relevant assets or liabilities
when the investment is disposed of.
If the equity investment held before the purchase date is accounted for in accordance with the relevant provisions of the
“Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”, the
cumulative fair value changes originally included in other comprehensive income are transferred to current profit or loss
when the cost method is adopted.
3) Equity method accounting to fair value measurement
If the Company loses joint control or significant influence on the investee due to the disposal of part of the equity investment
or otherwise, the remaining equity after disposal shall be accounted for according to the “Accounting Standards for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments”. The difference between the fair value and
the carrying amount on the date of losing joint control or significant impact is recognized in profit or loss.
The other comprehensive income recognized in respect of the original equity investment using the equity method is
accounted for on the same basis as the investee directly disposes of the relevant asset.
4) Cost method to equity method
Where the Company loses control over the investee due to the disposal of part of the equity investment, etc., in the
preparation of individual financial statements, if the remaining equity after disposal can exercise joint control or significant
influence on the investee, the equity method is adopted for accounting, and the remaining equity is deemed to be adjusted
under the equity method when it is acquired.
5) Cost method to fair value measurement
33
Where the Company loses control over the investee due to the disposal of part of the equity investment, etc., in the
preparation of individual financial statements, if the remaining equity after disposal cannot jointly control or exert significant
influence on the investee, the relevant provisions of the “Accounting Standards for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments” are adopted. The difference between the fair value and the carrying
amount on the date of loss of control is recognized in profit or loss for the current period.
4. Disposal of long-term equity investment
For the disposal of long-term equity investment, the difference between the carrying amount and the actual purchase price
shall be included in the current profit or loss. For the long-term equity investment accounted for using the equity method,
when the investment is disposed of, the part that is originally included in the other comprehensive income is accounted for
in the same proportion based on the same basis as the investee directly disposes of the relevant assets or liabilities.
If the terms, conditions and economic impact of each transaction on disposal of the equity investment in a subsidiary satisfy
one or more of the following cases, the multiple transactions are treated as a package transaction:
A. the transactions were entered into at the same time or by considering each other’s influence;
B. a complete business result can only be achieved by combining all these transactions together;
C. the performing of one transaction is depended on at least one other transaction;
D. a transaction is not economical if it is considered stand along but it will become economical if it is considered in
combination with other transactions.
Where the loss of control over the original subsidiary due to disposal of part of the equity investment or otherwise which is
not a package transaction, the individual financial statements and consolidated financial statements shall be classified for
relevant accounting treatment:
1) In individual financial statements, the difference between the book value of the disposed equity and the actual acquisition
price is recorded in the current profit and loss. If the remaining equity after disposal can exert joint control or significant
influence on the investee, it shall be accounted for under the equity method, and the residual equity shall be deemed to be
adjusted by equity method when it is acquired; if the remaining equity after disposal cannot exert joint control or significant
influence over the investee, it shall be accounted for by the relevant provisions of the “Accounting Standards for Business
Enterprises No. 22 – Recognition and Measurement of Financial Instruments”, and the difference between the fair value and
the carrying amount on the date of loss of control is included in the current profit or loss.
2) In the consolidated financial statements, for each transaction before the loss of control over the subsidiary, capital reserve
(share premium) is adjusted for the difference between the disposal price and the share of the net assets corresponding to
the disposed long-term equity investment that the subsidiary has continuously calculated from the date of purchase or the
merger date; if the capital reserve is insufficient to offset, the retained earnings will be adjusted; when the control of the
subsidiary is lost, the remaining equity shall be re-measured according to its fair value on the date of loss of control. The
sum of the consideration for the disposal of the equity and the fair value of the remaining equity, less the share of the net
assets that that the original subsidiary has continuously calculated from the date of purchase calculated based on the original
shareholding, is included in the investment income for the period of loss of control, while reducing goodwill. Other
comprehensive income related to the original subsidiary’s equity investment will be converted into current investment income
when control is lost.
If each transaction on disposal of the equity investment in a subsidiary until the loss of control is a package transaction,
each transaction is accounted for as a transaction to dispose of the equity investment in the subsidiary with loss of control,
which is distinguished between individual financial statements and consolidated financial statements:
1) In the individual financial statements, the difference between each disposal price and the carrying amount of the long-
term equity investment corresponding to the disposed equity before the loss of control is recognized as other comprehensive
income, and when the control is lost, it is transferred to profit or loss for the period of the loss of control.
2) In the consolidated financial statements, the difference between each disposal price and the disposal investment that has
the share of the net assets of the subsidiary before the loss of control is recognized as other comprehensive income, and
transferred to profit or loss for the period of the loss of control.
5. Judging criteria for joint control and significant influence
If the Company collectively controls an arrangement with other parties in accordance with the relevant agreement, and the
activity decision that has a significant impact on the return of the arrangement needs to be unanimously agreed upon by the
parties sharing the control, it is considered that the Company and other parties jointly control an arrangement, which is a
joint arrangement.
If the joint arrangement is reached through a separate entity and it determines that the Company has rights to the net assets
of the separate entity in accordance with the relevant agreement, the separate entity is regarded as a joint venture and is
34
accounted for using the equity method. If it is judged according to the relevant agreement that the Company does not have
rights to the net assets of the separate entity, the separate entity acts as a joint operation, and the Company recognizes the
items related to the share of the interests of the joint operation and conducts accounting treatment in accordance with the
relevant ASBEs.
Significant influence refers to the investor's power of participation in making an investee's financial and operation policies
but the Company cannot control or jointly control with other parties to make these policies. The Company has a significant
influence on the investee under one or more of the following situations and taking into account all facts and circumstances:
(1) it is represented on the board of directors or similar authorities of the investee; (2) it involves in the formulation of financial
and operating policy of the investee; (3) it has important transactions with the investee; (4) it dispatches management
personnel to the investee; (5) it provides key technical information to the investee.
23. Investment Property
Measurement model for investment property
Measured based on the cost method
Depreciation or amortization method
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including the land use right
which has already been let out, the land use right held and to be assigned after appreciation, building which has been leased
out, etc. In addition, if the Board of Directors has a written resolution on the vacant buildings held by the Company for the
purpose of operating the lease, it is clearly stated that they will be used for operating leases and that the intention to hold is
no longer changed in the short term and they are presented as investment property.
The Company’s investment property is recorded at its cost, and the cost of purchased investment property includes the
purchase price, related taxes and other expenses directly attributable to the asset; the cost of self-built investment property
is composed of the necessary expenses incurred before the asset is ready for expected use.
The Company adopts the cost model for subsequent measurement of investment property, and depreciates or amortizes
buildings and land use rights according to their estimated service life and net residual value. Expected useful life, residual
value and annual depreciation rate are as follows:
Annual depreciation
Categories Expected useful life (years) Expected residual value rate (%)
(amortization) (%)
Housing & buildings 20 -35 5.00 4.80-2.70
When the use of investment property is changed to self-use, the Company converts the investment property into fixed assets
or intangible assets from the date of change. When the use of self-use property changes to rental earning or capital
appreciation, the Company converts fixed assets or intangible assets into investment property from the date of change.
When a conversion occurs, the carrying amount before conversion is used as the converted value.
The investment property is derecognized when the investment property is disposed of, or permanently withdrawn from use
and is not expected to obtain economic benefits from its disposal. The amount of disposal income from the sale, transfer,
retirement or damage of the investment property after deducting its carrying amount and related taxes and expenses is
recognized in profit or loss for the current period.
24. Fixed asset
(1)Recognition conditions of fixed assets
Fixed assets are tangible assets that are held for production of goods, supply of services, for rental to others, or for
administrative purposes and have useful lives more than one accounting year. Fixed assets are recognized when the
following conditions are met at the same time:
1) The economic benefit related to the fixed asset is likely to flow into the enterprise;
2) The cost of the fixed asset can be reliably measured.
(2) Depreciation methods
Categories Depreciation methods Depreciation life Residual rate Yearly depreciation rate
Average service life
Plant & buildings 20 -35 5.00 4.80-2.70
method
Machinery & equipment Straight-line method 10 5.00-10.00 9.50-9.00
Electronic equipment Straight-line method 5 5.00 19.00
Motor vehicle Straight-line method 5 5.00 19.00
Other equipment Straight-line method 5 5.00 19.00
35
Depreciation of fixed assets is accrued over the estimated useful life based on its recorded value less the estimated net
residual value. The fixed assets that have been provided for impairment losses are depreciated in the future period based
on the carrying amount after deducting the impairment provision and the remaining useful life.
The Company determines the service life and estimated net residual value of fixed assets based on the nature and usage
of fixed assets. The Company rechecks the service life, predicted net residual value and depreciation method of the fixed
asset at the end of a year. In case there exists any difference with the original estimate, the corresponding adjustment
should be made.
(3) Basis for recognizing the fixed assets under financing lease, Pricing and Depreciation Methods
Inapplicable
25. Construction-in-progress
1. Construction-in-progress
The self-built construction in progress of the Company is measured at the actual cost, which is determined by the necessary
expenses incurred before the construction of the asset reaches the intended usable condition, including the cost of
engineering materials, labour costs and relevant taxes payable, capitalized borrowing costs and indirect costs that should
be apportioned.
2. Criteria for and time point of construction in progress to convert into fixed asset
For a construction-in-progress, its entry value shall be the total expenses incurred before the built asset reaches the
expected use condition. Where a construction in progress has reached the expected use condition but the final accounts of
the as-built project have not been settled, from the day when the fixed asset reaches the expected use condition, values
estimated according to the construction budget and cost or the actual construction cost shall be assigned to the fixed asset,
and the fixed asset shall be depreciated under the fixed asset depreciation provisions. The depreciation amount already
provided is not adjusted.
26. Borrowing Costs
1. Recognition principle of capitalization of borrowing costs
If the borrowing costs incurred to the Company can be directly attributable to the acquisition, construction or production of
assets that meet the conditions for capitalization, they shall be capitalized and included in the cost of the relevant assets;
other borrowing costs shall be recognized as expenses based on the amount incurred when they incur and included in the
current profit and loss.
The assets in compliance with the capitalization conditions refer to such assets as fixed assets, investment based real estate,
inventories, etc. which need to undergo long time of acquisition or construction or production activities before they can reach
the predicted applicable or sellable status.
As soon as the borrowing costs meet the following conditions, capitalization starts:
A. Asset expenditures have already occurred, including expenditures in the form of paying cash, transferring non-cash
assets, or assuming interest-bearing debts for the purchase, construction or production of assets that meet the capitalization
conditions;
B. Borrowing costs have incurred;
C. The purchase, construction or production activities necessary for the assets to reach the expected usable or marketable
state have already begun.
2. Period of capitalization of borrowing costs
The capitalization period refers to the period from the time when the capitalization of borrowing costs starts to the time when
the capitalization is stopped, excluding the period during which the capitalization of borrowing costs is suspended.
When the acquisition, construction or production of assets that meet the capitalization conditions reaches the intended
usable or saleable state, the capitalization of borrowing costs shall cease.
When a part of the assets purchased or produced that meet the capitalization conditions are completed and can be used
alone, such part of the assets shall stop capitalization of borrowing costs.
Where each part of the assets purchased or produced is completed separately, but must wait until the whole is completed
or can be sold externally, the capitalization of the borrowing costs shall be stopped when the assets are completed as a
whole.
3.Suspension of capitalization period
36
If an abnormal interruption occurs during the acquisition, construction or production of an asset that meets the capitalization
conditions, and the interruption lasts for more than 3 months, the capitalization of borrowing costs shall be suspended; if the
interruption is a necessary procedure for the acquired, constructed or produced assets eligible for capitalization to reach the
intended use or sale state, the borrowing costs may continue to be capitalized. The borrowing costs incurred during the
interruption period are recognized as the current profit and loss, and the borrowing costs continue to be capitalized after the
acquisition, construction or production activities of the asset are resumed.
4. Calculation method for the capitalized amount of borrowing costs
Interest charges on special borrowings (excluding interest income on unused borrowings deposited in the bank, or
investment income on temporary investment) and their ancillary expenses shall be capitalized before the assets purchased
or produced that meet the capitalization conditions are ready for intended use or sale.
The amount of capitalized interest on general borrowings is calculated by the weighted average of the excess portion of the
accumulative asset expenditures over the special borrowings multiplied by the capitalization rate of general borrowings. The
capitalization rate is determined based on the weighted average interest rate of general borrowings. The capitalization rate
is determined based on the weighted average interest rate of general borrowings.
Where there is a discount or premium in the borrowings, the interest amount shall be adjusted in accordance with the
effective interest rate method to determine the discount or premium amount that shall be amortized during each accounting
period.
27. Biological Assets
Inapplicable
28. Oil and Gas Assets
Inapplicable
29. Right-of-use Assets
The Company initially measures the right-to-use assets at cost, which includes:
1) initial measurement amount of lease liabilities;
2) lease payments made before or at the beginning of the lease term, and deduction of the relevant amount of rental
incentives if any;
3) initial direct expenses incurred by the Company;
4) expected costs to be incurred by the Company for dismantling and removing leased assets, restoring the site of leased
assets or restoring leased assets to the state agreed in the lease terms (excluding costs incurred for the production of
inventory)
After the starting date of the lease term, the Company adopts the cost model for subsequent measurement of the asset with
use right.
If it can be reasonably determined to obtain the ownership of the leased asset at the expiration of the lease term, the
Company shall accrue depreciation during the remaining useful life of the leased asset. If it is impossible to reasonably
determine that the ownership of the leased asset can be obtained when the lease term expires, the Company shall accrue
depreciation during the shorter period of the lease term and the remaining useful life of the leased asset. For the right-of-
use assets with impairment provision, depreciation shall be calculated based on the book value after deduction of impairment
provision in according with the above principles in future periods.
30. Intangible assets
(1) Pricing method, service life and impairment test
Intangible assets refer to the identifiable non-monetary assets owned or controlled by the Company which have no physical
form, including land use rights, software and trademark use rights.
1) Initial measurement of intangible assets
The cost of outsourcing intangible assets includes the purchase price, relevant taxes, and other expenditures directly
attributable to the asset's intended use. If the payment for the purchase of intangible assets is delayed beyond the normal
credit conditions and is of a financing nature, the cost of the intangible assets is determined on the basis of the present
value of the purchase price.
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For an intangible asset acquired through debt restructuring by the debtor for the purpose of repaying debts, the Company
determines its entry value on the basis of the fair value of the intangible assets, and includes the difference between the
book value of the restructured debt and the fair value of the fixed assets used to repay the debts in the current period profit
and loss.
On the premise that the exchange of non-monetary assets has commercial substance and the fair value of the exchanged
assets or exchanged assets can be reliably measured, the intangible assets exchanged in with non-monetary assets are
determined on the basis of the fair value of the exchanged assets, unless there is conclusive evidence showing that the fair
value of the assets exchanged in is more reliable; for non-monetary asset exchanges that do not meet the above premises,
the book value of the assets exchanged and the relevant taxes and fees payable shall be used as the cost of the exchange
of intangible assets, and no profit or loss is recognized.
For intangible asset obtained through business absorption or combination under common control, its book value is
determined by the carrying amount of the combined party; for intangible asset obtained through business absorption or
merger not under common control, its book value is determined by the fair value of the intangible asset.
The costs of intangible assets developed internally includes: materials used in the development of the intangible asset, labor
costs, registration fees, amortization of other patents and franchises used in the development process, and interest
expenses that meet the capitalization conditions , and other direct expenses incurred before the intangible asset reaches
its intended use.
2) Subsequent measurement of intangible assets
The Company determines the useful life of intangible assets on acquisition, which are classified as intangible assets with
limited useful life and indefinite useful life.
Intangible assets with a limited useful life
Intangible assets with a limited useful life are depreciated using straight line method over the term during which they bring
economic benefits to the Company. The estimated life and basis for the intangible assets with a limited useful life are as
follows:
Items Estimated useful life Basis
Land use right 50 Straight-line method
Software system 5 Straight-line method
Trademark rights 5-10 Straight-line method
The useful life and depreciation method of intangible assets with a limited useful life are reassessed at the end of each
period. If there is a difference from the original estimate, corresponding adjustments will be made.
Upon re-assessment, there was no difference in the useful life and depreciation method of intangible assets from the
previous estimates at the end of the period.
(2) Accounting policy for internal research and development expenditure
1) Specific basis for determining the research stage and development stage of internal research and development projects
of the Company
Research phase: The phase of original planned investigations, research activities to acquire and understand new science
or technology knowledge, etc.
Development phase: It is the phase in which the research result or other knowledge is applied in some plan or design so
that new or substantially improved materials, devices, products, etc. are produced prior to commercial production or use.
The expenditure of the research stage of the internal research and development project is included in the current profit or
loss at the time of occurrence
2) Specific standard for capitalization of expenditure in the development stage
The expenditure of an internal research and development project in the development stage is recognized as an intangible
asset when meeting all of the following conditions:
A. It is technically feasible to complete the intangible asset so that it can be used or sold;
B. With an intention to complete the intangible asset and to use or sell it;
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C. The way the intangible asset generates economic benefits can prove the existence of a market for the products produced
using the intangible asset or a market for the intangible asset itself, and if the intangible asset will be used internally, its
usefulness can be proven;
D. Having sufficient technical, financial resources and other resource support to complete the development of the intangible
asset, and having the ability to use or sell the intangible asset;
E. Expenditure attributable to the development stage of the intangible asset can be reliably measured.
Expenditures incurred in the development stage that do not meet the above conditions shall be included in the current profit
or loss at the time of occurrence. The development expenditures which have been included in the profit or loss in the previous
periods will not be recognized as an asset in the future period. The capitalized expenditures in the development phase are
shown in the balance sheet as development expenditures and are converted into intangible assets from the date of the
project’s intended use.
