FIYTA Precision Technology Co., Ltd.
2020 Semi-annual ReportFinancial Report
I. Auditors’ ReportHas the semi-annual report been auditedNoII. Financial Statements
The currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA Precision Technology Co., Ltd.
June 30, 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 chargeof the Accounting 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 the AccountingDepartment: 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 chargeof the Accounting 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 | -100,902.52 | -64,803.91 |
| stated with “-”) | ||
| 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 the AccountingDepartment: 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 the AccountingDepartment: 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 the AccountingDepartment: 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 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 | 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 | 4,224,00 | 16,596,19 | 18,585,60 | 2,234,597. | 2,234,597.3 | ||||||||||
| contributed by the owner | 0.00 | 7.31 | 0.00 | 31 | 1 | ||||||||||
| 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 the AccountingDepartment: 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 the AccountingDepartment: Tian HuiIII. Company Profile
FIYTA Precision Technology Co., Ltd (hereinafter referred to as the Company) was reorganized,incorporated and renamed from Shenzhen FIYTA Timer Industry Company on December 25 1992 withapproval by the General Office of Shenzhen Municipal People’s Government with Document SHEN FUBAN FU [1992] No. 1259 and with China National Aero-Technology Import & Export CorporationShenzhen Industry & Trade Center (which was renamed as AVIC International Shenzhen CompanyLimited) as the sponsor. The Company's head office is located at the 20th Floor, FIYTA TechnologyBuilding, 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 SpecialEconomic Zone Branch [SHEN REN YIN FU ZI (1993) No. 070], issued publically domestic CNY basedcommon shares (A-shares) and CNY based special shares (B-shares). In accordance with the ApprovalDocument of Shenzhen Municipal Securities Regulatory Office SHEN ZHENG BAN FU [1993] No. 20 andthe Approval Document of Shenzhen Stock Exchange SHEN ZHENG SHI ZI (1993) No. 16, theCompany’s A-shares and B-shares were all listed with Shenzhen Stock Exchange for tradingcommencing from June 3, 1993.
On January 30, 1997, with approval by Shenzhen Municipal Administration for Industry and Commerce,the Company was renamed as Shenzhen FIYTA Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between China National Aero-TechnologyCorporation Shenzhen (CATIC Shenzhen Corporation) and CATIC Shenzhen Holdings Limited ( withoriginal name of Shenzhen CATIC Group Co., Ltd. (hereinafter referred to as CATIC Shenzhen)), CATICShenzhen Corporation assigned 72.36 million corporate shares (taking 52.24% of the Company’s totalshares) to CATIC Shenzhen. From then on, the Company’s controlling shareholder turned to be CATICShenzhen from CATIC Shenzhen Corporation.
On October 26, 2007, the Company implemented the equity separation reform, according to which the
shareholder of the Company’s non-negotiable shares would pay shares to the whole shareholders ofnegotiable shares registered on the equity record day as designated in the equity separation reform planat the rate of 3.1 shares for every 10 shares held by them while the Company’s total 249,317,999 sharesremained unchanged. So far, after the equity separation reform, the proportion of the Company’s sharesheld 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 byShenzhen Municipal Administration for Industry and Commerce, the Company’s enterprise corporatebusiness licence number was changed from 4403011001583 into 440301103196089.
In 2010, approved by China Securities Regulatory Commission (CSRC) with the Official Reply onApproval of Non-public Issuing of Shenzhen FIYTA Holdings Ltd., ZHENG JIAN XU KE [2010] No. 1703and the Official Reply on the Issue of Non-Public Issuing of Shenzhen FIYTA Holdings Ltd. byState-owned Assets Supervision and Administration Commission of the State Council [2010] No. 430, theCompany was approved to non-publically issue no more than 50 million common shares (A-shares). Aftercompletion of non-public issuing on December 9, 2010, the Company’s registered capital increased toCNY 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, theCompany was renamed as FIYTA Holdings Ltd. On April 8, 2011, the Company took the total share capitalof 280,548,479 shares as at December 31, 2010 as the base, converted its capital reserve into sharecapital at the rate of 4 shares for every 10 shares. After the conversion, the Company’s total share capitalbecame 392,767,870 shares.
On November 11, 2015, approved by China Securities Regulatory Commission (CSRC) with the OfficialReply on Approval of Non-public Issuing of FIYTA Holdings Ltd., ZHENG JIAN XU KE [2015] No. 2588and the Official Reply on the Issue of Non-Public Issuing of FIYTA Holdings Ltd. by State-owned AssetsSupervision and Administration Commission of the State Council [2015] No. 415, the Company wasapproved to non-publically issue no more than 46,911,649 common shares (A-shares). After completionof non-public issuing on December 22, 2015, the Company’s registered capital increased to CNY438,744,881.00 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 ofthe State Council with the “Official Reply on FIYTA Holdings Ltd. to Implement the Restricted stockIncentive Program”, GUO ZI KAO FEN [2018] No. 936, the Company awarded A-share restricted stock byless than 4.277 million shares. After completion of implementation of the A-share Restricted stockIncentive Program (Phase I) by January 30, 2019, the Company’s registered capital increased to CNY442,968,881 and AVIC IHL holds 36.79% of the Company’s equity based capital.
According to the “Proposal on the Intentional Change of the Company Name and the Short Term ofA-share Securities reviewed and approved at 2019 3rd Extraordinary General Meeting of the Companyand approved by the Administration for Industry and Commerce of Shenzhen Municipality, commencingfrom January 9, 2020, the Company changed its name from FIYTA Holdings Limited to FIYTA PrecisionTechnology Co., Ltd."
On April 30, 2020, the Company wrote off 14,730,000 B-shares repurchased by the Company, and onJune 9, 2020, the number of A-share restricted stock to the original three retired incentive objects whichwere written-off after being repurchased was 67,000 in total. After the write-off, the total capital stock ofthe Company decreased from 428,238,881 shares to 428,171,881 shares. The equity capital of theCompany 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, theSupervisory Committee, the Audit Committee, the Strategy Committee and the Nomination,Remuneration and Assessment Committee as the governance organs, etc. The Company has alsoestablished a number of functional departments, including the comprehensive management department,the Party construction work department, department of discipline inspection, audit and law, the financialdepartment, the human resource department, the strategy operation department, the data & informationdepartment, the innovation & design department, the R & D department, the property operationdepartment, etc.
The principal business activities of the Company and its subsidiaries are: production and sales of variouspointer type mechanical watches, quartz watches and their driving units, spares and parts, varioustiming apparatus, processing and wholesale of K gold watches and ornament watches; domestic trade,materials supply and sales (excluding the commodities for exclusive operation, exclusive control andmonopoly); 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). TheCompany's legal representative is Huang Yongfeng.
The financial statements was approved and issued through the resolution of the Board of Directors datedJuly 28, 2020.
There were 11 subsidiaries consolidated during the reporting period. For the detail, refer to Note IX."Equity in Other Entities". The consolidation scope of the reporting year is the same as that of theprevious year. For the detail, refer to Note 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 Enterprisespromulgated by the Ministry of Finance and its application guidelines, interpretations and other relevantprovisions (collectively referred to as the "Accounting Standards for Enterprises"). In addition, the Groupdisclosed the relevant financial information according to the Preparation Rules for Information Disclosureby Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports (2014Revision) 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 shallprovide for impairment in accordance 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 incomerecognition policies according to its own production and operation characteristics. For the specificaccounting policies, refer to Notes V.24, V.30 and V. 39.
1. Statement on complying with the accounting standards for business enterprise
The financial statements prepared by the Company in accordance with the requirements of accountingstandards for enterprises 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 Gregoriancalendar.
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 bookkeeping. Except Switzerland based Montres Chouriet SA (hereinafter referred to as the "SwissCompany"), an overseas subsidiary of FIYTA Hong Kong Co., Ltd. (hereinafter referred to as "FIYTA HK"),has determined Swiss Franc as its recording currency for accounting in accordance with the currenciesavailable in its major economic environment where it is operated. The other overseas subsidiaries,including FIYTA HK, Station-68 Limited (hereinafter referred to as “Station-68”), another subsidiary ofFIYTA HK, have determined Hong Kong currency as their recording currency for accounting inaccordance with the currencies available in their major economic environment where they are operated.Hong Kong currency will be converted into Renminbi while in preparing its financial statements. Thecurrency the Grouptakes in preparation of these financial 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 partyobtained by the merging party in process of consolidation are measured according to the book value ofthe merged party in the consolidated financial statements of the eventual controlling party on the date ofmerger, except for adjustment due to different accounting policies. The difference between the book valueof the net assets which the merging party obtains and the book value of the consideration which it pays(or the total par value of the shares issued) shall adjust the capital reserve (capital stock premium). If thecapital reserve (capital stock premium) is not sufficient to be offset, the retained earnings shall beadjusted.
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 partyenjoyable in the eventual controller's consolidated financial statements as at the consolidation day istaken as the initial investment cost of the long term equity investment; the difference between the initialinvestment cost of the long term equity investment and the sum of the book value of the long term equityinvestment before the consolidation plus the book value of the consideration newly paid for furtheracquiring 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 mergingparty obtains in a business combination shall be measured on the basis of their book value in theconsolidated financial statements of the eventual controller on the date of combination except theadjustment carried out due to different accounting policies; difference between the sum of the book valueof the investment held before the consolidation plus the book value of the consideration newly paid on theconsolidation day is used to adjust the capital reserve (capital stock premium); if the capital reserve is notsufficient to be offset, the retained earnings should be adjusted. For the long term equity investment heldbefore the merging party has acquired the control power over the merged party, the concerned profit andloss are recognized commencing from the latter of the day when the original equity is acquired and theday when the merging party and the merged party are under the eventual joint control to the date ofcombination; the movement of other comprehensive income and other owner’s equity respectively writedown the retained earning or current profit and loss at the beginning of the period during the comparativestatements.
