FIYTA HOLDINGS LTD.
2016 Annual Report
March, 2017
Section 1 Important Notice, Table of Contents and Definition
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives
hereby individually and collectively accept responsibility for the correctness, accuracy and
completeness of the contents of this report and confirm that there are neither material omissions
nor errors which would render any statement misleading.
Mr. Xu Dongsheng, the Company leader, Mr. Chen Zhuo, chief financial officer, and Mr. Tian Hui,
the manager of the accounting department (treasurer) hereby confirm the authenticity and
completeness of the financial report enclosed in this Annual Report.
With the exception of the following directors, all the other directors personally attended the Board Meeting for
reviewing the Annual Report
Posts of the directors Cause of failure in
Names of the directors failed in
failed in attending the attending the meeting Names of the attorneys
attending the meeting personally
meeting personally personally
Zhong Sijun Director Business trip Wang Mingchuan
Any perspective description, such as future plan, development strategy, etc. involved in the
Annual Report shall not constitute the Company’s substantial commitment to the investors and
the investors should please pay attention to their investment risks.
In the Report, the Company has presented in detail the potential risks existing in the macro
economy and operation. Investors are advised to read carefully the contents concerning risk
factors possibly to be confronted with in the Company’s future development prospects and the
countermeasures in Section 4 Management Discussion and Analysis.
The profit distribution preplan reviewed and approved by the said board meeting is summarized
as follows: With the Company’s total share capital 438,744,881 as the base, the Company would
distribute cash dividend at the rate of CNY 1.00 for every 10 shares (with tax inclusive) and bonus
share at the rate of 0 share (with tax inclusive) to the whole shareholders and no reserves would
be converted into share capital.
Table of Contents
Section 1 Important Notice, Table of Contents and Definitions
Section 2 Company Profile and Financial Highlights
Section 3 Business Summary
Section 4 Discussion and Analysis of the Management
Section 5 Significant Events
Section 6 Changes in Shares and Particulars about the Shareholders
Section 7 About the Preferred Shares
Section 8 Directors, Supervisors, Officers and Employees
Section 9 Corporate Governance
Section 10 Bond Related Information
Section 11 Financial Report
Section 12 List of Documents Available for Inspection
Definition
Terms to be defined Refers to Definition
This Company, the Company or Fiyta Refers to FIYTA Holdings Ltd.
AVIC International Holdings Refers to CATIC Shenzhen Holdings Limited
HARMONY Refers to Shenzhen Harmony World Watches Center Co., Ltd.
Rainbow Supermarket Refers to Rainbow Supermarket Co., Ltd.
CATIC Real Estate Refers to CATIC Real Estate Co., Ltd.
CATIC Property Refers to CATIC Property Management Co., Ltd.
Section 2 Company Profile and Financial Highlights
I. Company Profile
Short form of the stock: FIYTA A, FIYTA B Stock Codes:
Stock Exchange Listed with Shenzhen Stock Exchange
Company Name In Chinese FIYTA Holdings Ltd.
Abbreviation of Registered
飞亚达公司
Company Name in Chinese
Company name in foreign
FIYTA HOLDINGS LTD.
language (if any)
Short form of the Company
name in foreign language (if FIYTA
any)）
Legal Representative Xu Dongsheng
Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the
Registered Address
Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen
Postal Code of the Office
Address
Internet Web Site www.fiytagroup.com
E-mail investor@fiyta.com.cn
II. Liaison Persons and Communication Information
Secretary of the Board Securities Affairs Representative
Names Lu Wanjun Zhang Yong
20th Floor, FIYTA Technology Building, 20th Floor, FIYTA Technology Building,
Liaison Address Gaoxin S. Road One, Nanshan District, Gaoxin S. Road One, Nanshan District,
Shenzhen Shenzhen
Tel. 0755－86013198 0755－86013669
Fax 0755－83348369 0755－83348369
E-mail investor@fiyta.com.cn investor@fiyta.com.cn
III. Information Disclosure and Place where the Regular Reports are Prepared
Newspapers Designated for Disclosing the Securities Times
Information: and Hong Kong Commercial Daily
Internet Web Site Designated by China Securities
Regulatory Commission for Publishing the www.cninfo.com.cn
Company’s semi-annual report:
Place of the Company’s Semi-annual Report
Board Secretary Office
Prepared for Inquiry
IV. Changes in Registration
Organization Code 19218978-3
Changes in principal business activities
No change
since listing (if any)
Changes in the controlling shareholder
No change
in the past (if any)
V. Other Relevant Information
CPAs appointed
Name of the CPAs Ruihua Certified Public Accountants (Special General Partnership)
Inapplicable
The sponsor performing persistent supervision duties engaged by the Company in the reporting period
Duration of persistent
Name of the Sponsor Office Address Representatives
supervision
Huachuang Building, 216
Huachuang Securities Co., January 15, 2016 to
Zhonghua N. Road, Guiyang, Li Xiumin and Huang Junyi
Ltd. December 31, 2017
Guizhou Province
The financial advisor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
VI. Summary of Accounting/Financial Data
May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to change
of the accounting policy and correction of accounting errors?
No
Year-on-year
2016 2015
increase/decrease
Turnover in CNY 2,993,864,561.43 3,162,196,212.90 -5.32% 3,278,142,785.87
Net profit attributable to the
Company’s shareholders, in 110,662,681.59 121,702,057.44 -9.07% 145,591,136.39
CNY
Net profit attributable to the
Company’s shareholders less
97,200,540.64 113,441,715.91 -14.32% 136,799,116.72
the non-recurring items, in
CNY
Net cash flows arising from
455,759,094.15 396,236,992.41 15.02% 289,189,630.97
operating activities, in CNY
Basic earning per share
0.2522 0.3099 -18.62% 0.3710
(CNY/share)
Diluted earning per share
0.2522 0.3099 -18.62% 0.3710
(CNY/share)
Return on equity, weighted
4.74% 7.24% -2.50% 8.62%
average (%)
Increase/decrease
at the end of the
End of 2016 End of 2015 year over the end End of 2014
of the previous
year
Total assets, in CNY 4,004,897,562.72 4,246,670,045.02 -5.69% 3,657,781,647.20
Net assets attributable to the
Company’s shareholders
(owner’s equity attributable to 2,371,370,535.17 2,299,215,650.21 3.14% 1,633,401,930.64
the Company’s shareholders,
in CNY)
VII. Difference in the Accounting Data based respectively on the Chinese Accounting Standards
(CAS) and International Accounting Standards (IAS)
(I) Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s shareholders
respectively according to the IAS and the CAS.
Inapplicable
(II) Didfferences in the net profit disclosed in the financial report & the net assets attributable to the Company’s
shareholders according to both the IAS and the CAS
Inapplicable
VIII. Financial Data Summary based on Quarters
In CNY
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Operating revenue 732,961,459.52 746,566,323.66 754,607,535.18 759,729,243.07
Net profit attributable to the
27,251,347.69 33,261,671.75 47,808,248.72 2,341,413.43
Company’s shareholders
Net profit attributable to the
Company’s shareholders less
27,249,320.31 32,543,089.53 47,563,700.79 -10,155,569.99
the non-recurring profit and
loss
Net cash flows arising from
97,495,185.15 120,114,547.39 73,431,299.53 164,718,062.08
operating activities
Does there exist significant difference in the foregoing financial data or their total sum from the relevant financial data as
disclosed in the quarterly reports and/or semi-annual report.
No
IX. Non-recurring gain/loss items and amount involved
in CNY
Items Amount in 2016 Amount in 2015 Amount in 2014 Note
Gain/loss from disposal of non-current
assets, including the part offset from -660,129.92 34,435.32 -44,920.98
the provision for impairment of assets.
Government subsidy credited to the
current gain and loss (except the
government subsidies closely related
with the Company’s business and 17,234,482.25 10,889,579.23 10,344,542.00
enjoyable according to the unified
standard quota or fixed amount
specified by the central government).
Operating income and expenses other
935,294.98 -17,790.06 0.00
than the aforesaid items
Less: Amount affected by the income
1,149,979.86
tax
Amount affected by minority equity
4,047,506.36 2,645,882.96 2,657,581.21
(after tax)
Total 13,462,140.95 8,260,341.53 8,792,019.67 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring
gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it
is necessary to explain the reason.
Inapplicable
Section 3 Business Summary
I. Principal Businesses in the Reporting Period
Does the Company need to comply with the requirements on information disclosure for special industries?
No
FIYTA has been concentrating itself in watch industry under the strategy of brand building, carrying forward integration
and upgrading of the key value chain, successfully constructed watch retail network with all standing of HARMONY and
the Sales Company (including BRAND GALLERY), e-commerce platform, etc. so as to provide extremely considerable
excellent services to vast consumers; improved the watch research & development, design, manufacture platform, and
formed an own brand cluster with the high-end brands, FIYTA watch and fashion brands with the principal components
and the brands and products have been continuously improved.
II. Significant Changes in the Prime Assets
1. Significant Changes in the Prime Assets
Prime Assets Notes to Significant Changes
On November 11, 2015 China Securities Regulatory Commission issued the
Official Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing
( ZHENG JIAN XU KE [2015] No. 2588 which authorized the Company to issue
no more than 46,911,649 new shares in non-public way. Ended December 22,
2015, the Company completed the work of non-public issuing of 45,977,011
A-shares to the designated investors. After deducting the issuing costs, the net
Equity Assets
raised capital amounted to CNY 582,924,373.62. Upon the foregoing
transaction, the Company increased the registered capital by CNY 45,977,011
with the total registered capital turning to be CNY 438,744,881, and increased
the capital reserve by CNY 536,947,362.62. The A shares involved in the
non-public issuing were registered for listing on January 15, 2016 and the sales
restriction was released on January 16, 2017.
In the reporting year, Guangming New Zone Watch Industry Base successfully
Construction-in-progress passed the completion inspection and was transferred into fixed assets with
total amount of CNY 298,884,061.22.
2. Summary of Overseas Assets
Inapplicable
III. Analysis on Core Competitiveness
Does the Company need to comply with the requirements on disclosure for special industries
No
FIYTA’s core competitiveness is a collection consisting of a set of techniques and technology which enables the Company
to provide customers with particular values, is the competitive power on which our products or services rely in achieving
the leading position. It consists of the ability of brand building, ability of offering top quality services, ability of product
innovation, ability of knowledge management and ability of management of strategic human resources. So far, the
Company has established an industrial design center at national level and a technology center at national level. All our
manufacture enterprises are national hi-tech enterprises. In addition, the Company has participated in preparation or
revision of a number of national industrial standards.
In addition to continuous consolidation of the aforesaid core competences, during the reporting period,the Company
achieved great success in construction of science and technology platform and scientific and technological innovation.
The Company's technology platform has been recognized as a key laboratory of ligh industry in China and has been
awarded as a model science and technology collective of the \"12th Five-Year Plan\" of China light industry. In 2016, the
Company was awarded two third prizes for scientific and technological advancement of China light industry, one \"First
Prize for Industry Design at the First Erdos International Creative Design Competition\", \"the Gold Award of the 8th
Provincial Governor Cup Industrial Design Competition,\" \"the Bronze Award of the 8th Provincial Governor Cup Industrial
Design Competition\", \"the Honorable Mention at Shenzhen Competition Area of the 8th Provincial Governor Cup Industrial
Design Competition\", “China Red Star Design Award 2016” and \"Honorable Mention of the 18th China design patents\". In
the year, the Company applied for 3 patents for invention, 11 utility model patents and 26 design patents. In the very year,
the Company took lead or participated in preparation or revision of 5 national industrial standards.
Section 4 Discussion and Analysis of the Management
I. General
In 2016, in the face of the external environment of economic slowdown and uncertainty, the Company withstood the
enormous operation pressure up and down, still insisted on the enterprise phylosophy, with the enterprise values of
\"customer orientation, good faith, cooperation, learning and innovation, and speed\", based on the annual subject terms of
\"deep ploughing, integration, innovation and efficiency improvement\", concentrated itself in doing the best in the \"Chinese
Market\", kept a close watch on \"the Chinese people's market\", with study on customers as the origin, carefully studied the
industrial development trend and customers' demands, kept laying solid management foundation, tried hard in building
excellent own brand ethnic group and high efficiency famous brand watch comprehensive service system. Thanks to the
joint efforts of all the colleagues of the Company, the Company realized sales revenue amounting to CNY
2,993,864,561.43 in the reporting year, a year-on-year drop by 5.32%; the realized net profit attributable to the Company's
shareholders amounted to CNY 110,662,681.59, a year-on-year drop by 9.07% and the net cash flow generated from
operation activities amounted to CNY 455,759,094.15.
During the reporting period, the Company achieved new progress in optimizing the business model of \"products+channel\"
and improving the whole value chain arrangement; continuously carried forward the brand development strategy with
FIYTA, high-end brands, Jonas & Verus and JEEP as the subjective with coverage of high, medium and fashion brands.
The exclusive operation of Beijing Brand watches has been granted by means of authorization which has enriched its own
brand ethnic group. and became a new member of the brand ethnic group. The Company's innovative design center
was elected \"an industrial design center at national level\", the driving units project was substantially carried forward; the
Company's core ability in the professional supporting platform for research, design, productions was further improved; the
channel system with multi-dimensional comprehensive coverage of high, medium, fashion, e-commerce, domestic and
overseas jointly constructed by HARMONY, FIYTA Sales Co., Ltd., FIYTA Hong Kong and 68zhan.com got further
developed and favorably raised the market share of the Company's retail business and supported the sustainable
development of the Company's product brand.
During the reporting period, with the joint collaboration of the research, design, production and sales departments of
FIYTA brand, the brand construction based on 4P+C brand has been improved and the brand reputation has been
continuously raised, and the brand competiveness has been gradually manifested and the market share has been
continuously expanded. So far, FIYTA Brand has entered and been stationed in 30 countries/regions and the number of
overseas channels has broken through 100 and the number of domestic channels has broken through 3000 and brand
competitive edge has been steadily improved. Meanwhile, based on sustainable development and enrichening series
products and with combination of application of the intellectual technology, the Company created FIYTA Impress.Series
Light Smart Wrist Watch together with ALIBABA Group which have brought about brand new experience to the users.
During the reporting period, the operation efficiency and customer satisfaction of FIYTA Brand have been continuously
improved. The Company realized a operation revenue amounting to CNY 897,301,500.23, a year-on-year growth of
1.36%. Meanwhile, the Company has enthusiastically carried forward the development strategy of the Company's
high-end brands, fashion brands and Beijing brand.
During the reporting period, HARMONY Channel Brands have established a business model transition from \"a famous
brand watch retail service provider\" towards \"a famous brand watch comprehensive service providers\". In the face of
complicated and changeable high-end consumption environment, HARMONY closely centered on the annual work theme
of \"values, customers, deep ploughing, innovation and profit\", focused on the four tasks of \"study on customers, deep
ploughing in operation, innovative development and striving to acheive great success\", put forth effort on developing
\"three high\" team, positively coped with changes of the market environment, continuously developed customer research
work so as to affine customers and improve the customers' consumption experience; with \"deep ploughing\" as the
orientation, continuously carried out the per-unit-yield improvement work, adjusted the business structure, cut short the
redundant investment, replaced the low efficiency assets and improved the assets operation efficiency; with profit as the
objective, conduct dynamic monitoring of the operation of physical stores, and adjusted and optimized the store structure
in a timely way. In the reporting period, under the very difficult circumstances of the market, a preliminary result was
achieved in business model transition of HARMONY famous brand watches, the gross profit rate of sales was raised and
the profit on operation was significantly improved. The Company realized operation revenue amounting to CNY
1,973,725,639.76 with a year-on-year drop of 8.10%. Meanwhile, the Company's Grand Gallery got steady growth in
channel development and sales income, and the efficiency of operation was continuously improved, the e-commerce
channel was boosted steadily and the repairing service developed quickly and the Company's channel business income
was raised enthusiastically and the construction of the channel system was enriched.
During the reporting period, the designing, R & D competence and the superiority in competitiveness of the Company's
innovative design center and the technology center were further enhanced; the supply chain management ability and agile
manufacturing ability of the manufacture platform were continuously improved, the production efficiency and product
quality were constantly improved and the products were further well sold and enjoyed positive comments from the
consumers. The spaceflight watches continuously developed and produced by the Company completed various tasks of
Shenzhou-11 Airship; the Company implemented the informatization strategy on comprehensive way and entirely got
online SAP information management system which has greatly improved the Company's organization operation efficiency.
The construction of the ability of these platforms has better supported the sustainable development of the Company's
\"products+channel\" business model.
In the reporting period, the principal part of the Company's FIYTA Watch R & D and Manufacture Center has been put into
application progressively and the Company's revenue from the properties kept steady growth continuously and the
operation revenue realized reached RMB 99,036,108.21, with a year-on-year growth of 4.39%.
Movements of the Key Financial Items in 2016 are summarized as follows:
Statement Items 2016 2015 Increase/ Decrease Cause of the Movements
(%)
Operating revenue 2,993,864,561.43 3,162,196,212.90 -5.32%
Operating costs 1,772,811,718.01 1,929,513,666.04 -8.12%
Sales expenses 760,530,356.03 779,536,520.59 -2.44%
Administrative expenses 201,274,142.02 198,077,866.76 1.61%
Financial expenses 68,887,564.91 94,347,464.79 -26.99%
Net cash flow arising from 455,759,094.15 396,236,992.41 15.02%
operating activities
Net cash flow arising from -185,209,981.10 -230,011,696.17 -19.48%
investment activities
Net cash flow arising from -482,612,797.72 354,689,968.60 It was mainly due to that the non-public
investment activities issuing as of year 2015 of A shares was
completed and the bank borrowings
were reduced in the reporting year.
II. Analysis on Principal Businesses
1. General
Refer to “I. General” of “Discussion and Analysis of the Management”
2. Revenue and Costs
(1) Operating Revenue Composition
In CNY
2016
Year-on-year
Proportion in the Proportion in the
increase/decreas
Amount operating Amount operating
e
revenue revenue
Total operating 2,993,864,561.4 3,162,196,212.9
100% 100% -5.32%
revenue 3
Classified based on sectors
Watches 2,871,027,139.9 95.90% 3,032,902,719.4 95.91% -5.34%
9
Lease 99,036,108.21 3.30% 94,871,950.77 3.00% 4.39%
Others 23,801,313.23 0.80% 34,421,542.72 1.09% -30.85%
Classified based on products
1,973,725,639.7 2,147,608,465.8
Watches 65.94% 67.91% -8.10%
6
FIYTA watches 897,301,500.23 29.96% 885,294,253.56 28.00% 1.36%
Lease 99,036,108.21 3.30% 94,871,950.77 3.00% 4.39%
Others 23,801,313.23 0.80% 34,421,542.72 1.09% -30.85%
Classified based on regions
1,034,176,502.1
South China 996,436,356.08 33.28% 32.71% -3.65%
Northwest China 489,661,181.56 16.35% 524,570,697.36 16.59% -6.65%
North China 470,509,053.79 15.72% 504,961,668.45 15.97% -6.82%
East China 424,998,042.02 14.20% 449,126,026.79 14.20% -5.37%
Northeast China 275,092,433.66 9.19% 303,634,173.44 9.60% -9.40%
1,034,176,502.1
Southwest China 996,436,356.08 33.28% 32.71% -3.65%
(2) Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating
Profit
Does the Company need to comply with the requirements on information disclosure for special industries?
No
In CNY
Year-on-year Year-on-year Year-on-year
increase/decreas increase/decreas increase/decreas
Operating
Operating costs Gross profit rate e of operating e of operating e of gross profit
revenue
revenue over the costs over the rate over the
previous year previous year previous year
Sectors
2,871,027,139.9 1,755,381,683.7
Watch 38.86% -5.34% -7.91% 1.71%
9
Lease 99,036,108.21 13,544,062.15 86.32% 4.39% -6.81% 1.64%
Others 23,801,313.23 3,885,972.13 83.67% -30.85% -56.31% 9.51%
Products
Famous brand 1,973,725,639.7 1,467,331,518.3
25.66% -8.10% -9.64% 1.27%
watches 6
FIYTA watches 897,301,500.23 288,050,165.34 67.90% 1.36% 2.08% -0.23%
Lease 99,036,108.21 13,544,062.15 86.32% 4.39% -6.81% 1.64%
Others 23,801,313.23 3,885,972.13 83.67% -30.85% -56.31% 9.51%
Regions
South China 996,436,356.08 505,052,726.99 49.31% -3.65% -10.24% 3.72%
Northwest China 489,661,181.56 313,757,695.26 35.92% -6.65% -7.85% 0.83%
North China 470,509,053.79 303,527,675.35 35.49% -6.82% -7.75% 0.65%
East China 424,998,042.02 258,333,324.92 39.22% -5.37% -7.03% 1.08%
Northeast China 275,092,433.66 172,735,780.16 37.21% -9.40% -10.48% 0.76%
Southwest China 337,167,494.32 219,404,515.32 34.93% -2.48% -3.14% 0.45%
While adjustment of the statistical caliber for the principal business data took place in the reporting period, the principal
business data with the statistical caliber adjusted at the end of the reporting period.
Inapplicable
(3) Is the income from sales in kind greater than service revenue
√ yes □ no
Year-on-year
Based on sector(s) Items Unit 2016
increase/decrease
Sales volume pcs 975,070 967,866 0.74%
FIYTA watches Output pcs 872,116 1,185,408 -26.43%
Stock pcs 897,180 1,000,134 -10.29%
Causes of the change in the year-on-year data by over 30%
Inapplicable
(4) Implementation of Important Sale Contracts Concluded at the End of the Reporting Period
□ Applicable √ Inapplicable
(5) Composition of Operating Costs
Classified based on sectors and products
In CNY
2016
Classified Year-on-year
Proportion in Proportion in
based on Items increase/decr
Amount operating Amount operating
sectors ease
costs costs
Merchandise
1,467,331,51 1,623,918,119
Watches procurement 82.77% 84.16% -9.64%
8.39 .34
cost
255,161,011.8 243,872,473.
Watches Raw materials 14.39% 12.64% 4.63%
3
23,587,107.9 26,043,601.6
Watches Labor cost 1.33% 1.35% -9.43%
8
Depreciation
Watches 2,084,515.81 0.12% 2,186,010.90 0.11% -4.64%
cost
Watches Utilities 1,462,288.72 0.08% 2,566,336.12 0.13% -43.02%
Watches Rental fee 2,408,563.43 0.14% 2,211,474.27 0.11% 8.91%
Watches Others 3,346,677.57 0.19% 5,287,170.65 0.27% -36.70%
Depreciation
Lease 9,144,044.91 0.52% 9,144,144.60 0.47% 0.00%
cost
Lease Labor cost 1,540,446.00 0.09% 480,178.00 0.02% 220.81%
Lease Others 2,859,571.24 0.16% 4,909,628.18 0.25% -41.76%
Procurement
Others 3,885,972.13 0.22% 8,894,528.54 0.46% -56.31%
cost
In CNY
2016
Classified Year-on-year
Proportion in Proportion in
based on Items increase/decr
Amount operating Amount operating
products ease
costs costs
Merchandise
Brand 1,467,331,51 1,623,918,119
procurement 82.77% 84.16% -9.64%
watches 8.39 .34
cost
FIYTA 255,161,011.8 243,872,473.
Raw materials 14.39% 12.64% 4.63%
watches 3
FIYTA 23,587,107.9 26,043,601.6
Labor cost 1.33% 1.35% -9.43%
watches 8
FIYTA Depreciation
2,084,515.81 0.12% 2,186,010.90 0.11% -4.64%
watches fee
FIYTA
Utilities 1,462,288.72 0.08% 2,566,336.12 0.13% -43.02%
watches
FIYTA Rental fee 2,408,563.43 0.14% 2,211,474.27 0.11% 8.91%
watches
FIYTA
Others 3,346,677.57 0.19% 5,287,170.65 0.27% -36.70%
watches
Depreciation
Lease 9,144,044.91 0.52% 9,144,144.60 0.47% 0.00%
fee
Lease Labor cost 1,540,446.00 0.09% 480,178.00 0.02% 220.81%
Lease Others 2,859,571.24 0.16% 4,909,628.18 0.25% -41.76%
Procurement
Others 3,885,972.13 0.22% 8,894,528.54 0.46% -56.31%
cost
Note:
Inapplicable
(6) Is there any change in the consolidation scope in the reporting period
Kunming Lishan Company, one of HARMONY's subsidiaries was cancelled on December 28, 2016 and the Company did
not put it in the consolidation at the end of the reporting period.
(7) Is there any significant change or adjustment related situation take place in the Company’s
business, products or services in the reporting period
Inapplicable
(8) Major trade debtors and major suppliers
Information about the major trade debtors
Total sales to the top five customers, in CNY 326,013,262.41
Proportion of the total sales to the top five
10.90%
customers in the total sales of the year,
Proportion of the sales volume to the top five
customers in the total sales to the related parties in 2.42%
the year
Information of the top 5 customers
Proportion in the total sales of the
No. Customers Sales (in CNY)
year
1 VIP.COM 88,821,776.04 2.97%
2 Rainbow Supermarket 72,415,842.70 2.42%
3 Yongan Department Store Co., Ltd. 57,448,055.42 1.92%
4 Pinghe Tong (China) Ltd. 54,098,217.88 1.81%
5 Kaiyuan Shopping Mall Co., Ltd. 53,229,370.37 1.78%
Total -- 326,013,262.41 10.90%
Other Information about the major customers
Of the top five customers, Rainbow Supermarket is one of the controlled subsidiaries of AVIC International Holdings
Limited and is one of the Company’s related legal persons.
Top 5 suppliers
Total amount of purchase from top five suppliers, in
985,337,510.19
CNY
Proportion of the purchase amount from the top
five suppliers in the Company’s total purchase 55.58%
amount
Proportion of purchase amount from the top 5
suppliers in the total purchase amount from the 0.00%
related parties in the year
Information about the top 5 suppliers
Proportion in the total purchases of
No. Suppliers Purchase amount, in CNY
the year (%)
SMH Swiss Watch Trading
1 549,811,610.16 31.01%
(Shanghai) Co., Ltd.
Ningbo Shangheng Watches Co.,
2 198,705,712.37 11.21%
Ltd.
3 Rolex (Guangzhou) Ltd,. 110,943,641.88 6.26%
Shenzhen C.S.J. Watch Promotion
4 65,369,222.20 3.69%
Ltd.
5 Lifeng Commerce Co., Ltd. 60,507,323.58 3.41%
Total -- 985,337,510.19 55.58%
Other information about the major suppliers
Inapplicable
3. Expenses
In CNY
Year-on-year
2016 2015 increase/decre Note to significant changes
ase
Sales expenses 760,530,356.03 779,536,520.59 -2.44%
Administrative
201,274,142.02 198,077,866.76 1.61%
expenses
Financial expenses 68,887,564.91 94,347,464.79 -26.99%
4. Investment in R & D
The Company has always attached importance on technology innovation work all the time, enhances its core
competitiveness through innovation of the technology with own intellectual property, consolidate its leading position of
self-innovation in China’s clock and watch brands so as to realize its vision of becoming an international brand and
improve its international competitiveness in the industry. In year 2016, the Company’s total investment in R & D amounted
to CNY 41,757,819.70, a 11.41% growth over the previous year, taking 1.76% of the net assets as audited in the most
recent period and taking 1.39% of the operation revenue as audited in the most recent period. The growth of the R & D
budget in 2016 was mainly for consolidating the Company's leading position in self-dependent innovation in China's watch
brands. The Company increased investment in such key technology fields as space watches, industrial design,
timekeeping technology, research on application of new materials, etc., greatly increased personnel, equipment, research
budget, etc., and achieved a number of scientific research achievements. In 2016, the Company applied for 40 patents for
invention and utility models. By virtue of the accumulation in innovation mechanism, innovation ability, innovative talents
and innovation products, etc., the Company has been granted the title of \"National Certified Enterprise Technology
Center\" in addition to the existing titles of \"Hi-tech Enterprise at National Level\", \"Industrial Design Center at National
Level\" and \"National Technology Innovation Demonstration Enterprise\", and has been elected \"a pilot enterprise for
implementing the standards for industralization and informatization integration management system\" and \"Model
Collective in Scientific and Technological Innovation of Light Industry in the 12th Five-Year Plan\".