31. Impairment of long term assets
On the balance sheet date, the Company determines whether there may be a sign of impairment on long-term assets. If
there is a sign of impairment on long-term assets, the recoverable amount is estimated on the basis of a single asset. If it is
difficult to estimate the recoverable amount of a single asset, then determine the recoverable amount of the asset group on
the basis of the asset group to which the asset belongs.
The estimated recoverable amount of an asset is the higher of its fair value less the cost of disposal and the present value
of the expected future cash flow of the asset.
The measurement results of recoverable amount show that when the recoverable amount of an long-term asset is lower
than its book value, the book value of the long-term asset is reduced to its recoverable amount. The reduced amount is
recognized as an impairment loss on the asset and included in the current profit or loss, at the same time, asset impairment
provision will be made accordingly. Asset impairment loss shall not be reversed during the subsequent accounting period
once recognized.
After the loss of asset impairment has been recognized , the depreciation or amortization expenses of the impaired asset
shall be adjusted accordingly in the future periods so as to amortize the post - adjustment carrying value of the asset
systematically (deducting the expected net salvage value) within the residual service life of the asset.
For the goodwill formed from consolidation of an enterprise and intangible asset with the undetermined service life,
regardless whether there exists any evidence of impairment, impairment testing is conducted every year.
In the impairment test of goodwill, the book value of goodwill would be apportioned to asset group or portfolio of asset group
expected to benefit from the synergy effect of an enterprise merger. When taking an impairment test on the relevant asset
group or portfolio of asset group containing goodwill, if there is a sign of impairment on the asset group or portfolio of asset
group related to the goodwill, the Company first calculates the recoverable amount after testing the asset group or portfolio
of asset group which does not contain the goodwill for impairment, and then compares it with the related book value to
recognize the corresponding impairment loss. Next, the Company conducts an impairment test on the asset group or
portfolio of asset group which contains the goodwill and compares the book value of the related asset group or portfolio of
asset group (book value includes the share of goodwill) with the recoverable amount. If the recoverable amount of the related
asset group or portfolio of asset group is lower than the book value, the Company will recognize the impairment loss of
goodwill.
32. Long term expenses to be apportioned
1. Amortization Method
Long term expenses to be apportioned refer to expenses that have already been spent by the Company, but shall be
apportioned in the current period and the future periods and the benefit period is over 1 year. Long term expenses to be
apportioned are amortized in benefit period.
2. Amortization period
Categories Amortization period
Counter fabrication expenses 2-3
Decoration expenses 3-5
Others 2-3
33. Contract liabilities
The obligation to transfer goods to a customer for which consideration has been received or receivable is recognized in part
as a contract liability.
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34. Payroll to Employees
(1) Accounting treatment of short term salaries
Short-term remuneration refers to the remuneration of the employees that needs to be fully paid within 12 months
after the end of the annual reporting period in which the employees provide related services, except for post-employment
benefits and termination benefits. During the accounting period in which employees provide services, the Company
recognizes the short-term remuneration payable as a liability and accounts for the relevant asset costs and expenses based
on the beneficiaries of the services provided by the employees.
(2) Post-employment benefits
Post-employment benefits refer to the compensation and benefits provided, after employees’ retirement and
termination of employment, by the Company in order to obtain services from employees, except for the short-
term compensation and employee benefits.
The Company’s post-employment benefits is classified as contribution plan.
The defined contribution plan of the Company refers to the basic endowment insurance, unemployment insurance paid for
the employees according to relevant regulation by local governments. During the accounting period when employees render
services to the Company, amount payable calculated by the base and ratio in conformity with local regulation is recognized
as liability and accounted for profit and loss or related cost of assets.
After paying the above-mentioned funds regularly in accordance with the standards and annuity plans stipulated by the state,
the Company does not have other payment obligations.
(3)Termination benefits
Termination benefits refer to the compensation paid to an employee when the Company terminates the employment
relationship with the employee before the expiry of the employment contract or provides compensation as an offer to
encourage the employee to accept voluntary redundancy. The Company recognizes the liabilities arising from the
compensation paid to terminate the employment relationship with employees and includes the same in the current profit or
loss at the earlier date of the following: when the Company cannot reverse the termination benefits due to the plan of
cancelling the labour relationship or the termination benefits provided by the advice of reducing staff; and the Company
recognizes the cost or expense relative to the payment of termination benefits of restructuring into the current profit or loss.
The Company provides internal retirement benefits to employees who accept internal retirement arrangements. The internal
retirement benefits refer to the remuneration and the social insurance premiums paid to the employees who have not
reached the retirement age set by the State, and voluntarily withdrew from the job after approval of the Company’s
management. The Company pays internal retired benefits to an internal retired employee from the day when the internal
retirement arrangement begins till the employee reaches the normal retirement age. For internal retirement benefits, the
Company conducts accounting treatment in contrast to the termination benefits. When the related recognition conditions of
termination benefits are met, the Company will recognize the remuneration and the social insurance premiums of the internal
retired employee to be paid during the period between the employee’s termination of service and normal retirement date as
liabilities and include the same in the current profit or loss in one time. Changes in actuarial assumptions of internal
retirement benefits and differences arising from the adjustment of welfare standards are included in current profit or loss
when incurred.
(4) Other long term employee benefits
Other long-term employee benefits refer to all employee benefits except for short-term remuneration, post-employment
benefits, and termination benefits.
For other long-term employee benefits that meet the conditions of the defined contribution plan, during the accounting period
in which the employees provide services for the Company, the amount that should be paid is recognized as a liability and is
included in the current profit or loss or related asset costs. In addition to the above situations, other long-term employee
benefits are actuarially calculated by the independent actuary using the expected cumulative welfare unit method on the
balance sheet date, and the welfare obligations arising from the defined benefit plans are attributed to the period during
which the employees provide services and are included in the current profit or loss or related asset costs.
35. Lease liabilities
The Company initially measures the lease liabilities according to the present value of the unpaid lease payments at the
beginning of the lease term. In calculating the present value of lease payments, the Company adopts the interest rate implicit
in the lease as the discount rate. If it is impossible to determine the interest rate implicit in the lease, the incremental
borrowing rate of the Company shall be used as the discount rate. Lease payments include:
1) Fixed payments and substantive fixed payments after deducting the relevant amount of lease incentives;
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2) Variable lease payments depending on an index or rate;
3) Where the Company reasonably determines that the option will be exercised, the amount of the lease payment includes
the exercise price of purchase option;
4)Where the lease term reflects that the Company will exercise the option to terminate the lease, the amount of the lease
payment includes the amount to be paid for the exercise of the option to terminate the lease;
5) Expected payments based on the guaranteed residual value provided by the Company.
The Company calculates the interest charges of the lease liabilities for each period of the lease term at a fixed discount rate
and includes the same in the profit or loss of the current period or the related asset costs.
Variable lease payments not included in the measurement of lease liabilities shall be included in the current profit or loss or
the related asset costs when they actually occur.
36. Estimated liabilities
1. Basis for recognition of projected liabilities
The Company will recognize projected liabilities if the obligation relating to contingent matters meets all of the following
conditions:
This obligation is a present obligation assumed by the Company;
The fulfillment of this obligation will probably cause the outflow of economic benefits from the Company;
The amount of this obligation can be measured reliably.
2. Measurement method of projected liabilities
The initial measurement of projected liabilities of the Company is based on the best estimate of the expenditure required for
the performance of the related present obligations.
When determining the best estimate, the Company comprehensively considers the risks, uncertainties relating to the
contingent matters and time value of currency. If the time value of currency has a great influence, the Company determines
the best estimate by discounting the related future cash outflows.
The best estimate is determined in different situations as follow:
If there is a continuous range (or interval) of the required expenditure and the probability of the occurrence of all the results
in the range is the same, the best estimate is determined according to the median value of the range, which is the average
of the upper and lower limit.
Where there is not a continuous range (or interval) of the required expenditure, or there is a continuous range, but the
probability of the occurrence of all the results in the range is different, if the contingencies involve a single project, the best
estimate is determined by the amount which is most likely to occur; if the contingencies involve a number of projects, the
best estimate is determined based on various possible results and related probability calculation.
If all or part of the expenses of the Company required to settle projected liabilities are expected to be compensated by a
third party and it is basically certain to receive the amount of compensation, it is independently recognized as an asset. The
amount of compensation recognized will not exceed the book value of the projected liabilities.
37. Share-based payments
1. Category of share-based payment
The Company’s share-based payments include equity-settled share-based payments and cash settled share-based
payments.
2. Method for determining the fair value of equity instruments
For options and other equity instruments granted by the Company with an active market, the fair value is determined at the
active market quotations. For options and other equity instruments granted by the Company with no active market, option
pricing model shall be used to estimate the fair value of the equity instruments. Factors as follows shall be taken into account
using option pricing models: (1) the exercise price of the option; (2) the validity of the option; (3) the current price of the
target share; (4) the expected volatility of the share price: (5) predicted dividend of the share; (6) risk-free rate of the option
within the validity period.
In determining the fair value of the equity instruments at the date of grant, the Company shall consider the impact of market
conditions in the vesting conditions and non-vesting conditions stated in the share-based payment agreement. If there are
no vesting conditions in the share-based payments, as long as the employees or other parties satisfy the non-market
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conditions in all of the vesting conditions (such as term of service) , the Company shall recognize the services rendered as
an expense accordingly.
3. Recognition basis for the best estimate of exercisable equity instruments
On each balance sheet date within the vesting period, the estimated number of exercisable equity instruments is amended
based on the best estimate made by the Company according to the latest available subsequent information as to changes
in the number of employees with exercisable rights. As at the exercise date, the final estimated number of exercisable equity
instruments should equal the actual number of exercisable equity instruments.
4. Accounting treatment
Equity-settled share-based payments are measured at the fair value of the equity instruments granted to employees. If the
right can be exercised immediately after the grant, the fair value of the equity instrument shall be included in the relevant
costs or expenses on the date of grant, and the capital reserve shall be increased accordingly. If the right is exercised after
the completion of the waiting period services or the achievement of the specified performance conditions, on each balance
sheet date during the waiting period, based on the best estimate of the number of exerciseable equity instruments, the fair
value of the equity instruments is granted on the basis of value, including the services obtained in the current period into
related costs or expenses and capital reserves. No adjustment will be made to the recognized related costs or expenses
and the total owner's equity after the vesting date.
The cash-settled share-based payment is measured at the fair value of the liabilities assumed by the Company determined
and based on shares and other equity instruments. If the right can be exercised immediately after the grant, the fair value
of the liabilities assumed by the Company shall be included in the relevant costs or expenses on the date of grant, and the
liabilities shall be increased accordingly. Cash-settled share-based payments that can only be exercised after the completion
of the waiting period services or the specified performance conditions are exercised. At each balance sheet date during the
waiting period, the best estimate of the exercise is based on the fair value of the liabilities assumed by the Company,
including the services obtained in the current period as costs or expenses and corresponding liabilities. The fair value of the
liabilities is re-measured and the movement is counted in the current profits and losses on each balance sheet date and
settlement day before the settlement of related liabilities.
If the Company cancels the granted equity instrument during the vesting period, the Company shall treat it as accelerated
vesting, the amount which should be recognized during the remaining vesting period is counted to the current profit and loss
immediately and at the same time the capital reserve is recognized. If an employee or other party can choose to meet the
non-vesting conditions but fails to meet the vesting period, the Company treats it as a cancellation of the granted equity
instrument.
38. Other financial instruments, such as preferred shares, perpetual liabilities, etc.
Inapplicable
39. Revenue
Accounting policies used in revenue recognition and measurement
The Company’s revenue mainly come from:
1) Sales of watch
2) Precision manufacturing
3) Property leasing
1. General principle of revenue recognition
The Company recognizes revenue when the contract performance obligations have been fulfilled i.e. the customer has
gained control over the relevant goods or services.
Performance obligations means the Company’s commitment to transfer identifiable goods or service to clients.
Obtaining control of the relevant goods means that it is able to dominate the use of the goods and derive almost all economic
benefits therefrom.
The Company assesses contracts at the beginning date of a contract to identify each performance obligations contained in
a contract and to determine whether each performance obligation is to be finished over a period of time or at a point of time.
The Company satisfies a performance obligation over time if one of the following criteria is met; or otherwise, a performance
obligation is satisfied at a certain point in time: (1) the customer simultaneously receives and consumes the benefits provided
by the Company’s performance as the Company performs; (2) the customer can control the goods under construction during
the Company’s performance; (3) the Company’s performance does not create goods with an alternative use to it and the
Company has a right to payment for performance completed to date throughout the contract term. Otherwise, the Company
recognizes revenue at the point of time.
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For performance obligation satisfied over time, the Company recognizes revenue over time by measuring the progress
towards complete satisfaction of that performance obligation. The output method determines the progress of performance
based on the value of the goods transferred to the customers (The input method is to determine the performance progress
based on the Company's input for fulfilling its performance obligations.) When the outcome of that performance obligation
cannot be measured reasonably, but the Company expects to recover the costs incurred in satisfying the performance
obligation, the Company recognizes revenue only to the extent of the amount of costs incurred until it can reasonably
measure the outcome of the performance obligation.
2. Detailed method of revenue recognition
The Company has three main business sectors: sales of watch, precision manufacturing and property leasing. Based on
the Company’s business mode and terms of settlement, the Company set detailed method of revenue recognition method
as follows:
1) Sales of watch
Sale of watch belongs to fulfilling performance obligations at a point of time.
① Online sales
Revenue shall be recognized at the point that the goods are dispatched and the customer confirmed received the goods.
② Offline sales
Revenue shall be recognized at the point when the goods are delivered and payment by customer is collected.
③ Consignment sale
The Company recognizes revenue when the Company receives the detail of the sales list from distributors and confirms that
the control over goods ownership were transferred to the purchaser.
④ Sale of consigned goods from others
Under sale of consigned goods from others, the Group recognizes revenue in net amount when it delivered consigned sale
goods to customer and confirms that control over the ownership of goods were transferred to the purchaser.
2) Precision manufacturing
Precision manufacturing business belongs to fulfilling performance obligations at a point of time. Revenue from domestic
sales shall be recognized when the goods are delivered and the economic benefit associated with the goods is probable to
flow into the Company. Revenue from export shall be recognized when the following criteria is satisfied: The Company
declared the good at custom; obtained bill of lading; the right of collecting payment is obtained and its probable that the
economic benefit associated with the goods flows into the Company.
3)Property leasing
Refer to Note V 42 for details: accounting treatment with the Company as the lessor
3. Revenue treatment principles for specific transactions
1) Contracts with sales return provisions
When the customer obtains control of the relevant goods, revenue is recognized based on the amount of consideration
expected to be received due to the transfer of goods to the customers (exclusive of the amount expected to be refunded
due to the return of sales) , while liability is recognized based on the amount expected to be refunded due to the return of
sales.
The carrying amount of goods expected to be returned at sales of goods, after deduction of costs expected to incur for
recovery of such goods (including impairment of value of the returned goods) , will be accounted for under the item of “Right
of return assets”.
2) Contracts with quality assurance provisions
The Company assesses whether a separate service is rendered in respect of the quality assurance besides guaranteeing
the sales of goods to customers are in line with the designated standards. When additional service is provided by the
Company, it is considered as a single performance obligation and under accounting treatment according to the standards
on revenue; otherwise, quality assurance obligations will be under accounting treatment according to the accounting
standards on contingent matters
Differences in accounting policies for revenue recognition caused by the adoption of different business models for similar
businesses
Nil
40. Government subsidies
1. Classification
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Government subsidies refer to monetary and non-monetary assets received from the government without compensation,
however excluding the capital invested by the government as a corporate owner. According to the subsidy objects stipulated
in the documents of relevant government, government subsidies are divided into subsidies related to assets and subsidies
related to income.
Government subsidies related to assets are obtained by the Company for the purposes of acquiring, constructing or
otherwise forming long-term assets. Government subsidies related to income refer to the government subsidies other than
those related to assets.
2. Recognition of government subsidies
Where evidence shows that the Company complies with relevant conditions of policies for financial supports and is expected
to receive the financial support funds at the end of the period, the amount receivable is recognized as government subsidies.
Otherwise, the government subsidy is recognized upon actual receipt.
Government subsidies in the form of monetary assets are stated at the amount received or receivable. Government
subsidies in the form of non-monetary assets are measured at fair value; if fair value cannot be reliably obtained, a nominal
amount (CNY 1) is used. Government subsidies that are measured at nominal amount shall be recognized in the current
profit or loss directly.
3. Accounting treatment
The Company determines whether a government subsidy shall use gross method or net method based on its economical
substance. In general, only one method is used for one category or similar government subsidy and it shall be used in a
consistent way.
Government subsidies related to assets should be used to offset the book value of related assets or be recognized as
deferred income. under reasonable and systematic approach, in profit and loss in each period over the useful life of the
constructed or purchased assets;
Government subsidies related to income aiming at compensating for relevant expenses or losses to be incurred by the
enterprise in subsequent periods are recognized as deferred income, and are recognized in current profit or loss when
relevant expenses or losses are recognized. Government subsidies aiming at compensating for relevant expenses or losses
of the enterprise that are already incurred are charged to current profit or loss once received.
Government subsidies related to daily activities of enterprises are included in other income; government subsidies that are
not related to daily activities of enterprises are included in non-operating income and expense.
Government subsidies related to the discount interest received from policy-related preferential loans offset the relevant
borrowing costs; if the policy-based preferential interest rate loan provided by the lending bank is obtained, the borrowing
amount actually received shall be taken as the recording value of the borrowings, and borrowing cost should be calculated
using the preferential interest rate according to the loan principal and the policy.