(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 theassets, liabilities incurred or assumed and equity securities issued on the date of the acquisition for thepurpose of acquiring the control over the acquired party. On the date of acquisition, the assets, liabilitiesand contingent liabilities of the acquired party are recognized based on the fair value.
The difference between the combination cost and the fair value share of the identifiable net assets of theacquired party obtained in the merger is recognized as goodwill, and subsequent measurement is madeaccording to the accumulated impairment provision deducted from the cost; the difference between the
combination cost and the fair value share of the identifiable net assets of the acquired party obtained inthe combination is recorded in the current profit and loss after review.
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 acquiredparty before the acquisition date and the new investment cost on the purchase date shall be taken as theinitial investment cost of the investment. For the equity investment held before the date of acquisition,other comprehensive income recognized by means of the equity method does not undergo accountingtreatment by using the this part of other comprehensive income on the date of acquisition; in disposal ofthe investment, the accounting treatment is carried out on the same basis used by the invested entity indirect disposal of the relevant assets or liabilities; the owner's equity recognized as a result of changes inowner'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 equityinvestment held before the acquisition date is measured at fair value, the accumulated fair value changeoriginally included in other comprehensive income is transferred to the current profit and loss when it iscalculated according to the cost method.
In the consolidated financial statement, the combined cost is the sum of the consideration paid on theacquisition date and the fair value of the equity held by the acquired party prior to the acquisition date.The equity held by the acquired party before the acquisition date is re-measured according to the fairvalue of the equity on the acquisition date, and the difference between the fair value and the book value isrecorded in the current income; the equity held by the acquired party before the acquisition date involvesother comprehensive income, and changes in other owners' equity converted into current income on theacquisition date, except for other comprehensive income generated by changes in net liabilities or netassets of the investee due to re-measurement of the defined income plan.
(3) Disposal of the relevant transaction expenses in business combinationIntermediary fees in connection with audit, law service, appraisal and consulting, etc. incurred to thebusiness combination and other relevant administrative fees are counted to the current profit and loss atthe time of incurrence. The transaction costs of equity securities or debt securities issued as mergerconsideration are included in the initial confirmation amount of 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 to that the Company has he power over the investee, enjoys variable return by participatingin the relevant activities of the investee and is able to impact the amount of return by using the power tothe investee. A subsidiary refers to the entity under 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, and prepared by the Company according to other relevant information. In preparing theconsolidated financial statements, the accounting policies and accounting period of the Company and itssubsidiaries are required to maintain consistent, and the significant inter-company transactions andbalances are written off.
The newly increased subsidiary as well as business as a result of a business combination under jointcontrol during the reporting period, it is deemed that the subsidiaries and business are incorporated intothe consolidation scope of the Company from the controlling date by the ultimate controlling party, and theoperating results and cash flows from the date are included in the consolidated income statement andcash flow statement.
The newly increased subsidiary as well as business as a result of a business combination not under jointcontrol, the subsidiaries and business from the acquisition date and the income, expenses and profit as atthe end of reporting period are included in the consolidated income statement, and the cash flow isincluded in the consolidated statement of cash flows.
The part in the shareholders’ equity of the subsidiaries that did not belong to the Company shall beseparately presented as minority interest under the shareholders’ equity in the consolidated balancesheet. The share attributable to minority interests of the subsidiaries in current profit and loss, shall bepresented as “minority interests” under the net profit in the consolidated income statement. When the lossof the subsidiaries shared by minority shareholders exceeded the shares enjoyed by the minorityshareholders in the owners’ equity of the subsidiaries in the beginning period, the balance shall offset theminority 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 ofa portion of an interest in a subsidiary without a change in control, the transaction is treated as equitytransaction, and the book value of shareholder’s equity attributed to the Bank and to the minority interestis adjusted to reflect the change in the Bank’s interest in the subsidiaries. The difference between theproportion interests of the subsidiary’s net assets being acquired or disposed and the amount of theconsideration paid or received is adjusted to the capital reserve in the consolidated balance sheet, withany 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 otherreasons, the remaining part of the equity investment is re-measured at fair value at the date when losingcontrol over the subsidiary. A gain or loss is recognized in profit or loss for the current period and iscalculated by the aggregate of the consideration received in disposal and the fair value of remaining partof the equity investment deducting the share of carrying value of net assets in proportion to previousshareholding 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 currentperiod when the control is lost, except for the comprehensive income arising from the movement of netliabilities or assets in the former subsidiary’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. Thejoint venture of the 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 thearrangement and assumes the liabilities related to the arrangement.
The Group recognizes the following items related to the interests of the joint operation, and theaccounting treatment is in accordance 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 theshares;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 withthe shares.
(2) Joint Venture
Joint venture refers to the joint venture arrangements that the Group only has the rights of arranged netassets.
The accounting treatment of the joint venture investment in the Group was in accordance with long-termequity investment on 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 anytime. The Company takes short-term, highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an 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 betranslated into amount 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 functionalcurrency using the spot exchange rate at the balance sheet date. Exchange differences arising from thespot exchange rates at the balance sheet date being different from those at which the monetary itemswere translated on initial recognition during the period or those of previous balance sheet dates should berecognized in current period profit and loss. Non-monetary items that are measured at historical cost arestill using the spot exchange rate at the transaction date. Non-monetary items that are measured 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 aretranslated, the spot exchange rate on the balance sheet date shall be used for the translation of theassets and liabilities items, and the spot exchange rate on the date of incurrence shall be used for thetranslation of the shareholders' equity items except the "retained earnings".
The items of incomes and expenses in the profit statement are translated at the current averageexchange rate on the transaction occurring date.
All the items in the cash flow statement are translated based on the spot rate of the day of incurrence ofthe cash flow. The amount of influence of exchange rate changes on cash is taken as the adjustment item,and the item of "influence of exchange rate changes on cash and cash equivalents" is separately listed inthe cash flow statement.
The difference resulting from the translation of the financial statements is reflected under the "Othercomprehensive income" 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 currencystatements as listed under the item of stockholder's equity in balance sheet and related to overseasoperation is transferred fully or at the ratio of disposing the overseas operation into the current profits andlosses from disposal.
10. Financial instruments
Financial instruments refer to any contract that gives rise to a financial asset of the Bank and a financialliability or equity instrument 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 financialinstrument 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 thederecognition of financial assets prescribed by transfer of financial assets as stated below.
The Company should derecognize a financial liability or part of a financial liability when the presentobligation associated with the financial liability ceases or partly ceases. The Group (debtor) enters into anagreement with a creditor so as to substitute the existing financial liabilities by way of any new financialliability, and if the contractual stipulations regarding the new financial liability is substantially different from
that regarding the existing financial liability, it shall terminate the recognition of the existing financialliability, and shall at the same time recognize the new financial liability.
The financial assets purchased or sold in any conventional manner are made accounting confirmationand termination of confirmation 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 accordingto the business model of financial assets management and the contractual cash flow characteristics offinancial assets: financial assets measured at amortized cost, financial assets measured at fair value andwhose movements are included in other comprehensive income, and financial assets measured at fairvalue and whose movements are included in current profit and 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 atfair value and its movements recorded in the current profit and loss, classified as a financial assetmeasured at the amortized cost:
The business model of the Group to manage the financial assets is to collect the contract cash flow as thetarget;
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, the effective interest rate method is adopted to measure the financial assetsby amortized cost. Profit or loss of financial assets measured at the amortized cost but not belonging topart of any hedge relationship is recorded in the current profit and loss upon termination of recognition,amortization or recognition of the impairment in accordance 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 asfair value-measured financial assets and whose movement is recorded in the current profit and loss asthe financial assets that are measured at fair value and whose movement is recorded in othercomprehensive income:
The Group’s business model for managing the financial asset is aimed at both collecting contractual cashflow and selling the financial asset according to the contractual terms of the financial asset，the cash flowcreated on the specific date is exclusively for payment of the principal and the interest based on theoutstanding amount of the principal.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value.Interest, loss from impairment loss or profit calculated by the effective interest rate method and exchange
profit and loss are recorded in the current profit and loss, while other profit and loss are recorded in othercomprehensive 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 inthe 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 withmovement included in other comprehensive income, the Group classifies all other financial assets asfinancial assets at fair value with movement included in current profits and losses. At the time of initialrecognition, in order to eliminate or significantly reduce accounting mismatches, the Group irrevocablydesignates some financial assets that should be measured at amortized cost or at fair value and whosemovement is included in other comprehensive income as being measured at fair value and its movementincluded in the financial assets of the current profit and loss.
After initial recognition, such financial assets are subsequently measured at fair value, and the resultingprofit or loss (including interest and dividend income) are included in the current profit and loss, unless thefinancial assets are part of the hedging relationship.
However, for non-trading equity instrument investments, the Group irrevocably designates them asfinancial assets measured at fair value and whose movement is included in other comprehensive incomeat the time of initial recognition. The designation is made on the basis of a single investment, and therelated investment meets the definition of an equity instrument from the issuer's perspective.
After the initial recognition, subsequent measurement of such financial assets is carried out at fair value.Dividend income meeting the conditions is included in profit and loss, and other profit or loss and themovement of the fair value are included in other comprehensive income. When the recognition isterminated, the accumulated profit or loss included in other comprehensive income before is transferredout from other comprehensive income and included in the retained earnings.
The business model of managing financial assets refers to how the Group manages financial assets togenerate cash flow. The business model determines whether the source of the cash flow of the financialassets managed by the Group is to collect contractual cash flows, sell financial assets or a combination ofboth. The Group determines the business model for managing financial assets based on objective factsand the specific business objectives of managing financial assets determined by key managementpersonnel.
The Group evaluates the contractual cash flow characteristics of financial assets to determine whetherthe contractual cash flow generated by the relevant financial assets on a specific date is only the paymentof principal and interest based on the outstanding principal amount. Where the principal refers to the fairvalue of financial assets at the time of initial recognition; interest includes consideration for the time valueof money, credit risks related to the outstanding principal amount in a specific period, and other basicborrowing risks, costs and profits. In addition, the Group evaluates contract terms that may lead tochanges 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 financialassets will be reclassified on the first day of the first reporting period after the business model is changed;otherwise the financial assets shall not be reclassified after initial recognition.