Information of Investment in R & D
2016 2015 Variable proportion
Number of R & D staff
43 39 10.26%
(persons)
Proportion of R & D staff in
0.81% 0.70% 0.11%
total employees
Amount of investment in R
41,757,819.70 37,481,362.43 11.41%
& D, in CNY
Proportion of investment in
1.39% 1.19% 0.20%
R & D in operating revenue
Amount of capitalized
investment in R & D (in 0.00 0.00 0.00%
CNY)
Proportion of capitalized
investment in R & D in the 0.00% 0.00% 0.00%
total investment in R & D
Cause(s) of significant change of the total investment in R & D in the operating revenue
Inapplicable
Note to the cause of significant change in the capitalization rate of investment in R & D and note to the reasonability
Inapplicable
5. Cash flow
In CNY
Year-on-year
Items 2016
increase/decrease
Sub-total of cash flow
received from operation 3,450,624,235.76 3,696,332,927.45 -6.65%
activities
Subtotal of cash flow paid
2,994,865,141.61 3,300,095,935.04 -9.25%
for operating activities
Net cash flow arising from
455,759,094.15 396,236,992.41 15.02%
operating activities
Sub-total of cash flow-in
received from investing 4,534,113.94 340,367.11 1,232.12%
activities
Sub-total of cash flow paid
189,744,095.04 230,352,063.28 -17.63%
for investment activities
Net cash flow arising from
-185,209,981.10 -230,011,696.17 -19.48%
investment activities
Sub-total cash flow
received from financing 1,405,213,268.91 2,937,413,848.66 -52.16%
activities
Sub-total cash flow paid for
1,887,826,066.63 2,582,723,880.06 -26.91%
financing activities
Net cash flow arising
-482,612,797.72 354,689,968.60 -236.07%
from financing activities
Net increase in cash and
-210,160,120.12 522,507,805.39 -140.22%
cash equivalents
Note to the major influence factors for the significant change in the relevant year-on-year data
Net cash flow-in arising from investment activities:
During the reporting period, growth of cash flow-in from investment activities by 1,232.12% on year-on-year basis was
mainly due to increase of flow-in from disposal of fixed assets of Montres Chouriet SA.
Cash flow-in arising from financing activities:
During the reporting period, a drop of cash flow-in from financing activities by 52.16% was mainly due to that the Company
completed the work of raising proceeds by non-public issuing of A shares in 2015 and the bank loans were reduced in the
reporting year accordingly.
Net cash-flow arising from financing activities:
During the reporting period, that the cash flow arising from financing activities decreased by 236.07% over the same
period of the previous year was mainly due to that Company completed the work of raising proceeds by non-public issuing
of A shares in 2015 and the bank loans were reduced in the reporting year accordingly.
Net increase of cash and cash equivalent:
In the reporting period, that net increase of cash and cash equivalent dropt by 140.22% was mainly due to that the
Company successfully completed non-public issuing of A-shares.
Cause(s) of significant difference in the net cash flow arising from the operating activities and the net profit in the reporting
year
Inapplicable
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Assets and Liabilities
1. Significant Changes in Assets Composition
In CNY
End of 2016 End of 2015
Proportion
Proportion Proportion
increased/d Note to significant changes
Amount in total Amount in total
ecreased
assets assets
Monetary 428,802,75 638,962,87
10.71% 15.05% -4.34%
capital 5.81 5.93
Accounts 306,671,02 304,725,67
7.66% 7.18% 0.48%
receivable 1.69 6.29
1,997,097, 2,092,691,0
Inventories 49.87% 49.28% 0.59%
192.38 19.29
Investment
244,202,63 216,948,19
based real 6.10% 5.11% 0.99%
5.09 3.02
estate
Long term
43,423,624 43,221,572.
equity 1.08% 1.02% 0.06%
.87
investment
611,204,16 361,979,82
Fixed assets 15.26% 8.52% 6.74%
9.03 8.01
Construction-i 173,189,27
0.00 0.00% 4.08% -4.08%
n-process 4.57
Short term 1,098,438, 27.43% 988,186,20 23.27% 4.16%
loan 070.00 0.00
Long term 115,301,04 90,994,964.
2.88% 2.14% 0.74%
loan 8.00
2. Assets and liabilities measured based on fair value
Inapplicable
3. Restriction on rights in the assets ended the reporting period
A property located in Hong Kong owned by Station 68 Ltd. with the net value of CNY 3,054,864.89 has been used as
collateral for the overseas long term loans amounting to CNY 227,187.52; a property owned by Montres Chouriet SA with
net value of CNY16,958,617.77has been used as collateral for the overseas long term loans amounting to CNY
5,439,120.00. The total book amount of the aforesaid properties was CNY20,013,482.66.
V. Investment
1. General
Inapplicable
2. Significant equity investment acquired in the reporting period
Inapplicable
3. Significant non-equity investment in process in the reporting period
Inapplicable
4. Financial assets investment
(1) Portfolio investment
Inapplicable
(2) Investment in derivatives
Inapplicable
5. Application of raised capital
(1) General application of the raised capital
In CNY 10,000
Proportio
Total
n of the
Total raised Total
total
Total accumula capital accumula Amount
accumula Applicatio
amount tive whose tive of the
tive Total n and
of raised amount applicatio raised raised
Total raised raised status of
Year of Way of capital of raised n capital capital
capital capital capital the
raising raising used in capital purpose whose idled for
raised whose not yet raised
the used has been applicatio more
applicatio used capital
reporting accumula changed n than 2
n unused
period ted in the purpose years
purpose
reporting has been
has been
period changed
changed
Issuing
Inapplic
2012 compan 40,000 0 40,000 0 0 0.00% 0
able
y bonds
Non-pu
blic
issuing 60,000. 31,492. 47,850. 10,721. Inapplic
2015 0 0 0.00%
of 00 27 68 75 able
A-share
s
100,000 31,492. 87,850. 10,721.
Total -- 0 0 0.00% --
.00 27 68
Note to General Application of the Raised Capital
The Company held the 33rd session of the Sixth Board of Directors and 2012 1st extraordinary general meeting
respectively on June 19, 2012 and July 6, 2012. The meetings reviewed and approved the Proposal of Issuing
Company Bonds, etc. according to which, the Company planned to issue company bonds with a size not exceeding
CNY400 million and with a term not exceeding 5 years (with 5 years inclusive) which would be used for replacing bank
loan and replenishing the working capital. On September 9, 2012, approved through verification by China Securities
Regulatory Commission (CSRC) with Document ZHENG JIAN XU KE [2012] No. 1209, the Company was approved to
issue company bonds with the size not exceeding CNY 400 million. The Company issued CNY 400 million of bonds in
the said period. After deduction of the issuing costs, the net raised capital amounting to CNY396.9 million was remitted
to the bank account designated by the Company on March 5, 2013. RSM China CPAs, the CPAs engaged by the
Company issued the capital verification reports of ZHONG RUI YUE HUA YAN ZI [2013] No. 0053, ZHONG RUI YUE
HUA YAN ZI [2013] No. 0054 and ZHONG RUI YUE HUA YAN ZI [2013] No. 0055 respectively for the frozen capital for
subscription of the on-line bond issuing, the frozen capital for subscription of the off-line placement and the actual
raised capital conditions. Approved by Shenzhen Stock Exchange with Document SHEN ZHENG SHANG [2013] No.
99, the bonds have been listed with both SZSE Centralized Bidding System and the Comprehensive Agreement
Based Transaction Platform commencing from March 29, 2013 with the abbreviation of the security as “12 YADA
BOND” and security code as “112152”. The issuing of the company bonds has been completed. The capital raised
from the issuing was remitted to the bank account designated by the Company on March 5, 2013. Up to now, the
Company had used up all the raised capital and no change has taken place in the application purpose of the raised
capital. By February 29, 2016, the Company had redeemed all the company bonds and the company bonds have
been delisted.
The Company held the 18th session of the Seventh Board of Directgors and 2014 Annual General Meeting respectively
on April 16, 2015 and June 17, 2015. The meetings reviewed and approved the Proposal on the Plan for Non-public
Issuing of A-shares to the Specified Investors, etc., according to which the Company planned to issue in a non-public
way A-shares to no more than 10 (with 10 inclusive) specified investors with the total raised capital not exceeding CNY
600 million, which would be applied for four projects, including the project of launching new FIYTA watches and
supplement the working capital. The application for non-public issuing of A-shares was reviewed and approved by
CSRC Securities Issuance Examination Committee (CSIEC) on October 30, 2015. On November 17, 2015, the
Company received Official Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing ( ZHENG JIAN XU KE
[2015] No. 2588 which authorized the Company to issue no more than 46,911,649 new shares in non-public way. The
actual number of A-shares actually issued in the non-public issuing activity was 45,977,011 shares and the raised
capital amounted to CNY 599 million. After deduction of the underwriting fee, the carised capital amounted to RMB
585 million,designated by the Company on December 18, 2015. Grant Thornton Certified Public Accountants (Special
General Partnership) issued the Capital Verification Reports ZHI TONG YAN ZI (2015) No. 441ZC0653, ZHI TONG
YAN ZI (2015) No. 441ZC0652 respectively for the raised capital. Up to now, the capital raised from non-public issuing
of A-shares is going to be applied for the originally designated application purpose and there exists no such a case
that the application purpose has been changed. The concerned follow-up commitments have been completed in
implementation.
(2) Promised Projects with Raised Capital
In CNY 10,000
Date
Amount Investm Has
when
Has the Total accumul ent Has the significa
the
project promise atively progres predicte nt
Total Amount project Result
Promised investment been d invested s by the d change
investm invested has realized
projects and change investm up to end of operatio taken
ent after in the reached in the
investment with the d ent the end the n result place in
adjustm report the reportin
over-raised capital (includin with of the report been the
ent (1) period predicte g period
g partial raised report period reached feasibilit
d
change) capital period (%) (3) ? y of the
applicab
(2) = (2)/(1) project?
le status
Investment projects as promised
Repayment of bank 100.00
No 30,000 30,000 0 30,000 0 Yes No
loan %
Replenishing the 100.00
No 10,000 10,000 0 10,000 0 Yes No
working capital. %
Project of Launching 18,000 18,000 17,981 18,000 100.00 3,845.
No Yes No
New FIYTA Watches .00 .00 .66 .00 %
FIYTA E-commerce 12,000 12,000 5,804. 7,017. 58.48 2,114.
No Yes No
project .00 .00 02 76 %
FIYTA Brand Marketing 10,000 10,000 3,350. 8,051. 80.51
No - Yes No
Promotion Project .00 .00 52 17 %
Technical Service
5,000. 5,000. 1,313. 26.27
Website Construction No 887.97 207.00 Yes No
00 00 63 %
Project
Replenishing working 15,000 15,000 3,468. 13,468 89.79
No - Yes No
capital .00 .00 10 .12 %
Subtotal of investment 100,00 100,00 31,492 87,850 6,166.
-- -- -- -- --
projects as committed 0 0 .27 .68
Intended investment with the over-raised capital
Inapplicable
Subtotal of the
intended investment
-- 0 0 0 0 -- -- 0 -- --
with the over-raised
capital
100,00 100,00 31,492 87,850 6,166.
Total -- -- -- -- --
0 0 .27 .68
Case of failure to
satisfy the plan
progress or predicted
Inapplicable
revenue and the cause
(based on specific
project)
Note to the significant
change in the feasibility Inapplicable
of a project
Amount, application Inapplicable
and application
progress of the
over-raised capital
Change of the site for Inapplicable
implementation of the
project invested with
the raised capital
Adjustment of the way Inapplicable
of implementation of
the project invested
with the raised capital
Applicable
The Company raised proceeds from non-public issuing of A-shares amounting to CNY 599 million. After deduction
of the underwriting fee, the proceeds amounted to CNY 585 million. According to the Proposal for Replacing the
Self-raised Fund Earlier Invested in the Project(s) to be Invested with Raised Capital with the Raised Capital
Earlier investment in reviewed and approved at the 5th session of the Eighth Board of Directors, the Company decided to replace the
and replacement of the self-raised capital invested earlier with the raised capital amounting to CNY 63.5839 million. Ended December 31,
project invested with 2016, the replacement with the proceeds was completed. The said replacement with the raised capital does not
the raised capital contradict the implementation plan of the projects to be invested with the raised capital from the non-public issuing
and shall not affect the normal process of the projects to be invested with the raised capital. There exists no such
situation that the investment plan for the raised capital has been changed in disguised form or that it has harmed
the shareholders’ interest. The time distance from replacement of the raised capital to the entry of the raised capital
into the bank account should not be less than 6 months.
The idled raised capital Inapplicable
used to replenish
working capital for time
being
Amount of the balance Inapplicable
of the raised capital
incurred in project
implementation and the
cause
Application of the
raised capital not yet
Inapplicable
used and the
whereabouts
Application of the
raised capital and the
existing problems not Inapplicable
disclosed or other
situation
(3) Change of the Projects Invested with the Raised Capital
Inapplicable
VI. Sales of Significant Assets and Equity
1. Sales of Significant Assets
Inapplicable
2. Sales of Significant Equity
Inapplicable
VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit
by over 10%.
In CNY
Net
Operating
Company Principal Registered Total assets, assets Turnover in Net profit (in
Company type profit (in
Names business capital in CNY (CNY) CNY CNY)
CNY)
Wholesale,
retail and
repairing
services of
watches and
components.I
mport &
export (based
on SHEN
MAO JIN
ZHUN ZI NO.
[2001] No.
2204; sales of
Shenzhen
general
Harmony
merchandise,
World 1,890,581,5 744,730,2 1,947,345, 36,104,562. 27,661,334.
Subsidiary jewelry, 600,000,000
Watches 26.89 88.24 369.13 85
diamond
Center Co.,
ornaments,
Ltd.
leatherwares,
pens, ties, tie
clips,
electronic
products,
communicatio
n equipment;
domestic
trading;
property
management;
advertising
business.
Design, R & D
and sales of
watches,
timing
instruments,
and spare and
accessory
FIYTA Sales 723,981,732 411,494,6 963,197,36 -9,640,280.
Subsidiary parts; sales of 450,000,000 690,181.13
Co., Ltd. .88 34.03 2.05
jewelry and
ornaments;
import &
export of
watches and
repairing
services.
R & D, design
and sales of
various
watches and
driving units,
watchcases,
watchbands,
and other
spare and
accessory
parts; sales of
Shenzhen sophisticated
FIYTA timepieces
Sophisticate and their pare
129,164,663 57,795,71 323,019,39 44,985,371. 41,841,338.
d Subsidiary and 10,000,000
.45 3.17 4.20 40
Timepieces accessory
Manufacture parts;
Co., Ltd. wholesale of
K gold
ornaments
and
watches,supe
rhard
materials
(hard alloy,
sophisticated
ceramics)
spare and
accessory
parts; and
development
of technology
for the
aforesaid
products and
supporting
business;
import &
export.
Production of
various
watches and
driving units,
watchcases,
watchbands
and other
spare and
accessory
parts;
production of
sophisticated
timepieces
and their
sophisticated
spare and
accessory
parts;
processing of
K gold
ornamental
watches,
superhard
material (hard
alloy,
sophisticated
ceramics)
spare and
accessory
parts; and
repairing of
the aforesaid
products.
Shenzhen Subsidiary R&D, 10,000,000 72,588,537. 58,715,06 128,952,53 4,190,321.2 4,009,291.8
FIYTA production 46 5.04 8.58 9
Technology sales of
Developme watches
nt Co., Ltd. (excluding the
products in
the catalogue
of measuring
instruments
under control
according to
the law);
production &
machining
and sales of
sophisticated
parts and
technology
development;
investment
and initiation
of industrial
entities
(application
shall be
submitted for
a specific
project);
domestic
commerce,
materials
supply and
sales.
Trading of
FIYTA
watches and
(Hong 462,147,658 202,650,6 119,041,43 -7,931,545. -9,001,023.
Subsidiary accessories 137,737,520
Kong) .83 23.42 9.40 80
and
Limited
investment.
Design, R &
D, sales of
Shiyuehui
timing
Boutique 9,956,890.2 2,972,009 6,280,563.
Subsidiary instruments 5,000,000 660,405.22 508,194.66
(Shenzhen) 7 .11
and spare and
Co., Ltd.
accessory
parts; brand
planning,
design, R&D,
sales and
wholesale of
general
merchandise,
jewelry,
ornaments
and gifts (with
the restricted
items
exclusive);
brand
planning;
advertising
business;
import &
export.
production of
timing
instruments
and spare and
accessory
parts;
production of
general
merchandise,
jewelry,
ornaments,
gifts.
Production
(outward
processing)
and sales of
watches,
Shanghai Mutual watch driving
Watch shareholding units, watch 105,456,418 97,909,69 86,054,541 3,124,281.7 2,343,211.2
15,350,000
Industry company parts, .40 5.16 .55 0
Co., Ltd. sophisticated
instruments
and
accessories;
goods import
& export and
technology
import &
export.
Subsidiaries acquired and disposed in the reporting period
Inapplicable
Particulars about the principal holding and mutual shareholding companies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Development Prospect
(I) Development Trend of the Industry
In 2017, the brand watch market shall gradually recover its rationality. With continuous upgrading of consumption quality
of medium- and high-income group in China, the demand on watches for self-use shall maintain steady growth; the
consumption market share of high quality brand watches is expected to expand continuously. We maintain optimistic
judgment for long term development potential of the brand watch market.
(II) Development Strategy
The Company shall continuously develop the business model of \"products + channel\", establish most outstanding watch
brand group and brand watch comprehensive service body in the domestic watch industry, carry forward integration and
improvement of the key value chain, improve the operation quality and operation efficiency, keep a foothold on the
domestic market, unceasingly extend international cooperation and promote internationalization development of watch
business.
(III) Summary of Operation Plan in 2017
1. To create a customer-focus organization. The Company shall continue to carry out whole-staff based study on
customers, approach to and make deeper understanding of the customers; adjust the organization structure based on the
customer value improvement process system and carry forward business innovation, construct a new customer
relationship operation and linkage mechanism;
2. To systematically improve the brand image. The Company shall insist on the brand development strategy, apply \"4P+C\"
brand building model, systematically improve own watch brand image and expand the brand market share.
3. To improve the per unit yield performance on overall basis. The Company shall deeply cultivate the principal business of
watches, with customers' demand as the orientation, make innovative products and services, optimize the structure of
channel, brands and products, and practically elevate growth of per unit yield benefit.
4. To develop repairing and technical service business. The Company shall continue to expand the investment
construction of technical service businesses of HARMONY, TRUSTWORTHY, etc. promote innovation of the business
model and operation management, speed up overall arrangement, optimize the network and improve the earning power.
5. To develop internationalization business. The Company shall enhance the understanding of the international market,
study on overseas consumption market and differences of different customer groups, integrate and develop overseas
business, and devote greater effort to develop international business space.
6. To speed up transition and upgrading of business model. The Company shall take the customers' demand as the
orientation, enhance innovative management, increase investment in and enhance development of innovative businesses,
further strengthen the proprietary brands and cooperative value of channels and accelerate transition and upgrading of
the business model.
7. To set up data analysis ability. The Company shall integrate customer information resources by using the Internet and
big data, get through the channel of internal information resources, constantly improve the informatization system and
realize high efficiency datamation competition decision making analysis so as to understand customers' consumption
habit, and improve the product and service supporting efficiency.
8. To improve service platform construction. The Company shall continuously improve the ability of the platforms of design,
R & D, manufacture, etc. to offer the comprehensive service and support to proprietary brands.
9. To enhance organization ability construction. The Company shall take the Company's values as the driving force, apply
FIYTA operation innovation system in a comprehensive and in-depth way, optimize talents incentive measures, constantly
carry forward core speciality construction.
(IV) Capital Necessary for Future Development
According to the Company’s business development plan and financial budget planning in 2017, for the purpose of
satisfying the capital demand for investment and operation and at the same time timely seizing the development
opportunity which is to be brought about from change of the market, the Company is going to apply for bank credit line not
exceeding CNY 1.8 billion in various ways, including credit, secured loan, loans through subsidiaries, mortgage, etc.
(V) Risks Possibly to be Confronted with
1. As there exists uncertainty in the market environment, it becomes more and more difficult to make advance judgment
on the watch retail business and market environment. With the change of consumers' and customers' preferences and
business transformation, our self-renewal and improvement ability still needs to be improved.
2. Investment in and construction of the brand key value chain are still in process. It is still necessary to constantly insist
on investment for the purpose of mastering the core technology of the driving units and key spares and accessories, etc.
3. The principal business model of retail and repairing of watches still belongs to traditional industry which relies on
endophytism and continuous outstanding development with the varieties and patterns to be slightly unitary.
4. Lateral communication and resources synergistic interaction still need to be improved; comprehensive application of
external resources still needs to be enhanced; it is still necessary to enhance innovation in terms of management thought
and operation pattern.
X. Statement of Such Activities as Reception of Survey, Communications, Interview,
etc.
1. Registration Form of the Activities, such as Reception of Survey, Communications, Interviews,
etc. in the Reporting Period
Types of visitors
Reception time Way of reception Index of basic information of survey
received
http://irm.cninfo.com.cn/ircs/ssgs/c
October 10, 2016 Field survey Institution ompanyIrmForSzse.do?stockcode
=000026
http://irm.cninfo.com.cn/ircs/ssgs/c
October 13, 2016 Field survey Institution ompanyIrmForSzse.do?stockcode
=000026
http://irm.cninfo.com.cn/ircs/ssgs/c
November 15, 2016 Field survey Institution ompanyIrmForSzse.do?stockcode
=000026
http://irm.cninfo.com.cn/ircs/ssgs/c
November 24, 2016 Field survey Institution ompanyIrmForSzse.do?stockcode
=000026
Number of reception
Number of institutions received
Number of persons received
Number of other visitors received
Is there any important information
No
disclosed, revealed or leaked to the public?
Chapter 5 Significant Events
I. Profit Distribution for Common Stock and Conversion of Capital Reserve into
Share Capital
Preparation, Implementation or Adjustment of the Policy for Common Stock Profit Distribution, Especially the Policy for
Cash Dividend Distribution
The Company's 2015 Annual Profit Distribution Plan was reviewed and approved at the 6th session of the Eighth Board of
Directors held on March 8, 2016 and 2015 General Meeting held on May 20, 2016. It was resolved that with the total share
capital of 438,744,881 shares as at January 15, 2015 as the base, the Company distributed to the whole shareholders
cash dividend at CNY 1.00 for every 10 shares (with tax inclusive), 0 bonus share for every 10 shares; converted no
reserve into share capital. The implementation of the profit distribution plan was finished on June 28, 2016. For the detail,
refer to the Announcement on Implementation of the Profit Distribution for Year 2015 (2016-026).
Special Note to Cash Dividend Distribution Policy
Does it comply with the Articles of Association or the
Yes
resolution of the General Meeting?
Are the profit distribution criteria and proportions definite
Yes
and clear?
Are the relevant decision-making process and
Yes
mechanism complete?
Do independent directors do their best in performing their
Yes
duties and bring their duties into due play?
Do minority shareholders have opportunity to make full
expression of their opinions and appeal? Have their Yes
lawful rights and interests been fully protected?
In case of adjustment or variation of the cash dividend
distribution policy, do the conditions and procedures Inapplicable
comply with the regulations and transparant?
The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into share
capital in the past three years (with the reporting period inclusive):
According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared
specific cash dividend distribution plan after the Board of Directors and the Shareholders’ General Meeting have reviewed
strictly according to the requirements. In the past three years, the Company has well implemented the cash dividend
distribution policy, fully asked for the independent directors’ opinions, effectively ensured the minority shareholders’
benefit and made timely and accurate disclosure in its annual report and the relevant media,
Profit Distribution Plan in 2014: With the total share capital of 392,767,870 shares as at December 31, 2014 as the base,
the Company distributed to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax inclusive), 0
bonus share for every 10 shares; converted no reserve into share capital.
Profit Distribution Plan in 2015: With the total share capital of 438,744,881 shares as at January 15, 2016 as the base, the
Company is going to distribute to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
Profit Distribution Plan in 2016: With the total share capital of 438,744,881 shares as at Decenver 31, 2016 as the base,
the Company is going to distribute to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax
inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.
The accumulative amount of cash dividend distributed in the past three years took 100.83% of the annual average net
profit in the past three years, which complies with the rules and regulations.
Statement of cash dividends distributed in the past three years (with the reporting period inclusive)
In CNY
Net profit
attributable to the Ratio of the net profit
Company’s attributable to the Proportion of the
Amount of Cash Amount of cash
Year of Dividend shareholders in the Company’s cash dividend
Dividend (including dividend distributed
Distribution consolidated shareholders taken distributed in other
tax) in other way(s)
statements of the in the consolidated way(s)
year of dividend statements
distribution
2016 43,874,488.10 110,662,681.59 39.65% 0.00 0.00%
2015 43,874,488.10 121,702,057.44 36.05% 0.00 0.00%
2014 39,276,787.00 145,591,136.39 26.98% 0.00 0.00%
In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders of common
stock were positive but no common stock cash dividend distribution proposal has been put forward.
Inapplicable
II. Preplan for Profit Distribution and Conversion of Capital Reserve into Share
Capital in the Reporting Period
Bonus shares distributed at the rate of ___
(share) for every 10 shares
Dividend distributed at the rate of CNY___
1.00
for every 10 shares (with tax inclusive)
Number of shares converted for every 10
shares (shares)
Share capital base for the dividend
438,744,881
distribution preplan (shares)
Total cash dividend distributed (with tax
43,874,488.10
inclusive)
Profit available for distribution (CNY) 553,934,710.97
Proportion of the cash dividend in the total
100.00%
profit available for distribution (%)
Cash Dividend Distribution this Time
Others
Detailed information for profit distribution or conversion of capital reserve into share capital preplan
The Company’s profit distribution plan for 2016 was reviewed and approved at the 6th session of the Eighth Board of
Directors held on March 8, 2017 and is going to be submitted to 2016 Annual General Meeting for review. According to
the plan, the Company is going to distribute cash dividend at the rate of CNY 1.00 for every 10 shares (with tax
inclusive) and 0 bonus share to the whole shareholders with the total share capital as at January 15, 2015 totaling
438,744,881 shares as the base; and no public reserve is going to be converted into share capital. The profit
distribution plan is subject to review and approval of the General Meeting before implementation.
III. Implementation of Commitments
1. Commitments finished in implementation by the Company, shareholders, actual controller, acquirer, directors,
supervisors, senior executives or other related parties in the reporting period and commitments unfinished in
implementation at the end of the reporting period
Commitment Commitment Commitment Implementati
Commitments Promiser Description
type time deadline on status
Commitment for Equity Separation
Reform
Commitments in the acquisition report
or the written report on change of
equity
Commitment made at the time of asset
reorganization
The expected
subscribers
of the said
non-public
issuing
including
Caitong
Fund Manag
ement Co.,
Ltd.;
MANULIFE
Caitong TEDA Fund
Fund Manag Management
ement Co., Co, Ltd.;
Ltd.;
Xizang Invest
MANULIFE ment Co.,
TEDA Fund Ltd.;
Management
Golden Eagle
Co, Ltd.; Commitment Asset Manag
Completed in
Commitment made at IPO or Xizang Invest on restricted ement Co.,Lt January 15,
1 year implementati
re-financing ment Co., sales of d.; Sws Mu 2016
on
Ltd.; shares Fund
Golden Eagle Management
Asset Manag Co., Ltd.
ement Co., committed
Ltd.; Sws Mu that the
Fund shares
Management subscribed
Co., Ltd from the said
non-public
issuing must
not be
transferred
within 12
months
commecing
from the
listing of the
shares.