When it is required to return recognized government subsidy, if such subsidy is used to write down the carrying value of
relevant assets on initial recognition, the carrying value of the relevant assets shall be adjusted; if there is balance of relevant
deferred income, it shall be written down to the book balance of relevant deferred income, and the excess is included in the
current profit or loss; where there is no relevant deferred income, it shall be directly included in the current profit or loss
41. Deferred Income Tax Assets and Deferred Income Tax Liabilities
Deferred income tax assets and deferred income tax liabilities are measured and recognized based on the difference
(temporary difference) between the taxable base of assets and liabilities and book value. On balance sheet date, the
deferred income tax assets and deferred income tax liabilities are measured at the applicable tax rate during the period
when it is expected to recover such assets or settle such liabilities.
1. Criteria for recognition of deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporary difference to the extent it is probably
that future taxable amount will be available against which the deductible temporary difference can be utilized, and deductible
losses and taxes can be carried forward to subsequent years. However, the deferred income tax assets arising from the
initial recognition of assets or liabilities in a transaction with the following features are not recognized: (1) the transaction is
not a business combination; (2) neither the accounting profit or the taxable income or deductible losses will be affected when
the transaction occurs.
For deductible temporary difference in relation to investment in the associates, corresponding deferred income tax assets
are recognized in the following conditions: the temporary difference is probably reversed in a foreseeable future and it is
likely that taxable income is obtained for deduction of the deductible temporary difference in the future.
2. Criteria for recognition of deferred income tax liabilities
The Company recognizes deferred income tax liabilities on the temporary difference between the taxable but not yet paid
taxation in the current and previous periods, excluding:
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1) temporary difference arising from the initial recognition of goodwill;
2) a transaction or event arising from non-business combination, and neither the accounting profit or the taxable income (or
deductible losses) will be affected when the transaction or event occurs;
3) for taxable temporary difference in relation to investment in subsidiaries or associates, the time for reversal of the
temporary difference can be controlled and the temporary difference is probably not reversed in a foreseeable future
3. When all of the following conditions are satisfied, deferred income tax assets and deferred income tax liabilities
shall be presented on a net basis
1) An enterprise has the statutory right to settle the current income tax assets and current income tax liabilities at their net
amounts;
2) The deferred income tax assets and deferred income tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle current income tax assets
and current income tax liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
42. Lease
(1) Accounting process for operating lease
The Company adopts the straight-line method or other systematic and reasonable method in each period of the lease term,
and recognizes the lease receipts from operating leases as rental income; the initial direct expenses incurred in relation to
operating leases are capitalized and amortized on the same basis as rental income recognition during the lease term, and
included in the current profit and loss in installments; the variable lease payments obtained in relation to operating leases
that are not included in the lease receipts are included in the current profit and loss when actually incurred.
(2) Accounting treatment method for finance lease
If a lease has one or more of the following characteristics, the Company usually classifies it as a financial lease：
1) At the expiry of the lease term, the ownership of the leased assets is transferred to the lessee.
2) The lessee has the option to purchase the leased assets, and the purchase price set by the lessee is low enough
compared with the expected fair value of the leased assets when exercising the option. Therefore, it can be reasonably
determined on the lease start date that the lessee will exercise the option.
3) Although the ownership of the assets is not transferred, the lease term accounts for the majority of the life of the leased
assets.
4) On the commencement date of the lease, the present value of the lease receipts is almost equal to the fair value of the
leased assets.
5)The nature of leased assets is special. If there is no major transformation, only the lessee can use them.
If one or more of the following conditions exist in a lease, it may also be classified as a financial lease:
1) If the lessee stops the lease, the lessee shall bear the losses caused by the termination of the lease to the lessor.
2)The profits or losses caused by the fluctuation of the fair value of the balance of assets belong to the lessee.
3) The lessee can continue to lease far below the market level for the next period.
On the commencement date of lease term, the Company recognizes the financial lease receivable on the financial leases
and derecognizes the financial lease assets.
When the initial measurement of the financial lease receivable is made, the book value of the financial lease
receivable is the sum of the unsecured balance and the present value of lease receipts that have not yet been
received at the beginning of the lease term discounted at the interest rate implicit in the lease. The lease receipts
include:
1) Fixed payments and substantive fixed payments after deducting the relevant amount of lease incentives;
2) Variable lease payments depending on an index or rate;
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3) In the case of reasonably determining that the lessee will exercise the purchase option, the lease receipts include the
exercise price of purchase option;
4) If the lease term reflects that the lessee will exercise the option to terminate the lease, the lease receipts include the
amount to be paid by the lessee in exercising the option to terminate the lease;
5) Guarantee residual value provided to the lessor by the lessee, the party concerned with the lessee and an independent
third party with financial capacity to fulfill the guarantee obligation.
The Company calculates and recognizes the interest income for each period of the lease term based on the fixed interest
rate implicit in the lease, and the variable lease payments which are obtained and not included in the net rental investment
amount are included in the profit or loss of the period when they actually occur.
43. Other important accounting policy and accounting estimate
Inapplicable
44. Changes in significant accounting policies and accounting estimates
(1) Change in significant accounting policies
Inapplicable
(2) Change in significant accounting estimates
Inapplicable
(3) The Company started implementing the updated accounting standards commencing from 2023 and adjusted
the relevant items of the financial statements at the beginning of the very year involved in the initial implementation
of the said standards
Inapplicable
45. Others
Inapplicable
VI. Taxation
1. Types of major taxes and tax rates
Type of taxes Taxation basis Tax rates
Domestic sales and provision of processing,
repairing and repairing services; property
Value-added tax 13%, 9%, 6% and 5%
lease services; other taxable sales service
activities; simplified method
Consumption tax High-grade watches 20%
Urban maintenance and construction tax Amount of the turnover tax actually paid 7% and 5%
Enterprise income tax Taxable income amount For the detail, refer to the following table
In case there exist taxpayers subject to different corporate income tax rates, disclose the information.
Taxpayers Income tax rates
Shenzhen Harmony World Watches Center Co., Ltd.(①) 25%
FIYTA Sales Co., Ltd. (①) 25%
Shenzhen FIYTA Precision Technology Co., Ltd. (②③) 15%
Shenzhen FIYTA Technology Development Co., Ltd. (②③) 15%
Harmony World Watches Center (Hainan) Ltd.(⑥) 20%
Shenzhen XUNHANG Precision Technology Co., Ltd.(⑥) 20%
Emile Chouriet (Shenzhen) Limited 25%
Liaoning Hengdarui Commerce & Trade Co., Ltd. 25%
Shiyuehui Boutique (Shenzhen) Co., Ltd. 25%
Shenzhen Harmony E-Commerce Limited (⑥) 20%
FIYTA (Hong Kong) Limited (④) 16.5%
Montres Chouriet SA (⑤) 30%
46
2. Tax Preferences
Note ① : According to the regulations stated in “Interim Administration Method for Levy of Corporate Income Tax to
Enterprise that Operates Cross-regionally”, the head office of the Company and its branch offices, the head office of
HARMONY Company and its branch offices, and the head office of Sales Company and its branch offices adopt tax
submission method of “unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and
adjustment by finance authorities”. Branch offices mentioned above share 50% of the enterprise income tax and prepay
locally; and 50% will be prepaid by the head offices mentioned above;
Note ②: According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of Science on
Further Perfection of the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui (2021) No.
13) , if the research and development costs are not capitalized as intangible assets but charged to current profit or loss, all
of these entities can enjoy a 100% super deduction on top of the R&D expenses that allowed to deduct before income tax
since 1st January 2021.
Note ③: The Company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New Technology
Enterprises that Require Key Support from the State”;
Note ④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is 16.50% this
year.
Note ⑤: The comprehensive tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
Note ⑥: These companies are small and low-profit enterprises, which enjoy 20% tax rate.
Preferential treatment and corresponding approval
According to the Announcement of the Ministry of Finance and the State Administration of Taxation on the Preferential
Income Tax Policies for Micro and Small Enterprises and Individual Industrial and Commercial Households (CAISHUI (2023)
No. 6) and “Proclamation of Ministry of Finance and State Administration of Taxation in Implementing Preferential Tax Rate
to Small and Low Profit Enterprises and Sole-proprietors” (Caishui (2022) No.13), the portion of annual taxable income of
small low-profit enterprise that is below RMB1,000,000.00 will be included in taxable income at 25% and to be taxed at a
rate of 20%; and for annual taxable income that is greater than RMB1,000,000.00 but not exceeding RMB3,000,000.00, of
which 25% will be included in taxable income and to be taxed at 20%.
In accordance with Notice of the Ministry of Finance and the State Administration of Taxation on Extending the Loss
Carryover Period for High and New Technology Enterprises and Small and Medium-Sized Technological Enterprises (CAI
SHUI (2018)No.76), commencing from January 1, 2018, the unrecovered losses incurred in the 5 fiscal years before being
qualified for becoming a high-tech enterprise are allowed to be carried forward to make up for subsequent years, and the
longest carry-forward period has been extended from 5 years to 10 years.
According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of Science on Further
Perfection of the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui (2023) No. 7) , if the
research and development costs are not capitalized as intangible assets but charged to current profit or loss, all of these
entities can enjoy a 100% super deduction on top of the R&D expenses that allowed to deduct before income tax since 1st
January 2021; commencing from January 1, 2023, the intangible assets formed shall be amortized at 200% of the cost of
intangible assets before tax.
3. Others
Inapplicable
VII. Notes to items of consolidated financial statements
1. Monetary capital
In CNY
Items Ending balance Opening balance
Cash in stock 63,562.14 173,368.68
Bank deposit 514,412,146.09 312,433,893.29
Other monetary funds 4,893,086.89 1,140,201.67
Total 519,368,795.12 313,747,463.64
Including: total amount deposited overseas 398,877.12 716,733.44
The total amount of funds with restrictions on 9,074.00
use due to mortgage, pledge, or freezing
47
Other notes
As at 30th June 2023, the Company did not have balance of cash or other monetary funds that are restricted because
being pledged as security, frozen or have potential risk in recovery.
2. Transactional financial assets
Inapplicable
3. Derivative financial assets
Inapplicable
4. Notes receivable
(1) Presentation of classification of notes receivable
In CNY
Items Ending balance Opening balance
Bank acceptance 4,917,352.62 10,690,221.03
Trade acceptance 9,711,946.28 21,524,691.07
Total 14,629,298.90 32,214,912.10
In CNY
Ending balance Opening balance
Categories Book balance Bad debt reserve Book balance Bad debt reserve
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Including:
Notes
receivable
for which
bad debt 15,140,453 14,629,298 33,347,790 1,132,878. 32,214,912
reserve 100.00% 511,155.07 3.38% 100.00% 3.40%
.97 .90 .58 48 .10
has been
provided
based on
portfolios
Including
:
Business
10,223,101 9,711,946. 22,657,569 1,132,878. 21,524,691
acceptanc 67.52% 511,155.07 5.00% 67.94% 5.00%
.35 28 .55 48 .07
e note
Risk-free
bank 4,917,352. 4,917,352. 10,690,221 10,690,221
32.48% 0.00% 32.06% 0.00%
acceptanc 62 62 .03 .03
e portfolio
15,140,453 14,629,298 33,347,790 1,132,878. 32,214,912
Total 100.00% 511,155.07 3.38% 100.00% 3.40%
.97 .90 .58 48 .10
Provision for bad debts based on portfolio: commercial acceptance portfolio
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Business acceptance note 10,223,101.35 511,155.07 5.00%
Total 10,223,101.35 511,155.07
Note to the basis for determining the combination:
The issuer has higher level of credit rating and no default in past and has strong ability to fulfill its contractual cash follow
obligation
Provision for bad debts based on portfolio: risk-free bank acceptance portfolio
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Risk-free bank acceptance
4,917,352.62 0.00%
portfolio
48
Total 4,917,352.62
Note to the basis for determining the combination:
The issuer has higher level of credit rating and no default in past and has strong ability to fulfill its contractual cash follow
obligation
If the provision for bad debts of notes receivable is accrued in accordance with the general expected credit loss model,
please refer to the disclosure of other receivables to disclose the relevant information of the provision for bad debts:
Inapplicable
(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Recovery or Ending balance
Provision Written-off Others
reversal
Notes receivable for
which bad debt
reserve has been
provided based on
individual items
Notes receivable for
which bad debt
reserve has been 1,132,878.48 621,723.41 511,155.07
provided based on
portfolios
Total 1,132,878.48 621,723.41 511,155.07
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Notes receivable already pledged by the Company at the end of the reporting period
Inapplicable
(4) Endorsed or discounted notes receivable at the end of the reporting period, but not yet due on the balance
sheet date
In CNY
Amount involved in the termination of Amount without termination of recognition at
Items
recognition at the end of the reporting period the end of the reporting period
Bank acceptance 3,867,105.40
Total 3,867,105.40
(5) Notes transferred to receivables due to issuer’s default at the end of the reporting period
Inapplicable
(6) Notes receivable actually written off in current period
Inapplicable
5. Accounts receivable
(1) Accounts receivable disclosed by category
In CNY
Ending balance Opening balance
Categories Book balance Bad debt reserve Book balance Bad debt reserve
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable
for which 26,826,283 23,787,082 3,039,201. 34,982,967 29,705,797 5,277,170.
6.14% 88.67% 10.12% 84.92%
bad debt .99 .62 37 .68 .13 55
reserve
has been
49
provided
based on
individual
items
Including
:
Accounts
receivable
for which
bad debt 409,787,37 13,250,311 396,537,06 310,770,29 10,756,501 300,013,78
reserve 93.86% 3.23% 89.88% 3.46%
7.88 .26 6.62 0.64 .51 9.13
has been
provided
based on
portfolios
Including
:
Accounts
receivable 409,787,37 13,250,311 396,537,06 310,770,29 10,756,501 300,013,78
93.86% 3.23% 89.88% 3.46%
from other 7.88 .26 6.62 0.64 .51 9.13
customers
436,613,66 37,037,393 399,576,26 345,753,25 40,462,298 305,290,95
Total 100.00% 8.48% 100.00% 11.70%
1.87 .88 7.99 8.32 .64 9.68
Bad debt reserve provided based on individual items: Accounts receivable from other customers
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion Provision reason
Accounts receivable from Small possibility of
26,826,283.99 23,787,082.62 88.67%
other customers recovery
Total 26,826,283.99 23,787,082.62
Bad debt reserve provided based on portfolio: Accounts receivable from other customers
In CNY
Ending balance
Description
Book balance Bad debt reserve Provision proportion
Accounts receivable from other
409,787,377.88 13,250,311.26 3.23%
customers
Total 409,787,377.88 13,250,311.26
Note to the basis for determining the combination:
Accounts receivable with same aging have similar credit risk characteristics
If the provision for bad debts of accounts receivable is accrued in accordance with the general expected credit loss model,
please refer to the disclosure of other receivables to disclose the relevant information of the provision for bad debts:
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 406,593,079.37
1 to 2 years 4,977,810.21
2 to 3 years 6,691,774.94
Over 3 years 18,350,997.35
3 to 4 years 18,350,997.35
Total 436,613,661.87
(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Recovery or Ending balance
Provision Written-off Others
reversal
Accounts
receivable with
single provision 29,705,797.13 85,000.00 5,954,740.99 85,000.00 36,026.48 23,787,082.62
for expected
credit loss
Accounts 10,756,501.51 2,501,374.43 130,612.05 123,047.37 13,250,311.26
50
receivable with
provision for
expected credit
loss by portfolio
Total 40,462,298.64 2,586,374.43 6,085,353.04 85,000.00 159,073.85 37,037,393.88
Where the significant amount of the reserve for bad debt recovered or reversed:
In CNY
Organization names Amount recovered or reversed Way of recovery
Fuzhou Cangshan Suning e-buy Plaza Co.,
3,981,455.50 Bank transfer
Ltd.
Fuzhou Suning e-buy Plaza Co., Ltd. 706,157.30 Bank transfer
Xiangyang Zizhen Suning e-buy Plaza
517,576.18 Bank transfer
Business Management Co., Ltd.
