FIYTA Precision Technology Co., Ltd.
2020 Semi-annual Report
July, 2020
Section 1 Important Notice, Table of Contents and Definition
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives herebyindividually and collectively accept responsibility for the correctness, accuracy and completeness of thecontents of this report and confirm that there are neither material omissions nor errors which would render anystatement misleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of theaccounting department (treasurer) hereby confirm the authenticity and completeness of the financial reportenclosed in this Annual Report.
All the directors attended the board meeting for reviewing the Annual Report.
Any perspective description, such as future plan, development strategy, etc. involved in the Semi-annual Reportshall not constitute the Company’s substantial commitment to the investors and the investors should please payattention to their investment risks.
In this report, the Company has described in detail the existing macro-economic risks as well as operation risks.Investors are advised to refer to the contents concerning risks possibly to be confronted with by the Companyand the countermeasures to be taken in Section 4 Discussion and Analysis of the Operation
The Company intends neither to distribute any cash dividend or bonus shares nor to convert any reserve intoshare capital.
Table of Contents
2020 Semi-annual Report
Section 1 Important Notice, Table of Contents and Definition
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Section 4 Discussion and Analysis of the Operation
Section 5 Significant Events
Section 6 Change of Shares and Particulars about Shareholders
Section 7 About the Preferred Shares
Section 8 About the Convertible Bonds
Section 9 Directors, Supervisors and Senior Executives
Section 10 Bond Related Information
Section 11 Financial Report
Chapter 12 Documents Available for Inspection
Definitions
| Terms to be defined | Refers to | Definition |
| This Company, the Company or FIYTA | Refers to | FIYTA Precision Technology Co., Ltd. |
| AVIC | Refers to | Aviation Industry Corporation of China, Ltd. |
| AVIC International | Refers to | AVIC International Holding Corporation |
| AVIC International Shenzhen | Refers to | AVIC International Shenzhen Co., Ltd. |
| AVIC IHL | Refers to | AVIC International Holding Limited |
| The Sales Co. | Refers to | FIYTA Sales Co., Ltd. |
| Harmony | Refers to | Shenzhen Harmony World Watches Center Co., Ltd. |
| Precision Technology Co. | Refers to | Shenzhen FIYTA Precision Technology Co., Ltd. |
| Science & Technology Development Co. | Refers to | Shenzhen FIYTA Technology Development Co., Ltd. |
| the Hong Kong Co. | Refers to | FIYTA (Hong Kong) Limited |
| CMPO | Refers to | China Merchants Property Operation & Service Co., Ltd. |
| Rainbow Ltd. | Refers to | Rainbow Digital Commercial Co., Ltd. |
| Shennan Circuit | Refers to | Shennan Circuit Co., Ltd. |
| AVIC Property | Refers to | AVIC Property Management Co., Ltd. |
Section 2 Company Profile and Financial Highlights
I. Company Profile
| Short form of the stock: | FIYTA and FIYTA B | Stock Code | 000026 and 200026 |
| Short form of the stock after the change (if any) | FIYTA | ||
| Stock Exchange Listed with | Shenzhen Stock Exchange | ||
| Company Name in Chinese | FIYTA Precision Technology Co., Ltd. | ||
| Abbreviation of Registered Company Name in Chinese | 飞亚达公司 | ||
| Company name in English (if any) | FIYTA Precision Technology Co., Ltd. | ||
| Abbreviation of the Company name in English (if any) | FIYTA | ||
| Legal Representative | Huang Yongfeng | ||
II. Liaison Persons and Communication Information
| Secretary of the Board | Securities Affairs Representative | |
| Name | Pan Bo | Zhang Yong |
| Liaison Address | 18th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen | 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen |
| Tel. | 0755-86013669 | 0755-86013669 |
| Fax | 0755-83348369 | 0755-83348369 |
| investor@fiyta.com.cn | investor@fiyta.com.cn |
III. Other Information
1. Way of Communication
There is no change in the registered address, office address and post code, company website and email during thereporting period. For the detail, refer to 2019 Annual Report.
2. Information Disclosure and Place where the Regular Reports are Prepared
There is no change in the newspapers designated for disclosing the information, the Internet website designated by ChinaSecurities Regulatory Commission for publishing the Semi-annual Report, and the place where the Company’sSemi-annual Report is prepared and available for inquiry. For the detail, refer to 2019 Annual Report.
3. Other Relevant Information
The Company has changed its name in Chinese, its name in English and abbreviation of its A-share securities. For thedetail, refer to the Announcement on Change of the Company Name and the Abbreviation of its A-share Securities2020-006 published on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.IV. Summary of Accounting/Financial DataDoes the Company need to make retroactive adjustment or restatement of the accounting data of the previous yearsNo
| Reporting period | Same period of the previous year | Year-on-year increase/decrease in the reporting period | |
| Revenue in CNY | 1,581,834,715.03 | 1,785,036,020.23 | -11.38% |
| Net profit attributable to the Company’s shareholders, in CNY | 77,738,906.30 | 123,495,460.90 | -37.05% |
| Net profit attributable to the Company’s shareholders less the non-recurring items, in CNY | 68,669,477.45 | 113,627,146.69 | -39.57% |
| Net cash flows arising from operating activities, in CNY | 103,645,235.27 | 159,014,650.37 | -34.82% |
| Basic earning per share (CNY/share) | 0.1775 | 0.2788 | -36.33% |
| Diluted earning per share (CNY/share) | 0.1775 | 0.2788 | -36.33% |
| Return on equity, weighted average | 2.91% | 4.69% | -1.78% |
| End of the reporting period | End of the previous year | Increase/decrease at the end of the year over the end of the previous year | |
| Total assets (in CNY) | 3,837,627,638.42 | 3,760,923,285.37 | 2.04% |
| Net profit attributable to the Company’s shareholders, in CNY | 2,628,145,112.24 | 2,654,533,766.99 | -0.99% |
V. Difference in the Accounting Data based respectively on the Chinese Accounting Standards (CAS) andInternational Accounting Standards (IAS)
1. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’sshareholders respectively according to the IAS and the CAS.Inapplicable
2. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’sshareholders according to both the IAS and the CASInapplicable
VI. Non-recurring gain/loss items and the amount involved
In CNY
| Items | Amount | Note |
| Gain/loss from disposal of non-current assets, including the part offset from the provision for impairment of assets. | -200,140.17 | |
| The government subsidies included in the profits and losses of the current period ( (excluding government grants which are closely related to the Company’s business and conform with the national standard amount or quantity) | 10,154,015.67 | |
| Reversal of the impairment provision for receivables and contract assets which have been tested individually for impairment | 296,622.87 | |
| Other non-operating income and expenses other than the aforesaid items | 1,273,213.01 | |
| Less: Amount affected by the income tax | 2,454,282.53 | |
| Total | 9,069,428.85 | -- |
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on InformationDisclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurringgain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offeringtheir Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, itis necessary to explain the reason.
Inapplicable
Section 3 Business SummaryI. Main business the Company operated during the reporting periodFIYTA is engaged in principal business of watch brand management and brand watch retails. In respect of thetechnological nature, it belongs to precision technology industry. Depending on its accumulated technological andindustrial advantages in the high-end precision technology field, the Company is also actively carrying forwarddevelopment of innovation businesses, including precision technology, smart watches, etc.
Affected by the COVID-19 epidemic, the watch industry has been severely impacted. In the face of severe marketchallenges, the Company resolutely implements the strategic deployment of the Central Party Committee and the superior,and comprehensively promotes the epidemic prevention and control and the resumption of work and production. Duringthe reporting period, there was no significant change in the Company's principal business and operation model, industrydevelopment status and the Company’s status in the industry. For details, please refer to 2019 Annual Report.II. Significant Movements in Prime Assets
1. Significant Movements in Prime Assets
Inapplicable
2. Major Overseas Assets
InapplicableIII. Analysis on Core CompetitivenessDuring the reporting period, there was no significant change in the Company's core competitiveness. For the detail, referto 2019 Annual Report.
Section 4 Discussion and Analysis of the OperationI. GeneralAt the beginning of 2020, a sudden outbreak of COVID-19 brought about an unprecedented impact on the economy.Being confronted with the severe challenge of the market situation, the Company resolutely implemented the strategicdeployment of the CPC Central Committee and the superior, started the wartime combat system, comprehensivelypromoted the epidemic prevention and control work, and ensured employees to be “zero suspected and zero confirmed”for the disease. At the same time, the Company actively carried forward the resumption of work and production; throughstrict cost control, seized the market opportunity; through WeChat, live broadcast and other ways, actively expandedcommunity marketing, social marketing and through continuous innovation, adapted to the market situation andcompetitive situation after the epidemic. In the first half of the year, in response to the progress of the epidemic, theCompany successively planned and promoted the “epidemic prevention and control war”, “market recovery war” and“operation counterattack war”, which have demonstrated the Company’s strong market recovery and adjustment andadaptation ability. Having experienced the test of the epidemic, the Company has continuously improved its team fightingability and profitability.
During the first half year, the Company achieved operating revenue amounting to CNY 1,581,834,700, a year-on-yeardecrease of 11.38%, and realized net profit attributable to the shareholders of the listed company amounting to CNY77,738,900, a year-on-year decrease of 37.05%. Where, the operating revenue in the second quarter was CNY 993.4737million, a year-on-year increase of 11.42%, and the net profit attributable to shareholders of the listed company was CNY
90.7137 million, a year-on-year increase of 53.40%, which set a new record in the single-quarter operating revenue andnet profit attributable to the shareholders of the listed company. During the reporting period, the Company achieved adeep V-shaped rebound trend in its business. This February was the month in which the Company was affected worst bythe COVID-19 - its revenue dropped by more than 70% year on year and recorded a significant loss in a single month.Since March, the operating revenue and profit rebounded rapidly, although the recovery of the offline customer volumewas still below that as expected. Since May and June, the Company has achieved a significant growth in its operatingrevenue and profit.
In terms of different businesses, the current revenue from the self-owned brands has recovered to more than 90% in thesame period of last year, and the current profit has achieved a sharp year-on-year growth in the second quarter. In termsof the business of the world brand watches, especially high-end Swiss watch brands, benefited from overseasconsumption backflow and the Company’s continuous optimization of the channels and brands in recent years, theCompany realized a high-speed growth in revenue and profit in the second quarter which have stimulated the Company inquick improvement of overall income and profitability. The Company has also a good performance in the growth ofprecision technology, has achieved an outstanding progress in accumulation of the technology and products of smartwears. The Company is optimistic about the follow-up business development and performance growth on overall basis.During the reporting period, the Company carried out the following key work:
A. Having started the "wartime" command system and launched the "epidemic prevention and control war"During the reporting period, the Company launched a “wartime system” and strictly followed the deployment of the centralgovernment and authorities of higher levels to do its best to prevent and control the epidemic. The Company's current
production and operations have returned to normal, and the employees’ operation and production resumption rate was100%, and there was no suspected or confirmed case. To cope with the impact of the epidemic on its business, theCompany quickly adjusted its business strategy, centered on supporting current sales, strictly controlled all non-essentialexpenses, and strengthened cash flow management. In the first half of 2020, the Company's overall expenses fell by 9.07%on year-on-year basis and a significant result was achieved.
B. Seizing the market opportunities and quickly launching the "market recovery war" and "market counterattack”Under the personal direction of General Secretary Xi Jinping, China has brought the epidemic under fundamental control.The Chinese government is trying every means to support the whole people to get through this tough time with variouspolicies and promote the economy recovery. The Company quickly adjusted its status in various businesses and carriedout the “market recovery war” and “operation counterattack”, and achieved rapid revenue rebound and profit overtaking,and further enhanced the competitive advantage of the principal businesses. During the reporting period, the new imageof the “FIYTA” brand channel was gradually spread across the country, and the special work of excellent channeloperation and sales excellence continued to be implemented; the Four-leaf Clover and Xtreme Series of new productswere launched as scheduled, and the Company won the 2020 IF Design Award for its “FIYTA” brand dual visual displaycustomization concept watch; the memorial watch of FIYTA fighting against the “epidemic” to pay tribute to the “heroes inharm’s way” in the battle against COVID-19; the brand-new image blockbuster of “FIYTA” Brand spokesperson GaoYuanyuan was officially released. The free public welfare promotion activities with “we always believe in love and thepower of time" as the promotion theme were launched in all regions of the country. The performance of HARMONYWorld Watches exceeded the expectations. Meanwhile, HARMONY World Watches is continuously carrying forward theimprovement of operational efficiency and keeping continuous improvement in gross margin, expense ratio, inventoryturnover and other indicators; and the profit growth is significantly higher than revenue growth.
C. Implementing innovation-driven development, and continuing to enhance the Company's new growthmomentumDuring the reporting period, the Company continued to promote business innovation and development, and supported toconstantly strengthen the new driving forces of the Company's future development. While carrying forward recovery andgrowth of the offline channel in the Company’s brand cluster and Harmony World Watches business, the Company at thesame time also speeded up investment in the online platform, accelerated the exploration of the new retail formatsincluding “live webcasting”, “community marketing”, etc. , by using informatization means, continuously innovated newretail formats and service models. Invited by the Ministry of Commerce, "FIYTA" was elected as the only clock brand asa “Made-in-China” brand of the Ministry of Commerce to participate in the first live events at Alibaba "Dual-brand OnlineShopping Festival" the Chinese first live events and achieved an extraordinary success; the Company accelerated thedigital transformation and continuously built a customer-oriented digital operation system. The construction of the CRMsystem of brand cluster business and the digital retail system of HARMONY watch business has been successfully carriedforward.
During the reporting period, the Company enjoyed a favorable growth trend in its precision technology innovationbusiness, continued to consolidate the optical communication and laser device market, constantly strengthened theopportunity recognition of military, medical and other fields, FIYTA Technology Co., participated in LASER World ofPHOTONICS CHINA and exhibited its powerful technology strength in precision parts and components with highdimensional accuracy and high design standard, and continuously developed new customer areas; the brand “Jeep” hasaccurately targeted urban women, and launched smart women's watch with fashionable appearance design and
female-exclusive and body temperature monitoring features.
II. Analysis on the Principal BusinessRefer to “I. General” of “Discussion and Analysis of Business Conditions”Movements of the Key Financial Items are summarized as follows:
In CNY
| Reporting period | Same period of the previous year | Year-on-year increase/decrease | Cause of the movement | |
| Operating revenue | 1,581,834,715.03 | 1,785,036,020.23 | -11.38% | Inapplicable |
| Operating cost | 977,435,676.87 | 1,051,504,075.22 | -7.04% | Inapplicable |
| Sales costs | 380,928,312.51 | 415,776,028.95 | -8.38% | Inapplicable |
| Administrative expenses | 98,240,348.73 | 116,352,835.42 | -15.57% | Inapplicable |
| Financial expenses | 16,528,943.36 | 16,238,965.89 | 1.79% | Inapplicable |
| Income tax expenses | 13,907,911.89 | 40,615,187.57 | -65.76% | mainly due to the decrease in the total profit in the year. |
| R&D input | 20,704,270.76 | 19,526,410.93 | 6.03% | Inapplicable |
| Net cash flows arising from operating activities | 103,645,235.27 | 159,014,650.37 | -34.82% | mainly due to the decrease of payments received this year. |
| Net cash flows arising from investment activities | -53,892,827.56 | -89,214,047.63 | 39.59% | Mainly due to year-on-year decrease of the payment for the construction project of the Watch Building and the rent of counters this year. |
| Net cash flow arising from financing activities: | -19,875,245.29 | -8,308,417.60 | -139.22% | Mainly due to the increase in total borrowings and the earlier allocation of equity this year over the previous year. |
| Net increase of cash and cash equivalents | 29,813,076.59 | 61,693,492.45 | -51.68% | Mainly due to decrease of net cash flow from operating activities. |
Significant change in profit composition or profit sources during the reporting period.Inapplicable
Composition of Revenues
In CNY
| Reporting period | Same period of the previous year | Year-on-year increase/decrease | |||
| Amount | Proportion in the revenue | Amount | Proportion in the revenue | ||
| Total operating revenue | 1,581,834,715.03 | 100% | 1,785,036,020.23 | 100% | -11.38% |
| Based on sectors | |||||
| Watches | 1,463,489,661.92 | 92.52% | 1,665,295,400.25 | 93.29% | -12.12% |
| Precision technology business | 59,445,727.65 | 3.76% | 42,946,232.05 | 2.41% | 38.42% |
| Leases | 56,149,280.30 | 3.55% | 67,373,825.03 | 3.77% | -16.66% |
| Others | 2,750,045.16 | 0.17% | 9,420,562.90 | 0.53% | -70.81% |
| Based on products | |||||
| Watch brand business | 378,593,080.99 | 23.93% | 556,286,718.01 | 31.16% | -31.94% |
| Watch retail and services | 1,084,896,580.93 | 68.58% | 1,109,008,682.24 | 62.13% | -2.17% |
| Precision technology business | 59,445,727.65 | 3.76% | 42,946,232.05 | 2.41% | 38.42% |
| Leases | 56,149,280.30 | 3.55% | 67,373,825.03 | 3.77% | -16.66% |
| Others | 2,750,045.16 | 0.17% | 9,420,562.90 | 0.53% | -70.81% |
| Based on regions | |||||
| South China | 791,143,597.98 | 50.01% | 816,517,312.49 | 45.74% | -3.11% |
| Northwest China | 244,986,597.57 | 15.49% | 307,450,222.84 | 17.22% | -20.32% |
| Northeast China | 81,410,583.11 | 5.15% | 115,213,698.49 | 6.45% | -29.34% |
| East China | 207,949,022.33 | 13.15% | 241,568,771.25 | 13.53% | -13.92% |
| Northeast China | 81,751,729.88 | 5.17% | 130,823,214.98 | 7.33% | -37.51% |
| Southwest China | 174,593,184.16 | 11.04% | 173,462,800.18 | 9.72% | 0.65% |
Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating Profit
In CNY
| Operating revenue | Operating cost | Gross profit rate | Year-on-year increase/decrease of operating revenue over the previous year | Year-on-year increase/decrease of operating costs over the previous year | Year-on-year increase/decrease of gross profit rate over the previous year | |
| Based on sectors | ||||||
| Watches | 1,463,489,661.92 | 910,076,516.90 | 37.81% | -12.12% | -8.93% | -2.18% |
| Precision technology business | 59,445,727.65 | 49,288,212.11 | 17.09% | 38.42% | 39.59% | -0.70% |
| Leases | 56,149,280.30 | 17,756,851.00 | 68.38% | -16.66% | 21.67% | -9.96% |
| Others | 2,750,045.16 | 314,096.86 | 88.58% | -70.81% | -86.43% | 13.15% |
| Based on products | ||||||
| Watch brand business | 378,593,080.99 | 106,423,723.72 | 71.89% | -31.94% | -34.00% | 0.87% |
| Watch retail and services | 1,084,896,580.93 | 803,652,793.18 | 25.92% | -2.17% | -4.10% | 1.49% |
| Precision technology business | 59,445,727.65 | 49,288,212.11 | 17.09% | 38.42% | 39.59% | -0.70% |
| Leases | 56,149,280.30 | 17,756,851.00 | 68.38% | -16.66% | 21.67% | -9.96% |
| Others | 2,750,045.16 | 314,096.86 | 88.58% | -70.81% | -86.43% | 13.15% |
| Based on regions | ||||||
| South China | 791,143,597.97 | 477,635,892.51 | 39.63% | -3.11% | 1.82% | -2.92% |
| Northwest China | 244,986,597.57 | 160,970,051.46 | 34.29% | -20.32% | -11.63% | -6.46% |
| Northeast China | 81,410,583.11 | 47,485,763.54 | 41.67% | -29.34% | -27.03% | -1.85% |
| East China | 207,949,022.33 | 127,522,856.76 | 38.68% | -13.92% | -6.44% | -4.90% |
| Northeast China | 81,751,729.88 | 56,114,620.18 | 31.36% | -37.51% | -38.72% | 1.35% |
| Southwest China | 174,593,184.16 | 107,706,492.42 | 38.31% | 0.65% | 0.39% | 0.16% |
While adjustment of the statistical caliber for the principal business data took place in the reporting period, the principalbusiness data with the statistical caliber adjusted at the end of the reporting period in the latest year.Inapplicable
Causes of the change in the relevant data by over 30%InapplicableIII. Analysis on Non-Principal BusinessesInapplicableIV. Analysis on the Status of Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
| End of the reporting period | End of the same period of the previous year | Proportion increased/decreased | Note to significant changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary fund | 346,481,641.68 | 9.03% | 226,521,552.42 | 6.19% | 2.84% | Inapplicable |
| Accounts receivable | 428,154,219.98 | 11.16% | 448,122,115.59 | 12.24% | -1.08% | Inapplicable |
| Inventories | 1,798,215,040.24 | 46.86% | 1,727,402,092.53 | 47.19% | -0.33% | Inapplicable |
| Investment-oriented | 399,881,983.38 | 10.42% | 370,467,221.69 | 10.12% | 0.30% | Inapplicable |
| real estate | ||||||
| Long-term equity investment | 48,584,749.77 | 1.27% | 46,412,373.21 | 1.27% | 0.00% | Inapplicable |
| Fixed assets | 354,294,685.37 | 9.23% | 414,522,443.81 | 11.32% | -2.09% | Inapplicable |
| Construction-in-process | 0.00% | 12,886,665.68 | 0.35% | -0.35% | Inapplicable | |
| Short term loans | 673,562,359.55 | 17.55% | 550,078,332.26 | 15.03% | 2.52% | Inapplicable |
| Long-term borrowings | 4,295,595.00 | 0.11% | 4,409,875.00 | 0.12% | -0.01% | Inapplicable |
2. Assets and liabilities measured based on fair value
Inapplicable
3. Restriction on rights in the assets ended the reporting period
A property owned by Switzerland based Montres Chouriet SA with net value of CNY 14,201,915.48 was used as acollateral for the overseas long term loan amounting to CNY 4,295,595.00.V. Investment
1. General
Inapplicable
2. Significant equity investment acquired in the reporting period
Inapplicable
3. Significant non-equity investment in process in the reporting period
Inapplicable
4. Financial assets measured with fair value
Inapplicable
5. Financial assets investment
(1) Portfolio investment
Inapplicable
(2) Investment in derivatives
InapplicableVI. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
2. Sales of Significant Equity
InapplicableVII. Analysis on Principal Subsidiaries and Mutual Shareholding CompaniesParticulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profitby over 10%.
In CNY
| Company name | Company type | Principal businesses | Registered capital | Total assets | Net assets | Operating revenue | Operation profit | Net profit |
| Shenzhen Harmony World Watches Center Co., Ltd. | Subsidiaries | Purchase & sale and repairing service of watches and components | 600,000,000.00 | 1,605,024,722.18 | 857,960,826.78 | 1,105,078,780.80 | 67,394,014.39 | 51,134,197.54 |
| FIYTA Sales Co., Ltd. | Subsidiaries | Design, R & D and sales of watches and components & parts | 450,000,000.00 | 535,867,904.04 | 352,761,933.19 | 323,309,657.57 | -70,100,242.77 | -52,680,028.68 |
| Shenzhen FIYTA Precision Technology Co., Ltd. | Subsidiary | Manufacture and production of watches and components | 10,000,000.00 | 346,185,443.57 | 171,720,773.04 | 192,330,657.84 | 74,732,876.65 | 64,813,822.29 |
| Shenzhen FIYTA Technology Development Co., Ltd. | Subsidiaries | Production and machining of sophisticated components and parts | 10,000,000.00 | 119,601,765.14 | 82,350,678.80 | 69,486,985.85 | 4,970,078.30 | 4,951,245.05 |
| FIYTA (Hong Kong) Limited | Subsidiaries | Trading of watches and accessories and | 137,737,520.00 | 239,678,292.68 | 184,558,111.30 | 24,737,349.83 | -3,900,522.29 | -3,963,863.00 |
| investment | ||||||||
| Shiyuehui Boutique (Shenzhen) Co., Ltd. | Subsidiary | Design, R & D and sales of watches and components & parts | 5,000,000.00 | 42,111,501.99 | -1,793,433.45 | 17,564,716.67 | 2,927,775.59 | 2,195,312.53 |
| Liaoning Hengdarui Commerce & Trade Co., Ltd. | Subsidiary | Purchase & sale of watches and components & parts | 51,000,000.00 | 136,996,949.35 | 41,665,609.70 | 4,013,472.76 | 421,525.77 | 313,411.39 |
| Shenzhen Harmony E-Commerce Co., Ltd. | Subsidiary | Purchase & sale of watches and components & parts | 500,000.00 | 3,678,430.63 | 3,678,317.54 | -363.96 | 1,025.36 | |
| Emile Chouriet (Shenzhen) Limited | Subsidiary | Design, R & D and sales of watches and components & parts | 41,355,200.00 | 118,859,744.35 | 58,586,641.34 | 24,907,100.82 | -6,802,583.05 | -5,107,808.68 |
| Shanghai Watch Industry Co., Ltd. | Mutual shareholding company | Production and sales of watches and components & parts | 15,350,000.00 | 135,086,439.84 | 113,609,948.16 | 54,674,292.84 | 10,310,186.42 | 8,643,647.69 |
Acquisition and disposal of subsidiaries in the reporting periodInapplicable
Note to the principal mutual shareholding companiesInapplicableVIII. Structurized Entities Controlled by the CompanyInapplicableIX. Prediction of the Performances from January to September, 2020InapplicableX. Risks Possibly to be Confronted withA. The epidemic situation at home and abroad and the international political environment are still facing manyuncertainties, and the watch industry is to be confronted with bigger challengeAffected by the repetition of COVID-19 epidemic and the complex international political environment, the domestic
economy is still facing many challenges and uncertainties. As to the watch industry, the consumption structure andcompetition pattern in the market after the epidemic may undergo significant change. In the second half of 2020, theCompany shall maintain its “wartime” command system, seize the opportunity of expanding domestic demand andrecovering consumption while normalizing epidemic prevention and control, strengthen its attention to the market, andstrive to achieve the core work objective of the year.
B. Affected by the lack of consumer confidence and willingness, the brand business shall still be facing greatermarket pressureAgainst the backdrop of positive momentum in epidemic prevention and control and accelerating recovery of economicand social development, the government is constantly improving its consumption policy, optimizing the consumptionenvironment and stabilizing consumption expectations. However, the offline customer counting is still very slow inrecovery and the Company shall still be confronted with the big difficulty and challenge in its own brand business. In thesecond half of 2020, the Company shall continue to strengthen the construction of “brand power, product power andchannel power”, and ensure to win the initiative in the market competition.
C. With rapid progress in technologies such as the Internet of Things, artificial intelligence and communications,innovative businesses are still under pressure to growAt present, network information technologies represented by the Internet of Things, artificial intelligence, communication,etc., are rapidly evolving and accelerating their integration with traditional industries. The Company's innovation businessof precision technology and smart wears is still of small size, and its technical strength is still in the process ofimprovement. Meanwhile, the Company's digital operation system is still in process of construction, and the deepintegration effect of network information technology and the Company's watch business is still uncertain. In the secondhalf of 2020, the Company shall continue to refine the development path of precision technology and smart wear business,and continue to build the core strength of precision technology. At the same time, with customers as the center, theCompany shall accelerate the brand cluster business CRM system and the construction of the Harmony World WatchesBusiness Digital Retail Phase II system and promote the success of the Company's business digital transformation.
Section 5 Significant Events
I. General meeting and extraordinary general meetings
1. General meetings
| Sessions | Meeting type | Proportion of attendance of the investors | Meeting date | Date of disclosure | Disclosure index |
| 2020 1st Extraordinary General Meeting | Extraordinary General Meeting | 36.96% | April 13, 2020 | April 14, 2020 | http://www.cninfo.com.cn/ |
| 2019 Annual General Meeting | Annual general meeting | 38.61% | June 04, 2020 | June 05, 2020 | http://www.cninfo.com.cn/ |
2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting powerrecovered.InapplicableII. Profit distribution and conversion of capital reserve into share capital in the reporting periodInapplicableIII. Commitments finished in implementation by the Company's actual controller, shareholders, related parties,acquirer, the Company, etc. in the reporting period and commitments unfinished in implementation at the end ofthe reporting periodInapplicableIV. Engagement/disengagement of CPAsHas the financial report to the Semi-Annual Report been auditedNoV. Explanation of the Board of Directors and the Supervisory Committee on the Qualified Auditors' Report for thereporting period issued by the CPAsInapplicable
VI. Explanation of the Board of Directors on the Qualified Auditors' Report for the previous year issued by theCPAsInapplicableVII. Matters concerning bankruptcy reorganizationInapplicableVIII. LawsuitsInapplicableIX. Matters questioned by the mediaInapplicableX. Penalty and rectificationInapplicableXI. Integrity of the Company, its controlling shareholder and actual controllerInapplicableXII. Implementation of the Company’s equity incentive plan, employee stock ownership plan or other employeeincentive measuresThe 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meetingheld on January 11, 2019 decided to start 2018 A-Share Restricted Stock Incentive Program (Phase I), which was later onreviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Companyeventually granted 4.224 million restricted A-shares to 128 persons eligible for the incentive. For the detail, refer to therelevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn onJanuary 12, 2019. This part of A-share restricted shares was all granted and registered for listing by January 30, 2019.
As three original incentive objects of the above incentive plan, namely Wu Yue (27,000 shares granted), Yang Shuzhi(20,000 shares granted), Lin Yichao (20,000 shares granted) have left the Company, according to the 2018 A-ShareRestricted Stock Incentive Plan (Phase I) (Draft Revision), they have no longer met the incentive conditions. TheCompany has now completed the repurchase and write-off of 67,000 A-share restricted shares held by the above threeincentive objects and granted but not yet released. For the detail, refer to the relevant announcement disclosed in theSecurities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 9, 2020.
As one of the original incentive objects of the incentive plan, Kong Mengqi (27,000 shares granted) has left the Company.According to the 2018 A-Share Restricted Stock Incentive Plan (Phase I) (Draft Revision), he has no longer metthe incentive conditions. Approved at 2019 Annual General Meeting, as the notice to the creditor has expired, the
Company is now in process of handling the procedures of repurchase and write-off of the 27,000 A-share restricted sharesheld by the above incentive object and granted but not yet released. For the detail, refer to the relevant announcementdisclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 5, 2020.
As one original incentive object of the above incentive plan, namely Liu Liyuan (20,000 shares granted) has left theCompany, according to the 2018 A-Share Restricted Stock Incentive Plan (Phase I) (Draft Revision), she has no longermet the incentive conditions. Upon approval by 2020 2nd Extraordinary General Meeting, the Company will repurchaseand write off the 20,000 A-shares restricted shares held by the incentive object granted but not yet released uponexpiration of the notice of the debenturer. For the detail, refer to the relevant announcement disclosed in the SecuritiesTimes, Hong Kong Commercial Daily and www.cninfo.com.cn respectively on July 7, 2020 and July 24, 2019.XIII. Significant related transactions
1. Related transactions related with day-to-day operations
Inapplicable
2. Related transactions concerning acquisition and sales of assets or equity
Inapplicable
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current associated rights of credit and liabilities
Does there exist non-operating current associated rights of credit and liabilitiesNo
5. Other significant related transactions
InapplicableXIV. Non-operational occupancy of the Company’s capital by the controlling shareholder and its related partiesInapplicableXV. Important contracts and implementation
1. Custody, contacting and leases
(1) Custody
Inapplicable
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
2. Significant guarantees
(1) Guarantees
In CNY 10,000
| Outward guarantees Offered by the Company and its Subsidiaries (excluding guarantee to the subsidiaries) | ||||||||
| Names of Guarantees | Date of the announcement on the guarantee line | Guarantee line | Date of occurrence | Actual amount of guarantee | Type of guarantee | Guarantee period | Implementation status | Guarantee to related party? |
| Total amount of outward guarantee approved in the report period (A1) | Total amount of outward guarantee actually incurred in the report period (A2) | |||||||
| Total amount of outward guarantee already approved at the end of the report period (A3) | Total ending balance of outward guarantee at the end of the report period (A4) | |||||||
| Guarantee to the subsidiaries | ||||||||
| Names of Guarantees | Date of the announcement on the guarantee line | Guarantee line | Date of occurrence | Actual amount of guarantee | Type of guarantee | Guarantee period | Implementation status | Guarantee to related party? |
| Harmony | March 15, 2019 | 20,000 | December 30, 2019 | 10,000 | Guarantee with joint responsibility | 1 year | No | No |
| Harmony | March 20, 2020 | 4,000 | April 21, 2020 | 4,000 | Guarantee with joint responsibility | 1 year | No | No |
| The Sales Co. | March 20, 2020 | 5,000 | April 26, 2020 | 5,000 | Guarantee with joint responsibility | 1 year | No | No |
| Precision Technology Co. | March 20, 2020 | 3,000 | April 24, 2020 | 3,000 | Guarantee with joint responsibility | 1 year | No | No |
| Science & Technology Development Co. | March 20, 2020 | 3,000 | April 29, 2020 | 243 | Guarantee with joint responsibility | 1 year | No | No |
| the Hong Kong Co. | March 15, 2019 | 3,653.76 | August 22, 2019 | 372 | Guarantee with joint responsibility | 1 year | No | No |
| the Hong Kong Co. | March 15, 2019 | September 23, 2019 | 372 | Guarantee with joint responsibility | 1 year | No | No | ||
| the Hong Kong Co. | March 15, 2019 | October 31, 2019 | 298 | Guarantee with joint responsibility | 1 year | No | No | ||
| Total guarantee quota to the subsidiaries approved in the reporting period (B1) | 15,000 | Total amount of guarantee to the subsidiaries actually incurred in the reporting period (B2) | 12,243 | ||||||
| Total guarantee quota to the subsidiaries approved at the end of the reporting period (B3) | 38,653.76 | Total balance of actual guarantee to the subsidiaries at the end of the reporting period (B4) | 23,285 | ||||||
| Guarantee among the subsidiaries | |||||||||
| Names of Guarantees | Date of the announcement on the guarantee line | Guarantee line | Date of occurrence | Actual amount of guarantee | Type of guarantee | Guarantee period | Implementation status | Guarantee to related party? | |
| Inapplicable | 0 | 0 | |||||||
| Total guarantee quota to the subsidiaries approved in the reporting period (C1) | 0 | Total amount of guarantee to the subsidiaries actually incurred in the reporting period (C2) | 0 | ||||||
| Total guarantee quota to the subsidiaries approved at the end of the reporting period (C3) | 0 | Total balance of actual guarantee to the subsidiaries at the end of the reporting period (C4) | 0 | ||||||
| Total amount of guarantees (i.e. Total of the previous three major items) | |||||||||
| Total guarantee quota to the subsidiaries approved in the reporting period (A1) | 15,000 | Total amount of outward guarantee actually incurred in the report period (A2) | 12,243 | ||||||
| Total amount of guarantees already approved at the end of the report period (A3) | 38,653.76 | Total ending balance of guarantees at the end of the report period (A4) | 23,285 | ||||||
| Proportion of the actual guarantees in the Company’s net assets (namely A4+B4 + C4) | 8.86% | ||||||||
| where | |||||||||
| Amount of guarantees offered to the shareholders, actual controller and its related parties (D) | 0 | ||||||||
| Amount of guarantee for liabilities directly or indirectly offered to the guarantees with the asset-liability ratio exceeding 70% (E) | 0 | ||||||||
| Guarantee with total amount exceeding 50% of the net assets (F) | 0 | ||||||||
| Total amount of the aforesaid three guarantees (D+E+F) | 0 | ||||||||
| For the guarantee not yet due, guarantee responsibility incurred in the reporting period or description of the possible related discharge duty (if any) | Inapplicable | ||||||||
| Note to the outward guarantee against the established procedures (if any) | Inapplicable |
Description of the guarantee with complex methodInapplicable
(2) Outward guarantee against regulations
Inapplicable
3. Finance management on commission
Inapplicable
4. Other important contracts
InapplicableXVI. Social responsibilities
1. Significant issues concerning environmental protection
Does the Company or any of its subsidiaries belong to a key pollutant discharging unit as announced to the public by theenvironmental protection authority?Yes
| Name of the Company or its Subsidiary | Description of the major pollutants or specific pollutant | Way of discharging | Number of discharging outlets | Distribution of the discharging outlets | Discharging concentration | Pollutant Discharge Standards in Force | Total discharge volume | Total discharge volume verified | Over-discharging |
| Shanghai Watch Industry Co., Ltd. | Nickel and hexavalent chromium waste water | Intermittent and interruption | 1 | At the port of effluent treatment equipment | Nickel﹤0.1, hexavalent chromium﹤0.1 | Nickel is 0.1 and hexavalent chromium is 0.1 | 2640 tons/year | 3960 tons/year | None |
Construction and operation of the pollution prevention and control facilitiesShanghai Watch Co., Ltd. reconstructed the clean production facility in 2016 and added 2 sets of equipment in 2018 forthe purpose of ensuring discharging of nickel and chromium effluent to comply with the Emission Standard of Pollutantsfor Electroplating in 2018. Up to now, the facility has been operating normally and its emission has never exceeded thelimit as specified by the standard. The Company's online monitoring terminal has been docked with the governmentmonitoring platform for timely testing. It complies with the standard in terms of emission factors.