Other commitments to the minority
shareholders
Have the commitments been
Yes
implemented in a timely way
If the commitment has not been
implemented at the end of the reporting
period, it is necessary to explain the
Inapplicable
specific reason of failure in
implementation and the future work
plan.
2. There existed profit anticipation for the Company’s assets or projects while the reporting
period was still within the duration of the profit anticipation. The Company made explanation on
whether the assets or projects reached the anticipated profit and the cause
Inapplicable
IV. Non-operational Occupancy of the Company’s Capital by the Controlling
Shareholder and its Related Parties
Inapplicable
V. Explanation of the Board of Directors, the Supervisory Committee and
Independent Directors (if any) on the “Qualified Auditor’s Report” issued by the
CPAs in the Reporting Period
Inapplicable
VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and
Accounting Method in Comparison with the Financial Report of the Previous Year
Inapplicable
VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period
Necessary to be Restated Retrospectively
Inapplicable
VIII. Explanation on the Changes in the Scope of the Consolidated Statements in
Comparison with the Financial Report of the Previous Year.
Kunming Lishan Company, one of HARMONY's subsidiaries was cancelled on December 28, 2016 and the Company did
not put it in the consolidation at the end of the reporting period.
IX. Engagement/Disengagement of CPAs
CPAs currently engaged
Name of the domestic CPAs Ruihua Certified Public Accountants (Special General Partnership)
Remuneration to the domestic CPAs (in
CNY10,000)
Successive years of the domestic CPAs
offering auditing services
Name of the certified public accountants from
Ruihua Certified Public Accountants (Special General Partnership)
the domestic CPAs
Has the CPAs been changed in the current period?
Yes
Was the CPAs changed during the auditing period
No
Is the procedure for examination and approval implemented in changing the CPAs?
Yes
Detailed description of replacing or changing the CPAs:
The Company held the 11th session of the Eighth Board of Directors and 2016 1st Extraordinary General Meeting
respectively on October 25, 2016 and November 11, 2016. The meetings reviewed and approved the Proposal for
Appointing New CPAs and approved the appointment of Ruihua Certified Public Accountants (Special General
Partnership) as the Company's independent auditor and internal control auditing agent for year 2016 to take charge of
auditing the Company's financial report and internal control system for year 2016 with the employment term of one year.
For the detail, refer to the Announcement of the Resolution of the 11th Session of the Eighth Board of Directors No.
2016-036 and the Announcement of the Resolution of 2016 1st Extraordinary General Meeting No. 2016-042.
About the CPAs for auditing the internal control system, financial consultant or sponsor appointed by the Company
Inapplicable
X. Listing Suspension or Delisting Possibly to be Confronted with after Disclosure of
the Annual Report
Inapplicable
XI. Matters concerning Bankruptcy Reorganization
Inapplicable
XII. Significant Lawsuits and Arbitrations
Inapplicable
XIII. Penalty and Rectification
Inapplicable
XIV. Integrity of the Company and its Controlling Shareholder and Actual Controller
Inapplicable
XV. Implementation of the Company’s Equit Incentive Plan, Employee Stock
Ownership Plan or other Employee Incentive Measures
Inapplicable
XVI. Significant Related Transactions
1. Related Transactions Related with Day-to-Day Operations
Proporti
Transa Has the
Principl Amount on in Way of
ction approv
Descript e of of the the settlem
Price of quota ed
Type of ion of pricing related amount ent for Disclos Disclos
Related Relatio related as quota Market
related Related of the transac of the the ure ure
Parties nship transac approv been price
parties Transac related tion (in similar related date index
tions ed (in exceed
tions transact CNY transac transac
CNY10, ed?
ions 10,000) tions tion
000)
(%)
Income
Commo from Bank
Rainbow March www.c
n principa Sales of Market Inapplic 7,241.5 7,241.5 account Inapplic
Supermar 2.42% No 10, ninfo.c
controll l goods price able 8 8 transfer able
ket 2016 om.cn
er busines ence
s
China Income
National Eventu from Bank
March www.c
Aviation al principa Sales of Market Inapplic account Inapplic
26.69 0.01% 26.69 No 10, ninfo.c
Industry controll l goods price able transfer able
2016 om.cn
Group er busines ence
Co. s
Income
Commo Bank
Shennan from March www.c
n Sales of Market Inapplic account Inapplic
Circuit principa 502.12 12.85% 502.12 No 10, ninfo.c
controll goods price able transfer able
Co., Ltd. l 2016 om.cn
er ence
busines
s
Income
Commo from Bank
CATIC March www.c
n principa Propert Market Inapplic account Inapplic
PROPER 681.38 6.88% 681.38 No 10, ninfo.c
controll l y lease price able transfer able
TY 2016 om.cn
er busines ence
s
Income
Xi’an Commo from Bank
March www.c
Tianyue n principa Propert Market Inapplic account Inapplic
439.52 4.44% 439.52 No 10, ninfo.c
Hotel Co., controll l y lease price able transfer able
2016 om.cn
Ltd. er busines ence
s
Income
Commo from Bank
CATIC March www.c
n principa Propert Market Inapplic account Inapplic
Real 160.31 1.62% 160.31 No 10, ninfo.c
controll l y lease price able transfer able
Estate 2016 om.cn
er busines ence
s
Shenzhe Income
n CATIC Commo from Bank
March www.c
City n principa Propert Market Inapplic account Inapplic
146.16 1.48% 146.16 No 10, ninfo.c
Develop controll l y lease price able transfer able
2016 om.cn
ment Co., er busines ence
Ltd. s
Income
Commo from Bank
CATIC March www.c
n principa Propert Market Inapplic account Inapplic
Securities 115.26 1.16% 115.26 No 10, ninfo.c
controll l y lease price able transfer able
, Co., Ltd. 2016 om.cn
er busines ence
s
Shenzhe
Income
n CATIC
Commo from Bank
City March www.c
n principa Propert Market Inapplic account Inapplic
Property 58.65 0.59% 58.65 No 10, ninfo.c
controll l y lease price able transfer able
Develop 2016 om.cn
er busines ence
ment Co.,
s
Ltd.
Commo Income Bank
Rainbow March www.c
n from Propert Market Inapplic account Inapplic
Supermar 50.13 0.51% 50.13 No 10, ninfo.c
controll principa y lease price able transfer able
ket 2016 om.cn
er l ence
busines
s
Shenzhe
n CATIC Income
Huachen Commo from Bank
March www.c
g n principa Propert Market Inapplic account Inapplic
44.21 0.45% 44.21 No 10, ninfo.c
Property controll l y lease price able transfer able
2016 om.cn
Develop er busines ence
ment Co., s
Ltd.
Shenzhe
Income
n CATIC
Commo from Bank
Jiufang March www.c
n principa Propert Market Inapplic account Inapplic
Assets 36.94 0.37% 36.94 No 10, ninfo.c
controll l y lease price able transfer able
Managem 2016 om.cn
er busines ence
ent Co.,
s
Ltd.
Income
CATIC Commo from Bank
March www.c
Public n principa Propert Market Inapplic account Inapplic
18.01 0.18% 18.01 No 10, ninfo.c
Security, controll l y lease price able transfer able
2016 om.cn
Co., Ltd. er busines ence
s
Shenzhe
n CATIC Income
Guanlan Commo from Bank
March www.c
Real n principa Propert Market Inapplic account Inapplic
9.49 0.10% 9.49 No 10, ninfo.c
Estate controll l y lease price able transfer able
2016 om.cn
Develop er busines ence
ment Co., s
Ltd.
CATIC Income
Property Commo from Bank
March www.c
& Assets n principa Propert Market Inapplic account Inapplic
8.45 0.09% 8.45 No 10, ninfo.c
Managem controll l y lease price able transfer able
2016 om.cn
ent Co., er busines ence
Ltd. s
Shenzhe Income
Commo Bank
n CATIC from March www.c
n Propert Market Inapplic account Inapplic
City principa 2.37 0.02% 2.37 No 10, ninfo.c
controll y lease price able transfer able
Develop l 2016 om.cn
er ence
ment Co., busines
Ltd. s
Ganzhou
CATIC
Commo Bank
Real Sales March www.c
n Propert Market Inapplic account Inapplic
Estate expens 104.2 1.59% 104.2 No 10, ninfo.c
controll y lease price able transfer able
Develop es 2016 om.cn
er ence
ment Co.,
Ltd.
Shenzhe
n CATIC
Changtai Commo Bank
Sales March www.c
Investme n Propert Market Inapplic account Inapplic
expens 31.17 0.48% 31.17 No 10, ninfo.c
nt controll y lease price able transfer able
es 2016 om.cn
Develop er ence
ment Co.,
Ltd.
Jiujiang
CATIC
Commo Bank
Real Sales March www.c
n Propert Market Inapplic account Inapplic
Estate expens 28.74 0.44% 28.74 No 10, ninfo.c
controll y lease price able transfer able
Develop es 2016 om.cn
er ence
ment Co.,
Ltd.
CATIC
Commo Bank
City Sales March www.c
n Propert Market Inapplic account Inapplic
Property expens 19.25 0.29% 19.25 No 10, ninfo.c
controll y lease price able transfer able
(Kunshan es 2016 om.cn
er ence
) Co., Ltd.
Jiujiang
Commerc Commo Bank
Sales March www.c
ial n Propert Market Inapplic account Inapplic
expens 1.7 0.03% 1.7 No 10, ninfo.c
Managem controll y lease price able transfer able
es 2016 om.cn
ent er ence
Company
Chengdu
CATIC
Commo Bank
Real Sales March www.c
n Propert Market Inapplic account Inapplic
Estate expens 0.04 0.00% 0.04 No 10, ninfo.c
controll y lease price able transfer able
Develop es 2016 om.cn
er ence
ment Co.,
Ltd.
CATIC Commo Admini Propert Market Inapplic 527.54 100.00 527.54 Yes Bank Inapplic March www.c
PROPER n strative y price able % account able 10, ninfo.c
TY controll expens manage transfer 2016 om.cn
er es ment ence
fee
Commo Bank
Rainbow Sales Shoppin March www.c
n Market Inapplic account Inapplic
Supermar expens g mall 470.83 8.27% 470.83 No 10, ninfo.c
controll price able transfer able
ket es costs 2016 om.cn
er ence
Shenzhe
Long
n CATIC
Commo term Enginee Bank
Real March www.c
n expens ring Market Inapplic account Inapplic
Building 184.22 1.47% 184.22 Yes 10, ninfo.c
controll es to be paymen price able transfer able
Technolo 2016 om.cn
er apporti ts ence
gy Co.,
oned
Ltd.
AVIC
Internatio
nal Commo Constru Enginee Bank
March www.c
Economic n ction in ring Market Inapplic account Inapplic
16.98 0.14% 16.98 Yes 10, ninfo.c
and Trade controll progres paymen price able transfer able
2016 om.cn
Develop er s ts ence
ment Co.,
Ltd.
Shenzhe
Long
n CATIC
Commo term Enginee Bank
Nanguan March www.c
n expens ring Market Inapplic account Inapplic
g Elevator 15.61 0.12% 15.61 Yes 10, ninfo.c
controll es to be paymen price able transfer able
Engineeri 2016 om.cn
er apporti ts ence
ng Co.,
oned
Ltd.
Shenzhe
n CATIC Commo Admini Bank
March www.c
Group n strative Training Market Inapplic account Inapplic
12.94 0.83% 12.94 Yes 10, ninfo.c
Enterpris controll expens fee price able transfer able
2016 om.cn
e Training er es ence
Center
10,95 23,22
Total -- -- -- -- -- -- -- --
4.49
Details of the rejection of the goods
Inapplicable
already sold in big amount
In case the total amount of the regular The 6th session of the Eighth Board of Directors and 2015 Annual General Meeting reviewed and
related transaction incurred in the approved the Proposal on Implementation of the Regular Related Transactions in 2014 and
reporting period has been predicted Prediction of the Regular Related Transactions in 2016. It is predicted that the total amount of the
based on categories, state the actual related transactions between the Company and the Related Parties would not exceed CNY 232.20
implementation of the in the reporting million in Year 2016 while the amount of the related transactions actually incurred in the reporting
period (if any) year was CNY 109.5449 million, which has not exceeded the predicted amount. Where the
advances paid to CATIC Property by the Company for the property management fee did not
exceed CNY 3 million while the amount of the related transactions actually incurred was CNY
5.2754 million of which the exceeded part has not reached the approved amount. The amount of
related transactions between the Company and Shenzhen CATIC Real Building Technology Co.,
Ltd., AVIC International Economic and Trade Development Co., Ltd., Shenzhen CATIC Nanguang
Elevator Engineering Co., Ltd. and Shenzhen CATIC Group Enterprise Training Center has not
reached the approved amount either.
Cause of the big difference between the
transaction price and the market Inapplicable
reference price. (if applicable)
2. Related transactions concerning acquisition and sales of assets or equity
Inapplicable
3. Related transactions concerning joint investment in foreign countries
Inapplicable
4. Current Associated Rights of Credit and Liabilities
Due from related parties
Newly
Amount
Does there increased Interest in
Opening recovered in
exist amount in the reporting Ending
Related Causes of balance (in the reporting
Relationship non-operatio the reporting Interest rate period balance (in
parties formation CNY10,000) period (in
n capital period (in CNY10,000)
CNY10,000)
occupancy? (in CNY10,000)
CNY10,000)
Rainbow
Common Payment for
Supermarke No 801.28 8,472.65 8,340.7 933.23
controller goods
t
Shennan
Common Payment for
Circuit Co., No 717.19 587.48 1,163.69 140.98
controller goods
Ltd.
Ganzhou
Common Payment for
CATIC No 28.96 0 28.96
controller goods
Jiufang
Commerce
Co., Ltd.
China
National
Eventual Payment for
Aviation No 1.35 31.23 32.58 0
controller goods
Industry
Group Co.
Rainbow
Common Shopping
Supermarke No 56.31 12.44 68.75
controller mall deposit
t
CATIC Common
Rent No 22.59 0 22.59 0
PROPERTY controller
Ganzhou
CATIC
Common Rental
Jiufang No 12.27 0 0 12.27
controller deposit
Commerce
Co., Ltd.
Chengdu
CATIC Real
Common Rental
Estate No 11.56 0 11.56 0
controller deposit
Developme
nt Co., Ltd.
Shenzhen
CATIC
Changtai Common Rental
No 5 0 0 5
Investment controller deposit
Developme
nt Co., Ltd.
Jiujiang
CATIC Real
Common Rental
Estate No 5 0 0 5
controller deposit
Developme
nt Co., Ltd.
CATIC City
Property Common Rental
No 3.71 0.5 0 4.21
(Kunshan) controller deposit
Co., Ltd.
Grand Sky
Common Rental
Light Hotel No 0 3.2 0 3.2
controller deposit
Shenzhen
Influence of the related rights Inapplicable
of credit and liabilities upon
the Company’s operation
results and financial position.
Due to related parties
Amount
newly Amount Interest
Opening increased in repaid in the in the Ending
Related Relationshi Causes of
balance (in the reporting Interest rate reporting balance (in
Parties p formation
CNY10,000) reporting period(in period(in CNY10,000)
period(in CNY10,000) CNY10,000)
CNY10,000)
Rent
CATIC Real Common
received in 13.38 0 0 13.38
Estate controller
advance
Guanlan Real
Common Rental
Estate Co., 0 0.79 0 0.79
controller deposit
Ltd.
Shenzhen
CATIC City Common Rental
0 0.2 0 0.2
Development controller deposit
Co., Ltd.
CATIC Common Rental
47.2 152.18 0 199.38
PROPERTY controller deposit
CATIC Real Common Rental
42.48 0 0 42.48
Estate controller deposit
Shenzhen
CATIC City Common Rental
24.41 0 0 24.41
Development controller deposit
Co., Ltd.
CATIC
Common Rental
Securities, 18.74 0 0 18.74
controller deposit
Co., Ltd.
Shenzhen
CATIC Real
Common Rental
Building 0.96 9.38 0 10.34
controller deposit
Technology
Co., Ltd.
Shenzhen
CATIC City Common Rental
9.79 0 0 9.79
Property controller deposit
Development
Co., Ltd.
Shenzhen
CATIC
Huacheng Common Rental
7.38 0 0 7.38
Property controller deposit
Development
Co., Ltd.
Shenzhen
CATIC
Jiufang Common Rental
6.06 0.61 0 6.67
Assets controller deposit
Management
Co., Ltd.
Rainbow Common Rental
6 0 0 6
Supermarket controller deposit
Shenzhen
CATIC City Common Rental
0.4 0 0 0.4
Development controller deposit
Co., Ltd.
Chengdu
CATIC Real
Common Rental
Estate 1.65 0 1.65 0
controller deposit
Development
Co., Ltd.
Influence of the related rights
of credit and liabilities upon
Inapplicable
the Company’s operation
results and financial position.
5. Other Major Related Transactions
Inapplicable
XVII. Important Contracts and Implementation
1. Custody, Contacting and Leases
(1) Custody
Inapplicable
(2) Contracting
Inapplicable
(3) Leases
Inapplicable
2. Significant Guarantees
(1) Guarantees
In CNY 10,000
Outward guarantees Offerred by the Company and its Subsidiaries (excluding guarantee to the subsidiaries)
Date of
the Date of
Guarant
announce occurrence Actual Implem
Guarante Type of Guarantee ee to
Names of Gurantees ment on (date of amount of entation
e line guarantee period related
the agreement guarantee status
party?
guarantee execution)
line
Inapplicable
Total amount of outward
Total amount of outward guarantee
0 guarantee actually incurred
approved in the report period (A1)
in the report period (A2)
Total amount of outward guarantee Total ending balance of
already approved at the end of the 0 outward guarantee at the
report period (A3) end of the report period (A4)
Guarantees between the Company and its Subsidiaries
Date of
the Date of
Guarant
announce occurrence Actual Impleme
Guarantee Type of Guarantee ee to
Names of Guarantees ment on (date of amount of ntation
line guarantee period related
the agreement guarantee status
party?
guarantee execution)
line
Guarantee
FIYTA (Hong Kong) March 10, October 14, with joint
7,156.08 402.53 1 year No No
Limited 2016 2016 responsibilit
y
FIYTA (Hong Kong) March 10, 7,156.08 November 24, 402.53 Guarantee 1 year No No
Limited 2016 2016 with joint
responsibilit
y
Guarantee
FIYTA (Hong Kong) March 10, September 7, with joint
7,156.08 2,057.37 1 year No No
Limited 2016 2016 responsibilit
y
Guarantee
FIYTA (Hong Kong) February with joint
12,567 March 3, 2014 1,789.02 3 years No No
Limited 28, 2014 responsibilit
y
Guarantee
FIYTA (Hong Kong) March 10, with joint
13,417.65 August 3, 2016 4,472.55 1 year No No
Limited 2016 responsibilit
y
Guarantee
FIYTA (Hong Kong) March 10, with joint
13,417.65 July 4, 2016 6,708.83 1 year No No
Limited 2016 responsibilit
y
Guarantee
March 10, October 24, with joint
FIYTA Holdings Ltd. 40,000 5,000 1 year No No
2016 2016 responsibilit
y
Guarantee
March 10, with joint
FIYTA Holdings Ltd. 7,000 April 11, 2016 7,000 1 year No No
2016 responsibilit
y
Guarantee
Shenzhen Harmony
March 10, December 30, with joint
World Watches Center 40,000 8,500 1 year No No
2016 2016 responsibilit
Co., Ltd.
y
Total guarantee quota to the Total amount of guarantee
subsidiaries approved in the to the subsidiaries actually
67,573.73 34,543.81
reporting period (B1) incurred in the reporting
period (B2)
Total balance of actual
Total guarantee quota to the
guarantee to the
subsidiaries approved at the end of 80,140.73 36,332.83
subsidiaries at the end of
the reporting period (B3)
the reporting period (B4)
Guarantees between Subsidiaries
Names of Guarantees Date of Guarante Date of Actual Type of Guarantee Implem Guarant
the e line occurrence amount of guarantee period entation ee to
announce (date of guarantee status related
ment on agreement party?
the execution)
guarantee
line
Inapplicable
Total guarantee quota to the Total amount of guarantee
subsidiaries approved in the to the subsidiaries actually
0
reporting period (C1) incurred in the reporting
period (C2)
Total balance of actual
Total guarantee quota to the
guarantee to the
subsidiaries approved at the end of 0
subsidiaries at the end of
the reporting period (C3)
the reporting period (C4)
The Company’s total guarantee (i.e. total of the first three main items)
Total amount of guarantee
Total guarantee quota approved in actually incurred in the
67,573.73 34,543.81
the reporting period (A1+B1+C1) reporting period
(A2+B2+C2)
Total balance of the actual
Total guarantee quota already
guarantee at the end of the
approved at the end of the reporting 80,140.73 36,332.83
reporting period
period (A3+B3+C3)
(A4+B4+C4)
Proportion of the actual guarantees in the Company’s net assets
15.32%
(namely A4+B4 + C4)
Including:
Amount of guarantees offered to the shareholders, actual controller
and its related parties (D)
Amount of guarantee for liabilities directly or indirectly offered to the
guarantees with the asset-liability ratio exceeding 70% (E)
Guarantee with total amount exceeding 50% of the net assets (F)
Total amount of the aforesaid three guarantees (D+E+F)
For the guarantee not yet due, guarantee responsibility incurred in the
reporting period or description of the possible related discharge Inapplicable
duty (if any)
Note to the outward guarantee against the established procedures (if
Inapplicable
any)
Description of the guarantee with complex method
Inapplicable
Description of the guarantee with complex method
Inapplicable
(2) Outward guarantee against regulations
Inapplicable
3. Entrusting other Person to Manage the Cash Assets
(1) Finance Management on Commission
Inapplicable
(2) Entrusted Loan
Inapplicable
4. Other Major Contracts
Inapplicable
XVIII Social Responsibilities
1. Implementation of the social responsibility of precise poverty relief
Inapplicable
2. Implementation of other social responsibilities
\"The Social Responsibility Report \" was published on www.cninfo.com.cn on March 10, 2017.
Do the Company and its subsidiaries belong to a key pollutant discharging unit published by the environmental protection
authority?
No
Has the Social Responsibility Report been published?
Yes
Enterprise’s Social Responsibility Report
Does it contain Does it contain Does it contain Report disclosure standards
Enterprise information information information
International
property concerning concerning the concerning Domestic standards
standards
environment society corporate
governance
State-owned
Inapplicable Yes Yes Yes Others
enterprise
Notes to specific circumstances
1. Has the Company been certified for the Environment
Yes
Management System Certification (ISO14001)
2. Amount of investment in the environmental protection
in the reporting year, in CNY 10,000
3. Performances of the emission reduction of “waste gas,
Inapplicable
waste water and waste residue
4. Investment for improving employees’ personal
knowledge and techniques so as to upgrade employees’
career development ability, in CNY10,000
5. Social charitable donations (fund, goods and materials
and free professional services), in CNY 10,000
XIX. Notes to Other Significant Events
1. About Non-public Issuing of A-shares
The 18th session of the Seventh Board of Directors held on April 16, 2015 reviewed and approved the Proposal on the
Plan for Non-public Issuing of A-shares to the Specified Investors and other relevant proposal(s). For the detail, refer to
the Announcement on the Resolutions of the 18th of the Seventh Board of Directors. 2015-008;
On June 2, 2015,the Company received the Official Reply to some Issues concerning Non-public Issuing of A-shares by
FIYTA Holdings Ltd. (GUO ZI CHAN QUAN [2015] No. 415 from the State-owned Assets Supervision and Administration
Commission of the State Council. For the detail, refer to the Announcement on the Official Reply of the State-owned
Assets Supervision and Administration Commission of the State Council to some Issues concerning Non-public Issuing
2015-08 disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
2014 Annual General Meeting held on June 17, 2015 reviewed and approved the Proposal on the Plan for Non-public
Issuing of A-shares to the Specified Investors and other relevant proposals, for the detail, refer to the Announcement on
the Resolution of 2014 Annual General Meeting 2015-020 disclosed on Securities Times, Hong Kong Commercial Daily
and www.cninfo.com.cn.
On July 1, 2015, the Company received the Notice of China Securities Regulatory Commission on Accepting the
Application for Administrative Licensing issued by China Securities Regulatory Commission (CSRC) (No. 152013). For
the detail, refer to the Announcement on Accepting Application for Non-public Issuing of A-shares by China Securities
Regulatory Commission 2015-021 disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn;
On September 8, 2015, the Company received the Notice on the Feedback Opinions of China Securities Regulatory
Commission on Examination of the Administrative Licensing Project (No. 152013). For the detail, refer to the
Announcement on the Receiving of the Notice on the Feedback Opinions of China Securities Regulatory Commission on
Examination of the Administrative Licensing Project 2015-034 disclosed on Securities Times, Hong Kong Commercial
Daily and www.cninfo.com.cn;
The Company and the relevant intermediary carefully studied and implemented the Feedback Opinions, supplemented
the materials and submitted reply to the questions according to the requirements of the Feedback Opinions. For the detail,
refer to the Announcement on the Reply to the Feedback Opinions on the Application for Non-public Issuing of A-shares
2015-035, disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn;
The 17th session of the Seventh Board of Directors and 2014 Annual General Meeting reviewed and approved the Profit
Distribution Plan for Year 2014. According to the relevant provisions of the Rules for Implementation on Non-public
Issuing of Listed Companies, etc., if the Company had ex-rights/ex-dividend events such as dividend distribution, bonus
shares distribution, conversion of capital reserve into share capital, etc., during the period from the pricing benchmark to
the issuing day, the issuing price would be adjusted correspondingly. Within the authorization by the Board of Directors,
the Company made adjustment of the plan of the non-public issuing of A-shares. For the detail, refer to the
Announcement on Adjustment of the Issuing Price and Issuing Volume of the A-shares to be Issued in a Non-public Way
2015-036, disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
In compliance with the Feedback Opinions, the Company disclosed the Announcement on the Indication of Risk of
Diluting the Immediate Returns from the Non-public Issuing and the Measures the Company Intends to Take 2015-037
and the Announcement on the Penalty Given or Supervision Measures Taken by the Securities Regulatory Authority and
the Stock Exchange in the Past Five Years 2015-038;
On October 30, 2015, the application for non-public issuing of A-shares was approved by CSRC Securities Issuance
Examination Committee. For the detail, refer to the Announcement on Approval of the Application for Non-public Issuing
of A-shares by CSRC Securities Issuance Examination Committee, 2015-042;
On November 17, 2015, the Company received the Official Reply to FIYTA Holdings Ltd. for Approval of Non-public
Issuing of Shares of (ZHENG JIAN XU KE [2015]No. 2588). For the detail, refer to the Announcement on Approval of the
Application for Non-public Issuing of A-shares by China Securities Regulatory Commission 2015-043;
On January 15, 2016, the Company’s A-shares issued in a non-public way got listed with Shenzhen Stock Exchange and
the Company published the announcement for listing and the announcement on the related commitments. For the detail,
refer to the Report on the Non-public Issuing and Announcement on Listing 2016-003 and the Announcement on the
Commitments for the Shares Issued in a Non-public Way 2016-004.