Financial assets are measured at fair value at the tune of initial recognition. For the financial assetsmeasured at fair value with the movement counted to the current profit and loss, the relevant transactionexpenses are directly included in the current profit and loss; the relevant transaction expenses for othercategories of financial assets are counted to the amount of the initial recognition. For accounts receivablearising from the sale of products or the provision of labor services that do not contain or considersignificant financing components, the amount of consideration that the Group is expected to be entitled toreceive 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 theamortized cost and that measured at fair value with the movement counted to the current profit and loss.For the financial assets which have not been classified as those measured at fair value with themovement counted to the current profit and loss, the relevant transaction expenses are directly counted tothe 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 lossinclude transactional financial liabilities and the financial liabilities measured at fair value with themovement counted to the current profit and loss directly designated at the initial recognition. For suchfinancial liabilities with the follow-up measurement carried out at fair value, the profit or loss formed due tothe movement of the fair value and dividends and interest expenses related to these financial liabilitiesincluded 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 oramortization are included in 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 orfinancial liabilities with other parties.
③ A non-derivative contract that must use or may use the Company’s own equity instruments forsettlement in the future, and the Company shall deliver a variable amount of its own equity instrumentaccording to the contract.
④ A derivative instrument contract that must use or may use the Company’s own equity instruments for
settlement in the future, except for derivative instrument contract that exchanges a fixed amount of cashor other financial assets for a fixed amount of its own equity instruments.
Equity instrument refers to the contract that can certify possession of the residual equity of the Companyin the assets after deducting all liabilities.
If the Group cannot unconditionally avoid the delivery of cash or other financial assets to perform acontractual 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 isnecessary to consider whether the Group’s own equity instruments are used as a substitute for cash orother financial assets to settle the instrument, or to enable the holder of the instrument to enjoy theresidual equity in the issuer's assets after deducting all the liabilities. If it is the former, the instrument is afinancial liability of the Group; if it is the latter, the instrument is an equity 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 fortransferring a liability 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 ofselling assets or transferring liabilities takes place in the main market of related assets or liabilities; if thereis no main market, the Group assumes that the transaction is most beneficial to the market of the relatedassets or liabilities. The main market (or the most favorable market) is the trading market that the Groupcan enter on the measurement date. The Group adopts the assumptions used by market participants tomaximize 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 activemarket to determine their fair value. If there exists no active market for a financial instrument, the Groupuses valuation techniques to determine its fair value.
When non-financial assets are measured at fair value, the ability of market participants to use the assetfor the best use to generate economic benefits, or the ability to sell the asset to other market participantswho can be used for the best use to generate economic benefits is taken into consideration.
The Group adopts valuation techniques that are applicable under the current circumstances and havesufficient available data and other information to support, take priority to use the relevant observable inputvalues; use unobservable input values only if the observable input values are not available or notpracticable.
For assets and liabilities that are measured or disclosed at fair value in financial statements, the fair valuelevel to which they belong is determined based on the lowest level of input value that is important for fairvalue measurement as a whole: the input value of the first level is the unadjusted quotation of the sameasset or liability in the active market that can be obtained on the measurement date; the second-levelinput value is the directly or indirectly observable input value of related assets or liabilities other than the
first-level input value; the input value of the third level is the unobservable input value of the related assetsor liabilities.
On each balance sheet date, the Group re-evaluates the assets and liabilities recognized in the financialstatements that are continuously measured at fair value to determine whether there is a conversionbetween the fair value measurement levels.
(5) Impairment of financial assets
Based on expected credit losses, the Group performs impairment accounting treatments on the followingitems and recognizes 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 othercomprehensive income;
Measurement of the predicted credit lossExpected credit loss refers to the weighted average of the credit loss of financial instruments weightedbased on the risk of default. Credit loss refers to the difference between all contractual cash flowsreceivable under the contract and all cash flows expected to be received by the Group discounted at theoriginal effective interest rate, that is, the present value of all cash shortages.
The Group measures the expected credit losses of financial instruments at different stages. If the creditrisk has not increased significantly since the initial recognition, the financial instrument is at the first stage,and the Group measures the provision for the loss according to the expected credit loss within the next 12months; if the credit risk has increased significantly since the initial confirmation but impairment of thecredit has not yet occurred, the financial instrument is at the second stage, the Group measures theprovision for the loss according to the expected credit loss of the financial instrument for the entireduration; if impairment of the credit has taken place after the initial recognition, the financial instrument isat the third stage, and the Group measures the provision for the loss according to the expected credit lossof the financial instrument for the entire duration.
For financial instruments with lower credit risk on the balance sheet date, the Group assumes that itscredit risk has not increased significantly since the initial recognition, and measures the provision for theloss according to the expected credit loss within the future 12 months.
The expected credit loss for the entire duration refers to the expected credit loss caused by all possibledefault events that may occur during the entire expected lifetime of a financial instrument. Expected creditloss in the next 12 months refers to the expected credit loss caused by the event of a financial instrumentdefault that may occur within 12 months after the balance sheet date (if the expected duration of thefinancial instrument is less than 12 months, then the expected duration). It is part of the expected creditloss in the entire duration.
When measuring expected credit losses, the longest period that the Group needs to consider is the
longest contract period for which the Group faces credit risk (including the consideration of the option ofrenewal).
For the financial instrument at the first stage or the second stage or with lower credit risk, the Groupcalculates the interest income according to the book balance without deduction of the provision forimpairment and the effective interest rate. For the financial instrument at the third stage, the Groupcalculates the interest income according to the book balance less the amortized cost after provision forthe impairment and effective interest rate
Regarding notes and accounts receivable, regardless of whether there is a significant financingcomponent, the Group always measures its provision for loss at an amount equivalent to expected creditlosses during the entire duration.
The Group divides the portfolio of notes receivable and accounts receivable based on credit riskcharacteristics, and calculates the expected credit losses on the basis of the portfolio. The basis fordetermining 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 creditloss experience with combination of the current conditions and forecasts of future economic conditions,and compiles a comparison table of accounts receivable aging and the entire duration of expected creditloss rate, and calculate the expected credit loss.
Other receivablesThe Group divides the portfolio of other receivables based on credit risk characteristics, and calculatesthe expected credit losses on the basis of the portfolio. The basis for determining the portfolio is asfollows:
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 thedefault risk exposure 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 expectedcredit loss with reference to the nature of the investment according to various types of counterparties andrisk exposures, through the default risk exposure and the expected credit loss rate within the next 12months 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 ofdefault on the initial recognition day to determine the relative change in the default risk of the financialinstrument during the expected life of the financial instrument to assess whether the credit risk of thefinancial instrument has increased significantly since the initial recognition.
When determining whether the credit risk has increased significantly since the initial recognition, theGroup considers reasonable and evidence-based information that can be obtained without unnecessaryadditional costs or efforts, including forward-looking information. The information the Group concernsincludes:
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 hasoccurred or is expected;
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 asignificant adverse impact on the debtor's ability to repay the Group.
According to the nature of financial instruments, the Group assesses whether the credit risk hasincreased significantly on the basis of individual financial instruments or a combination of financialinstruments. When evaluating financial instruments based on a portfolio of financial instruments, theGroup may classify financial instruments based on common credit risk characteristics, such as overdueinformation 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 anddebt investments measured at fair value with the movement included in other comprehensive incomehave experienced credit impairment. When one or more events that have an adverse effect on theexpected future cash flow of a financial asset occur, the financial asset becomes a financial asset withcredit impairment. Evidence of credit impairment of financial assets includes the following observableinformation:
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 oroverdue, etc.;
Due to economic or contractual considerations related to the debtor’s financial difficulty, the Group givesthe debtor concession 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 financialasset.
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, theGroup re-measures expected credit losses on each balance sheet date, and the resulting increase in lossprovision or the amount of reversal shall be counted as impairment loss or profit in the current profit andloss. For financial assets measured at amortized cost, the reserve for loss is deducted from the bookvalue of the financial asset listed in the balance sheet; for creditor’s right investments which is measuredat fair value and whose movement is included in other comprehensive income, the Group recognizes theprovision 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 berecovered in full or in part, it will directly write down the book value of the financial asset. Termination ofrecognition of the relevant financial assets formed from such writing-down This situation usually occurswhen the Group determines that the debtor has no assets or sources of income that can generatesufficient cash flow to repay the amount to be written down. However, in accordance with the Group'sprocedures for recovering due payments, the financial assets that have been written down may still beaffected by execution activities.
If the written-down financial assets are later recovered, they shall be included in the current profit and lossas the reversal of the impairment loss.
(6) Transfer of financial assets
Transfer of financial assets refers to when the Group(the transferor) transfers or delivers a financial assetto a party (the transferee) other than the issuer of the financial asset.
The Group derecognizes a financial asset when it transfers substantially all the risks and rewards ofownership of the asset to the transferee, and the Group does not derecognize a financial asset when itretains substantially all the risks and rewards of ownership of the asset.
If the Group has neither transferred nor kept substantially all of risks and remunerations on the ownershipof the financial asset, treatment is made respectively based on the following conditions: in case controlover the financial asset has been given up, recognition of that financial asset as well and the assets andliabilities generated are terminated; in case control over the financial asset has not been given up,relevant financial assets are recognized based on the extent continually involved with the transferredfinancial 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 liabilitiesand can currently these legal rights now, and if the Group has the plan to settle with net amount orsynchronously realize these financial assets and discharge these financial liabilities, the financial assetsand financial liabilities are listed in the balance sheet with the amount after mutual set-off. Except that,financial assets and financial liabilities are listed respectively in the balance sheet and are not set offmutually.