Environmental impact assessment on construction projects and other environmental protection administrative licensingIn 2018 Yangpu District Environmental Protection Bureau of Shanghai organized and held the Clean Production Auditingand Assessment Seminar of Shanghai Watch Co., Ltd. where the company's clean production work was assessed,audited and approved. Shanghai Watch Co., Ltd. passed the pollution discharge verification organized by Yangpu DistrictEnvironmental Protection Bureau of Shanghai and received the Pollutant Discharge Permit issued by the said authorityat the end of 2019.
Contingency Plan for Emergent Environmental IncidentsShanghai Watch Co., Ltd. prepared the Emergency Response Plan against Emergent Environmental Incidents andregularly organizes training and exercise every year. The aforesaid plan has been approved and filed for record byYangpu District Environmental Protection Bureau of Shanghai and has been published on the Environmental InformationDisclosure Platform of Enterprises and Institutions of Shanghai.
Environment Self-Monitoring ProgramYangpu District Environmental Protection Bureau of Shanghai conducts supervision once every quarter. The companyhas entrusted Shanghai Textile Energy Conservation & Environmental Protection Center, a competent independent agentto conduct the monitoring. The company is itself equipped with monitoring instruments and conducts self-monitoring atleast 4 times every month.
Other environment information necessary to be disclosedThe company has disclosed the concerned information on the Environmental Information Disclosure Platform ofEnterprises and Institutions of Shanghai according to the requirements of the local environmental protection authorities.Website name: http://xxgk.eic.sh.cn.
Other information in connection with the environmental protectionNone
2. Implementation of the social responsibility of precise poverty relief
During the reporting period of half a year, the Company had neither precise poverty relief work nor follow-up precisepoverty relief plan to be carried out.
XVII. Notes to Other Significant EventsAmendment of the Articles of AssociationThe 18th Session of the Ninth Board of Directors held on May 11, 2020 and 2019 Annual General Meeting held on June04, 2020 reviewed and approved the Proposal on Amendment of the Articles of Association and respectively reviewed andapproved the Proposal for Amendment of the Articles of Association. For the detail, refer to the relevant announcementsdisclosed on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
XVIII. Significant Events of the Company's SubsidiariesDuring the reporting period, FIYTA Sales Co., Ltd., a wholly-owned subsidiary of the Company, changed its business cope,and the procedures of application for the change with the authority of industry and commerce were completed on March13, 2020.
Section 6 Change of Shares and Particulars about ShareholdersI. Change of Shares
1. Change of Shares
In shares
| Before the change | Increase / Decrease (+/ -) | After the change | |||||||
| Quantity | Proportion | New issuing | Bonus shares | Shares converted from reserve | Others | Sub-total | Quantity | Proportion | |
| I. Restricted shares | 4,628,591 | 1.04% | -91,078 | -91,078 | 4,537,513 | 1.06% | |||
| 1. Shares held by the state | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 2. State corporate shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 3. Other domestic shares | 4,628,591 | 1.04% | -91,078 | -91,078 | 4,537,513 | 1.06% | |||
| Including: Domestic corporate shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Shares held by domestic natural persons | 4,628,591 | 1.04% | -91,078 | -91,078 | 4,537,513 | 1.06% | |||
| 4. Foreign invested shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Including: Foreign corporate shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Shares held by foreign natural persons | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| II. Unrestricted shares | 438,340,290 | 98.96% | -14,705,922 | -14,705,922 | 423,634,368 | 98.94% | |||
| 1. CNY ordinary shares | 356,692,290 | 80.53% | 24,078 | 24,078 | 356,716,368 | 83.31% | |||
| 2. Foreign invested shares listed in Mainland China | 81,648,000 | 18.43% | -14,730,000 | -14,730,000 | 66,918,000 | 15.63% | |||
| 3. Foreign invested shares listed abroad | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 4. Others | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| III. Total shares | 442,968,881 | 100.00% | -14,797,000 | -14,797,000 | 428,171,881 | 100.00% | |||
Cause of the change of sharesAs of April 29, 2020, the Company completed the cancellation of some of its domestically listed foreign capital shares (Bshares), with a total of 14,730,000 shares repurchased or cancelled this time. After cancellation of the repurchased shares,the total capital stock of the Company decreased from 442,968,881 shares to 428,238,881 shares.
As of June 5, 2020, the Company completed the repurchase and cancellation of partial restricted shares involved in in2018 A-share Restricted Stock Incentive Plan (Phase I). The total number of shares repurchased and cancelled this timewas 67,000 shares. After cancellation of the repurchased shares, the total capital stock of the Company decreased from428,238,881 shares to 428,171,881 shares.
Approval of Change of the SharesThe Company held 2019 2nd Extraordinary General Meeting on April 23, 2019, authorized the Company's Board ofDirectors to fully handle matters related to the cancellation of the repurchased shares after the repurchase of somedomestically listed foreign shares (B-shares) was completed.
The Company held 2020 1st Extraordinary General Meeting on April 13, 2020, authorized the Company’s Board ofDirectors to repurchase and cancel 67,000 shares of restricted A-shares of the Company held by the three originalincentive objects (Wu Yue, Yang Shuzhi and Lin Yichao) as they have left the Company but restriction on sales of these67,000 shares of restricted A-shares has not been lifted yet.
Transfer of the Shares ChangedVerified by China Securities Depository & Clearing Corporation Limited Shenzhen Branch, as of April 29, 2020, theCompany completed the cancellation of some of its domestically listed foreign capital shares (B shares).
Verified by China Securities Depository & Clearing Corporation Limited Shenzhen Branch, as of June 05, 2020, theCompany completed the cancellation of partial A-share restricted stock.
Progress of implementation of the stock repurchaseThe 7th session of the Ninth Board of Directors held on April 4, 2019 and 2019 2nd Extraordinary General Meeting held onApril 23, 2019, reviewed and approved the “Proposal for the Repurchase of Partial Domestically Listed Foreign Shares inthe Company (B-shares)”. The share repurchase period expired on April 22, 2020. The Company has repurchased a totalof 14,730,000 domestically listed foreign shares (B shares) during the validity period of the repurchase which have beencancelled according to law. In accordance with relevant regulations, the Company disclosed the result of the repurchaseof the shares and published announcement on the completion of the cancellation. For the detail, please refer to therelevant announcement published on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on April24, 2020 and April 30, 2020.
Progress of implementation of reduction of the holding size of the shares repurchased by centralized biddingInapplicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset valueper share attributable to the common stockholders in the past year and the latest period
| Net return on equity, weighted average (%) | Earnings per share | ||||
| Basic earnings per share (CNY/share) | Diluted earnings per share (CNY/share) | ||||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 |
| 2.91% | 4.69% | 0.1775 | 0.2788 | 0.1775 | 0.2788 |
Other information the Company considers necessary or required by the securities regulatory authority to be disclosed.
Inapplicable
2. Change of the Restricted Shares
In shares
| Names of the Shareholders | Number of restricted shares at the beginning of the reporting period | Number of restricted shares relieved in the reporting period | Number of restricted shares increased in the reporting period | Number of restricted shares at the end of the reporting period | Cause of restriction | Date of relieving the restriction |
| Huang Yongfeng | 160,000 | 0 | 0 | 160,000 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Chen Libin | 160,000 | 0 | 0 | 160,000 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Lu Wanjun | 117,500 | 0 | 0 | 117,500 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Liu Xiaoming | 117,500 | 0 | 0 | 117,500 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Pan Bo | 117,500 | 0 | 0 | 117,500 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity |
| incentive management | ||||||
| Li Ming | 117,530 | 0 | 0 | 117,530 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Chen Zhuo | 118,250 | 0 | 0 | 118,250 | Locked shares for senior executives and restricted shares as the granted locked shares | To be unlocked subject to the conditions of the locked shares for senior executives and the measures for the Company’s equity incentive management |
| Tang Haiyuan | 60,000 | 0 | 0 | 60,000 | Restricted shares as the granted locked shares | To be unlocked subject to the conditions as specified in the measures for the Company’s equity incentive management |
| Xu Chuangyue | 50,000 | 0 | 0 | 50,000 | Restricted shares as the granted locked shares | To be unlocked subject to the conditions as specified in the measures for the Company’s equity incentive management |
| Lu Bingqiang | 96,311 | 24,078 | 0 | 72,233 | Locked shares for senior executives | To be unlocked subject to the conditions of the locked shares for senior executives |
| Other persons eligible for the incentive of A-share restricted stock | 3,514,000 | 67,000 | 0 | 3,447,000 | Restricted shares as the granted locked shares | To be unlocked subject to the conditions as specified in the measures for the Company’s equity incentive management |
| Total | 4,628,591 | 91,078 | 0 | 4,537,513 | -- | -- |
II. Issuing and ListingInapplicable
III. Number of Shareholders and Shareholding
In shares
| Total common shareholders at the end of the reporting period | 34,122 | Total preference shareholders with the voting power recovered at the end of the reporting period (if any) (Refer to Note 8) | 0 | |||||||||
| Shares held by the common shareholders holding over 5% shares or the top 10 common shareholders | ||||||||||||
| Names of the Shareholders | Nature of the shareholder | Shareholding proportion | Number of common shares held at the end of the reporting period | Increase/decrease in the reporting period | Number of the restricted common shares held | Number of the unrestricted common shares held | Pledging or freezing | |||||
| Status of the shares | Quantity | |||||||||||
| AVIC International Holding Limited | State corporate | 38.06% | 162,977,327 | 0 | 0 | 162,977,327 | ||||||
| #Yang Zugui | Domestic natural person | 4.47% | 19,144,621 | 2,125,815 | 0 | 19,144,621 | ||||||
| Yang Sancai | Domestic natural person | 2.34% | 9,999,933 | 4,797,233 | 0 | 9,999,933 | ||||||
| Zhang Sufen | Domestic natural person | 0.80% | 3,420,000 | 3,420,000 | 0 | 3,420,000 | ||||||
| Zhang Huaming | Domestic natural person | 0.44% | 1,873,800 | 1,398,800 | 0 | 1,873,800 | ||||||
| Qiu Hong | Domestic natural person | 0.35% | 1,500,000 | 1,500,000 | 0 | 1,500,000 | ||||||
| Na Zhizhong | Domestic natural person | 0.35% | 1,480,163 | 1,480,163 | 0 | 1,480,163 | ||||||
| # Li Yue | Domestic natural person | 0.23% | 1,000,000 | 1,000,000 | 0 | 1,000,000 | ||||||
| Penghua Fund - Minsheng Bank - Penghua Fund - Huili No. 1 Assets Management Plan | Domestic non-state-owned legal person | 0.22% | 951,700 | 0 | 0 | 951,700 | ||||||
| # Shen Xuewen | Domestic natural person | 0.21% | 883,920 | 500 | 0 | 883,920 | ||||||
| About the fact that a strategic investor or ordinary corporate became one of the top ten common shareholders due to placement of new shares (if any) (Refer to Note 3) | Inapplicable | |||||||||||
| Explanation on associated relationship or consistent action of the above shareholders | Inapplicable | |||||||||||
| Shares held by top 10 shareholders of unrestricted shares | ||||||||||||
| Names of the Shareholders | Quantity of unrestricted shares held at the end of the reporting period | Share type | ||||||||||
| Share type | Quantity | |||||||||||
| AVIC International Holding Limited | 162,977,327 | CNY ordinary shares | 162,977,327 | |||||||||
| #Yang Zugui | 19,144,621 | CNY ordinary shares | 19,144,621 |
| Yang Sancai | 9,999,933 | CNY ordinary shares | 9,999,933 |
| Zhang Sufen | 3,420,000 | CNY ordinary shares | 3,420,000 |
| Zhang Huaming | 1,873,800 | CNY ordinary shares | 1,873,800 |
| Qiu Hong | 1,500,000 | CNY ordinary shares | 1,500,000 |
| Na Zhizhong | 1,480,163 | CNY ordinary shares | 1,480,163 |
| # Li Yue | 1,000,000 | CNY ordinary shares | 1,000,000 |
| Penghua Fund - Minsheng Bank - Penghua Fund - Huili No. 1 Assets Management Plan | 951,700 | CNY ordinary shares | 951,700 |
| # Shen Xuewen | 883,920 | CNY ordinary shares | 883,920 |
| Note to the associated relationship or consistent action among the top 10 shareholders of non-restricted common shares and that between the top 10 shareholders of non-restricted common shares and top 10 common shareholders. | Inapplicable | ||
| Note to the top 10 common shareholders involved in margin financing & securities lending (if any) (Refer to Note 4) | Inapplicable | ||
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractualrepurchase during the reporting period?NoIV. Change of the Controlling Shareholder or Actual ControllerInapplicable
Section 7 About the Preferred SharesInapplicable
Section 8 About the Convertible BondsInapplicable
Section 9 Directors, Supervisors and Senior Executives
I. Change in shares held by directors, supervisors and senior executivesInapplicable
No change has taken place in the shares held by directors, supervisors and senior executives of the Company during thereporting period. For the detail, refer to 2019 Annual Report.II. Personnel Change in Directors, Supervisors and Senior ExecutivesInapplicable
No change has taken place in directors, supervisors and senior executives of the Company during the reporting period.For the detail, refer to 2019 Annual Report.
Section 10 Bond Related InformationDid there exist any company bonds which were issued to the public and listed with the stock exchange for trading and wasdue by the date when the Semi-annual Report was approved for issuing or failed to be fully cashed by the end of thereporting period?No
Section 11 Financial ReportI. Auditors’ ReportHas the semi-annual report been auditedNoII. Financial StatementsThe currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA Precision Technology Co., Ltd.
June 30, 2020
In CNY
| Items | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary fund | 346,481,641.68 | 316,668,565.09 |
| Settlement reserve | ||
| Inter-bank lending | ||
| Transactional financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 21,231,543.36 | 10,596,431.31 |
| Accounts receivable | 428,154,219.98 | 397,471,106.98 |
| Financing with accounts receivable | ||
| Advance payment | 18,403,768.63 | 10,847,962.28 |
| Receivable premium | ||
| Reinsurance accounts receivable | ||
| Reserve for reinsurance contract receivable | ||
| Other receivables | 106,768,399.40 | 47,239,844.58 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Redemptory monetary capital for sale | ||
| Inventories | 1,798,215,040.24 | 1,808,820,089.92 |
| Contract assets |
| Held-for-sale assets | ||
| Non-current assets due within a year | ||
| Other current assets | 44,538,051.17 | 68,858,096.74 |
| Total current assets | 2,763,792,664.46 | 2,660,502,096.90 |
| Non-current assets: | ||
| Loan issuing and advance in cash | ||
| Equity investment | ||
| Other equity investment | ||
| Long term accounts receivable | ||
| Long-term equity investment | 48,584,749.77 | 46,423,837.85 |
| Investment in other equity instruments | 85,000.00 | 85,000.00 |
| Other non-current financial assets | ||
| Investment-oriented real estate | 399,881,983.38 | 407,503,307.24 |
| Fixed assets | 354,294,685.37 | 363,997,098.94 |
| Construction-in-process | ||
| Productive biological asset | ||
| Oil and gas assets | ||
| Use right assets | ||
| Intangible assets | 37,857,017.44 | 38,711,821.26 |
| Development expenses | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 126,571,325.96 | 152,587,491.33 |
| Deferred income tax asset | 96,067,247.70 | 83,739,383.37 |
| Other non-current assets | 10,492,964.34 | 7,373,248.48 |
| Total non-current assets | 1,073,834,973.96 | 1,100,421,188.47 |
| Total assets | 3,837,627,638.42 | 3,760,923,285.37 |
| Current liabilities: | ||
| Short term borrowings | 673,562,359.55 | 567,908,833.21 |
| Borrowings from central bank | ||
| Loans from other banks | ||
| Transactional financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 1,400,000.00 | |
| Accounts payable | 191,041,428.35 | 279,772,787.37 |
| Advance Receipts | 7,251,488.79 | 23,433,463.57 |
| Contract liabilities | 21,475,843.30 | |
| Income 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 | 62,233,409.51 | 82,602,845.67 |
| Taxes payable | 53,088,654.29 | 24,064,803.00 |
| Other payables | 190,515,397.99 | 119,616,721.63 |
| Including: interest payable | ||
| Dividends payable | 53,887,144.07 | 848,233.27 |
| Service charge and commission payable | ||
| Payable reinsurance | ||
| Held-for-sale liabilities | ||
| Non-current liabilities due within a year | 373,530.00 | 360,140.00 |
| Other current liabilities | ||
| Total current liabilities | 1,200,942,111.78 | 1,097,759,594.45 |
| Non-current liabilities: | ||
| Reserve for insurance contract | ||
| Long-term borrowings | 4,295,595.00 | 4,321,680.00 |
| Bonds payable | ||
| Including: preferred shares | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term accounts payable | ||
| Long term payroll payable to the employees | ||
| Estimated liabilities | ||
| Deferred income | 3,046,090.60 | 3,046,090.60 |
| Deferred income tax liability | 1,192,721.71 | 1,256,242.49 |
| Other non-current liabilities | ||
| Total non-current liabilities | 8,534,407.31 | 8,624,013.09 |
| Total liabilities | 1,209,476,519.09 | 1,106,383,607.54 |
| Owner’s equity: |
| Capital stock | 428,171,881.00 | 442,968,881.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bond | ||
| Capital Reserve | 1,019,385,022.79 | 1,081,230,215.32 |
| Less: shares in stock | 17,447,988.68 | 71,267,118.78 |
| Other comprehensive income | 3,389,668.49 | -940,209.09 |
| Special reserve | ||
| Surplus Reserve | 235,701,180.14 | 235,701,180.14 |
| Provision for general risks | ||
| Retained earnings | 958,945,348.50 | 966,840,818.40 |
| Total owners’ equity attributable to the parent company | 2,628,145,112.24 | 2,654,533,766.99 |
| Minority shareholders’ equity | 6,007.09 | 5,910.84 |
| Total owner’s equity | 2,628,151,119.33 | 2,654,539,677.83 |
| Total liabilities and owners’ equity | 3,837,627,638.42 | 3,760,923,285.37 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
2. Balance Sheet, Parent Company
In CNY
| Items | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary fund | 296,412,869.24 | 270,673,346.02 |
| Transactional financial assets | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 4,468,617.83 | 2,848,025.39 |
| Financing with accounts receivable | ||
| Advance payment | ||
| Other receivables | 697,541,260.60 | 783,647,732.22 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories |
| Contract assets | ||
| Held-for-sale assets | ||
| Non-current assets due within a year | ||
| Other current assets | 14,411,160.44 | 12,380,243.67 |
| Total current assets | 1,012,833,908.11 | 1,069,549,347.30 |
| Non-current assets: | ||
| Equity investment | ||
| Other equity investment | ||
| Long term accounts receivable | ||
| Long-term equity investment | 1,385,319,621.50 | 1,380,895,239.27 |
| Investment in other equity instruments | 85,000.00 | 85,000.00 |
| Other non-current financial assets | ||
| Investment-oriented real estate | 323,720,394.86 | 329,970,083.18 |
| Fixed assets | 232,525,547.05 | 238,594,698.50 |
| Construction-in-process | ||
| Productive biological asset | ||
| Oil and gas assets | ||
| Use right assets | ||
| Intangible assets | 28,849,765.24 | 30,925,974.54 |
| Development expenses | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 11,407,352.44 | 12,106,759.98 |
| Deferred income tax asset | 1,376,549.26 | 1,125,840.75 |
| Other non-current assets | 4,798,820.13 | 4,707,236.86 |
| Total non-current assets | 1,988,083,050.48 | 1,998,410,833.08 |
| Total assets | 3,000,916,958.59 | 3,067,960,180.38 |
| Current liabilities: | ||
| Short term borrowings | 540,581,988.89 | 540,650,622.50 |
| Transactional financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 1,484,563.53 | 12,952,934.93 |
| Advance Receipts | 7,251,488.79 | 3,434,407.04 |
| Contract liabilities |
| Payroll payable to the employees | 16,173,553.17 | 19,019,554.57 |
| Taxes payable | 2,695,509.97 | 1,713,130.68 |
| Other payables | 132,347,479.64 | 82,631,590.46 |
| Including: interest payable | ||
| Dividends payable | 53,887,144.07 | 848,233.27 |
| Held-for-sale liabilities | ||
| Non-current liabilities due within a year | ||
| Other current liabilities | ||
| Total current liabilities | 700,534,583.99 | 660,402,240.18 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: preferred shares | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term accounts payable | ||
| Long term payroll payable to the employees | ||
| Estimated liabilities | ||
| Deferred income | 3,046,090.60 | 3,046,090.60 |
| Deferred income tax liability | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 3,046,090.60 | 3,046,090.60 |
| Total liabilities | 703,580,674.59 | 663,448,330.78 |
| Owner’s equity: | ||
| Capital stock | 428,171,881.00 | 442,968,881.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bond | ||
| Capital Reserve | 1,025,040,563.89 | 1,086,885,756.42 |
| Less: shares in stock | 17,447,988.68 | 71,267,118.78 |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus Reserve | 235,701,180.14 | 235,701,180.14 |
| Retained earnings | 625,870,647.65 | 710,223,150.82 |
| Total owner’s equity | 2,297,336,284.00 | 2,404,511,849.60 |
| Total liabilities and owners’ equity | 3,000,916,958.59 | 3,067,960,180.38 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
3. Consolidated Profit Statement
In CNY
| Items | The first half year of 2020 | The first half year of 2019 |
| I. Turnover | 1,581,834,715.03 | 1,785,036,020.23 |
| Including: operating income | 1,581,834,715.03 | 1,785,036,020.23 |
| Interest income | ||
| Earned insurance premium | ||
| Service charge and commission income | ||
| II. Total operating costs | 1,501,108,535.92 | 1,634,493,191.74 |
| Including: Operating costs | 977,435,676.87 | 1,051,504,075.22 |
| Interest payment | ||
| Service charge and commission payment | ||
| Surrender Value | ||
| Compensation expenses, net | ||
| Appropriation of deposit for duty, net | ||
| Payment of policy dividend | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 7,270,983.69 | 15,094,875.33 |
| Sales costs | 380,928,312.51 | 415,776,028.95 |
| Administrative expenses | 98,240,348.73 | 116,352,835.42 |
| R & D expenditures | 20,704,270.76 | 19,526,410.93 |
| Financial expenses | 16,528,943.36 | 16,238,965.89 |
| Where: Interest cost | 13,485,670.67 | 12,023,843.93 |
| Interest income | -2,482,721.82 | -908,850.92 |
| Plus: Other income | 10,154,015.67 | 13,045,742.36 |
| Investment income (loss is stated with “-”) | 2,160,911.92 | 1,531,310.06 |
| Including: return on investment in associate and joint venture | 2,160,911.92 | 1,531,310.06 |
| Income 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 stated with “-”) | -2,467,361.35 | -3,081,768.89 |
| Loss from impairment of assets (loss is stated with “-”) | 2,514,740.86 | |
| Income from disposal of assets (loss is stated with “-“) | -200,140.17 | -212,010.13 |
| III. Operating Profit (loss is stated with “-“) | 90,373,605.18 | 164,340,842.75 |
| Plus: Non-operating income | 1,391,859.42 | 294,311.70 |
| Less: non-operating expenditures | 118,646.41 | 524,505.98 |
| IV. Total profit (total loss is stated with “-”) | 91,646,818.19 | 164,110,648.47 |
| Less: Income tax expense | 13,907,911.89 | 40,615,187.57 |
| V. Net Profit (net loss is stated with “-“) | 77,738,906.30 | 123,495,460.90 |
| (I) Classification based on operation sustainability | ||
| 1. Net Profit from sustainable operation (net loss is stated with “-”) | 77,738,906.30 | 123,495,460.90 |
| 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 owner | 77,738,906.30 | 123,495,460.90 |
| 2. Minority shareholders’ gain/loss | ||
| VI. Net of other comprehensive income after tax | 4,329,973.83 | 1,749,420.87 |
| Net of other comprehensive income after tax attributable to the parent company’s owner | 4,329,877.58 | 1,749,407.20 |
| (I) Other comprehensive income which cannot be re-classified into gain and loss | ||
| 1. Movement of the net liabilities and net assets re-measured for setting the beneficial plan | ||
| 2. Other comprehensive income which cannot be converted into gain and loss based on the equity method |
| 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 | 4,329,877.58 | 1,749,407.20 |
| 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 debt investment | ||
| 5. Reserve for cash flow hedge | ||
| 6. Conversion difference in foreign currency statements | 4,329,877.58 | 1,749,407.20 |
| 7. Others | ||
| Net amount of other comprehensive income after tax attributable to minority shareholders | 96.25 | 13.67 |
| VII. Total comprehensive income | 82,068,880.13 | 125,244,881.77 |
| Total comprehensive income attributable to the parent company’s owner | 82,068,783.88 | 125,244,868.10 |
| Total comprehensive income attributable to minority shareholders | 96.25 | 13.67 |
| VIII. Earnings per share: | ||
| (I) Basic earnings per share | 0.1775 | 0.2788 |
| (II) Diluted earnings per share | 0.1775 | 0.2788 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
4. Profit Statement, Parent Company
In CNY
| Items | The first half year of 2020 | The first half year of 2019 |
| I. Operating revenue | 57,313,218.41 | 64,124,939.95 |
| Less: Operating cost | 17,626,390.24 | 11,807,925.90 |
| Taxes and surcharges | 1,616,108.15 | 2,257,018.92 |
| Sales costs | 597,618.02 | 582,036.03 |
| Administrative expenses | 31,406,670.97 | 39,783,149.16 |
| R & D expenditures | 7,989,092.54 | 9,146,589.64 |
| Financial expenses | 3,458,375.39 | 3,247,689.32 |
| Where: Interest cost | 5,364,370.20 | 4,007,526.54 |
| Interest income | -2,363,907.44 | -776,046.44 |
| Plus: Other income | 4,334,756.32 | 7,743,695.89 |
| Investment income (loss is stated with “-”) | 2,160,911.92 | 1,531,310.06 |
| Including: return on investment in associate and joint venture | 2,160,911.92 | 1,531,310.06 |
| 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 stated with “-”) | -100,902.52 | -64,803.91 |
| Loss from impairment of assets (loss is stated with “-”) | ||
| Income from disposal of assets (loss is stated with “-“) | -15,641.58 | -2,074.20 |
| II. Operating Profit (loss is stated with “-“) | 998,087.24 | 6,508,658.82 |
| Plus: Non-operating income | 33,077.28 | 18,000.00 |
| Less: non-operating expenditures | 200,000.00 | |
| III. Total profit (total loss is stated with “-“) | 1,031,164.52 | 6,326,658.82 |
| Less: Income tax expense | -250,708.51 | 1,174,172.39 |
| IV. Net Profit (net loss is stated with “-“) | 1,281,873.03 | 5,152,486.43 |
| (I) Net Profit from sustainable operation (net loss is stated with “-”) | 1,281,873.03 | 5,152,486.43 |
| (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 gain and loss | ||
| 1. Movement of the net liabilities and net assets re-measured for setting the beneficial plan | ||
| 2. Other comprehensive income which cannot be converted into gain and loss based on the equity method | ||
| 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 debt investment | ||
| 5. Reserve for cash flow hedge | ||
| 6. Conversion difference in foreign currency statements | ||
| 7. Others | ||
| VI. Total comprehensive income | 1,281,873.03 | 5,152,486.43 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | 0.0030 | 0.0116 |
| (II) Diluted earnings per share | 0.0030 | 0.0116 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
5. Consolidated Cash Flow Statement
In CNY
| Items | The first half year of 2020 | The first half year of 2019 |
| I. Cash flows arising from operating activities: | ||
| Cash received from sales of goods and supply of labor service | 1,704,132,389.05 | 1,913,555,960.34 |
| 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 | 1,408,520.48 | 3,160,067.59 |
| Other operation activity related cash receipts | 31,287,429.73 | 40,976,127.91 |
| Subtotal of cash flow in from operating activity | 1,736,828,339.26 | 1,957,692,155.84 |
| Cash paid for purchase of goods and reception of labor services | 1,124,364,970.39 | 1,116,738,134.87 |
| 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 | 280,396,366.01 | 314,068,308.62 |
| Taxes paid | 62,495,543.38 | 130,569,918.63 |
| Other business activity related cash payments | 165,926,224.21 | 237,301,143.35 |
| Subtotal of cash flow out from operating activity | 1,633,183,103.99 | 1,798,677,505.47 |
| Net cash flows arising from operating activities | 103,645,235.27 | 159,014,650.37 |
| II. Net cash flows arising from investment activities | ||
| Cash received from recovery of investment | ||
| Cash received from investment income | ||
| Net cash from disposal of fixed assets, intangible assets and recovery of other long term assets | 19,552.47 | 84,258.51 |
| Net cash received from disposal of subsidiaries and other operating units | ||
| Other investment related cash receipts | ||
| Subtotal of cash flow in from investment activity | 19,552.47 | 84,258.51 |
| Cash paid for purchase/construction of fixed assets, intangible assets and other long term assets | 53,912,380.03 | 89,298,306.14 |
| Cash paid for investment | ||
| Net increase of the pledged loan | ||
| Net cash paid for acquisition of subsidiaries and other operation units | ||
| Other investment related cash payments | ||
| Subtotal of cash flow out from investment activity | 53,912,380.03 | 89,298,306.14 |
| Net cash flows arising from investment activities | -53,892,827.56 | -89,214,047.63 |
| III. Cash flow arising from financing activities: | ||
| Cash received from absorbing investment | 0.00 | 18,585,600.00 |
| Incl.: Cash received from the subsidiaries’ absorption of minority shareholders’ investment | ||
| Cash received from loans | 572,430,000.00 | 330,176,520.00 |
| Other fund-raising related cash receipts | ||
| Subtotal of cash flow in from fund raising activity | 572,430,000.00 | 348,762,120.00 |
| Cash paid for debt repayment | 467,250,228.75 | 327,486,253.30 |
| Cash paid for dividend/profit distribution or repayment of interest | 98,229,142.76 | 12,018,884.30 |
| Including: Dividend and profit paid by the subsidiaries to minority shareholders |
| Cash paid for other financing activities | 26,825,873.78 | 17,565,400.00 |
| Sub-total cash flow paid for financing activities | 592,305,245.29 | 357,070,537.60 |
| Net cash flow arising from financing activities: | -19,875,245.29 | -8,308,417.60 |
| IV. Influence of the change of exchange rate on the cash and cash equivalents | -64,085.83 | 201,307.31 |
| V. Net increase of cash and cash equivalents | 29,813,076.59 | 61,693,492.45 |
| Plus: Opening balance of cash and cash equivalents | 315,093,565.09 | 162,623,059.97 |
| VI. Ending balance of cash and cash equivalents | 344,906,641.68 | 224,316,552.42 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
6. Cash Flow Statement, Parent Company
In CNY
| Items | The first half year of 2020 | The first half year of 2019 |
| I. Net cash flows arising from operating activities: | ||
| Cash received from sales of goods and supply of labor service | 84,447,213.29 | 66,872,263.13 |
| Rebated taxes received | ||
| Other operation activity related cash receipts | 1,761,219,003.00 | 1,733,050,857.61 |
| Subtotal of cash flow in from operating activity | 1,845,666,216.29 | 1,799,923,120.74 |
| Cash paid for purchase of goods and reception of labor services | ||
| Cash paid to and for staff | 28,476,180.31 | 42,848,757.99 |
| Taxes paid | 5,608,474.08 | 5,460,385.81 |
| Other business activity related cash payments | 1,646,751,070.92 | 1,676,610,396.74 |
| Subtotal of cash flow out from operating activity | 1,680,835,725.31 | 1,724,919,540.54 |
| Net cash flows arising from operating activities | 164,830,490.98 | 75,003,580.20 |
| II. Net cash flows arising from investment activities | ||
| Cash received from recovery of investment | ||
| Cash received from investment income | ||
| Net cash from disposal of fixed assets, intangible assets and recovery of other long term assets | 550.00 | 23,000.00 |
| Net cash received from disposal of subsidiaries |
| and other operating units | ||
| Other investment related cash receipts | ||
| Subtotal of cash flow in from investment activity | 550.00 | 23,000.00 |
| Cash paid for purchase/construction of fixed assets, intangible assets and other long term assets | 15,073,283.59 | 31,845,425.44 |
| Cash paid for investment | ||
| Net cash paid for acquisition of subsidiaries and other operation units | ||
| Other investment related cash payments | ||
| Subtotal of cash flow out from investment activity | 15,073,283.59 | 31,845,425.44 |
| Net cash flow arising from investment activities | -15,072,733.59 | -31,822,425.44 |
| III. Cash flow arising from financing activities: | ||
| Cash received from absorbing investment | 18,585,600.00 | |
| Cash received from loans | 450,000,000.00 | 310,000,000.00 |
| Other fund-raising related cash receipts | ||
| Subtotal of cash flow in from fund raising activity | 450,000,000.00 | 328,585,600.00 |
| Cash paid for debt repayment | 450,000,000.00 | 295,000,000.00 |
| Cash paid for dividend/profit distribution or repayment of interest | 97,351,309.71 | 11,510,341.40 |
| Cash paid for other financing activities | 26,693,235.96 | 17,565,400.00 |
| Sub-total cash flow paid for financing activities | 574,044,545.67 | 324,075,741.40 |
| Net cash flow arising from financing activities: | -124,044,545.67 | 4,509,858.60 |
| IV. Influence of the change of exchange rate on the cash and cash equivalents | 26,311.50 | 1,378.48 |
| V. Net increase of cash and cash equivalents | 25,739,523.22 | 47,692,391.84 |
| Plus: Opening balance of cash and cash equivalents | 269,098,346.02 | 134,970,466.27 |
| VI. Ending balance of cash and cash equivalents | 294,837,869.24 | 182,662,858.11 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
7. Consolidated Statement of Changes in Owner’s Equity
Amount in the reporting period
In CNY
| Items | The first half year of 2020 |
| Owners’ equity attributable to the parent company | Minority shareholders’ equity | Total owner’s equity | |||||||||||||
| Capital stock | Other equity instruments | Capital Reserve | Less: shares in stock | Other comprehensive income | Special reserve | Surplus Reserve | Provision for general risks | Retained earnings | Others | Sub-total | |||||
| Preferred shares | Perpetual bond | Others | |||||||||||||
| I. Ending balance of the previous year | 442,968,881.00 | 1,081,230,215.32 | 71,267,118.78 | -940,209.09 | 235,701,180.14 | 966,840,818.40 | 2,654,533,766.99 | 5,910.84 | 2,654,539,677.83 | ||||||
| Plus: Change in accounting policy | |||||||||||||||
| Correction of previous errors | |||||||||||||||
| Consolidation of enterprises under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the reporting year | 442,968,881.00 | 1,081,230,215.32 | 71,267,118.78 | -940,209.09 | 235,701,180.14 | 966,840,818.40 | 2,654,533,766.99 | 5,910.84 | 2,654,539,677.83 | ||||||
| III. Decrease/increase of the report year (decrease is stated with “-“) | -14,797,000.00 | -61,845,192.53 | -53,819,130.10 | 4,329,877.58 | -7,895,469.90 | -26,388,654.75 | 96.25 | -26,388,558.50 | |||||||
| (I) Total comprehensive income | 4,329,877.58 | 77,738,906.30 | 82,068,783.88 | 96.25 | 82,068,880.13 | ||||||||||
| (II) Owners’ input and decrease of capital | -14,797,000.00 | -61,845,192.53 | -53,819,130.10 | -22,823,062.43 | -22,823,062.43 | ||||||||||
| 1. Common shares contributed by the owner | -14,797,000.00 | -64,385,948.25 | -53,819,130.10 | -25,363,818.15 | -25,363,818.15 | ||||||||||
| 2. Capital contributed by other equity instruments holders | |||||||||||||||
| 3. Amount of payment for shares counted to owners’ equity | 2,784,096.62 | 2,784,096.62 | 2,784,096.62 | ||||||||||||
| 4. Others | -243,340.90 | -243,340.90 | -243,340.90 | ||||||||||||
| (III) Profit Distribution | -85,634,376.20 | -85,634,376.20 | -85,634,376.20 | ||||||||||||
| 1. Provision of surplus reserve | |||||||||||||||
| 2. Provision for general risks | |||||||||||||||
| 3. Distributions to the owners (or shareholders) | -85,634,376.20 | -85,634,376.20 | -85,634,376.20 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over of owners’ equity | |||||||||||||||
| 1. Conversion of capital reserve into capital (or capital stock) | |||||||||||||||
| 2. Conversion of surplus reserve into capital (or capital stock) | |||||||||||||||
| 3. Loss made up 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 balance of the reporting period | 428,171,881.00 | 1,019,385,022.79 | 17,447,988.68 | 3,389,668.49 | 235,701,180.14 | 958,945,348.50 | 2,628,145,112.24 | 6,007.09 | 2,628,151,119.31 |