2. Amendment of Articles of Association
The 5th session of the Eighth Board of Directors held on January 19, 2016 and 2015 Annual General Meeting held on May
20, 2016 reviewed and approved the Proposal on Amendment of the Articles of Association. For the detail, refer to the
Announcement on the Resolutions of the 5th session of the Eighth Board of Directors No. 2016-005, the Announcement
on the Resolutions of 2015 Annual General Meeting No. 2016-025 and the Bill of Amendment of the Articles of
Association disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
3. Redemption of Bonds
The Company held the 4th session of the Eighth Board of Directors on January 8, 2016 which reviewed and approved the
Proposal on Exercising the Option of Redeeming “12 YADA BOND” as the Bond Issuer, and the indicative
announcement was published respectively on January 13, 2016, January 22, 2016, February 2, 2016 and February 23,
2016. For the detail, refer to the Announcement on Waiving the Option of Adjusting up the Nominal Interest Rate of the
Company Bond Titling “12 YADA BOND” and the Investor's Option of Repurchase & Exercising the Option of
Redemption as the Bond Issuer 2016-001, the First Indicative Announcement of Redemption and Delisting of \"12 Yada
Bond\" 2016-002, the Second Indicative Announcement of Redemption and Delisting of \"12 Yada Bond\" 2016-010, the
Third Indicative Announcement of Redemption and Delisting of \"12 Yada Bond\" 2016-012 and the Fourth Indicative
Announcement of Redemption and Delisting of \"12 Yada Bond\" 2016-012. The redemption of the bonds was finished on
February 29, 2016.
4. Carrying out the Special Work of Protection of Investors Titled \"Blue Sky Action\"
For the purpose of implementing the Circular on Carrying out the Special Work of Protection of Investors Titled \"Blue Sky
Action\" promulgated by China Securities Regulatory Commission Shenzhen Office, further enhancing the work of
protecting investors, establishing and improving the administrative mechanism of offering return to the investors, helping
investors in establishing an idea of rational investment and long term investment, improving consciousness of risks and
self-protection ability, and promoting the shareholder value maximization, the Company formulated the Plan for Carrying
out the Special Work of Protection of Investors Titled \"Blue Sky Action\". During the reporting period, the said special work
was implemented strictly according to the plan and carried forward steadily.
5. About Termination of the \"Joint Venture Cooperation Framework Agreement between Beijing Watch Plant Co.,
Ltd. and the Company and Carrying out \"BEIJING\" Brand Exclusive Licencing Business Cooperation
The Company held the 9th Session of the Eighth Board of Directors on September 19, 2016. The meeting reviewed and
approved the Proposal on the Termination of the \"Joint Venture Cooperation Framework Agreement between Beijing
Watch Plant Co., Ltd. and the Company and Carrying out \"BEIJING\" Brand Exclusive Licencing Business Cooperation.
Due to unfavorable cooperation conditions for the joint venture such as the market environment, through mutual
consultation based on the principle of equality, mutual trust and friendship, both parties reached agreement. The
management authorized by the Board of Directors terminated the Framework Agreement on Joint Venture Cooperation
with Beijing Watch Plant Co., Ltd. and concluded the Agreement on BEIJING Brand Exclusive Authorization Business
Cooperation with Beijing Watch Plant Co., Ltd. instead so as to carry out better cooperation at the level of specific
business. For the detail, refer to the Announcement on the Resolution of the 9th Session of the Eighth Board of Directors
2016-29 and the Announcement on the Termination of the \"Joint Venture Cooperation Framework Agreement between
Beijing Watch Plant Co., Ltd. and the Company and Carrying out \"BEIJING\" Brand Exclusive Licencing Business
Cooperation 2016-031.
XX. Significant Events of the Company's Subsidiaries
Inapplicable
Chapter 6 Change of Shares and Particulars about
Shareholders
I. Change of Shares
1. Change of Shares
In shares
Before the change Increase / Decrease (+/ -) After the change
Shares
Proporti New Bonus converte Proporti
Quantity Others Sub-total Quantity
on (%) issuing shares d from on (%)
reserve
45,977,0 45,977,0 46,026,
I. Restricted shares 49,733 0.01% 10.49%
11 11 744
1. Shares held by the state 0 0.00% 0 0.00%
2. State corporate shares 0 0.00% 0 0.00%
45,977,0 45,977,0 46,026,
3. Other domestic shares 49,733 0.01% 10.49%
11 11 744
Including: Domestic corporate 45,977,0 45,977,0 45,977,
0 0.00% 10.48%
shares 11 11 011
Shares held by domestic
49,733 0.01% 49,733 0.01%
natural persons
4、Foreign invested shares 0 0.00% 0.00%
Including: Foreign corporate
0 0.00% 0.00%
shares
Shares held by foreign
0 0.00% 0.00%
natural persons
392,718, 392,718
II. Unrestricted shares 99.99% 89.51%
137 ,137
311,070, 311,070,
1. CNY ordinary shares 79.20% 70.90%
137
2. Foreign invested shares 81,648,0 81,648,
20.79% 18.61%
listed in Mainland China 00
3、Foreign invested shares
0 0.00% 0.00%
listed abroad
4. Others 0 0.00% 0.00%
392,767, 45,977,0 45,977,0 438,744 100.00
III. Total shares 100.00% 0 0
870 11 11 ,881 %
Causes of Change of Shares
In 2015, the Company issued 45,977,011 shares by non-public issuing which got listed with Shenzhen Stock Exchange
on January 15, 2016. The new shares were not allowed to be listed for trading or assigned within 12 months from the first
day of listing. On January 16, 2017, the restriction on sales of the shares involved in the said non-public issuing was
released. Ended the day of disclosing this report, the sum of the Company's shares was 438,744,881 shares, including
49,733 shares with restriction on sales and 438,695,148 shares without restriction on sales.
Approval of Change of the Shares
The Company held the 18th session of the Seventh Board of Directors and 2014 Annual General Meeting respectively on
April 16, 2015 and June 17, 2015. The meetings reviewed and approved the proposal on non-public issuing of A-shares to
the designated investors.
The application for non-public issuing of A-shares was approved by CSRC Securities Issuance Examination Committee
on October 30, 2015; on November 17, 2015, the Company received Official Reply to FIYTA Holdings Ltd. on Approval for
Non-public Issuing ( ZHENG JIAN XU KE [2015] No. 2588 on November 17, 2015, according to which the Company was
approved to issue new shares with size not exceeding 46,911,649 shares.
Transfer in Change of Shares
Inapplicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value
per share attributable to the common stockholders in the past year and the latest period
Weighted average EPS
ROE (%) Basic EPS (CNY/share) Diluted EPS (CNY/share)
2016 2015 2016 2015 2016
4.74% 7.24% 0.2522 0.3099 0.2522 0.3099
Other information the Company considers it necessary or required by the securities regulatory authority to be disclosed.
Inapplicable
2. Change of Restricted Shares
In shares
Number of Number of Number of Number of
Date of releasing
restricted shares shares restricted shares restricted shares
Causes of of trading
Shareholders at the beginning released from increased in the at the end of the
restriction restriction
of the reporting trading reporting period reporting period
period restrictions
Golden Eagle 0 0 4,674,329 4,674,329 Raised capital January 16,
Asset from non-public 2017
Management issuing of
Co.,Ltd A-shares
Raised capital
Caitong Fund
from non-public January 16,
Management Co., 0 0 12,590,027 12,590,027
issuing of
Ltd.
A-shares
Raised capital
Sws Mu Fund
from non-public January 16,
Management Co., 0 0 8,429,118 8,429,118
issuing of
Ltd
A-shares
Raised capital
Xizang Investment from non-public January 16,
0 0 4,976,551 4,976,551
Co., Ltd. issuing of
A-shares
Raised capital
MANULIFE TEDA
from non-public January 16,
Fund Management 0 0 15,306,986 15,306,986
issuing of
Co, Ltd.
A-shares
Mr. Lu is holding
totally 66,311
shares 75% of
Restricted
which are
Lu Bingqiang 49,733 0 0 49,733 shares for senior
restricted shares
executives
with total
number of
49,733 shares.
Total 49,733 0 45,977,011 46,026,744 -- --
II. Issuing and Listing
1. Issuing of securities (with preferred stock exclusive) in the reporting period
Number of
Description of Issuing price shares
Issuing Trading
stock and the Issuing date (or interest Listing date approved to
quantity termination date
derivatives rate) be listed for
trading
Types of stock
A-shares December January 15,
13.05 45,977,011 45,977,011
issued in a 22, 2015
non-public way
Convertible company bonds, convertible company bonds for separated trading, debentures
Other derivatives
Note to the issuing of securities (with preferred shares exclusive) in the reporting period
The Company held the 18th meeting of the Seventh Board of Directgors and 2014 Annual General Meeting respectively on
April 16, 2015 and June 17, 2015. The meetings reviewed and approved the Proposal on the Plan for Non-public Issuing
of A-shares to the Specified Investors, etc., according to which the Company planned to issue in a non-public way
A-shares to no more than 10 (with 10 inclusive) specified investors with the total raised capital not exceeding CNY 600
million, which would be applied for four projects, including the project of launching new FIYTA watches and supplement
the working capital. The application for non-public issuing of A-shares was reviewed and approved by CSRC Securities
Issuance Examination Committee (CSIEC) on October 30, 2015. On November 17, 2015, the Company received Official
Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing ( ZHENG JIAN XU KE [2015] No. 2588 which authorized
the Company to issue no more than 46,911,649 new shares in non-public way. The actual number of A-shares actually
issued in the non-public issuing activity was 45,977,011 shares and the raised capital amounted to CNY 599 million. After
deduction of the issuing costs, the net raised capital amounting to CNY583 million was remitted to the bank account
designated by the Company on December 18, 2015. Grant Thornton Certified Public Accountants (Special General
Partnership) issued the Capital Verification Reports ZHI TONG YAN ZI (2015) No. 441ZC0653, ZHI TONG YAN ZI (2015)
No. 441ZC0652 respectively for the raised capital. The A-shares issued in a non-public way were registered for listing on
January 15, 2016 and the restriction on trading has been released since January 16, 2017.
2. Changes of the Company’s Total Shares and the Structure of Shareholders as well as the
Structure of Assets and Liabilities
Ended December 22, 2015, the Company completed the work of non-public issuing of 45,977,011 A-shares to the
designated investors. Upon completion of the issuing, the Company increased the registered capital by CNY 45,977,011
with the total registered capital turning to be CNY 438,744,881, and increased the capital reserve by CNY 536,947,362.62.
The proportion of the shares held by the controlling shareholder decreased from 41.49% to 37.15%. The Company’s
asset-liability ratio before the non-public issuing was 55.27% and that after the non-public issuing was 45.77%. The new
shares got listed with Shenzhen Stock Exchange on January 15, 2016 and the restriction on trading has been released
since January 16, 2017.
3. About the existing employees’ shares
Inapplicable
III. Shareholders and Actual Controlling Shareholder
1. Number of Shareholders and Shareholding
In shares
Total common Total common Total preference Total preference
33,751 38,017 0
shareholders shareholders at shareholders with shareholders
in the the end of the the voting power with the voting
reporting month before recovered at the power not
period the date of end of the recovered at the
disclosing the reporting period (if end of the
annual report any) (Refer to month before
Note 8) the day of
disclosing the
annual report (if
any) (Refer to
Note 8)
Shares held by the shareholders holding over 5% shares or the top ten shareholders
Shares Number Pledging or freezing
Quantity Increas Number
held by of the
at the e/decre of the
Shares held by the top non-restr
Shareholder end of ase in restricte
the top ten ten icted Status of the
names the the d Quantity
shareholders shareho shares shares
reportin reportin shares
lders held
g period g period held
(%)
CATIC Shenzhen State-owned 162,977 162,977,
37.15% 0
Holdings Limited corporate ,327
MANULIFE TEDA
Fund－ Minsheng
Bank－MANULIFE
TEDA Value Domestic
9,093,2 9,093,2
Growth Oriented non-state-owned 2.07% 0
59
Additional Issue corporate
No. 351 Assets
Management
Program
SWS MU Assets -
CMBC
-China
Resources SZITIC
Domestic
Trust- Ruihua 8,429,1 8,429,1
non-state-owned 1.92% 0
Oriented 18
corporate
Additional Issue
Hedge Fund No. 2
Assembled Funds
Trust Program
Xizang Investment State-owned 4,976,5 4,976,5
1.13% 0
Co., Ltd. corporate 51
Golden Eagle
Fund- Minsheng
Bank-Golden
Eagle Wenshi Domestic
4,674,3 -4,456,9 4,674,3
Junye Flexible non-state-owned 1.07%
29 03
Disposition No. 3 corporate
Assets
Management
Program
MANULIFE TEDA
Fund-ICBC-
MANULIFE TEDA
GUOMAO Domestic
4,546,6 4,546,6
DONGFANG non-state-owned 1.04% 0
30
DINGZENGBAO corporate
No.1 Assets
Management
Program
Zhonghai Trust
Co., Ltd. -
Zhonghai Jufa- Domestic
2,600,0 2,600,0 2,600,00
New Share non-state-owned 0.59%
00 00
Appointed corporate
Subscription No. 3
Fund Trust
Domestic natural 2,066,6 2,066,62
Dai Wen 0.47% 57,300
person 21
Domestic natural 2,050,0 2,050,0 2,050,09
Xu Guoliang 0.47%
person 95 95
Essence
International Overseas 2,000,0 2,000,00
0.46% 0
Securities (Hong corporate 00
Kong) Limited
Of the top 10 shareholders, MANULIFE TEDA Fund - Minsheng Bank－MANULIFE TEDA Value
Growth Oriented Additional Issue No. 351 Assets Management Program, SWS MU Assets-CMBC
-China Resources SZITIC Trust- Ruihua Oriented Additional Issue Hedge Fund No. 2 Assembled
About the fact that a strategic investor or
Funds Trust Program, Xizang Investment Co., Ltd., Golden Eagle Fund- Minsheng Bank-Golden
ordinary corporate became one of the
Eagle Wenshi Junye Flexible Disposition No. 3 Assets Management Program and MANULIFE
top ten shareholders due to placement
TEDA Fund-ICBC- MANULIFE TEDA GUOMAO DONGFANG DINGZENGBAO No.1 Assets
of new shares (if any) (Refer to Note 3)
Management Program are all the shareholders that have participated in the Company's non-public
issuing; the new shares subscribed by them got listed with Shenzhen Stock Exchange on January
15, 2016; of them, the restricted shares were not allowed to be listed for trading or assigned within
12 months commencing from the first of listing. The aforesaid restriction on sales has been
released since January 16, 2017.
Of the top 10 shareholders, both MANULIFE TEDA Fund－ Minsheng Bank－MANULIFE TEDA
Value Growth Oriented Additional Issue No. 351 Assets Management Program and MANULIFE
Explanation on associated relationship TEDA Fund-ICBC- MANULIFE TEDA GUOMAO DONGFANG DINGZENGBAO No.1 Assets
or consistent action of the above Management Program are subsidiaries of MANULIFE TEDA Fund Management Co., Ltd. The total
shareholders 13,639,889 shares in the Company held by these two shareholders were all the restricted shares
involved in the Company's non-public issuing. The restriction on sales of these shares have been
released since January 16, 2017.
Shareholding of top 10 shareholders of unrestricted shares
Quantity of unrestricted shares held at the end of the Share type
Shareholder’s Name reporting period
Share type Quantity
CATIC Shenzhen Holdings Limited 162,977,327 A-shares 162,977,327
Zhonghai Trust Co., Ltd. - Zhonghai
Jufa - New Share Appointed
2,600,000 A-shares 2,600,000
Subscription - New Shares Appointed
Subscription No. 3 Funds Trust
Dai Wen 2,066,621 A-shares 2,066,621
Xu Guoliang 2,050,095 A-shares 2,050,095
Essence International Securities (Hong
2,000,000 B-shares 2,000,000
Kong) Limited
Industrial and Commercial Bank of
China Co., Ltd. - Sino-Europe Mingrui
1,799,458 A-shares 1,799,458
New Starting Point
Hybrid Securities Investment Funds
Yang Zugui 1,528,400 A-shares 1,528,400
China Merchants Securities (HK)
1,214,829 B-shares 1,214,829
Limited
Zhonghai Trust Co., Ltd. - Zhonghai -
Pujiang Star No. 130 Assembled Fund 1,196,158 A-shares 1,196,158
Trust
Vanguard Investment Australia Ltd -
Vanguard Emerging Market Stock Index 1,190,485 A-shares 1,190,485
Fund (Exchange)
Explanation to the associated
Zhonghai Trust Co., Ltd. - Zhonghai Jufa - New Share Appointed Subscription - New Shares
relationship or consistent action among
Appointed Subscription No. 3 Funds Trust and Zhonghai Trust Co., Ltd. - Zhonghai - Pujiang Star
the top 10 shareholders of
No. 130 Assembled Fund Trust are all subsidiaries of Zhonghai Trust Co., Ltd. The totally
non-restricted negotiable shares and
3,796,158 shares held by them are all outstanding Renminbi common shares.
that between the top 10 shareholders of
non-restricted negotiable shares and
top 10 shareholders.
Note to the top 10 shareholders
involved in margin financing & securities Inapplicable
lending (if any) (Refer to Note 4)
Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual
repurchase during the reporting period?
No
2. Controlling Shareholder
Nature of the controlling shareholder: State-owned holding directly under the central government
Type of the controlling shareholder: corporate
Legal
Name of the Controlling
Representative Date of incorporation Organization code Principal business activities
Shareholder
/Leader
Investing and initiating
entities (separate
application is to be
submitted for a specific
project); domestic
commerce, supply and
sales of goods and
materials (excluding the
goods for exclusive sale,
CATIC Shenzhen
Wu Guangquan June 20, 1997 under special control and
Holdings Limited 9A
monopolized goods); import
and export (excluding the
goods forbidden by law,
administrative rules and
regulations, decision of the
State Council; the restrictive
goods is not allowed for
operation until permit is
granted).
Equity in other domestic and
CATIC Shenzhen Holdings Limited is holding 37.15% equity in FIYTA Holdings Ltd.
foreign listed companies held
(FIYTA A 000026 and FIYTA B 200026) , 22.35% equity in CATIC Real Estate Co., Ltd.
by the controlling shareholder
(CATIC Real Estate 000043), 20.81% equity in Tianma Micro-electronics Co., Ltd. (SHEN
by means of control and
TIANMA A 000050) and 73.87% equity in AVIC International Maritime Holdings Limited (a
mutual shareholding in the
Singapore listed company, O2I).
reporting period
Change of the controlling shareholder in the reporting period
Inapplicable
3. Actual Controller
Nature of the actual controller: State-owned assets regulatory agency directly under the central government
Type of the actual controller: corporate
Legal
Date of
Name of the Actual Controller Representative Organization code Principal business activities
incorporation
/Leader
International aviation, trading and
logistic, retail and high-end
AVIC International Holdings consumption goods, real estate
Liu Hongde April 12, 1983 911100001000009992
Limited and hotel, electronics and
hi-tech, resource development,
etc.
Equity in other domestic and
foreign listed companies held by
AVIC International Holdings Limited is holding 37.50% equity in CATIC Shenzhen Holdings Limited
the actual controler by means of
(HK.0161) and 5.56% equity in Tianma Micro-electronics Co., Ltd. (SHEN TIANMA A 000050).
control and mutual shareholding
in the reporting period
Change of the actual controller in the reporting period
Inapplicable
Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller
State-owned Assets Supervision and Administration
Commission of the State Council
100%
National Council for Beijing Putuo Hanhua Aviation Industry AVIC CCB Aviation Industry
Social Security Fund Investment Management Corporation of China Equity Investment (Tianjin) Co.,
14.31% 14.31% 62.52% 8.86%
AVIC International Holdings Limited
100%
AVIC International Shenzhen Company Limited
37.50%
33.93%
CATIC Shenzhen Holdings Limited
37.15%
Fiyta Holdings Ltd.
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. Other Corporate Shareholder Holding over 10% of the Company’s Shares
Inapplicable
5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the
Reorganizing Party and other Committing Party
Inapplicable
Chapter 7 About the Preferred Shares
Inapplicable
Chapter 8 Directors, Supervisors, Senior Executives and Staff
I. Change in Shares Held by Directors, Supervisors and Senior Executives
Number Volume Volume
Number
of of of
of
shares shares shares
Other shares
acquired acquired sold
Starting Expiry increase held at
Position Office at end of during during
Names Gender Age date of date of /decreas end of
s Status the the the
tenure tenure e the
reportin reportin reportin
(shares) reportin
g g g
g period
period(s period(s period(s
(shares)
hares) hares) hares)
Xu
Chairma March 8, August
Dongsh In office Male 51
n 2017 31, 2018
eng
Wang
August August
Mingchu Director In office Male 51
31, 2015 31, 2018
an
Decemb
Fu August
Director In office Male 40 er 9,
Debin 31, 2018
Zhong August August
Director In office Male 41
Sijun 31, 2015 31, 2018
Cao August August
Director In office Female 46
Zhen 31, 2015 31, 2018
Zhang Indepen
August August
Honggu dent In office Male 61
31, 2015 31, 2018
ang director
Zhang Indepen
August August
Shunwe dent In office Male 51
31, 2015 31, 2018
n director
Wang Indepen August August
In office Male 60
Yan dent 31, 2015 31, 2018
director
Chairma
n of the
Sui Supervi August August
In office Male 59
Yong sory 31, 2015 31, 2018
Committ
ee
Sheng Supervi May 14, August
In office Female 41
Qing sor 2016 31, 2018
Wang Supervi October August
In office Male 37
Jingqi sor 14, 2016 31, 2018
Chen March 8, August
GM In office Male 53
Libin 2017 31, 2018
Lu Septem
Deputy August
Bingqia In office Male 56 ber 28, 66,311 0 0 0 66,311
GM 31, 2018
ng
Deputy
GM and Septem
Lu August
Board In office Male 50 ber 28,
Wanjun 31, 2018
secretar
y
Liu
Deputy October August
Xiaomin In office Male 46
GM 17, 2016 31, 2018
g
Deputy October August
Pan Bo In office Male 41
GM 17, 2016 31, 2018
Deputy October August
Li Ming In office Male 44
GM 17, 2016 31, 2018
Chief
Chen October August
account In office Male 41
Zhuo 14, 2016 31, 2018
ant
Diao Septem
Chairma March 8,
Weichen Retired Male 54 ber 28,
n
g
Xu Managin Septem
March 8,
Dongsh g Retired Male 51 ber 28,
eng Director
Novemb
August
Liu Aiyi Director Retired Male 45 er 18,
31, 2015
Chen Supervi August October
Retired Male 41
Zhuo sor 31, 2015 17, 2016
Tang Supervi Retired Male 56 August May 14,
Boxue sor 31, 2015 2016
Septem
Chen Deputy March 8,
Retired Male 53 ber 28,
Libin GM
Septem
Deputy April 29,
Du Xi Retired Male 42 ber 28,
GM
Hu Chief Septem
October
Xinglon account Retired Male 53 ber 28,
14, 2016
g ant
Total -- -- -- -- -- -- 66,311 0 0 0 66,311
II. Change of Directors, Supervisors and/or Senior Executives
Names Office Taken Type Date Cause
Elected Chairman of the Eighth Board of Directors
Xu Appointment March 8,
Chairman at the 13th Session of the Eighth Board of
Dongsheng & removal
Directors
Elected director of the Eighth Board of Directors at
Appointment December 9,
Fu Debin Director the 12th Session of the Eighth Board of Directors
& removal
and 2016 2nd Extraordinary General Meeting
Appointment Elected supervisor of the Company at the
Sheng Qing Supervisor May 14, 2016
& removal congress of workers and staff
Appointment October 14, Elected supervisor of the Company at the
Wang Jingqi Supervisor
& removal 2016 congress of workers and staff
Appointment March 8, Appointed as the GM at the 13th Session of the
Chen Libin GM
& removal 2017 Eighth Board of Directors
Appointment October 17, Appointed as the deputy GM at the 10th Session of
Liu Xiaoming Deputy GM
& removal 2016 the Eighth Board of Directors
Appointment October 17, Appointed as the deputy GM at the 10th Session of
Pan Bo Deputy GM
& removal 2016 the Eighth Board of Directors
Appointment October 17, Appointed as the deputy GM at the 10th Session of
Li Ming Deputy GM
& removal 2016 the Eighth Board of Directors
Chief Appointment October 17, Appointed as the chief accountant at the 10th
Chen Zhuo
accountant & removal 2016 Session of the Eighth Board of Directors
Proposed resignation of the titles of director and
the Chairman, and director member of the strategy
Diao March 8,
Chairman Dismissal committee of the Eighth Board of Directors due to
Weicheng
job reassignment and would no longer take any
office in the Company upon resignation.
Xu Managing March 8, Resigned the title of the Managing Director of the
Dismissal
Dongsheng Director 2017 Company due to job transfer.
Proposed resignation of the titles of director and
member of the nomination, remuneration and
November assessment committee of the Eighth Board of
Liu Aiyi Director Dismissal
18, 2016 Directors due to job reassignment and would no
longer take any office in the Company upon
resignation.
October 17, Resigned the title of supervisor of the Company
Chen Zhuo Supervisor Dismissal
2016 due to job transfer.
Resigned the title of supervisor of the Company
Tang Boxue Supervisor Dismissal May 14, 2016
due to job transfer.
March 8, Resigned the title of Deputy GM of the Company
Chen Libin Deputy GM Dismissal
2017 due to job transfer.
Resigned the title of deputy GM of the Company
Du Xi Deputy GM Dismissal April 29, 2016 due to personal reason and would no longer take
any office in the Company upon resignation.
Resigned the title of Chief accountant of the
Chief October 14, Company due to personal reason and would no
Hu Xinglong Dismissal
accountant 2016 longer take any office in the Company upon
resignation.
III. Office Taking
Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office
Mr. Xu Dongsheng, born in April 1966 research fellow senior economist, MBA of Tongji University. and PhD of
Beijing University of Aeronautics & Astronautics. He is now the Secretary of the CPC Committee and Chairman of
the Company, a deputy of the 6th Session of People’s Congress of Shenzhen Municipality, vice president of China
Timepieces Association and chairman of Shenzhen Timepieces Association. Mr. Xu used to the Secretary and
Managing Director of the Company, Deputy Secretary of CYL Committee, manager of the supervision and
auditing department and assistant to the President of CATIC Shenzhen Company Limited, GM of the Living
Service Co., Ltd. of Shenzhen CATIC Enterprise Group, and the secretary of the Youth League Committee of
CATIC Shenzhen Company Limited.
Mr. Wang Mingchuan, born in December 1966, senior accountant, master of management engineering of Tongji
University. Mr. Wang is a director of the Company, Deputy GM and Chief accountant of CATIC International
Holdings Limited, chief accountant of CATIC Shenzhen Company Limited, director of Tianma Microelectronics Co.,
Ltd., director of CATIC Real Estate Co., Ltd. and director of Rainbow Supermarket Co., Ltd. He used to be a
financial supervisor of the finanical division of Chengdu Engine Company, manager of the financial department of
Shenzhen Shenrong Engineering Plastic Company, manager of the comprehensive management department and
chief financial officer of Shenzhen CATIC Trading Co., Ltd., manager of the financial and audit department,
manager of the financial department and vice chief accountant of CATIC Shenzhen Company Limited and vice
chief accountant of AVIC International Holding Corporation.
Mr. Fu Debin, born in February 1977, master of engineering and doctor of engineering of Beijing University of
Aeronautics & Astronautics. He is now the head of H.R. department of AVIC International Holding Corporation. He
used to be the head of the administration and management department and deputy head of the management
department of AVIC International Holding Corporation, deputy director of the party policy office and deputy
secretary of the general Party branch of Power School of Beijing University of Aeronautics & Astronautics.
Mr. Zhong Sijun, born in December 1976, senior economist, master of management of Northwestern
Polytechnical University. Mr. Zhong is now a director of the Company, the secretary of AVIC International Holdings
Limited, director of CATIC Real Estate Co., Ltd., director of Rainbow Supermarket Co., Ltd. and director of
Tianma Micro-electronics Co., Ltd. Mr. Zhong used to be the board secretary of Shanghai Tianma
Micro-electronics Co., Ltd., deputy supervisor of the Operation Management Department of AVIC International
Holdings Limited, etc.