Total 5,205,188.98
(3) Accounts receivable actually written off in the reporting period
In CNY
Items Amount written-off
Xi'an Tangcheng Group Co., Ltd. 85,000.00
Where, the important accounts receivable written-off:
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Ending balance of the Proportion in total ending Ending balance of the provision
Organization name
accounts receivable balance of accounts receivable for bad debts
Summary of the top five accounts
104,324,362.77 23.89% 2,278,271.19
receivable in the ending balance
Total 104,324,362.77 23.89%
(5) Account receivable with recognition terminated due to transfer of financial assets
Inapplicable
(6) Amount of assets and liabilities formed through transfer of accounts receivable and continuing to be involved
Inapplicable
6. Financing with accounts receivable
Inapplicable
7. Advance payments
(1) Advance payments are presented based on ages
In CNY
Ending balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 8,005,894.20 100.00% 8,039,794.97 100.00%
Total 8,005,894.20 8,039,794.97
Note to the reason why advance payments with an age exceeding 1 year and significant amount are not settled in time:
Inapplicable
51
(2) Advance payment to the top five payees in the ending balance collected based on the payees of the advance
payment
Proportion in the total advance payments
Organization name Ending balance
(%)
Summary of the advance payments in the ending
4,308,626.86 53.82%
balance to the top 5 payees
8. Other receivables
In CNY
Items Ending balance Opening balance
Other receivables 57,386,850.68 56,918,019.48
Total 57,386,850.68 56,918,019.48
(1) Interest receivable
1) Classification of interest receivable
Inapplicable
2) Significant overdue interest
Inapplicable
3) Provision for bad debts
Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable
Inapplicable
2) Significant dividends receivable with age exceeding 1 year
Inapplicable
3) Provision for bad debts
Inapplicable
(3) Other receivables
1) Classification of other receivables based on nature of payment
In CNY
Nature of the fund Ending book balance Opening book balance
Reserve for employees 5,093,048.28 2,841,915.70
Collateral, deposit 49,899,834.88 49,430,408.24
Others 6,505,130.45 8,910,245.87
Total 61,498,013.61 61,182,569.81
2) Provision for bad debts
In CNY
Stage 1 Stage 2 Stage 3
Expected credit loss in Expected credit loss in
Provision for bad debt Expected credit loss in the whole duration (no the whole duration (credit Total
future 12 months credit impairment impairment already
incurred) incurred)
52
Balance as at January 2,850,206.43 1,414,343.90 4,264,550.33
01, 2023
Balance as at January
01, 2023 in the reporting
period
Provision in the reporting 32,519.05 25.00 32,544.05
period
Reversal in the reporting 130,851.02 55,230.00 186,081.02
period
Other changes 149.57 149.57
Balance as at June 30, 2,752,024.03 1,359,138.90 4,111,162.93
2023
Provision for loss - Change of the book balance with significant amount during the reporting period
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 59,512,781.85
1 to 2 years 498,803.32
2 to 3 years 702,029.90
Over 3 years 784,398.54
3 to 4 years 784,398.54
Total 61,498,013.61
3) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Recovery or Ending balance
Provision Written-off Others
reversal
Provision for bad
4,264,550.33 32,544.05 186,081.02 149.57 4,111,162.93
debt
Total 4,264,550.33 32,544.05 186,081.02 149.57 4,111,162.93
Where a significant amount of the reserve for bad debt recovered or reversed during the reporting period:
Inapplicable
4) Other receivables actually written off in the reporting period
Inapplicable
5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion in total Ending balance of
Organization name Nature of Payment Ending balance Aging ending balance of the provision for bad
other receivables debts
Summary of the top
Collateral and
five other receivables 9,157,527.22 Within 1 year 14.89% 457,876.36
deposit
in the ending balance
Total 9,157,527.22 14.89% 457,876.36
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables derecognized due to transfer of financial assets
Inapplicable
53
8) Amount of assets and liabilities formed through transfer of other receivables and continuing to be involved
Inapplicable
9. Inventories
Does the Company need to comply with the requirements on information disclosure for real estate industry
No
(1) Classification of inventories
In CNY
Ending balance Opening balance
Provision for price Provision for price
falling of inventory or falling of inventory or
Items provision for provision for
Book balance Book value Book balance Book value
impairment of impairment of
contract contract
performance costs performance costs
Raw 161,850,331.54 17,653,314.17 144,197,017.37 162,338,704.65 17,241,512.65 145,097,192.00
materials
Products in 10,056,978.44 10,056,978.44 7,204,699.11 7,204,699.11
process
Commodities 2,027,169,791.07 96,042,984.40 1,931,126,806.67 2,085,640,712.37 96,622,229.81 1,989,018,482.56
in stock
Total 2,199,077,101.05 113,696,298.57 2,085,380,802.48 2,255,184,116.13 113,863,742.46 2,141,320,373.67
(2) Provision for price falling of inventory or provision for impairment of contract performance costs
In CNY
Amount increased in the reporting
Decrease in the reporting period
period
Items Opening balance Ending balance
Reversal or
Provision Others Others
write-off
Raw materials 17,241,512.65 411,801.52 17,653,314.17
Commodities in 96,622,229.81 34,011.93 613,257.34 96,042,984.40
stock
Total 113,863,742.46 445,813.45 613,257.34 113,696,298.57
Reversal or write-off during the reporting period
Items Evidence of determine NRV and future selling cost
Cause of the provision for price falling of inventories
Estimated selling price less estimated cost to complete and Factors that caused impairment has been disappeared
Raw materials
selling and distribution expenses and associated taxes and the NAV is higher than its carrying amount
Commodities in Estimated selling price less estimated selling and distributing Inventory that already provided for was sold or used in
stock expenses and associated taxes current period
(3) Note to the amount of capitalized borrowing costs involved in the ending balance of inventories
Inapplicable
(4) Description of the current amortization amount of contract performance costs
Inapplicable
10. Contract assets
Inapplicable
11. Held-for-sale assets
Inapplicable
54
12. Non-current assets due within a year
Inapplicable
13. Other current assets
In CNY
Items Ending balance Opening balance
excess VAT paid 13,493,362.67 12,967,188.47
Input VAT to be certified 13,402,110.47 39,454,283.19
Income tax paid in advance 2,299,239.63 3,419,026.38
Others 10,113,909.03 10,499,007.28
Total 39,308,621.80 66,339,505.32
14. Equity investment
Inapplicable
15. Other equity investment
Inapplicable
16. Long term accounts receivable
(1) About long term accounts receivable
Inapplicable
(2) Long term account receivable derecognized due to transfer of financial assets
Inapplicable
(3) Amount of assets and liabilities formed through transfer of long term accounts receivable and continuing to
be involved
Inapplicable
17. Long-term equity investments
In CNY
Increase/ Decrease (+ / -) in the reporting period
Ending
Income balance
Opening Announce Ending
from equity Adjustme of the
balance Decreas Other d for Provision balance
Investees Additional investment nt of other provision
(book e of equity distributin for (book
investme recognized comprehe Others for
value) investm movemen g cash impairme value)
nt under nsive impairme
ent t dividend nt
equity income nt
or profit
method
I. Joint Venture
II. Associates
Shanghai
-
Watch 58,182,08 56,484,60
1,697,481.
Industry 6.90 5.25
65
Co., Ltd.
-
58,182,08 56,484,60
Sub-total 1,697,481.
6.90 5.25
65
-
58,182,08 56,484,60
Total 1,697,481.
6.90 5.25
65
18. Investment in other equity instruments
In CNY
Items Ending balance Opening balance
55
Xi'an Tangcheng Group Co., Ltd. 0.00 85,000.00
Total 0.00 85,000.00
Itemized disclosure of investment in non-transactional equity instruments in the reporting period
Inapplicable
19. Other non-current financial assets
Inapplicable
20. Investment based real estate
(1) Investment property measured based on the cost method
In CNY
Items Housing & buildings Land use right Construction-in-progress Total
I. Original book value
1. Opening balance 619,762,618.36 619,762,618.36
2. Amount increased in
the reporting period
(1) Purchased
(2) Inventories\fixed
assets/construction-in–
progress transferred in
(3) Increase of
enterprise consolidation
3. Amount decreased in
the reporting period
(1) Disposal
(2) Other transfer
out
4. Ending balance 619,762,618.36 619,762,618.36
II. Accumulative depreciation
and accumulative
amortization
1. Opening balance 244,783,123.65 244,783,123.65
2. Amount increased in 7,839,242.82 7,839,242.82
the reporting period
(1) Provision or 7,839,242.82 7,839,242.82
amortization
3. Amount decreased in
the reporting period
(1) Disposal
(2) Other transfer
out
4. Ending balance 252,622,366.47 252,622,366.47
III. Provision for impairment
1. Opening balance
2. Amount increased in
the reporting period
(1) Provision
3. Amount decreased in
the reporting period
(1) Disposal
(2) Other transfer
out
4. Ending balance
IV. Book value
1.Book value at the end 367,140,251.89 367,140,251.89
of the reporting period
2.Book value at the
beginning of the reporting 374,979,494.71 374,979,494.71
period
(2) Investment property measured based on fair value
Inapplicable
56
(3) Investment property that does not have certificate for property right
Inapplicable
21. Fixed asset
In CNY
Items Ending balance Opening balance
Fixed asset 356,142,836.23 364,628,765.17
Total 356,142,836.23 364,628,765.17
(1) About fixed assets
In CNY
Machinery & Electronic
Items Housing & buildings Motor vehicle Others Total
equipment equipment
I. Original book
value
1. Opening 436,320,947.20 117,552,809.38 14,472,510.38 47,600,350.65 45,458,802.97 661,405,420.58
balance
2. Amount
increased in the 4,073,026.96 2,546,928.33 22,133.50 967,232.86 565,462.83 8,174,784.48
reporting period
(1) 913,540.15 1,010,713.52 22,133.50 910,214.97 426,929.90 3,283,532.04
Purchase
(2)
Construction-in-
process transferred
in
(3)
Increase of
business
combination
(4) Translation
difference in foreign
3,159,486.81 1,536,214.81 57,017.88 138,532.93 4,891,252.43
currency
statements
3. Amount
decreased in the 442,670.05 1,107,530.63 827,091.61 2,377,292.29
reporting period
(1)
Disposal or 442,670.05 1,107,530.63 827,091.61 2,377,292.29
scrapping
4. Ending 440,393,974.16 120,099,737.71 14,051,973.83 47,460,052.88 45,197,174.19 667,202,912.77
balance
II. Accumulative
depreciation
1. Opening 135,388,740.98 71,466,324.74 12,901,120.89 37,167,150.60 39,853,318.20 296,776,655.41
balance
2. Amount
increased in the 8,633,075.14 5,362,220.14 166,731.15 1,291,766.11 780,574.73 16,234,367.28
reporting period
(1) 6,577,515.70 4,073,216.85 166,731.15 1,246,360.85 643,223.82 12,707,048.37
Provision
(2) Translation
difference in foreign
2,055,559.45 1,289,003.29 45,405.26 137,350.91 3,527,318.91
currency
statements
3. Amount
decreased in the 420,536.55 916,580.94 613,828.66 1,950,946.15
reporting period
(1)
Disposal or 420,536.55 916,580.94 613,828.66 1,950,946.15
scrapping
4. Ending 144,021,816.12 76,828,544.88 12,647,315.49 37,542,335.77 40,020,064.27 311,060,076.54
balance
III. Provision for
impairment
1. Opening
balance
2. Amount
increased in the
reporting period
(1)
Provision
3. Amount
decreased in the
reporting period
(1)
Disposal or
57
scrapping
4. Ending
balance
IV. Book value
1.Book value at
the end of the 296,372,158.04 43,271,192.83 1,404,658.34 9,917,717.11 5,177,109.92 356,142,836.23
reporting period
2.Book value at
the beginning of the 300,932,206.22 46,086,484.64 1,571,389.49 10,433,200.05 5,605,484.77 364,628,765.17
reporting period
(2) About temporarily idle fixed assets
Inapplicable
(3) Fixed assets leased through operating lease
Inapplicable
(4) Fixed assets that do not have certificate for property right
In CNY
The reason why the title certificate has not
Items Book value
been granted
Housing & buildings 30,941,254.14 Not yet completed
Housing & buildings 198,768.71 There existed problem in ownership
(5) Disposal of fixed assets
Inapplicable
22. Construction-in-progress
Inapplicable
(1)About construction-in-progress
Inapplicable
(2) Movements of important construction-in-progress projects in the reporting period
Inapplicable
(3) Provision for impairment of construction in progress in the current period
Inapplicable
(4) Engineering materials
Inapplicable
23. Productive biological asset
(1) Productive biological asset by using the cost measurement model
Inapplicable
(2) Productive biological asset by using the fair value measurement model
Inapplicable
58
24. Oil and Gas Assets
Inapplicable
25. Right-of-use Assets
In CNY
Items Housing & buildings Total
I. Original book value
1. Opening balance 362,417,078.85 362,417,078.85
2. Amount increased in the reporting 27,157,628.92 27,157,628.92
period
(1) Lease 27,156,080.80 27,156,080.80
(2) Translation difference in foreign currency
1,548.12 1,548.12
statements
3. Amount decreased in the reporting 40,531,858.34 40,531,858.34
period
(1) Expiry of tenancy 38,437,066.38 38,437,066.38
(2) Other decreases 2,094,791.96 2,094,791.96
4. Ending balance 349,042,849.43 349,042,849.43
II. Accumulative depreciation
1. Opening balance 252,086,566.82 252,086,566.82
2. Amount increased in the reporting 50,579,624.79 50,579,624.79
period
(1) Provision 50,579,624.79 50,579,624.79
3. Amount decreased in the reporting 40,857,442.68 40,857,442.68
period
(1) Disposal 1,160,251.39 1,160,251.39
(2) Expiry of tenancy 39,308,277.33 39,308,277.33
(3) Other decreases 388,913.96 388,913.96
4. Ending balance 261,808,748.93 261,808,748.93
III. Provision for impairment
1. Opening balance
2. Amount increased in the reporting
period
(1) Provision
3. Amount decreased in the reporting
period
(1) Disposal
4. Ending balance
IV. Book value
1.Book value at the end of the reporting 87,234,100.50 87,234,100.50
period
2.Book value at the beginning of the 110,330,512.03 110,330,512.03
reporting period
26. Intangible assets
(1) About the intangible assets
In CNY
Non-patent Software system Trademark rights
Items Land use right Patent Right Total
technology
I. Original book
value
1. Opening 34,933,822.40 33,197,692.51 16,518,590.29 84,650,105.20
balance
2. Amount
increased in the 90,000.00 122,616.24 212,616.24
reporting period
(1) 90,000.00 122,616.24 212,616.24
Purchase
(2) Internal
R&D
(3)
Increase of
business
combination
59
3. Amount
decreased in the
reporting period
(1)
Disposal
4. Ending 35,023,822.40 33,320,308.75 16,518,590.29 84,862,721.44
balance
II. Accumulative
amortization
1. Opening 16,515,922.01 25,903,908.15 9,030,056.41 51,449,886.57
balance
2. Amount
increased in the 366,776.65 874,444.06 612,598.41 1,853,819.12
reporting period
(1) 366,776.65 874,444.06 612,598.41 1,853,819.12
Provision
3. Amount
decreased in the
reporting period
(1)
Disposal
4. Ending 16,882,698.66 26,778,352.21 9,642,654.82 53,303,705.69
balance
III. Provision for
impairment
1. Opening
balance
2. Amount
increased in the
reporting period
(1)
Provision
3. Amount
decreased in the
reporting period
(1)
Disposal
4. Ending
balance
IV. Book value
1.Book value at
the end of the 18,141,123.74 6,541,956.54 6,875,935.47 31,559,015.75
reporting period
2.Book value at
the beginning of the 18,417,900.39 7,293,784.36 7,488,533.88 33,200,218.63
reporting period
At the end of the reporting period, the intangible assets formed through the Company's internal research and development
accounted for 0.00% of the balance of intangible assets.
(2) About the land use right that does not have certificate of title
Inapplicable
27. Development expenditure
Inapplicable
28. Goodwill
(1) Original book value of the goodwill
Inapplicable
(2) Provision for impairment of the goodwill
Inapplicable
29. Long term expenses to be apportioned
In CNY
Items Opening balance Amount increased in Amount amortized in Other decrease Ending balance
60
the reporting period the reporting period
Charge of
fabrication of special 22,247,070.17 5,191,622.68 10,324,598.31 17,114,094.54
counters
Decoration
116,030,323.61 21,605,559.10 30,885,043.21 106,750,839.50
expenses
Others 6,211,058.40 288,304.21 5,410,962.05 1,088,400.56
Total 144,488,452.18 27,085,485.99 46,620,603.57 124,953,334.60
30. Deferred tax assets and deferred tax liabilities
(1) Deferred income tax asset without offsetting
In CNY
Ending balance Opening balance
Items Offsetable provisional Deferred income tax Offsetable provisional Deferred income tax
difference asset. difference asset.
Asset impairment reserve 128,613,031.38 28,990,110.15 143,503,292.94 30,225,885.07
Unrealized profit from the
intracompany 62,320,154.02 15,530,810.81 75,781,866.09 18,681,772.44
transactions
Offsetable loss 173,670,367.97 42,693,574.15 157,860,317.75 37,779,977.71
Equity incentive 6,771,029.72 1,594,027.74 23,141,270.85 5,411,762.47
Promotion expenses
available for carrying- 515,068.99 128,767.25
forward to the next year
Lease liabilities 98,448,712.63 24,583,069.44 113,136,916.00 28,284,229.00
Others 7,895,926.80 1,973,981.70 7,295,926.80 1,823,981.80
Total 477,719,222.52 115,365,573.99 521,234,659.42 122,336,375.74
(2) Deferred income tax liabilities without offsetting
In CNY
Ending balance Opening balance
Items Provisional difference Deferred income tax Provisional difference of Deferred income tax
of taxes payable liability taxes payable liability
Fixed assets deducted in
once-and-for-all way before 28,913,730.11 4,337,059.52 29,872,344.91 4,480,851.74
taxation
Right-of-use Assets 97,585,959.35 24,367,470.13 110,279,028.02 27,569,757.01
Total 126,499,689.46 28,704,529.65 140,151,372.93 32,050,608.75
(3) Deferred income tax asset or liabilities stated with net amount after offsetting
In CNY
Amount mutually offset Amount mutually offset
Ending balance of the Opening balance of the
between the deferred between the deferred
deferred income tax deferred income tax
Items income tax assets and income tax assets and
asset or liabilities after asset or liabilities after
liabilities at the end of the liabilities at the beginning
offsetting offsetting
reporting period of the reporting period
Deferred income tax 23,262,880.76 92,102,693.23 26,551,763.80 95,784,611.94
asset.
Deferred income tax 23,262,880.76 5,441,648.89 26,551,763.80 5,498,844.95
liability
(4) Statement of deferred income tax asset not recognized
In CNY
Items Ending balance Opening balance
Provision for impairment of assets 17,012,250.30 16,220,176.97
Offsetable loss 47,715,557.14 50,761,915.00
Total 64,727,807.44 66,982,091.97
(5) Unrecognized deferred income tax asset available for offsetting loss is going to expire in the following years
In CNY
Amount at the end of the
Year Amount at the year beginning Remarks
reporting period
61
2024 5,410,461.09 8,456,818.95
2025 18,449,678.50 18,449,678.50
2026 23,855,417.55 23,855,417.55
Total 47,715,557.14 50,761,915.00
31. Other non-current assets
In CNY
Ending balance Opening balance
Items Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Advance payment
12,604,532.04 12,604,532.04 11,593,741.57 11,593,741.57
for long term assets
Total 12,604,532.04 12,604,532.04 11,593,741.57 11,593,741.57
32. Short term borrowings
(1) Classification of short-term borrowings
In CNY
Items Ending balance Opening balance
Credit loan 390,000,000.00 290,000,000.00
Undue interest payable 273,749.99 237,111.11
Total 390,273,749.99 290,237,111.11
(2)Short-term borrowings overdue but still remaining outstanding
Inapplicable
33. Transactional financial liabilities
Inapplicable
34. Derivative financial liabilities
Inapplicable
35. Notes payable
In CNY
Category Ending balance Opening balance
Commercial acceptance bills 2,000,600.00
Total 2,000,600.00
The total amount of due but outstanding notes payable at the end of the reporting period is CNY 0.00.