Amount in the previous period
In CNY
| Items | The first half year of 2019 | ||||||||||||
| Owners’ equity attributable to the parent company | Minority shareholder | Total owner’s | |||||||||||
| Capital | Other equity instruments | Capital | Less: | Other | Special | Surplus | Provision | Retained | Others | Sub-total | |||
| stock | Preferred shares | Perpetual bond | Others | Reserve | shares in stock | comprehensive income | reserve | Reserve | for general risks | earnings | s’ equity | equity | |||
| I. Ending balance of the previous year | 438,744,881.00 | 1,062,455,644.22 | -5,442,139.78 | 223,015,793.80 | 851,360,603.66 | 2,570,134,782.90 | 5,781.64 | 2,570,140,564.54 | |||||||
| Plus: Change in accounting policy | |||||||||||||||
| Correction of previous errors | |||||||||||||||
| Consolidation of enterprises under the same control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the reporting year | 438,744,881.00 | 1,062,455,644.22 | -5,442,139.78 | 223,015,793.80 | 851,360,603.66 | 2,570,134,782.90 | 5,781.64 | 2,570,140,564.54 | |||||||
| III. Decrease/increase of the report year (decrease is stated with “-“) | 4,224,000.00 | 16,596,197.31 | 32,902,198.89 | 1,749,407.21 | 123,495,460.89 | 113,162,866.52 | 13.66 | 113,162,880.18 | |||||||
| (I) Total comprehensive income | 1,749,407.21 | 123,495,460.89 | 125,244,868.10 | 13.66 | 125,244,881.76 | ||||||||||
| (II) Owners’ input and decrease of capital | 4,224,000.00 | 16,596,197.31 | 32,902,198.89 | -12,082,001.58 | -12,082,001.58 | ||||||||||
| 1. Common shares contributed by the owner | 4,224,000.00 | 16,596,197.31 | 18,585,600.00 | 2,234,597.31 | 2,234,597.31 | ||||||||||
| 2. Capital contributed by other equity instruments holders | |||||||||||||||
| 3. Amount of payment for shares counted to owners’ equity | |||||||||||||||
| 4. Others | 14,316,598.89 | -14,316,598.89 | -14,316,598.89 | ||||||||||||
| (III) Profit Distribution | |||||||||||||||
| 1. Provision of surplus reserve | |||||||||||||||
| 2. Provision for general |
| risks | |||||||||||||||
| 3. Distributions to the owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over of owners’ equity | |||||||||||||||
| 1. Conversion of capital reserve into capital (or capital stock) | |||||||||||||||
| 2. Conversion of surplus reserve into capital (or capital stock) | |||||||||||||||
| 3. Loss made up 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 balance of the reporting period | 442,968,881.00 | 1,079,051,841.53 | 32,902,198.89 | -3,692,732.57 | 223,015,793.80 | 974,856,064.55 | 2,683,297,649.42 | 5,795.30 | 2,683,303,444.72 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui
8. Statement of Changes in Owner’s Equity, Parent Company
Amount in the reporting period
In CNY
| Items | The first half year of 2020 | |||||||||||
| Capital stock | Other equity instruments | Capital Reserve | Less: shares in stock | Other comprehensive income | Special reserve | Surplus Reserve | Retained earnings | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bond | Others | ||||||||||
| I. Ending balance of the previous year | 442,968,881.00 | 1,086,885,756.42 | 71,267,118.78 | 235,701,180.14 | 710,223,150.82 | 2,404,511,849.60 | ||||||
| Plus: Change in accounting policy | ||||||||||||
| Correction of previous errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the reporting year | 442,968,881.00 | 1,086,885,756.42 | 71,267,118.78 | 235,701,180.14 | 710,223,150.82 | 2,404,511,849.60 | ||||||
| III. Decrease/increase of the report year (decrease is stated with “-“) | -14,797,000.00 | -61,845,192.53 | -53,819,130.10 | -84,352,503.17 | -107,175,565.60 | |||||||
| (I) Total comprehensive income | 1,281,873.03 | 1,281,873.03 | ||||||||||
| (II) Owners’ input and decrease of capital | -14,797,000.00 | -61,845,192.53 | -53,819,130.10 | -22,823,062.43 | ||||||||
| 1. Common shares contributed by the owner | -14,797,000.00 | -64,385,948.25 | -53,819,130.10 | -25,363,818.15 | ||||||||
| 2. Capital contributed by other equity instruments holders | ||||||||||||
| 3. Amount of payment for shares counted to owners’ equity | 2,784,096.62 | 2,784,096.62 | ||||||||||
| 4. Others | -243,340.90 | -243,340.90 | ||||||||||
| (III) Profit Distribution | -85,634,376.20 | -85,634,376.20 | ||||||||||
| 1. Provision of surplus reserve | ||||||||||||
| 2. Distributions to the owners (or shareholders) | -85,634,376.20 | -85,634,376.20 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over of | ||||||||||||
| owners’ equity | ||||||||||||
| 1. Conversion of capital reserve into capital (or capital stock) | ||||||||||||
| 2. Conversion of surplus reserve into capital (or capital stock) | ||||||||||||
| 3. Loss made up 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 balance of the reporting period | 428,171,881.00 | 1,025,040,563.89 | 17,447,988.68 | 235,701,180.14 | 625,870,647.65 | 2,297,336,284.00 |
Amount in the previous period
In CNY
| Items | The first half year of 2019 | |||||||||||
| Capital stock | Other equity instruments | Capital Reserve | Less: shares in stock | Other comprehensive income | Special reserve | Surplus Reserve | Retained earnings | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bond | Others | ||||||||||
| I. Ending balance of the previous year | 438,744,881.00 | 1,068,111,185.32 | 223,015,793.80 | 683,798,086.83 | 2,413,669,946.95 | |||||||
| Plus: Change in accounting policy | ||||||||||||
| Correction of previous errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the reporting year | 438,744,881.00 | 1,068,111,185.32 | 223,015,793.80 | 683,798,086.83 | 2,413,669,946.95 | |||||||
| III. Decrease/increase of the report year (decrease is stated with “-“) | 4,224,000.00 | 16,596,197.31 | 32,902,198.89 | 5,152,486.43 | -6,929,515.15 | |||||||
| (I) Total comprehensive income | 5,152,486.43 | 5,152,486.43 | ||||||||||
| (II) Owners’ input and decrease of capital | 4,224,000.00 | 16,596,197.31 | 32,902,198.89 | -12,082,001.58 | ||||||||
| 1. Common shares contributed by the owner | 4,224,000.00 | 16,596,197.31 | 18,585,600.00 | 2,234,597.31 | ||||||||
| 2. Capital contributed by other equity instruments holders | ||||||||||||
| 3. Amount of payment for shares counted to owners’ equity | ||||||||||||
| 4. Others | 14,316,598.89 | -14,316,598.89 | ||||||||||
| (III) Profit Distribution | ||||||||||||
| 1. Provision of surplus reserve | ||||||||||||
| 2. Distributions to the owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over of owners’ equity | ||||||||||||
| 1. Conversion of capital reserve into capital (or capital stock) | ||||||||||||
| 2. Conversion of surplus reserve into capital (or capital stock) | ||||||||||||
| 3. Loss made up 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 balance of the reporting period | 442,968,881.00 | 1,084,707,382.63 | 32,902,198.89 | 223,015,793.80 | 688,950,573.26 | 2,406,740,431.80 |
Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian HuiIII. Company ProfileFIYTA Precision Technology Co., Ltd (hereinafter referred to as the Company) was reorganized, incorporated andrenamed from Shenzhen FIYTA Timer Industry Company on December 25 1992 with approval by the General Office ofShenzhen Municipal People’s Government with Document SHEN FU BAN FU [1992] No. 1259 and with China NationalAero-Technology Import & Export Corporation Shenzhen Industry & Trade Center (which was renamed as AVICInternational Shenzhen Company Limited) as the sponsor. The Company's head office is located at the 20th Floor, FIYTATechnology Building, Gaoxin S. Road One, Nanshan District, Shenzhen, Guangdong Province.
On March 10, 1993, the Company, with approval by the People’s Bank of China Shenzhen Special Economic ZoneBranch [SHEN REN YIN FU ZI (1993) No. 070], issued publically domestic CNY based common shares (A-shares) andCNY based special shares (B-shares). In accordance with the Approval Document of Shenzhen Municipal SecuritiesRegulatory Office SHEN ZHENG BAN FU [1993] No. 20 and the Approval Document of Shenzhen Stock Exchange SHENZHENG SHI ZI (1993) No. 16, the Company’s A-shares and B-shares were all listed with Shenzhen Stock Exchange fortrading commencing from June 3, 1993.
On January 30, 1997, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company wasrenamed as Shenzhen FIYTA Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between China National Aero-Technology CorporationShenzhen (CATIC Shenzhen Corporation) and CATIC Shenzhen Holdings Limited ( with original name of Shenzhen
CATIC Group Co., Ltd. (hereinafter referred to as CATIC Shenzhen)), CATIC Shenzhen Corporation assigned 72.36million corporate shares (taking 52.24% of the Company’s total shares) to CATIC Shenzhen. From then on, theCompany’s controlling shareholder turned to be CATIC Shenzhen from CATIC Shenzhen Corporation.
On October 26, 2007, the Company implemented the equity separation reform, according to which the shareholder of theCompany’s non-negotiable shares would pay shares to the whole shareholders of negotiable shares registered on theequity record day as designated in the equity separation reform plan at the rate of 3.1 shares for every 10 shares held bythem while the Company’s total 249,317,999 shares remained unchanged. So far, after the equity separation reform, theproportion of the Company’s shares held by CATIC Shenzhen reduced from 52.24% to 44.69%.
On February 29, 2008, due to expansion of the Company’s business scope and with approval by Shenzhen MunicipalAdministration for Industry and Commerce, the Company’s enterprise corporate business licence number was changedfrom 4403011001583 into 440301103196089.
In 2010, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on Approval of Non-publicIssuing of Shenzhen FIYTA Holdings Ltd., ZHENG JIAN XU KE [2010] No. 1703 and the Official Reply on the Issue ofNon-Public Issuing of Shenzhen FIYTA Holdings Ltd. by State-owned Assets Supervision and Administration Commissionof the State Council [2010] No. 430, the Company was approved to non-publically issue no more than 50 million commonshares (A-shares). After completion of non-public issuing on December 9, 2010, the Company’s registered capitalincreased to CNY 280,548,479.00 and CATIC Shenzhen holds 41.49% of the Company’s equity based capital.
On March 3, 2011, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company wasrenamed as FIYTA Holdings Ltd. On April 8, 2011, the Company took the total share capital of 280,548,479 shares as atDecember 31, 2010 as the base, converted its capital reserve into share capital at the rate of 4 shares for every 10 shares.After the conversion, the Company’s total share capital became 392,767,870 shares.
On November 11, 2015, approved by China Securities Regulatory Commission (CSRC) with the Official Reply onApproval of Non-public Issuing of FIYTA Holdings Ltd., ZHENG JIAN XU KE [2015] No. 2588 and the Official Reply on theIssue of Non-Public Issuing of FIYTA Holdings Ltd. by State-owned Assets Supervision and Administration Commission ofthe State Council [2015] No. 415, the Company was approved to non-publically issue no more than 46,911,649 commonshares (A-shares). After completion of non-public issuing on December 22, 2015, the Company’s registered capitalincreased to CNY 438,744,881.00 and CATIC Shenzhen holds 37.15% of the Company’s equity based capital.
On December 20, 2018, approved by State-owned Assets Supervision and Administration Commission of the StateCouncil with the “Official Reply on FIYTA Holdings Ltd. to Implement the Restricted stock Incentive Program”, GUO ZIKAO FEN [2018] No. 936, the Company awarded A-share restricted stock by less than 4.277 million shares. Aftercompletion of implementation of the A-share Restricted stock Incentive Program (Phase I) by January 30, 2019, theCompany’s registered capital increased to CNY 442,968,881 and AVIC IHL holds 36.79% of the Company’s equity basedcapital.
According to the “Proposal on the Intentional Change of the Company Name and the Short Term of A-share Securitiesreviewed and approved at 2019 3rd Extraordinary General Meeting of the Company and approved by the Administrationfor Industry and Commerce of Shenzhen Municipality, commencing from January 9, 2020, the Company changed itsname from FIYTA Holdings Limited to FIYTA Precision Technology Co., Ltd."
On April 30, 2020, the Company wrote off 14,730,000 B-shares repurchased by the Company, and on June 9, 2020, thenumber of A-share restricted stock to the original three retired incentive objects which were written-off after beingrepurchased was 67,000 in total. After the write-off, the total capital stock of the Company decreased from 428,238,881shares to 428,171,881 shares. The equity capital of the Company held by AVIC IHL increased to 38.06%.
Ended June 30, 2020, the Company accumulatively issued altogether 428,171,881 shares. For the detail, refer to Note VII.53 “Share Capital”.
The Company has established the Shareholders’ General Meeting, the Board of Directors, the Supervisory Committee,the Audit Committee, the Strategy Committee and the Nomination, Remuneration and Assessment Committee as thegovernance organs, etc. The Company has also established a number of functional departments, including thecomprehensive management department, the Party construction work department, department of discipline inspection,audit and law, the financial department, the human resource department, the strategy operation department, the data &information department, the innovation & design department, the R & D department, the property operation department,etc.
The principal business activities of the Company and its subsidiaries are: production and sales of various pointer typemechanical watches, quartz watches and their driving units, spares and parts, various timing apparatus, processing andwholesale of K gold watches and ornament watches; domestic trade, materials supply and sales (excluding thecommodities for exclusive operation, exclusive control and monopoly); property management and lease; design service;self-run import & export business (implemented according to the Document SHEN MAO GUAN DENG ZHENG ZI No.2007-072). The Company's legal representative is Huang Yongfeng.
The financial statements was approved and issued through the resolution of the Board of Directors dated July 28, 2020.
There were 11 subsidiaries consolidated during the reporting period. For the detail, refer to Note IX. "Equity in OtherEntities". The consolidation scope of the reporting year is the same as that of the previous year. For the detail, refer toNote VIII "Change of the Consolidation Scope".IV. Basis for preparation of the financial statements
1. Preparation Basis
These financial statements are prepared in accordance with the Accounting Standards for Enterprises promulgated by theMinistry of Finance and its application guidelines, interpretations and other relevant provisions (collectively referred to asthe "Accounting Standards for Enterprises"). In addition, the Group disclosed the relevant financial information accordingto the Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - GeneralProvisions on Financial Reports (2014 Revision) promulgated by China Securities Regulatory Commission.
2. Operation on Going Concern Basis
The financial statements of the Company have been prepared on going concern basis.
The Group follows the accrual basis for bookkeeping. With the exception of some financial instruments, these financial
statements are measured based on the historic cost basis. If impaired, the assets shall provide for impairment inaccordance with the relevant regulations.V. Important accounting policies and accounting estimatesPresentation on specific accounting policies and accounting estimates:
The Group determines the depreciation of fixed assets, amortization of intangible assets and income recognition policiesaccording to its own production and operation characteristics. For the specific accounting policies, refer to Notes V.24,V.30 and V. 39.
1. Statement on complying with the accounting standards for business enterpriseThe financial statements prepared by the Company in accordance with the requirements of accounting standards forenterprises truly and fully reflect the financial status of the Company as at June 30, 2020, and the relevant information,such as the operation result and cash flow for January to June, 2020.
2. Fiscal period
The accounting period adopted by the Company is from January 1 to December 31 of the Gregorian calendar.
3. Business Cycle
The Company's operating cycle is 12 months.
4. Recording Currency
The Company and its domestic subsidiaries use Renminbi (CNY) as the function currency for book keeping. ExceptSwitzerland based Montres Chouriet SA (hereinafter referred to as the "Swiss Company"), an overseas subsidiary ofFIYTA Hong Kong Co., Ltd. (hereinafter referred to as "FIYTA HK"), has determined Swiss Franc as its recording currencyfor accounting in accordance with the currencies available in its major economic environment where it is operated. Theother overseas subsidiaries, including FIYTA HK, Station-68 Limited (hereinafter referred to as “Station-68”), anothersubsidiary of FIYTA HK, have determined Hong Kong currency as their recording currency for accounting in accordancewith the currencies available in their major economic environment where they are operated. Hong Kong currency will beconverted into Renminbi while in preparing its financial statements. The currency the Grouptakes in preparation of thesefinancial statements is Renminbi.
5. The accounting treatment on combination of enterprises under the joint control and not under the joint control
(1) Combination of enterprises under the joint control
For the combination of an enterprise under the joint control, the assets and liabilities of the merged party obtained by themerging party in process of consolidation are measured according to the book value of the merged party in theconsolidated financial statements of the eventual controlling party on the date of merger, except for adjustment due todifferent accounting policies. The difference between the book value of the net assets which the merging party obtainsand the book value of the consideration which it pays (or the total par value of the shares issued) shall adjust the capitalreserve (capital stock premium). If the capital reserve (capital stock premium) is not sufficient to be offset, the retained
earnings shall be adjusted.
Combination of enterprises under the joint control realized in steps through repeated transactionsIn some financial statements, the share of the book value of the shareholders’ equity in the merged party enjoyable in theeventual controller's consolidated financial statements as at the consolidation day is taken as the initial investment cost ofthe long term equity investment; the difference between the initial investment cost of the long term equity investment andthe sum of the book value of the long term equity investment before the consolidation plus the book value of theconsideration newly paid for further acquiring the shares on the consolidation day is used to adjust the capital reserve(capital stock premium); if the capital reserve is not sufficient to be offset, the retained earnings should be adjusted.
In the consolidated financial statements, the assets and liabilities of the merged party that the merging party obtains in abusiness combination shall be measured on the basis of their book value in the consolidated financial statements of theeventual controller on the date of combination except the adjustment carried out due to different accounting policies;difference between the sum of the book value of the investment held before the consolidation plus the book value of theconsideration newly paid on the consolidation day is used to adjust the capital reserve (capital stock premium); if thecapital reserve is not sufficient to be offset, the retained earnings should be adjusted. For the long term equity investmentheld before the merging party has acquired the control power over the merged party, the concerned profit and loss arerecognized commencing from the latter of the day when the original equity is acquired and the day when the merging partyand the merged party are under the eventual joint control to the date of combination; the movement of othercomprehensive income and other owner’s equity respectively write down the retained earning or current profit and loss atthe beginning of the period during the comparative statements.
(2) Combination of enterprises not under the joint control
For the combination of enterprises not under the joint control, the combination cost is the fair value of the assets, liabilitiesincurred or assumed and equity securities issued on the date of the acquisition for the purpose of acquiring the controlover the acquired party. On the date of acquisition, the assets, liabilities and contingent liabilities of the acquired party arerecognized based on the fair value.
The difference between the combination cost and the fair value share of the identifiable net assets of the acquired partyobtained in the merger is recognized as goodwill, and subsequent measurement is made according to the accumulatedimpairment provision deducted from the cost; the difference between the combination cost and the fair value share of theidentifiable net assets of the acquired party obtained in the combination is recorded in the current profit and loss afterreview.
Combination of enterprises not under the joint control realized in steps through repeated transactions
In individual financial statements, the sum of the book value of the equity investment held by the acquired party before theacquisition date and the new investment cost on the purchase date shall be taken as the initial investment cost of theinvestment. For the equity investment held before the date of acquisition, other comprehensive income recognized bymeans of the equity method does not undergo accounting treatment by using the this part of other comprehensive incomeon the date of acquisition; in disposal of the investment, the accounting treatment is carried out on the same basis used bythe invested entity in direct disposal of the relevant assets or liabilities; the owner's equity recognized as a result ofchanges in owner's equity other than the net profit and loss of the investee, other comprehensive income and profitdistribution are transferred to the current profit and loss during the disposal of the investment. If the equity investment held
before the acquisition date is measured at fair value, the accumulated fair value change originally included in othercomprehensive income is transferred to the current profit and loss when it is calculated according to the cost method.
In the consolidated financial statement, the combined cost is the sum of the consideration paid on the acquisition date andthe fair value of the equity held by the acquired party prior to the acquisition date. The equity held by the acquired partybefore the acquisition date is re-measured according to the fair value of the equity on the acquisition date, and thedifference between the fair value and the book value is recorded in the current income; the equity held by the acquiredparty before the acquisition date involves other comprehensive income, and changes in other owners' equity convertedinto current income on the acquisition date, except for other comprehensive income generated by changes in net liabilitiesor net assets of the investee due to re-measurement of the defined income plan.
(3) Disposal of the relevant transaction expenses in business combination
Intermediary fees in connection with audit, law service, appraisal and consulting, etc. incurred to the business combinationand other relevant administrative fees are counted to the current profit and loss at the time of incurrence. The transactioncosts of equity securities or debt securities issued as merger consideration are included in the initial confirmation amountof equity securities or debt securities.
6. Method of preparing consolidated financial statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control refers tothat the Company has he power over the investee, enjoys variable return by participating in the relevant activities of theinvestee and is able to impact the amount of return by using the power to the investee. A subsidiary refers to the entityunder control of the Company (including the dividable part, structured entity, etc. in the enterprise and the investee, etc.)
(2) Method of preparing consolidated financial statements
The consolidated financial statements are based on the financial statements of the Company and its subsidiaries, andprepared by the Company according to other relevant information. In preparing the consolidated financial statements, theaccounting policies and accounting period of the Company and its subsidiaries are required to maintain consistent, andthe significant inter-company transactions and balances are written off.
The newly increased subsidiary as well as business as a result of a business combination under joint control during thereporting period, it is deemed that the subsidiaries and business are incorporated into the consolidation scope of theCompany from the controlling date by the ultimate controlling party, and the operating results and cash flows from the dateare included in the consolidated income statement and cash flow statement.
The newly increased subsidiary as well as business as a result of a business combination not under joint control, thesubsidiaries and business from the acquisition date and the income, expenses and profit as at the end of reporting periodare included in the consolidated income statement, and the cash flow is included in the consolidated statement of cashflows.
The part in the shareholders’ equity of the subsidiaries that did not belong to the Company shall be separately presentedas minority interest under the shareholders’ equity in the consolidated balance sheet. The share attributable to minorityinterests of the subsidiaries in current profit and loss, shall be presented as “minority interests” under the net profit in the
consolidated income statement. When the loss of the subsidiaries shared by minority shareholders exceeded the sharesenjoyed by the minority shareholders in the owners’ equity of the subsidiaries in the beginning period, the balance shalloffset the minority interests.
(3) Acquisition of the minority shareholders’ equity of the subsidiaries
Where the Company acquires a minority interest from a subsidiary’s minority shareholders or disposes of a portion of aninterest in a subsidiary without a change in control, the transaction is treated as equity transaction, and the book value ofshareholder’s equity attributed to the Bank and to the minority interest is adjusted to reflect the change in the Bank’sinterest in the subsidiaries. The difference between the proportion interests of the subsidiary’s net assets being acquiredor disposed and the amount of the consideration paid or received is adjusted to the capital reserve in the consolidatedbalance sheet, with any excess adjusted to retained earnings.
(4) Losing control over the subsidiary
When the Company loses control over subsidiary because of disposing part of equity investment or other reasons, theremaining part of the equity investment is re-measured at fair value at the date when losing control over the subsidiary. Again or loss is recognized in profit or loss for the current period and is calculated by the aggregate of the considerationreceived in disposal and the fair value of remaining part of the equity investment deducting the share of carrying value ofnet assets in proportion to previous shareholding percentage in former subsidiary since acquisition date and the goodwill.
Other comprehensive income related to the former subsidiary is transferred to profit or loss for the current period when thecontrol is lost, except for the comprehensive income arising from the movement of net liabilities or assets in the formersubsidiary’s re-measurement of defined benefit plan.
7. Classification of Joint Venture Arrangements and Accounting Treatment of Joint OperationsThe joint venture arrangement refers to an arrangement between two or more parties control jointly. The joint venture ofthe Group was divided in co-operation and joint venture.
(1) Joint Operation
Joint operation refers to the joint venture arrangement in which the Group enjoys the assets related to the arrangementand assumes the liabilities related to the arrangement.
The Group recognizes the following items related to the interests of the joint operation, and the accounting treatment is inaccordance with the related accounting standards for enterprises:
A. Confirmed the assets held individually and the common assets held in accordance with the shares;B. Confirmed the liabilities assumed separately and liabilities shared commonly in accordance with the shares;C. Confirmed income from the sale of joint operation shares;D. Confirmed income from the joint operation in accordance with the shares;E. Recognized expense occurred separately and confirmed the costs of joint operation in accordance with the shares.
(2) Joint Venture
Joint venture refers to the joint venture arrangements that the Group only has the rights of arranged net assets.
The accounting treatment of the joint venture investment in the Group was in accordance with long-term equity investmenton equity method.
8. Standard for confirming cash and cash equivalent
Cash refers to the cash in stock of the Company and the deposit in hand available for payment at any time. The Companytakes short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject toan insignificant risk of changes in value as cash equivalents.
9. Foreign currency transactions and translation of foreign currency statements
(1) Foreign Currency Translation
For the foreign currency businesses incurred in the Group, the amount in a foreign currency shall be translated intoamount in the functional currency at the spot exchange rate of the transaction date.
On the date of balance sheet, foreign currency monetary items should be translated into functional currency using the spotexchange rate at the balance sheet date. Exchange differences arising from the spot exchange rates at the balance sheetdate being different from those at which the monetary items were translated on initial recognition during the period orthose of previous balance sheet dates should be recognized in current period profit and loss. Non-monetary items that aremeasured at historical cost are still using the spot exchange rate at the transaction date. Non-monetary items that aremeasured at fair value adopts the spot exchange rates at the date when the fair value was determined, and the exchangedifferences thus arising should be recognized in the profit or loss for the period.
(2) Translation of Foreign Currency Financial Statement
On the balance sheet date, when the foreign currency financial statements of overseas subsidiaries are translated, thespot exchange rate on the balance sheet date shall be used for the translation of the assets and liabilities items, and thespot exchange rate on the date of incurrence shall be used for the translation of the shareholders' equity items except the"retained earnings".
The items of incomes and expenses in the profit statement are translated at the current average exchange rate on thetransaction occurring date.
All the items in the cash flow statement are translated based on the spot rate of the day of incurrence of the cash flow. Theamount of influence of exchange rate changes on cash is taken as the adjustment item, and the item of "influence ofexchange rate changes on cash and cash equivalents" is separately listed in the cash flow statement.
The difference resulting from the translation of the financial statements is reflected under the "Other comprehensiveincome" under the item of stockholders' equity in the balance sheet.
If overseas operation is disposed and the control right is lost, the translated difference of foreign currency statements aslisted under the item of stockholder's equity in balance sheet and related to overseas operation is transferred fully or at theratio of disposing the overseas operation into the current profits and losses from disposal.
10. Financial instruments
Financial instruments refer to any contract that gives rise to a financial asset of the Bank and a financial liability or equityinstrument of other entities.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognized when the Group becomes a party to a financial instrument contract.
A financial asset is derecognized when one of the following criteria is met:
① the contractual rights to the cash flows from the financial asset expire;
② The Company transfers the financial asset and the transfer qualifies under the criteria for the derecognition of financialassets prescribed by transfer of financial assets as stated below.
The Company should derecognize a financial liability or part of a financial liability when the present obligation associatedwith the financial liability ceases or partly ceases. The Group (debtor) enters into an agreement with a creditor so as tosubstitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regardingthe new financial liability is substantially different from that regarding the existing financial liability, it shall terminate therecognition of the existing financial liability, and shall at the same time recognize the new financial liability.
The financial assets purchased or sold in any conventional manner are made accounting confirmation and termination ofconfirmation on the date of transaction.
(2) Classification and measurement of financial assets
In the initial recognition, the Group classifies financial assets into the following three categories according to the businessmodel of financial assets management and the contractual cash flow characteristics of financial assets: financial assetsmeasured at amortized cost, financial assets measured at fair value and whose movements are included in othercomprehensive income, and financial assets measured at fair value and whose movements are included in current profitand loss.
Financial assets measured based on the amortized cost
The Group shall also meet the following conditions and is not designated as a financial asset measured at fair value andits movements recorded in the current profit and loss, classified as a financial asset measured at the amortized cost:
The business model of the Group to manage the financial assets is to collect the contract cash flow as the target;
According to the contractual terms of the financial asset，the cash flow created on the specific date is exclusively forpayment of the principal and the interest based on the outstanding amount of the principal.
After the initial recognition, the effective interest rate method is adopted to measure the financial assets by amortized cost.Profit or loss of financial assets measured at the amortized cost but not belonging to part of any hedge relationship isrecorded in the current profit and loss upon termination of recognition, amortization or recognition of the impairment inaccordance with the effective interest rate method.
Financial assets measured at fair value with the movement recorded in the other comprehensive income.
The Group classifies the financial assets that as well meet the following conditions and not designated as fairvalue-measured financial assets and whose movement is recorded in the current profit and loss as the financial assetsthat are measured at fair value and whose movement is recorded in other comprehensive income:
The Group’s business model for managing the financial asset is aimed at both collecting contractual cash flow and sellingthe financial asset according to the contractual terms of the financial asset，the cash flow created on the specific date isexclusively for payment of the principal and the interest based on the outstanding amount of the principal.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value. Interest, lossfrom impairment loss or profit calculated by the effective interest rate method and exchange profit and loss are recorded inthe current profit and loss, while other profit and loss are recorded in other comprehensive income. When the recognitionis terminated, the accumulated profit or loss included in other comprehensive income before is transferred out from othercomprehensive income and included in the current profit and loss.
Financial assets measured at fair value with the movement recorded in the current profit and lossExcept for the above-mentioned financial assets measured at amortized cost and at fair value with movement included inother comprehensive income, the Group classifies all other financial assets as financial assets at fair value withmovement included in current profits and losses. At the time of initial recognition, in order to eliminate or significantlyreduce accounting mismatches, the Group irrevocably designates some financial assets that should be measured atamortized cost or at fair value and whose movement is included in other comprehensive income as being measured at fairvalue and its movement included in the financial assets of the current profit and loss.
After initial recognition, such financial assets are subsequently measured at fair value, and the resulting profit or loss(including interest and dividend income) are included in the current profit and loss, unless the financial assets are part ofthe hedging relationship.