Ms. Cao Zhen, born in October 1971, medium-rank journalist, Bachelor of Arts of Jiangxi Normal University,
EMBA of China Europe International Business School. Ms. Cao is a supervisor of CATIC Shenzhen Company
Limited, a supervisor of CATIC Real Estate Co., Ltd. She used to be the manager of the enterprise culture
department of AVIC International Holding Corporation, the the assistant to GM of CATIC Shenzhen Company
Limited, the editor-in-chief of AVIC News of CATIC Shenzhen Company Limited, the manager of the
Administration and Management Department of CATIC Shenzhen Company Limited and the secretary of the
board of CATIC Shenzhen Company Limited.
Mr. Zhang Hongguang, born in March 1956, senior engineer, bachelor of light industry machinery of Dalian
Polytechnic University. He is now an independent director of the Company, vice president of China Timepieces
Association. He used to be the GM of Shenzhen Qixin Construction Group, manager of Shenzhen Xinghua Co.,
Ltd. and deputy chief of the education department of the Ministry of Light Industry.
Mr. Zhang Shunwen, born in May, 1966, senior accountant, a Chinese CPA, and master of Zhongnan University
of Economics and Law. He is now an independent director of the Company, a partner of Lixin Certified Public
Accountants (special general partnership), an expert member of the Third Assessment Committee of Guangdong
Senior Accountants, vice president of Shenzhen Service Trade Association, practicing tutor of College of
Economics of Shenzhen University, independent director of Henan Zhongyuan Air Cylinder Parts Co., Ltd.,
Shenzhen Special Economic Zone Real Estate&Properties (Group).Co.,Ltd. and Shenzhen Mingdiao Decoration
Co., Ltd. He used to be a vice president of Shenzhen Association of CPAs and a member of CPPCC of Shenzhen
Municipality.
Mr. Wang Yan, born in February 1957, senior economist, master of business administration of State University of
New York. He is now an independent director of the Company, professor of Intellectual Property Academy of
South China University of Technology, deputy director of South China Training Base of the State Intellectual
Property Bureau, independent director of Shenzhen Maxonic Automation Control Co., Ltd. He used to be a deputy
director of the Intellectual Property Bureau of Shenzhen Municipality, associate professor of the management
school of Southwest University of Political Science and Law, senior executive of First State China Fund
Management Co., Ltd., chief economist of the domestic listing company of China Merchants Group (China
Merchants Harbor Service), and the assistant to the director of the Management Department of the State
Intellectual Property Bureau.
Mr. Sui Yong, born in January 1958, senior accountant, bachelor of management engineering of Beijing University
of Aeronautics & Astronautics. He is the Chairman of the Supervisory Committee of the Company, deputy GM of
CATIC Shenzhen Company Limited. He used to be deputy manager and manager of the financial department,
manager of the settlement center, manager of the financial department, vice chief accountant and chief
accountant of China National Aero-Technology Import & Export Corporation Shenzhen Company and chairman of
the supervisory committee of CATIC Real Estate Co., Ltd.
Ms. Sheng Qing, born in April, 1976, accountant, senior HR administrator, master of organization and HR
management of the University of Hong Kong, bachelor of international accounting specialization of Jiangxi
University of Finance and Economics. She is now the manager of the supervision and audit department of the
Company. She used to be senior business manager of the audit department and manager of HR department of
the Company.
Mr. Wang Jingqi, born in October, 1980, master of Tianjin University. Mr. Wang is deputy manager of the HR
department of the Company. He used to be the assistant to the GM and manager of the basic support department
of FIYTA Technology Development Co., Ltd.
Mr. Chen Libin, born in June 1964, master of economics of the Party School of Guangdong Provincial CPC
Committee and EMBA of Sun Yat-Sen University. He is now the Vice Secretary of the CPC Committee and the
GM of the Company. Mr. Chen used to be the Secretary of the CPC Committee, deputy GM and Board Secretary
of the Company, deputy director and director of the Party’s affairs of the Party-masses Work Department and
senior commissioner, deputy manager and manager of the enterprise culture department of CATIC Shenzhen.
Mr. Lu Bingqiang, born in December 1961, senior economist, bechalor of Guangzhou Jinan University. Mr. Lu is
deputy GM of the Company and Managing Director of FIYTA (Hong Kong) Limited. He used to be the assistant to
the GM and director of the Company, and GM and chairman of Shenzhen Harmony World Watches Center, the
president secretary of CATIC Shenzhen.
Mr. Lu Wanjun, born in February, 1967, accountant and EMBA of Sino-European International Management
Institute. Mr. Lu is now a deputy GM and the Secretary of the Board of the Company. He used to be the assistant
to the GM of the Company, executive deputy GM and deputy GM, the assistant to the GM and concurrently the
manager of the financial department of Shenzhen Harmony World Watches Center Co.
Mr. Liu Xiaoming, born in 1971, engineer, economist, bachelor of mechanical engineering of Beijing University of
Aeronautics & Astronautics, and EMBA of China Europe International Business School. He is a deputy GM of the
Company, the managing director of Shenzhen Harmony World Watches Center Co., Ltd. He used to be the
assistant of the GM of the Company and the assistant to a deputy GM of Shenzhen Harmony World Watches
Center Co., Ltd.
Mr. Pan Bo, born in March, 1976, bachelor of electromechanical engineering of Beijing University of Aeronautics &
Astronautics, and EMBA of China Europe International Business School. He is now a deputy GM of the Company,
the GM of FIYTA Brand, the managing director of FIYTA Sales Co., Ltd. Mr. Pan used to be the assistant to the
GM of the Company, executive deputy GM, deputy GM, the assistant to the GM, manager of the sales department,
manager of the logistic department, manager of the after-sale department, etc. of FIYTA Sales Co., Ltd.
Mr. Li Ming, born in September, 1973, bachelor of marketing of Zhongnan University of Economics and Law and
EMBA of China Europe International Business School. He is a deputy GM of the Company. Mr. Li used to the
assistant to the GM and chief HR officer of the Company, a deputy GM, the assistant to the GM and manger of the
HR department of Shenzhen Harmony World Watches Center Co., Ltd.; chief HR officer and the GM of the
marketing center of China Netcom Shenzhen; manager of big customer market planning of China Telecom
Shenzhen.
Mr. Chen Zhuo, born in September 1976, accountant, MBA of Wuhan University, EMBA of China Europe
International Business School. He is the chief accountant of the Company. Mr. Chen used to be a supervisor, the
assistant to the GM, manager of the strategy and information department, deputy manager of the strategy and
information department and securities affairs representative of the Company, deputy GM and manager of the
financial information department of FIYTA Sales Co., Ltd.
Office taking in shareholder companies
Does he/she
receive
Names of the Titles engaged
Starting date Expiry date of remuneration or
persons in Names of the Shareholders in the
of office term office term allowance from the
office shareholders
shareholder?
Wang AVIC International Holding Deputy chief November
No
Mingchuan Corporation accountant 3, 2010
Wang Chief August 6,
CATIC Shenzhen Yes
Mingchuan accountant
head of the
AVIC International Holding
Fu Debin HR July 1, 2016 Yes
Corporation
department
Board June 1,
Zhong Sijun AVIC International Holdings Limited Yes
secretary
manager of
AVIC International Holding the October 20,
Cao Zhen Yes
Corporation enterprise
culture dept.
August 20,
Cao Zhen CATIC Shenzhen Supervisor No
August 6,
Sui Yong CATIC Shenzhen Deputy GM Yes
Explanation to
the office
taking in Inapplicable
shareholder
companies
Offices Taken in Other Organizations
Does he/she
Titles
receive
Names of the engaged in
Starting date of Expiry date of remuneration or
persons in Names of Other Organizations the other
office term office term allowance from
office organization
other
s
organization?
Zhang Vice January 1,
China Timepieces Association Yes
Hongguang chairman 2010
Zhang Lixin Certified Public Accountants (Special January 1,
Partner Yes
Shunwen Ordinary Partnership)
Intellectual Property Academy of South China Full-time August 1,
Wang Yan Yes
University of Technology professor 2010
Explanation to
the office
Inapplicable
taking in other
organizations
Punishment imposed by the securities regulatory authority on the directors, supervisors and senior executives
both in office and having left their posts in the reporting period.
Inapplicable
IV. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis for determination and actual payment of the remuneration to directors,
supervisors and senior executives
1. Decision-making procedures of the remuneration to directors, supervisors and senior executives:
Remuneration to directors and supervisors was reviewed and approved by the Company’s General Meeting and
remuneration to senior executives was reviewed and approved by the Board of Directors.
2. Basis for determining the remuneration to directors, supervisors and senior executives:
(1) Basis for Determining Remuneration to Directors: Remuneration to the directors appointed by the controlling
shareholder is determined and distributed by the controlling shareholder. Allowance to independent directors is
subject to the proposal prepared by the Board of Directors and reviewed and approved by the General Meeting
and disclosed in the Company’s annual report. Except the aforesaid allowance, independent directors received no
extra and undisclosed benefit from the Company, the Company’s principal shareholders or other organization or
personnel with stakeholding.
(2) Basis for Determining Remuneration to Supervisors: Remuneration to the supervisors appointed by the
controlling shareholder is determined and distributed by the controlling shareholder. Remuneration to the staff
representative supervisor is determined by the Company based on the specific job he/she is engaged in.
(3) Basis for Determining Remuneration to senior executives: The Company brought into full play and mobilized
the senior executives’ work enthusiasm and creativeness based on the Company’s operating results and with
reference to the average remuneration level in the trade, better improved the Company’s operating ability and
result and ensured realization of the Company’s strategic targets. The Company worked out the Measures for
Administration of Remuneration to the Senior Executives in 2009, insisted on the principle of distribution
according to work and combination of power, responsibility and benefit. The major orientation was “market based”,
“full amount based” and “broadband based”. Commencing from 2007 on, the Company has introduced Balance
Scorecard Strategic Management Structure, based on the establishment of the incentive and restriction
mechanism adaptable to the modern enterprise system, improved the corporate governance structure,
decomposed the Company’s strategy to every department and post through the balance scorecard to determine
senior executives’ performance indicators and action plan on this basis, conducted regular strategic review, work
report and assessment on quarterly basis, and decided their total remuneration and renewal of engagement
according to the assessment results and fulfillment of performances.
3. Actual payment of the remuneration to directors, supervisors and senior executives:
The Company practiced the annual salary system for its senior executives. The annual salary structure consists of
the basic annual salary and performance based annual salary. The annual salary assessment for the GM was
carried out according to the assessment methods worked out by the shareholder. The assessment basis is mainly
in accordance with a series of indicators systems prepared based on the balance scorecard. The assessment for
other senior executives was conducted based on the indicators in the balance scorecard prepared at year
beginning and the work report at year end.
Remuneration to directors, supervisors and senior executives in the reporting period
In CNY10,000
Total Remuneration
remuneration actually received
Names Positions Gender Age Office Status
received from the at the end of the
Company reporting period
Xu
Chairman Male 51 In office 183.33 No
Dongsheng
Wang
Director Male 51 In office 0 No
Mingchuan
Fu Debin Director Male 40 In office 0 No
Zhong Sijun Director Male 41 In office 0 No
Cao Zhen Director Female 46 In office 0 No
Zhang Independent
Male 61 In office 9 No
Hongguang director
Zhang Independent
Male 51 In office 9 No
Shunwen director
Independent
Wang Yan Male 60 In office 9 No
director
Chairman of
the
Sui Yong Male 59 In office 0 No
Supervisory
Committee
Sheng Qing Supervisor Female 41 In office 92.54 No
Wang Jingqi Supervisor Male 37 In office 41.34 No
Chen Libin GM Male 53 In office 145.40 No
Lu Bingqiang Deputy GM Male 56 In office 142.25 No
Deputy GM &
Lu Wanjun Board Male 50 In office 140.83 No
Secretary
Liu Xiaoming Deputy GM Male 46 In office 150.37 No
Pan Bo Deputy GM Male 41 In office 164.68 No
Li Ming Deputy GM Male 44 In office 131.28 No
Chief
Chen Zhuo Male 41 In office 128.85 No
accountant
Diao
Chairman Male 54 Retired 0 No
Weicheng
Xu Managing
Male 51 Retired 0 No
Dongsheng Director
Liu Aiyi Director Male 45 Retired 0 No
Chen Zhuo Supervisor Male 41 Retired 0 No
Tang Boxue Supervisor Male 56 Retired 97.08 No
Chen Libin Deputy GM Male 53 Retired 0 No
Du Xi Deputy GM Male 42 Retired 32.27 No
Chief
Hu Xinglong Male 53 Retired 78.62 No
accountant
Total -- -- -- -- 1,555.84 --
Incentive equity to directors, supervisors or/and senior executives in the reporting period
Inapplicable
V. Employees
1. Number, Job Composition and Education Background of Employees
Number of employees working for the parent company
Number of employees working for the major subsidiaries 5,160
Total employees on active duty 5,291
Total employees receiving remuneration in the reporting period 5,291
Number of the retired employees for whom the parent company
and the major subsidiaries need to share the pension
Job Composition
Number of persons involved in the job
Job Composition Categories
composition
Production
Sales 3,935
Technical
Financial
Administrative
Total 5,291
Education background
Education levels Number of persons
Master's degree or higher
Undergraduate
Junior college 1,328
Below junior college 3,012
Total 5,291
2. Remuneration Policy for Staff
The Company’s remuneration policy is based on strategy, market, performances and job value. The Company
has established a remuneration and benefit system with external competitiveness and internal fairness according
to the Company’s strategic target, ensuring the attractiveness to high quality talents of the industry, retaining the
core and key talents of the Company, activating the human resource, mobilizing staff’s enthusiasm and improving
the Company’s core competitiveness.
3. Training Program
The Company is concentrated on watch industry, insists on the principle of guiding various businesses with the
brand strategy, takes a broad view of the world and has established its vision of “moulding an international brand
and becoming a globalized enterprise”. While speeding up development, the Company firmly believes that “to
build brand is to integrate the brand work and life style”, the core speciality of the organization and staff and the
qualification of the staff as brand personnel are the key elements determining the future development. For the
purpose of creating the core competitiveness based on “brand building”, meeting the strategy challenge,
promoting realization of the long and short term plan, the Company determined the talent standard and
qualification model based on the brand strategy by means of strategy analysis, internal and external environment
analysis, talent supply analysis and employees’ ability gap analysis, kept building a training system integrated
with talent development model, improved comprehensive, multi-level, targeted and comprehensive
accomplishment bearing, promoted overall and quick growth of employees and senior officers and enhanced the
Company’s core competitiveness.
4. Labor outsourcing
Inapplicable
Chapter 9 Corporate Governance
I. General
In year 2016, the Company kept improving the Company’s corporate governance structure strictly according to
the PRC Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission
concerning governance of listed companies, and tried to enhance construction of modern enterprise system,
upgraded the level of regulatory operation of the Company. As a result, there was no discrepancy between the
situation of the Company’s corporate governance and the regulatory documents of China Securities Regulatory
Commission concerning governance of listed companies.
The Company established and improved relatively standardized corporate governance structure and rules of
procedures strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of
Association of the Company, formed a decision-making and operation management system with the
Shareholders’ Meeting, the Board of Directors, the Supervisory Committee and the management of the Company
as the principal structure. They implemented their respective duties according to the PRC Company Law and the
Articles of Association.
The General Meeting is the Company’s supreme organ and has the power of deciding the Company’s operation
policy and investment plan, reviewing and approving the Company’s annual fincial budget scheme, settlement
scheme, profit distribution plan, loss make-up plan, change of the application of the proceeds raised through
issuing, etc., makes resolution on increase and decrease of the Company’s registered capital, issuing bond, etc.,
election and replacement of directors, non-staff supervisors and decision on their remuneration and way of
payment.
The Board of Directors is the Company’s decision-making organ, takes charge of implementing the decisions
made by the Shareholders’ General Meeting, assumes responsibility to the Shareholders’ General Meeting and
reports the work to it; within the authorization from the General Meeting, decides the Company’s external
investment, acquisition and sales of assets, assets pledgement, external guarantee, related transactions, etc.,
decides establishment of the Company’s internal management organs, engagement and disengagement of the
Company’s general manager, the Board secretary and other senior executives, etc. The Board of Directors
consists of nine directors, including three independent directors. The Board of Directors has established three
subordinate special committees, namely the Strategy Committee, the Audit Committee and Nomination,
Emolument and Assessment Committee.
The Supervisory Committee is the Company’s supervisory organ in charge of supervising the directors, managers
and other senior executives in performaning duties according to the law and proposes dismissal of any director or
senior executive who breaches the law, the administrative rules and regulations, the Articles of Association or the
General Meeting’s resolutions. The Supervisory Committee consists of three supervisors including two staff
supervisors.
The management assumes responsibility to the Board of Directors and the General Manager takes full
responsibility for the Company’s routine operation and management and development under the leadership of the
Board of Directors, supervises the work of every functional department, assesses the work result of each
functional department and coordinate the relationship of all departments.
Does there exist any difference in compliance with the corporate governance, the PRC Company Law and the
relevant provisions of CSRC.
No
II. Independence in Business, Personnel, Assets, Organization, Finance, etc.
from the Controlling Shareholders
The Company is independent in business, personnel, assets, organization and finance from its controlling
shareholder. The Company has complete and independent business and the ability of autonomous operation.
Business. The Company is mainly engaged in timepiece businesses and has independent production, auxiliary
production system and complementary facilities, and possesses its own procurement and sales systems. There
exists no competition in the same sector between the Company and its controlling shareholder.
Personnel: The Company is completely independent in organization and has sound systems in labor, personnel
and salaries management. Except Mr. Lai Weixuan, the Chairman, Mr. Wang Mingchuan, Mr. Huang Yongfeng, Mr.
Wu Xiaohua and Madam Wang Xiaohua, the four directors, and Mr. Sui Yong, the chairman of the Supervisory
Committee, none of other senior executives takes any concurrent office in the shareholders and none of the
financial staff works concurrently for any related parties.
Assets: The assets of the Company and its controlling shareholder are highly distinct. The Company enjoys the
corporate ownership over its assets and the assets are completely independent from its controlling shareholder. In
addition, the Company enjoys sole ownership of such trademarks as FIYTA, HARMONY, etc.
Organization: The Company has established its own intra-company organizations independent from the
controlling shareholder. The Board, the Supervisory Committee and the other internal departments and offices
work independently. There exist neither subordinate relations between the controlling shareholder/its functional
departments nor doing joint office work. The controlling shareholder enjoys its rights and undertakes the
corresponding obligations according to the law and has never been involved in any action which directly or
indirectly interferes the Company’s business activities surpassing the authority of the General Meeting.
Finance: The Company has established independent financial department, worked out sound and independent
financial and accounting system and financial management system and independently opened bank accounts.
The controlling shareholder has never interfered the Company in its financial and accounting activities.
III. Horizontal Competitions
Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings in the
Reporting Period
1. General Meetings in the Reporting Period
Proportion of
Sessions Meeting Types investors in total Meeting date Disclosure date Disclosure index
participants
2015 Annual Annual General www.cninfo.com.
0.03% May 20, 2016 May 21, 2016
General Meeting Meeting cn
2016 1st Extraordinary November 11, November 12, www.cninfo.com.
0.03%
Extraordinary General Meeting 2016 2016 cn
General Meeting
2016 2nd
Extraordinary December 9, December 10, www.cninfo.com.
Extraordinary 0.03%
General Meeting 2016 2016 cn
General Meeting
2. Request by the Preference Shareholders with the Vote Recovered for an Extraordinary General Meeting
Inapplicable
V. Duty Performance of Independent Directors in the Reporting Period
1. Attendance of Board Meetings and General Meetings
Independent Directors’ Attendance at Board Meetings
Failure to
Number of
Number of personally
Board meetings Number of
Independent Number of Spot Meetings Number of attend board
necessary to be attendances by
directors Attendances Attended by Absence meetings
attended in the representative
Communication successively
reporting period
twice (Yes/No)
Zhang Hongguang 9 1 7 1 0 否
Zhang Shunwen 9 2 7 0 0 否
Wang Yan 9 1 7 1 0 否
Number of general meetings
attended by independent directors
as non-voting delegates
Notes to Failure to Personally Attend Board Meetings Successively Twice
Inapplicable
2. Objection of independent directors on some relevant issues
Did any of independent directors put forth any objection on some relevant issues
No
3. Other Note to Duty Performance of Independent Directors
Inapplicable
VI Duty Performance of Special Committees under the Board of Directors in the
Reporting Period
Summary Report on Performances of the Strategy Committee of the Board of Directors
During the reporting period, the Strategy Committee performed its duties strictly according to the law and
regulations, the Articles of Association and the Rules for Implementation of the Strategy Committee of the Board
of Directors, continued to do research work on the strategic planning for the Company’s long term development
and supervised the Company in implementation of various strategies. The Strategy Committee held its first
meeting of year 2016 on March 8, 2016. The meeting reviewed and approved the Work Report of the Board of
Directors in Year 2015 and the Profit Distribution for Year 2015, the Proceedings on Increasing Investment in
FIYTA Sales Co., Ltd. The second meeting of the Strategy Committee of year 2016 was held on September 19,
2016. The meeting reviewed and approved the Proposal on Termination of the Joint Venture Cooperation
Framework Agreement between Beijing Watch Plant Co., Ltd. and the Company and Carrying out \"BEIJING\"
Brand Exclusive Licencing Business Cooperation and the Proposal on Change of the Name of Shenzhen
Symphony Trading Co., Ltd., one of the Company's solely owned subsidiaries.
Summary Report on Performances of the Audit Committee of the Board of Directors
In accordance with China Securities Regulatory Commission, Contents and Formats for Information Disclosure by
Companies that Offer Securities to the Public Guideline (No. 2): Contents and Format of Annual Reports (Revision
2016), Shenzhen Stock Exchange: Basic Regulations on Enterprise Internal Control, Memorandum of
Information Disclosure No. 21 – Information to be Disclosed in the Annual Report and the Company’s
Enforcement Regulations of the Special Committees of the Board of Directors, the Audit Committee of the Board
of Directors carried out comprehensive examination of the Company's financial report and internal control audit
work for year 2016. The following is the summary of the performances of the Audit Committee and the work of
Ruihua Certified Public Accountants (Special General Partnership) (hereinafter referred to as the “CPAs”):
1. Collecting General Information of the Company in the Reporting Period and Reviewing the Financial
Statements Prepared by the Company and Progress of Internal Control Implementation
On January 12, 2017, the Audit Committee heard the management’s overall report on the production and
operation and progress of significant events during the reporting period and reviewed 2016 Financial and
Accounting Statements prepared by the Company and heard the progress of implementation of the Company’s
internal control. In its opinion, the data in the financial and accounting statements prepared by the Company
basically reflected the financial position and operation results of the Company as ended at December 31, 2016,
and approved to carry out the audit work for the year 2015 with the financial statements as the base. The internal
control implementation work carried out by the Company has been duly carried forward according to the Company
Law, the Securities Law, Basic Standards for Enterprise Internal Control and other relevant laws and regulations.
It has basically reflected the Company’s internal control construction work ended December 31, 2016 and
approved to prepare the Self-Assessment Report on the Internal Control on this basis and carry out the internal
control audit work in 2016.
2. Decision on Overall Audit Plan
Before the CPAs started auditing, the audit committee, after consultation with the CPAs, decided the time
schedule of the audit work in 2016.
3. Supervision of the Audit Work
On January 13, 2017, the CPAs formally started the audit work. During the auditing, the Audit Committee
frequently urged the CPAs to complete the audit work according to the time schedule of audit so as to ensure
timely disclosure of the Company’s annual report and relevant documents.
4. Preliminary Auditor’s Opinions after Reviewing the Financial and Accounting Statements
On March 3, 2017, the CPAs issued a preliminary auditor’s opinions on the financial and accounting statements
and internal control assessment, and the Audit Committee once again reviewed the Company’s financial and
accounting statements and internal control assessment report as preliminarily audited by the CPAs. In the opinion
of the Audit Committee, these financial statements truly, accurately and completely reflected the financial position
and operation result of the Company ended December 31, 2016 and approved 2016 Annual Report and Summary
prepared on the basis of these statements. The said internal control assessment report has truly, accurately and
entirely reflected the Company’s achievement in internal control construction ended December 31, 2016 and
approved to complete the internal control assessment report and internal control audit report based on said report.
Meanwhile, the audit committee demanded the CPAs to complete the audit work according to the plan as soon as
possible so as to ensure the Company to disclose 2016 Annual Report as scheduled.
5. Summary Work after the Formal Report
On March 8, 2017, the CPAs completed the auditing procedures as scheduled and issued a standard unqualified
auditor’s report and other relevant documents to the Audit Committee. The Audit Committee held 2016 1st Session
of the Audit Committee on the very day and concluded a resolution and submitted it to the Board of Directors for
review; and at the same time submitted the Summary Report on the Performances of the Audit Committee and the
Audit Work of the Certified Public Accountants in 2016. In the opinion of the Audit Committee, Ruihua Certified
Public Accountants (Special General Partnership), the domestic and international auditor engaged by the
Company faithfully performed the duties in process of offering audit performances according to the professional
principle of independence, objectiveness and fairness and did a good job in auditing 2016 Annual Accounting
Statements and the internal control auditing.
6. CPAs’ Performance of Basic Principle of the Professional Ethics
(1) Independence
None of the staff from the CPAs worked for the Company; the CPAs received neither cash nor economic interest
in any other form from the Company other than the statutory audit fee. There existed neither direct or indirect
mutual investment between the CPAs and the Company nor close operation relationship; there existed no
self-assessment on the Company’s audit work and there existed no related relation between the member of the
auditing team and the Company’s decision makers; the CPAs and the auditing staff kept independence both in
form and substance in the auditing work and complied with the requirement on keeping independence as
specified in the basic principle of the professional ethics.
(2) Professional Competence
All the members of the auditing team possessed the professional knowledge and relevant professional
qualification certificates necessary for the auditing work, were competent for the auditing work and at the same
time maintained necessary attention and professional cautiousness.
Summary Report on Performances of the Committees of Nomination, Remuneration and
Assessment of the Board of Directors
In the reporting period, the Committees of Nomination, Remuneration and Assessment of the Board of Directors
performed its functions strictly according to the law and regulations, the Articles of Association and the Rules for
Implementation of the Committees of Nomination, Remuneration and Assessment of the Board of Directors. 2016
1st session of the Committees of Nomination, Remuneration and Assessment held on March 8, 2016 reviewed
and approved the emoluments to the senior executives in the year 2015; 2016 2nd session of the Committees of
Nomination, Remuneration and Assessment held on October 17, 2016 reviewed and approved the proposal on
election for the new senior executives; 2016 3rd session of the Committees of Nomination, Remuneration and
Assessment held on November 23, 2016 reviewed and approved the proposal for nominating Mr. Fu Debin as
director candidate.
VII. Work Summary of the Supervisory Committee
Did the Supervisory Committee find any risk existing in performing the supervision activities in the reporting period
No
VIII. Assessment and Incentive Mechanism for Senior Executives
The Company brought into full play and mobilized the senior executives’ work enthusiasm and creativeness
based on the Company’s operating results and with reference to the average remuneration level in the trade,
better improved the Company’s operating ability and result and ensured realization of the Company’s strategic
targets. The Company worked out the Measures for Administration of Remuneration to the Senior Executives in
2009, insisted on the principle of distribution according to work and combination of power, responsibility and
benefit. The major orientation was “market based”, “full amount based” and “broadband based”. Since 2007, the
Company has introduced the balance scorecard as the strategic management instrument. Based on the
establishment of the incentive and binding mechanism corresponding to the modern enterprise system and
improvement of the corporate governance structure, the Company disintegrated the Company’s strategy to
various departments and posts by means of the balance scorecard so as to determine senior executives’
performance targets and plan of action, and regularly conducted strategic review and work report assessment on
quarterly basis, and decided the total remuneration and office renewal based on the assessment results and
performances. The remuneration to the Company’s senior executives is the annual salary system. The annual
salary structure consists of the basic annual salary and performance based annual salary. The annual salary
assessment for the GM was carried out according to the assessment methods worked out by the shareholder. The
assessment basis is mainly based on a series of indicators systems prepared based on the balance scorecard, in
which the performance indicators of the surplus revenue rate were the main indicators. The assessment for other
senior executives was conducted based on the indicators in the balance scorecard prepared at year beginning
and the work report and assessment were carried out at year end.