(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 cashflows due to movement in foreign exchange rates. Exchange rate risk may be derived from financialinstruments denominated in foreign currencies other than the functional currency. The Company'soverseas subsidiaries are mainly settled in Hong Kong dollars and Swiss francs. The Company'smonetary assets and liabilities denominated in foreign currencies are all affected by the risk of foreigncurrency exchange rate fluctuations.
11. Notes receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. FinancialInstruments.
12. Accounts receivable
For the detail, refer to Note V. Important Accounting Policies and Accounting Estimates and 10. FinancialInstruments.
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. FinancialInstruments.
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 priced respectively according to the weighted average (with brand world watch stocks exclusive),specific identification (for famous brand watch stocks) at the time of delivery.
(3) Basis for determining net realizable value of inventories and method for providing reserve for pricefalling of inventoriesThe net realizable value of the inventories refers to the amount of the estimated sales price of theinventory less the estimated sales costs to incur at the time of completion, estimated sales expenses andrelevant taxes. In determining the net realizable value of inventory, with the obtained valid evidence as thebase, the purpose of holding the inventory and the influence from the events after the balance sheet dateis 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 forfalling prices of inventories is made. The Group makes provision for inventory depreciation forself-produced FIYTA watch inventory according to model classification, and makes provision for inventorydepreciation for brand watches sold in accordance with individual inventory items. On the balance sheetdate, if the factors affecting the previous write-down of the inventory value have disappeared, theprovision 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 therelationship between performance obligations and customer payments. The Company is entitled toreceive consideration for the transfer of goods or services to customers (while such right depends onother factors other than the passage of time) listed as contract assets. Contract assets and liabilitiesunder the same contract are presented in net. The Company's right to unconditionally (only depending onthe passage of time) collect consideration from the customers are separately stated as accountsreceivable.
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, please refer to the accounting treatment of accounts receivable under the new financialinstrument standards in Note V. 10 Testing Methods of Financial Asset Impairment and AccountingTreatment Method.
17. Contract cost
The contract costs include the incremental cost incurred in obtaining the contract and the cost forperformance of the contract.
The incremental cost incurred in obtaining the contract refers to the cost which will not incur as long as theGroup does not obtain the contract (such as sales commission, etc.) If the cost is expected to berecoverable, the Group recognizes it as a contract acquisition cost as an asset. The Group's expensesincurred in obtaining the contract other than the incremental cost expected to be recovered are includedin the current profit and loss when incurred.
If the cost incurred in implementing the contract does not fall within the scope of other accountingstandards and regulations such as inventory and meets the following conditions at the same time, theGroup shall recognize it as an asset as the contract performance cost:
① The cost is directly related to a current or expected contract, including direct labor, direct materials,manufacturing expenses (or similar expenses), clearly borne by the customer, and other costs incurredsolely 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(hereinafter referred to as "assets related to contract costs") are amortized on the same basis as therevenue recognition of goods or services related to the asset and included in the current profit and loss. (Ifthe amortization period does not exceed one year, it shall be included in the current profit and loss when itincurs.)
When the book value of the asset related to the contract cost is higher than the difference between thefollowing two items, the Group makes provision for impairment of the excess part and recognizes it as anasset impairment loss:
①The residual consideration that the Group expects to obtain due to the transfer of the goods or servicesrelated to the asset;
② The costs that shall incur for transferring the related goods or services as estimated. The contractperformance cost recognized as an asset is presented in the item of “inventories” with the amortizationperiod not exceeding one year or one normal business cycle at the initial recognition, while it is presentedin the item of "other non-current assets" with the amortization 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” withthe amortization period not exceeding one year or one normal business cycle at the initial recognition,while it is presented in the item of "other non-current assets" with the amortization period not exceedingone year or one normal operation cycle at 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 the Group 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 investmentacquired through a business combination involving enterprises under joint control, the initial investmentcost of the long-term equity investment is the absorbing party’s share of the book value of the owners’equity of the party being absorbed at the date of combination; for a long-term equity investment acquiredthrough a business combination involving enterprises not under joint control, the initial investment cost ofthe 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 equity acquired by cash paid, the initial investment cost is the actual payment; long-term equityacquired by the issuing of equity securities, the initial investment cost is the fair value of the equitysecurities.
(2) Subsequent Measurement of Long-term Equity Investment
Where the Bank can exercise joint control over the investee, a long-term equity investment is accountedfor using the cost method and a long-term equity investment is accounted for using the equity method forassociated enterprises and joint ventures.
For long-term equity investments accounted for in the cost method, except for payments made actuallyfrom the investments or cash dividends or profits contained in the consideration which have beendeclared but not yet paid, the cash dividends or profits which have been declared distribution by investeesare recognized and recorded in the current profit and loss as investment gains.
For long term equity investment calculated by the equity method, if the initial cost of a long-term equityinvestment is greater than the investor’s attributable share of the fair values of the net identifiable assetsof the investee enterprise at the acquisition date, no adjustment is made to the initial investment cost. Ifthe initial cost of a long-term equity investment is less than the investor’s attributable share of the fairvalue of the net identifiable assets of the investee enterprise at the acquisition date, the difference ischarged to profit or loss for the current period, and the cost of the long-term equity investment is adjustedaccordingly.
When the equity method is used for calculation, the net gains and losses realized by the investee and theshare of the other comprehensive income enjoyable or sharable shall be respectively used to recognizethe return on investment and other comprehensive income and at the same time the book value of thelong term equity investment is adjusted; according to the profit announced for distribution by the investeeor the part of the cash dividend enjoyable upon calculation, the book value of the long term equityinvestment is reduced correspondingly. For other change in the net profit and loss, other comprehensiveincome and owner's equity other than the profit distribution, the book value of the long term equityinvestment 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 thedistinguishable net assets of the investee at the time of investment as the base and recognizes it after thenet profit of the investee has been recognized after adjustment.
If due to additional investment or other reasons, it is possible to exert significant influence on the investeeor implement joint control but does not constitute control, on the conversion date, the total of the fair valueof the original equity plus the new investment cost shall be used as the initial investment cost calculatedaccording to the equity method. The difference between the fair value and the book value of the originalequity on the conversion date, and the accumulated fair value changes originally included in othercomprehensive income are transferred to the current profit and loss accounted for by the equity method.
If the joint control over or significant influence on the investee is lost due to the disposal of part of theequity investment, the remaining equity after the disposal shall undergo the accounting treatmentaccording to the "Accounting Standards for Enterprises No. 22-Recognition and Measurement ofFinancial Instruments instead on the day when joint control or significant influence is lost. The differencebetween the fair value and the book value is counted in the current profit and loss. The othercomprehensive income from the original equity investment calculated and recognized by means of theequity method undergoes accounting treatment by using the same base as the investee directly disposesthe relevant assets or liabilities when the calculation based on the equity method is terminated; themovement of the other owner's equity in connection with the original equity investment is transferred intothe 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 residual equity after disposal may implement joint control or exert significant influence on the investee,the equity method may be used for accounting instead, and the remaining equity shall be regarded asself-acquisition, and the equity method shall be adopted for accounting adjustment; if the residual equityafter disposal can no longer jointly control or exert significant influence on the investee, the accountingtreatment shall be carried out in accordance with the relevant provisions of the Accounting Standards forEnterprises No. 22 - Recognition and Measurement of Financial Instruments, and the difference betweenthe fair value and the book value on the day when the control is lost shall be recorded in the current profitand loss.
If the Company’s shareholding proportion decreases due to the increase of capital by other investors sothat its control power has lost but can still exercise joint control over or exert significant influence on theinvested entity, the new shareholding proportion shall be used to confirm the Company’s share of theinvested entity due to capital increase and the increase in the share of net assets due to share expansionand the difference between the original book value of the long-term equity investment corresponding tothe decline in the shareholding proportion which should be carried forward is included in the current profitand loss; and subsequently according to the new shareholding proportion, it is deemed to be adjustedusing the equity method when the investment is obtained
The unrealized internal transaction profit and loss between the Group and associates and joint venturesare calculated based on the shareholding proportion attributable to the Group, and the investment profitand loss are recognized on the basis of offsetting. However, the loss from the unrealized internaltransaction between the Group and an investee shall not be offset if the loss belongs to impairment of theassets 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 agreementand the relevant activities for the arrangement must be jointly decided by all the parties sharing the controlpower. In judging whether there exists joint control, firstly determine whether all the participants or acombination of participants collectively control the arrangement, and secondly determine whether thedecision-making on the related activities of the arrangement must be unanimously agreed by theparticipants collectively controlling the arrangement. If all the participants or a group of participants mustact in concert to determine the relevant activities of an arrangement, then all the participants or the groupof the participants are considered as collectively in control of the arrangement; If there exists a portfolio oftwo or more participants that can collectively control an arrangement, it does not constitute joint control.When judging whether there exists joint control, the protective right enjoyed shall not be taken intoconsideration.
Significant influence refers to the investor's power of participation in making an investee's financial andoperation policies but the investor cannot control or jointly control with other parties to make such policies.When determining whether significant influence may be exerted on the investee, it is necessary toconsider the influence from that the voting shares of the investee directly or indirectly held by the investorand the currently executable potential voting rights held by the investor and other parties are assumed tobe convered into equity of the investee,including the influence of current convertible 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%) butless than 50% of the voting shares of the investee, it is generally considered to have a significantinfluence on the investee, unless there is clear evidence that this condition is not allowed to participate inthe production and operation decision-making of the invested entity, which means no significant influencehas formed; when the Group owns less than 20% (with 20% exclusive) of the voting shares of theinvestee, it is generally not considered to have a significant influence on the investee unless there is clearevidence 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 forImpairment of Assets
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 fixedassets, see Note V.24.