However, for non-trading equity instrument investments, the Group irrevocably designates them as financial assetsmeasured at fair value and whose movement is included in other comprehensive income at the time of initial recognition.The designation is made on the basis of a single investment, and the related investment meets the definition of an equityinstrument from the issuer's perspective.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value. Dividend incomemeeting the conditions is included in profit and loss, and other profit or loss and the movement of the fair value areincluded in other comprehensive income. When the recognition is terminated, the accumulated profit or loss included inother comprehensive income before is transferred out from other comprehensive income and included in the retainedearnings.
The business model of managing financial assets refers to how the Group manages financial assets to generate cash flow.The business model determines whether the source of the cash flow of the financial assets managed by the Group is tocollect contractual cash flows, sell financial assets or a combination of both. The Group determines the business model formanaging financial assets based on objective facts and the specific business objectives of managing financial assets
determined by key management personnel.
The Group evaluates the contractual cash flow characteristics of financial assets to determine whether the contractualcash flow generated by the relevant financial assets on a specific date is only the payment of principal and interest basedon the outstanding principal amount. Where the principal refers to the fair value of financial assets at the time of initialrecognition; interest includes consideration for the time value of money, credit risks related to the outstanding principalamount in a specific period, and other basic borrowing risks, costs and profits. In addition, the Group evaluates contractterms that may lead to changes in the time distribution or amount of contractual cash flows of financial assets to determinewhether they meet the above-mentioned contractual cash flow characteristics.
Only when the Group changes the business model of managing financial assets, all affected financial assets will bereclassified on the first day of the first reporting period after the business model is changed; otherwise the financial assetsshall not be reclassified after initial recognition.
Financial assets are measured at fair value at the tune of initial recognition. For the financial assets measured at fair valuewith the movement counted to the current profit and loss, the relevant transaction expenses are directly included in thecurrent profit and loss; the relevant transaction expenses for other categories of financial assets are counted to theamount of the initial recognition. For accounts receivable arising from the sale of products or the provision of laborservices that do not contain or consider significant financing components, the amount of consideration that the Group isexpected to be entitled to receive is the initial confirmation amount.
(3) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are classified as the financial liabilities measured at the amortized cost and thatmeasured at fair value with the movement counted to the current profit and loss. For the financial assets which have notbeen classified as those measured at fair value with the movement counted to the current profit and loss, the relevanttransaction expenses are directly counted to the amount of the initial recognition.
Financial liabilities measured at fair value with the movement recorded in the current profit and loss
Financial liabilities measured at their fair value with the movement counted to the current profit and loss includetransactional financial liabilities and the financial liabilities measured at fair value with the movement counted to thecurrent profit and loss directly designated at the initial recognition. For such financial liabilities with the follow-upmeasurement carried out at fair value, the profit or loss formed due to the movement of the fair value and dividends andinterest expenses related to these financial liabilities included in the current profit and loss.
Financial liabilities measured based on the amortized cost
The gains or losses generating in case of terminated confirmation, occurrence of devaluation or amortization are includedin the current profits and losses.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① Contractual obligations to deliver cash or other financial assets to other parties.
②Under a potentially unfavorable condition, the contractual obligation to exchange financial assets or financial liabilitieswith other parties.
③ A non-derivative contract that must use or may use the Company’s own equity instruments for settlement in the future,and the Company shall deliver a variable amount of its own equity instrument according to the contract.
④ A derivative instrument contract that must use or may use the Company’s own equity instruments for settlement inthe future, except for derivative instrument contract that exchanges a fixed amount of cash or other financial assets for afixed amount of its own equity instruments.
Equity instrument refers to the contract that can certify possession of the residual equity of the Company in the assetsafter deducting all liabilities.
If the Group cannot unconditionally avoid the delivery of cash or other financial assets to perform a contractual obligation,the contractual obligation meets the definition of a financial liability.
If a financial instrument must use or may use the Group’s own equity instruments for settlement, it is necessary toconsider whether the Group’s own equity instruments are used as a substitute for cash or other financial assets to settlethe instrument, or to enable the holder of the instrument to enjoy the residual equity in the issuer's assets after deductingall the liabilities. If it is the former, the instrument is a financial liability of the Group; if it is the latter, the instrument is anequity instrument of the Group.
(4) Fair value of financial instruments
Fair value refers to the price that a market participant can receive from selling an asset or is payable for transferring aliability in the orderly transactions occurring in the date of measurement.
The Group measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets ortransferring liabilities takes place in the main market of related assets or liabilities; if there is no main market, the Groupassumes that the transaction is most beneficial to the market of the related assets or liabilities. The main market (or themost favorable market) is the trading market that the Group can enter on the measurement date. The Group adopts theassumptions used by market participants to maximize their economic benefit when pricing the asset or liability.
For financial assets or financial liabilities in an active market, the Group uses quoted prices in the active market todetermine their fair value. If there exists no active market for a financial instrument, the Group uses valuation techniquesto determine its fair value.
When non-financial assets are measured at fair value, the ability of market participants to use the asset for the best use togenerate economic benefits, or the ability to sell the asset to other market participants who can be used for the best use togenerate economic benefits is taken into consideration.
The Group adopts valuation techniques that are applicable under the current circumstances and have sufficient availabledata and other information to support, take priority to use the relevant observable input values; use unobservable inputvalues only if the observable input values are not available or not practicable.
For assets and liabilities that are measured or disclosed at fair value in financial statements, the fair value level to whichthey belong is determined based on the lowest level of input value that is important for fair value measurement as a whole:
the input value of the first level is the unadjusted quotation of the same asset or liability in the active market that can beobtained on the measurement date; the second-level input value is the directly or indirectly observable input value ofrelated assets or liabilities other than the first-level input value; the input value of the third level is the unobservable inputvalue of the related assets or liabilities.
On each balance sheet date, the Group re-evaluates the assets and liabilities recognized in the financial statements thatare continuously measured at fair value to determine whether there is a conversion between the fair value measurementlevels.
(5) Impairment of financial assets
Based on expected credit losses, the Group performs impairment accounting treatments on the following items andrecognizes the provision for loss:
Financial assets measured based on the amortized cost;
Creditor's rights investment measured at fair value with the movement counted in the other comprehensive income;
Measurement of the predicted credit lossExpected credit loss refers to the weighted average of the credit loss of financial instruments weighted based on the risk ofdefault. Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cashflows expected to be received by the Group discounted at the original effective interest rate, that is, the present value of allcash shortages.
The Group measures the expected credit losses of financial instruments at different stages. If the credit risk has notincreased significantly since the initial recognition, the financial instrument is at the first stage, and the Group measuresthe provision for the loss according to the expected credit loss within the next 12 months; if the credit risk has increasedsignificantly since the initial confirmation but impairment of the credit has not yet occurred, the financial instrument is atthe second stage, the Group measures the provision for the loss according to the expected credit loss of the financialinstrument for the entire duration; if impairment of the credit has taken place after the initial recognition, the financialinstrument is at the third stage, and the Group measures the provision for the loss according to the expected credit loss ofthe financial instrument for the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Group assumes that its credit risk has notincreased significantly since the initial recognition, and measures the provision for the loss according to the expectedcredit loss within the future 12 months.
The expected credit loss for the entire duration refers to the expected credit loss caused by all possible default events thatmay occur during the entire expected lifetime of a financial instrument. Expected credit loss in the next 12 months refers tothe expected credit loss caused by the event of a financial instrument default that may occur within 12 months after thebalance sheet date (if the expected duration of the financial instrument is less than 12 months, then the expectedduration). It is part of the expected credit loss in the entire duration.
When measuring expected credit losses, the longest period that the Group needs to consider is the longest contractperiod for which the Group faces credit risk (including the consideration of the option of renewal).
For the financial instrument at the first stage or the second stage or with lower credit risk, the Group calculates the interestincome according to the book balance without deduction of the provision for impairment and the effective interest rate. Forthe financial instrument at the third stage, the Group calculates the interest income according to the book balance less theamortized cost after provision for the impairment and effective interest rate
Regarding notes and accounts receivable, regardless of whether there is a significant financing component, the Groupalways measures its provision for loss at an amount equivalent to expected credit losses during the entire duration.
The Group divides the portfolio of notes receivable and accounts receivable based on credit risk characteristics, andcalculates the expected credit losses on the basis of the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivableNotes receivable portfolio 1: Bank acceptanceNotes receivable portfolio 2: Trade acceptance
B. Accounts receivableAccounts receivable portfolio 1: Receivables from related parties within the scope of consolidationAccounts receivable portfolio 2: Accounts receivable from other customers
For notes receivable and accounts receivable divided into portfolios, the Group refers to historical credit loss experiencewith combination of the current conditions and forecasts of future economic conditions, and compiles a comparison tableof accounts receivable aging and the entire duration of expected credit loss rate, and calculate the expected credit loss.
Other receivablesThe Group divides the portfolio of other receivables based on credit risk characteristics, and calculates the expected creditlosses on the basis of the portfolio. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Deposit and margin receivableOther receivables portfolio 2: Reserve receivable from employeesOther receivables portfolio 3: Advance for another to the social insurance premium receivableAccounts receivable portfolio 4: Receivables from related parties within the scope of consolidationOther receivables portfolio 5: Other receivables
For other receivables classified into portfolios, the Group calculates expected credit losses based on the default riskexposure and the expected credit loss rate within the next 12 months or the entire duration.
Creditor’s rights investment and other creditor’s right investment
For creditor’s right investments and other creditor’s right investments, the Group calculates the expected credit loss withreference to the nature of the investment according to various types of counterparties and risk exposures, through thedefault risk exposure and the expected credit loss rate within the next 12 months or the entire duration loss.
Assessment of a significant increase in credit risk
The Group compares the default risk of financial instruments on the balance sheet date and the risk of default on the initialrecognition day to determine the relative change in the default risk of the financial instrument during the expected life ofthe financial instrument to assess whether the credit risk of the financial instrument has increased significantly since theinitial recognition.
When determining whether the credit risk has increased significantly since the initial recognition, the Group considersreasonable and evidence-based information that can be obtained without unnecessary additional costs or efforts,including forward-looking information. The information the Group concerns includes:
A debtor has failed to pay the principal and interest on the due date of the contract;
A serious deterioration in the external or internal credit rating (if any) of the financial instrument that has occurred or isexpected;
A serious deterioration in the debtor’s operating results that has occurred or is expected;
The existing or anticipated changes in technology, market, economic or legal environment will have a significant adverseimpact on the debtor's ability to repay the Group.
According to the nature of financial instruments, the Group assesses whether the credit risk has increased significantly onthe basis of individual financial instruments or a combination of financial instruments. When evaluating financialinstruments based on a portfolio of financial instruments, the Group may classify financial instruments based on commoncredit risk characteristics, such as overdue information and credit risk ratings.
Financial assets which have experienced credit impairment
On the balance sheet date, the Group assesses whether financial assets measured at amortized cost and debtinvestments measured at fair value with the movement included in other comprehensive income have experienced creditimpairment. When one or more events that have an adverse effect on the expected future cash flow of a financial assetoccur, the financial asset becomes a financial asset with credit impairment. Evidence of credit impairment of financialassets includes the following observable information:
The issuer or debtor has experienced serious financial difficulty;
The debtor has violated the contract, such as the payment of the interest or the principal in default or overdue, etc.;
Due to economic or contractual considerations related to the debtor’s financial difficulty, the Group gives the debtorconcession that the debtor may not make under any other circumstances;
The debtor is likely to go into liquidation or carry out other financial restructuring;
The issuer or debtor’s financial difficulty caused the disappearance of the active market for the financial asset.
Presentation of the provision for the predicted credit lossIn order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Group re-measuresexpected credit losses on each balance sheet date, and the resulting increase in loss provision or the amount of reversalshall be counted as impairment loss or profit in the current profit and loss. For financial assets measured at amortized cost,the reserve for loss is deducted from the book value of the financial asset listed in the balance sheet; for creditor’s rightinvestments which is measured at fair value and whose movement is included in other comprehensive income, the Grouprecognizes the provision for the loss in other comprehensive income, and the book value of the financial asset is notoffset.
Writing-off
If the Group no longer reasonably expects that the contractual cash flow of a financial asset can be recovered in full or inpart, it will directly write down the book value of the financial asset. Termination of recognition of the relevant financialassets formed from such writing-down This situation usually occurs when the Group determines that the debtor has noassets or sources of income that can generate sufficient cash flow to repay the amount to be written down. However, inaccordance with the Group's procedures for recovering due payments, the financial assets that have been written downmay still be affected by execution activities.
If the written-down financial assets are later recovered, they shall be included in the current profit and loss as the reversalof the impairment loss.
(6) Transfer of financial assets
Transfer of financial assets refers to when the Group(the transferor) transfers or delivers a financial asset to a party (thetransferee) other than the issuer of the financial asset.
The Group derecognizes a financial asset when it transfers substantially all the risks and rewards of ownership of theasset to the transferee, and the Group does not derecognize a financial asset when it retains substantially all the risks andrewards of ownership of the asset.
If the Group has neither transferred nor kept substantially all of risks and remunerations on the ownership of the financialasset, treatment is made respectively based on the following conditions: in case control over the financial asset has beengiven up, recognition of that financial asset as well and the assets and liabilities generated are terminated; in case controlover the financial asset has not been given up, relevant financial assets are recognized based on the extent continuallyinvolved with the transferred financial asset, and relevant liabilities are recognized accordingly.
(7) Setoff of financial assets and financial liabilities
When the Group has the legal rights of setting off the recognized financial assets and financial liabilities and can currentlythese legal rights now, and if the Group has the plan to settle with net amount or synchronously realize these financialassets and discharge these financial liabilities, the financial assets and financial liabilities are listed in the balance sheetwith the amount after mutual set-off. Except that, financial assets and financial liabilities are listed respectively in thebalance sheet and are not set off mutually.
(8) Financial instruments that bear the risk of exchange rate fluctuation
Exchange rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due to
movement in foreign exchange rates. Exchange rate risk may be derived from financial instruments denominated inforeign currencies other than the functional currency. The Company's overseas subsidiaries are mainly settled in HongKong dollars and Swiss francs. The Company's monetary assets and liabilities denominated in foreign currencies are allaffected by the risk of foreign currency exchange rate fluctuations.
11. Notes receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
12. Accounts receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
13. Financing with accounts receivable
Inapplicable
14. Other receivables
Determination and accounting treatment of the predicted credit loss of other receivablesFor the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. Financial Instruments.
15. Inventories
(1) Classification of Inventories
The Group’s inventories are classified into raw materials,products-in-process and commodity in stock,etc.
(2) Valuation of Inventories Delivered
The Group's inventories are priced according to the actual cost. Raw materials, commodity in stock, etc. are pricedrespectively according to the weighted average (with brand world watch stocks exclusive), specific identification (forfamous brand watch stocks) at the time of delivery.
(3) Basis for determining net realizable value of inventories and method for providing reserve for price falling of inventoriesThe net realizable value of the inventories refers to the amount of the estimated sales price of the inventory less theestimated sales costs to incur at the time of completion, estimated sales expenses and relevant taxes. In determining thenet realizable value of inventory, with the obtained valid evidence as the base, the purpose of holding the inventory andthe influence from the events after the balance sheet date is taken into consideration at the same time..
On the balance sheet date, if the cost of inventories is higher than its net realizable value, provision for falling prices ofinventories is made. The Group makes provision for inventory depreciation for self-produced FIYTA watch inventoryaccording to model classification, and makes provision for inventory depreciation for brand watches sold in accordancewith individual inventory items. On the balance sheet date, if the factors affecting the previous write-down of the inventoryvalue have disappeared, the provision for price falling of inventory shall be reversed within the amount originally provided.
(4) Inventory system
The Company adopts the perpetual inventory system in inventory accounting.
(5) Amortization of low value consumables and packing materials
Low value consumables and packing materials are amortized in lump sum at the time of reception.
16. Contract assets
1. Method and criteria for confirmation of contract assets
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship betweenperformance obligations and customer payments. The Company is entitled to receive consideration for the transfer ofgoods or services to customers (while such right depends on other factors other than the passage of time) listed ascontract assets. Contract assets and liabilities under the same contract are presented in net. The Company's right tounconditionally (only depending on the passage of time) collect consideration from the customers are separately stated asaccounts receivable.
2. Recognition and accounting treatment of the predicted credit loss of contract assetsFor details on the recognition and accounting treatment method of the predicted credit losses of contract assets, pleaserefer to the accounting treatment of accounts receivable under the new financial instrument standards in Note V. 10Testing Methods of Financial Asset Impairment and Accounting Treatment Method.
17. Contract cost
The contract costs include the incremental cost incurred in obtaining the contract and the cost for performance of thecontract.
The incremental cost incurred in obtaining the contract refers to the cost which will not incur as long as the Group does notobtain the contract (such as sales commission, etc.) If the cost is expected to be recoverable, the Group recognizes it as acontract acquisition cost as an asset. The Group's expenses incurred in obtaining the contract other than the incrementalcost expected to be recovered are included in the current profit and loss when incurred.
If the cost incurred in implementing the contract does not fall within the scope of other accounting standards andregulations such as inventory and meets the following conditions at the same time, the Group shall recognize it as anasset as the contract performance cost:
① The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturingexpenses (or similar expenses), clearly borne by the customer, and other costs incurred solely due to the contract;
② This cost increases the Group's resources for future performance obligations;
③ This cost is expected to be recoverable.
Assets recognized for contract acquisition costs and assets recognized for contract performance costs (hereinafterreferred to as "assets related to contract costs") are amortized on the same basis as the revenue recognition of goods orservices related to the asset and included in the current profit and loss. (If the amortization period does not exceed oneyear, it shall be included in the current profit and loss when it incurs.)
When the book value of the asset related to the contract cost is higher than the difference between the following two items,the Group makes provision for impairment of the excess part and recognizes it as an asset impairment loss:
①The residual consideration that the Group expects to obtain due to the transfer of the goods or services related to theasset;
② The costs that shall incur for transferring the related goods or services as estimated. The contract performance costrecognized as an asset is presented in the item of “inventories” with the amortization period not exceeding one year or onenormal business cycle at the initial recognition, while it is presented in the item of "other non-current assets" with theamortization period not exceeding one year or one normal operation cycle.
The contract acquisition cost recognized as an asset is presented in the item of “other current assets” with theamortization period not exceeding one year or one normal business cycle at the initial recognition, while it is presented inthe item of "other non-current assets" with the amortization period not exceeding one year or one normal operation cycleat the initial recognition.
18. Classified as assets held for sale
Inapplicable
19. Equity investment
Inapplicable
20. Other equity investment
Inapplicable
21. Long term accounts receivable
Inapplicable
22. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associates. Those that theGroup may exert significant influence on the investees are associates of the Group.
(1) Recognition of initial investment cost
Long-term equity investment that forms a business combination: For a long-term equity investment acquired through abusiness combination involving enterprises under joint control, the initial investment cost of the long-term equityinvestment is the absorbing party’s share of the book value of the owners’ equity of the party being absorbed at the date ofcombination; for a long-term equity investment acquired through a business combination involving enterprises not underjoint control, the initial investment cost of the long-term equity investment is the merge cost.
For a long-term equity investment acquired through other ways rather than a business combination: long-term equityacquired by cash paid, the initial investment cost is the actual payment; long-term equity acquired by the issuing of equitysecurities, the initial investment cost is the fair value of the equity securities.
(2) Subsequent Measurement of Long-term Equity Investment
Where the Bank can exercise joint control over the investee, a long-term equity investment is accounted for using the costmethod and a long-term equity investment is accounted for using the equity method for associated enterprises and jointventures.
For long-term equity investments accounted for in the cost method, except for payments made actually from theinvestments or cash dividends or profits contained in the consideration which have been declared but not yet paid, thecash dividends or profits which have been declared distribution by investees are recognized and recorded in the currentprofit and loss as investment gains.
For long term equity investment calculated by the equity method, if the initial cost of a long-term equity investment isgreater than the investor’s attributable share of the fair values of the net identifiable assets of the investee enterprise atthe acquisition date, no adjustment is made to the initial investment cost. If the initial cost of a long-term equity investmentis less than the investor’s attributable share of the fair value of the net identifiable assets of the investee enterprise at theacquisition date, the difference is charged to profit or loss for the current period, and the cost of the long-term equityinvestment is adjusted accordingly.
When the equity method is used for calculation, the net gains and losses realized by the investee and the share of theother comprehensive income enjoyable or sharable shall be respectively used to recognize the return on investment andother 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 uponcalculation, the book value of the long term equity investment is reduced correspondingly. For other change in the netprofit and loss, other comprehensive income and owner's equity other than the profit distribution, the book value of thelong term equity investment is adjusted and counted to the capital reserve (other capital reserve). In recognizing the shareof the net profit or loss of an investee enjoyable by the Company, the Company takes the fair value of the distinguishablenet assets of the investee at the time of investment as the base and recognizes it after the net profit of the investee hasbeen recognized after adjustment.
If due to additional investment or other reasons, it is possible to exert significant influence on the investee or implementjoint control but does not constitute control, on the conversion date, the total of the fair value of the original equity plus thenew investment cost shall be used as the initial investment cost calculated according to the equity method. The differencebetween the fair value and the book value of the original equity on the conversion date, and the accumulated fair valuechanges originally included in other comprehensive income are transferred to the current profit and loss accounted for bythe equity method.
If the joint control over or significant influence on the investee is lost due to the disposal of part of the equity investment,the remaining equity after the disposal shall undergo the accounting treatment according to the "Accounting Standards forEnterprises No. 22-Recognition and Measurement of Financial Instruments instead on the day when joint control orsignificant influence is lost. The difference between the fair value and the book value is counted in the current profit andloss. The other comprehensive income from the original equity investment calculated and recognized by means of the
equity method undergoes accounting treatment by using the same base as the investee directly disposes the relevantassets or liabilities when the calculation based on the equity method is terminated; the movement of the other owner'sequity in connection with the original equity investment is transferred into the current profit and loss.
If the control over an investee is lost due to the disposal of part of the equity investment and other reasons, the residualequity after disposal may implement joint control or exert significant influence on the investee, the equity method may beused for accounting instead, and the remaining equity shall be regarded as self-acquisition, and the equity method shallbe adopted for accounting adjustment; if the residual equity after disposal can no longer jointly control or exert significantinfluence on the investee, the accounting treatment shall be carried out in accordance with the relevant provisions of theAccounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and the differencebetween the fair value and the book value on the day when the control is lost shall be recorded in the current profit andloss.
If the Company’s shareholding proportion decreases due to the increase of capital by other investors so that its controlpower has lost but can still exercise joint control over or exert significant influence on the invested entity, the newshareholding proportion shall be used to confirm the Company’s share of the invested entity due to capital increase andthe increase in the share of net assets due to share expansion and the difference between the original book value of thelong-term equity investment corresponding to the decline in the shareholding proportion which should be carried forwardis included in the current profit and loss; and subsequently according to the new shareholding proportion, it is deemed tobe adjusted using the equity method when the investment is obtained
The unrealized internal transaction profit and loss between the Group and associates and joint ventures are calculatedbased on the shareholding proportion attributable to the Group, and the investment profit and loss are recognized on thebasis of offsetting. However, the loss from the unrealized internal transaction between the Group and an investee shall notbe offset if the loss belongs to impairment of the assets assigned.
(3) Recognition basis of the joint control over and significant influence upon an invested entityJoint control refers to the joint control over some arrangement made according to the relevant agreement and the relevantactivities for the arrangement must be jointly decided by all the parties sharing the control power. In judging whether thereexists joint control, firstly determine whether all the participants or a combination of participants collectively control thearrangement, and secondly determine whether the decision-making on the related activities of the arrangement must beunanimously agreed by the participants collectively controlling the arrangement. If all the participants or a group ofparticipants must act in concert to determine the relevant activities of an arrangement, then all the participants or thegroup of the participants are considered as collectively in control of the arrangement; If there exists a portfolio of two ormore participants that can collectively control an arrangement, it does not constitute joint control. When judging whetherthere exists joint control, the protective right enjoyed shall not be taken into consideration.
Significant influence refers to the investor's power of participation in making an investee's financial and operation policiesbut the investor cannot control or jointly control with other parties to make such policies. When determining whethersignificant influence may be exerted on the investee, it is necessary to consider the influence from that the voting sharesof the investee directly or indirectly held by the investor and the currently executable potential voting rights held by theinvestor and other parties are assumed to be convered into equity of the investee,including the influence of currentconvertible warrants, share options and convertible corporate bonds issued by the investee.
When the company directly or indirectly through its subsidiaries owns more than 20% (including 20%) but less than 50%of the voting shares of the investee, it is generally considered to have a significant influence on the investee, unless thereis clear evidence that this condition is not allowed to participate in the production and operation decision-making of theinvested entity, which means no significant influence has formed; when the Group owns less than 20% (with 20%exclusive) of the voting shares of the investee, it is generally not considered to have a significant influence on the investeeunless there is clear evidence that it can participate in the production and operation decision-making of the investee undersuch circumstances, which means significant influence has formed.
(4) Method for testing the impairment and provision for impairment
About the investment in subsidiaries, associates and joint ventures, see Note V.31 Method of Provision for Impairment ofAssets
23. Investment based real estate
Measurement model for investment real estateMeasured based on the cost method
Depreciation or amortization methodAbout the depreciation method of investment based real estate and the depreciation method of fixed assets, see NoteV.24.
24. Fixed asset
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for product production, supply of services, lease or operation andadministration with useful life more than one fiscal year. A fixed asset shall be recognized only when it is probable thateconomic benefits associated with the asset will flow into the enterprise and the cost of the asset can be measured reliably.The Group's fixed assets are initially measured at the actual cost at the time of acquisition.
(2) Depreciation methods
| Categories | Depreciation methods | Depreciation life | Residual rate | Yearly depreciation rate |
| Plant & buildings | Average service life method | 20 -35 | 5% | 4.80%-2.70% |
| Machinery & equipment | Average service life method | 10 | 5%-10% | 9.50%-9.00% |
| Electronic equipment | Average service life method | 5 | 5% | 19% |
| Motor vehicle | Average service life method | 5 | 5% | 19% |
| Other equipment | Average service life method | 5 | 5% | 19% |
(3) Basis for recognizing the fixed assets under financing lease, Pricing and Depreciation MethodsInapplicable
25. Construction-in-process
The Group determines the cost of construction-in-process according to the actual expenditure incurred for theconstruction, including all necessary construction expenditures incurred during the construction period, borrowing coststhat shall be capitalized before the construction reaches the condition for intended use and other relevant expenses.
Construction-in-process is transferred to fixed assets when the asset is ready for its intended use.
About the method of provision for asset impairment of construction-in-process, refer to Note V. 31.
26. Borrowing Costs
1. Principle for recognition of the capitalization of the borrowing costs
If the borrowing costs incurred to the Group may be directly attributable to the purchase, construction or production ofassets that meet the capitalization conditions, they shall be capitalized and included in the cost of the relevant assets;other borrowing costs are recognized as the expenses based on the amount incurred at the time of occurrence, andcounted to the current profit and loss. If the borrowing costs meet the following conditions at the same time, they shall becapitalized:
① The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interestbearing debts paid for the acquisition and construction or production activities for preparing assets eligible forcapitalization;
② The borrowing costs have already incurred; and
③ The acquisition and construction or production activities which are necessary to prepare the asset for its intended useor sale have already started.
(2) Capitalization period of borrowing costs:
When the qualified asset under acquisition and construction or production is ready for the intended use or sale, thecapitalization of the borrowing costs shall be ceased. The borrowing costs incurred after the qualified asset underacquisition and construction or production is ready for the intended use or sale shall be recognized as expenses at theincurred amount when they are incurred, and shall be recorded into the current profits and losses.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruptionperiod lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.
(3) Calculation for the capitalization rate and capitalization amount of the borrowing costsInterest expenses of special borrowings incurred actually for the current period less interest income from borrowings atbank or investment income from temporary investments is capitalized; capitalization amount is determined asaccumulative asset expenditure of general borrowings over weighted average asset expenditure of special borrowingsmultiples capitalization rate of general borrowings. Capitalization rate is determined as calculating weighted averageinterest rate of general borrowings.
In the capitalization period, exchange differences of special borrowings in foreign currency is totally capitalized; exchangedifferences of general borrowings in foreign currency is recognized in profit or loss for the current period.
27. Biological Assets
Inapplicable
28. Oil and Gas Assets
Inapplicable
29. Use right assets
Inapplicable
30. Intangible assets
(1) Pricing Method, Service Life and Impairment Test
The Group's intangible assets include land use rights, software systems, trademark use rights, etc.
Intangible assets are initially measured at cost and the useful life of an intangible asset is analyzed and defined at the timeof acquisition of the asset. An intangible asset with a finite useful life should be amortized over its estimated useful lifeusing an amortization method that can reflect the expected consumption pattern of the economic benefits associated withthe asset, commencing from the time when the intangible asset is available for use. When the expected consumptionpattern cannot be determined reliably the asset should be amortized based on a straight-line method. An intangible assetwith an indefinite useful life should not be amortized.
The method for amortization of intangible assets with limited service life is as follows:
| Categories | Useful Life | Amortization Method | Remarks |
| Land use right | 50 | Straight-line method | |
| Software system | 5 | Straight-line method |
| Trademark rights | 5 -10 | Straight-line method |
At the end of each year, the Group shall review the service life and amortization method of intangible assets with limitedservice life. If the former estimate is different, the previous estimate shall be adjusted and treated as the change of theaccounting estimate.
If an intangible asset is no longer expected to bring future economic benefits to the enterprise on the balance sheet date,the book value of the intangible asset shall be transferred into the current profit and loss.
About the method of provision for asset impairment of intangible assets, refer to Note V. 31.
(2) Accounting policy for internal research and development expenditure
The internal research and development expenditures of the Group are divided into research expenditures anddevelopment expenditures.
Expenditures on research phase are recorded into profit or loss when it occurred.
Expenditure in development stage can be capitalized while meeting the following conditions, i.e. completing the intangibleasset so that it is technically feasible to use or sale; has the intent to complete the intangible asset and use or sell it; theway of the intangibles to generate economic benefits, including being able to prove that the products that produced withthe use of the intangibles have market or the intangible asset itself has market, the intangible assets will be used internally,and can prove its usefulness; have adequate technical, financial resources and other resources support to complete thedevelopment of the intangible assets, and have the ability to use or sell the intangible asset; the expenditure attributable tothe intangible asset development phase can be reliably measured. Development expenditure does not meet the aboveconditions are recognized in the current profit and loss.
When the Group’s research and development projects meet the above conditions, through technical feasibility andeconomic feasibility studies, the development stage begins after project is approved.
Expenditures on the development phase after capitalization is listed on the balance sheet as development expenditureand transferred to intangible assets after the project reach its intended use.
31. Impairment of long term assets
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments, foreclosed assets,investment property subsequently measured at cost model, fixed assets, construction in progress, and intangible assets(with inventories, deferred income tax asset and financial assets exclusive) are determined as follows:
At each balance sheet date, the Group determines whether there may be indication of impairment of the assets, if there isany, the Group will estimate the recoverable amount of the asset, and perform test for impairment. For goodwill and theintangible assets with the service life undetermined and the intangible assets which have not reached applicable status,regardless whether there exists sign of impairment, the Group makes impairment test every year.
The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the disposalexpenses, and the current value of the expected future cash flow of the asset, whichever is higher. The recoverableamount of asset is estimated on individual basis. If it is not possible to estimate the recoverable amount of the individualasset, the Bank determines the recoverable amount of the asset group to which the asset belongs. The recognition of anasset group shall base on whether the main cash inflow generated by the asset group is independent of those generatedby other assets or other group assets.
When the asset or asset group’s recoverable amount is lower than its book value, the Group reduces its book value to itsrecoverable amount, the reduced amount is recorded in profit or loss for the current period and the provision forimpairment of assets are recognized.
As far as the goodwill impairment test concerned, the book value of the goodwill formed by merger is apportioned to therelevant asset group according to the reasonable method commencing from the date of acquisition; in case it is difficult tobe apportioned to the relevant asset group, it is apportioned to the portfolio of the relevant asset groups. The relevantasset group or portfolio of asset groups are those which get benefit from the coordinative effect of enterprise consolidation
but should not be greater than the reporting segment determined by the Group.
When the relevant asset group or portfolio of asset groups with goodwill included undergo the impairment testing, in casethere exists impairment evidence in the goodwill related asset group or portfolio of asset groups, impairment testingshould be first conducted on the asset group or portfolio of asset groups without goodwill and the recoverable amount iscalculated, and the corresponding impairment loss is recognized. Impairment testing is then conducted on the asset groupor portfolio of asset groups with goodwill included. In comparison with the book value and recoverable amount, in case therecoverable amount is lower than the book value, the loss of goodwill impairment is recognized.
The loss of asset impairment, once recognized, shall no longer be reversable in the future fiscal periods.
32. Long term expenses to be apportioned
Long-term expenses to be apportioned occurred by the Group are priced according to the actual cost, and are amortizedaveragely according to the expected period of benefit. As for the long-term deferred expenses that can not benefit thefuture accounting period, the amortized value is recognized in the current profit and loss.
33. Contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship betweenperformance obligations and customer payments. The obligation of the Company to transfer goods or provide services tocustomers after receiving or receivable consideration from customers are listed as contractual liabilities. Contract assetsand liabilities under the same contract are presented in net.
34. Employees’ Wages and Salaries
(1) Accounting treatment of short term salaries
During the accounting period in which the employees render services to the Group, the Group recognizes the actualwages, bonuses, medical insurance premiums, work-related injury insurance premiums, maternity insurance premiumsand other social insurance premiums and housing provident funds paid for the employees in accordance with theprescribed standards and proportions as liabilities which are included in the current profit and loss or related asset costs. Ifthe liability is not expected to be fully paid within twelve months after the end of the annual reporting period in whichemployees have rendered the related services while the financial impact is significant, the liability will be measured at thediscounted amount.
(2) Post-employment benefits
A post-employment benefit plan consists of the defined contribution plan and the defined benefit plan. Where, the definedcontribution plan refers to a post-employment benefit plan in which the Company no longer assumes further paymentobligation after paying fixed fees to an independent fund; the defined benefit plan refers to a post-employment benefit planother than the defined contribution plan.
Defined Contribution PlansThe defined contribution plan includes the basic pension insurance, unemployment insurance and enterprise annuity
plans.
In addition to basic pension insurance, the Group has established an enterprise annuity plan (the "annuity plan") inaccordance with the relevant policies of the national enterprise annuity system, and employees may participate in theannuity plan voluntarily. With the exception of the above, the Group has no other significant social security commitmentsto employees.