IX. Internal Control
1. No particular case found involving material defects in the internal control during the
reporting period
No
2. Self-assessment Report of the Internal Control
Date of disclosing the full text of the
March 10, 2017
internal control assessment report
Index of disclosure of the full text of
the internal control assessment www.cninfo.com.cn
report
Proportion of the total assets of the
organizations involved in the
assessment in the total assets of the 99.00%
Company’s consolidated financial
statements
Proportion of the operation revenue
of the entitled involved in the
assessment in the total operation 99.00%
revenue of the Company’s
consolidated financial statements
Criteria for affirming the defects
Categories Financial Report Non-financial Report
(1)Material defects: 5% of
(1) Material defects：Misstatement≥ 5%
misstatement ≥Profit before tax;
of the pre-tax profit；(2)Important
(2)Important defects: 1% of profit
defects：1% of profit before tax ≤
Qualitative criteria before tax ≤Misstatement＜5% of
Misstatement＜5% of profit before tax;
profit before tax； (3) Common
(3)Common defects：Misstatement＜
defects：Misstatement＜1% if Profit
1% of profit before tax.
before tax.
(1) Seriously breaching the law,
administrative regulations and
normative documents of the state;
(2) \"decision on major issues,
important officer appointment
and/or removal and arrangement of
(1) This defect involves malpractices of
important projects as well as
the directors, supervisors and senior
application of big sum of fund have
executives; (2) correction of the
not undergone collective
financial statements already published;
decision-making procedures; (3)
(3) material misstatement involved in
serious running off of officers and
the current financial statements found
technicians of the key positions; (4)
Quantitative criterion by the CPAs while such misstatement
there is no system control available
has not been found in process of
for the Company’s production and
cooperation of the internal control; (4)
operation practice or the system no
the Company’s audit committee and
longer works; (5) the internal
the internal audit service have
control for information disclosure no
conducted ineffective supervision over
longer works, having caused the
the internal control.
Company censured publicly by the
regulatory authority; (6) the results
of the internal control assessments,
especially the material defects or
important defects have not been
rectified.
Number of material defects in the
financial statements
Number of material defects in the
non-financial statements
Number of important defects in the
financial report
Number of important defects in the
non-financial report
X. Internal Control Audit Report
Deliberation Opinions in the Internal Control Audit Report
In our opinion, FIYTA Holdings Limited maintained effective internal control on the financial report in all material aspect
according to the Basic Regulations for Enterprise Internal Control and the relevant provisions ended December 31,
2016.
Disclosure of the internal
Disclosed
control audit report
Date of disclosing the full text
of the internal control audit March 10, 2017
report
Index of disclosing the full text
of the internal control audit www.cninfo.com.cn
report
Type of the onions in the
Standard unqualified auditor’s report
internal control audit report
Are there any material defects
No
in the non-financial report
Has the CPAs issued a qualified auditor’s report of internal control.
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of
Directors
Yes
Section 10 Bond Related Information
Were there any bonds which have been publically issued and listed with the stock exchange but have not yet
been due or have not been entirely cashed despite that they have been due by the day when this annual report is
approved for issuing?
No
Section 11 Financial Report
通讯地址：北京市东城区永定门西滨河路 8 号院 7 号楼中海地产广场西塔 5-11 层
Postal Address:5-11/F,West Tower of China Overseas Property Plaza, Building 7,NO.8,Yongdingmen
Xibinhe Road, Dongcheng District, Beijing
邮政编码（Post Code）：100077
电话（Tel）：+86(10)88095588 传真（Fax）：+86(10)88091199
AUDITORS’ REPORT
Rui Hua Shen Zi (2017) No.48460003
To the shareholders of FIYTA Holdings Ltd.：
We have audited the accompanying financial statements of FIYTA Holdings Ltd. (the “Company”) and its
subsidiaries, which comprise the consolidated and the Company’s balance sheet as at 31 December 2016, the
consolidated and the Company’s income statement, the consolidated and the Company’s cash flow statement for
the year then ended and consolidated and the Company’s statement of change in shareholders’ equity, and notes
to the financial statements.
I. Management’s Responsibility for the Financial Statements
The Company’s management is responsible for the preparation and fair presentation of these financial
statements. This responsibility includes: (1) preparing and fairly presenting financial statements in accordance
with Accounting Standards for Business Enterprises; (2) designing, implementing and maintaining necessary
internal control in order that financial statements are free from material misstatement, whether due to fraud or
error.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with China Standards on Auditing. Those standards require that we comply with Chinese
Certified Public Accountants’ ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements。
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
III. Opinion
In our opinion, the financial statements give a true and fair view of the consolidated financial position of FIYTA
Holdings Ltd. and its subsidiaries as at 31 December 2016, and of their consolidated financial performance and
their consolidated cash flows for the year then ended and, of the financial position of FIYTA Holdings Ltd. as at 31
December 2016, and of its financial performance and its cash flows for the year then ended in all material aspects
in accordance with Accounting Standards for Business Enterprises.
Ruihua Certified Public Accountants Chinese Certified Public Accountant:Xing xiangzong
Beijing, China Chinese Certified Public Accountant:Yan yusong
8 March 2017
Consolidated Balance Sheet
as at 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 31 Dec 2016 31 Dec 2015
Current assets
Cash and bank balances VI. 1 428,802,755.81 638,962,875.93
Fair value through profit or loss
- -
financial asset
Derivative financial asset - -
Notes receivable VI. 2 7,662,556.28 7,197,788.08
Accounts receivable VI. 3 306,671,021.69 304,725,676.29
Prepayments VI. 4 33,709,656.73 48,869,563.60
Interest receivable - -
Dividends receivable - -
Other receivables VI. 5 33,393,017.28 39,847,732.76
Inventories VI. 6 1,997,097,192.38 2,092,691,019.29
Asset held for sale - -
Non-current assets due within one year - -
Other current assets VI. 7 20,344,532.09 15,796,773.56
Total current assets 2,827,680,732.26 3,148,091,429.51
Non-current assets:
Available-for-sale financial assets VI. 8 85,000.00 85,000.00
Held-to-maturity investments - -
Long-term receivables - -
Long-term equity investment VI. 9 43,423,624.87 43,221,572.05
Investment property VI. 10 244,202,635.09 216,948,193.02
Fixed assets VI. 11 611,204,169.03 361,979,828.01
Construction in progress VI. 12 - 173,189,274.57
Construction materials - -
Disposal of fixed assets - -
Intangible assets VI. 13 38,751,903.42 36,429,626.66
Development expenditures - -
Goodwill VI. 14 - -
Long-term deferred expenses VI. 15 133,688,403.88 155,704,564.39
Deferred tax assets VI. 16 95,179,575.26 105,901,723.16
Other non-current assets VI. 17 10,681,518.91 5,118,833.65
Total non-current assets 1,177,216,830.46 1,098,578,615.51
Total assets 4,004,897,562.72 4,246,670,045.02
Consolidated Balance Sheet (continued)
as at 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 31 Dec 2016 31 Dec 2015
Current liabilities
Short-term loans VI. 18 1,098,438,070.00 988,186,200.00
Fair value through profit or loss
- -
financial liabilities
Notes payable - -
Accounts payable VI. 19 215,422,089.74 155,939,686.54
Advances from customer VI. 20 13,902,703.90 18,031,129.87
Employee benefits payable VI. 21 45,254,585.69 39,396,747.95
Taxes payable VI. 22 50,945,289.31 68,921,732.81
Interest payable VI. 23 2,475,969.65 19,211,630.02
Dividends payable - -
Other payables VI. 24 53,733,080.99 48,131,616.20
Held for sale liabilities - -
Non-current liabilities due within one
year
VI. 25 26,117,387.52 108,914,000.00
Other current liabilities VI. 26 2,379,148.19 1,988,252.38
Total current liabilities 1,508,668,324.99 1,448,720,995.77
Non-current liabilities:
Long-term loan VI. 27 115,301,048.00 90,994,964.33
Bonds payable VI. 28 - 399,823,760.28
Deferred income VI. 29 5,980,000.00 4,300,000.00
Deferred tax liabilities - -
Other non-current liabilities - -
Total non-current liabilities 121,281,048.00 495,118,724.61
Total liabilities 1,629,949,372.99 1,943,839,720.38
Shareholders’’ equity
Share capital VI. 30 438,744,881.00 438,744,881.00
Capital reserve VI. 31 1,062,455,644.22 1,062,455,644.22
Less: treasury stock - -
Other comprehensive income VI. 32 -11,778,498.24 -17,145,189.71
Special reserves - -
Surplus reserve VI. 33 193,961,700.45 179,743,077.15
Undistributed profit VI. 34 687,986,807.74 635,417,237.55
Total shareholders’ equity
attributable to shareholders of the 2,371,370,535.17 2,299,215,650.21
parent company
Minority shareholders’ interests 3,577,654.56 3,614,674.43
Total shareholders’ equity 2,374,948,189.73 2,302,830,324.64
Total liabilities and shareholders’
4,004,897,562.72 4,246,670,045.02
equity
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
91
Consolidated Income Statement
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Notes 2016
1. Total Revenue 2,993,864,561.43 3,162,196,212.90
Incl. Operating income VI. 35 2,993,864,561.43 3,162,196,212.90
2. Total Cost 2,866,928,721.59 3,038,404,027.19
Incl. Operating cost VI. 35 1,772,811,718.01 1,929,513,666.04
Tax and surcharges VI. 36 34,047,056.22 30,674,510.18
Distribution expenses VI. 37 760,530,356.03 779,536,520.59
Administrative expenses VI. 38 201,274,142.02 198,077,866.76
Financial expenses VI. 39 68,887,564.91 94,347,464.79
Asset impairment loss VI. 40 29,377,884.40 6,253,998.83
Plus: gain or loss from changes in fair value - -
Investment gain VI. 41 446,593.23 831,812.14
Incl. gain from investment in associates and
585,802.82 831,812.14
jointly controlled enterprises
3. Operating profit (loss) 127,382,433.07 124,623,997.85
Plus: Non-operating income VI. 42 18,580,518.04 12,037,251.82
Incl. gain from disposal of non-current assets 5,779.00 94,316.07
Less: Non-operating expenses VI. 43 931,661.14 1,131,027.33
Incl. losses from disposal of non-current assets 526,699.33 59,880.75
4. Profit before income tax 145,031,289.97 135,530,222.34
Less: Income tax VI. 44 34,656,442.67 13,486,541.61
5. Net profit 110,374,847.30 122,043,680.73
Net profit attributable to shareholders of the parent
110,662,681.59 121,702,057.44
company
Profit attributable to minority shareholders -287,834.29 341,623.29
6. After-tax other comprehensive income VI. 32 5,617,505.89 658,770.06
After-tax other comprehensive income attributable to
5,366,691.47 464,075.51
shareholders of parent company
After-tax other comprehensive income attributable to
VI. 32 250,814.42 194,694.55
minority shareholders
7. Total other comprehensive income 115,992,353.19 122,702,450.79
Total comprehensive income attributable to
116,029,373.06 122,166,132.95
shareholders of the parent company
Total comprehensive income attributable to minority
-37,019.87 536,317.84
shareholders
8. Earnings per share
(1) Basic EPS 0.2522 0.3099
(2) Diluted EPS 0.2522 0.3099
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
Consolidated Cash Flow Statement
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Notes 2016
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of
3,399,049,587.48 3,655,072,713.33
services
Cash received from refund of taxes 6,421.29 -
Other cash received relating to operating activities VI. 45 51,568,226.99 41,260,214.12
Subtotal of cash inflows from operating activities 3,450,624,235.76 3,696,332,927.45
Cash paid for purchasing goods and services 1,875,799,503.14 2,182,822,674.35
Cash paid to and for employees 493,983,490.08 498,411,775.82
Cash paid for taxes and surcharges 279,007,317.31 267,337,552.24
Other cash paid relating to operating activities VI. 45 346,074,831.08 351,523,932.63
Subtotal of cash outflows in operating activities 2,994,865,141.61 3,300,095,935.04
Net cash flows from operating activities 455,759,094.15 396,236,992.41
2. Cash flows from investing activities
Cash received from returns on investments - -
Cash received from returns on investments 383,750.00
Net cash received from disposal of fixed assets,
4,150,363.94 340,367.11
intangible assets and other long-term assets
Cash received from disposal of subsidiaries and other
business units
- -
Net cash received relating to other investing activities - -
Subtotal of cash inflows from investing activities 4,534,113.94 340,367.11
Cash paid to acquire fixed assets, intangible assets and
189,744,095.04 230,352,063.28
other long-term assets
Cash paid to acquire investments - -
Net cash paid to acquire subsidiaries and other business units - -
Cash paid relating to other investing activities - -
Subtotal of cash outflows for investing activities 189,744,095.04 230,352,063.28
Net cash flows from investing activities -185,209,981.10 -230,011,696.17
3. Cash flows from financing activities：
Cash received from capital contributions - 585,499,993.55
Including: Cash received from capital contributions by minority
shareholders of subsidiaries
- -
Cash received from loans 1,405,213,268.91 2,338,413,855.11
Cash received from bonds - -
Cash received relating to other financing activities VI. 45 - 13,500,000.00
Sub-total of cash inflows from financing activities 1,405,213,268.91 2,937,413,848.66
Cash repayments of borrowings 1,765,309,978.60 2,289,386,353.35
Cash payments for interest expenses and distribution of
dividends or profits
121,523,418.84 127,821,827.59
Including: Cash payments for dividends or profit to minority
shareholders of subsidiaries
- -
Cash payments relating to other financing activities VI. 45 992,669.19 165,515,699.12
Sub-total of cash outflows for financing activities 1,887,826,066.63 2,582,723,880.06
Net cash flows from financing activities -482,612,797.72 354,689,968.60
4. Effect of foreign exchange rate changes on
1,903,564.55 1,592,540.55
cash and cash equivalents
5. Net increase in cash and cash equivalents VI. 46 -210,160,120.12 522,507,805.39
Plus: cash and cash equivalents at the beginning of the
637,387,875.93 114,880,070.54
year
6. Cash and cash equivalents at the end of the
VI. 46 427,227,755.81 637,387,875.93
year
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
Consolidated Statement of Changes in Shareholders’ Equity
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Total shareholders’ equity attributable to shareholders of the parent company
Item Total
Less: Other General Minority
Special Undistributed shareholders'
Share capital Capital reserve treasury comprehensive Surplus Reserve risk interest
reserve profit equity
stocks income reserve
I. Balance at the end of prior year 438,744,881.00 1,062,455,644.22 - -17,145,189.71 - 179,743,077.15 - 635,417,237.55 3,614,674.43 2,302,830,324.64
Add: Changes in accounting policies - - - - - - - - - -
Correction of errors - - - - - - - - - -
Consolidation under common control - - - - - - - - - -
Others - - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,062,455,644.22 - -17,145,189.71 - 179,743,077.15 - 635,417,237.55 3,614,674.43 2,302,830,324.64
III. Changes in equity for the year ( \"- \"for decrease) - - - 5,366,691.47 - 14,218,623.30 - 52,569,570.19 -37,019.87 72,117,865.09
(I) Total comprehensive income for the year - - - 5,366,691.47 - - 110,662,681.59 -37,019.87 115,992,353.19
(II) Shareholders' contributions and decrease of capital - - - - - - - - - -
1. Common shares by the shareholders - - - - - - - - - -
2. Other equity holders’ contribution - - - - - - - - - -
3. Increase in shareholders' equity resulted from
- - - - - - - - - -
share-based payments
4. Others - - - - - - - - - -
(III) Appropriation of profits - - - - - 14,218,623.30 - -58,093,111.40 - -43,874,488.10
1. Make surplus reserves - - - - - 14,218,623.30 - -14,218,623.30 - -
2. Make general risk reserve - - - - - - - - - -
3. Distributions to shareholders - - - - - - - -43,874,488.10 - -43,874,488.10
4. Others - - - - - - - - - -
(IV) Transfer within equity - - - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - - - -
4. Others - - - - - - - - - -
(V) Special Reserve - - - - - - - - - -
1. Accrued for the year - - - - - - - - - -
2. Use for the year - - - - - - - - - -
(VI) Others - - - - - - - - - -
IV. Balance at the end of current year 438,744,881.00 1,062,455,644.22 - -11,778,498.24 - 193,961,700.45 - 687,986,807.74 3,577,654.56 2,374,948,189.73
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo Head of accounting department:Tianhui
Consolidated Statement of Changes in Shareholders’ Equity (continued)
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Total shareholders’ equity attributable to shareholders of the parent company
Item Total
Other Minority
Less: treasury Special Surplus General risk Undistributed shareholders'
Share capital Capital reserve comprehensive interest
stocks reserve Reserve reserve profit equity
income
I. Balance at the end of prior year 392,767,870.00 525,508,281.60 - -17,609,265.22 - 165,915,466.89 - 566,819,577.37 3,078,356.59 1,636,480,287.23
Add: Changes in accounting policies - - - - - - - - - -
Correction of errors - - - - - - - - - -
Consolidation under common control - - - - - - - - - -
Others - - - - - - - - - -
II. Balance at the beginning of current year 392,767,870.00 525,508,281.60 - -17,609,265.22 - 165,915,466.89 - 566,819,577.37 3,078,356.59 1,636,480,287.23
III. Changes in equity for the year ( \"- \"for decrease) 45,977,011.00 536,947,362.62 - 464,075.51 - 13,827,610.26 - 68,597,660.18 536,317.84 666,350,037.41
(I) Total comprehensive income for the year - - - 464,075.51 - - - 121,702,057.44 536,317.84 122,702,450.79
(II) Shareholders' contributions and decrease of capital 45,977,011.00 536,947,362.62 - - - - - - - 582,924,373.62
1. Common shares by the shareholders 45,977,011.00 536,947,362.62 - - - - - - - 582,924,373.62
2. Other equity holders’ contribution - - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - - - -
4. Others - - - - - - - - - -
(III) Appropriation of profits - - - - - 13,827,610.26 - -53,104,397.26 - -39,276,787.00
1. Make surplus reserves - - - - - 13,827,610.26 - -13,827,610.26 - -
2. Make general risk reserve - - - - - - - - - -
3. Distributions to shareholders - - - - - - - -39,276,787.00 - -39,276,787.00
4. Others - - - - - - - - - -
(IV) Transfer within equity - - - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - - - -
4. Others - - - - - - - - - -
(V) Special Reserve - - - - - - - - - -
1. Accrued for the year - - - - - - - - - -
2. Use for the year - - - - - - - - - -
(VI) Others - - - - - - - - - -
IV. Balance at the end of current year 438,744,881.00 1,062,455,644.22 - -17,145,189.71 - 179,743,077.15 - 635,417,237.55 3,614,674.43 2,302,830,324.64
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo Head of accounting department:Tianhui
Balance Sheet
as at 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 31 Dec 2016 31 Dec 2015
Current assets
Cash and bank balances 270,947,926.47 513,869,824.81
Fair value through profit or loss financial asset - -
Derivative financial asset - -
Notes receivable - -
Accounts receivable XV. 1 255,995.64 -
Prepayments - -
Interest receivable - -
Dividends receivable - -
Other receivables XV. 2 1,191,947,054.57 1,527,756,817.18
Inventories - -
Asset held for sale - -
Non-current assets due within one year - -
Other current assets 5,805,712.39 2,089,651.83
Total current assets 1,468,956,689.07 2,043,716,293.82
Non-current assets:
Available-for-sale financial assets 85,000.00 85,000.00
Held-to-maturity investments - -
Long-term receivables - -
Long-term equity investment XV. 3 1,256,593,344.87 814,121,292.05
Investment property 207,804,447.15 216,948,193.02
Fixed assets 414,581,425.11 113,553,719.50
Construction in progress - 173,189,274.57
Construction materials - -
Disposal of fixed assets - -
Productive biological assets - -
Oil and gas assets - -
Intangible assets 32,438,001.77 30,104,404.98
Development expenditures - -
Goodwill - -
Long-term deferred expenses 5,721,622.60 4,693,186.19
Deferred tax assets 1,502,555.54 1,081,888.10
Other non-current assets 10,681,518.91 5,118,833.65
Total non-current assets 1,929,407,915.95 1,358,895,792.06
Total assets 3,398,364,605.02 3,402,612,085.88
Balance Sheet (continued)
as at 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 31 Dec 2016 31 Dec 2015
Current liabilities
Short-term loans 908,000,000.00 700,000,000.00
Fair value through profit or loss financial liability - -
Derivative financial liabilities - -
Notes payable - -
Accounts payable 77,826,174.63 23,711,339.76
Advances from customer 2,767,858.84 3,207,516.61
Employee benefits payable 8,020,288.56 8,188,793.56
Taxes payable 2,883,511.63 2,857,031.42
Interest payable 1,312,644.11 18,170,745.35
Dividends payable - -
Other payables 18,959,721.51 17,550,238.03
Held for sale liabilities - -
Non-current liabilities due within one year 8,000,000.00 -
Other current liabilities - -
Total current liabilities 1,027,770,199.28 773,685,664.73
Non-current liabilities:
Long-term loan 109,861,928.00 68,361,928.00
Bonds payable - 399,823,760.28
Incl: preferential share - -
Perpetual debt - -
Deferred income 5,980,000.00 4,300,000.00
Deferred tax liabilities - -
Other non-current liabilities - -
Total non-current liabilities 115,841,928.00 472,485,688.28
Total liabilities 1,143,612,127.28 1,246,171,353.01
Shareholders’ equity
Share capital 438,744,881.00 438,744,881.00
Other equity instrument - -
Incl: preferential share - -
Perpetual debt - -
Capital reserve 1,068,111,185.32 1,068,111,185.32
Less: treasury stock - -
Other comprehensive income - -
Special reserves - -
Surplus reserve 193,961,700.45 179,743,077.15
General risk reserve - -
Undistributed profit 553,934,710.97 469,841,589.40
Total shareholders’ equity 2,254,752,477.74 2,156,440,732.87
Total liabilities and shareholders’ equity 3,398,364,605.02 3,402,612,085.88
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
Income Statement
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 2016
1. Revenue XV. 4 98,387,059.04 95,435,182.26
Less: operating cost XV. 4 13,573,121.98 14,952,820.19
Tax and surcharges 5,612,327.76 5,351,881.76
Distribution expenses - -
Administrative expenses 62,135,280.94 53,984,337.81
Financial expenses 14,080,570.16 18,388,066.34
Impairment loss 2,669.72 -566,874.66
Plus: gain on changes of fair value - -
Investment income XV. 5 135,930,463.18 132,219,952.72
Incl. income from investment in
associates and jointly controlled 585,802.82 831,812.14
enterprises
2. Operating profit 138,913,551.66 135,544,903.54
Plus: Non-operating income 3,484,145.59 3,566,753.92
Incl. gains from disposal of non-current
4,000.00 4,000.00
assets
Less: Non-operating expenses 364,571.59 316,767.32
Incl. losses from disposal of non-current
64,571.59 16,717.32
assets
3. Profit before income tax 142,033,125.66 138,794,890.14
Less: Income tax -153,107.31 518,787.56
4. Net profit 142,186,232.97 138,276,102.58
5. Other comprehensive income - -
1. Other comprehensive income that cannot be
- -
re-classified into profit or loss in future
(1) Net liability or net asset changes due to
- -
re-measurement of defined contribution plan
(2) Portion enjoyed in the investee's
comprehensive income which cannot be
- -
reclassified to profit or loss under equity
method in future
2. Comprehensive income that can be
- -
reclassified in profit or loss in future
(1) Portion enjoyed in the investee's
comprehensive income which can be
- -
reclassified to profit or loss under equity
method in future
(2) Profit or loss from changes of fair value of
- -
available for sale financial asset
(3) Profit or loss from reclassification from
- -
held-to-maturity to available for sale
(4) Profit or loss of effective part of a cash flow
- -
hedge
(5) Exchange difference of financial statement
- -
denominated in foreign currency
(6) Others - -
6. Total comprehensive income 142,186,232.97 138,276,102.58
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
Cash Flow Statement
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Item Note 2016
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 101,146,875.41 106,837,676.30
Cash received from refund of taxes - -
Other cash received relating to operating activities 1,771,270,749.83 62,329,516.00
Subtotal of cash inflows from operating activities 1,872,417,625.24 169,167,192.30
Cash paid for purchasing goods and services 34,000.00
Cash paid to and for employees 54,565,535.75 50,544,482.34
Cash paid for taxes and surcharges 8,610,117.24 10,408,943.54
Other cash paid relating to operating activities 1,396,061,933.91 13,607,560.44
Subtotal of cash outflows in operating activities 1,459,271,586.90 74,560,986.32
Net cash flows from operating activities 413,146,038.34 94,606,205.98
2. Cash flows from investing activities
Cash received from returns on investments - -
Cash received from returns on investments 135,728,410.36 131,388,140.58
Net cash received from disposal of fixed assets, intangible assets and other 5,600.00 111,800.00
long-term assets
Net cash received relating to other investing activities - -
Subtotal of cash inflows from investing activities 135,734,010.36 131,499,940.58
Cash paid to acquire fixed assets, intangible assets and other long-term 97,544,258.42 105,530,925.54
assets
Cash paid to acquire investments 442,270,000.00 40,100,000.00
Net cash paid to acquire subsidiaries and other business units
Cash paid relating to other investing activities - -
Subtotal of cash outflows for investing activities 539,814,258.42 145,630,925.54
Net cash flows from investing activities -404,080,248.06 -14,130,984.96
3. Cash flows from financing activities:
Cash received from capital contributions - 585,499,993.55
Cash received from loans 1,211,500,000.00 1,813,000,000.00
Cash received from bonds - -
Cash received relating to other financing activities - -
Sub-total of cash inflows from financing activities 1,211,500,000.00 2,398,499,993.55
Cash repayments of borrowings 1,354,000,000.00 1,743,000,000.00
Cash payments for interest expenses and distribution of dividends or profits 108,495,019.43 107,150,257.43
Cash payments relating to other financing activities 992,669.19 152,015,699.12
Sub-total of cash outflows for financing activities 1,463,487,688.62 2,002,165,956.55
Net cash flows from financing activities -251,987,688.62 396,334,037.00
4. Effect of foreign exchange rate changes on cash and cash - -
equivalents
5. Net increase in cash and cash equivalents -242,921,898.34 476,809,258.02
Cash and cash equivalents at the beginning of the year 512,294,824.81 35,485,566.79
6. Cash and cash equivalents at the end of the year 269,372,926.47 512,294,824.81
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo
Head of accounting department:Tianhui
Statement of Changes in Shareholders’ Equity
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Less: Other General Total
Item Special Surplus Undistributed
Share capital Capital reserve treasury comprehensive risk shareholders'
reserve Reserve profit
stocks income reserve equity
I. Balance at the end of prior year 438,744,881.00 1,068,111,185.32 - - - 179,743,077.15 - 469,841,589.40 2,156,440,732.87
Add: Changes in accounting policies - - - - - - - - -
Correction of errors - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 438,744,881.00 1,068,111,185.32 - - - 179,743,077.15 - 469,841,589.40 2,156,440,732.87
III. Changes in equity for the year ( \"- \"for decrease) - - - - - 14,218,623.30 - 84,093,121.57 98,311,744.87
(I) Total comprehensive income for the year - - - - - - - 142,186,232.97 142,186,232.97
(II) Shareholders' contributions and decrease of capital - - - - - - - - -
1. Common shares by the shareholders - - - - - - - - -
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from
- - - - - - - - -
share-based payments
4. Others - - - - - - - - -
(III) Appropriation of profits - - - - - 14,218,623.30 - -58,093,111.40 -43,874,488.10
1. Make surplus reserves - - - - - 14,218,623.30 - -14,218,623.30 -
2. Make general risk reserve - - - - - - - - -
3. Distributions to shareholders - - - - - - - -43,874,488.10 -43,874,488.10
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - - -
4. Others - - - - - - - - -
(V) Special Reserve - - - - - - - - -
1. Accrued for the year - - - - - - - - -
2. Use for the year - - - - - - - - -
(VI) Others - - - - - - - - -
IV. Balance at the end of current year 438,744,881.00 1,068,111,185.32 - - - 193,961,700.45 - 553,934,710.97 2,254,752,477.74
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo Head of accounting department:Tianhui
Statement of Changes in Shareholders’ Equity (continued)
for the Year Ended 31 December 2016
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Less: Other General Total
Item Special Surplus Undistributed
Share capital Capital reserve treasury comprehensive risk shareholders'
reserve Reserve profit
stocks income reserve equity
I. Balance at the end of prior year 392,767,870.00 531,163,822.70 - - - 165,915,466.89 - 384,669,884.08 1,474,517,043.67
Add: Changes in accounting policies - - - - - - - - -
Correction of errors - - - - - - - - -
Others - - - - - - - - -
II. Balance at the beginning of current year 392,767,870.00 531,163,822.70 - - - 165,915,466.89 - 384,669,884.08 1,474,517,043.67
III. Changes in equity for the year ( \"- \"for decrease) 45,977,011.00 536,947,362.62 - - - 13,827,610.26 - 85,171,705.32 681,923,689.20
(I) Total comprehensive income for the year - - - - - - - 138,276,102.58 138,276,102.58
(II) Shareholders' contributions and decrease of capital 45,977,011.00 536,947,362.62 - - - - - - 582,924,373.62
1. Common shares by the shareholders 45,977,011.00 536,947,362.62 - - - - - - 582,924,373.62
2. Other equity holders’ contribution - - - - - - - - -
3. Increase in shareholders' equity resulted from share-based payments - - - - - - - - -
4. Others - - - - - - - - -
(III) Appropriation of profits - - - - - 13,827,610.26 - -53,104,397.26 -39,276,787.00
1. Make surplus reserves - - - - - 13,827,610.26 - -13,827,610.26 -
2. Make general risk reserve - - - - - - - - -
3. Distributions to shareholders - - - - - - - -39,276,787.00 -39,276,787.00
4. Others - - - - - - - - -
(IV) Transfer within equity - - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - - -
4. Others - - - - - - - - -
(V) Special Reserve - - - - - - - - -
1. Accrued for the year - - - - - - - - -
2. Use for the year - - - - - - - - -
(VI) Others - - - - - - - - -
IV. Balance at the end of current year 438,744,881.00 1,068,111,185.32 - - - 179,743,077.15 - 469,841,589.40 2,156,440,732.87
The accompanying notes from page 15 to 107 form an integral part of these financial statements.