24. Fixed asset
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for product production, supply of services, lease oroperation and administration with useful life more than one fiscal year. A fixed asset shall be recognizedonly when it is probable that economic benefits associated with the asset will flow into the enterprise andthe cost of the asset can be measured reliably. The Group's fixed assets are initially measured at theactual 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 forthe construction, including all necessary construction expenditures incurred during the construction period,borrowing costs that shall be capitalized before the construction reaches the condition for intended useand 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 orproduction of assets that meet the capitalization conditions, they shall be capitalized and included in thecost of the relevant assets; other borrowing costs are recognized as the expenses based on the amountincurred at the time of occurrence, and counted to the current profit and loss. If the borrowing costs meetthe following conditions at the same time, they shall be capitalized:
① The asset disbursements have already incurred, which shall include the cash, transferred non-cashassets or interest bearing debts paid for the acquisition and construction or production activities forpreparing assets eligible for capitalization;
② The borrowing costs have already incurred; and
③ The acquisition and construction or production activities which are necessary to prepare the asset forits intended use or 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 orsale, the capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after thequalified asset under acquisition and construction or production is ready for the intended use or sale shallbe recognized as expenses at the incurred amount when they are incurred, and shall be recorded into thecurrent profits and losses.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and theinterruption period lasts for more than 3 months, the capitalization of the borrowing costs shall besuspended.
(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 fromborrowings at bank or investment income from temporary investments is capitalized; capitalization
amount is determined as accumulative asset expenditure of general borrowings over weighted averageasset expenditure of special borrowings multiples capitalization rate of general borrowings. Capitalizationrate is determined as calculating weighted average interest rate of general borrowings.
In the capitalization period, exchange differences of special borrowings in foreign currency is totallycapitalized; exchange differences of general borrowings in foreign currency is recognized in profit or lossfor 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 anddefined at the time of acquisition of the asset. An intangible asset with a finite useful life should beamortized over its estimated useful life using an amortization method that can reflect the expectedconsumption pattern of the economic benefits associated with the asset, commencing from the time whenthe intangible asset is available for use. When the expected consumption pattern cannot be determinedreliably the asset should be amortized based on a straight-line method. An intangible asset with anindefinite 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 intangibleassets with limited service life. If the former estimate is different, the previous estimate shall be adjustedand treated as the change of the accounting estimate.
If an intangible asset is no longer expected to bring future economic benefits to the enterprise on thebalance sheet date, the book value of the intangible asset shall be transferred into the current profit andloss.
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 expendituresand development 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 intangible asset so that it is technically feasible to use or sale; has the intent to completethe intangible asset and use or sell it; the way of the intangibles to generate economic benefits, includingbeing able to prove that the products that produced with the use of the intangibles have market or theintangible asset itself has market, the intangible assets will be used internally, and can prove itsusefulness; 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; theexpenditure attributable to the intangible asset development phase can be reliably measured.Development expenditure does not meet the above conditions are recognized in the current profit andloss.
When the Group’s research and development projects meet the above conditions, through technicalfeasibility and economic feasibility studies, the development stage begins after project is approved.
Expenditures on the development phase after capitalization is listed on the balance sheet as developmentexpenditure and 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, constructionin progress, and intangible assets (with inventories, deferred income tax asset and financial assetsexclusive) are determined as follows:
At each balance sheet date, the Group determines whether there may be indication of impairment of theassets, if there is any, the Group will estimate the recoverable amount of the asset, and perform test forimpairment. For goodwill and the intangible assets with the service life undetermined and the intangibleassets which have not reached applicable status, regardless whether there exists sign of impairment, theGroup 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 disposal expenses, and the current value of the expected future cash flow of the asset,whichever is higher. The recoverable amount of asset is estimated on individual basis. If it is not possibleto estimate the recoverable amount of the individual asset, the Bank determines the recoverable amountof the asset group to which the asset belongs. The recognition of an asset group shall base on whetherthe main cash inflow generated by the asset group is independent of those generated by other assets orother group assets.
When the asset or asset group’s recoverable amount is lower than its book value, the Group reduces itsbook value to its recoverable amount, the reduced amount is recorded in profit or loss for the currentperiod and the provision for impairment of assets are recognized.
As far as the goodwill impairment test concerned, the book value of the goodwill formed by merger isapportioned to the relevant asset group according to the reasonable method commencing from the dateof acquisition; in case it is difficult to be apportioned to the relevant asset group, it is apportioned to theportfolio of the relevant asset groups. The relevant asset group or portfolio of asset groups are thosewhich get benefit from the coordinative effect of enterprise consolidation but should not be greater thanthe reporting segment determined by the Group.
When the relevant asset group or portfolio of asset groups with goodwill included undergo the impairmenttesting, in case there exists impairment evidence in the goodwill related asset group or portfolio of assetgroups, impairment testing should be first conducted on the asset group or portfolio of asset groupswithout goodwill and the recoverable amount is calculated, and the corresponding impairment loss isrecognized. Impairment testing is then conducted on the asset group or portfolio of asset groups withgoodwill included. In comparison with the book value and recoverable amount, in case the recoverableamount 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, andare amortized averagely according to the expected period of benefit. As for the long-term deferredexpenses that can not benefit the future accounting period, the amortized value is recognized in thecurrent profit and loss.
33. Contract liabilities
The Company presents contract assets or contract liabilities in the balance sheet based on therelationship between performance obligations and customer payments. The obligation of the Company totransfer goods or provide services to customers after receiving or receivable consideration fromcustomers are listed as contractual liabilities. Contract assets and liabilities under the same contract arepresented 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 recognizesthe actual wages, bonuses, medical insurance premiums, work-related injury insurance premiums,maternity insurance premiums and other social insurance premiums and housing provident funds paid forthe employees in accordance with the prescribed standards and proportions as liabilities which areincluded in the current profit and loss or related asset costs. If the liability is not expected to be fully paidwithin twelve months after the end of the annual reporting period in which employees have rendered therelated services while the financial impact is significant, the liability will be measured at the discountedamount.
(2) Post-employment benefits
A post-employment benefit plan consists of the defined contribution plan and the defined benefit plan.Where, the defined contribution plan refers to a post-employment benefit plan in which the Company nolonger assumes further payment obligation after paying fixed fees to an independent fund; the definedbenefit plan refers to a post-employment benefit plan other than the defined contribution plan.
Defined Contribution PlansThe defined contribution plan includes the basic pension insurance, unemployment insurance andenterprise annuity plans.
In addition to basic pension insurance, the Group has established an enterprise annuity plan (the "annuityplan") in accordance with the relevant policies of the national enterprise annuity system, and employeesmay participate in the annuity plan voluntarily. With the exception of the above, the Group has no othersignificant social security commitments to employees.
During the accounting period in which employees provide services to the Group, the amount of thedeposits calculated based on the defined contribution plan is recognized as a liability and counted in thecurrent profit or loss or related asset costs.
The defined benefit planFor the defined benefit plan, an independent actuary performs actuarial valuation on the annual balancesheet date, and uses the expected cumulative benefit unit method to determine the cost of providingbenefits. The employee compensation cost resulting from the defined benefit plan of the Group includesthe following components:
① Service costs include current service costs, past service costs, and settlement profit or loss. Where,the current service cost refers to the increase in the present value of the defined benefit plan obligationscaused by the employees providing services in the current period; past service costs refer to the increaseor decrease in the present value of defined benefit plan obligations related to previous employee servicesas 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 theplan 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 thecost of assets, the Group will include the above Items ① and ② in the current profit and loss; Item ③will be included in other comprehensive income and will not be converted back to profit and loss insubsequent accounting period. The part originally included in other comprehensive income will be carriedforward to the retained earnings within the scope of equity 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 arisingfrom the termination benefits shall be recognized as soon as possible and included in the current profitand loss: when the Group cannot unilaterally withdraw the termination benefits provided due to thetermination of the labor relationship plan or reduction proposal; when the Group confirms the costs orexpenses related to the reorganization involving the payment of termination benefits.
In the case of implementing an internal retirement plan, the economic compensation prior to the officialretirement date shall be considered as termination benefit. During the period from the time when anemployee ceases to render services to the day of normal retirement, the salary to the employee of internalretirement and the social insurance premium to be paid shall be recorded into the current profit and loss ina lump sum. The economic compensation after the official retirement date (such as normal old-agepension) 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 accountingtreatment according to the defined contribution plan as long as it complies with the defined contributionplan. If it meets the defined benefit plan, it shall be treated in accordance with the above relevantprovisions of the defined benefit plan. However, in the relevant employee compensation cost, the part of"change caused by remeasurement of net liabilities or net assets of the defined benefit plan" shall berecorded 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 willrecognize it as estimated 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 necessaryexpenses for the performance of the current obligation, and the Bank shall take into full consideration ofthe risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. If the timevalue of money is of great significance, the best estimate shall be determined after discounting therelevant future outflow of cash. On the balance sheet date, the Group re-checks the book value of theestimated debts and makes proper adjustment in order to reflect the best estimated amount at present.
If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and thecompensated amount can only be received basically, it is recognized separated as asset. Thecompensated amount shall not be greater than 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-settledshare-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 activemarket according to the price quoted in the active market. The fair value of equity instruments such asoptions without active market is determined by option pricing model. In selecting the option pricing model,the following factors have been taken into consideration: A. price for exercising the option; B. validity ofthe option; C. the current price of the underlying shares; D. the expected volatility of stock prices; E. theexpected 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 instrumentsOn each balance sheet date during the vesting period, the Group may make best estimate based on thesubsequent information, such as the movement of the number of employees eligible for exercising therights as latest obtained and the number of the vested equity instruments is corrected. On the vestingdate, the number of the final estimated vested equity instrument should be equal to the number of theactually vested equity instruments.
(4) Relevant accounting treatment for implementation, amendment or termination of the share-basedpayment planShare-based payment settled with equity is measured with the fair value of the employee's equityinstruments at the grant date. If the right may be exercised immediately after the grant, the fair value ofthe equity instruments shall, on the date of the grant, be included in the relevant cost or expense and thecapital reserves shall be increased accordingly. As to a equity-settled share-based payment in return foremployee services, if the right cannot be exercised until the vesting period comes to an end or until the
prescribed performance conditions are met, then on each balance sheet date within the 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 valueof the equities instruments on the date of the grant. The Group shall, after the vesting date, make noadjustment to the relevant costs or expenses as well as the total amount of the owner's equities whichhave been confirmed.