During the accounting period in which employees provide services to the Group, the amount of the deposits calculatedbased on the defined contribution plan is recognized as a liability and counted in the current profit or loss or related assetcosts.
The defined benefit planFor the defined benefit plan, an independent actuary performs actuarial valuation on the annual balance sheet date, anduses the expected cumulative benefit unit method to determine the cost of providing benefits. The employeecompensation cost resulting from the defined benefit plan of the Group includes the following components:
① Service costs include current service costs, past service costs, and settlement profit or loss. Where, the current servicecost refers to the increase in the present value of the defined benefit plan obligations caused by the employees providingservices in the current period; past service costs refer to the increase or decrease in the present value of defined benefitplan obligations related to previous employee services as a result of modification of the defined benefit plan.
② Net interest on net liabilities or net assets of the defined benefit plan, including interest income on the plan assets,interest expense on the defined benefit plan obligations, and interest on the asset cap effect.
③ Movement of the net liabilities and net assets re-measured for setting the beneficial plan.Unless other accounting standards require or permit the cost of employee benefits to be included in the cost of assets, theGroup will include the above Items ① and ② in the current profit and loss; Item ③ will be included in othercomprehensive income and will not be converted back to profit and loss in subsequent accounting period. The partoriginally included in other comprehensive income will be carried forward to the retained earnings within the scope ofequity at the end of the original defined benefit plan.
(3) Accounting treatment for termination benefits
If the Group provides termination benefits to employees, the employee compensation liabilities arising from thetermination benefits shall be recognized as soon as possible and included in the current profit and loss: when the Groupcannot unilaterally withdraw the termination benefits provided due to the termination of the labor relationship plan orreduction proposal; when the Group confirms the costs or expenses related to the reorganization involving the payment oftermination benefits.
In the case of implementing an internal retirement plan, the economic compensation prior to the official retirement dateshall be considered as termination benefit. During the period from the time when an employee ceases to render servicesto the day of normal retirement, the salary to the employee of internal retirement and the social insurance premium to bepaid shall be recorded into the current profit and loss in a lump sum. The economic compensation after the officialretirement date (such as normal old-age pension) shall be treated as post-employment benefits.
(4) Accounting treatment for other long term employees' welfare
Other long term employees' welfare provided by the Group to its employees shall undergo the accounting treatmentaccording to the defined contribution plan as long as it complies with the defined contribution plan. If it meets the definedbenefit plan, it shall be treated in accordance with the above relevant provisions of the defined benefit plan. However, inthe relevant employee compensation cost, the part of "change caused by remeasurement of net liabilities or net assets ofthe defined benefit plan" shall be recorded into the current profit and loss or the cost of relevant assets.
35. Lease liabilities
Inapplicable
36. Predicted liabilities
If the obligation related to the contingencies meet the following conditions at the same time, the Group will recognize it asestimated liability:
(1) The obligation is a current obligation of the Group;
(2) The performance of this obligation is likely to lead to the outflow of economic benefit from the Group;
(3)The amount of the obligation can be reliably measured.
The estimated liabilities shall be initially measured in accordance with the best estimate of the necessary expenses for theperformance of the current obligation, and the Bank shall take into full consideration of the risks, uncertainty, time value ofmoney, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the bestestimate shall be determined after discounting the relevant future outflow of cash. On the balance sheet date, the Groupre-checks the book value of the estimated debts and makes proper adjustment in order to reflect the best estimatedamount at present.
If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and the compensatedamount can only be received basically, it is recognized separated as asset. The compensated amount shall not be greaterthan the book value of the predictive liability.
37. Share-based payment
(1) Type of share-based payment
Share-based payments are divided into equity-settled share-based payment and cash-settled share-based payment.
(2) Method for determining the fair value of equity instruments
The Group determines the fair value of the equity instruments granted, such as options with an active market according tothe price quoted in the active market. The fair value of equity instruments such as options without active market isdetermined by option pricing model. In selecting the option pricing model, the following factors have been taken intoconsideration: A. price for exercising the option; B. validity of the option; C. the current price of the underlying shares; D.the expected volatility of stock prices; E. the expected dividends on the shares; F. the risk-free interest rate within the term
of the option.
(3) Basis for determining the best estimate of the vested equity instruments
On each balance sheet date during the vesting period, the Group may make best estimate based on the subsequentinformation, such as the movement of the number of employees eligible for exercising the rights as latest obtained and thenumber of the vested equity instruments is corrected. On the vesting date, the number of the final estimated vested equityinstrument should be equal to the number of the actually vested equity instruments.
(4) Relevant accounting treatment for implementation, amendment or termination of the share-based payment planShare-based payment settled with equity is measured with the fair value of the employee's equity instruments at the grantdate. If the right may be exercised immediately after the grant, the fair value of the equity instruments shall, on the date ofthe grant, be included in the relevant cost or expense and the capital reserves shall be increased accordingly. As to aequity-settled share-based payment in return for employee services, if the right cannot be exercised until the vestingperiod comes to an end or until the prescribed performance conditions are met, then on each balance sheet date withinthe vesting period, the services obtained in the current period shall, based on the best estimate of the number of vestedequity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equitiesinstruments on the date of the grant. The Group shall, after the vesting date, make no adjustment to the relevant costs orexpenses as well as the total amount of the owner's equities which have been confirmed.
A cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated andconfirmed based on the shares or other equity instruments undertaken by the Group. As to a cash-settled share-basedpayment instruments, if the right may be exercised immediately after the grant, the fair value of the liability undertaken bythe Group shall, on the date of the grant, be included in the relevant costs or expenses, and the liabilities shall beincreased accordingly. As to a cash-settled share-based payment, if the right may not be exercised until the vesting periodcomes to an end or until the specified performance conditions are met, on each balance sheet date within the vestingperiod, the services obtained in the current period shall, based on the best estimate of the information about theexercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the fair value of theliability undertaken by the Group. The fair value of the liabilities is re-measured and the movement is counted in thecurrent profits and losses on each balance sheet date and settlement day before the settlement of related liabilities.
When the Group amends the share-based payment plan, if the amendment increases the fair value of the equityinstruments granted, the increase of the services obtained is recognized accordingly based on the increase of the fairvalue of the equity instruments. If the amendment increases the number of equity instruments granted, the fair value of theincreased equity instruments is correspondingly recognized as increase in the services acquired. Increase of the fair valueof the equity instrument refers to the difference between the fair value of the equity instrument on the amendment daybefore and after the amendment. If the amendment reduces the total fair value of the share-based payment or adopts anyother method unfavorable to the employees, the service obtained will continue to undergo accounting treatment as if suchamendment has never taken place unless the Group has canceled part or all of the granted equity instruments.
If the granted equity instrument has been canceled (unless the non-market condition which does not satisfy the right offeasibility is cancelled)during the vesting period, the Group shall treat the cancellation of the granted equity instrument asaccelerated vesting, the amount which should be recognized during the remaining vesting period is counted to the currentprofit and loss immediately and at the same time the capital reserve is recognized. If an employee or other party canchoose to meet the non-vesting conditions but fails to meet the vesting period, the Group shall treat it as a cancellation of
the granted equity instrument.
38. Other financial instruments, such as preferred shares, perpetual liabilities, etc.Inapplicable
39. Revenue
The accounting policy used for revenue recognition and measurementThe Company recognizes revenue when it has satisfied the performance obligation under the contract, that is, when thecustomer has obtained the right to control the relevant goods or services “Obtaining the right to control the relevant goodsor services” means that it is able to dominate the use of the goods or services and derive almost all economic benefitstherefrom.
If a contract contains two or more performance obligations, the Company shall allocate the transaction price to eachindividual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods orservices promised by each individual performance obligation on the date of the contract The Company measures revenuebased on the transaction price allocated to each individual performance obligation.
The transaction price refers to the amount of consideration that the company expects to be entitled to receive due to thetransfer of goods or services to customers, excluding payments collected on behalf of third parties and paymentsexpected to be returned to customers. The Company determines the transaction price in accordance with the terms of thecontract with combination of its past customary practices. When determining the transaction price, the influence fromvariable consideration, major financing components in the contract, non-cash consideration, consideration payable tocustomers and other factors should be taken into consideration. The Company determines the transaction price thatincludes variable consideration at an amount that does not exceed the amount of accumulated recognized revenue that isunlikely to be materially reversed when the relevant uncertainty is eliminated. If there is a significant financing componentin the contract, the Company determines the transaction price based on the amount payable in cash when the customerobtains control of the goods or services, and uses the actual interest method to amortize the difference between thetransaction price and the contract consideration during the contract period. One of the following conditions shall be fulfilledwithin a certain period of time; otherwise, it shall be fulfilled at a certain point in time:
? A customer obtains and consumes the economic benefits brought by the Company's performance at the same time asthe Company's performance.
? A customer may control the products under construction in the Company's performance process.
? The goods produced by the Company during the performance of the contract have irreplaceable uses, and the Companyhas the right to collect payment for the cumulative performance part that has been completed so far during the entirecontract period.
For performance obligations performed within a certain period of time, the Company recognizes revenue in accordancewith the performance progress during that period, except where the performance progress cannot be reasonablydetermined. The Company determines the progress of a contract by using the output method or input method with
consideration of the nature of goods or services. When the performance progress cannot be reasonably determined, andthe costs incurred are expected to be compensable, the Company recognizes the revenue according to the amount of thecosts incurred until the performance progress can be reasonably determined.
For performance obligations performed at a certain point of time, the Company recognizes revenue at the point when acustomer obtains control of the relevant goods or services. In judging whether a customer has obtained control of goodsor services, the Company considers the following signs:
? The Company has the current right to receive payment for the goods or services, that is, the customer has the currentpayment obligation for the goods or services.
? The Company has transferred the legal ownership of the product to the customer, that is, the customer has the legalownership of the product.
? The Company has transferred the goods to the customer in kind, that is, the customer has taken possession of thegoods in kind.
? The Company has transferred the main risks and rewards of the ownership of the goods to the customer, that is, thecustomer has obtained the main risks and rewards of the ownership of the goods.
? The customer has accepted the goods or services, etc.Differences in revenue recognition accounting policies caused by different business models in similar businessesNil
40. Government subsidies
Government subsidies are recognized when they meet the conditions attached to the government subsidies and can bereceived.
Government subsidies for monetary assets are measured according to the amount received or receivable. If agovernment subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in areliable way, it shall be measured at its nominal amount.
The government subsidies pertinent to assets mean the government subsidies that are obtained by the Group used forpurchase or construction, or forming the long-term assets by other ways with those pertinent to income exclusive.
If the subsidy recipient is not specified in the government documents and long-term assets can be formed, the part of thegovernment subsidies corresponding to the asset value is regarded as the government subsidy pertinent to the asset, andthe rest is regarded as the government subsidy pertinent to the income; if it is difficult to distinguish, the governmentsubsidies as a whole are regarded as the government subsidies pertinent to the income.
Government subsidies pertinent to assets are recognized as deferred income and recorded in profit and loss ininstallments in accordance with a reasonable and systematic method within the useful life of the relevant assets. Ifgovernment subsidies pertinent to income are used to compensate related cost or loss already incurred, they are included
in the current profit and loss or offsets the related costs; if they are used to compensate related costs or losses insubsequent periods, they shall be included in the deferred income, and included in the current profit and loss or offset therelated costs during the recognition period of the related costs or losses. The government subsidy measured at a nominalamount is directly counted to the current profit and loss. The Group adopts the same method to deal with the same orsimilar government subsidy business.
Government subsidies pertinent to daily activities are included in other income in accordance with the nature of economicbusiness. Government subsidies irrelevant with the daily activities are included in non-operating revenue and expenditure.
When the government subsidy already recognized needs to be returned, if there is a relevant deferred income balance,the book balance of the relevant deferred income shall be offset, and the excess part shall be included in the current profitand loss; in other cases, it shall be directly included in the current profit and loss.
41. Deferred income tax asset/deferred income tax liability
Income tax includes current income tax and deferred income tax. Income taxes should be recognized as income taxexpenses in profit or loss for current period except for deferred income tax associated with goodwill arising from businesscombination, or transactions or events that are directly recognized in owners’ equity, which should be recorded underowners’ equity.
A deferred income tax asset or liability is recognized based on the temporary differences between the book value of anasset or a liability at the balance sheet date and its tax basis using the balance sheet liability method.
A deferred income tax liability should be recognized for all taxable temporary differences, except to the extent that thedeferred income tax liability arises from the following transactions:
(1) The initial recognition of goodwill; or the initial recognition of an asset or liability in a transaction that has both of thefollowing characteristics: the transaction is not a business combination; and at the time of the transaction, it neither affectsthe accounting profit nor taxable profit.
(2) A deferred income tax liability should be recognized for all taxable temporary differences arising from the investmentsin subsidiaries, joint ventures and associates, except to the extent that both of the following conditions are satisfied: A. theGroup is able to control the timing of the reversal of the temporary differences; and B. it is probable that the temporarydifference will not reverse in the foreseeable future.
In respect of deductible temporary differences, the carry-forward of deductible losses and tax deductions, the Groupshould recognize deferred tax assets to the extent that it is probable that future taxable profit will be available againstwhich the deductible temporary differences, the deductible losses and tax deductions can be utilized, unless thedeductible temporary differences arises from the following transactions.
(1) The transaction is not business combination and at the time of the transaction, it neither affects accounting profit nortaxable profit.
(2) Deferred tax assets should be recognized for all deductible temporary differences associated with investments insubsidiaries, joint ventures and associates if all of the following conditions are satisfied: it is probable that the deductibletemporary difference will reverse in the foreseeable future and it is probable that taxable profit in the future will be
available against which the deductible temporary difference can be utilized.
At the balance sheet date deferred income tax assets and liabilities should be measured at tax rates expected to beapplied to the period when the asset is recovered or the liability is settled and the measurement of deferred income taxassets and liabilities should reflect the tax consequences that would follow from the manner in which The Bank expects, atthe balance sheet date, to recover or settle the book value of its assets and liabilities.
At the balance sheet date the Bank should review the book value of deferred income tax assets. The book value of adeferred income tax asset should be reduced to the extent that it is no longer probable that sufficient taxable profit will beavailable to allow the benefit of the deferred income tax asset to be utilized. Any such reduction in amount is reversedwhen it becomes probable that sufficient taxable profits will be available.
42. Lease
(1) Accounting process for operating lease
A. The Group as the LessorThe rents from operating leases shall be recorded in the profits and losses of the current period by using the straight-linemethod over each period of the lease term. The initial direct costs incurred shall be recorded into the profits and losses ofthe current period.
B. The Group as the TenantLease income from operating leases shall be recorded in the profits and losses of the current period using the straight-linemethod over each period of the lease term. The initial direct costs incurred shall be recorded into the profits and losses ofthe current period.
(2) Accounting treatment method for finance lease
Inapplicable
43. Other important accounting policy and accounting estimate
(1) Repurchased shares
The shares repurchased by the Company shall be managed as treasury stock before they are cancelled or transferred,and all expenditures for the repurchase of shares shall be transferred to the cost of treasury stock. The consideration andtransaction costs paid in the repurchase reduce the owner’s equity. In process of repurchasing, transferring or cancelingthe Company’s shares, no profit or loss is recognized.
When transferring treasury shares, the difference between the actual amount received and the book value of treasuryshares is included in the capital reserve. If the capital reserve is insufficient to offset, the surplus reserve and retaintedearnings shall be offset. For the cancellation of treasury shares, the share capital shall be reduced according to the bookvalue of the shares and the number of shares cancelled, and the capital reserve shall be reduced according to thedifference between the book balance and the book value of the cancelled treasury shares. If the capital reserve isinsufficient, the surplus reserve and retained earnings shall be written-down.
(2) Restricted stocks
In the equity incentive plan, the Company grants restricted stocks to the motivated objects. The motivated objects firstsubscribe for the stocks. If the unlocking conditions stipulated in the equity incentive plan are not met subsequently, theCompany shall repurchase the stocks at the previously agreed price. If the restricted stocks issued to employees havefulfilled the capital increase procedures such as registration in accordance with relevant regulations, on the grant date, theCompany shall confirm the share capital and capital reserve (share capital premium) based on the subscription moniespaid by the employees; at the same time, the treasury stock and other payables are confirmed for the repurchaseobligation.
44. Changes in significant accounting policies and accounting estimates
(1) Change in significant accounting policies
| Contents and cause of the change in the accounting policy | Examination and approval procedures | Remarks |
| On July 5, 2017, the Ministry of Finance revised and issued the "Accounting Standards for Enterprises No. 14-Revenue". According to the requirements of the Ministry of Finance, companies listed both at home and abroad or listed overseas should prepare their financial statements according to the IFRS or the Accounting Standards for Enterprises commencing from January 1, 2018; other domestically listed companies implement the same commencing from January 1, 2020; non-listed companies implementing the Accounting Standards for Business Enterprises shall implement the same commencing from January 1, 2021. | The Company reviewed and approved the implementation at its 16th Session of the Ninth Board of Directors. |
The Ministry of Finance revised the "Accounting Standards for Enterprises No. 14 - Revenue" in 2017. The revisedstandards stipulate that in the initial implementation of the standards, an enterprise should adjust the amount of retainedearnings and other related items in the financial statements at the beginning of the year based on the cumulative impact,and no adjustments should be made to comparable period information.
The Company started to implement the new standards for revenue commencing from January 1, 2020. According to thestandards, the Company only adjusts the accumulated impact of contracts that have not been completed on the date offirst implementation. The retained earnings at the beginning of 2020 and the amount of other related items in the financialstatements would not be adjusted in the 2019 financial statements. The implementation of these standards has no impacton retained earnings at the beginning of 2020 and the amount of other related items in the financial statements.
The main impacts of the changes in accounting policies caused by the above new standards for revenue in the financialstatements on January 1, 2020 are as follows::
Consolidated Financial Statements:
| Book value as presented according to the previous standards (December 31, 2019) | Reclassified | January 1, 2020) | |
| Advance Receipts | 23,433,463.57 | -19,999,056.53 | 3,434,407.04 |
| Contract liabilities | 19,999,056.53 | 19,999,056.53 |
Financial Statements, Parent Company
| Book value as presented according to the previous standards (December 31, 2019) | Reclassified | January 1, 2020) |
| Advance Receipts | 3,434,407.04 | 3,434,407.04 | |
| Contract liabilities |
(2) Change in significant accounting estimates
Inapplicable
(3) Adjustment of the relevant financial statements at the current year beginning according to the new standardsfor revenues and the new standards for lease initially implemented commencing from 2020Consolidated Balance Sheet
In CNY
| Items | December 31, 2019 | January 01, 2020 | Amount involved in the adjustment |
| Current assets: | |||
| Monetary fund | 316,668,565.09 | 316,668,565.09 | |
| Settlement reserve | |||
| Inter-bank lending | |||
| Transactional financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 10,596,431.31 | 10,596,431.31 | |
| Accounts receivable | 397,471,106.98 | 397,471,106.98 | |
| Financing with accounts receivable | |||
| Advance payment | 10,847,962.28 | 10,847,962.28 | |
| Receivable premium | |||
| Reinsurance accounts receivable | |||
| Reserve for reinsurance contract receivable | |||
| Other receivables | 47,239,844.58 | 47,239,844.58 |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Redemptory monetary capital for sale | |||
| Inventories | 1,808,820,089.92 | 1,808,820,089.92 | |
| Contract assets | |||
| Held-for-sale assets | |||
| Non-current assets due within a year | |||
| Other current assets | 68,858,096.74 | 68,858,096.74 | |
| Total current assets | 2,660,502,096.90 | 2,660,502,096.90 | |
| Non-current assets: | |||
| Loan issuing and advance in cash | |||
| Equity investment | |||
| Other equity investment | |||
| Long term accounts receivable | |||
| Long-term equity investment | 46,423,837.85 | 46,423,837.85 | |
| Investment in other equity instruments | 85,000.00 | 85,000.00 | |
| Other non-current financial assets | |||
| Investment-oriented real estate | 407,503,307.24 | 407,503,307.24 | |
| Fixed assets | 363,997,098.94 | 363,997,098.94 | |
| Construction-in-process | |||
| Productive biological asset | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 38,711,821.26 | 38,711,821.26 | |
| Development expenses | |||
| Goodwill | |||
| Long-term expenses to be apportioned | 152,587,491.33 | 152,587,491.33 | |
| Deferred income tax asset | 83,739,383.37 | 83,739,383.37 | |
| Other non-current assets | 7,373,248.48 | 7,373,248.48 | |
| Total non-current assets | 1,100,421,188.47 | 1,100,421,188.47 |
| Total assets | 3,760,923,285.37 | 3,760,923,285.37 | |
| Current liabilities: | |||
| Short term borrowings | 567,908,833.21 | 567,908,833.21 | |
| Borrowings from central bank | |||
| Loans from other banks | |||
| Transactional financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 279,772,787.37 | 279,772,787.37 | |
| Advance Receipts | 23,433,463.57 | 3,434,407.04 | -19,999,056.53 |
| Contract liabilities | 19,999,056.53 | 19,999,056.53 | |
| Income 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 | 82,602,845.67 | 82,602,845.67 | |
| Taxes payable | 24,064,803.00 | 24,064,803.00 | |
| Other payables | 119,616,721.63 | 119,616,721.63 | |
| Including: interest payable | |||
| Dividends payable | 848,233.27 | 848,233.27 | |
| Service charge and commission payable | |||
| Payable reinsurance | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within a year | 360,140.00 | 360,140.00 | |
| Other current liabilities | |||
| Total current liabilities | 1,097,759,594.45 | 1,097,759,594.45 | |
| Non-current liabilities: | |||
| Reserve for insurance contract | |||
| Long-term borrowings | 4,321,680.00 | 4,321,680.00 | |
| Bonds payable |
| Including: preferred shares | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term accounts payable | |||
| Long term payroll payable to the employees | |||
| Estimated liabilities | |||
| Deferred income | 3,046,090.60 | 3,046,090.60 | |
| Deferred income tax liability | 1,256,242.49 | 1,256,242.49 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 8,624,013.09 | 8,624,013.09 | |
| Total liabilities | 1,106,383,607.54 | 1,106,383,607.54 | |
| Owner’s equity: | |||
| Capital stock | 442,968,881.00 | 442,968,881.00 | |
| Other equity instruments | |||
| Including: preferred shares | |||
| Perpetual bond | |||
| Capital Reserve | 1,081,230,215.32 | 1,081,230,215.32 | |
| Less: shares in stock | 71,267,118.78 | 71,267,118.78 | |
| Other comprehensive income | -940,209.09 | -940,209.09 | |
| Special reserve | |||
| Surplus Reserve | 235,701,180.14 | 235,701,180.14 | |
| Provision for general risks | |||
| Retained earnings | 966,840,818.40 | 966,840,818.40 | |
| Total owners’ equity attributable to the parent company | 2,654,533,766.99 | 2,654,533,766.99 | |
| Minority shareholders’ equity | 5,910.84 | 5,910.84 | |
| Total owner’s equity | 2,654,539,677.83 | 2,654,539,677.83 | |
| Total liabilities and owners’ equity | 3,760,923,285.37 | 3,760,923,285.37 |
Note to the AdjustmentBalance Sheet, Parent Company
In CNY
| Items | December 31, 2019 | January 01, 2020 | Amount involved in the adjustment |
| Current assets: | |||
| Monetary fund | 270,673,346.02 | 270,673,346.02 |
| Transactional financial assets | |||
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 2,848,025.39 | 2,848,025.39 | |
| Financing with accounts receivable | |||
| Advance payment | |||
| Other receivables | 783,647,732.22 | 783,647,732.22 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventories | |||
| Contract assets | |||
| Held-for-sale assets | |||
| Non-current assets due within a year | |||
| Other current assets | 12,380,243.67 | 12,380,243.67 | |
| Total current assets | 1,069,549,347.30 | 1,069,549,347.30 | |
| Non-current assets: | |||
| Equity investment | |||
| Other equity investment | |||
| Long term accounts receivable | |||
| Long-term equity investment | 1,380,895,239.27 | 1,380,895,239.27 | |
| Investment in other equity instruments | 85,000.00 | 85,000.00 | |
| Other non-current financial assets | |||
| Investment-oriented real estate | 329,970,083.18 | 329,970,083.18 | |
| Fixed assets | 238,594,698.50 | 238,594,698.50 | |
| Construction-in-process | |||
| Productive biological asset | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 30,925,974.54 | 30,925,974.54 | |
| Development expenses | |||
| Goodwill | |||
| Long-term expenses to be | 12,106,759.98 | 12,106,759.98 |
| apportioned | |||
| Deferred income tax asset | 1,125,840.75 | 1,125,840.75 | |
| Other non-current assets | 4,707,236.86 | 4,707,236.86 | |
| Total non-current assets | 1,998,410,833.08 | 1,998,410,833.08 | |
| Total assets | 3,067,960,180.38 | 3,067,960,180.38 | |
| Current liabilities: | |||
| Short term borrowings | 540,650,622.50 | 540,650,622.50 | |
| Transactional financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 12,952,934.93 | 12,952,934.93 | |
| Advance Receipts | 3,434,407.04 | 3,434,407.04 | |
| Contract liabilities | |||
| Payroll payable to the employees | 19,019,554.57 | 19,019,554.57 | |
| Taxes payable | 1,713,130.68 | 1,713,130.68 | |
| Other payables | 82,631,590.46 | 82,631,590.46 | |
| Including: interest payable | |||
| Dividends payable | 848,233.27 | 848,233.27 | |
| Held-for-sale liabilities | |||
| Non-current liabilities due within a year | |||
| Other current liabilities | |||
| Total current liabilities | 660,402,240.18 | 660,402,240.18 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: preferred shares | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term accounts payable | |||
| Long term payroll payable to the employees | |||
| Estimated liabilities | |||
| Deferred income | 3,046,090.60 | 3,046,090.60 | |
| Deferred income tax liability |
| Other non-current liabilities | |||
| Total non-current liabilities | 3,046,090.60 | 3,046,090.60 | |
| Total liabilities | 663,448,330.78 | 663,448,330.78 | |
| Owner’s equity: | |||
| Capital stock | 442,968,881.00 | 442,968,881.00 | |
| Other equity instruments | |||
| Including: preferred shares | |||
| Perpetual bond | |||
| Capital Reserve | 1,086,885,756.42 | 1,086,885,756.42 | |
| Less: shares in stock | 71,267,118.78 | 71,267,118.78 | |
| Other comprehensive income | |||
| Special reserve | |||
| Surplus Reserve | 235,701,180.14 | 235,701,180.14 | |
| Retained earnings | 710,223,150.82 | 710,223,150.82 | |
| Total owner’s equity | 2,404,511,849.60 | 2,404,511,849.60 | |
| Total liabilities and owners’ equity | 3,067,960,180.38 | 3,067,960,180.38 |
Note to the AdjustmentInapplicable
(4) Note to the retroactive adjustment of the previous comparative data according to the new standards forrevenue and the new standards for lease to be implemented commencing from year 2020Inapplicable
45. Miscelleneous
InapplicableVI. Taxation
1. Types of major taxes and tax rates
| Type of taxes | Tax basis | Tax rates |
| Value-added tax | Taxable income | 13%, 10%, 9%, 6% and 5% |
| Consumption tax | Taxable income | 20% |
| Urban maintenance and construction tax | Amount of payable turnover tax | 5% and 7% |
| Enterprise income tax | Taxable income amount | Refer to the Note |
| Real estate tax | Cost of the property or rental income | 1.2% and 12% |
In case there exists taxpayers subject to different corporate income tax rates, disclose the information.
| Taxpayers | Income tax rates |
| The Company | 25.00% |
| Shenzhen Harmony World Watches Center Co., Ltd. (HARMONY) | 25.00% |
| Shenzhen FIYTA Precision Technology Co., Ltd. | 15.00% |
| FIYTA (Hong Kong) Limited (FIYTA HK) | 16.50% |
| Station-68 Co. | 16.50% |
| Shenzhen FIYTA Technology Development Co., Ltd. (Technology Development Co.) | 15.00% |
| Shiyuehui Boutique (Shenzhen) Co., Ltd. (Shiyuehui ) | 25.00% |
| Shenzhen Harmony E-Commerce Co., Ltd. | 20.00% |
| Emile Chouriet (Shenzhen) Limited (Emile Choureit Shenzhen Company) | 25.00% |
| FIYTA Sales Co., Ltd. (FIYTA Sales Co.) | 25.00% |
| Liaoning Hengdarui Commerce & Trade Co., Ltd. (Hengdarui) | 25.00% |
| Montres Chouriet SA (the Swiss Co.) | 30.00% |
2. Tax Preferences
(1) According to Article 2 of the Circular on Transmission of the Provisions on the Policy in Connection with the PropertyTax and Urban Land Use Tax Promulgated by the State Administration of Taxation (SHEN DI SHUI FA [2003] No. 676: forthe new properties newly constructed or purchased by taxpayers, the property tax may be exempted for three yearscommencing from the next month after completion of the construction or purchase. Our FIYTA Watch Building located atGuangming New Zone of Shenzhen enjoys exemption from the property tax for three years commencing from the nextmonth of completion of the construction in September 2016.
(2) In accordance with Notice of the Ministry of Finance and the State Administration of Taxation on Extending the LossCarryover Period for High and New Technology Enterprises and Small and Medium-Sized Technological Enterprises (CAISHUI [2018] No. 76), beginning on January 1, 2018, the losses of an enterprise currently qualified as a high and newtechnology enterprise that occurred during the prior five years and are still not fully covered may be carried over forcovering in subsequent years, and the maximum carryover period shall be extended from 5 years to 10 years.
3. Others
Note: Property tax
According to the provisions of Article 5 of the Notice of Shenzhen Local Tax Bureau on the Issuance of the "Questions andAnswers on the Policy for the Property Tax and Vehicle & Vessel Use Tax": Production and business units leasing itsproperties should pay real estate tax based on 70% of the cost of the properties at the tax rate of 1.2%.
The Group pays the property tax for its properties located in Shenzhen at the tax rate specified in the said Notice, andpays the property tax for its properties located in other cities according to local regulations.
VII. Notes to items of consolidated financial statements
1. Monetary capital
In CNY
| Items | Ending balance | Opening balance |
| Cash in stock | 215,989.73 | 229,258.38 |
| Bank deposit | 343,931,215.59 | 285,306,297.62 |
| Other Monetary Funds | 2,334,436.36 | 31,133,009.09 |
| Total | 346,481,641.68 | 316,668,565.09 |
| Including: total amount deposited overseas | 1,156,395.61 | 3,641,389.51 |
| Total amount with restrictions on use due to mortgage, pledge or freezing of account | 1,575,000.00 | 1,575,000.00 |
Other notesOf other monetary fund, CNY 1,575,000.00 (December 31, 2017: CNY 1,575,000.00) was the margin deposits depositedby the Company for application to banks for unconditional and irrevocable letter of guarantee.