36. Accounts payable
(1) Presentation of accounts payable
In CNY
Items Ending balance Opening balance
Payment for goods 168,155,513.01 149,811,781.06
Payment for materials 22,297,895.29 19,729,474.20
Engineering payment payable 1,034,800.53 1,048,201.41
Total 191,488,208.83 170,589,456.67
(2) Significant accounts payable with age exceeding 1 year
Inapplicable
62
37.Advance Receipts
(1) Statement of advances from customers
In CNY
Items Ending balance Opening balance
Rent received in advance 9,945,161.72 16,960,128.83
Total 9,945,161.72 16,960,128.83
(2) Significant advances from customers with age exceeding 1 year
Inapplicable
38. Contract liabilities
In CNY
Items Ending balance Opening balance
Payment for goods 19,287,771.81 16,844,437.47
Total 19,287,771.81 16,844,437.47
The amount involved in the significant change of the book value and the cause during the reporting period
Inapplicable
39. Payroll payable to employees
(1) Presentation of payroll payable to the employees
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
I. Short term 122,389,603.47 285,457,917.07 305,981,244.68 101,866,275.86
remuneration
II. Post-employment
benefit program - defined 9,282,692.00 23,046,218.60 23,781,610.47 8,547,300.13
contribution plan.
III. Dismissal welfare 4,915,643.91 2,054,382.52 6,196,361.50 773,664.93
Total 136,587,939.38 310,558,518.19 335,959,216.65 111,187,240.92
(2) Presentation of short term remuneration
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
1. Salaries, bonus, 121,169,046.53 255,699,465.59 275,765,045.21 101,103,466.91
allowances and subsidies
2. Staff’s welfare 10,643.28 4,904,729.50 4,910,920.78 4,452.00
3. Social security 404,028.29 11,030,921.06 11,404,082.79 30,866.56
premium
Including: medical 404,028.29 10,401,071.69 10,774,233.42 30,866.56
insurance premium
Work injury 467,199.86 467,199.86
insurance
Maternity 359,188.24 359,188.24
Insurance
4. Public reserve for 169,121.00 10,040,520.84 10,187,999.84 21,642.00
housing
5. Trade union fund and 636,764.37 3,782,280.08 3,713,196.06 705,848.39
staff education fund
Total 122,389,603.47 285,457,917.07 305,981,244.68 101,866,275.86
(3) Presentation of the defined contribution plan
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
1. Basic endowment 290,781.95 20,757,450.87 20,786,597.50 261,635.32
insurance premium
63
2. Unemployment 581.68 550,463.15 550,581.89 462.94
insurance premium
3. Contribution to the
enterprise annuity 8,991,328.37 1,738,304.58 2,444,431.08 8,285,201.87
scheme
Total 9,282,692.00 23,046,218.60 23,781,610.47 8,547,300.13
40. Taxes payable
In CNY
Items Ending balance Opening balance
Value-added tax 38,636,532.43 39,086,878.23
Enterprise income tax 29,802,234.48 16,751,872.66
Individual income tax 1,104,976.43 1,070,872.15
Urban maintenance and construction tax 350,547.55 1,353,097.21
Education Surcharge 169,969.72 966,809.02
Others 3,783,922.64 1,540,639.03
Total 73,848,183.25 60,770,168.30
41. Other payables
In CNY
Items Ending balance Opening balance
Dividends payable 2,889,585.48 6,324,013.97
Other payables 126,277,971.34 158,736,108.61
Total 129,167,556.82 165,060,122.58
(1) Interest payable
Inapplicable
(2) Dividend payable
In CNY
Items Ending balance Opening balance
Dividends of common shares 2,889,585.48 6,324,013.97
Total 2,889,585.48 6,324,013.97
Other notes, including that if significant dividends payable have not been paid for more than 1 year, it is necessary to
disclose the reasons for non-payment：
Inapplicable
(3) Other payables
1) Other payments stated based on nature of fund
In CNY
Items Ending balance Opening balance
Cash pledge or cash deposit 35,883,820.09 38,319,837.05
Fund for shop-front activities 25,644,797.87 16,105,216.84
Refurbishment 10,668,322.92 12,827,532.03
Obligation of repurchase of restricted shares 13,829,399.95 50,759,806.16
Others 40,251,630.51 40,723,716.53
Total 126,277,971.34 158,736,108.61
2) Other payables in significant amount and with aging over 1 year
In CNY
Items Ending balance Cause of failure in repayment or carry-over
Deposit for property rent 16,810,342.85 Settlement not due yet
Total 16,810,342.85
64
42. Held-for-sale liabilities
Inapplicable
43. Non-current liabilities due within a year
In CNY
Items Ending balance Opening balance
Long-term rent liabilities due within one year 57,351,473.17 71,546,316.16
Total 57,351,473.17 71,546,316.16
44. Other current liabilities
In CNY
Items Ending balance Opening balance
Pending output VAT 2,146,851.31 1,686,806.01
Total 2,146,851.31 1,686,806.01
Increase/decrease of the short term bonds payable:
Inapplicable
45. Long-term Loan
(1) Classification of Long-term Borrowings
Inapplicable
46. Bonds payable
(1) Bonds payable
Inapplicable
(2) Increase/Decrease of bonds payable (excluding other financial instruments classified as financial liabilities,
such as preferred shares, perpetual bonds, etc.)
Inapplicable
(3) Note to the conditions and time of share conversion of convertible company bonds
Inapplicable
(4) Note to other financial instruments classified as financial liabilities
Inapplicable
47. Rent liabilities
In CNY
Items Ending balance Opening balance
Housing & buildings 88,096,853.79 113,188,877.74
Less: Long-term rent liabilities due within
-57,351,473.17 -71,546,316.16
one year
Total 30,745,380.62 41,642,561.58
48. Long term accounts payable
(1) Long term accounts payable stated based on the nature
Inapplicable
65
(2) Special accounts payable
Inapplicable
49. Long term payroll payable to employees
(1) Statement of long term payroll payable to employees
Inapplicable
(2) Change of defined benefit plans
Inapplicable
50. Estimated liabilities
Inapplicable
51. Deferred income
In CNY
Increase in the Decrease in the
Items Opening balance Ending balance Cause of formation
reporting period reporting period
Government 1,295,926.80 1,295,926.80
subsidies
Total 1,295,926.80 1,295,926.80
Items involving government subsidies:
In CNY
Amount of Amount
Amount Amount
newly counted to
counted to offsetting
added the non- Related with
Opening the other costs and Other Ending
Liabilities subsidy in operating assets/relate
balance income in expenses in changes balance
the income in d with income
the reporting the reporting
reporting the reporting
period period
period period
Special
purpose fund
of Shenzhen Related with
314,539.36 314,539.36
industrial assets
design
development
Funding
project for
construction
of enterprise Related with
338,833.33 338,833.33
technology assets
center
designated
by the state
Special
purpose fund
for the
Industry and Related with
642,554.11 642,554.11
Informationiz assets
ation at
Provincial
Level
52. Other non-current liabilities
Inapplicable
53. Capital stock
In CNY
Increase / Decrease (+/ -)
Opening balance Bonus Shares Ending balance
New issuing Others Sub-total
shares converted from
66
reserve
Total Shares 417,627,960.00 417,627,960.00
54. Other equity instruments
(1) Basic information on the outstanding other financial instruments, including preferred shares, perpetual bonds,
etc. at the end of the reporting period
Inapplicable
(2) Movement of the outstanding financial instruments, including preferred shares, perpetual bonds, etc. at the
end of the reporting period
Inapplicable
55. Capital reserve
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
Capital premium (capital 969,665,728.36 12,799,265.10 2,734.41 982,462,259.05
stock premium)
Other capital reserve 37,420,915.12 1,359,195.75 17,888,062.96 20,892,047.91
Total 1,007,086,643.48 14,158,460.85 17,890,797.37 1,003,354,306.96
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
1. According to the "Proposal on Granting Restricted Stocks to the Incentive Recipients of 2018 A-share Restricted Stock
Incentive Plan (Phase II)" and the "Proposal on the Failure in Satisfying the Conditions for Lifting the Restrictions during the
Second Period of the 2018 A-share Restricted Stock Incentive Plan (Phase II) and the Repurchase and Cancellation of
Some Restricted Stocks" passed by the Company's Board of Directors and the General Meeting, in the first half of 2023,
the services obtained by the Company from the above-mentioned incentive recipients were included in relevant costs or
expenses, and the corresponding reduction in capital reserve amounted to CNY 5,088,797.86.
2. According to the Plan for Repurchasing some Domestically Listed Foreign Shares (B-shares) of the Company approved
by the Board of Directors and the General Meeting, in the first half year of 2023，the Company repurchased its own shares
through a centralized bidding method with the special account for the securities repurchased at expense equivalent to CNY
2,734.41 which has written off capital reserve amounting to CNY 2,734.41.
3. Differences, caused by fair value different when unlock the restricted shares, between CIT deducted amount and cost or
expenses recognized in vesting period increased the capital reserve by CNY 1,359,195.75. Meanwhile, the reclassification
of capital reserves was adjusted for the unlocked part, other capital reserves decreased by CNY 12,799,265.10, and capital
premium increased by CNY 12,799,265.10.
56. Treasury shares
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
Decrease of the
repurchase of the 17,007,830.70 17,007,830.70
registered capital
Payment for restricted
50,759,806.16 20,637,919.21 30,121,886.95
shares
Total 50,759,806.16 17,007,830.70 20,637,919.21 47,129,717.65
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
1. In the first half year of 2023，the Company repurchased accumulatively 2,403,565 shares of the Company's B-shares
through a centralized bidding method with Shenzhen Stock Exchange and paid HKD 18,653,010.10 (with trading cost
exclusive) which was equivalent to CNY 17,007,830.70. As a result, the treasury stock increased by CNY 17,007,830.70.
2. In the first half year of 2023,the cash dividends corresponding to the remaining restricted shares were reduced by CNY
1,138,902.50 for treasury shares.
3. According to the Proposal on the Achievement of Lifting Restrictions during the Third Period of the 2018 A-share
Restricted Stock Incentive Plan (Phase I) and the Proposal on the Achievement of Lifting Restrictions during the First Period
67
of the 2018 A-share Restricted Stock Incentive Plan (Phase II), which were reviewed and approved by the Company's Board
of Directors and the General Meeting, the Company satisfied the conditions for lifting the restrictions for the third restriction
lifting period of 2018 A-share Restricted Stock Incentive Plan (Phase I) as well as the conditions for lifting the restrictions
for the first restriction lifting period of 2018 A-share Restricted Stock Incentive Plan (Phase II). Authorized by the General
Meeting, the Board of Directors of the Company handled the lifting of sales restriction for incentive recipients that had meet
the conditions for lifting sales restriction in accordance with relevant regulations. The shares that had satisfied the conditions
for lifting sales restrictions were listed for trading on January 31, 2023, and the corresponding dividends amounting to CNY
19,499,016.71 were reduced by treasury shares.
57. Other comprehensive income
In CNY
Amount incurred in the reporting period
Less: the Less: the amount
amount counted counted to the
Amount
to the other other
incurred
Opening comprehensive comprehensive Attributable to Attributable to Ending
Items before Less:
balance profit of the profit of the the parent minority balance
income tax Income tax
previous period previous period company after shareholders
in the expense
was transferred was transferred tax after tax
reporting
to the profit and to the retained
period
loss of the earnings of the
reporting period. current period.
I. Other
comprehensive
income which
cannot be re-
classified into
profit and loss
Where: Amount of
change of the
beneficial plan
remeasured for
setting
Other
comprehensive
income which
cannot be
converted into
gain and loss
based on the
equity method
Movement of the
fair value of the
investment in
other equity
instruments
Movement of the
fair value of the
Company’s own
credit risk
II. Other
comprehensive
income which 5,739,589.
9,405,009.07 9,405,009.07 15,144,598.96
shall be re- 89
classified into
profit and loss
Where other
comprehensive
income which can
be converted into
gain and loss
based on the
equity method
Change of the fair
value of the
investment in
other creditor
investment
Amount of the
reclassified
financial assets
counted to the
other
comprehensive
income
Provision for
impairment of the
credit of the other
debt investment
Reserve for cash
flow hedge
Conversion 5,739,589.
9,405,009.07 9,405,009.07 15,144,598.96
difference in 89
68
foreign currency
statements
Total other 5,739,589.
comprehensive 9,405,009.07 9,405,009.07 15,144,598.96
89
income
58. Special reserve
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
Safety production costs 2,012,064.91 816,618.92 81,420.83 2,747,263.00
Total 2,012,064.91 816,618.92 81,420.83 2,747,263.00
59. Surplus Reserve
In CNY
Increase in the reporting Decrease in the reporting
Items Opening balance Ending balance
period period
Statutory surplus reserve 213,025,507.50 213,025,507.50
Discretionary surplus 61,984,894.00 61,984,894.00
reserve
Total 275,010,401.50 275,010,401.50
Note to surplus reserve, including the note to its increase/decrease and the cause(s) of its movement in the reporting
period:
According to the Company Law and the Articles of Association, the Company provided statutory surplus reserve based on
10% of the net profit. When the accumulative amount of the statutory surplus reserve exceeds 50% of the Company’s
registered capital, no such reserve shall be provided any longer.
After provision of the statutory surplus reserve, the Company may provide free surplus reserve. With authorization, the
free surplus reserve may be used to make up for the deficits of previous years or increase capital stock.
60. Retained earnings
In CNY
Items Reporting period Previous period
Retained earnings at the end of the previous 1,479,706,638.53 1,338,444,326.09
period before the adjustment
After adjustment: Retained earnings at the 1,479,706,638.53 1,338,444,326.09
beginning of the reporting period
Plus: Net profit attributable to the parent 187,395,067.23 266,681,451.84
company’s owner in the report period
Dividends of common shares payable 104,157,772.00 125,419,139.40
Retained earnings at the end of the reporting 1,562,943,933.76 1,479,706,638.53
period
Statement of adjustment of retained earnings at the beginning of the reporting period:
1). The amount involved in the retroactive adjustment according to the Enterprise Accounting Standards and the relevant
new provisions influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
2). The amount involved in change of the accounting policy influencing the retained earnings at the beginning of the reporting
period was CNY 0.00.
3). The amount involved in correction of the significant accounting errors influencing the retained earnings at the beginning
of the reporting period was CNY 0.00.
4). The amount involved in change of the consolidation scope caused by the common control influencing the retained
earnings at the beginning of the reporting period was CNY 0.00.
5). The total amount involved in other adjustments influencing the retained earnings at the beginning of the reporting period
was CNY 0.00.
61. Operation Income and Costs
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
69
Income Cost Income Cost
Principal business 2,356,716,526.00 1,512,310,635.56 2,176,850,503.24 1,373,173,952.09
Other businesses 7,788,736.56 216,846.27 6,720,245.87 490,608.32
Total 2,364,505,262.56 1,512,527,481.83 2,183,570,749.11 1,373,664,560.41
Information in connection with the revenue:
In CNY
Classification of
Segment 1 Segment 2 Total
Contracts
Types of commodities
Including:
Watch brand business 396,794,035.90 396,794,035.90
Watch retail and services 1,813,444,463.53 1,813,444,463.53
Precision technology 67,709,263.28 67,709,263.28
Leases 78,768,763.29 78,768,763.29
Others 7,788,736.56 7,788,736.56
Classification based on
the operation regions
Including:
South China 1,085,243,222.03 1,085,243,222.03
Northwest China 364,119,542.91 364,119,542.91
North China 127,379,519.35 127,379,519.35
East China 293,815,408.18 293,815,408.18
Northeast China 183,610,107.98 183,610,107.98
Southwest China 310,337,462.11 310,337,462.11
Information concerning obligation performance:
For the detail, refer to Note V. 39.
Information related to the transaction price allocated to the remaining obligations performance:
At the end of the reporting period, the amount of revenue corresponding to the performance obligations of the contracts
which have been signed, but not yet performed or not yet completed is CNY 0.00, of which CNY 0.00 is expected to be
recognized as revenue in year_____, CNY 0.00 is expected to be recognized as revenue in year______, and CNY 0.00 is
expected to be recognized as revenue in year _____.