A cash-settled share-based payment shall be measured in accordance with the fair value of liabilitycalculated and confirmed based on the shares or other equity instruments undertaken by the Group. As toa cash-settled share-based payment instruments, if the right may be exercised immediately after thegrant, the fair value of the liability undertaken by the Group shall, on the date of the grant, be included inthe relevant costs or expenses, and the liabilities shall be increased accordingly. As to a cash-settledshare-based payment, if the right may not be exercised until the vesting period comes to an end or untilthe specified performance conditions are met, on each balance sheet date within the vesting period, theservices 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 fairvalue of the liability undertaken by the Group. The fair value of the liabilities is re-measured and themovement is counted in the current profits and losses on each balance sheet date and settlement daybefore the settlement of related liabilities.
When the Group amends the share-based payment plan, if the amendment increases the fair value of theequity instruments granted, the increase of the services obtained is recognized accordingly based on theincrease of the fair value of the equity instruments. If the amendment increases the number of equityinstruments granted, the fair value of the increased equity instruments is correspondingly recognized asincrease in the services acquired. Increase of the fair value of the equity instrument refers to thedifference between the fair value of the equity instrument on the amendment day before and after theamendment. 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 accountingtreatment as if such amendment has never taken place unless the Group has canceled part or all of thegranted equity instruments.
If the granted equity instrument has been canceled (unless the non-market condition which does notsatisfy the right of feasibility is cancelled)during the vesting period, the Group shall treat the cancellationof the granted equity instrument as accelerated vesting, the amount which should be recognized duringthe remaining vesting period is counted to the current profit and loss immediately and at the same timethe capital reserve is recognized. If an employee or other party can choose to meet the non-vestingconditions but fails to meet the vesting period, the Group shall treat it as a cancellation of the grantedequity 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 the customer has obtained the right to control the relevant goods or services “Obtaining theright to control the relevant goods or services” means that it is able to dominate the use of the goods orservices and derive almost all economic benefits therefrom.
If a contract contains two or more performance obligations, the Company shall allocate the transactionprice to each individual performance obligation in accordance with the relative proportion of thestand-alone selling price of the goods or services promised by each individual performance obligation onthe date of the contract The Company measures revenue based on the transaction price allocated toeach individual performance obligation.
The transaction price refers to the amount of consideration that the company expects to be entitled toreceive due to the transfer of goods or services to customers, excluding payments collected on behalf ofthird parties and payments expected to be returned to customers. The Company determines thetransaction price in accordance with the terms of the contract with combination of its past customarypractices. When determining the transaction price, the influence from variable consideration, majorfinancing components in the contract, non-cash consideration, consideration payable to customers andother 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 accumulatedrecognized revenue that is unlikely to be materially reversed when the relevant uncertainty is eliminated.If there is a significant financing component in the contract, the Company determines the transaction pricebased on the amount payable in cash when the customer obtains control of the goods or services, anduses the actual interest method to amortize the difference between the transaction price and the contractconsideration during the contract period. One of the following conditions shall be fulfilled within a certainperiod 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 thesame time as the 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 Company has the right to collect payment for the cumulative performance part that has beencompleted so far during the entire contract period.
For performance obligations performed within a certain period of time, the Company recognizes revenuein accordance with the performance progress during that period, except where the performance progresscannot be reasonably determined. The Company determines the progress of a contract by using theoutput method or input method with consideration of the nature of goods or services. When theperformance progress cannot be reasonably determined, and the costs incurred are expected to becompensable, the Company recognizes the revenue according to the amount of the costs incurred until
the performance progress can be reasonably determined.
For performance obligations performed at a certain point of time, the Company recognizes revenue at thepoint when a customer obtains control of the relevant goods or services. In judging whether a customerhas obtained control of goods or services, the Company considers the following signs:
? The Company has the current right to receive payment for the goods or services, that is, the customerhas the current payment obligation for the goods or services.
? The Company has transferred the legal ownership of the product to the customer, that is, the customerhas the legal ownership of the product.
? The Company has transferred the goods to the customer in kind, that is, the customer has takenpossession of the goods in kind.
? The Company has transferred the main risks and rewards of the ownership of the goods to the customer,that is, the customer 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 similarbusinessesNil
40. Government subsidies
Government subsidies are recognized when they meet the conditions attached to the governmentsubsidies and can be received.
Government subsidies for monetary assets are measured according to the amount received or receivable.If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair valuecannot be obtained in a reliable way, it shall be measured at its nominal amount.
The government subsidies pertinent to assets mean the government subsidies that are obtained by theGroup used for purchase or construction, or forming the long-term assets by other ways with thosepertinent to income exclusive.
If the subsidy recipient is not specified in the government documents and long-term assets can be formed,the part of the government subsidies corresponding to the asset value is regarded as the governmentsubsidy pertinent to the asset, and the rest is regarded as the government subsidy pertinent to the income;if it is difficult to distinguish, the government subsidies as a whole are regarded as the governmentsubsidies pertinent to the income.
Government subsidies pertinent to assets are recognized as deferred income and recorded in profit andloss in installments in accordance with a reasonable and systematic method within the useful life of the
relevant assets. If government subsidies pertinent to income are used to compensate related cost or lossalready incurred, they are included in the current profit and loss or offsets the related costs; if they areused to compensate related costs or losses in subsequent periods, they shall be included in the deferredincome, and included in the current profit and loss or offset the related costs during the recognition periodof the related costs or losses. The government subsidy measured at a nominal amount is directly countedto the current profit and loss. The Group adopts the same method to deal with the same or similargovernment subsidy business.
Government subsidies pertinent to daily activities are included in other income in accordance with thenature of economic business. Government subsidies irrelevant with the daily activities are included innon-operating revenue and expenditure.
When the government subsidy already recognized needs to be returned, if there is a relevant deferredincome balance, the book balance of the relevant deferred income shall be offset, and the excess partshall be included in the current profit and loss; in other cases, it shall be directly included in the currentprofit 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 asincome tax expenses in profit or loss for current period except for deferred income tax associated withgoodwill arising from business combination, or transactions or events that are directly recognized inowners’ equity, which should be recorded under owners’ equity.
A deferred income tax asset or liability is recognized based on the temporary differences between thebook value of an asset or a liability at the balance sheet date and its tax basis using the balance sheetliability method.
A deferred income tax liability should be recognized for all taxable temporary differences, except to theextent that the deferred 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 thathas both of the following characteristics: the transaction is not a business combination; and at the time ofthe transaction, it neither affects the accounting profit nor taxable profit.
(2) A deferred income tax liability should be recognized for all taxable temporary differences arising fromthe investments in subsidiaries, joint ventures and associates, except to the extent that both of thefollowing conditions are satisfied: A. the Group is able to control the timing of the reversal of the temporarydifferences; and B. it is probable that the temporary difference will not reverse in the foreseeable future.
In respect of deductible temporary differences, the carry-forward of deductible losses and tax deductions,the Group should recognize deferred tax assets to the extent that it is probable that future taxable profitwill be available against which the deductible temporary differences, the deductible losses and taxdeductions can be utilized, unless the deductible temporary differences arises from the followingtransactions.
(1) The transaction is not business combination and at the time of the transaction, it neither affectsaccounting profit nor taxable profit.
(2) Deferred tax assets should be recognized for all deductible temporary differences associated withinvestments in subsidiaries, joint ventures and associates if all of the following conditions are satisfied: itis probable that the deductible temporary difference will reverse in the foreseeable future and it isprobable that taxable profit in the future will be available against which the deductible temporarydifference can be utilized.
At the balance sheet date deferred income tax assets and liabilities should be measured at tax ratesexpected to be applied to the period when the asset is recovered or the liability is settled and themeasurement of deferred income tax assets and liabilities should reflect the tax consequences that wouldfollow from the manner in which The Bank expects, at the balance sheet date, to recover or settle thebook value of its assets and liabilities.
At the balance sheet date the Bank should review the book value of deferred income tax assets. The bookvalue of a deferred income tax asset should be reduced to the extent that it is no longer probable thatsufficient taxable profit will be available to allow the benefit of the deferred income tax asset to be utilized.Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will beavailable.
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 usingthe straight-line method over each period of the lease term. The initial direct costs incurred shall berecorded into the profits and losses of the current period.
B. The Group as the TenantLease income from operating leases shall be recorded in the profits and losses of the current period usingthe straight-line method over each period of the lease term. The initial direct costs incurred shall berecorded into the profits and losses of the 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 cancelledor transferred, and all expenditures for the repurchase of shares shall be transferred to the cost oftreasury stock. The consideration and transaction costs paid in the repurchase reduce the owner’s equity.
In process of repurchasing, transferring or canceling the Company’s shares, no profit or loss isrecognized.
When transferring treasury shares, the difference between the actual amount received and the book valueof treasury shares is included in the capital reserve. If the capital reserve is insufficient to offset, thesurplus reserve and retainted earnings shall be offset. For the cancellation of treasury shares, the sharecapital shall be reduced according to the book value of the shares and the number of shares cancelled,and the capital reserve shall be reduced according to the difference between the book balance and thebook value of the cancelled treasury shares. If the capital reserve is insufficient, the surplus reserve andretained earnings shall be written-down.
(2) Restricted stocks
In the equity incentive plan, the Company grants restricted stocks to the motivated objects. The motivatedobjects first subscribe for the stocks. If the unlocking conditions stipulated in the equity incentive plan arenot met subsequently, the Company shall repurchase the stocks at the previously agreed price. If therestricted stocks issued to employees have fulfilled the capital increase procedures such as registration inaccordance with relevant regulations, on the grant date, the Company shall confirm the share capital andcapital reserve (share capital premium) based on the subscription monies paid by the employees; at thesame time, the treasury stock and other payables are confirmed for the repurchase obligation.