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 | 6,593,239.62 | 6,187,353.98 |
| Trade acceptance | 14,638,303.74 | 4,409,077.33 |
| Total | 21,231,543.36 | 10,596,431.31 |
In CNY
| Categories | Ending balance | Opening balance | ||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| where | ||||||||||
| Notes receivable for which bad debt reserve has been provided based on portfolios | 21,448,726.09 | 100.00% | 217,182.73 | 1.01% | 21,231,543.36 | 10,813,614.04 | 100.00% | 217,182.73 | 2.01% | 10,596,431.31 |
| where | ||||||||||
| Bank acceptance | 6,593,239.62 | 30.74% | 6,593,239.62 | 6,187,353.98 | 57.22% | 6,187,353.98 | ||||
| Trade acceptance | 14,855,486.47 | 69.26% | 217,182.73 | 1.46% | 14,638,303.74 | 4,626,260.06 | 42.78% | 217,182.73 | 4.69% | 4,409,077.33 |
| Total | 21,448,726.09 | 100.00% | 217,182.73 | 1.01% | 21,231,543.36 | 10,813,614.04 | 100.00% | 217,182.73 | 2.01% | 10,596,431.31 |
Individual provision for bad and doubtful debts:
Inapplicable
Total provision for bad and doubtful debts based on portfolio:
In CNY
| Description | Ending balance | ||
| Book balance | Bad debt reserve | Provision proportion | |
| Trade acceptance | 14,855,486.47 | 217,182.73 | 1.46% |
| Total | 14,855,486.47 | 217,182.73 | -- |
Note to the basis for determining the combination:
Inapplicable
(2) Provision, recovery or reversal of reserve for bad debts during the reporting periodProvision for bad debt during the reporting period
In CNY
| Categories | Opening balance | Amount of movement during the reporting period | Ending balance | |||
| Provision | Amount recovered or reversed | Writing-off | Others | |||
| Trade acceptance | 217,182.73 | 217,182.73 | ||||
| Total | 217,182.73 | 217,182.73 | ||||
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 periodInapplicable
(4) Endorsed or discounted notes receivable at the end of the reproting period, but not yet due on the balancesheet dateInapplicable
(5) Notes transferred to receivables due to issuer’s default at the end of the reporting periodInapplicable
(6) Notes receivable actually written off in current period
Inapplicable
5. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
| Categories | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Accounts receivable for which bad debt reserve has been provided based on individual items | 18,435,421.50 | 4.01% | 17,685,254.65 | 95.93% | 750,166.85 | 24,140,377.57 | 5.66% | 17,562,041.15 | 72.75% | 6,578,336.42 |
| where | ||||||||||
| Accounts receivable from other customers | 18,435,421.50 | 4.01% | 17,685,254.65 | 95.93% | 750,166.85 | 24,140,377.57 | 5.66% | 17,562,041.15 | 72.75% | 6,578,336.42 |
| Accounts receivable for which bad debt reserve has been provided based on portfolios | 441,309,124.89 | 95.99% | 13,905,071.76 | 3.15% | 427,404,053.13 | 402,376,052.00 | 0.94% | 11,483,281.44 | 2.85% | 390,892,770.56 |
| where | ||||||||||
| Portfolios 1 (Receivables from related parties within the scope of consolidation) | ||||||||||
| Portfolios 2 (Accounts | 441,309,124 | 95.99% | 13,905,071. | 3.15% | 427,404,053. | 402,376,052. | 94.34% | 11,483,281.4 | 2.85% | 390,892,770.56 |
| receivable from other customers) | .89 | 76 | 13 | 00 | 4 | |||||
| Total | 459,744,546.39 | 100.00% | 31,590,326.41 | 6.87% | 428,154,219.98 | 426,516,429.57 | 100.00% | 29,045,322.59 | 6.81% | 397,471,106.98 |
Individual provision for bad and doubtful debts:
In CNY
| Description | Ending balance | |||
| Book balance | Bad debt reserve | Provision proportion | Provision reason | |
| Accounts receivable from other customers | 18,435,421.50 | 17,685,254.65 | 95.93% | Expected to be unrecoverable |
| Total | 18,435,421.50 | 17,685,254.65 | -- | -- |
Individual provision for bad and doubtful debts:
Inapplicable
Total provision for bad and doubtful debts based on portfolio:
In CNY
| Description | Ending balance | ||
| Book balance | Bad debt reserve | Provision proportion | |
| Accounts receivable from other customers | 441,309,124.89 | 13,905,071.76 | 3.15% |
| Total | 441,309,124.89 | 13,905,071.76 | -- |
Note to the basis for determining the combination:
Inapplicable
Disclosed based on aging
In CNY
| Aging | Ending balance |
| Within 1 year (with 1 year inclusive) | 449,801,260.02 |
| 1 to 2 years | 7,015,459.22 |
| 2 to 3 years | 942,383.55 |
| Over 3 years | 1,985,443.60 |
| 3 to 4 years | 1,953,085.41 |
| 4 to 5 years | 32,358.19 |
| Total | 459,744,546.39 |
(2) Provision, recovery or reversal of reserve for bad debts during the reporting periodProvision for bad debt during the reporting period
In CNY
| Categories | Opening balance | Amount of movement during the reporting period | Ending balance | |||
| Provision | Amount recovered or reversed | Writing-off | Others | |||
| Accounts receivable from other customers | 29,045,322.59 | 2,928,414.87 | 383,411.05 | 31,590,326.41 | ||
| Total | 29,045,322.59 | 2,928,414.87 | 383,411.05 | 31,590,326.41 | ||
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
| Description of Units | Ending balance of accounts receivable | Proportion of the ending balance of the accounts receivable | Ending balance of the provision for bad debts |
| Accounts receivable from the top five debtors | 70,888,754.40 | 15.41% | 3,544,437.72 |
| Total | 70,888,754.40 | 15.41% |
(5) Account receivable with recognition terminated due to transfer of financial assetsInapplicable
(6) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involvedInapplicable
6. Financing with accounts receivable
Inapplicable
7. Advance payments
(1) Advance payments are presented based on ages
In CNY
| Aging | Ending balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 15,017,714.46 | 81.60% | 10,221,061.48 | 94.23% |
| 1 to 2 years | 2,759,153.37 | 14.99% | 284,733.40 | 2.62% |
| 2 to 3 years | 284,733.40 | 1.55% | 342,167.40 | 3.15% |
| Over 3 years | 342,167.40 | 1.86% | ||
| Total | 18,403,768.63 | -- | 10,847,962.28 | -- |
Note to the reason why the prepayment with age exceeding 1 year and a significant amount of money has not beensettled in time:
Inapplicable
(2) Advance payment to the top five payees of the ending balance collected based on the payees of the advancepaymentThe total amount of advance payment to the top five payees of the ending balance collected based on the payees of theadvance payment was CNY 10,980,253.84, taking 59.66% of the toal ending balance of the advance payment.Other notes:
Inapplicable
8. Other receivables
In CNY
| Items | Ending balance | Opening balance |
| Other receivables | 106,768,399.40 | 47,239,844.58 |
| Total | 106,768,399.40 | 47,239,844.58 |
(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 Payment | Ending book balance | Opening book balance |
| Reserve | 5,462,300.98 | 2,147,617.27 |
| Cash deposits | 45,511,609.60 | 45,014,657.70 |
| Commodity promotion fee | 749,974.83 | 2,518,891.09 |
| Advance payment for equity allocation | 53,183,393.38 | |
| Others | 12,376,982.56 | 7,903,069.93 |
| Total | 117,284,261.35 | 57,584,235.99 |
2) Provision for bad debts
In CNY
| Bad debt reserve | The 1st stage | The 2nd stage | The 3rd stage | Total |
| Predicted credit loss in the future 12 months | Predicted credit loss in the whole duration (no credit impairment taken place) | Predicted credit loss in the whole duration (credit impairment already taken place) | ||
| Balance as at January 01, 2020 | 2,450,903.29 | 7,893,488.12 | ||
| Balance as at January 01, 2020 during the reporting period | —— | —— | —— | —— |
| Provision in the reporting period | 49,663.99 | |||
| Reversal in the reporting period | 120,707.78 | |||
| Other changes | 242,514.33 | |||
| Balance as at June 30, 2020 | 2,379,859.50 | 8,136,002.45 |
Movement of the book balance of provision for loss with significant amount in the reporting periodInapplicable
Disclosed based on aging
In CNY
| Aging | Ending balance |
| Within 1 year (with 1 year inclusive) | 93,144,499.37 |
| 1 to 2 years | 6,207,121.99 |
| 2 to 3 years | 4,015,241.00 |
| Over 3 years | 13,917,398.99 |
| 3 to 4 years | 11,790,568.98 |
| 4 to 5 years | 1,922,066.01 |
| Over 5 years | 204,764.00 |
| Total | 117,284,261.35 |
3) Provision, recovery or reversal of reserve for bad debts during the reporting periodProvision for bad debt during the reporting period
In CNY
| Categories | Opening balance | Amount of movement during the reporting period | Ending balance | |||
| Provision | Amount recovered or reversed | Writing-off | Others | |||
| Bad debt reserve | 10,344,391.41 | 49,663.99 | 120,707.78 | 242,514.33 | 10,515,861.95 | |
| Total | 10,344,391.41 | 49,663.99 | 120,707.78 | 242,514.33 | 10,515,861.95 | |
Where the significant amount of the provision for bad debt recovered or reversed:
Inapplicable
4) Accounts receivable actually written off in the reporting period
Inapplicable
5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
| Description of Units | Nature of Payment | Ending balance | Aging | Proportion in total ending balance of other receivables | Ending balance of the provision for bad debts |
| A | Payment for goods | 6,293,233.44 | Over 3 years | 5.37% | 6,293,233.44 |
| B | Deposit in security | 3,166,648.00 | Within 1 year | 2.70% | 158,332.40 |
| C | Deposit in security | 1,672,563.00 | Within 1 year | 1.43% | 83,628.15 |
| D | Deposit in security | 1,151,403.00 | Within 1 year | 0.98% | 57,570.15 |
| E | Deposit in security | 946,179.00 | Within 1 year | 0.81% | 47,308.95 |
| Total | -- | 13,230,026.44 | -- | 11.28% | 6,640,073.09 |
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables with recognition terminated due to transfer of financial assetsInapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involvedInapplicable
9. Inventories
Does the Company need to comply with the disclosure requirements of real estate industryNo
(1) Classification of inventories
In CNY
| Items | Ending balance | Opening balance | ||||
| Book balance | Provision for price falling of inventories or provision for impairment of contract performance costs | Book value | Book balance | Provision for price falling of inventories or provision for impairment of contract performance costs | Book value | |
| Raw materials | 198,721,964.25 | 21,420,955.08 | 177,301,009.17 | 195,644,341.20 | 21,197,269.90 | 174,447,071.30 |
| Products in process | 6,274,467.37 | 6,274,467.37 | 11,707,382.99 | 11,707,382.99 | ||
| Commodities in stock | 1,676,669,349.53 | 62,029,785.83 | 1,614,639,563.70 | 1,684,674,585.69 | 62,008,950.06 | 1,622,665,635.63 |
| Total | 1,881,665,781.15 | 83,450,740.91 | 1,798,215,040.24 | 1,892,026,309.88 | 83,206,219.96 | 1,808,820,089.92 |
(2) Provision for price falling of inventories or provision for impairment of contract performance costs
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance | ||
| Provision | Others | Reversal or Offset | Others | |||
| Raw materials | 21,197,269.90 | 223,685.19 | 21,420,955.08 | |||
| Commodities in stock | 62,008,950.06 | 20,835.76 | 62,029,785.83 | |||
| Total | 83,206,219.96 | 244,520.95 | 83,450,740.91 | |||
(3) Note to the amount of capitalized borrowing costs involved in the ending balance of inventoriesInapplicable
(4) Note to the amortized amount of the contract performance costs in the reporting periodInapplicable
10. Contract assets
Inapplicable
11. Classified as assets held for sale
Inapplicable
12. Non-current assets due within a year
Inapplicable
13. Other current assets
In CNY
| Items | Ending balance | Opening balance |
| Input VAT to be offset | 28,805,937.14 | 47,626,820.11 |
| Income tax paid in advance | 3,248,429.93 | 1,313,954.49 |
| Others - short-term expenses to be apportioned | 11,240,638.19 | 15,661,429.95 |
| VAT paid in advance | 1,243,045.91 | 4,255,892.19 |
| Total | 44,538,051.17 | 68,858,096.74 |
Other notes:
Inapplicable
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 with recognition terminated due to transfer of financial assetsInapplicable
(3) Amount of assets and liabilities formed through transfer of long-term accounts receivable and continuing tobe involvedInapplicable
17. Long-term equity investments
In CNY
| Investees | Opening balance (book value) | Increase/ Decrease (+ / -) in the reporting period | Ending balance (book value) | Ending balance of the provision for impairment | |||||||
| Additional investment | Decrease of investment | Income from equity investment recognized under equity method | Other comprehensive income adjustment | Other equity movement | Announced for distributing cash dividend or profit | Provision for impairment | Others | ||||
| I. Joint Venture | |||||||||||
| II. Associates | |||||||||||
| Shanghai Watch Industry Co., Ltd. (Shanghai | 46,423,837.85 | 2,160,911.92 | 48,584,749.77 | ||||||||
| Watch) | |||||||||||
| Sub-total | 46,423,837.85 | 2,160,911.92 | 48,584,749.77 | ||||||||
| Total | 46,423,837.85 | 2,160,911.92 | 48,584,749.77 |
Other notesInapplicable
18. Investment in other equity instruments
In CNY
| Items | Ending balance | Opening balance |
| Xi'an Tangcheng Co., Ltd. | 85,000.00 | 85,000.00 |
| Total | 85,000.00 | 85,000.00 |
Itemized disclosure of investment in non-trading equity instruments in the reporting periodInapplicable
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 and buildings | Land use right | Construction-in-process | Total |
| I. Original book value | ||||
| 1. Opening balance | 603,886,647.35 | 603,886,647.35 | ||
| 2. Increase in the reporting period | ||||
| (1) Purchased | ||||
| (2) Inventories\fixed assets/construction- in – process transferred in | ||||
| (3) Increase of enterprise consolidation | ||||
| 3. Amount decreased in the |
| reporting period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4. Ending balance | 603,886,647.35 | 603,886,647.35 | ||
| II. Accumulative depreciation and accumulative amortization | ||||
| 1. Opening balance | 196,383,340.11 | 196,383,340.11 | ||
| 2. Increase in the reporting period | 7,621,323.86 | 7,621,323.86 | ||
| (1) Provision or amortization | 7,621,323.86 | 7,621,323.86 | ||
| 3. Amount decreased in the reporting period | ||||
| (1) Disposal | ||||
| (2) Other transfer out | ||||
| 4. Ending balance | 204,004,663.97 | 204,004,663.97 | ||
| III. Provision for impairment | ||||
| 1. Opening balance | ||||
| 2. Increase 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 of the reporting period | 399,881,983.38 | 399,881,983.38 | ||
| 2.Book value at the beginning of the reporting period | 407,503,307.24 | 407,503,307.24 |
(2) Investment property measured based on fair value
Inapplicable
(3) Investment property that does not have certificate for property right
Inapplicable
21. Fixed asset
In CNY
| Items | Ending balance | Opening balance |
| Fixed assets | 354,294,685.37 | 363,997,098.94 |
| Total | 354,294,685.37 | 363,997,098.94 |
(1) About fixed assets
In CNY
| Items | Plant & buildings | Machinery & equipment | Motor vehicle | Electronic equipment | Others | Total |
| I. Original book value | ||||||
| 1. Opening balance | 399,884,182.37 | 88,576,975.77 | 15,357,879.37 | 45,484,697.66 | 46,262,752.19 | 595,566,487.36 |
| 2. Increase in the reporting period | 1,673,662.24 | 2,374,605.84 | 987,842.49 | 602,909.94 | 5,639,020.51 | |
| (1) Purchase | 1,673,662.24 | 2,374,605.84 | 987,842.49 | 602,909.94 | 5,639,020.51 | |
| (2) Construction-in-process transferred in | ||||||
| (3) Increase of enterprise consolidation | ||||||
| 3. Amount decreased in the reporting period | 418,674.85 | 779,760.00 | 406,310.94 | 1,604,745.79 | ||
| (1) Disposal or scrapping | 418,674.85 | 779,760.00 | 406,310.94 | 1,604,745.79 | ||
| 4. Ending balance | 401,557,844.61 | 90,532,906.76 | 15,357,879.37 | 45,692,780.15 | 46,459,351.19 | 599,600,762.08 |
| II. Accumulative depreciation |
| 1. Opening balance | 99,134,756.79 | 49,325,868.54 | 13,492,690.81 | 32,184,334.98 | 37,431,737.30 | 231,569,388.42 |
| 2. Increase in the reporting period | 6,968,805.33 | 3,933,316.11 | 201,480.66 | 2,214,596.73 | 1,601,335.24 | 14,919,534.07 |
| (1) Provision | 6,968,805.33 | 3,933,316.11 | 201,480.66 | 2,214,596.73 | 1,601,335.24 | 14,919,534.07 |
| 3. Amount decreased in the reporting period | 217,213.16 | 643,229.61 | 322,403.01 | 1,182,845.78 | ||
| (1) Disposal or scrapping | 217,213.16 | 643,229.61 | 322,403.01 | 1,182,845.78 | ||
| 4. Ending balance | 106,103,562.12 | 53,041,971.49 | 13,694,171.47 | 33,755,702.10 | 38,710,669.53 | 245,306,076.71 |
| III. Provision for impairment | ||||||
| 1. Opening balance | ||||||
| 2. Increase in the reporting period | ||||||
| (1) Provision | ||||||
| 3. Amount decreased in the reporting period | ||||||
| (1) Disposal or scrapping | ||||||
| 4. Ending balance | ||||||
| IV. Book value | ||||||
| 1.Book value at the end of the reporting period | 295,454,282.49 | 37,490,935.27 | 1,663,707.90 | 11,937,078.05 | 7,748,681.66 | 354,294,685.37 |
| 2.Book value at the beginning of the reporting period | 300,749,425.58 | 39,251,107.23 | 1,865,188.56 | 13,300,362.68 | 8,831,014.89 | 363,997,098.94 |
(2) About temporarily idle fixed assets
Inapplicable
(3) Fixed assets rented through finance lease
Inapplicable
(4) Fixed assets leased through operating lease
Inapplicable
(5) Fixed assets that do not have certificate for property right
| Items | Book value | The reason why the property ownership certificate has not been granted |
| Office occupancy of Harbin Office | 247,083.50 | There existed problem in ownership |
(6) Disposal of fixed assets
Inapplicable
22. Construction-in-process
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
24. Oil and Gas Assets
Inapplicable
25. Use right assets
Inapplicable
26. Intangible assets
(1) About the intangible assets
In CNY
| Items | Land use right | Patent Right | Non-patent technology | Software system | Trademark rights | Total |
| I. Original book value | ||||||
| 1. Opening balance | 34,933,822.40 | 24,114,126.36 | 11,930,531.38 | 70,978,480.14 | ||
| 2. Increase in the reporting period | 1,268,215.40 | 1,711,282.42 | 2,979,497.82 | |||
| (1) Purchase | 1,268,215.40 | 1,711,282.42 | 2,979,497.82 | |||
| (2) Internal R & D | ||||||
| (3) Increase of enterprise consolidation | ||||||
| 3. Amount decreased in the reporting period | ||||||
| (1) Disposal | ||||||
| 4. Ending balance | 34,933,822.40 | 25,382,341.76 | 13,641,813.80 | 73,957,977.96 | ||
| II. Accumulative amortization | ||||||
| 1. Opening balance | 11,353,509.97 | 15,410,275.67 | 5,502,873.24 | 32,266,658.88 | ||
| 2. Increase in the reporting period | 366,776.65 | 2,197,060.87 | 1,270,464.12 | 3,834,301.64 | ||
| (1) Provision | 366,776.65 | 2,197,060.87 | 1,270,464.12 | 3,834,301.64 | ||
| 3. Amount decreased in the reporting period | ||||||
| (1) Disposal | ||||||
| 4. Ending balance | 11,720,286.62 | 17,607,336.54 | 6,773,337.36 | 36,100,960.52 | ||
| III. Provision for |
| impairment | ||||||
| 1. Opening balance | ||||||
| 2. Increase 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 period | 23,213,535.78 | 7,775,005.22 | 6,868,476.44 | 37,857,017.44 | ||
| 2.Book value at the beginning of the reporting period | 23,580,312.43 | 8,703,850.69 | 6,427,658.14 | 38,711,821.26 |
Proportion 0% of the intangible assets formed through the Company’s internal R & D in the balance of the intangibleassets at the end of the reporting period.
(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 | Increase in the reporting period | Amount amortized in the reporting period | Other decrease | Ending balance |
| Charge of fabrication of special counters | 41,961,947.89 | 11,476,444.96 | 23,585,536.88 | 29,852,855.97 | |
| Refurbishment expenses | 95,266,200.86 | 13,998,397.46 | 23,273,140.55 | 85,991,457.77 | |
| Others | 15,359,342.58 | 0.00 | 4,632,330.36 | 10,727,012.22 | |
| Total | 152,587,491.33 | 25,474,842.42 | 51,491,007.79 | 126,571,325.96 |
Other notesInapplicable
30. Deferred income tax asset/deferred income tax liability
(1) Deferred income tax asset without offsetting
In CNY
| Items | Ending balance | Opening balance | ||
| Offsetable provisional difference | Deferred income tax asset | Offsetable provisional difference | Deferred income tax asset | |
| Asset impairment reserve | 103,310,389.63 | 22,788,457.81 | 100,912,679.00 | 22,188,996.64 |
| Unrealized profit from the intracompany transactions | 156,287,413.96 | 38,840,027.68 | 179,676,673.34 | 44,654,504.04 |
| Offsetable loss | 122,599,534.04 | 30,135,383.47 | 50,678,682.32 | 12,074,057.61 |
| Deferred income | 3,046,090.60 | 761,522.65 | 3,046,090.60 | 761,522.65 |
| Share-based payment | 7,606,027.81 | 1,823,052.62 | 4,440,625.91 | 1,062,967.67 |
| Advertisement fee available for carrying-forward to the next year | 8,221,847.42 | 1,718,803.47 | 14,988,443.65 | 2,997,334.76 |
| Total | 401,071,303.46 | 96,067,247.70 | 353,743,194.82 | 83,739,383.37 |
(2) Deferred income tax liabilities without offsetting
In CNY
| Items | Ending balance | Opening balance | ||
| Taxable provisional difference | Deferred income tax liability | Taxable provisional difference | Deferred income tax liability | |
| One-time pre-tax deduction of fixed assets | 7,951,478.07 | 1,192,721.71 | 8,374,949.93 | 1,256,242.49 |
| Total | 7,951,478.07 | 1,192,721.71 | 8,374,949.93 | 1,256,242.49 |
(3) Deferred income tax asset or liabilities stated with net amount after offsettingInapplicable
(4) Statement of deferred income tax asset not recognized
In CNY
| Items | Ending balance | Opening balance |
| Offsetable loss | 68,005,378.21 | 64,205,351.75 |
| Provision for impairment of assets | 22,775,235.70 | 22,200,437.70 |
| Total | 90,780,613.91 | 86,405,789.45 |
(5) Unrecognized deferred income tax asset available for offsetting loss is going to expire in the following years
In CNY
| Year | Amount at the end of the reporting period | Amount at the beginning of the reporting period | Remarks |
| 2020 | |||
| 2021 | |||
| 2022 | |||
| 2023 | 2,417,279.16 | 2,417,279.16 | |
| 2024 | 7,798,677.32 | 7,798,677.32 | |
| 2025 | 11,684,299.22 | 11,684,299.22 | |
| 2026 | 18,449,678.50 | 18,449,678.50 | |
| 2027 | 23,855,417.55 | 23,855,417.55 | |
| 2028 | 3,800,026.46 | ||
| Total | 68,005,378.21 | 64,205,351.75 | -- |
Other notes:
Inapplicable
31. Other non-current assets
In CNY
| Items | Ending balance | Opening balance | ||||
| Book balance | Impairment reserve | Book value | Book balance | Impairment reserve | Book value | |
| Advance payment for engineering works and equipment | 10,492,964.34 | 10,492,964.34 | 7,373,248.48 | 7,373,248.48 | ||
| Total | 10,492,964.34 | 10,492,964.34 | 7,373,248.48 | 7,373,248.48 | ||
Other notes:
Inapplicable
32. Short term loans
(1) Classification of short-term loans
In CNY
| Items | Ending balance | Opening balance |
| Secured loan | 60,512,090.66 | 37,271,502.38 |
| Credit loan | 613,050,268.89 | 530,637,330.83 |
| Total | 673,562,359.55 | 567,908,833.21 |
Note to classification of short term borrowings:
Inapplicable
(2)Short-term loans overdue but still remaining outstanding
Inapplicable
33. Transactional financial liabilities
Inapplicable
34. Derivative financial liabilities
Inapplicable
35. Notes payable
In CNY
| Categories | Ending balance | Opening balance |
| Trade acceptance | 1,400,000.00 | 0.00 |
| Total | 1,400,000.00 | 0.00 |
Total amount of notes payable due but not paid amounting to CNY 0 at the end of the reporting period.
36. Accounts payable
(1) Statement of accounts payable
In CNY
| Items | Ending balance | Opening balance |
| Payment for goods | 189,556,864.82 | 254,887,129.91 |
| Payment for materials | 11,932,722.53 | |
| Construction cost payable | 1,484,563.53 | 12,952,934.93 |
| Total | 191,041,428.35 | 279,772,787.37 |
(2) Significant accounts payable with age exceeding 1 year
Inapplicable
37. Advance Receipts
(1) Statement of advances from customers
In CNY
| Items | Ending balance | Opening balance |
| Payment for goods | ||
| Engineering fees | ||
| Rent | 7,251,488.79 | 3,434,407.04 |
| Unfinished projects formed in the construction contract but already settled | ||
| Total | 7,251,488.79 | 3,434,407.04 |
(2) Significant advances from customers with age exceeding 1 year
Inapplicable
38. Contract liabilities
In CNY
| Items | Ending balance | Opening balance |
| Payment for goods | 21,475,843.30 | 19,999,056.53 |
| Total | 21,475,843.30 | 19,999,056.53 |
Amount and reason of the significant change in the book value during the reporting periodInapplicable
39. Employee remuneration payable
(1) Statement of employee remuneration payable
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| I. Short term remuneration | 75,434,545.00 | 254,001,441.87 | 271,417,606.03 | 58,018,380.84 |
| II. Post-employment benefit program - defined contribution plan. | 7,067,511.52 | 6,552,660.39 | 9,405,143.24 | 4,215,028.67 |
| III. Dismissal welfare | 100,789.15 | 614,333.23 | 715,122.38 | |
| Total | 82,602,845.67 | 261,168,435.49 | 281,537,871.65 | 62,233,409.51 |
(2) Presentation of short term remuneration
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| 1. Salaries, bonus, allowances and subsidies | 74,919,776.81 | 229,817,392.02 | 247,521,739.12 | 57,215,429.71 |
| 2. Staff’s welfare | 5,604,972.00 | 5,604,972.00 | ||
| 3. Social security premium | 6,959,476.34 | 6,791,592.13 | 167,884.21 | |
| Including: medical insurance premium | 6,408,859.43 | 6,259,816.74 | 149,042.69 | |
| Work injury insurance | 117,511.50 | 117,078.36 | 433.14 | |
| Maternity Insurance | 433,105.41 | 414,697.03 | 18,408.38 | |
| 4. Public reserve for housing | 8,279,142.71 | 8,233,410.71 | 45,732.00 | |
| 5. Trade union fund and staff education fund | 514,768.19 | 3,308,991.61 | 3,234,424.88 | 589,334.92 |
| 6. Short-term paid leave | 31,467.19 | 31,467.19 | ||
| Total | 75,434,545.00 | 254,001,441.87 | 271,417,606.03 | 58,018,380.84 |
(3) Presentation of the defined contribution plan
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| 1. Basic endowment insurance premium | 255,571.47 | 5,508,582.11 | 5,376,258.34 | 387,895.24 |
| 2. Unemployment insurance premium | 137,321.18 | 329,926.24 | -192,605.06 | |
| 3. Contribution to the enterprise annuity scheme | 6,811,940.05 | 906,757.10 | 3,698,958.66 | 4,019,738.49 |
| Total | 7,067,511.52 | 6,552,660.39 | 9,405,143.24 | 4,215,028.67 |
Other notes:
Inapplicable
40. Taxes payable
In CNY
| Items | Ending balance | Opening balance |
| Value-added tax | 26,548,335.81 | 6,929,833.12 |
| Enterprise income tax | 24,101,242.37 | 15,512,840.60 |
| Individual income tax | 1,487,307.93 | 1,227,923.78 |
| Urban maintenance and construction tax | 127,921.38 | 91,612.52 |
| Education Surcharge | 84,988.48 | 65,887.11 |
| Others | 738,858.32 | 236,705.87 |
| Total | 53,088,654.29 | 24,064,803.00 |
Other notes:
Inapplicable
41. Other payables
In CNY
| Items | Ending balance | Opening balance |
| Dividends payable | 53,887,144.07 | 848,233.27 |
| Other payables | 136,628,253.92 | 118,768,488.36 |
| Total | 190,515,397.99 | 119,616,721.63 |
(1) Interest payable
Inapplicable
(2) Dividend payable
In CNY
| Items | Ending balance | Opening balance |
| Dividends of common shares | 53,887,144.07 | 848,233.27 |
| Total | 53,887,144.07 | 848,233.27 |
Other note, including the significant dividends payable remaining outstanding for more than 1 year and necessary todisclose the reason of unpayment:
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 | 68,019,256.56 | 45,114,205.97 |
| Fund for shop-front activities | 1,535,874.76 | 16,636,771.40 |
| Personal account payable | 1,280,092.78 | 1,321,518.82 |
| Refurbishment | 3,558,722.65 | 4,556,469.41 |
| Obligation for repurchase of the restricted stocks | 17,442,566.73 | 17,737,366.73 |
| Others | 44,791,740.44 | 33,402,156.03 |
| Total | 136,628,253.92 | 118,768,488.36 |
2) Other payables in significant amount and with aging over 1 year
Inapplicable
42. Held-for-sale liabilities
Inapplicable
43. Non-current liabilities due within a year
In CNY
| Items | Ending balance | Opening balance |
| Long-term liabilities due within a year | 373,530.00 | 360,140.00 |
| Total | 373,530.00 | 360,140.00 |
Other notes:
Inapplicable
44. Other current liabilities
Inapplicable
45. Long-term Loan
(1) Classification of Long-term Borrowings
In CNY
| Items | Ending balance | Opening balance |
| Mortgage loan | 4,295,595.00 | 4,321,680.00 |
| Total | 4,295,595.00 | 4,321,680.00 |
Note to classification of long term borrowings:
(1) The Company has no overdue and outstanding long term borrowing.
(2) The Company has no secured borrowings in the balance of the long term borrowings during the reporting period
Other notes, including the interest rate interval:
The interest rate of long term borrowings is 3.00%.
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 bondsInapplicable
(4) Note to other financial instruments classified as financial liabilities
Inapplicable
47. Lease liabilities
Inapplicable
48. Long term accounts payable
Inapplicable
(1) Long term accounts payable stated based on the nature
Inapplicable
(2) Special accounts payable
Inapplicable
49. Long term payroll payable
(1) Statement of long term payroll payable
Inapplicable
(2) Change of defined benefit plans
Inapplicable
50. Predicted liabilities
Inapplicable
51. Deferred income
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance | Cause of formation |
| Government subsidies | 3,046,090.60 | 3,046,090.60 | Income to be recognized | ||
| Total | 3,046,090.60 | 3,046,090.60 | -- |
Items involving government subsidies:
In CNY
| Liabilities | Opening balance | Amount of newly added subsidy in the reporting period | Amount counted to the non-operating income in the reporting period | Amount counted to the other income in the reporting period | Amount offsetting costs and expenses in the reporting period | Other changes | Ending balance | Related with assets/related with income |
| Special purpose fund of Shenzhen industrial design development (Note (1)) | 729,945.01 | 729,945.01 | Related with assets | |||||
| Funding project for construction of enterprise technology center designated by the state (Note (2)) | 1,218,274.51 | 1,218,274.51 | Related with assets | |||||
| Special purpose fund for 2017 Industry and | 1,031,833.34 | 1,031,833.34 | Related with income |
| Informationization at Provincial Level (Note (3)) | ||||||||
| Special fund for upgrading standard and quality of consumer goods | 66,037.74 | 66,037.74 | Related with income |
Other notes:
Note (1): It is the special fund for development of industrial design in Shenzhen obtained according to the OperationInstructions on Certification and Financial Support Program for Industrial Design Centers in Shenzhen (TrialImplementation) SHEN JING MAO IT Zi [2013] No. 227 jointly promulgated by Economy, Trade and InformationCommission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality;
Note (2) : It is the fund from the financial support for construction of enterprise technology centers in Shenzhen obtainedaccording to the Circular of Development and Reform Commission of Shenzhen Municipality on Issuing the First Batch ofSupporting Program of Financial Support Fund for Construction of Enterprise Technology Centers in Shenzhen in 2015(SHEN JING MAO XINXI YU [2015] No. 129 ;
Note (3): The special purpose fund obtained according to the Circular of the Economic and Information Commission ofGuangdong Province on Doing a Good Job in Submission to the Special Project Library of Production and Services atProvincial Level in 2017 (YUE JING XIN SHENG CHAN HAN (2016) No. 53) jointly promulgated by the Economic &Information Commission of Guangdong Province and the Finance Department of Guangdong Province.
52. Other non-current liabilities
Inapplicable
53. Capital stock
In CNY
| Opening balance | Increase / Decrease (+/ -) | Ending balance | |||||
| New issuing | Bonus shares | Shares converted from reserve | Others | Sub-total | |||
| Total Shares | 442,968,881.00 | -14,797,000.00 | -14,797,000.00 | 428,171,881.00 | |||
Other notes:
(1) The Company held the 7th session of the Ninth Board of Directors on April 4, 2019 and the 2nd Extraordinary GeneralMeeting 2019 on April 23, 2019, and reviewed and approved the "Proposal for Repurchase of the Company's PartialDomestically Listed Foreign Shares (B-shares)”, according to which the Company was approved to repurchase theCompany’s partial domestically listed foreign shares (B-shares) by means of centralized bidding to reduce its registeredcapital. Ended April 29, 2020, the Company completed the cancellation of the above shares (14,730,000 shares)repurchased with China Securities Depository and Clearing Corporation Limited Shenzhen Branch. After cancellation ofthe repurchased shares, the total capital stock of the Company decreased from 442,968,881 shares to 428,238,881
shares.
(2) On January 10, 2020 and March 18, 2020, the Company held the 15th and 16th sessions of the Ninth Board ofDirectors and reviewed and approved the “Proposal for Repurchase and Cancellation of the Partially Restricted SharesInvolved in 2018 A-Share Restricted Stock Incentive Plan (Phase 1)”, according to which the Company intended torepurchase and cancel a total of 67,000 A-share restricted stock jointly held, already granted but with the restriction notreleased to three former incentive objects who have left the Company.
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 periodInapplicable
(2)Movement of the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. atthe end of the reporting periodInapplicable
55. Capital reserve
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| Capital premium (capital stock premium) | 1,062,297,140.76 | 0.00 | 65,007,645.82 | 997,289,494.94 |
| Other capital reserve | 18,933,074.56 | 3,165,401.89 | 2,948.60 | 22,095,527.85 |
| Total | 1,081,230,215.32 | 3,165,401.89 | 65,010,594.42 | 1,019,385,022.79 |
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
(1) The Company held the 7th session of the Ninth Board of Directors on April 4, 2019 and the 2nd Extraordinary GeneralMeeting 2019 on April 23, 2019, and reviewed and approved the "Proposal for Repurchase of the Company's PartialDomestically Listed Foreign Shares (B-shares)”, according to which the Company was approved to repurchase theCompany’s partial domestically listed foreign shares (B-shares) by means of centralized bidding to reduce its registeredcapital. The Company accumulatively repurchased 14,730,000 domestically listed foreign shares (B shares) by means ofcentralized bidding through special securities repurchase accounts, and the capital reserve (capital stock premium)decreased by CNY 65,007,645.82 (converted in Hong Kong dollars, including the service fees of CNY 243,340.90).
(2) Other capital reserve increased by CNY 3,165,401.89 in the reporting period are the restricted stock incentiveexpenses of A-shares in January, 2020 provided from January to June, 2020.
56. Treasury shares
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| Shares in stock | 71,267,118.78 | 25,969,974.82 | 79,789,104.92 | 17,447,988.68 |
| Total | 71,267,118.78 | 25,969,974.82 | 79,789,104.92 | 17,447,988.68 |
Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period:
The increase of the shares in stock during the reporting period consisted of two parts. One part was the cancelled retiredemployees’ restrictive shares in stock with total amount of CNY 294,800.00 and the other part was the amount from therepurchase of B-shares totaling CNY 25,969,974.82 and the repurchased B-shares in stock cancelled subsequently withtotal amount of CNY 79,494,304.92.
57. Other comprehensive income
In CNY
| Items | Opening balance | Amount incurred in the reporting period | Ending balance | |||||
| Amount incurred before income tax in the reporting period | Less: the amount counted to the profit and loss during the reporting period which had been counted to the other comprehensive income in the previous period. | Less: the amount counted to the retained earnings during the reporting period which had been counted to the other comprehensive income in the previous period. | Less: Income tax expense | Attributable to the parent company after tax | Attributable to minority shareholders after tax | |||
| II. Other comprehensive income which shall be re-classified into profit and loss | -940,209.09 | 4,329,973.83 | 4,329,877.58 | 96.25 | 3,389,668.49 | |||
| Conversion difference in foreign currency statements | -940,209.09 | 4,329,973.83 | 4,329,877.58 | 96.25 | 3,389,668.49 | |||
| Total other comprehensive income | -940,209.09 | 4,329,973.83 | 4,329,877.58 | 96.25 | 3,389,668.49 | |||
Other notes include the valid part of gain and loss of a cash-flow hedge converted into initial amount of arbitraged itemsfor adjustment:
The net amount of the other comprehensive income after tax incurred in the reporting period was CNY 4,329,973.83.Where, the net after-tax amount of other comprehensive income attributable to shareholders of the parent company wasCNY 4,329,877.58; the net after-tax amount of other comprehensive income attributable to the minority shareholdersincurred in the reporting period was CNY 96.25.