62. Taxes and surcharges
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Consumption tax 1,764,057.54 1,080,093.60
Urban maintenance and construction tax 4,791,269.83 4,471,185.46
Education Surcharge 3,381,982.77 3,176,217.12
Real estate tax 3,557,771.54 3,617,599.55
Land use tax 186,994.62 202,038.96
Tax on using vehicle and boat 2,880.00 2,880.00
Stamp duty 1,492,951.96 1,271,846.47
Others 584,547.81 379,332.17
Total 15,762,456.07 14,201,193.33
63. Sales expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Payroll to employees 184,843,963.06 207,143,891.55
Shopping mall and rental fees 82,289,084.29 76,494,295.56
Advertising, exhibition and market
66,569,380.88 57,874,652.62
promotion fee
Depreciation and amortization 91,843,176.93 107,506,179.52
Packing expenses 4,588,450.00 4,439,070.05
Water & power supply and property 11,172,272.71 11,198,105.55
70
management fee
Freight 2,972,928.76 2,865,405.58
Office expenses 2,929,620.97 2,712,847.35
Business travel expenses 3,826,254.03 2,022,337.58
Business entertainment 1,947,349.51 1,346,935.04
Others 3,291,148.06 4,202,320.36
Total 456,273,629.20 477,806,040.76
64. Administrative expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Payroll to employees 83,415,424.92 90,844,037.52
Depreciation and amortization 11,499,296.13 11,956,926.63
Business travel expenses 2,036,742.28 610,091.19
Office expenses 1,561,690.78 2,112,092.81
Service fee to intermediary agencies 1,750,354.69 1,632,375.61
Water, electricity, property and rent 1,735,898.86 1,529,714.92
Business entertainment 567,726.27 288,878.74
Trucks and freight 919,436.00 631,799.40
Communication fee 195,521.76 376,723.40
Others 939,637.92 6,733,024.47
Total 104,621,729.61 116,715,664.69
65. R & D expenditures
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Payroll to employees 22,913,768.63 19,230,230.93
Sample and material charges 663,576.68 797,464.23
Cost of moulds -4,970.13 98,716.00
Depreciation and amortization 2,243,045.93 2,501,878.19
Technical cooperation fee 444,619.97 -136,897.08
Others 1,901,429.46 2,535,321.58
Total 28,161,470.54 25,026,713.85
66. Financial expenses
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Interest payment 6,690,859.35 9,731,247.68
Less: Interest income 2,432,180.03 1,981,825.39
Exchange gain & loss 1,335,231.32 -1,648,258.56
Service charges and miscellaneous 6,594,306.18 5,776,243.25
Total 12,188,216.82 11,877,406.98
67. Other income
In CNY
Source of arising of other income Amount incurred in the reporting period Amount incurred in the previous period
Government subsidies 6,691,609.41 13,369,782.95
68. Return on investment
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income from long term equity investment -1,697,481.65 2,462,626.52
based on equity method
Total -1,697,481.65 2,462,626.52
71
69. Net exposure hedge income
Inapplicable
70. Income from change of the fair value
Inapplicable
71. Loss from impairment of credit
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Provision for bad debt of other receivables 153,871.31 174,478.00
Loss from bad debt of notes receivable 621,723.41 463,943.28
Loss from bad debt of accounts receivable 3,558,352.90 -636,572.43
Total 4,333,947.62 1,848.85
72. Loss from impairment of assets
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
I. Loss from impairment of assets
II. Loss from price falling of inventory and
loss from impairment of contract -348,218.69
performance costs
III. Loss from impairment of long-term equity
investment
IV. Loss from impairment of investment
property
V. Loss from impairment of fixed assets
VI. Loss from impairment of engineering
supplies
VII. Loss from impairment of construction-in-
progress
VIII. Loss of impairment of productive
biological asset
IX. Loss from impairment of oil and gas
assets
X. Loss from impairment of intangible assets
XI. Loss from impairment of goodwill
XII. Loss from impairment of assets
XIII. Others
Total -348,218.69
73. Income from disposal of assets
In CNY
Source of income from disposal of assets Amount incurred in the reporting period Amount incurred in the previous period
Profit or loss from disposal of fixed assets -89,254.33 -14,180.88
Profit or loss from disposal of right-of-use
12,564.60 -801,840.28
assets
74. Non-operating income
In CNY
Amount incurred in the reporting Amount incurred in the previous Amount counted to the current
Items
period period non-operating gain and loss
Default compensation income 286,740.28 146,132.71 286,740.28
Accounts payable unnecessary
226,699.03 0.40 226,699.03
to be paid
Others 83,084.52 62,454.77 83,084.52
Total 596,523.83 208,587.88 596,523.83
Government subsidy counted to the current profit and loss:
Inapplicable
72
75. Non-operating expenditure
In CNY
Amount incurred in the reporting Amount incurred in the previous Amount counted to the current
Items
period period non-operating gain and loss
Loss from non-monetary assets
exchange
Outward donation
Fine and overdue fine 208,833.38 15,080.06 208,833.38
default fine 54,416.71 693,689.72 54,416.71
Others 28,351.09 117,127.58 28,351.09
Total 291,601.18 825,897.36 291,601.18
76. Income tax expense
(1) Income tax expense
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income tax expenses in the reporting period 52,147,601.16 43,213,735.62
Deferred income tax expense 4,983,918.40 -5,574,641.83
Total 57,131,519.56 37,639,093.79
(2) Process of adjustment of accounting profit and income tax expenses
In CNY
Items Amount incurred in the reporting period
Total profit 244,526,586.79
Income tax expense calculated based on the statutory/ applicable tax 61,131,646.70
rate
Influence of different tax rates applicable to subsidiaries -3,026,153.58
Influence of adjustment of the income tax in the previous period 474,249.39
Influence of the non-taxable income 424,370.41
Influence of the non-offsetable costs, expenses and loss 842,051.77
The effect of using deductible losses of deferred income tax assets -257,100.89
that have not been recognized in the previous period
Influence from the addition of the R & D expenses upon deduction of
-2,457,544.24
tax payment (to be stated with “-“)
Income tax expense 57,131,519.56
77. Other comprehensive income
For the detail, refer to Note VII. 57.
78. Cash Flow Statement Items
(1) Other operation activities related cash receipts
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Collateral and deposit 4,310,663.92 6,532,789.76
Government subsidies 6,623,312.69 13,193,456.48
Commodity promotion fee 6,824,544.07 4,611,388.01
Interest income 2,432,180.03 1,985,621.79
Reserve 3,098,754.09 2,740,310.90
Others 14,009,396.39 8,516,510.57
Total 37,298,851.19 37,580,077.51
(2) Other operation activities related cash payments
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Collateral and deposit 8,763,786.62 7,419,015.67
Reserve 6,711,750.04 5,082,764.84
73
Period expenses 162,631,345.85 138,375,768.78
Others 4,342,740.34 4,512,408.32
Total 182,449,622.85 155,389,957.61
(3) Other investment activity related cash receipts
Inapplicable
(4) Other investment activity related cash payments
Inapplicable
(5) Other financing activity related cash receipts
Inapplicable
(6) Other financing activity related cash payments
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Rent cash flow out 56,886,698.46 63,385,293.68
Payment for repurchase of shares 35,483,644.86 53,318,818.77
Total 92,370,343.32 116,704,112.45
79. Supplementary information of the cash flow statement
(1) Supplementary information of the cash flow statement
In CNY
Supplementary information Amount in the reporting period Amount in the previous period
1 Adjustment of net profit into cash flows of
operating activities:
Net profit 187,395,067.23 140,692,784.29
Plus: Provision for impairment of assets -4,333,947.62 346,369.84
Depreciation of fixed assets, depletion of oil
and gas asset, depreciation of productive biological 20,546,291.19 20,129,448.57
asset
Depreciation of use right assets 50,579,624.79 57,747,319.25
Amortization of intangible assets 1,853,819.12 2,750,043.18
Amortization of long term expenses to be 46,620,603.57 52,053,443.19
apportioned
Loss (income is stated in “-”) from disposal of
fixed assets, intangible assets and other long term 76,689.73 816,021.16
assets
Loss on scrapping of fixed assets (profit is
stated with “-”)
Loss from change of fair value (profit is
stated with “-”)
Financial expenses (income is stated with 8,026,090.67 8,082,989.12
“-”)
Investment loss (income is stated with “-”) 1,697,481.65 -2,462,626.52
Decrease of the deferred income tax asset 3,681,918.71 -5,564,912.60
(increase is stated with “_”)
Increase of deferred income tax liability -57,196.06 -327,370.24
(decrease is stated with “-”)
Decrease of inventories (Increase is stated 56,107,015.08 74,801,604.17
with “-”)
Decrease of operative items receivable -73,392,204.29 -23,794,469.22
(Increase is stated with “-”)
Increase of operative items payable 45,858,589.85 -46,884,380.59
(Decrease is stated with “-”)
Others
Net cash flows arising from operating 344,659,843.62 278,386,263.60
activities
2 Significant investment and fund-raising activities
with no cash income and expenses involved:
Capital converted from liabilities
74
Convertible company bonds due within a year
Fixed assets under financing lease
3 Net change in cash and cash equivalents:
Ending cash balance 519,368,795.12 393,873,930.55
Less: Opening balance of cash 313,747,463.64 210,254,737.14
Plus: Ending balance of cash equivalent
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalents 205,621,331.48 183,619,193.41
(2) Net cash paid for acquisition of subsidiary in the reporting period
Inapplicable
(3) Net cash received from disposal of subsidiary in the reporting period
Inapplicable
(4) Composition of cash and cash equivalents
In CNY
Items Ending balance Opening balance
I. Cash 519,368,795.12 313,747,463.64
Including: Cash in stock 63,562.14 173,368.68
Bank deposit available for payment at 514,412,146.09 312,433,893.29
any time
Other monetary fund used for 4,893,086.89 1,131,127.67
payment at any time
Due from central bank available for
payment
Due from banks
Call loan to banks
II. Cash equivalents
Including: bond investment due within three
months
III. Ending balance of cash and cash 519,368,795.12 313,747,463.64
equivalents
Including: cash and cash equivalents
restricted for use from the parent company 398,877.12 716,733.44
or other subsidiaries of the Group
80. Notes to items of statement of change in owner’s equity
Inapplicable
81. Assets restricted in ownership or right-of-use
Inapplicable
82. Foreign currency monetary items
(1) Foreign currency monetary items
In CNY
Ending balance of foreign Ending balance of Renminbi
Items Conversion rate
currency converted
Monetary capital
Including: USD 224,202.41 7.2258 1,620,041.77
Euro 505,646.07 7.8771 3,983,024.66
HKD 1,501,051.23 0.9220 1,383,939.21
SF 49,732.92 8.0614 400,916.96
Accounts receivable
75
Including: USD 848,686.02 7.2258 6,132,435.44
Euro 34,286.54 7.8771 270,078.50
HKD 2,951,437.54 0.9220 2,721,166.38
SF 23,815.43 8.0614 191,985.71
Long-term Loan
Including: USD
Euro
HKD
Accounts payable
Including: USD 1,019.00 7.2258 7,363.09
HKD 737,465.21 0.9220 679,928.17
Other receivables
Including: HKD 116,037.61 0.9220 106,984.36
SF 66,754.63 8.0614 538,135.77
Other payables
Including: USD 5,672.96 7.2258 40,991.67
Euro 489.33 7.8771 3,854.50
HKD 54,776.05 0.9220 50,502.42
SF 68,432.87 8.0614 551,664.74
(2) Note to overseas operating entities, including important overseas operating entities, which should be disclosed
about its principal business place, function currency for bookkeeping and basis for the choice. In case of any
change in function currency, the cause should be disclosed.
The Company and its domestic subsidiaries use Renminbi (CNY) as the function currency for book keeping. FIYTA (Hong
Kong) Limited, one of the Company's overseas subsidiaries, has determined Hong Kong Dollars as its recording currency
for accounting in accordance with the currencies available in its major economic environment where it is operated. Montres
Chouriet SA, one of the subsidiaries of FIYTA Hong Kong, determines Swiss Franc as its recording currency for accounting
in accordance with the currencies available in its major economic environment where it is operated and Swiss France is
converted into Renminbi in preparing its financial statements. The currency the Company takes in preparation of these
financial statements is Renminbi.
83. Hedging
Inapplicable
84. Government subsidies
(1) Basic information of government subsidies
In CNY
Amount counted to the current
Category Amount Items presented
profit and loss
Special subsidy for the field of
790,936.00 Other income 790,936.00
standards in Shenzhen
Refund of the service charge for
588,360.90 Other income 588,360.90
individual income tax
Subsidy for stabilizing
724,612.04 Other income 724,612.04
employment
Other subsidies 3,802.58 Other income 3,802.58
Subsidy for special funding
projects for stable commercial 1,251,400.00 Other income 1,251,400.00
growth
One-off subsidy for retained
1,500.00 Other income 1,500.00
employees training
Refund of 51job.com COVID-19
12,000.00 Other income 12,000.00
subsidy
“Welfare-to-work” based
4,900.00 Other income 4,900.00
application-free direct subsidy
Special-purpose fund subsidy for
100,000.00 Other income 100,000.00
economic development
Award subsidy for recognition of
100,000.00 Other income 100,000.00
hi-tech enterprise
First subsidy for financing the
120,000.00 Other income 120,000.00
fostering of hi-tech enterprise
76
Subsidy for employing the
9,669.71 Other income 9,669.71
disabled
Heavy precision projects for
1,000,000.00 Other income 1,000,000.00
technological breakthrough
Government subsidy for
1,000,000.00 Other income 1,000,000.00
technological innovation projects
Financial support for the
100,000.00 Other income 100,000.00
fostering of hi-tech enterprise
Central government
appropriation for technological
breakthrough and application 868,178.18 Other income 868,178.18
project of breathing machine and
key parts
Tax rebated to the key
organizations from the central 16,250.00 Other income 16,250.00
government
(2) Refunding of the government subsidies
Inapplicable
85. Others
Inapplicable
VIII. Change in consolidation scope
1. Business combination involving entities not under common control
(1) Consolidation of enterprises not under common control during the reporting period
Inapplicable
(2) Consolidation cost and goodwill
Inapplicable
(3) Purchasee's distinguishable assets and liabilities as at the date of purchase
Inapplicable
(4) Profit or loss of the equity held before the date of purchase arising from re-measurement based on the fair
value
Does there exist any transaction in which the enterprise consolidation is realized step by step through several transactions
and the control power is obtained within the reporting period.
No
(5) Note to the consolidation consideration or the fair value of the distinguishable assets and liabilities of the
purchasee which cannot be reasonably identified as at the date of purchase or at the end of the very period of
consolidation
Inapplicable
(6) Other note
Inapplicable
2. Business combination involving entities under common control
(1) Consolidation of enterprises under common control during the reporting period
Inapplicable
77
(2) Consolidation cost
Inapplicable
(3) Book value of the consolidatee's assets and liabilities as at the date of consolidation
Inapplicable
3. Counter purchase
Inapplicable
4. Disposal of subsidiaries
Does there exist any such situation that a single disposal may cause the control power over the investment in a subsidiary
lost?
No
Does there exist any such situation that disposal in steps through a number of transactions may cause the control power
over the investment in a subsidiary lost during the reporting period?
No
5. Change of consolidation scope due to other reason
Inapplicable
6. Others
Inapplicable
IX. Equity in other entities
1. Equity in a subsidiary
(1) Composition of an enterprise group
Main business Shareholding proportion
Subsidiaries Place of registration Nature of business Way of acquisition
location Direct Indirect
Shenzhen Harmony
Establishment or
World Watches Shenzhen Shenzhen Commerce 100.00%
investment
Center Co., Ltd.
FIYTA Sales Co., Establishment or
Shenzhen Shenzhen Commerce 100.00%
Ltd. investment
Shenzhen FIYTA
Precision Establishment or
Shenzhen Shenzhen Manufacture 99.00% 1.00%
Technology Co., investment
Ltd.
Shenzhen FIYTA
Technology Establishment or
Shenzhen Shenzhen Manufacture 100.00%
Development Co., investment
Ltd.
Harmony World
Establishment or
Watches Center Sanya Sanya Commerce 100.00%
investment
(Hainan) Ltd.
Shenzhen
XUNHANG
Establishment or
Precision Shenzhen Shenzhen Manufacture 100.00%
investment
Technology Co.,
Ltd.
Emile Chouriet Establishment or
Shenzhen Shenzhen Commerce 100.00%
(Shenzhen) Limited investment
Liaoning Hengdarui Consolidation of
Commerce & Trade Shenyang Shenyang Commerce 100.00% enterprises under
Co., Ltd. the common control
Shiyuehui Boutique
Establishment or
(Shenzhen) Co., Shenzhen Shenzhen Commerce 100.00%
investment
Ltd.
Shenzhen Harmony
Establishment or
E-Commerce Shenzhen Shenzhen Commerce 100.00%
investment
Limited
FIYTA (Hong Kong) Establishment or
Hong Kong Hong Kong Commerce 100.00%
Limited investment
78
Business
combination
Montres
Switzerland Switzerland Manufacture 100.00% involving entities
Chouriet SA
not under common
control
Note to the proportion of shareholding in a subsidiary different from the proportion of voting power:
Inapplicable
Basis of holding less than a half of the voting power but still controlling the investee and holding more than a half of the
voting power but not controlling the investee:
Inapplicable
Basis of an important structurized entity being brought to the consolidation scope and being controlled:
Inapplicable
Basis of distinguishing an agent from consignor:
Inapplicable
(2) Important non-wholly-owned subsidiaries
Inapplicable
(3) Key financial information of important non-wholly-owned subsidiaries
Inapplicable
(4) Significant restriction on use of enterprise group’s assets and paying off the enterprise group’s liabilities
Inapplicable
(5) Financial support or other support provided to the structured entities incorporated in the scope of
consolidated financial statements
Inapplicable
2. Transaction with a subsidiary with the share of the owner’s equity changed but still under control
(1) Note to change in the share of the owner's equity in subsidiaries
Inapplicable
(2) Affect of the transaction on the minority equity and owner's equity attributable to the parent company
Inapplicable
3. Equity in joint venture arrangement or associates
(1) Important joint ventures or associates
Shareholding proportion Accounting
treatment
Name of joint
Main business Place of Nature of method for
venture or
location registration business Direct Indirect investment in
associate
joint ventures or
associates
Shanghai Watch
Shanghai Shanghai Commerce 25.00% Equity method
Industry Co., Ltd.