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 revised standards stipulate that in the initial implementation of the standards, an enterprise shouldadjust the amount of retained earnings and other related items in the financial statements at the beginningof 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 the standards, the Company only adjusts the accumulated impact of contracts that have notbeen completed on the date of first implementation. The retained earnings at the beginning of 2020 andthe amount of other related items in the financial statements would not be adjusted in the 2019 financialstatements. The implementation of these standards has no impact on retained earnings at the beginningof 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 revenuein the financial statements on January 1, 2020 are as follows::
Consolidated Financial Statements:
| Book value as presented according to the previous standards (December 31, 2019) | Reclassified | Book value as presented according to the new standards 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 | Book value as presented according to the new standards 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 apportioned | 12,106,759.98 | 12,106,759.98 | |
| 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
Inapplicable
VI. 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 Connectionwith the Property Tax and Urban Land Use Tax Promulgated by the State Administration of Taxation(SHEN DI SHUI FA [2003] No. 676: for the new properties newly constructed or purchased by taxpayers,the property tax may be exempted for three years commencing from the next month after completion ofthe construction or purchase. Our FIYTA Watch Building located at Guangming New Zone of Shenzhenenjoys exemption from the property tax for three years commencing from the next month of completion ofthe construction in September 2016.
(2) In accordance with Notice of the Ministry of Finance and the State Administration of Taxation onExtending the Loss Carryover Period for High and New Technology Enterprises and Small andMedium-Sized Technological Enterprises (CAI SHUI [2018] No. 76), beginning on January 1, 2018, thelosses of an enterprise currently qualified as a high and new technology enterprise that occurred duringthe prior five years and are still not fully covered may be carried over for covering 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 and Answers on the Policy for the Property Tax and Vehicle & Vessel Use Tax": Productionand business units leasing its properties should pay real estate tax based on 70% of the cost of theproperties 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 saidNotice, and pays 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 margindeposits deposited by the Company for application to banks for unconditional and irrevocable letter ofguarantee.
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 period
Inapplicable
(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 receivable from other customers) | 441,309,124.89 | 95.99% | 13,905,071.76 | 3.15% | 427,404,053.13 | 402,376,052.00 | 94.34% | 11,483,281.44 | 2.85% | 390,892,770.56 |
| 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 period
Provision 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 | Writing-off | Others | |||
| reversed | ||||||
| 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 involved
Inapplicable
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 hasnot been settled 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 thepayees of the advance payment was CNY 10,980,253.84, taking 59.66% of the toal ending balance of theadvance 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 assets
Inapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
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 inventories
Inapplicable
(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 to beinvolved
Inapplicable
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 | |||||||
| Additional | Decrease of | Income from | Other | Other equity | Announced | Provision for | Others | ||||
| investment | investment | equity investment recognized under equity method | comprehensive income adjustment | movement | for distributing cash dividend or profit | impairment | for impairment | ||||
| I. Joint Venture | |||||||||||
| II. Associates | |||||||||||
| Shanghai Watch Industry Co., Ltd. (Shanghai Watch) | 46,423,837.85 | 2,160,911.92 | 48,584,749.77 | ||||||||
| 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 theintangible assets 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 offsetting
Inapplicable
(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 | 137,321.18 | 329,926.24 | -192,605.06 |
| premium | ||||
| 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 andnecessary to disclose 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 thereporting 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 Informationization at Provincial Level | 1,031,833.34 | 1,031,833.34 | Related with income |
| (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 theOperation Instructions on Certification and Financial Support Program for Industrial Design Centers inShenzhen (Trial Implementation) SHEN JING MAO IT Zi [2013] No. 227 jointly promulgated by Economy,Trade and Information Commission of Shenzhen Municipality and Finance Commission of ShenzhenMunicipality;
Note (2) : It is the fund from the financial support for construction of enterprise technology centers inShenzhen obtained according to the Circular of Development and Reform Commission of ShenzhenMunicipality on Issuing the First Batch of Supporting Program of Financial Support Fund for Constructionof 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 InformationCommission of Guangdong Province on Doing a Good Job in Submission to the Special Project Library ofProduction and Services at Provincial Level in 2017 (YUE JING XIN SHENG CHAN HAN (2016) No. 53)jointly promulgated by the Economic & Information Commission of Guangdong Province and theFinance 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 2ndExtraordinary General Meeting 2019 on April 23, 2019, and reviewed and approved the "Proposal forRepurchase of the Company's Partial Domestically Listed Foreign Shares (B-shares)”, according to whichthe Company was approved to repurchase the Company’s partial domestically listed foreign shares(B-shares) by means of centralized bidding to reduce its registered capital. Ended April 29, 2020, theCompany completed the cancellation of the above shares (14,730,000 shares) repurchased with ChinaSecurities Depository and Clearing Corporation Limited Shenzhen Branch. After cancellation of therepurchased 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 NinthBoard of Directors and reviewed and approved the “Proposal for Repurchase and Cancellation of thePartially Restricted Shares Involved in 2018 A-Share Restricted Stock Incentive Plan (Phase 1)”,according to which the Company intended to repurchase and cancel a total of 67,000 A-share restrictedstock jointly held, already granted but with the restriction not released to three former incentive objectswho 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 period
Inapplicable
(2)Movement of the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. atthe end of the reporting period
Inapplicable
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 reportingperiod:
(1) The Company held the 7th session of the Ninth Board of Directors on April 4, 2019 and the 2ndExtraordinary General Meeting 2019 on April 23, 2019, and reviewed and approved the "Proposal forRepurchase of the Company's Partial Domestically Listed Foreign Shares (B-shares)”, according to whichthe Company was approved to repurchase the Company’s partial domestically listed foreign shares(B-shares) by means of centralized bidding to reduce its registered capital. The Company accumulativelyrepurchased 14,730,000 domestically listed foreign shares (B shares) by means of centralized biddingthrough 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 CNY243,340.90).
(2) Other capital reserve increased by CNY 3,165,401.89 in the reporting period are the restricted stockincentive expenses 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 reportingperiod:
The increase of the shares in stock during the reporting period consisted of two parts. One part was thecancelled retired employees’ restrictive shares in stock with total amount of CNY 294,800.00 and theother part was the amount from the repurchase of B-shares totaling CNY 25,969,974.82 and therepurchased B-shares in stock cancelled subsequently with total 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 ofarbitraged items for adjustment:
The net amount of the other comprehensive income after tax incurred in the reporting period was CNY4,329,973.83. Where, the net after-tax amount of other comprehensive income attributable toshareholders of the parent company was CNY 4,329,877.58; the net after-tax amount of othercomprehensive income attributable to the minority shareholders incurred 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 inthe reporting period:
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 Standardsand the relevant new provisions influencing the retained earnings at the beginning of the reporting periodwas CNY 0.00.
2) The amount involved in change of the accounting policy influencing the retained earnings at thebeginning of the reporting period was CNY 0.00.
3) The amount involved in correction of the significant accounting errors influencing the retained earningsat the beginning of the reporting period was CNY 0.00.
4) The amount involved in change of the consolidation scope caused by the joint control influencing theretained earnings at the beginning of the reporting period was CNY 0.00.
5) The total amount involved in other adjustments influencing the retained earnings at the beginning of the
reporting period was CNY 0.00.
61. Operation Income and Costs
In CNY
| Items | Amount incurred in the reporting period | Amount incurred in the previous period | ||
| 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 impairment of contract performance costs | 0.00 | 2,514,740.86 |
| 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 Bureau of Xiacheng District engaged in nursing service | 500.00 | Other income | 500.00 |
| 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 | 60,814.00 | Other income | 60,814.00 |
| Shenzhen Standards in 2019 | |||
| 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 Excellence in Design) | 200,000.00 | Other income | 200,000.00 |
| 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 Innovation Commission on the First Supporting Fund Application Materials and AppropriationMaterials for the Advance Reception of the Enterprise R & D Funding Plan in 2019.
B. It is the government subsidy obtained according to the Notice of the Bureau of Industry and InformationTechnology of Shenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme forQuality Brand Double Promotion of 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 InformationTechnology of Shenzhen Municipality on the Disclosure of the Intentional Financial Support Scheme forQuality Brand Double Promotion of 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 andInformation Technology of Nanshan District for Management of the Special Fund for Development of theIndependent Innovation Industry in Nanshan District" and the "Rules for Implementation of the SpecialFund for Independent Innovation Industry Development in Nanshan District - the Itemized Fund forEconomic Development".
E. It is the government subsidy obtained according to the Notice of the General Office of Nanshan DistrictPeople's Government of Shenzhen Municipality on the Printing and Issuing of the "Measures forManagement of the Special Fund for Development of the Independent Innovation Industry in NanshanDistrict” 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 DistrictPeople's Government of Shenzhen Municipality on the Printing and Issuing of the "Measures forManagement of the Special Fund for Development of the Independent Innovation Industry in NanshanDistrict” SHEN NAN FU BAN GUI [2019] No. 2.
G. It is the government subsidy obtained according to the Notice of the Market Supervision andAdministration Bureau of Shenzhen Municipality on the Special Fund Support and Incentive Scheme forthe Standard Fields 2019 in Shenzhen.
H. It is the government subsidy obtained according to the Notice of the Small and Medium-sizedEnterprise Service Bureau of Shenzhen Municipality for Allocating the Subsidy for the Domestic MarketDevelopment Projects to the Program of Innovative Development, Fostering and Support of ShenzhenLocal Private and Small & Medium-sized Enterprises in 2020.