58. Special reserve
Inapplicable
59. Surplus Reserve
In CNY
| Items | Opening balance | Increase in the reporting period | Decrease in the reporting period | Ending balance |
| Statutory surplus reserve | 173,716,286.14 | 0.00 | 0.00 | 173,716,286.14 |
| Discretionary surplus reserve | 61,984,894.00 | 0.00 | 0.00 | 61,984,894.00 |
| Total | 235,701,180.14 | 0.00 | 0.00 | 235,701,180.14 |
Note to surplus reserve, including the note to its increase/decrease and the cause(s) of its movement in the reportingperiod:
Inapplicable
60. Retained earnings
In CNY
| Items | Reporting period | Previous period |
| Before adjustment: Retained earnings at the end of the previous period | 966,840,818.40 | 851,360,603.66 |
| After adjustment: Retained earnings at the beginning of the reporting period | 966,840,818.40 | 851,360,603.66 |
| Plus: Net profit attributable to the parent company’s owner in the report period | 77,738,906.30 | 215,909,014.15 |
| Less: Provision of statutory surplus public reserve | 12,685,386.34 | |
| Dividends of common shares payable | 85,634,376.20 | 87,743,413.07 |
| Retained earnings at the end of the reporting period | 958,945,348.50 | 966,840,818.40 |
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 relevantnew 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 thereporting period was CNY 0.00.
3) The amount involved in correction of the significant accounting errors influencing the retained earnings at the beginningof the reporting period was CNY 0.00.
4) The amount involved in change of the consolidation scope caused by the joint control influencing the retained earningsat 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 | ||
| Income | Costs | Income | Costs | |
| Principal business | 1,579,084,669.87 | 977,121,580.01 | 1,775,615,457.33 | 1,049,188,996.85 |
| Other businesses | 2,750,045.16 | 314,096.86 | 9,420,562.90 | 2,315,078.37 |
| Total | 1,581,834,715.03 | 977,435,676.87 | 1,785,036,020.23 | 1,051,504,075.22 |
Revenue related information:
Inapplicable
Information in connection with the performance obligation:
Inapplicable
Information related to the transaction price allocated to the remaining performance obligations:
Inapplicable
Other notes:
Inapplicable
62. Business Taxes and Surcharges
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Consumption tax | 39,803.71 | 184,399.06 |
| Urban maintenance and construction tax | 2,489,349.64 | 6,395,004.36 |
| Education Surcharge | 1,762,953.17 | 4,548,531.69 |
| Resource tax | 0.00 | 0.00 |
| Real estate tax | 1,403,403.52 | 1,886,754.77 |
| Land use tax | 119,304.10 | 211,126.82 |
| Tax on using vehicle and boat | 2,880.00 | 1,035.00 |
| Stamp duty | 1,007,174.51 | 1,102,915.98 |
| Others | 446,115.04 | 765,107.65 |
| Total | 7,270,983.69 | 15,094,875.33 |
Other notes:
Inapplicable
63. Sales expenses
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Salaries & bonus | 139,307,052.85 | 145,512,139.90 |
| Employees’ welfare | 2,813,685.58 | 3,159,080.44 |
| Public reserve for housing | 5,258,301.65 | 5,750,656.98 |
| Social security premium | 9,151,865.67 | 22,997,809.84 |
| Shopping mall and rental fees | 89,783,779.60 | 83,986,057.93 |
| Advertising, exhibition and market promotion fee | 61,631,796.14 | 72,972,500.97 |
| Depreciation and amortization | 44,191,277.25 | 43,315,834.35 |
| Packing expenses | 3,301,568.93 | 5,502,133.20 |
| Water & power supply and property management fee | 8,864,424.63 | 9,561,119.07 |
| Freight | 5,368,007.05 | 6,971,013.87 |
| Office expenses | 2,324,895.41 | 2,779,674.92 |
| Business travel expenses | 1,975,223.92 | 4,887,148.59 |
| Others | 6,956,433.83 | 8,380,858.89 |
| Total | 380,928,312.51 | 415,776,028.95 |
Other notes:
Inapplicable
64. Administrative expenses
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Salaries & bonus | 61,814,187.62 | 67,718,045.37 |
| Employees’ welfare | 1,940,091.63 | 1,790,667.18 |
| Social security premium | 2,319,177.99 | 5,755,767.56 |
| Public reserve for housing | 2,231,934.56 | 2,077,719.29 |
| Enterprise annuity | 961,256.78 | 1,125,994.66 |
| Labor union dues | 2,548,950.92 | 2,630,194.16 |
| Training fee | 341,994.77 | 518,230.67 |
| Depreciation and amortization | 13,362,685.84 | 14,295,251.10 |
| Business travel expenses | 967,235.20 | 3,353,907.41 |
| Office expenses | 2,085,464.53 | 1,688,108.77 |
| Service fee to intermediary agencies | 1,598,683.57 | 1,625,961.96 |
| Others | 8,068,685.32 | 13,772,987.29 |
| Total | 98,240,348.73 | 116,352,835.42 |
Other notes:
Inapplicable
65. R & D expenditures
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Salaries & bonus | 12,250,034.26 | 10,860,114.59 |
| Employees’ welfare | 198,645.82 | 205,127.58 |
| Social security premium | 392,814.93 | 924,124.54 |
| Public reserve for housing | 412,951.55 | 304,138.80 |
| Cost of materials | 9,453.09 | 63,256.68 |
| Intellectual property fee | 276,918.12 | 277,815.00 |
| Payment for samples | 593,599.24 | 868,357.42 |
| Consulting fee | 240,576.67 | 875,841.49 |
| Depreciation and amortization | 3,162,020.53 | 2,627,949.69 |
| Technical cooperation fee | 1,536,929.13 | 560,030.37 |
| Others | 1,630,327.42 | 1,959,654.77 |
| Total | 20,704,270.76 | 19,526,410.93 |
Other notes:
Inapplicable
66. Financial expenses
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Interest payment | 13,485,670.67 | 12,023,843.93 |
| Less: capitalized interest | 0.00 | 0.00 |
| Less: Interest income | 2,482,721.82 | 908,850.92 |
| Exchange gain & loss | 713,188.07 | -134,740.68 |
| Financial service charges and miscellaneous | 4,812,806.44 | 5,258,713.56 |
| Total | 16,528,943.36 | 16,238,965.89 |
Other notes:
Inapplicable
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 | 10,154,015.67 | 13,045,742.36 |
| Total | 10,154,015.67 | 13,045,742.36 |
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 based on equity method | 2,160,911.92 | 1,531,310.06 |
| Total | 2,160,911.92 | 1,531,310.06 |
Other notes:
Inapplicable
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 | -1,851.58 | -301,318.07 |
| Loss from bad debt of accounts receivable | -2,465,509.77 | -2,780,450.82 |
| Total | -2,467,361.35 | -3,081,768.89 |
Other notes:
Inapplicable
72. Loss from impairment of assets
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| II. Loss from price falling of inventories or loss from | 0.00 | 2,514,740.86 |
| impairment of contract performance costs | ||
| Total | 0.00 | 2,514,740.86 |
Other notes:
Inapplicable
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 from disposal of assets | 0.00 | 1,720.00 |
| Loss from disposal of assets | -200,140.17 | -213,730.13 |
| Total | -200,140.17 | -212,010.13 |
74. Non-operating expenses
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period | Amount counted to the current non-operating gain and loss |
| Disposal of account payable impossible to be paid | 877,410.33 | 212,175.93 | 877,410.33 |
| Carry-over of inventory overage | 226,888.80 | 226,888.80 | |
| Others | 287,560.29 | 82,135.77 | 287,560.29 |
| Total | 1,391,859.42 | 294,311.70 | 1,391,859.42 |
Government subsidy counted to the current profit and loss:
Inapplicable
75. Non-operating expenditure
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period | Amount counted to the current non-operating gain and loss |
| Outward donation | 0.00 | 200,000.00 | 0.00 |
| Others | 118,646.41 | 324,505.98 | 118,646.41 |
| Total | 118,646.41 | 524,505.98 | 118,646.41 |
Other notes:
Inapplicable
76. Income tax expense
(1) Statement of income tax expenses
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Income tax expense in the reporting period | 26,235,776.22 | 22,066,289.48 |
| Deferred income tax expense | -12,327,864.33 | 18,548,898.09 |
| Total | 13,907,911.89 | 40,615,187.57 |
(2) Process of adjustment of accounting profit and income tax expense
In CNY
| Items | Amount incurred in the reporting period |
| Total profit | 91,646,818.19 |
| Income tax expense calculated based on the statutory/ applicable tax rate | 22,911,704.55 |
| Influence of different tax rates applicable to subsidiaries | -9,197,395.81 |
| Influence of adjustment of the income tax in the previous period | -49,934.25 |
| Influence of the non-taxable income | 0.00 |
| Influence of the non-offsetable costs, expenses and loss | 891,927.62 |
| Influence from the offsetable loss of the unrecognized deferred income tax asset at the end of the previous period | 0.00 |
| Influence from the offsetable provisional difference or offsetable loss of the unrecognized deferred income tax asset at the end of the reporting period | 1,140,007.94 |
| Influence from the addition of the R & D expenses upon deduction of tax payment (to be stated with “-“) | -1,788,398.15 |
| Others | 0.00 |
| Income tax expenses | 13,907,911.89 |
Other notesInapplicable
77. Other comprehensive income
For the detail, refer to Note 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 |
| Commodity promotion fee | 5,210,311.30 | 7,326,827.42 |
| Government subsidies | 10,154,015.67 | 13,045,742.36 |
| Cash deposit | 7,315,744.37 | 6,493,217.88 |
| Interest income | 2,482,721.82 | 908,850.92 |
| Reserve | 1,303,065.89 | 687,618.62 |
| Others | 4,821,570.68 | 12,513,870.71 |
| Total | 31,287,429.73 | 40,976,127.91 |
Note to other cash received in connection with operating activities:
Inapplicable
(2) Other cash paid in connection with operation activities
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Market promotion | 30,650,504.85 | 55,480,743.21 |
| Rent | 56,722,191.19 | 54,742,365.90 |
| Shopping mall fees | 12,740,511.78 | 30,786,192.52 |
| Advertisement fee | 6,000,177.41 | 11,083,207.52 |
| Packing expenses | 3,491,359.91 | 5,703,500.29 |
| Business travel expenses | 2,955,291.84 | 8,284,981.38 |
| Water and electricity fees | 5,422,039.82 | 6,714,986.63 |
| R & D expenses | 3,588,855.18 | 4,322,224.36 |
| Office expenses | 5,169,903.19 | 5,207,489.18 |
| Freight | 5,917,126.15 | 7,747,014.23 |
| Exhibition fee | 45,727.87 | 6,546,230.71 |
| Property management fee | 9,544,159.17 | 7,982,065.97 |
| Business entertainment | 1,310,428.39 | 2,683,582.53 |
| Service fee to intermediary agencies | 2,671,307.29 | 2,043,210.38 |
| Others | 19,696,640.17 | 27,973,348.54 |
| Total | 165,926,224.21 | 237,301,143.35 |
Note to other cash paid in connection with operating activities:
Inapplicable
(3) Other investment activities related cash receipts
Inapplicable
(4) Other investment activities related cash payments
Inapplicable
(5) Other fund-raising activities related cash receipts
Inapplicable
(6) Other fund-raising activities related cash payments
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period |
| Repurchase of B-shares | 26,825,873.78 | 17,565,400.00 |
| Total | 26,825,873.78 | 17,565,400.00 |
Note to other cash paid in connection with fund-raising activities:
The amount incurred in the reporting period was the payment for repurchase of B-shares.
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. Net cash flows arising from adjustment of net profit into operating activities: | -- | -- |
| Net profit | 77,738,906.30 | 123,495,460.90 |
| Plus: Provision for impairment of assets | 2,467,361.35 | 567,028.03 |
| Depreciation of fixed assets, depletion of oil and gas asset, depreciation of productive biological asset | 21,037,291.58 | 21,385,076.08 |
| Amortization of intangible assets | 3,829,094.00 | 3,291,008.97 |
| Amortization of the long-term expenses to be apportioned | 50,739,190.23 | 46,754,405.36 |
| Loss (income is stated in “-”) from disposal of fixed assets, intangible assets and other long term assets | 200,140.17 | 212,010.13 |
| Financial expenses (income is stated with “-”) | 13,485,670.67 | 12,023,843.93 |
| Investment loss (income is stated with “-”) | -2,160,911.92 | -1,531,310.06 |
| Decrease of the deferred income tax asset (increase is stated with “_”) | -12,327,864.33 | 17,382,217.94 |
| Increase of deferred income tax liability (decrease is stated with “-”) | -63,520.78 |
| Decrease of inventories (Increase is stated with “-”) | 10,360,528.74 | 57,362,696.37 |
| Decrease of operative items receivable (Increase is stated with “-”) | -57,935,867.20 | -112,532,040.70 |
| Increase of operative items payable (Decrease is stated with “-”) | -3,724,783.54 | -9,395,746.58 |
| Net cash flows arising from operating activities | 103,645,235.27 | 159,014,650.37 |
| 2. Significant investment and fund-raising activities with no cash income and expenses involved: | -- | -- |
| 3. Net change in cash and cash equivalents: | -- | -- |
| Ending cash balance | 344,906,641.68 | 224,316,552.42 |
| Less: Opening balance of cash | 315,093,565.09 | 162,623,059.97 |
| Net increase of cash and cash equivalents | 29,813,076.59 | 61,693,492.45 |
(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 | 344,906,641.68 | 315,093,565.09 |
| Including: Cash in stock | 344,906,641.68 | 315,093,565.09 |
| Bank deposit available for payment at any time | 215,989.73 | 229,258.38 |
| Other monetary fund used for payment at any time | 343,931,215.59 | 285,306,297.62 |
| Due from central bank available for payment | 759,436.36 | 29,558,009.09 |
| III. Ending balance of cash and cash equivalents | 344,906,641.68 | 315,093,565.09 |
| Including: cash and cash equivalents restricted for use from the parent company or other subsidiaries of the Group | 1,575,000.00 | 3,641,389.51 |
Other notes:
Inapplicable
80. Notes to items of statement of change in owner’s equity
Specify the description of the item "others" and the adjusted amount of the balance at the end of last year:
Inapplicable
81. Assets restricted in ownership or use right
In CNY
| Items | Book value at the end of the reporting period | Cause of restriction |
| Monetary fund | 1,575,000.00 | Deposit for L/G |
| Fixed assets | 14,201,915.48 | Security guarantee |
| Total | 15,776,915.48 | -- |
Other notes:
Inapplicable
82. Foreign currency monetary items
(1) Foreign currency monetary items
In CNY
| Items | Ending balance of foreign currency | Conversion rate | Ending balance of Renminbi converted |
| Monetary fund | -- | -- | |
| Including: USD | 2,733,938.06 | 7.07950 | 19,354,914.51 |
| Euro | 30,154.43 | 7.96100 | 240,059.40 |
| HKD | 8,747,941.93 | 0.91344 | 7,990,720.07 |
| SF | 138,202.79 | 7.44340 | 1,028,698.65 |
| Accounts receivable | -- | -- | |
| Including: USD | 603,055.08 | 7.0795 | 4,269,328.45 |
| Euro | 30,425.59 | 7.9610 | 242,218.13 |
| HKD | 2,970,361.11 | 0.91344 | 2,713,246.66 |
| SF | 30,527.96 | 7.4434 | 227,231.82 |
| Long-term Loan | -- | -- | |
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 0.00 | 0.91344 | 0.00 |
| SF | 577,101.19 | 7.44340 | 4,295,595.00 |
| Advance payment for goods |
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 0.00 | 0.91344 | 0.00 |
| SF | 859,637.54 | 7.44340 | 6,398,626.07 |
| JP Yen | 10,477,519.30 | 0.06581 | 689,504.59 |
| Accounts payable | |||
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 1,771,811.89 | 0.91344 | 1,618,443.85 |
| SF | 29,675.49 | 7.44340 | 220,886.54 |
| Other receivables | |||
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 146,038.44 | 0.91344 | 133,397.35 |
| SF | 908,889.21 | 7.44340 | 6,765,225.95 |
| Advance from customers | |||
| Including: USD | 31,617.09 | 7.07950 | 223,833.19 |
| Euro | 0.00 | 7.96100 | |
| HKD | 1,179,628.55 | 0.91344 | 1,077,519.90 |
| SF | 7.44340 | ||
| Other payables | |||
| Including: USD | 4,702.87 | 7.07950 | 33,293.97 |
| Euro | 1,090.35 | 7.96100 | 8,680.28 |
| HKD | 416,145.72 | 0.91344 | 380,124.15 |
| SF | 71,910.54 | 7.44340 | 535,258.91 |
| Short term loans | |||
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 58,302.42 | 0.91344 | 53,255.76 |
| SF | 1,405,115.26 | 7.44340 | 10,458,834.93 |
| Non-current liabilities due within a year | |||
| Including: USD | 0.00 | 7.07950 | 0.00 |
| Euro | 0.00 | 7.96100 | 0.00 |
| HKD | 0.00 | 0.91344 | 0.00 |
| SF | 50,182.71 | 7.44340 | 373,530.00 |
Other notes:
Inapplicable
(2) Note to overseas operating entities, including important overseas operating entities, which should bedisclosed about its principal business place, function currency for bookkeeping and basis for the choice. In caseof any change in function currency, the cause should be disclosed.Inapplicable
83. Hedging
Inapplicable
84. Government subsidies
(1) Basic information of government subsidies
In CNY
| Categories | Amount | Items presented | Amount counted to the current profit and loss |
| Qualification of the enterprise in Guangming District for Baselworld 2019 | 150,000.00 | Other income | 150,000.00 |
| Financing the enterprises for project development in the domestic market in 2020 | 88,280.00 | Other income | 88,280.00 |
| The 1st fund allocation of the first R&D financial support (A) in 2019 | 571,000.00 | Other income | 571,000.00 |
| Financial support for improving both technical innovation and brands (B) in 2020 | 800,000.00 | Other income | 800,000.00 |
| Funding and award in the Shenzhen Standard Field in 2019 | 176,681.00 | Other income | 176,681.00 |
| Export credit insurance premiums for the second half year of 2018 | 34,123.00 | Other income | 34,123.00 |
| Financial support for improving both quality and brand in the technical innovation doubling special subsidy program (C) in 2020 | 800,000.00 | Other income | 800,000.00 |
| Business subsidy | 3,601.49 | Other income | 3,601.49 |
| Subsidy to the employees of the Education | 500.00 | Other income | 500.00 |
| Bureau of Xiacheng District engaged in nursing service | |||
| Business opening bonus received from the Bureau of Commerce | 100.00 | Other income | 100.00 |
| Local government subsidy for COVID-19 prevention | 6,577.35 | Other income | 6,577.35 |
| Refunded education surcharge | 273.22 | Other income | 273.22 |
| Financial support for improving both quality and brand in the technical innovation doubling special subsidy program (C) in 2020 | 800,000.00 | Other income | 800,000.00 |
| Social insurance subsidy | 12,100.00 | Other income | 12,100.00 |
| Allowance for the Endowment and Medical Insurance for the Disabled in the Second Half of 2019 from Guangming District | 3,590.52 | Other income | 3,590.52 |
| Financial support for exhibition at Guangdong Industrial Expo | 20,000.00 | Other income | 20,000.00 |
| Financial support for certifying the second national hi-tech enterprises in 2019 from Guangming District | 100,000.00 | Other income | 100,000.00 |
| Financing the enterprises for project development in the domestic market in 2020 | 71,510.00 | Other income | 71,510.00 |
| Special fund subsidy in the field of Shenzhen Standards in 2019 | 60,814.00 | Other income | 60,814.00 |
| Salary delivered to the employees still not starting work as subsidy in Switzerland | 1,078,243.40 | Other income | 1,078,243.40 |
| Special financial support for 2019 Nanshan District Excellence-Creation Rating Independent Innovation Project (National Design Center) (D) | 1,618,800.00 | Other income | 1,618,800.00 |
| Special financial support for 2019 Nanshan District Innovation Carrier Support Technology Project (E) | 776,500.00 | Other income | 776,500.00 |
| Special fund for 2019 Nanshan District Patent Support Program | 9,500.00 | Other income | 9,500.00 |
| Special fund for 2019 Nanshan District Standardization Work Support Plan | 57,000.00 | Other income | 57,000.00 |
| Award for 2019 Nanshan District Technology Innovation (China Award for | 200,000.00 | Other income | 200,000.00 |
| Excellence in Design) | |||
| Financial support from 2019 Nanshan District Enterprise R & D Investment Support Plan (F) | 657,400.00 | Other income | 657,400.00 |
| Basic electricity charge for February paid on behalf by the municipal government | 103,740.00 | Other income | 103,740.00 |
| Special fund subsidy in the field of Shenzhen Standards in 2019 from the Market Supervision & Administration Bureau of Shenzhen Municipality (G) | 741,665.00 | Other income | 741,665.00 |
| Financing the enterprises for project development in the domestic market in 2020 | 1,473.34 | Other income | 1,473.34 |
| Subsidies to the affected enterprises in 2019 (H) | 499,019.60 | Other income | 499,019.60 |
| Employment stabilization subsidies | 433,480.80 | Other income | 433,480.80 |
| Refunded individual income tax | 278,042.95 | Other income | 278,042.95 |
| Total | 10,154,015.67 | 10,154,015.67 |
Notes:
A. It is the government subsidy obtained according to the Notice of Shenzhen Municipal Science & Technology InnovationCommission on the First Supporting Fund Application Materials and Appropriation Materials for the Advance Reception ofthe Enterprise R & D Funding Plan in 2019.
B. It is the government subsidy obtained according to the Notice of the Bureau of Industry and Information Technology ofShenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme for Quality Brand Double Promotionof the Special Subsidy Plan for Technology Improvement Multiplication in 2020.
C. It is the government subsidy obtained according to the Notice of the Bureau of Industry and Information Technology ofShenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme for Quality Brand Double Promotionof the Special Subsidy Plan for Technology Improvement Multiplication (Batch I) in 2020.
D. It is the government subsidy obtained according to the "Measures of the Bureau of Industry and InformationTechnology of Nanshan District for Management of the Special Fund for Development of the Independent InnovationIndustry in Nanshan District" and the "Rules for Implementation of the Special Fund for Independent Innovation IndustryDevelopment in Nanshan District - the Itemized Fund for Economic Development".
E. It is the government subsidy obtained according to the Notice of the General Office of Nanshan District People'sGovernment of Shenzhen Municipality on the Printing and Issuing of the "Measures for Management of the Special Fundfor Development of the Independent Innovation Industry in Nanshan District” SHEN NAN FU BAN GUI [2019] No. 2.
F. It is the government subsidy obtained according to the Notice of the General Office of Nanshan District People'sGovernment of Shenzhen Municipality on the Printing and Issuing of the "Measures for Management of the Special Fundfor Development of the Independent Innovation Industry in Nanshan District” SHEN NAN FU BAN GUI [2019] No. 2.
G. It is the government subsidy obtained according to the Notice of the Market Supervision and Administration Bureau ofShenzhen Municipality on the Special Fund Support and Incentive Scheme for the Standard Fields 2019 in Shenzhen.
H. It is the government subsidy obtained according to the Notice of the Small and Medium-sized Enterprise ServiceBureau of Shenzhen Municipality for Allocating the Subsidy for the Domestic Market Development Projects to theProgram of Innovative Development, Fostering and Support of Shenzhen Local Private and Small & Medium-sizedEnterprises in 2020.
(2) Refunding of the government subsidies
Inapplicable
85. Others
InapplicableVIII. Change in consolidation scope
1. Consolidation of enterprises not under the joint control
(1) Consolidation of enterprises not under joint control during the reporting periodInapplicable
(2) Consolidation cost and goodwill
Inapplicable
(3) Purchasee's distinguishable assets and liabilities as at the date of purchaseInapplicable
(4) Profit or loss of the equity held before the date of purchase arising from re-measurement based on the fairvalueDoes there exist any transaction in which the enterprise consolidation is realized step by step through several transactionsand 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 thepurchasee which cannot be reasonably identified as at the date of purchase or at the end of the very period ofconsolidationInapplicable
(6) Other notes
No change took place in the consolidation scope of the Company in 2020
2. Consolidation of enterprises under the joint control
(1) Consolidation of enterprises under joint control during the reporting periodInapplicable
(2) Consolidation cost
Inapplicable
(3) Book value of the consolidatee's assets and liabilities as at the date of consolidationInapplicable
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 subsidiarylost?NoDoes there exist any such situation that disposal in steps through a number of transactions may cause the control powerover the investment in a subsidiary lost during the reporting period?No
5. Change of consolidation scope due to other reason
Note to the change in the consolidation scope (e.g. new subsidiaries, liquidation subsidiaries, etc.) caused by otherreasons and relevant information:
Inapplicable
6. Others
InapplicableIX. Equity in other entities
1. Equity in a subsidiary
(1) Composition of an enterprise group
| Subsidiaries | Main business location | Place of registration | Nature of business | Shareholding proportion | Way of acquisition | |
| Direct | Indirect | |||||
| HARMONY | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or investment |
| Precision Technology Co. | Shenzhen | Shenzhen | Manufacture | 90.00% | 10.00% | Establishment or investment |
| the Hong Kong Co. | Hong Kong | Hong Kong | Commerce | 100.00% | 0.00% | Establishment or investment |
| Station-68 Co. | Hong Kong | Hong Kong | Commerce | 0.00% | 60.00% | Establishment or investment |
| Shenzhen Harmony E-Commerce Co., Ltd. | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or investment |
| Science & Technology Development Co. | Shenzhen | Shenzhen | Manufacture | 100.00% | 0.00% | Establishment or investment |
| SHIYUEHUI | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or investment |
| Emile Choureit (Shenzhen) | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or investment |
| FIYTA Sales Co., Ltd. | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or investment |
| Hengdarui | Shenyang | Shenyang | Commerce | 100.00% | 0.00% | Consolidation of enterprises under the joint control |
| Swiss Company | Switzerland | Switzerland | Commerce | 0.00% | 100.00% | Consolidation of enterprises not under the joint control |
Other notes:
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 liabilitiesInapplicable
(5) Financial support or other support provided to the structured entities incorporated in the scope ofconsolidated financial statementsInapplicable
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 companyInapplicable
3. Equity in joint venture arrangement or associates
(1) Important joint ventures or associates
| Name of joint venture or associate | Main business location | Place of registration | Nature of business | Shareholding proportion | Accounting treatment method for investment in joint ventures or associates | |
| Direct | Indirect | |||||
| Shanghai Watch | Shanghai | Shanghai | Commerce | 25.00% | Equity method | |
(2) Key financial information of important joint ventures
Inapplicable
(3) Key financial information of important associates
In CNY
| Ending balance/amount incurred in the reporting period | Opening balance/amount incurred in the reporting period | |
| Current assets | 119,900,356.87 | 117,096,911.21 |
| Non-current assets | 15,186,082.97 | 13,556,720.58 |
| Total assets | 135,086,439.84 | 130,653,631.79 |
| Current liabilities | 21,476,491.68 | 22,661,506.61 |
| Non-current liabilities | - | 7,978,869.84 |
| Total liabilities | 21,476,491.68 | 30,640,376.45 |
| Equity attributable to the parent company’s shareholders | 113,609,948.16 | 100,013,255.34 |
| Share of net assets calculated according to the shareholding proportion | 28,402,487.04 | 25,003,313.84 |
| Book value of the equity investment in associates | 48,584,749.77 | 46,423,837.85 |
| Revenue | 54,674,292.84 | 57,039,155.07 |
| Net profit | 8,643,647.69 | 6,125,240.23 |
| Total comprehensive income | 8,643,647.69 | 6,125,240.23 |
Other notesInapplicable
(4) Financial information summary of unimportant joint ventures and associatesInapplicable
(5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to theCompanyInapplicable
(6) Excessive loss incurred to a joint venture or an associate
Inapplicable
(7) Unrecognized commitment in connection with investment in a joint ventureInapplicable
(8) Contingent liabilities in connection with investment in joint ventures or associatesInapplicable
4. Important joint operation
Inapplicable
5. Equity in the structurized entities not incorporated in the consolidated financial statementsInapplicable
6. Others
InapplicableX. Financial instruments and risk managementThe Group's main financial instruments include monetary funds, notes receivable, accounts receivable, other receivables,other equity instrument investments, accounts payable, other payables, short-term borrowings, non-current liabilities duewithin 1 year, and long-term borrowings. Details of the financial instruments have been disclosed in the relevant notes.The risks involved in these financial instruments and the Group’s risk control policies aiming at reducing these risks arestated as follows. The Group’s management conducts management and monitoring of these risk exposures so as toensure risks to be controlled within a specific limitation.
1. Risk management goals and policies
The Group's objective in risk management is to achieve a proper balance between risk and return and to reduce theadverse impact of financial risks on the Group's financial performance. Based on this risk management objective, theGroup has developed risk management policies to identify and analyze the risks faced by the Group, set appropriateacceptable levels of risks and design corresponding internal control procedures to monitor the risk level of the Group. TheGroup regularly reviews these risk management policies and relevant internal control systems to respond to changes inmarket conditions or the Group's business activities. The Group's internal audit department also periodically or randomlychecks whether the implementation of the internal control system conforms to the risk management policy.
The main risks caused by the Group's financial instruments are credit risk, liquidity risk and market risk (includingexchange rate risk, interest rate risk and commodity price risk).
The Board of Directors is responsible for planning and establishing the risk management framework of the Group,formulating the risk management policies and relevant guidelines of the Group and supervising the implementation of riskmanagement measures. The Group has formulated risk management policies to identify and analyze the risks faced bythe Group. These risk management policies clearly specify specific risks and cover many aspects such as market risk,credit risk and liquidity risk management. The Group regularly evaluates the market environment and changes in theGroup's business activities to determine whether or not to update the risk management policy and system. The riskmanagement of the Group is carried out by the Risk Management Committee in accordance with policy approved by theBoard of Directors. The Risk Management Committee works closely with other business units of the Group to identify,evaluate and mitigate risks. The internal audit department of the Group conducts regular audits of risk managementcontrols and procedures and reports the audit results to the audit committee of the Group.
The Group diversifies the risk of financial instruments through appropriate diversification of investments and business
portfolios and reduces the risk of being concentrated in a single industry, a specific region or a specific counterparty bydeveloping appropriate risk management policy.
(1) Credit risk
Credit risk refers to the risk of the Group's financial loss caused by the counterparty's failure to fulfill its contractualobligations.
The Group manages credit risk by portfolio classification. Credit risk mainly arises from bank deposits, notes receivable,accounts receivable, other receivables, etc.
The Group places its bank deposits mainly with financial institutions with good reputation and high credit rating, and theGroup does not expect that there exists any significant credit risk to the bank deposits.
For notes receivable, accounts receivable and other receivables, the Group has set the relevant policy to control creditexposure. The Group evaluates the customer's credit qualification and sets the corresponding credit period based on theirfinancial position, credit history and other factors such as current market conditions. The Group shall regularly monitorcustomers' credit records. For customers with poor credit records, the Group shall use such methods as written paymentreminders, shortening or canceling credit periods to ensure that the overall credit risks of the Group are under control.
The Group’s debtors of accounts receivable are customers engaged in different industries and located in different regions.The Group continues to conduct credit assessment of the financial position of accounts receivable and, where appropriate,purchases credit guarantee insurance.
The maximum credit risk exposure the Group accesses to is the book value of each financial asset in the balance sheet.The Group is also exposed to credit risks due to the provision of financial guarantees, as detailed in Note XII.2.
In the Group's accounts receivable, the amount owed by the top five customers took 15.42% of the Group's total accountsreceivable (2019: 25.39%); in the Group's other receivables, the amount owed by the top five customers took 11.28% ofthe Group's total other receivables (2019: 40.94%).
(2) Liquidity risks
Liquidity risk refers to the risk that the Group encounters a shortage of funds in fulfilling its obligation to settle by delivery ofcash or other financial assets.
When managing flow risks, each of the Group's affiliates is responsible for its own cash flow forecast. The Group'sfinancial center monitors long - and short-term fund demands at the Group level based on the cash flow forecast results ofeach member enterprise. The Group manages the surplus fund within the Group through the capital pool plan establishedwith some large banking financial institution, and ensures that each member enterprise has sufficient cash reserves tomeet the payment obligations due for settlement. In addition, the Group has entered into agreements for line of financingcredit with its major correspondent banks to support the Group in fulfilling its obligations related to commercial paper.
The Group raises working capital through funds generated from its operations and bank borrowings. As at June 30,2020,the amount of the bank loans not yet used by the Group was CNY 2,316.68 million (December 31,2019: CNY 1,970.39million).
(3) Market risks
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instruments mayfluctuate due to changes in market prices, including interest rate risk, exchange rate risk and other price risk.
Interest rate risksInterest rate risk refers to the risk that the fair value of financial instruments or future cash flow may fluctuate due tochanges in market interest rates. Interest rate risk may arise from recognized interest bearing financial instruments andunrecognized financial instruments (such as certain loan commitments).
The interest rate risk of the Group is mainly generated from short-term bank borrowing, long-term bank borrowing andother interest-bearing debts. Financial liabilities with floating interest rate expose the Group to interest rate risk of cashflow while financial liabilities with fixed interest rate expose the Group to interest rate risk of fair value. The Groupdetermines the relative proportion of fixed and floating rate contracts in accordance with prevailing market conditions andmaintains an appropriate portfolio of fixed and floating rate instruments through regular reviews and monitoring.
The interest-bearing financial instruments held by the Group are as follows (In CNY 10,000) :
| Items | Amount in the reporting year | Amount in the previous year |
| Financial instruments with fixed interest rate | ||
| Financial liabilities |
| Where: short-term borrowings | 67,356.24 | 48,710.37 |
| Long-term Loan | 466.91 | 468.18 |
| Sub-total | 67,823.15 | 49,178.55 |
| Financial instruments with floating interest rate | ||
| Financial liabilities | ||
| Where: short-term borrowings | 8,000.00 |
| Total | 67,823.15 | 57,178.55 |
For the financial instruments held on the balance sheet date that expose the Group to fair value interest rate risk, theimpact of net profit and shareholders' equity in the sensitivity analysis above is the impact after the re-measurement of thefinancial instruments according to the new interest rate, assuming that the daily interest rate of the balance sheet changes.For floating rate non-derivative instruments held at the balance sheet date that expose the Group to cash flow interest raterisk, the impact on net profit and shareholders' equity in the sensitivity analysis above is the impact of the above interestrate change on the annualized estimated interest expense or income. The previous year's analysis was based on thesame assumptions and methodology.
Exchange rate riskExchange rate risk refers to the risk of fluctuations in the fair value of financial instruments or future cash flows due tomovement in foreign exchange rates. Exchange rate risk may be derived from financial instruments denominated inforeign currencies other than the functional currency.