The financial statements from page 3 to page 14 shall be signed by the following personnel.
Legal Representative:Xu dongsheng Principal in charge of accounting:Chen zhuo Head of accounting department:Tianhui
FIYTA Holdings Ltd.
Notes to the Financial Statements
for the Year Ended 31 December 2016
(Expressed in RMB Yuan unless otherwise indicated)
I. Company status
FIYTA Holdings Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259 issued by
the General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time
Industrial Company by the promoter of China National Aero-Technology Import and Export Shenzhen Industry &
Trade Center (name changed to “China National Aero-Technology Shenzhen Co., Ltd” lately) on 25 December
1992, and the name changed to “Shenzhen FIYTA Holdings Limited”. The headquarters is located at FIYTA
Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District, Shenzhen, Guangdong Province.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen
Special Economic Zone Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special
shares (B shares) publicly on 10 March 1993. On 3 June 1993, both the Company’s A shares and B shares were
listed and traded on Shenzhen Stock Exchange pursuant to the approval of Shen Zheng Ban Fu[1993]20 issued
by Shenzhen Securities Regulatory Office and Shen Zheng Shi Zi (1993)16 issued by Shenzhen Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of
Shenzhen Municipal Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. (\"CATIC Shenzhen Company\") transferred
72,360,000 corporate shares (accounting for 52.24% of the Company's total share capital) to Shenzhen China
Aviation Group Company Limited (previously known as \"Shenzhen China Aviation Industry Company Limited\",
hereinafter referred to as \"China National Aviation Group\") according to share transfer agreement signed by both
parties. As a result, the Company’s controlling shareholder changed from CATIC Shenzhen Company to China
National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the premise of maintaining the
Company's total of 249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1
shares per 10 tradable shares to all the tradable share shareholders registered on option registration date
designated by the split-share reform program. At that point, after the reform, the shares held by China National
Aviation Group reduced to 44.69% from 52.24%.
On 29 February 2008, due to expanding the scope of business, the Company’s corporate business license was
altered from Shen Si Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen Municipal
Administration for Industry and Commerce.
With the approval of “Reply of China Securities Regulatory Commission (CSRC) to the Approval of Private
Placement of Shenzhen FIYTA Holdings Limited” (Zheng Jian Xu Ke [2010]1703) and “Reply of State-owned
Assets Supervision and Administration Commission of the State Council (SASAC) on Issues in Private Placement
of Shenzhen FIYTA Holdings Limited” (SASAC (2010)430) in 2010, the Company is approved to issue not more
than 50,000,000 ordinary shares (A shares) by private placement. After the completion of the placement on 9
December 2010, the Company’s registered capital increased to RMB280,548,479.00 and the equity capital of the
Company held by China National Aviation Group reduced to 41.49%.
On 8 April 2011, the Company increased its share capital by 4 shares for every 10 shares by capitalizing the
capital reserves on the basis of total shares of 280,548,479 as at 31 December 2010. Total shares of the
Company changed to 392,767,870 shares after the increase.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of
non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the approval
of State-owned Assets Supervision and Administration Commission of the State Council (SASAC) “Reply of
non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (SASAC(2015)415), the Company was
approved to issue not more than 46,911,649 ordinary shares (A shares) through non-public offering. After the
completion of the non-public offering of stocks on 22 December 2015, the Company’s registered capital was
increased to RMB438,744,881.00 and the equity capital of the Company held by China National Aviation Group
reduced to 37.15%.
As at 31 December 2016, the Company has accumulatively issued 438,744,881 shares in total (refer to Notes VI.
30 for details).
The business scope of the Company and its subsidiaries mainly includes: producing and selling of analogue
quartz watches and its movements, components, various timing devices, processing and wholesaling karat gold
jewellery watches (production sites are to be declared separately); domestic commercial and material supply and
distributing business (excluding goods under exclusive operational rights, special control and exclusive sales);
property management and leasing; import and export business of self-design, construction; import and export
business (according to Shen Mao Guan Deng Zheng Zi No.2007-072).The legal representative of the Company is
Xu Dongsheng.
Corporate governance institutions that were established by the Company include General Meeting of
Shareholders, Board of Directors, Board of Supervisors, Audit Committee, Strategy Committee and Nomination,
Remuneration and Evaluation Committee. The Company’s functional departments include Administration, Human
Resources, Finance, Property Management, Innovative Design, Strategy and Information, General Office of
Board of Directors, Audit, and R&D Department.
The financial statements have been approved and authorised for issue by the Board of Directors of the Company
on 8 March 2017.
There are 15 subsidiaries that are included in the Company’s scope of consolidation for year 2016, see Note VIII
“Equity in other entities” for detail. Comparing with prior year, the status of changes in scope of consolidation is:
zero addition and one decrease. See Note VII “Changes in scope of consolidation” for detail.
II. Basis of preparation
The financial statements of the Group have been prepared based on going concern assumption and based on
actual transactions and events occurred. It is prepared in accordance with the requirements of “Accounting
Standards for Business Enterprises - Basic Standard” (promulgated under Decree No. 33 of the Ministry of
Finance and revised under Decree No. 76 of the Ministry of Finance) and 41 Specific Standards issued and
revised by the Ministry of Finance on and after 15 February 2006, and application guidance, illustrations to the
standards and related pronouncements (collectively known as “Accounting Standards for Business Enterprises”
or “CAS”). These financial statements also comply with the disclosure requirements of “Regulation on the
Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for
Financial Reports” (revised in 2014) issued by China Securities Regulatory Commission (CSRC).
According to Accounting Standards for Business Enterprises, accrual basis is adopted for the Company’s
accounting activity. Except for some financial instruments, the financial statements are measured using historical
cost. In case of impairment occurred on assets, provisions for impairment are provided for in accordance with
related rules.
III. Statement of compliance
The financial statements of the Company have been prepared in accordance with the requirements of Accounting
Standards for Business Enterprises. These financial statements present truly and completely the financial position
as at 31 December 2016, the results of operations and the cash flows for the year then ended of the Company. In
addition, the financial statements of the Company comply with, in all material respects, the disclosure
requirements for financial statements and notes to the financial statements under “Regulation on the Preparation
of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial
Reports” as revised by CSRC in 2014.
IV. Accounting policies and estimates
The Company and each subsidiaries determines specific accounting policies and estimates for revenue
recognition, depreciation of fixed asset, amortization of intangible assets and R&D expenses according to the
characteristics of their production and operation and based on CAS. Refer to Notes IV. 22 “Revenue”, Note IV 14
“Fixed Asset”, Note IV 17 (1) “Intangible Asset” and Note IV 17 (2) “R&D Expenses” for detail. For explanation of
significant accounting judgement and estimate made by the management, refer to Note IV 27 “Significant
accounting judgement and estimate” for detail.
1. Accounting period
The accounting period of the Company includes accounting year and interim accounting period. An interim period
refers to a reporting period which is shorter than a full accounting year. The accounting year of the Company is the
calendar year, i.e. from 1 January to 31 December of each year.
2. Operating cycle
Normal operating cycle refer to the period start from purchasing asset for manufacturing until realization of cash or
cash equivalent. The operating cycle of the Company is 12 months, which is the basis for distinguishing liquidity of
assets and liabilities.
3. Recording currency
Renminbi (RMB) is the functional currency of the main economic environment in which the Company and its
domestic subsidiaries operate. The Company and its domestic subsidiaries adopt Renminbi as the recording
currency.
Except for the Swiss-based subsidiary Montres Chouriet SA (the “Swiss Company”) , which is a subsidiary of
FIYTA (Hong Kong) Limited (FIYTA Hong Kong), uses Swiss Franc as the recording currency according to the
main economic environment where the Swiss Company operated, all other subsidiaries outside the mainland
China, including HARMONY World Watches International Limited (World Watches International), a subsidiary of
Shenzhen HARMONY World Watches Center Co., Ltd (HARMONY Company), FIYTA Hong Kong and its
subsidiary Station 68 Limited (Station 68) as well as Nature Art Limited, which are special purpose vehicles
controlled by Station 68, use Hong Kong Dollar (HKD) as the recording currency and translate to Renminbi when
preparing financial statements.
The currency used in preparing the Company’s financial statements is Renminbi.
4. Accounting treatment for business combinations involving entities under
common control and not under common control
Business combination refers to transactions or events that combine two or more separate enterprises and form
one reporting entity. Business combinations are classified into business combinations involving enterprises under
common control and business combinations involving enterprises not under common control.
(1) Business combination involving entities under common control
If the enterprises involved in a combination are subject to control of the same party or parties both before and after
the combination, and that control is not temporary in nature, it is business combination under common control.
The party who obtains control over other participating enterprises on the combination date is the combining party,
and the other participating enterprises are combined parties in a business combination under common control.
Combination date means the date on which the combining party actually obtains control over the combined
parties.
Assets and liabilities that the combining party obtained are measured using book value of the combined party’s
accounts on combination date. Difference between book value of net assets the combining party obtained and
book value of combination consideration paid (or the aggregate nominal amount of shares issued) is recognized
in capital reserve (share premium). If the capital reserve (share premium) is insufficient to offset, retained
earnings will be adjusted accordingly.
All direct expenses incurred by the acquirer in relation to the combination are included in the current profit or loss
at the time such expenses incurred.
(2) Business combinations involving entities not under common control
If the enterprises involved in a combination are not subject to control of the same party or parties both before and
after the combination, it is the business combination involving entities not under common control. The party who
obtains control over the other participating enterprises on acquisition date is the acquirer, and the other
participating enterprises are the acquiree in a business combination not under common control. The acquisition
date is the date on which the acquirer actually obtains the control over the acquirees.
As for business combinations involving enterprises not under common control, combination cost includes assets
paid, liabilities incurred or assumed, and the fair value of equity securities issued by the acquirer to obtain control
over the acquiree on the acquisition date. Fees for auditing, legal service, evaluation and consultation, and other
administrative expenses incurred for the combination are recognized in profit or loss in the period in which such
expenses incurred. Transaction costs incurred by the acquirer for issuing equity securities or debt securities as
combination consideration are recognized in initial recognition amount of equity securities or debt securities.
Contingent consideration, if any, is included in acquisition cost at its fair value on the acquisition date. If, within 12
months, new or further evidence revealed regarding conditions that already existed on acquisition date, the
contingent consideration required to be adjusted, adjusting the goodwill arising from the acquisition accordingly.
For acquisition that realized step by step through multiple transfer transactions, the equity of the acquiree held by
the acquirer before the acquisition date are re-measured using fair value on the acquisition date. Any difference
between the fair value and its carrying amount is recognized as investment income and transfer other
comprehensive income related to this part of equity to investment gain in the period where the acquisition date
falls. The acquisition cost is the aggregate of fair value of acquiree’s equity held by the acquirer before the
acquisition date and fair value of additional equity acquired on the acquisition date.
Acquisition cost incurred by the acquirer and identifiable net assets acquired in the acquisition are measured at
fair value on the acquisition date. If the acquisition cost is greater than the fair value of the part of identifiable net
assets acquired on the acquisition date, the difference is recognized as goodwill. If the acquisition cost is lesser
than the fair value of the part of identifiable net assets acquired on the acquisition date, review the fair value of
each identifiable asset, liability and contingent liability that acquired and the calculation of acquisition cost. If, after
the review, the acquisition cost is still lesser than the fair value of the part of identifiable net assets acquired, the
difference is recognized in profit or loss in corresponding period.
Deductible temporary differences that the acquirer obtained from the acquiree, which are not recognized on
acquisition date due to the conditions of recognition as deferred tax assets are not fulfilled, are recognized as
deferred tax assets and correspondingly deduct goodwill if new or further evidence shows, within 12 months after
the acquisition date, that relevant conditions exist on the acquisition date and it is probable that the economic
benefit arising from the deductible temporary differences on acquisition date can be realized. If the goodwill is
insufficient to the deduction, the excess part is recognized in profit or loss in corresponding period. Deferred tax
assets recognized in relation to acquisition that other than the circumstances mentioned above are recognized in
profit or loss in corresponding period.
For business combination involving entities not under common control that achieved in stages that involves
multiple transactions, judgement of whether a transaction belongs to “a basket transaction” requires to be carried
out in accordance with the “Notice of the Ministry of Finance on Circulating the Fifth Interpretation to Accounting
Standards for Business Enterprise” (Cai Kuai (2012) No. 19) and criteria of “a basket transaction” stated in clause
51 of “Accounting Standards for Business Enterprise No. 33 – Financial Statements Consolidation” (see Note IV 5
(2) for detail). If it is “a basket transaction”, the accounting treatment shall be referred to descriptions in above
paragraphs and Note IV 12 “Long-term equity investment”. If it isn’t “a basket transaction”, the accounting
treatment shall be differentiated for individual and consolidated financial statements.
In the individual financial statements, the initial investment cost is the sum of the carrying amount of equity
investment of the acquiree held prior to the acquisition date and the additional investment cost at the acquisition
date. When disposing an equity held prior the acquisition date that involving other comprehensive income, the
other comprehensive income shall be accounted for on the same basis as would have been required if the
investee had directly disposed of the related assets or liabilities (i.e. except for the portion resulted from changes
in re-measuring the acquiree’s net liability or net asset of a defined benefit plan according to equity method
accounting, the rest shall be recorded in current period investment gain).
In the consolidated financial statements, the cost of equity investment of the acquiree held prior to the acquisition
date is re-measured at the fair value on the acquisition date, the difference between the fair value and carrying
value is recognized as investment gain for the current period.
For an equity held prior the acquisition date that involving other comprehensive income, the other comprehensive
income shall be accounted for on the same basis as would have been required if the investee had directly
disposed of the related assets or liabilities (i.e. except for the portion resulted from changes in re-measuring the
acquiree’s net liability or net asset of a defined benefit plan according to equity method accounting, the rest shall
be recorded in current period investment gain).
5. Method of preparing consolidated financial statements
(1) Principles in determining the scope of the consolidation
The scope of consolidation is determined on the basis of control. Control refers to the right that the Company is
able to make decision on financial and operational policies of the invested company, and receiving benefits from
the business activities conducted by the invested company. The scope of the consolidation includes the Company
and all its subsidiaries. Subsidiary means enterprise or entity that is controlled by the Company.
The Company will reevaluate the scope of consolidation once related facts and situation changes, which in turn
results in changes to key factors that define control.
(2) Method of preparing consolidated financial statements
The Group begins to include a subsidiary in the scope of consolidation from the date that the Company acquires
the net assets and effective control over the operation and business decisions of the subsidiary. A subsidiary is
excluded out of the scope of the Group’s consolidation from the date the Company losses effective control over it.
For subsidiary that is disposed, the operating performance and cash flows before the disposal date are properly
included in the consolidated income statement and consolidated cash flow statement. The opening balance of the
consolidated balance sheet is not adjusted if the disposal occurs in the same period. The business performance
and cash flows of the addition of subsidiary through combination involving entities not under common control after
the acquisition date have been properly included in the consolidated income statement and consolidated cash
flow statement, and no adjustments are made to the opening balance and comparative figures of the consolidated
financial statements. For addition of subsidiary through combination involving entities under common
control, the business performance and cash flows from the beginning of the period to the combination date are
properly included in the consolidated income statement and consolidated cash flow statement, and the opening
and comparative figures of the consolidated financial statements are adjusted at the same time.
If the accounting policies or accounting period adopted by the subsidiary are not in line with the Company,
necessary adjustments are made to the financial statements of the subsidiary according to the Company’s
accounting policies and period when preparing consolidated financial statements. If the subsidiary is acquired
through combinations involving entities not under common control, the adjustments are made based on the fair
value of its identifiable net assets on the acquisition date.
All material intra-group current account balances, transactions and unrealized profits are offset when preparing
the consolidated financial statements.
The part of subsidiary shareholders’ equity and current period net profit or loss that do not attribute to the
Company are presented separately under shareholders’ equity and net profit in consolidated financial statements
as minority shareholders’ equity and minority shareholders’ profit or loss respectively. Portion of subsidiaries’
current net profit or loss attributable to minority shareholder’s equity are presented under the title of “minority
shareholders’ profit or loss” under net profit in consolidated income statement. If subsidiary’s losses that
attributable to minority shareholders exceed the opening owners’ equity attributable to minority shareholders,
minority shareholders’ equity is deducted.
If the Company losses control over a subsidiary due to partial disposal of equity investment or other reasons, the
remaining equity is measured at fair value on the date when the control lost. The difference between the sum of
consideration received for disposal of equity interest and the fair value of remaining equity interest less the net
assets attributable to the Company calculated continuously since the purchase date based on shareholding
percentage before disposal are recognized in investment gain in the period when the control lost. Other
comprehensive income related to equity investment in the subsidiary is transferred to investment gain at the time
control lost. The remaining equity interests are measured subsequently according to “CAS No. 2 – Long-term
Equity Investment” or “CAS No. 22 – Recognition and measurement of Financial Instrument”. See Note IV. 9
“Financial instrument” or Note IV. 12 “Long-term equity investment” for details.
If the Company losses control over a subsidiary step by step through multiple disposal transactions, judgment of
whether these transactions belong to “a basket transaction”. It’s typically considered to account the multiple
transaction as “a basket transaction” if the terms, conditions or economic effects of each of the transactions meet
one or more criteria list below:
a. The transactions are entered into at the same time or in contemplation of each other;
b. The transactions together can achieve a complete commercial effect;
c. The occurrence of one transaction is dependent on the occurrence of at least one other transaction;
d. One transaction is not economically justified, but it is economically justified when considered together with
other transactions.
If the transactions do not belong to a basket transaction, each transactions shall be accounted for as a disposal
transaction that resulted in loss of control. However, the difference between each consideration received for
disposal and portion of net asset related to the disposal shall be accounted as other comprehensive income in
consolidated financial statement and charged to profit or loss at the time control losses and in the period of loss of
control.
6. Categorizing of joint arrangement and accounting treatment for joint
operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies
joint arrangements into joint operations and joint ventures. A joint operation is a joint arrangement whereby the
joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint
venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement.
The Company adopts equity method to joint venture investment and accounted for in accordance with accounting
policies stated in Note IV 12 (2) ② “Long-term investment accounted for using equity method”.
As a party in a joint operation, the Company recognize the followings: asset held independently; liability
undertaken independently; the Company’s share of asset held commonly and liability undertaken commonly;
revenue from selling output of the joint operation that enjoyed by the Company; revenue from selling output of the
joint operation based on the Company’s share; expenses incurred independently by the Company and common
expenses incurred and shall be borne by the Company according to its shares.
When the Company, as a party in a joint operation, invest or sell asset (the asset does not constitute business) to
the joint operation or purchase asset from the joint operation, the Company only recognize the portion of profit or
loss that attribute to other parties in the joint operation arises from the transaction before the asset is sold to third
party. If the asset impaired according to “CAS No. 8 – Asset impairment”, the Company recognize the loss in full if
the asset is invested or sold to the joint operation by the Company, or only recognize the portion attributable to the
Company should be recognized if the asset is purchased by the Company from the joint operation.
7. Determination of cash and cash equivalents
The Company's cash and cash equivalents include cash on hand, deposit that can be used for immediate
payment, and Company’s investments that are with characteristics of short term (generally matures in three
months from the date of purchase), highly liquid, readily convertible to known amount of cash, and with
insignificant risks of changes in value.
8. Foreign currency transactions and financial statements translation
(1) Translation of foreign currency transactions
Initial recognition of foreign currency transactions incurred by the Company are translated to recording currency
using the spot exchange rate at the trading date (usually refers to middle rate of foreign exchange rate on that day
published by the People's Bank of China). For foreign currency exchange transactions and transactions related to
foreign currency exchange, they are translated into recording currency using actual exchange rate.
(2) Translation of monetary items and non-monetary items denominated in foreign currencies
At the balance sheet date, monetary items denominated in foreign currencies are translated using the spot rate at
the balance sheet date. Translation differences arising from the translation are recognized in current profit or loss
except for capitalized exchange difference attributable to assets purchased or constructed, which can be
capitalized, using foreign currency specified loan and amortized cost of available for sale monetary items
denominated in foreign currency. The exchange difference arose from the two scenario mentioned above shall be
treated under the principal of capitalizing of borrowing cost and charged to other comprehensive income
respectively.
In preparing of the consolidated financial statements involving overseas operations, if there is any
foreign-currency monetary item constituting substantially net investment in overseas operation, the exchange
difference arising from exchange rate variation is recognized in other comprehensive income and will be charged
to profit or loss at the period the investment is disposed.
Non-monetary items denominated in foreign currencies that are measured using historical costs are still
measured using recording currency translated at the spot rate at transaction date. Non-monetary items
denominated in foreign currency which are measured using fair value are translated at spot rate of the day the fair
value is determined. The differences between amount of recording currency after the translation and the original
amount of recording currency are treated as changes in fair value (including exchange rate change) and are
recognized in current profit or loss or recognized in capital reserves as other comprehensive income.
(3) Translation of financial statements prepared in foreign currencies
In preparing of the consolidated financial statements involving overseas operations, if there is any
foreign-currency monetary item constituting substantially net investment in overseas operation, the exchange
difference arising from exchange rate variation is recognized as “translation difference” under owners’ equity in
balance sheet. In case of disposal of overseas operation, it is charged to the profit and loss of the period.
Financial statements of foreign businesses that denominated in foreign currencies are translated to financial
statements in RMB using following rules: asset and liability items in balance sheet are translated using the spot
rate on balance sheet date; except for “undistributed profit”, all other items in owners’ equity are translated using
the spot rate on the date the corresponding transactions occurred. Revenue and expenses items in income
statement are translated using the average rate on the transaction date. The undistributed profit at the beginning
of the year is the year-end balance translated at the prior year. The undistributed profit at the year-end is
presented using translated items in profit distribution. Difference between the translated assets and sum of
liabilities and owners’ equity is recognized in other comprehensive income as translation differences and is
presented separately under owners’ equity in balance sheet. When disposing overseas operations and losing
controls over the operations, relevant translation differences which are originally presented under owners’ equity
are charged to profit or loss entirely or proportionately according to percentage of disposal.
Cash flows denominated in foreign currency and cash flows of subsidiaries outside Mainland China are translated
using the average exchange rate on the date when cash flows occur. The amount of cash changes due to
exchange rate variations are recognized as adjustment item and presented in the cash flow statement separately.
The balance at the beginning of the year and amount actually incurred prior year are presented using figures in
prior year’s translated financial statements.
All foreign exchange translation difference of an oversea investment recorded under equity and attributable to the
shareholders of the parent company shall be charged to current period profit or loss when the Company losses
control over this oversea investment due to disposal of all equity owned or partial disposal or other reasons.
If the equity holding in an oversea investment decreased but still maintain control due to partial disposal or other
reasons, foreign exchange translation difference related to the part disposed shall be included as minority
shareholders’ interest and should not be charged to current period profit or loss. If the partial disposal is for
oversea associate or joint ventured enterprise, foreign exchange difference related to the oversea operation shall
be charged to profit or loss when the disposal occurred based on the percentage disposed.
9. Financial instruments
A financial asset or financial liability is recognized when the Company becomes one party of financial instrument
contracts. Financial asset and financial liability are initially recognized at fair value. Transaction expenses for fair
value through profit or loss financial asset and liability shall be charged to the profit or loss directly. Transaction
expenses for financial asset and liability other than that shall be included in the initial recognition amount.
(1) Determination of fair values for financial assets and financial liabilities
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. If there is an active market for a financial instrument, the quoted price
in the active market shall be used to establish the fair value of the financial instruments. Quoted prices from an
active market are prices that are readily and regularly available from an exchange, broker, industry association or
pricing service agency etc… and represent prices used in actual market transactions on an arm’s length basis. If
no active market exists for a financial instrument, the Group establishes fair values by using valuation techniques.
Valuation techniques include using the prices quoted in latest market transactions between knowledgeable, willing
parties for reference, referencing to the current fair value of another instrument that is substantially the same in
nature, discounted cash flow method and option pricing model, etc...
(2) Classification, recognition and measurement of financial assets
Financial assets which are traded in conventional manner are recognized or derecognized on the transaction date.
On initial recognition, financial assets are classified into fair value through profit or loss financial assets,
held-to-maturity financial assets, loans and receivables, and available-for-sale financial assets.
1 Fair value through profit or loss financial asset
Fair value through profit or loss financial asset includes financial asset held for trade and designated upon initial
recognition as at fair value through profit or loss.
Financial asset meet one of the following criteria is categorized as financial asset held for trade: A. the purpose of
acquiring the financial asset is for selling in short-term; B. belongs to identifiable financial instrument portfolio that
is centralized managed and objective evidence proofed that the Company manages the portfolio in a manner to
make profit in short-term; C. belongs to derivative instrument except for derivative instruments that are designated
as effective hedging tools, financial guarantee contract or connected with equity instrument investment that do not
have quotation in an active market and that the fair value cannot be measured reliably and the settlement of
derivative instrument must involve delivery of this equity instrument.
Financial asset can be recognized initially as designated fair value through profit or loss financial asset if one of
the following conditions is met: A. the designation can eliminate or reduce significantly the situation of
inconsistency in recognition or measurement of profit or loss caused by different measurement basis; B. the
official documents of the Company’s risk management or investment strategy state that the financial asset
portfolio or portfolio combines financial asset and financial liability that contains the financial asset are managed,
evaluated and reported to key management based on fair value.