Note to the proportion of the shareholding in a joint venture or an associate different from voting power therein:
Inapplicable
Basis of holding below 20% voting power but having significant influence or holding more than 20% voting power but not
having significant influence
79
Inapplicable
(2) Key financial information of important joint ventures
Inapplicable
(3) Key financial information of important associates
In CNY
Ending balance/amount incurred in the Opening balance/amount incurred in the
reporting period reporting period
Current assets 165,681,315.89 175,890,077.66
Non-current assets 15,811,254.46 21,637,323.67
Total assets 181,492,570.35 197,527,401.33
Current liabilities 41,236,245.43 44,595,566.75
Non-current liabilities 5,885,583.05
Total liabilities 41,236,245.43 50,481,149.80
Minority shareholders’ equity
Equity attributable to the parent company’s 140,256,324.92 147,046,251.53
shareholders
Share of net assets calculated according to 35,064,081.23 36,761,562.88
the shareholding proportion
Adjustment events 21,420,524.02 21,420,524.02
-- Goodwill 21,420,524.02 21,420,524.02
-- Unrealized profit from the intracompany
transactions
-- Others
Book value of the equity investment in 56,484,605.25 58,182,086.90
associates
Fair value of equity investments in
associates with public quotation
Operation Revenue 63,610,760.47 65,530,729.89
Net profit -6,789,926.61 9,850,506.06
Net profit from operation termination
Other comprehensive income
Total comprehensive income -6,789,926.61 9,850,506.06
Dividends received from associates during
the year
(4) Financial information summary of unimportant joint ventures and associates
Inapplicable
(5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to the
Company
Inapplicable
(6) Excessive loss incurred to a joint venture or an associate
Inapplicable
(7) Unrecognized commitment in connection with investment in a joint venture
Inapplicable
(8) Contingent liabilities in connection with investment in joint ventures or associates
Inapplicable
80
4. Important joint operation
Inapplicable
5. Equity in the structurized entities not incorporated in the consolidated financial statements
Inapplicable
6. Others
Inapplicable
X. Risk disclosure related to financial instrument
The major financial instruments of the Company primarily include cash at bank and on hand, equity investments, borrowings,
accounts receivable, accounts payables, etc. The Company is exposed to risks from various financial instruments in day-to-
day operation, mainly including credit risk, liquidity risk and market risk. The risks in connection with such financial
instruments and the risk management policies adopted by the Company to mitigate such risks are summarized as follows:
The board of directors is responsible for planning and establishing the risk management structure for the Company,
developing risk management policies and the related guidelines across the Company, and supervising the performance of
risk management measures. The Company has formulated risk management policies to identify and analyze the risks faced
by the Company. These risk management policies clearly stipulate specific risks, covering many aspects such as market
risk, credit risk and liquidity risk management. The Group regularly evaluates the market environment and changes in the
Company's operating activities to determine whether to update the risk management policy and system. The Company's
risk management is carried out by the Risk Management Committee in accordance with the policies approved by the Board
of Directors. The Risk Management Committee works closely with other business departments of the Company to identify,
evaluate and avoid related risks. The internal audit department of the Company conducts regular audits on risk management
controls and procedures, and reports the audit results to the audit committee of the Company. The Company diversifies the
risks of financial instruments through appropriate diversified investment and business portfolios, and formulates
corresponding risk management policies to reduce the risks concentrated in a single industry, a specific region or a specific
counterparty.
1. Credit risk
Credit risk refers to the risk of financial losses to the Company as a result of the failure of performance of contractual
obligations by the counterparties. The management has developed proper credit policies and continuously monitors credit
risk exposures.
The Company has adopted the policy of transacting with creditworthy counterparties only. In addition, the Company
evaluates the credit qualification of customers and sets up corresponding credit term based on the financial status of
customers, the possibility of obtaining guarantees from third parties, credit records and other factors such as current market
conditions. The Company monitors the balances and recovery of bills and accounts receivable, and contract assets on a
continual basis. As for bad credit customers, the Company will use the written reminders, shorten the credit term or cancel
the credit term to ensure that the Company is free from material credit losses. In addition, the Company reviews the recovery
of financial assets on each balance sheet date to ensure adequate expected credit loss provision is made for relevant
financial assets.
The Company's other financial assets include monetary capital,accounts receivable and other receivables. The credit risk
of these financial assets is derived from the default of the counterparty, and the maximum credit exposure is the carrying
amount of each financial asset on the balance sheet. The Company does not provide any other guarantee that may expose
the Company to credit risk.
The monetary funds held by the Company are mainly deposited with financial institutions such as state-owned banks and
other large and medium-sized commercial banks. The management believes that these commercial banks have a higher
reputation and assets, so there is no major credit risk and the Company would not have any significant losses caused by
the default by these institutions. The Company’s policy is to control the amount deposited with these famous financial
institutions based on their market reputation, operating size and financial background, to limit the credit risk amount of any
single financial institution.
As a part of its credit risk asset management, the Company assesses the credit loss of receivables using aging. The
Company’s receivable and other receivables involve large amount of customers. Aging information can reflect the ability to
repay and risk of bad debt of these customers. The Company determined expected loss rate by calculating historical bad
debt rate for receivables with different aging based on historical data and also taking forecast of future economic condition
into consideration such as GDP growth rate, state currency policy etc. For long-term receivables, the Company assesses
81
expected credit loss reasonably by considering settlement period, contracted payment terms, debtor’s financial situation and
the economic situation of the debtor’s industry.
As at June 30, 2023, the carrying amount of related assets and corresponding ECL is as follows:
Aging Book balance Provision for impairment
Notes receivable 15,140,453.97 511,155.07
Accounts receivable 436,613,661.87 37,037,393.88
Other receivables 61,498,013.61 4,111,162.93
Total 513,252,129.44 41,659,711.88
As the Company’s customer base is large, there exists no material credit concentration risk.
As at June 30 2023, the balance of top 5 receivable accounts accounted for 23.89% of total accounts receivables (2022:
32.76%).
2. Liquidity risks
Liquidity risk refers to the risk of short of funds when the company performs its obligation of cash payment or settlement by
other financial assets. The Company’s subordinate member companies are responsible for their respective cash flow
projections. Based on the results thereof, the subordinate financial management department continually monitors its short-
term and long-term capital needs at the company level to ensure adequate cash reserves; in the meantime, continually
monitors the compliance with loan agreements and secures undertakings for sufficient reserve funds from major financial
institutions, to address its short-term and long-term capital needs. Besides, the Company mainly signs financing agreements
with banks that have business transactions to provide support to fulfill commercial bill obligation. As at June 30, 2023, the
Company had financing facilities from several banks amounting to CNY1,987.24 million. Amongst, CNY 482.24 million had
already been used.
As at June 30, 2023, the discounted contractual cash flows for financial liabilities and off-balance sheet guarantee that
presented in maturity are as follows:
Ending balance (CNY 10,000)
Items
Within 1 year 1-2 years 2-3 years Over 3 years Total
Short-term borrowings 39,566.56 39,566.56
Accounts payable 19,148.82 19,148.82
Other payables 12,627.80 113.89 70.63 104.43 12,916.76
Total 71,343.18 113.89 70.63 104.43 71,632.14
3. Market Risks
1) Exchange rate risk
Except that the Company’s subsidiary in Hong Kong uses HKD as settlement currency and sub-subsidiary in Swiss used
CHF as settlement currency, the principal places of operations of the Company are located in China and the major
businesses are settled in Renminbi. However, the Company’s recognized foreign currency assets and liabilities as well as
the foreign currency transactions in the future (the functional currencies of foreign assets and liabilities as well as the
transactions are mainly HKD and SF) remain exposed to exchange rate risk
As at June 30 2023, the Renminbi equivalent of financial assets and financial liabilities denominated in foreign currencies
are as follows:
Ending balance
Items
HKD USD EURO SF Total
Financial asset denominated in
foreign
currency:
Monetary capital 1,383,939.21 1,620,041.77 3,983,024.66 400,916.96 7,387,922.61
Accounts receivable 2,721,166.38 6,132,435.44 270,078.50 191,985.71 9,315,666.04
Other receivables 106,984.36 538,135.77 645,120.13
Sub-total 4,212,089.95 7,752,477.22 4,253,103.16 1,131,038.44 17,348,708.77
Financial liabilities denominated
in foreign
82
currency:
Accounts payable 679,928.17 7,363.09 687,291.26
Other payables 50,502.42 40,991.67 3,854.50 551,664.74 647,013.34
Non-current liabilities due within
-
a year
Sub-total 730,430.60 48,354.76 3,854.50 551,664.74 1,334,304.60
Sensitivity analysis:
As at June 30, 2023, for financial assets and financial liabilities that denominated in foreign currency, if Renminbi appreciate
or depreciate of 5% to foreign currency and other factors remain unchanged, the net profit will decrease or increase about
CNY 0.6005 million(2022: CNY 1.419 million).
2) Interest rate risk
The interest rate risk of the Company mainly associates with bank borrowings. Floating rate financial liabilities expose the
Company to cash-flow interest rate risk, while fixed rate financial liabilities expose the Company to fair-value interest rate
risk. The Company determines the comparative proportion of fixed rate contracts and floating rate contracts based on the
then market conditions.
The financial department of the Company continuously monitors the Company’s interest rate level. Rise of interest rates
may increase the cost of new interest-bearing liabilities and interest costs on the Company's outstanding interest-bearing
liabilities at variable rates, and have a material adverse effect on the Company's financial results. The management may
make timely adjustments based on the latest market conditions to reduce interest rate risk.
Sensitivity analysis:
In case the loan interest rate calculated based on the floating interest rate rises or falls by 50 base points as at June 30,
2023, while the other factors keep unchanged, the Company's net profit shall decrease or increase by CNY 1.95 million (as
at 2022 about CNY 1.20 million).
The above sensitivity analysis is based on the assumption that change has taken place in the interest rates on the balance
sheet date and the change has been applied to all borrowings obtained by the Company at floating interest rates.
XI. Disclosure of Fair Value
1. Fair value at the end of the reporting period of the assets and liabilities measured based on the fair value
Inapplicable
2. Basis for determining the market price of the items measured based on the continuous and non-continuous
first level fair value
Inapplicable
3. Items measured based on the continuous or uncontinuous 2nd level fair value, valuation technique as used,
nature of important parameters and quantitative information
Inapplicable
4. Items measured based on the continuous or uncontinuous 3rd level fair value, valuation technique as used,
nature of important parameters and quantitative information
Inapplicable
5. Items measured based on the continuous 3rd level fair value, sensitivity analysis on adjusted information and
unobservable parameters between the book value at beginning and end of the period
Inapplicable
83
6. In case items measured based on fair value are converted between different levels incurred in the current
period, state the cause of conversion and determine conversion time point
Inapplicable
7. Change of valuation technique incurred in the current period and cause of such change
Inapplicable
8. Fair value of financial assets and financial liabilities not measured at fair value
Inapplicable
9. Others
Inapplicable
XII. Related parties and transactions
1. Details of the parent company of the Company
Shareholding ratio of Ratio of vote right of
Name of the parent
Place of registration Nature of business Registered capital the parent company the parent company
company
in the Company in the Company
AVIC International Business service CNY 1,166.162
Shenzhen 39.02% 39.02%
Holding Limited industry million
Note to the parent company:
AVIC IHL is a subsidiary 100% indirectly held by AVIC International Holding Corporation. Aviation Industry Corporation of
China Limited (AVIC) holds 91.14% equity in AVIC International Holding Corporation.
Therefore, the eventual controller of the Company is AVIC.
2. Subsidiaries of the Company
Refer to Note IX. 1 for details of subsidiaries of the Company.
3. Joint venture and association of the Company
Inapplicable
4. Other related parties
Relationship between other related parties and the
Names of other related parties
Company
AVIC Property Management Co., Ltd. (AVIC Property) An associate of the ultimate controller
Shenzhen AVIC Building Technology Co., Ltd. (AVIC Building) An associate of the ultimate controller
Shenzhen AVIC Nanguang Elevator Co., Ltd. (AVIC Nanguang ) An associate of the ultimate controller
AVIC City Property (Kunshan) Co., Ltd. (AVIC City Property (Kunshan) ) An associate of the ultimate controller
Shenzhen AVIC Security Service Co., Ltd. (AVIC Security Service) An associate of the ultimate controller
Jiujiang 9 Square Commerce Management Co., Ltd. (9 Square Commerce
An associate of the ultimate controller
Management)
Rainbow Digital Commercial Co., Ltd. (RAINBOW) Controlled by the same party
Shennan Circuit Co., Ltd. (Shennan Circuit) Controlled by the same party
AVIC Huadong Photoelectric (Shanghai) Co., Ltd. (Huadong Photoelectric
Controlled by the same party
(Shanghai))
Shenyang Xinghua Aero-Electric Appliance Corp. Ltd. (Shenyang Xinghua
Controlled by the same party
Aero-Electric Appliance)
AVIC Huadong Photoelectric Co., Ltd. (Huadong Photoelectric) Controlled by the same party
Shenzhen Lingzhi Digital Technology Co., Ltd. (Lingzhi Digital Technology) Controlled by the same party
Shenzhen AVIC Grand Skylight Hotel Management Co., Ltd. (Grand
Controlled by the same party
Skylight Hotel Management)
AVIC Securities Co., Ltd. (AVIC Securities) Controlled by the same party
84
Shenzhen AVIC Training Center (AVIC Training Center) Controlled by the same party
AVIC Finance Co., Ltd. (AVIC Finance) Controlled by the same party
Gongqingcheng CATIC Cultural Investment Co., Ltd. (Gongqingcheng
Controlled by the same party
CATIC Cultural Investment)
AVIC Jonhon Optronic Technology Co.,Ltd. (AVIC Optronic) Controlled by the same party
AVIC General Aircraft Co., Ltd. (AVIC General Aircraft) Controlled by the same party
Guizhou Huayang Electric Co., Ltd. (GUIZHOU HUAYANG ELECTRIC) Controlled by the same party
Zhuhai Linghang Composite Material Technology Co., Ltd. (Zhuhai
Controlled by the same party
Linghang Technology)
Guangdong International Building Industrial Company (Guangdong
Controlled by the same party
International Building)
Director, Manager, Chief Financial Officer and Secretary of the Board of the
A senior executive
Company (senior executives)
5. Related transactions
(1) Related transactions of purchase and sale of commodities and supply and acceptance of labor services
Statement of purchase of commodities and acceptance of labor services
In CNY
Description of
Amount incurred in Transaction quota Has it exceeded the Amount incurred in
Related party Related
the reporting period as approved transaction quota the previous period
Transactions
Water & power
AVIC Property supply and property 5,600,171.42 No 5,674,190.55
management fee
Shopping mall
Rainbow Ltd. fees/purchase of 1,939,136.26 No 2,205,812.33
goods
AVIC City Property
Shopping mall fees 32,726.23 45,000,000.00 No 23,584.90
(Kunshan)
9 Square
Commerce
Shopping mall fees 45,347.58 No 45,264.34
Management Co.,
Ltd.
Elevator
AVIC Nanguang 18,000.00 No
maintenance
Statement of sales of goods/supply of services
In CNY
Description of Related Amount incurred in the reporting Amount incurred in the previous
Related party
Transactions period period
Rainbow Ltd. Products and labor services 30,348,264.13 29,104,305.23
Sales of materials and supply of
Shennan Circuit 460.80 228,541.46
services
Gongqingcheng CATIC Cultural
Sales of products 154,635.87 192,621.21
Investment
AVIC Optronic Sales of products 406,907.87 379,058.98
AVIC General Aircraft Sales of products 554,207.98
Huadong Photoelectric
Sales of products 21,238.94
(Shanghai)
Guizhou Huayang Electric Sales of products 50,353.97
Zhuhai Linghang Technology Sales of products 75,711.51
Shenyang Xinghua Aero-
Sales of products 145,831.01
Electric Appliance
Note to the related transactions of purchase and sale of commodities and supply and acceptance of labor services
The above transaction volume does not contain tax amount.
(2) Related entrusted management/contracted and mandatory management/contracting
Inapplicable
(3) Related lease
The Company as lessor:
85
In CNY
Categories of leasehold Rental income recognized in Rental income recognized in
Names of lessees
properties the current period the previous period
AVIC Property Housing 2,677,492.91 5,220,338.61
AVIC Securities Housing 705,942.84 705,942.84
Rainbow Ltd. Housing 309,104.34 309,104.34
CATIC Public Security Service
Housing 453,202.26
Co.
The Company as lessee:
In CNY
Rental charges for
Variable rental payment
short-term leases and
not included in the Payment of the rental
leases of low-value Increased right-of-use
measurement of the Rent paid liability interest
assets for simplified assets
Categorie rent liability (if undertaken
processing (if
Name of s of applicable)
applicable)
lessor leasehold
properties Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount
incurred incurred incurred incurred incurred incurred incurred incurred incurred incurred
in the in the in the in the in the in the in the in the in the in the
reporting previous reporting previous reporting previous reporting previous reporting previous
period period period period period period period period period period
AVIC
City
- -
Property Housing 71,100.00 75,600.00 580.08 3,504.11
66,767.11 71,606.28
(Kunshan
)
9 Square
Commerc
-
e 136,406.9 129,495.4 145,907.0
Housing 41,544.03 37,267.73 4,179.58 8,636.46 124,732.0
Managem 6 2 9
8
ent Co.,
Ltd.
- -
Rainbow 218,271.0 255,127.0
Housing 6,473.23 7,561.36 195,898.0 241,122.0
Ltd. 0 0
5 0
(4) Related guarantee
Inapplicable
(5) Borrowings and lendings among related parties
In CNY
Inapplicable
(6) Assets assignment and liabilities reorganization of related parties
Inapplicable
(7)Remuneration to senior executives
Inapplicable
(8) Other related transactions
The Company’s deposit balance deposited with AVIC Finance at the end of the current year amounted to CNY
480,544,819.75, of which the deposit interest received during the year amounted to CNY 137,837.70.