Exchange rate risk mainly refers to the Group's financial position and cash flow affected by foreign exchange ratefluctuations. In addition to the subsidiary established in Hong Kong holding assets in Hong Kong dollars and the
sub-subsidiary established in Switzerland holding assets in Swiss Francs, the Group's other major business activities aremainly settled in Renminbi. However, foreign exchange risks still exist in the foreign currency assets and liabilitiesrecognized by the Group and in future foreign currency transactions.
As of June 30, 2020, the amount of foreign currency financial assets and foreign currency financial liabilities held by theGroup converted into Renminbi is listed as follows (In CNY 10,000) :
| Items | Foreign currency liabilities | Foreign currency assets | ||
| Amount at the end of the reporting period | Amount at the beginning of the reporting period | Amount at the end of the reporting period | Amount at the beginning of the reporting period | |
| US$ | 25.71 | - | 2,362.42 | 4,601.89 |
| HK$ | 312.93 | 1,939.47 | 1,083.74 | 1,072.77 |
| CHF | 1,588.41 | 1,700.89 | 1,441.98 | 3,497.65 |
| Euro | 0.87 | - | 48.23 | 359.81 |
| JP Yen | - | 68.95 | ||
| Total | 1,927.93 | 3,640.36 | 5,005.32 | 9,532.12 |
The Group pays close attention to the impact of exchange rate fluctuations on exchange rate risks of the Group. TheGroup is not currently taking any measures to protect itself from exchange rate risk. However, the management isresponsible for monitoring currency risks and will consider hedging significant currency risks as needed.
On June 30, 2020, for the Group’s foreign currency monetary funds, bank loans and other financial instruments, and so on,may lead to appreciation or depreciation of the Group's shareholders' equity and net profit by about CNY 1.2494 million(December 31, 2019: about CNY 2.9459 million) with the assumption that that Renminbi to foreign currencies (mainlyagainst US Dollars, HK Dollars and Swiss Franc) may be appreciated or depreciated by 5% with other factors remainunchanged.
2. Capital management
The objective of the Group's capital management policy is to ensure that the Group is a going concern, thus providingreturns to shareholders and benefits to other stakeholders, while maintaining an optimal capital structure to reduce thecost of capital.
In order to maintain or recapitalize, the Group may adjust the way of financing, adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares and other equity instruments, or sell assets to reduce itsdebts.
The Group monitors its capital structure on the basis of the asset-liability ratio (that is, the total liabilities are divided by thetotal assets). As at 30 June 2020, the Group's gearing was 31.52% (December 31, 2019: 29.420%).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 valueInapplicable
2. Basis for determining the market price of the items measured based on the continuous and non-continuousfirst level fair valueLevel 1: the quotation of the same assets or liabilities in an active market (unadjusted)
3. Items measured based on the continuous or uncontinuous 2nd level fair value, valuation technique as used,nature of important parameters and quantitative informationLevel 2: either directly (i.e., price) or indirectly (i.e., derived from price) use observable input value other than marketquotations for assets or liabilities at Level 1.
4. Items measured based on the continuous or uncontinuous 3rd level fair value, valuation technique as used,nature of important parameters and quantitative informationLevel 3: The asset or liability has used any input value not based on observable market data (non-observable input value).
5. Items measured based on the continuous 3rd level fair value, sensitivity analysis on adjusted information andunobservable parameters between the book value at beginning and end of the periodInapplicable
6. In case items measured based on fair value are converted between different levels incurred in the currentperiod, state the cause of conversion and determine conversion time pointThis year, the fair value measurement of the Group's financial assets and financial liabilities has neither experienced anyconversion between Level 1 and Level 2, nor experienced transfer-in or transfer-out to/from Level 3.
7. Change of valuation technique incurred in the current period and cause of such changeInapplicable
8. Fair value of financial assets and financial liabilities not measured at fair valueThe Group's financial assets and financial liabilities measured with amortized costs mainly include monetary funds, notesreceivable, accounts receivable, other receivables, short-term loans, accounts payable, other payables, long-term loansdue within a year, long-term loans, etc.
The difference between the book value and fair value of the above financial assets and financial liabilities not measuredwith fair value is very little.
9. Others
Inapplicable
XII. Related parties and transactions
1. Details of the parent company of the Company
| Name of the parent company | Place of registration | Nature of business | Registered capital | Shareholding ratio of the parent company in the Company | Ratio of vote right of the parent company in the Company |
| AVIC IHL | Shenzhen | Investment in industries, domestic trade, material supply and distribution | CNY 1,166.162 million | 38.06% | 38.06% |
Note to the parent company:
The proportion of the equity held by AVIC International Shenzhen Co., Ltd. in AVIC International Holdings Limited is
33.93%. AVIC International Shenzhen is a wholly owned subsidiary of AVIC International Holdings Limited (AVIC IHL)and China Aviation Industry Corporation (AVIC) directly holds 91.14% of the equity of AVIC IHL. Therefore, the Company’sultimate controller is AVIC.Other notes:
Inapplicable
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
Refer to NOTE IX.3 for details of the Company's major joint ventures or associates.
4. Other related parties of the Company
| Names of other related parties | Relationship between other related parties and the Company |
| AVIC Property Management Co., Ltd. (AVIC Property) | An associate of the holding shareholder |
| Shenzhen AVIC Building Technology Co., Ltd. (AVIC Building Co.) | An associate of the holding shareholder |
| China Merchants Jiyu Industry Operation & Service Co., Ltd. (China Merchants JIYU) | An associate of the holding shareholder |
| Shenzhen AVIC Guanlan Real Estate Development Co., Ltd. (AVIC Guanlan Real Estate) | An associate of the holding shareholder |
| Shenzhen AVIC 9 Square Assets Management Co., Ltd. (9 Square Asset) | An associate of the holding shareholder |
| Shenzhen AVIC City Investment Co., Ltd.(AVIC City Investment) | An associate of the holding shareholder |
| Ganzhou CATIC 9 Square Commerce Co., Ltd. (Ganzhou 9 Square) | An associate of the holding shareholder |
| AVIC City Property (Kunshan) Co., Ltd. (AVIC City Property (Kunshan) ) | An associate of the holding shareholder |
| Shenzhen AVIC Security Service Co., Ltd. (AVIC Security Service) | An associate of the holding shareholder |
| Shenzhen AVIC Property Asset Management Co., Ltd. (AVIC Property Asset | An associate of the holding shareholder |
| Management) | |
| Jiujiang 9 Square Commerce Management Co., Ltd. (9 Square Commerce Management) | An associate of the holding shareholder |
| Shenzhen AVIC Real Estate Development Co., Ltd. (AVIC Real Estate) | An associate of the holding shareholder |
| Shenzhen AVIC Nanguang Elevator Co., Ltd. | An associate of the holding shareholder |
| Rainbow Department Store Co., Ltd. and its subsidiaries (RAINBOW) | Controlled by the same party |
| Shennan Circuit Co., Ltd. and its subsidiaries (Shennan Circuit) | Controlled by the same party |
| Shenzhen AVIC City Commerce development Co., Ltd. (AVIC City Development) | Controlled by the same party |
| Shenzhen AVIC Huacheng Commerce development Co., Ltd. (AVIC Huacheng Commerce development) | Controlled by the same party |
| Shenzhen AVIC City Parking Lots Management Co., Ltd. (AVIC Parking Lots Management) | Controlled by the same party |
| Shenzhen CATIC Technical Testing Office Co., Ltd. (CATIC Technical Testing) | Controlled by the same party |
| Tianma Micro-electronics Co., Ltd. (SHEN TIANMA) | Controlled by the same party |
| AVIC Securities Co., Ltd. (AVIC Securities) | Controlled by the same party |
| Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) | Controlled by the same party |
| Shenzhen AVIC Changtai Investment Development Co., Ltd. (AVIC Changtai) | Controlled by the same party |
| Shenzhen CATIC Group Training Center (CATIC Training Center) | Controlled by the same party |
| Shenzhen Grand Skylight Hotel Management Co., Ltd. (Grand Skylight Hotel Management) | Controlled by the same party |
| AVIC Finance Co., Ltd. (AVIC Finance ) | Controlled by the same party |
| Shenzhen AVIC Grand Skylight Hotel Management Co., Ltd. (Grand Skylight Hotel) | Controlled by the same party |
| Gongqingcheng CATIC Cultural Investment Co., Ltd. (Gongqingcheng CATIC Cultural Investment) | Controlled by the same party |
| AVIC International Complete Set Equipment Co., Ltd. (AVIC Complete Set Equipment) | Controlled by the same party |
| AVIC International Aero-Development Corporation | Controlled by the same party |
| AVIC XI’AN AERONAUTICS COMPUTING TECHNIQUE RESEARCH INSTITUTE | Controlled by the same party |
| AVIC JINCHENG NANJING ENGINEERING INSTITUTE OF AIRCRAFT SYSTEM | Controlled by the same party |
| AVIC Lutong Industrial Co., Ltd. | Controlled by the same party |
| AVIC East China Optoelectronic Co., Ltd. | Controlled by the same party |
| AVIC East China Optoelectronic (Shanghai) Co., Ltd. | Controlled by the same party |
| China Aviation Industry Supply and Marketing Zhongnan Co., Ltd. | Controlled by the same party |
| Huang Yongfeng | A senior executive |
| Wang Mingchuan | A senior executive |
| Fu Debin | A senior executive |
| Xiao Zhanglin | A senior executive |
| Wang Bo | A senior executive |
| Chen Libin | A senior executive |
| Wang Jianxin | A senior executive |
| Zhong Hongming | A senior executive |
| Tang Xiaofei | A senior executive |
| Wang Baoying | A senior executive |
| Sheng Qing | A senior executive |
| Fang Jiasheng | A senior executive |
| Lu Wanjun | A senior executive |
| Liu Xiaoming | A senior executive |
| Pan Bo | A senior executive |
| Li Ming | A senior executive |
| Chen Zhuo | A senior executive |
| Tang Haiyuan | A senior executive |
| Xu Chuangyue | A senior executive |
Other notesInapplicable
5. Related transactions
(1) Related transactions of purchase and sale of commodities and supply and acceptance of labor servicesStatement of purchase of commodities and acceptance of labor services
In CNY
| Related parties | Description of Related Transactions | Amount incurred in the reporting period | Transaction quota as approved | Has it exceeded the transaction quota | Amount incurred in the previous period |
| AVIC Property | Property management fee | 5,938,619.97 | 1,800.00 | No | 4,665,553.46 |
| Rainbow Ltd. | Shopping mall fees/purchase of goods | 2,389,264.94 | 1,000.00 | No | 3,005,499.82 |
| SHEN TIANMA | Purchase of goods | 31,309.90 | 800.00 | No | |
| Ganzhou 9 Square | Shopping mall fees | 92,549.84 | 200.00 | No | |
| 9 Square Commerce Management Co., Ltd. | Shopping mall fees | 43,147.68 | No | ||
| AVIC Building Co. | Refurbishment | 32,924.52 | No | ||
| Shenzhen AVIC Nanguang | Repairing fee | 122,830.20 | No |
| Elevator Co., Ltd. | |||||
| AVIC City Commerce Development | Shopping mall fees | 19,346.13 | No |
Statement of sales of goods/supply of labor services
In CNY
| Related parties | Description of Related Transactions | Amount incurred in the reporting period | Amount incurred in the previous period |
| Rainbow Ltd. | Products and labor services | 29,669,833.80 | 35,273,411.88 |
| Ganzhou 9 Square | Products and labor services | 8,748.67 | 68,392.00 |
| Shennan Circuit | Sales of materials and supply of labor | 3,086,589.15 | 4,656,548.21 |
| Gongqingcheng CATIC Cultural Investment | Sales of products | 182,271.24 | |
| AVIC International | Sales of products | 4,424.78 | |
| AVIC International Aero-Development Corporation | Sales of products | 140,884.97 | |
| Shanghai Watch | Sales of products | 1,812,292.04 | |
| AVIC City Commerce Development | Sales of products | 94,585.88 | |
| AVIC Changtai | Sales of products | 0 | |
| AVIC XI’AN AERONAUTICS COMPUTING TECHNIQUE RESEARCH INSTITUTE | Sales of products | 7,061.95 | |
| AVIC JINCHENG NANJING ENGINEERING INSTITUTE OF AIRCRAFT SYSTEM | Sales of products | 176,991.15 | |
| AVIC Lutong Industrial Co., Ltd. | Sales of products | 14,123.89 | |
| AVIC East China Optoelectronic Co., Ltd. | Sales of products | 212,389.38 | |
| AVIC East China Optoelectronic (Shanghai) Co., Ltd. | Sales of products | 35,398.23 | |
| China Aviation Industry Supply and Marketing Zhongnan Co., Ltd. | Sales of products | 7,079.65 |
Note to the related transactions of purchase and sale of commodities and supply and acceptance of labor servicesInapplicable
(2) Related entrusted management/contracted and mandatory management/contractingInapplicable
(3) Related lease
The Company as lessor:
In CNY
| Names of lessees | Categories of leasehold properties | Rental income recognized in the current period | Rental income recognized in the previous period |
| AVIC Property | Housing | 6,196,298.09 | 9,236,271.13 |
| Tianyue Hotel | Housing | 2,095,238.09 | |
| CMPO | Housing | 972,906.73 | 926,577.86 |
| AVIC City Investment | Housing | 139,986.58 | 133,320.56 |
| AVIC Securities | Housing | 657,257.16 | 527,428.55 |
| Rainbow Ltd. | Housing | 696,114.82 | 289,764.58 |
| AVIC Huacheng Commerce Development | Housing | 117,566.50 | |
| 9 Square Assets | Housing | 1,042,900.03 | 993,238.13 |
| CATIC Public Security Service Co. | Housing | 502,635.07 | 706,043.41 |
| Guanlan Real Estate | Housing | 69,993.29 | 172,145.99 |
| AVIC City Property | Housing | 149,630.10 | |
| AVIC Real Estate | Housing | 140,569.86 | 133,876.07 |
The Company as lessee:
In CNY
| Names of lessees | Categories of leasehold properties | Rental fee recognized in the current period | Rental fee recognized in the previous period |
| Ganzhou 9 Square | Housing | 449,741.52 | 538,609.84 |
| AVIC City Property (Kunshan) | Housing | 87,666.38 | |
| 9 Square Commerce Management Co., Ltd. | Housing | 192,860.44 | 191,570.45 |
| AVIC City Commerce Development | Housing | 68,807.29 | 203,568.04 |
Note to related leaseInapplicable
(4) Related guarantee
The Company as a guarantor
In CNY
| Guarantees | Amount guaranteed | Effective date | Expiring date | Is the guarantee finished |
| Harmony | 100,000,000.00 | December 30, 2019 | December 29, 2020 | No |
| Harmony | 40,000,000.00 | April 21, 2020 | April 21, 2021 | No |
| the Hong Kong Co. | 3,721,700.00 | August 22, 2019 | August 19, 2020 | No |
| the Hong Kong Co. | 3,721,700.00 | September 23, 2019 | September 19, 2020 | No |
| the Hong Kong Co. | 2,977,360.00 | October 31, 2019 | October 25, 2020 | No |
| The Sales Co. | 50,000,000.00 | April 26, 2020 | April 26, 2021 | No |
| Precision Technology Co. | 30,000,000.00 | April 24, 2020 | April 24, 2021 | No |
| Science & Technology Development Co. | 2,430,000.00 | April 29, 2020 | April 29, 2021 | No |
The Company as a guaranteeInapplicable
(5) Borrowings and lendings among related parties
In CNY
| Related parties | Borrowing amount | Starting date | Due date | Note |
| Borrowed from | ||||
| AVIC Financial Co. | 50,000,000.00 | March 26, 2019 | March 26, 2020 | |
| AVIC Financial Co. | 100,000,000.00 | April 02, 2019 | April 02, 2020 | |
| AVIC Financial Co. | 60,000,000.00 | October 25, 2019 | October 25, 2020 | |
| Lending | ||||
(6) Assets assignment and liabilities reorganization of related parties
Inapplicable
(7)Remuneration to senior executives
Inapplicable
(8) Other related transactions
The balance of the Company's deposit at the end of the current year with AVIC Finance amounted to CNY 289,316,243.49,of which the interest received in the current year amounted to CNY 469,992.60.
6. Accounts receivable from and payable to related parties
(1) Receivables
In CNY
| Project name | Related parties | Ending balance | Opening balance | ||
| Book balance | Bad debt reserve | Book balance | Bad debt reserve | ||
| Accounts receivable: | |||||
| Rainbow Ltd. | 8,983,247.13 | 449,162.36 | 633,187.49 | 31,596.06 | |
| Shennan Circuit | 1,421,361.72 | 71,068.09 | 1,704,634.58 | 85,061.27 | |
| Gongqingcheng CATIC Cultural Investment | 31,387.08 | 1,569.35 | |||
| AVIC City Commerce Development | 29,251.10 | 1,462.56 | |||
| AVIC Property | 227,167.05 | 11,358.35 | |||
| Tianyue Hotel | 7,630.00 | 381.50 | |||
| CATIC Public Security Service Co. | 271,533.23 | 13,576.66 | |||
| Shanghai Watch | 140,000.00 | 6,986.00 | |||
| Notes receivable: | |||||
| Shennan Circuit | 2,094,782.89 | 2,263,719.32 | |||
| Advance payment: | |||||
| SHEN TIANMA | 581,280.00 | 31,309.90 | |||
| Other receivables: | |||||
| Rainbow Ltd. | 1,208,200.00 | 60,410.00 | 975,867.00 | 50,647.50 | |
| Ganzhou 9 Square | 122,665.60 | 6,366.34 | 122,665.60 | 6,366.34 | |
| AVIC City Property (Kunshan) | 40,000.00 | 2,000.00 | 32,000.00 | 1,660.80 | |
| Gongqingcheng CATIC Cultural Investment | 5,500.00 | 275.00 | |||
| 9 Square Commerce Management Co., Ltd. | 50,000.00 | 2,595.00 | 50,000.00 | 2,595.00 | |
| AVIC City Commerce Development | 59,923.00 | 3,110.00 | 59,923.00 | 3,110.00 | |
| AVIC IHL | 11,101.80 | 576.18 | 11,101.80 | 576.18 |
(2) Payables
In CNY
| Project name | Related parties | Ending book balance | Opening book balance |
| Accounts payable: | |||
| AVIC Building Co. | 23,300.97 | ||
| SHEN TIANMA | 3,415.84 | ||
| Advance receipts: | |||
| China Aviation Industry Supply and Marketing Zhongnan Co., Ltd. | 29,175.00 | ||
| Other payables: |
| AVIC Property | 1,994,524.54 | 1,237,403.65 | |
| CMPO | 442,407.92 | 442,407.92 | |
| AVIC City Investment | 309,732.00 | 309,732.00 | |
| AVIC Securities | 213,000.00 | 213,000.00 | |
| AVIC Building Co. | 71,153.70 | 54,691.44 | |
| AVIC City Commerce Development | 0.00 | 99,052.32 | |
| AVIC Huacheng Commerce Development | 0.00 | 73,819.68 | |
| 9 Square Assets | 378,483.84 | 378,483.84 | |
| Rainbow Ltd. | 257,490.98 | 155,672.90 | |
| AVIC Real Estate | 51,014.88 | 51,014.88 | |
| Guanlan Real Estate | 25,401.60 | 25,401.60 | |
| CATIC Public Security Service Co. | 226,603.44 | 226,603.44 | |
| Tianyue Hotel | 57,718.82 | 28,886.00 |
7. Related parties’ commitments
Inapplicable
8. Others
InapplicableXIII. Stock payment
1. General
Inapplicable
2. Stock payment for equity settlement
In CNY
| Method for determining the fair value of equity instruments as at the granting day | Closing price of the Company’s shares as at the granting day |
| Basis for determining the quantity of exercisable equity instruments | Employee service period, achievement rate of performance indicators and individual performance evaluation result |
| Cause of significant difference between the estimation of the reporting period and that of the previous period | Nil |
| Accumulated amount of the equity-settled share-based payment counted to the capital reserve | 17,447,988.68 |
| Total expenses recognized in the equity-settled share-based payment during the reporting | 3,165,401.89 |
Other notesInapplicable
3. Stock payment for cash settlement
Inapplicable
4. Correction and termination of stock payment
Inapplicable
5. Others
InapplicableXIV. Commitments and contingencies
1. Important commitments
Important commitments existing as at the balance sheet dateImplementation of irrevocable operating lease contract signed by the Company ended the balance sheet date is asfollows:
period
Minimum rent payment for irrevocable operational lease
| Minimum rent payment for irrevocable operational lease | Ending balance | Opening balance |
| 1st year after the balance sheet date | 75,083,458.13 | 69,420,770.36 |
| 2nd year after the balance sheet date | 34,286,090.53 | 40,749,688.35 |
| 3rd year after the balance sheet date | 14,875,155.04 | 15,620,420.28 |
| Subsequent years | 5,240,332.87 | 11,333,148.34 |
| Total | 129,485,036.57 | 137,124,027.33 |
2. Contingencies
(1) Significant contingencies existing as at the balance sheet date
As of June 30, 2020, the guarantee status within the Group is as follows (in CNY 10,000) :
| Guarantees | Guarantors | The guarantees | Line of credit | Used credit line | Effective date | Expiring date |
| Harmony | The Company | Letter of guarantee | 20,000.00 | 10,000.00 | December 30, 2019 | December 29, 2020 |
| Harmony | The Company | Loan | 4,000.00 | 4,000.00 | April 21, 2020 | April 21, 2021 |
| the Hong Kong Co. | The Company | Loan | 3,653.76 | 372.17 | August 22, 2019 | August 19, 2020 |
| the Hong Kong Co. | The Company | Loan | 372.17 | September 23, 2019 | September 19, 2020 | |
| the Hong Kong Co. | The Company | Loan | 297.74 | October 31, 2019 | October 25, 2020 |
| The Sales Co. | The Company | Loan | 5,000.00 | 5,000.00 | April 26, 2020 | April 26, 2021 |
| Precision Technology Co. | The Company | Loan | 3,000.00 | 3,000.00 | April 24, 2020 | April 24, 2021 |
| Science & Technology Development Co. | The Company | Loan | 3,000.00 | 243.00 | April 29, 2020 | April 29, 2021 |
| Total | 38,653.76 | 23,288.88 |
(2) Important contingencies unnecessary to be disclosed but necessary to be explainedInapplicable
3. Others
As of June 30, 2020, there exist no other contingencies in the Group necessary to be disclosed.XV. Events after balance sheet date
1. Significant non-adjustment events
Inapplicable
2. Profit distribution
In CNY
| Profit or dividend to be distributed | 85,634,376.20 |
| Profit or dividend announced to be distributed after review and approval | 85,634,376.20 |
3. Sales return
Inapplicable
4. Note to other matters after the balance sheet date
InapplicableXVI. 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. Pension plan
Inapplicable
5. Discontinuing operation
Inapplicable
6. Segment information
(1) Basis for determining the reporting segments and accounting policy
Inapplicable
(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 bedisclosed, explain the reasonInapplicable
(4) Other notes
Inapplicable
7. Other significant transactions and matters that may affect investors' decision makingInapplicable
8. Others
InapplicableXVII. Notes to the parent company’s financial statements
1. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
| Categories | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| where | ||||||||||
| Accounts receivable for which provision for bad debt is based on portfolios | 4,699,542.96 | 100.00% | 230,925.13 | 5.00% | 4,468,617.83 | 2,997,921.46 | 100.00% | 149,896.07 | 5.00% | 2,848,025.39 |
| where | ||||||||||
| Accounts receivable from other customers | 4,699,542.96 | 100.00% | 230,925.13 | 5.00% | 4,468,617.83 | 2,997,921.46 | 100.00% | 149,896.07 | 5.00% | 2,848,025.39 |
| Total | 4,699,542.96 | 100.00% | 230,925.13 | 5.00% | 4,468,617.83 | 2,997,921.46 | 100.00% | 149,896.07 | 5.00% | 2,848,025.39 |
Individual provision for bad and doubtful debts:
InapplicableProvision for bad debts based on portfolio: accounts receivable from other customers
In CNY
| Description | Ending balance | ||
| Book balance | Bad debt reserve | Provision proportion | |
| Accounts receivable from other customers | 4,699,542.96 | 230,925.13 | 5.00% |
| Total | 4,699,542.96 | 230,925.13 | -- |
Note to the basis for determining the combination:
InapplicableDisclosed based on aging
In CNY
| Aging | Ending balance |
| Within 1 year (with 1 year inclusive) | 4,699,542.96 |
| Total | 4,699,542.96 |
(2) Provision, recovery or reversal of reserve for bad debts during the reporting periodProvision for bad debt during the reporting period
In CNY
| Categories | Opening balance | Amount of movement during the reporting period | Ending balance | |||
| Provision | Amount recovered or reversed | Writing-off | Others | |||
| Bad debt reserve | 149,896.07 | 230,925.13 | 149,896.07 | 0.00 | 0.00 | 230,925.13 |
| Total | 149,896.07 | 230,925.13 | 149,896.07 | 0.00 | 0.00 | 230,925.13 |
Where the significant amount of the reserve for bad debt recovered or reversed:
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
| Description of Units | Ending balance of accounts receivable | Proportion of the ending balance of the accounts receivable | Ending balance of the provision for bad debts |
| Receivable from the top five customers | 2,421,654.32 | 52.00% | 121,082.71 |
| Total | 2,421,654.32 | 52.00% |
(5) Account receivable with recognition terminated due to transfer of financial assetsInapplicable
(6) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involvedInapplicable
2. Other receivables
In CNY
| Items | Ending balance | Opening balance |
| Other receivables | 697,541,260.60 | 783,647,732.22 |
| Total | 697,541,260.60 | 783,647,732.22 |
(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 Payment | Ending book balance | Opening book balance |
| Collateral and Deposit | 235,761.90 | 235,761.90 |
| Inter-company current account | 643,492,028.31 | 783,005,800.85 |
| Advance payment for equity allocation | 53,183,393.38 | 0.00 |
| Others | 739,511.33 | 495,730.33 |
| Total | 697,650,694.92 | 783,737,293.08 |
2) Provision for bad debts
In CNY
| Bad debt reserve | The 1st stage | The 2nd stage | The 3rd stage | Total |
| Predicted credit loss in the future 12 months | Predicted credit loss in the whole duration (no credit impairment taken place) | Predicted credit loss in the whole duration (credit impairment already taken place) | ||
| Balance as at January 01, 2020 | 89,560.86 | |||
| Balance as at January 01, 2020 during the reporting period | —— | —— | —— | —— |
| Provision in the reporting period | 19,873.46 | |||
| Balance as at June 30, 2020 | 109,434.32 |
Movement of the book balance of provision for loss with significant amount in the reporting periodInapplicableDisclosed based on aging
In CNY
| Aging | Ending balance |
| Within 1 year (with 1 year inclusive) | 697,403,235.59 |
| 1 to 2 years | 10,127.53 |
| 2 to 3 years | 197,281.80 |
| Over 3 years | 40,050.00 |
| 3 to 4 years | 40,050.00 |
| 4 to 5 years | 0.00 |
| Over 5 years | 0.00 |
| Total | 697,650,694.92 |
3) Provision, recovery or reversal of reserve for bad debts during the reporting periodProvision for bad debt during the reporting period
In CNY
| Categories | Opening balance | Amount of movement during the reporting period | Ending balance | |||
| Provision | Amount recovered or reversed | Writing-off | Others | |||
| Bad debt reserve | 89,560.86 | 19,873.46 | 0.00 | 0.00 | 0.00 | 109,434.32 |
| Total | 89,560.86 | 19,873.46 | 0.00 | 0.00 | 0.00 | 109,434.32 |
Where the significant amount of the provision for bad debt recovered or reversed:
Inapplicable
4) Accounts receivable actually written off in the reporting period
Inapplicable
5) Accounts receivable owed by the top five debtors based on the ending balance
In CNY
| Description of Units | Nature of Payment | Ending balance | Aging | Proportion in total ending balance of other receivables | Ending balance of the provision for bad debts |
| Harmony | Inter-company current account | 447,480,015.30 | Within 1 year | 64.00% | 0.00 |
| Hengdarui | Inter-company current account | 93,350,157.00 | Within 1 year | 13.00% | 0.00 |
| Precision Technology Co. | Inter-company current account | 63,956,637.59 | Within 1 year | 9.00% | 0.00 |
| SHIYUEHUI | Inter-company current account | 27,809,145.33 | Within 1 year | 4.00% | 0.00 |
| Emile Chouriet (Shenzhen) Limited | Inter-company current account | 10,896,073.09 | Within 1 year | 2.00% | 0.00 |
| Total | -- | 643,492,028.31 | -- | 92.00% | 0.00 |
6) Accounts receivable involving government subsidy
Inapplicable
7) Other receivables with recognition terminated due to transfer of financial assetsInapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involvedInapplicable
3. Long-term equity investments
In CNY
| Items | Ending balance | Opening balance | ||||
| Book balance | Impairment reserve | Book value | Book balance | Impairment reserve | Book value | |
| Investment in subsidiaries | 1,336,734,871.73 | 0.00 | 1,336,734,871.73 | 1,334,471,401.42 | 0.00 | 1,334,471,401.42 |
| Investment in | 48,584,749.77 | 0.00 | 48,584,749.77 | 46,423,837.85 | 0.00 | 46,423,837.85 |
| associates and joint ventures | ||||||
| Total | 1,385,319,621.50 | 0.00 | 1,385,319,621.50 | 1,380,895,239.27 | 0.00 | 1,380,895,239.27 |
(1) Investment in subsidiaries
In CNY
| Investees | Opening balance (book value) | Increase/ Decrease (+ / -) in the reporting period | Ending balance (book value) | Ending balance of the provision for impairment | |||
| Additional investment | Decrease of investment | Provision for impairment | Others | ||||
| Harmony | 602,538,761.04 | 0.00 | 0.00 | 0.00 | 875,279.56 | 603,414,040.60 | 0.00 |
| The Sales Co. | 451,377,582.46 | 0.00 | 0.00 | 0.00 | 970,532.34 | 452,348,114.80 | 0.00 |
| Precision Technology Co. | 9,344,923.49 | 0.00 | 0.00 | 0.00 | 255,455.31 | 9,600,378.80 | 0.00 |
| Science & Technology Development Co. | 10,126,964.71 | 0.00 | 0.00 | 0.00 | 57,199.69 | 10,184,164.40 | 0.00 |
| the Hong Kong Co. | 137,737,520.00 | 0.00 | 0.00 | 0.00 | 0.00 | 137,737,520.00 | 0.00 |
| SHIYUEHUI | 5,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5,000,000.00 | 0.00 |
| Shenzhen Harmony E-Commerce Co., Ltd. | 2,184,484.39 | 0.00 | 0.00 | 0.00 | 0.00 | 2,184,484.39 | 0.00 |
| Hengdarui | 36,867,843.96 | 0.00 | 0.00 | 0.00 | 0.00 | 36,867,843.96 | 0.00 |
| Emile Chouriet (Shenzhen) Limited | 79,293,321.37 | 0.00 | 0.00 | 0.00 | 105,003.41 | 79,398,324.78 | 0.00 |
| Total | 1,334,471,401.42 | 0.00 | 0.00 | 0.00 | 2,263,470.31 | 1,336,734,871.73 | 0.00 |
(2) Investment in associates and joint ventures
In CNY
| Investees | Opening balance (book value) | Increase/ Decrease (+ / -) in the reporting period | Ending balance (book value) | Ending balance of the provision for impairment | |||||||
| Additional investment | Decrease of investment | Income from equity investment recognized under equity method | Other comprehensive income adjustment | Other equity movement | Announced for distributing cash dividend or profit | Provision for impairment | Others | ||||
| I. Joint Venture | |||||||||||
| II. Associates | |||||||||||
| Shanghai | 46,423,837.85 | 0.00 | 0.00 | 2,160,911.92 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Watch Industry Co., Ltd. | 48,584,749.77 | ||||||||||
| Sub-total | 46,423,837.85 | 0.00 | 0.00 | 2,160,911.92 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 48,584,749.77 | 0.00 |
| Total | 46,423,837.85 | 0.00 | 0.00 | 2,160,911.92 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 48,584,749.77 | 0.00 |
(3) Other notes
Inapplicable
4. Operation Income and Costs
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period | ||
| Income | Costs | Income | Costs | |
| Principal business | 57,329,018.41 | 17,626,390.24 | 64,124,939.95 | 11,807,925.90 |
| Other businesses | -15,800.00 | 0.00 | 0.00 | 0.00 |
| Total | 57,313,218.41 | 17,626,390.24 | 64,124,939.95 | 11,807,925.90 |
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 based on equity method | 2,160,911.92 | 1,531,310.06 |
| Total | 2,160,911.92 | 1,531,310.06 |
6. Others
InapplicableXVIII. Supplementary information
1. Statement of non-recurring gains and losses in the reporting period
In CNY
| Items | Amount | Note |
| 1. Gain/Loss from disposal of non-current assets | -200,140.17 | |
| The government subsidies included in the profits and | 10,154,015.67 |
| losses of the current period ( (excluding government grants which are closely related to the Company’s business and conform with the national standard amount or quantity) | ||
| Reversal of the impairment provision for receivables and contract assets which have been tested individually for impairment | 296,622.87 | |
| Other non-operating income and expenses other than the aforesaid items | 1,273,213.01 | |
| Less: Amount affected by the income tax | 2,454,282.53 | |
| Total | 9,069,428.85 | -- |
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on InformationDisclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurringgain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offeringtheir Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, itis necessary to explain the reason.Inapplicable
2. ROE and EPS
| Profit in the reporting period | Return on equity, weighted average | Earnings per share | |
| Basic earning per share (CNY/share) | Diluted earning per share (CNY/share) | ||
| Net profit attributable to the Company’s shareholders of ordinary shares | 2.91% | 0.1775 | 0.1775 |
| Net profit attributable to the Company’s shareholders of ordinary shares less non-recurring gains and loss | 2.57% | 0.1568 | 0.1568 |
3. Discrepancy in accounting data between IAS and CAS
(1) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to IAS andCASInapplicable
(2) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to theaccounting standards outside Mainland China and CASInapplicable
(3) Note to the discrepancy in accounting data under the accounting standards outside Mainland China. In casethe discrepancy in data which have been audited by an overseas auditing agent has been adjusted, pleasespecify the name of the overseas auditing agent.Inapplicable
4. Others
Inapplicable
FIYTA Precision Technology Co., Ltd. 2020 Semi-annual Report, Full
Text
Section 12 Documents Available for Inspection
I. Financial statements signed by and under the seal of the legal representative, the chief financial officerand the person in charge of the accounting office.
II. Originals of all documents and manuscripts of announcements of the Company disclosed in SecuritiesTimes and Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.