(2) Refunding of the government subsidies
Inapplicable
85. Others
Inapplicable
VIII. Change in consolidation scope
1. Consolidation of enterprises not under the joint control
(1) Consolidation of enterprises not under joint control during the reporting period
Inapplicable
(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 throughseveral transactions and the control power is obtained within the reporting period.No
(5) Note to the consolidation consideration or the fair value of the distinguishable assets and liabilities of 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 consolidation
Inapplicable
3. Counter purchase
Inapplicable
4. Disposal of subsidiaries
Does there exist any such situation that a single disposal may cause the control power over theinvestment in a subsidiary lost?NoDoes there exist any such situation that disposal in steps through a number of transactions may cause thecontrol power over 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 other reasons 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 | Shenzhen | Shenzhen | Commerce | 100.00% | 0.00% | Establishment or |
| E-Commerce Co., Ltd. | 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 of consolidatedfinancial 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 company
Inapplicable
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 associates
Inapplicable
(5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to theCompany
Inapplicable
(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 management
The Group's main financial instruments include monetary funds, notes receivable, accounts receivable,other receivables, other equity instrument investments, accounts payable, other payables, short-termborrowings, non-current liabilities due within 1 year, and long-term borrowings. Details of the financialinstruments have been disclosed in the relevant notes. The risks involved in these financial instrumentsand the Group’s risk control policies aiming at reducing these risks are stated as follows. The Group’smanagement conducts management and monitoring of these risk exposures so as to ensure risks to becontrolled 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 toreduce the adverse impact of financial risks on the Group's financial performance. Based on this riskmanagement objective, the Group has developed risk management policies to identify and analyze therisks faced by the Group, set appropriate acceptable levels of risks and design corresponding internalcontrol procedures to monitor the risk level of the Group. The Group regularly reviews these riskmanagement policies and relevant internal control systems to respond to changes in market conditions orthe 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 managementpolicy.
The main risks caused by the Group's financial instruments are credit risk, liquidity risk and market risk(including exchange rate risk, interest rate risk and commodity price risk).
The Board of Directors is responsible for planning and establishing the risk management framework of theGroup, formulating the risk management policies and relevant guidelines of the Group and supervisingthe implementation of risk management measures. The Group has formulated risk management policiesto identify and analyze the risks faced by the Group. These risk management policies clearly specifyspecific risks and cover many aspects such as market risk, credit risk and liquidity risk management. TheGroup regularly evaluates the market environment and changes in the Group's business activities todetermine whether or not to update the risk management policy and system. The risk management of theGroup 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 theGroup to identify, evaluate and mitigate risks. The internal audit department of the Group conducts regularaudits of risk management controls and procedures and reports the audit results to the audit committee ofthe Group.
The Group diversifies the risk of financial instruments through appropriate diversification of investmentsand business portfolios and reduces the risk of being concentrated in a single industry, a specific region ora specific counterparty by developing 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 itscontractual obligations.
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 creditrating, and the Group 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 tocontrol credit exposure. The Group evaluates the customer's credit qualification and sets thecorresponding credit period based on their financial position, credit history and other factors such ascurrent market conditions. The Group shall regularly monitor customers' credit records. For customerswith poor credit records, the Group shall use such methods as written payment reminders, shortening orcanceling 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 indifferent regions. The Group continues to conduct credit assessment of the financial position of accountsreceivable 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 thebalance sheet. The Group is also exposed to credit risks due to the provision of financial guarantees, asdetailed in Note XII.2.
In the Group's accounts receivable, the amount owed by the top five customers took 15.42% of theGroup's total accounts receivable (2019: 25.39%); in the Group's other receivables, the amount owedby the top five customers took 11.28% of the 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 tosettle by delivery of cash or other financial assets.
When managing flow risks, each of the Group's affiliates is responsible for its own cash flow forecast. TheGroup's financial center monitors long - and short-term fund demands at the Group level based on thecash flow forecast results of each member enterprise. The Group manages the surplus fund within theGroup through the capital pool plan established with some large banking financial institution, and ensuresthat each member enterprise has sufficient cash reserves to meet the payment obligations due forsettlement. In addition, the Group has entered into agreements for line of financing credit with its majorcorrespondent 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 atJune 30,2020, the amount of the bank loans not yet used by the Group was CNY 2,316.68 million(December 31,2019: CNY 1,970.39 million).
(3) Market risks
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financialinstruments may fluctuate due to changes in market prices, including interest rate risk, exchange rate riskand other price risk.
Interest rate risksInterest rate risk refers to the risk that the fair value of financial instruments or future cash flow mayfluctuate due to changes in market interest rates. Interest rate risk may arise from recognized interestbearing financial instruments and unrecognized financial instruments (such as certain loan commitments).
The interest rate risk of the Group is mainly generated from short-term bank borrowing, long-term bankborrowing and other interest-bearing debts. Financial liabilities with floating interest rate expose theGroup to interest rate risk of cash flow while financial liabilities with fixed interest rate expose the Group tointerest rate risk of fair value. The Group determines the relative proportion of fixed and floating ratecontracts in accordance with prevailing market conditions and maintains an appropriate portfolio of fixedand 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 interestrate risk, the impact of net profit and shareholders' equity in the sensitivity analysis above is the impactafter the re-measurement of the financial instruments according to the new interest rate, assuming thatthe daily interest rate of the balance sheet changes. For floating rate non-derivative instruments held atthe balance sheet date that expose the Group to cash flow interest rate risk, the impact on net profit andshareholders' equity in the sensitivity analysis above is the impact of the above interest rate change onthe 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 cashflows due to movement in foreign exchange rates. Exchange rate risk may be derived from financialinstruments denominated in foreign currencies other than the functional currency.
Exchange rate risk mainly refers to the Group's financial position and cash flow affected by foreignexchange rate fluctuations. In addition to the subsidiary established in Hong Kong holding assets in HongKong dollars and the sub-subsidiary established in Switzerland holding assets in Swiss Francs, theGroup's other major business activities are mainly settled in Renminbi. However, foreign exchange risksstill exist in the foreign currency assets and liabilities recognized by the Group and in future foreigncurrency transactions.
As of June 30, 2020, the amount of foreign currency financial assets and foreign currency financialliabilities held by the Group 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 theGroup. The Group is not currently taking any measures to protect itself from exchange rate risk. However,the management is responsible for monitoring currency risks and will consider hedging significantcurrency risks as needed.
On June 30, 2020, for the Group’s foreign currency monetary funds, bank loans and other financialinstruments, and so on, may lead to appreciation or depreciation of the Group's shareholders' equity andnet profit by about CNY 1.2494 million (December 31, 2019: about CNY 2.9459 million) with theassumption that that Renminbi to foreign currencies (mainly against US Dollars, HK Dollars and SwissFranc) may be appreciated or depreciated by 5% with other factors remain unchanged.
2. Capital management
The objective of the Group's capital management policy is to ensure that the Group is a going concern,thus providing returns to shareholders and benefits to other stakeholders, while maintaining an optimalcapital structure to reduce the cost of capital.
In order to maintain or recapitalize, the Group may adjust the way of financing, adjust the amount ofdividends paid to shareholders, return capital to shareholders, issue new shares and other equityinstruments, or sell assets to reduce its debts.
The Group monitors its capital structure on the basis of the asset-liability ratio (that is, the total liabilitiesare divided by the total 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-continuous firstlevel 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 information
Level 2: either directly (i.e., price) or indirectly (i.e., derived from price) use observable input value otherthan market quotations 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 current period,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 neitherexperienced any conversion between Level 1 and Level 2, nor experienced transfer-in or transfer-outto/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 includemonetary funds, notes receivable, accounts receivable, other receivables, short-term loans, accountspayable, other payables, long-term loans due within a year, long-term loans, etc.
The difference between the book value and fair value of the above financial assets and financial liabilitiesnot measured with 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 InternationalHoldings Limited is 33.93%. AVIC International Shenzhen is a wholly owned subsidiary of AVICInternational Holdings Limited (AVIC IHL) and China Aviation Industry Corporation (AVIC) directly holds
91.14% of the equity of AVIC IHL. Therefore, the Company’s ultimate 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 Management) | An associate of the holding shareholder |
| 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 services
Statement 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 | 5,255,465.36 | 1,800.00 | No | 4,665,553.46 |
| fee | |||||
| 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 Elevator Co., Ltd. | Repairing fee | 122,830.20 | No | ||
| 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 | 2,047,890.00 | |
| 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 laborservicesInapplicable
(2) Related entrusted management/contracted and mandatory management/contracting
Inapplicable
(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 | 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 | |
| Jiujiang AVIC Real Estate | Housing | 191,570.45 | |
| 9 Square Commerce Management Co., Ltd. | Housing | 192,860.44 | |
| 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 CNY289,316,243.49, 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 | 2,001,989.48 | 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
Inapplicable
XIII. 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 period | 3,165,401.89 |
Other notesInapplicable
3. Stock payment for cash settlement
Inapplicable
4. Correction and termination of stock payment
Inapplicable
5. Others
Inapplicable
XIV. Commitments and contingencies
1. Important commitments
Important commitments existing as at the balance sheet dateImplementation of irrevocable operating lease contract signed by the Company ended the balance sheetdate is as follows:
| 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 explained
Inapplicable
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
Inapplicable
XVI. Other significant events
1. Correction of the accounting errors in the previous period
(1) Retroactive restatement
Inapplicable
(2) Prospective application
Inapplicable
2. Liabilities restructuring
Inapplicable
3. Replacement of assets
(1) Non-monetary assets exchange
Inapplicable
(2) Other assets exchange
Inapplicable
4. 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
Inapplicable
XVII. 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 | Amount | Proportion | Amount | Provision | |||
| proportion | 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 period
Provision 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 assets
Inapplicable
(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 assets
Inapplicable
8) Amount of assets and liabilities formed through transfer of account receivable and continuing to be involved
Inapplicable
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 associates and joint ventures | 48,584,749.77 | 0.00 | 48,584,749.77 | 46,423,837.85 | 0.00 | 46,423,837.85 |
| 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 Watch Industry Co., Ltd. | 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 |
| 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
Inapplicable
XVIII. 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 losses of the current period ( (excluding government grants | 10,154,015.67 |
| 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 onInformation Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains andLosses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No. 1 onInformation Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains andLosses which have been defined as recurring gains and losses, it is 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, please specifythe name of the overseas auditing agent.
Inapplicable
4. Others
Inapplicable