6. Accounts receivable from and payable to related parties
(1) Receivables
In CNY
Ending balance Opening balance
Project name Related parties
Book balance Provision for bad debt Book balance Provision for bad debt
Bank deposit
AVIC Finance 480,544,819.75 271,327,031.83
Accounts receivable
86
Rainbow Ltd. 6,971,407.56 259,780.04 3,808,470.31 219,873.20
Shennan Circuit 7,255.14 544.14
AVIC Optronic 117,068.05 16,639.44 649,797.16 48,734.79
Gongqingcheng CATIC
45,430.15 682.44 27,297.28 1,364.88
Cultural Investment
9 Square Commerce
3,430.00 171.50 45,762.00 2,288.10
Management Co., Ltd.
AVIC Training Center 2,772.00 207.90
Shenyang Xinghua
166,077.24 9,134.25
Aero-Electric Appliance
AVIC Property 453,084.31 22,654.22 55,910.00 2,795.50
GUIZHOU HUAYANG
59,528.00 4,464.60
ELECTRIC
Zhuhai Linghang
735,622.00 40,459.21 1,412,045.00 105,903.38
Technology
Notes receivable
AVIC Optronic 639,591.82 262,429.22
Other receivables
Rainbow Ltd. 834,092.43 41,704.62 1,055,557.43 52,777.87
AVIC City Property
56,000.00 2,800.00 73,000.00 2,800.00
(Kunshan)
Gongqingcheng CATIC
6,500.00 325.00 6,500.00 325.00
Cultural Investment
9 Square Commerce
91,751.75 4,587.59 50,000.00 2,500.00
Management Co., Ltd.
AVIC IHL 49.32 2.47 49.32 2.47
(2) Payables
In CNY
Project name Related parties Ending book balance Opening book balance
Accounts payable
AVIC Building Co. 32,992.35
AVIC Optronic 19,411.27
Other payables
AVIC Property 1,203,983.88 2,375,070.47
Jingzhi Digital Technology 830,000.00
AVIC Securities 247,080.00 247,080.00
AVIC Building Co. 14,808.41
Rainbow Ltd. 108,186.52 108,186.52
CATIC Public Security Service
158,620.80 158,620.80
Co.
AVIC Nanguang 26,424.47 23,432.43
Advance from customers
AVIC Securities 123,540.00
Rainbow Ltd. 162,324.03
7. Related parties’ commitments
Inapplicable
8. Others
Inapplicable
XIII. Stock payment
1. General
In CNY
Total amount of various equity instruments granted by the Company 0.00
during the reporting period
Total amount of various equity instruments of the Company 3,436,710.00
exercisable during the reporting period
Total amount of various equity instruments of the Company expired 2,201,130.00
87
during the reporting period
The scope of the exercise price of stock options issued at the end of Inapplicable
the reporting period and the remaining time of the contract
The scope of the exercise price of other equity instruments issued at Inapplicable
the end of the reporting period and the remaining time of the contract
2. Stock payment for equity settlement
In CNY
Method for determining the fair value of equity instruments on the Closing price of the Company's stock on the grant date
grant date
Employee service period, achievement rate of performance
Basis for determining the quantity of exercisable equity instruments indicators, and employee individual performance evaluation result
Cause of significant difference between the estimation of the Nil
reporting period and that of the previous period
Accumulated amount of the equity-settled share-based payment 26,899,484.20
counted to the capital reserve
Total expenses recognized in the equity-settled share-based -5,088,797.85
payment during the reporting period
3. Stock payment for cash settlement
Inapplicable
4. Correction and termination of stock payment
Inapplicable
5. Others
Inapplicable
XIV. Commitments and contingencies
1. Important commitments
Important commitments existing as at the balance sheet date
Lease contract that already signed or prepared to fulfill and its financial effect
Disclosure as the lessee:
(1) Lease activities
The Company's lease categories are all housing and buildings, including simplified short-term lease and leases other than
short-term rent where right-of-use assets and lease liabilities are recognized.
(2) Simplified treatment of short-term lease and leases of low-value assets
Short-term leases are treated using simplified method. Short-term leases include lease term that is shorter than 12 month
and no renew options attached, and leases that will be matured in 12 month after first adoption of CAS 21 – Lease. Short-
term lease expenses charged to profit or loss was CNY 496,529.80.
(3) Future potential cash outflows that does not included in lease liabilities
1) Variable lease payment
The lessee leased a lot of retail shops which contains variable lease payment terms in connection with sales.
Many of the Company’s property lease contain variable lease payment terms in connection with sales. In most circumstances,
the Company uses these terms to matches lease payment to shops that can generate more cash flows lease payment. For
standalone shops, variable can reach 100% of all lease payment at most and that the scope of percentage of sales used is
quite large. In some circumstances, variable payment terms include annual bottom payment and upper limit.
In the first half year of 2023, the amount of variable lease payments included in the current profit and loss was CNY
45,887,165.30.
2) Option to renew
Many lease contracts entered by the Company has option to renew. The Company has already estimated the option to
renew reasonably when determining lease terms in measuring lease liabilities.
3)Option to discontinue lease
88
Some of the lease contract entered by the Company has option to discontinue. The Company has already estimated the
option to discontinue reasonably when determining lease terms in measuring lease liabilities.
4) Residual value guarantee
The Company’s lease does not involve residual value guarantee.
5)Lease that the lessee has already made commitment but not yet started
The Company does not have lease that has already made commitment but not yet started.
Disclosure as a lessor:
(1) Lease activities
The Company’s leases are all properties
(2) Risk management strategy of retaining rights over lease assets
To reduce risks of lease, the Company normally asks lessee to pay rental in advance and collects 1-3 months rental as
deposit.
2. Contingencies
(1) Significant contingencies existing as at the balance sheet date
Inapplicable
(2) Important contingencies unnecessary to be disclosed but necessary to be explained
Inapplicable
3. Others
Inapplicable
XV. Events after the balance sheet date
1. Significant non-adjustment events
Inapplicable
2. Profit distribution
Inapplicable
3. Sales return
Inapplicable
4. Note to other matters after the balance sheet date
Inapplicable
89
XVI. Other significant events
1. Correction of the accounting errors in the previous period
(1) Retroactive restatement
Inapplicable
(2) Prospective application
Inapplicable
2. Liabilities restructuring
Inapplicable
3. Replacement of assets
(1) Non-monetary assets exchange
Inapplicable
(2) Other assets exchange
Inapplicable
4. Annuity plan
Inapplicable
5. Discontinuing operation
Inapplicable
6. Segment information
(1) Basis for determining the reporting segments and accounting policy
Operating segments of the Company are identified on the basis of internal organization structure, management requirements
and internal reporting system. An operating segment represents a component of the Company that satisfied the following
criteria simultaneously:
(1) Its business activities are engaged to earn revenue and incur expenses;
(2) Its operating results are regularly reviewed by the Company’s management to make decisions on resources allocation
and performance assessment;
(3) Its financial conditions, operating results, cash flow and related accounting information are available to the Company.
The Company determines the reporting segment based on the operating segment, and the operating segment that meets
any of the following conditions is determined as the reporting segment:
(1) The segment income of the operating segment accounts for 10.00% or more of total income of all segments;
(2) The absolute amount of profits (losses) of the segment account for 10.00% or more of the higher of the absolute
amount of total profits of the profiting segment and the absolute amount of total losses of the unprofitable segment.
90
(2) Financial information of the reporting segments
Inapplicable
(3) In case there is no reporting segment or the total assets and liabilities of the reporting segments cannot be
disclosed, explain the reason
The Company’s business is simple. The business mainly involves manufacturing and sales of watch. The management
considers the business as a whole in implementing management and assessing its performance. As a result, no segment
information is disclosed in this financial statement.
(4) Other note
Inapplicable
7. Other significant transactions and matters that may affect investors' decision making
Inapplicable
8. Others
Inapplicable
XVII. Notes to the parent company’s financial statements
1. Accounts receivable
(1) Accounts receivable disclosed by category
In CNY
Ending balance Opening balance
Categories Book balance Provision for bad debt Book balance Provision for bad debt
Provision Book value Provision Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable
for which
bad debt
reserve
has been
provided
based on
individual
items
Including
:
Accounts
receivable
for which
bad debt 9,837,158. 9,527,390.
reserve 100.00% 309,767.44 3.15% 635,132.16 100.00% 31,916.13 5.03% 603,216.03
31 87
has been
provided
based on
portfolios
Including
:
Accounts
receivable 9,837,158. 9,527,390.
100.00% 309,767.44 3.15% 635,132.16 100.00% 31,916.13 5.03% 603,216.03
from other 31 87
customers
9,837,158. 9,527,390.
Total 100.00% 309,767.44 3.15% 635,132.16 100.00% 31,916.13 5.03% 603,216.03
31 87
Bad debt reserve provided based on portfolio: Grouping of accounts receivable from other customers
In CNY
Ending balance
Description
Book balance Provision for bad debt Provision proportion
Accounts receivable from other
9,837,158.31 309,767.44 3.15%
customers
Total 9,837,158.31 309,767.44
91
Note to the basis for determining the combination:
Inapplicable
If the provision for bad debts of accounts receivable is accrued in accordance with the general expected credit loss model,
please refer to the disclosure of other receivables to disclose the relevant information of the provision for bad debts:
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 9,837,158.31
Total 9,837,158.31
(2) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Recovery or Ending balance
Provision Written-off Others
reversal
Accounts
receivable with
single provision 85,000.00 85,000.00
for expected
credit loss
Accounts
receivable with
provision for 31,916.13 309,576.01 31,724.70 309,767.44
expected credit
loss by portfolio
Total 31,916.13 394,576.01 31,724.70 85,000.00 309,767.44
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Accounts receivable actually written off in the reporting period
In CNY
Items Amount written-off
Xi'an Tangcheng Group Co., Ltd. 85,000.00
Where, the important accounts receivable written-off:
Inapplicable
Note to writing-of of accounts receivable:
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion in total ending
Ending balance of the Ending balance of the
Organization name balance of accounts
accounts receivable provision for bad debts
receivable
Summary of the top five
accounts receivable in the 4,754,574.43 48.33% 237,728.73
ending balance
Total 4,754,574.43 48.33%
(5) Account receivable with recognition terminated due to transfer of financial assets
Inapplicable
92
(6) Amount of assets and liabilities formed through transfer of accounts receivable and continuing to be involved
Inapplicable
2. Other receivables
In CNY
Items Ending balance Opening balance
Other receivables 667,253,750.44 839,782,543.07
Total 667,253,750.44 839,782,543.07
(1) Interest receivable
1) Classification of interest receivable
Inapplicable
2) Significant overdue interest
Inapplicable
3) Provision for bad debts
Inapplicable
(2) Dividends receivable
1) Classification of dividends receivable
Inapplicable
2) Significant dividends receivable with age exceeding 1 year
Inapplicable
3) Provision for bad debts
Inapplicable
(3) Other receivables
1) Classification of other receivables based on nature of payment
In CNY
Nature of the fund Ending book balance Opening book balance
Reserve for employees 1,120.88 24,542.88
Collateral, deposit 537,615.90 537,615.90
Other receivables within FIYTA 666,767,491.31 839,271,199.44
Others 13,105.95 14,855.95
Total 667,319,334.04 839,848,214.17
2) Provision for bad debts
In CNY
Stage 1 Stage 2 Stage 3
Expected credit loss in Expected credit loss in
Provision for bad debt Expected credit loss in the whole duration (no the whole duration (credit Total
future 12 months credit impairment impairment already
incurred) incurred)
Balance as at January 65,671.10 65,671.10
01, 2023
93
Balance as at January
01, 2023 in the reporting
period
Reversal in the reporting 87.50 87.50
period
Balance as at June 30, 65,583.60 65,583.60
2023
Provision for loss - Change of the book balance with significant amount during the reporting period
Inapplicable
Disclosed based on aging
In CNY
Aging Ending balance
Within 1 year (with 1 year inclusive) 666,780,480.72
1 to 2 years 498,803.32
2 to 3 years 0.00
Over 3 years 40,050.00
3 to 4 years 40,050.00
Total 667,319,334.04
3) Provision, recovery or reversal of reserve for bad debts during the reporting period
Provision for bad debt during the reporting period
In CNY
Amount of movement during the reporting period
Categories Opening balance Recovery or Ending balance
Provision Written-off Others
reversal
Provision for bad
65,671.10 87.50 65,583.60
debt
Total 65,671.10 87.50 65,583.60
4) Other receivables actually written off in the reporting period
Inapplicable
5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
Proportion in total Ending balance of
Organization name Nature of Payment Ending balance Aging ending balance of the provision for bad
other receivables debts
Within the scope of
Top five debtors of
consolidation of
the ending balance
receivables 664,807,340.64 Within 1 year 99.62% 0.00
Summary of other
Due from related
receivables
parties
Total 664,807,340.64 99.62% 0.00
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables derecognized due to transfer of financial assets
Inapplicable
8) Amount of assets and liabilities formed through transfer of other receivables and continuing to be involved
Inapplicable
3. Long-term equity investments
In CNY
94
Ending balance Opening balance
Provisi Provisi
Items on for on for
Book balance Book value Book balance Book value
impair impair
ment ment
Investment in 1,490,485,375.68 1,490,485,375.68 1,494,128,399.60 1,494,128,399.60
subsidiaries
Investment in
associates and 56,484,605.25 56,484,605.25 58,182,086.90 58,182,086.90
joint ventures
Total 1,546,969,980.93 1,546,969,980.93 1,552,310,486.50 1,552,310,486.50
(1) Investment in subsidiaries
In CNY
Increase/ Decrease (+ / -) in the reporting period Ending
Provision balance of
Opening balance (book Decrease Ending balance (book
Investees Additional for the provision
value) of Others value)
investment impairmen for
investment impairment
t
Shenzhen
Harmony World
610,354,397.34 -1,376,597.97 608,977,799.37
Watches Center
Co., Ltd.
FIYTA Sales Co.,
458,083,251.89 -1,233,973.05 456,849,278.84
Ltd.
Shenzhen FIYTA
Precision
102,482,069.76 -561,875.76 101,920,194.00
Technology Co.,
Ltd.
Shenzhen FIYTA
Technology
51,224,974.98 -210,708.31 51,014,266.67
Development
Co., Ltd.
FIYTA (Hong
137,737,520.00 137,737,520.00
Kong) Limited
Shiyuehui
Boutique
5,000,000.00 5,000,000.00
(Shenzhen) Co.,
Ltd.
Shenzhen
Harmony E-
11,684,484.39 11,684,484.39
Commerce
Limited
Liaoning
Hengdarui
36,867,843.96 36,867,843.96
Commerce &
Trade Co., Ltd.
Emile Chouriet
(Shenzhen) 80,693,857.28 -259,868.83 80,433,988.45
Limited
Total 1,494,128,399.60 -3,643,023.92 1,490,485,375.68
(2) Investment in associates and joint ventures
In CNY
Increase/ Decrease (+ / -) in the reporting period
Income Ending
from balance
Opening Announce Ending
equity Adjustme of the
balance Decrease Other d for Provision balance
Investees Additional investme nt of other provision
(book of equity distributin for (book
investme nt comprehe Others for
value) investme movemen g cash impairme value)
nt recognize nsive impairme
nt t dividend nt
d under income nt
or profit
equity
method
I. Joint Venture
II. Associates
Shanghai
-
Watch 58,182,08 56,484,60
1,697,481
Industry 6.90 5.25
.65
Co., Ltd.
-
58,182,08 56,484,60
Sub-total 1,697,481
6.90 5.25
.65
-
58,182,08 56,484,60
Total 1,697,481
6.90 5.25
.65
95
(3) Other note
Inapplicable
4. Operation Income and Costs
In CNY
Amount incurred in the reporting period Amount incurred in the previous period
Items
Income Cost Income Cost
Principal business 90,155,946.21 22,121,058.14 90,020,775.90 19,190,036.95
Other businesses 1,886,928.93 1,621,838.79
Total 92,042,875.14 22,121,058.14 91,642,614.69 19,190,036.95
5. Return on investment
In CNY
Items Amount incurred in the reporting period Amount incurred in the previous period
Income from long term equity investment -1,697,481.65 2,462,626.52
based on equity method
Total -1,697,481.65 2,462,626.52
6. Others
Inapplicable
XVIII. Supplementary information
1. Statement of non-recurring gains and losses in the reporting period
In CNY
Items Amount Notes
Gain/loss from disposal of non-current
assets, including the part written-off with the -76,689.73
provision for impairment of assets.
The government subsidies included in the
profits and losses of the current period
( (excluding government grants which are 6,691,609.41
closely related to the Company’s normal
business and conform with the national
standard amount or quantity)
Reversal of provision for impairment of
accounts receivable that has been 5,954,740.99
separately tested for impairment
Other non-operating income and expenses 304,922.65
with the aforesaid items exclusive
Less: Amount affected by the income tax 2,832,059.75
Total 10,042,523.57 --
Details of other gains and losses in compliance with the definition of non-recurring gains and losses.
Inapplicable
Explanation of the non-recurring gains and losses listed in the Explanatory Announcement No.1 on Information Disclosure
for Companies Offering Their Securities to the Public as recurring gains and losses
Inapplicable
2. ROE and EPS
Earnings per share
Return on equity, weighted
Profit in the reporting period Basic earning per share Diluted earning per share
average
(CNY/share) (CNY/share)
Net profit attributable to the
Company’s shareholders of 5.80% 0.4517 0.4517
ordinary shares
Net profit attributable to the
Company’s shareholders of 5.49% 0.4274 0.4274
ordinary shares less non-
96
recurring gains and loss
3. 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 & the net assets disclosed in the financial report respectively according to the IAS
and the CAS
Inapplicable
(3) Note to the discrepancy in accounting data under the IAS and the CAS. In case the discrepancy in data which
have been audited by an overseas auditing agent has been adjusted, please specify the name of the overseas
auditing agent.
Inapplicable
4. Others
Inapplicable
FIYTA Precision Technology Co., Ltd.
Board of Directors
August 23, 2023
97