Fair value through profit or loss financial asset is measured consequently using fair value. Profit or loss arose from
changes in fair value and dividend and interest income related to the asset are recorded in current period profit or
loss.
② Held-to-maturity investment
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity dates that the Company has the positive intention and ability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method;
gains and losses arising from derecognition, impairment or amortization is recognized in profit or loss for the
current period.
Effective interest rate method refers to the method that calculates amortized cost and interest income or expenses
for each period based on actual interest rate of a financial asset or financial liability (or a group of financial asset
or financial liability). Effective interest rate is the rate that used to discount future cash flows of a financial asset or
financial liability in its holding period or a shorter time applicable to its current book value.
When calculating effective interest, the Company estimates future cash flows (do not consider future credit loss)
based on all contractual terms of the financial asset or financial liability, and taking into consideration of expenses,
transaction fee and discount or premium, which consist part of the actual interest rate, that are paid to or received
from different parties of the financial asset or financial liability contract.
③ Loan and receivables
Loan and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. The Company’s assets fall under this category include notes receivable, accounts receivable,
interest receivable, dividends receivable and other receivables etc…
Loan and receivables are subsequently measured at amortized cost using the effective interest method; gains
and losses arising from derecognition, impairment or amortization is recognized in profit or loss for the current
period.
④ Available-for-sale financial asset (AFS financial asset)
AFS financial assets are those non-derivative financial assets that are designated as available for sale and those
financial assets in addition to those above mentioned.
The cost of AFS debt instrument investment at period end is determined according to amortized cost, i.e. the initial
recognized amount minus principal repaid plus or minus the accumulated amortization of difference between
initial recognized amount and amount at the maturity date, and minus impairment loss incurred. The cost of AFS
equity instrument at period end is the initial cost when it is acquired.
AFS financial assets are subsequently measured at fair value. Gain and losses arising from changes in fair value
of AFS financial assets (other than impairment losses and foreign exchange gains and losses resulted from
foreign currency monetary assets which are recognized in profit or loss for the current period) are recognized as
other comprehensive income, until the financial assets are derecognized, are transferred to profit or loss for the
current period. Equity instrument investment with no quoted price in active markets and with not reliably measured
fair value, and derivative financial assets for the equity instrument and settled by paying the equity instrument are
subsequently measured at cost.
Interest income and dividends related to the AFS financial assets are recognized as investment gain for the
current period.
(3) Impairment of financial assets
The Company assesses the carrying amount of financial assets at each balance sheet date other than those at
fair value through profit or loss, if there is objective evidence that financial assets are impaired, the Company
determines the amount of impairment loss.
The Company conducts impairment test on individually significant financial assets separately. Financial assets
that are not individually significant in amount are tested for impairment separately or grouped into different asset
portfolios based on similarity and correlation of the credit risk characteristics. Financial assets that are not
impaired after standalone impairment tests will be tested again by including it in a portfolio of financial assets with
similar credit risk characteristics. Financial assets that have been impaired in standalone test will not be tested
again by including it in a portfolio of financial assets with similar credit risk characteristics.
① Impairment to held-to-maturity, loan and receivables
The carrying amount of financial assets that are measured at cost or amortized cost shall be reduced to the
present value of estimated future cash flows. The amount reduced shall be recognized as impairment loss and
charged to current period profit or loss. If there is objective evidence shows that the value of the financial asset
recovered after impairment loss was recognized, and the recovery is connected with matters happened after the
recognition of impairment loss, the loss recognized previously could be reversed. The carrying amount after the
reversal shall not exceed the amortized cost at the reversal date as if there is no impairment before.
② Available-for-sale financial assets
It indicated that impairment incurred to the AFS financial asset if the air value decrease is judged as severe and
not temporary by considering all relevant factors.
If AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized
directly in other comprehensive income are reversed and charged to profit or loss for the current period. The
reversed accumulated losses are the asset's initial acquisition costs after deducting amounts recovered and
amortized, current fair value and impairment losses previously recognized in profit or loss.
If, in a subsequent period, the fair value of financial assets increases and the increase can be related objectively
to an event occurring after the impairment was recognized, the previously recognized impairment losses can be
reversed. The reversal of impairment losses of AFS equity instruments are to be included in other comprehensive
income and the AFS debt instrument impairments are to be reversed through current period profit or loss.
The impairment for derivative financial asset that do not have quotation in an active market and that the fair value
cannot be measured reliably and the settlement of derivative instrument must involve delivery of this equity
instrument are not allowed to be reversed.
(4) Condition of recognition and measurement of transfer of financial assets
Financial asset is derecognized if one of the following conditions is satisfied: ① the contractual rights of receiving
cash flows from the financial asset is terminated; ② financial asset has been transferred, and substantially all
risks and reward associated with the ownership of the financial asset have been transferred to transferee; ③ the
financial asset has been transferred. The enterprise neither transfers nor retains substantially all the risks and
rewards associated with the ownership of the financial asset, but it has not retained control over the financial
asset.
If the enterprise neither transfers nor retains substantially all the risks and rewards associated with the ownership
of a financial asset, and it retains control over the financial asset, it recognizes the financial asset to the extent of
its continuing involvement in the transferred financial asset and recognizing associated liability. The extent of
continuing involvement in the transferred asset is the extent to which the enterprise is exposed to risks of changes
in the value of the transferred asset.
For an entire transfer of a financial asset that satisfies the de-recognition criteria, the difference between the
carrying amount of the financial asset transferred and the sum of the consideration received from the transfer and
any cumulative gain or loss that had been recognized in other comprehensive income is recognized in current
profit or loss.
If a part of the transferred financial asset qualifies for de-recognition, the carrying amount of the transferred
financial asset in its entirety shall be allocated between the part that is derecognized and the remaining portion
proportionately based on the relative fair value of each part. The difference between the carrying amount
allocated to the part derecognized and the sum of the consideration received for the part derecognized and any
cumulative gain or loss attributable to it that had been recognized in other comprehensive income is recognized in
current profit or loss.
For financial asset sold with recourse or endorsed, it needs to assure that almost all risk and rewards associated
with the financial asset have been transferred. If almost all risk and rewards associated with the financial asset
have been transferred to the recipient, the financial asset shall be de-recognized. If the Company retains almost
all risk and rewards associated with the financial asset, it shall not be de-recognized. If the Company neither
transfers nor retains almost all risk and rewards associated with the financial asset, judgment of whether the
Company retains control over the asset needs to be carried out and it shall be accounted for based on principals
stated in above paragraphs.
(5) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified in financial liabilities at fair value through profit or loss and
other financial liabilities. A financial liability is initially recognized at fair value. Transaction costs for financial
liability at fair value through profit or loss are charged to current profit or loss. Transaction costs for other financial
liabilities are included in their initial recognition amounts.
① Fair value through profit or loss financial liability
The condition of categorizing fair value through profit or loss financial liability and designated as fair value through
profit or loss financial liability is the same as fair value through profit or loss financial asset and designated fair
value through profit or loss asset.
Fair value through profit or loss financial liability is measured subsequently using fair value and gain or losses
resulted from changes in fair value and dividend or interest payment related to the financial liability shall be
charged to current period profit or loss.
2 Other financial liability
Derivative financial liabilities, which connected with equity instrument without quotation in an active market and
that the fair value cannot be measured reliably and the settlement of such financial liabilities require delivery of the
equity instrument, are measured subsequently at cost. Other financial liabilities are measured at amortized cost
using effective interest rate method. Gain or losses arising from derecognizing or amortization are charged to
current profit or loss.
(6) De-recognition of financial liabilities
A financial liability or part of it can only be derecognized only when the present obligations are fully or partly
discharged. If an agreement between the Company (the debtor) and creditor indicates that the present financial
liability are to be replaced with a new financial liability which has substantially different terms compare with the
present financial liability, the present financial liability is derecognized and the new financial liability is recognized.
When a financial liability is entirely or partly derecognized, the difference between the carrying amount of the
derecognized financial liability and the consideration paid (including any non-cash assets transferred or new
financial liabilities undertook) is charged to current profit or loss.
(7) Derivative instrument and embedded derivative instrument
Derivative financial instruments of the Company are initially measured at the fair value of the date a derivative
contract entered into and subsequently measured at their fair value. Gain or losses arising from changes in fair
value of derivative instrument that designated hedging instrument and highly effective are charged to profit or loss
based on hedging accounting. Any gains or losses arising from changes in fair value which do not meet the
requirements of hedge accounting are directly recognized to profit or loss for the current period.
For hybrid instrument with embedded derivative, where financial assets or liabilities not designated as fair value
through profit or loss, the economic features and risks of the embedded derivative are not closely related to that of
the host contract, and a similar instrument with the same terms as the embedded derivative would meet the
definition of a derivative, then embedded derivative is separated from hybrid instrument and accounted for as a
derivative. If embedded derivative is unable to measure separately either at acquisition or subsequently at
balance sheet date, hybrid instrument as a whole is designated as financial assets or liabilities at fair value
through profit or loss.
(8) Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities can be presented in the balance sheet using net figure after offsetting only
when the Group has the legal rights to offset the financial assets and liabilities that are already recognized and
plans to execute such rights, and the Group intends to settle corresponding financial assets and liabilities on net
basis or to realize the financial asset and settle the financial liability simultaneously. Other than situations
mentioned above, financial assets and liabilities are presented separately in balance sheet and cannot be offset.
(9) Equity Instrument
An equity instrument is a contract that evidences any residual interest in the assets of the Group after deducting
all of its liabilities. The equity instrument will increase the owners’ equity by deducting transaction costs from
consideration received for the issuance of the equity instrument.
All kinds of distributions to the owners of equity instrument (excluding stock dividends) decrease the owners’
equity. The Group does not recognize fair value changes for equity instrument.
10. Accounts receivable
Receivables include accounts receivable and other receivables.
(1) Recognition principle for bad debts provision
The Company examines, at the balance sheet date, the carrying amounts of receivables and impairment
provision is recognized if following objective evidences that indicating impairment to receivables occurs: ①
severe financial difficulties of the debtor; ② a breach of contract by the debtor (such as a default or breach of
contract in interest or principle repayments); ③ it is probable that the debtor will be bankrupted or conduct other
financial reorganization; and ④ other objective evidences indicating there is an impairment of the receivables.
(2) Method of recognizing bad debt provision
① Determination and providing bad debt provision for receivables which are individually significant in amount
and provided for bad debt individually
The Company identifies single accounts receivable item that above RMB800,000.00 (inclusive) and single other
receivable item that above RMB500,000.00 (inclusive) as receivables that individually significant in amount.
The Company conducts impairment test on individually significant receivables separately. Financial assets that
are not impaired after standalone impairment tests will be tested again by including it in a portfolio of financial
assets with similar credit risk characteristics. Receivables that have been impaired in standalone test will not be
tested again by including it in a portfolio of financial assets with similar credit risk characteristics.
② Determination of receivables that recognize bad debt provision under credit risk portfolio and bad debt
provision recognition.
A. Basis of determining portfolio with similar credit risk characteristics
Receivables that are not individually significant in amount and receivables that are individually significant in
amount but not impaired after individual impairment test are grouped into different asset portfolios based on
similarity and correlation of the credit risk characteristics. These credit risk characteristics reflect the ability of the
debtor to repay all amounts due according to terms of contracts related to the assets under test and are in
connection with estimation of future cash flows expected to be generated by these assets.
Basis of portfolio determination
Item Basis of portfolio determination
Portfolio of aging Based on aging of receivables
Receivables from petty cash advanced to employees, from subsidiaries
Portfolio of specific accounts of the Company and sales revenue between the last settlement date with
the department store and the balance sheet date
B. Recognizing bad debt provision based on credit risk portfolio
If the impairment test is carried out for a portfolio of assets, the amount of bad debt provision is recognized based
on the structure of the portfolio and similar credit risk characteristics (the ability of repayment by the debtor
according to contract terms) by assessing historical experience on assets impairment with similar credit risk
characteristics, current economic condition, and losses that are already exist in the portfolio.
Method of recognizing bad debt provision for different portfolios
Item Method
Portfolio of aging Analyzing the aging of receivables
No bad debt provision is recognized as the risk of impairment does not
Portfolio of specific accounts exist according to its credit risk characteristics
a. Recognizing bad debt provision based on aging analysis method within the portfolio
Percentage of provision Percentage of provision
Aging recognized for accounts recognized for other
receivable (%) receivables (%)
Within 1 year (inclusive) 5
1-2 years (inclusive) 10
2-3 years (inclusive) 30
Above 3 years 50
b. Recognizing bad debt provision using other method within the portfolio
Percentage of provision Percentage of provision
Name of portfolio recognized for accounts recognized for other
receivable (%) receivables (%)
No bad debt provision is recognized as the risk of impairment does not
Portfolio of specific accounts
exist according to its credit risk characteristics
Based on historical experience, the Group’s receivables from petty cash advanced to employees, from
subsidiaries of the Company and sales revenue between the last settlement date of the same department store
and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no
bad debt provisions are provided for such receivables.
③ Receivables that are insignificant in amount individually but recognize bad debt provision individually
The Company conducts impairment test to receivables that insignificant in amount individually but with the
following characteristics: receivables that involving dispute or legal case, arbitration with the other party; obvious
indicators show that it is probable that the debtor is unable to fulfil the repayment obligation. Standalone
impairment test is carried out for this kind of receivables. If any objective evidence indicate that the receivables
impaired, impairment losses are recognized based on the difference between the carrying amount and the
present value of estimated future cash flows. Bad debt provision is recognized accordingly.
(3) Reversal of bad debt provision
If, subsequent to the recognition of an impairment loss on a receivable, there are objective evidences of a
recovery in value of the receivable and the recovery is related objectively to events occurred after the impairment
was recognized, the impairment loss recognized previously is reversed and recognized in profit or loss. The
carrying amount after the reversal shall not exceed the amortized cost of the receivable on the reversal date as if
there is no impairment previously.
Accounts receivable transferred by the Company to financial institutions without recourse, the difference between
transaction amount minus the carrying amount of receivable and related transaction taxes and fees is charged to
current period profit or loss.
11. Inventory
(1) Classification of inventory
Inventory mainly includes raw material, work-in-process and stored goods.
(2) Costing method of acquiring and delivering of inventory
The inventory is valued using actual cost when it is acquired. The cost of inventory includes cost of purchase,
manufacturing cost and other costs. Costing methods used for inventory usage and shipment include: weighted
average costing (for stored goods of watches with FIYTA brand name), specific identification method (for stored
goods of branded watches), and first-in-first-out method (for raw material and WIPs for FIYTA watches).
(3) Determination of net realizable value of the inventory and method of recognizing impairment provision
Net realizable value (NRV) equals to estimated selling price less estimated costs of completion, estimated selling
costs and related taxes in the ordinary course of business. The determination of net realizable value of the
inventory is based on reliable evidence and taking into consideration of the intents of holding the inventory and
impacts of events after the balances sheet date. In particular: (a) the NRV of inventories that are available for sale
such as finished goods and materials held for trading are determined using the estimated selling price less
estimated selling expenses and related taxes if the business is in the ordinary course of operation; (b) the NRV of
materials that need to be processed are determined using estimated selling price of finished goods which is
manufactured from the material less estimated cost of completion, estimated selling expenses and related taxes if
the business is in the ordinary course of operation.
The Company recognizes inventory impairment provision for FIYTA brand watches based on models.
Impairment provisions for branded watches are recognized by specific item.
Impairment provisions for raw materials of FIYTA watches are recognized by categories based on terminal selling
status of FIYTA finished watches taking into considerations of the exchangeability of the spare parts and the
special usage of materials.
If, after the impairment provision is recognized, the influence conditions are no longer exist and as a result, the
NRV of the inventory is higher than its carrying amount, the impairment provision recognized previously can be
reversed. The amount reversed is to be recognized in current profit or loss.
(4) The inventory system is perpetual inventory system
(5) Amortization of low-value consumables and packaging material
The low-value consumables and packaging material are amortized using one-off method at the time it is used.
12. Long-term equity investment
Long-term equity investment refers to equity investments where the Company has control, joint control or
significant influence over, an investee. Equity investment where the Company cannot control, joint control or
exercise significant influence over the investee, shall be accounted for as AFS financial asset or Fair value
through profit or loss financial asset, of which the accounting policies are stated in Note IV 9 “Financial
instrument”.
Joint control means jointly control of a certain business activity according to the agreement of contract. It exists
only when the agreement on important accounting and business policies that needs to be reached between
investors who share the control rights. Significant influence means participation in decision making to a
company’s finance and business policies, but could not control or jointly control with other parties to the policy
making.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving entities under common
control, the investment cost of the long-term equity investment is the attributable share of the carrying amount of
the shareholders' equity of the acquiree at the date of combination. The difference between the initial cost of the
long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of
the debts borne by the acquirer shall offset against the capital reserve. If the capital reserve is insufficient to
deduct, retained earnings shall be adjusted. If the consideration is paid by issuing equity securities, it shall, on the
date of acquisition, regard the share of the book value of the shareholder's equity of the acquiree on the
consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment.
The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the
initial cost of the long-term equity investment and total face value of the shares issued shall offset against the
capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities
of the combined party which respectively acquired through multiple transaction under the same control that
ultimately form into the combination of the enterprises under the common control, should be disposed according
whether belongs to a basket transaction. If it belongs to a basket transaction, each transaction shall be accounted
for by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the
date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise
on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity
investment, and as for the difference between the initial investment cost of the long-term equity investment and
sum of the book value of the long-term equity investment before the combination and the book value of the
consideration of the new payment that further required on the combination date, should adjust the capital reserve.
If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other comprehensive income
confirmed for the available-for-sale financial assets, should not have any accounting disposal for the moment.
For the long-term investment required acquired from the business combination involving entities not under
common control, the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the
liabilities incurred or assumed and the equity securities issued by the Company. The equity of the acquirees which
respectively acquired through multiple transactions that ultimately form into the combination of the entities under
common control, should be disposed according whether belongs to a basket transaction. If it belongs to a basket
transaction, each transaction would be accounted for by the Company as a transaction of acquiring the control
right. If it does not belong to a basket transaction, the sum of the book value of the original held equity investment
of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the
long-term equity investment that changed to be accounted by cost method. If the original held equity is calculated
by cost method, the other relevant comprehensive income would not have any accounting disposal for the
moment. If the original held equity investment is the financial assets available for sale, its difference between the
fair value and the book value as well as the accumulative changes of the fair value that include in the other
comprehensive income, should transfer into the current gains and losses.
Agent fees incurred by the acquirer for the business combination such as audit, legal service, and valuation and
consultation fees, and other related administration expenses are charged to current profit or loss at the time such
expenses incurred.
Equity investments that other than the kind originated from business combinations are measured at cost initially.
The investment cost differs based on ways of acquiring the long-term equity investment. It can be determined
based on cash consideration actually paid by the Company, fair value of equity securities issued by the Company,
value stimulated in investment contract or agreement reached, fair value or carrying amount of assets that is
exchanged in a non-monetary asset transfer transaction, or the fair value of the long-term equity investment itself.
Expenses that directly related to the acquisition of the long-term equity investment, taxes and other necessary
expenditure are included in the investment cost. Cost for long-term equity investment that has significant
influences over the investees because of addition of the investment or execute joint control, shall be accounted for
based on the sum of the fair value of the equity investment original held according to “CAS No.22 – Recognition
and Measurement of Financial Instrument” and the newly added investment cost.
(2) Subsequent measurement and recognition of gain or losses
Equity method is used for measurement of long-term equity investment if there is common control (except joint
operation) with or significant influence over the invested entity. Cost method is used for measurement of long-term
equity investment if there is control over the invested entity.
① Long-term equity investments that are measured using cost method
Under cost method, long-term equity investment is measured at initial investment cost. Current period investment
gain or losses are recognized according to the cash dividend or profit distribution that is announced by the
invested entity, except for cash dividend or profit distribution that is already announced but not distributed which is
included in the consideration that actually paid.
② Long-term equity investments that are measured using equity method
If the initial investment cost of a long-term equity investment, which is measured using equity method, is greater
than the portion of fair value of the identifiable net assets of the invested entity attributable to the Company, the
initial investment cost of the long-term equity investment is not adjusted. Otherwise, the difference is charged to
current profit or loss, and the cost of long-term equity investment is adjusted accordingly.
When measured by adopting equity method, respectively recognize investment income and other comprehensive
income according to the net gains and losses as well as the portion of other comprehensive income which should
be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment;
corresponding reduce the book value of the long-term equity investment according to profits which be declared to
distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the
other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for
the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as
include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable
assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and
losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies adopted
by the investees is not accord with that of the Company, should be adjusted according to the accounting policies
of the Company and the financial statement of the investees during the accounting period and according which to
recognize the investment income as well as other comprehensive income. For the transaction happened between
the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into
business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group
according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the
basis. But the losses of the unrealized internal transaction happened between the Company and the investees
which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched
by the Company to the associated enterprises or the joint ventures if could form into business, the long-term
equity investment without control right which acquired by the investors, should regard the fair value of the
launched business as the initial investment cost the newly added long-term equity investment, and for the
difference between the initial investment cost and the book value of the launched business, should be included
into the current gains and losses with full amount. The assets sold by the Company to the associated enterprises
or the joint ventures if could form into business, the difference between the acquired consideration and the book
value of the business should be included in the current gains and losses with full amount. The assets purchased
by the Company to the associated enterprises or the joint ventures if could form into business, should be
accounting disposed according to the CAS - No. 20 – “Business Combination”, and should be recognized gains or
losses related to the transaction with full amount.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity
investment and other long-term rights and interests which substantially form the net investment made to the
invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall
be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
③ Purchasing minority equity
When preparing consolidated financial statements, the difference, resulted from addition of long-term equity
investment and shares of net assets calculated continuously since acquisition date (or combination date)
according to new shareholding, is adjusted to capital reserve. If the capital reserve is insufficient to offset,
adjusting retained earnings.
④ Disposal of long-term equity investment
In consolidated financial statements, the parent company can dispose part of the long-term equity investment to a
subsidiary given that the parent does not lose control over the subsidiary. The difference between consideration
received for the disposal and the part of net assets disposed attributable to the parent is recognized in owners’
equity. If the parent company losses control over a subsidiary because of long-term equity investment disposal,
the accounting treatment shall refer to accounting policies stated in Note IV. 5 (2) – “Preparing consolidated
financial statements”.
For long-term equity investment disposal other than situations mentioned above, the difference of carrying
amount of disposed equity and the consideration actually received is charged to current profit or loss.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control
of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities
directly disposed by the investees and should be carried forward into the current gains and losses according to
the proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
If the Company lost control over the investee by disposing part of the equity investment and the remained equity
after disposal could execute joint control or significant influences over the investees, it should change to measure
by equity method when preparing the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired. If the remaining equity after disposal could
not execute joint control or significant influences on the investees, it should change the accounting disposal
according to the relevant regulations of the recognition and measurement standards of financial instrument, and
its difference between the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity method for
measurement or the recognition and measurement standards of financial instrument before the Company
acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the
accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of
them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
Of which, for the disposed remained equity which adopted the equity method for measurement, the other
comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the
disposed remained equity which changed to execute the accounting disposal according to the recognition and
measurement standards of financial instrument, the other comprehensive income and the other owners’ equity
should be charged to profit or loss in full.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.
The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until
lose the control right, if the above transactions belongs to the package deal, should execute the accounting
disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose
the control right, while the difference between each expenses of the disposal and the book value of the long-term
equity investment in accord with the disposed equity before losing the control right, should firstly be recognized as
other comprehensive income then be transferred into the current gains and losses of losing the control right along
until the time when lose it.
13. Investment property
Investment property is property held to earn rentals or for capital appreciation or both. It includes buildings that are
already leased out.
An investment property is measured initially at cost. If it is probable that the benefit related to subsequent
expenditures incurred for an investment property will flow into the Company and that the cost can be measured
reliably, the expenditure is included in the cost of investment property. Other subsequent expenditures are
charged to profit or loss in the period in which they are incurred.
The Company adopts cost method for subsequent measurement to investment property. Depreciation or
amortization policy for investment properties are the same as the one for plants and buildings or land use rights.
Please refer to Note IV. 19 “Impairment of Long-term assets” for details of impairment test and impairment
provision recognition for investment property.
If the usage of a property changed from self-use to investment or vice versa, the carrying amount before change
shall be used as initial recognition amount after the change.
When the usage of the property changed from investment property to self-use property, the property is transferred
from investment property to fixed asset or intangible asset on the changing date. If the usage of the property
changes from self-use to earn rental or capital appreciation, the property is switched to investment property from
fixed asset or intangible asset. If it switched to investment property that measured using cost method, it is
recognized using the carrying amount before the switch. If it switched to investment property that measured using
fair value method, it is recognized using the fair value on the switching date.
The investment property is derecognized when it is disposed or ceased usage permanently and it is estimated
that no benefit can be obtained from the disposal. Disposal income arising from selling, transfer, disposing and
damaging the investment property, less its carrying amount and taxes related to the disposal, is recognized in
profit or loss.
14. Fixed asset
(1) Recognition principles
Fixed assets refer to tangible assets that are held for the purpose of goods production, providing services, lease,
or for administrative purposes with useful life of more than one accounting year. Fixed asset is recognized only
when the economic benefit associated with the fixed asset is probable to flow into the Company and the cost can
be measured reliably. Fixed asset is recognized initially at cost by considering estimated disposal expenses.
(2) Depreciation method
The fixed asset is depreciated on straight-line basis over its estimated useful life from the next month after it
reached estimated useful condition. The useful lives, estimated residual ratios and annual depreciation rates for
each category of fixed assets are as follows:
Estimated net Annual
Estimated useful
Categories Method of depreciation residual value depreciation
lives (year)
ratios (%) rates (%)
Plants and buildings straight-line 20-35 5.00 2.70-4.80
Machinery equipment straight-line 10 5.00-10.00 9.00-9.50
Electronics devices straight-line 5 5.00 19.00
Transportation vehicles straight-line 5 5.00 19.00
Other equipment straight-line 5 5.00 19.00
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal, if the asset’s useful life is passed and in the
condition expected at the end of its useful life.
(3) Impairment test and impairment provision recognition for fixed asset
For impairment test and impairment provision recognition for fixed asset, please refer to Note IV. 19 “Impairment
of Long-term asset”.
(4) Others
Subsequent expenditure in relation to fixed asset is recognized in the cost of the fixed asset and derecognizing
the carrying amount of the part replaced if it is probable that the economic benefit related to the fixed asset will
flow in the entity and the cost can be measured reliably. Subsequent expenditures other than this are charged to
current profit or loss.
When a fixed asset is sold, transferred, retired or damaged, the disposal proceed net of the carrying amount and
related taxes is charged in profit or loss for the current period.
The Company conduct reviews to the useful life, estimated net residual rate and depreciation method at least at
each end of the accounting year. Any changes will be treated as changes in accounting estimates.
15. Construction in progress
Construction in progress is measured at actual project expenditure which includes construction expenditures,
capitalized borrowing costs before the project reaches estimated useful condition and other related expenses.
Construction in progress is transferred to fixed asset when the asset reaches its estimated useful condition.
For impairment test and impairment provision recognition for construction in progress, please refer to Note IV. 19
“Impairment of Long-term asset”.
16. Borrowing cost
Borrowing cost includes loan interest, associated expenses incurred in connection with the arrangement of
borrowings and exchange difference arising from foreign currency loans. Borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset can be capitalized starting from the
time the necessary acquisition or production for bringing the asset to its estimated useful or sellable condition
started, and given that the capital expenditure and borrowing cost have been incurred. The capitalization stops
when the asset reaches its estimated useful or sellable conditions. Other borrowing costs are charged to profit or
loss at the time they are incurred.
The interest expenses actually incurred current-period special borrowing less unused borrowing funds in bank
interest earned or investment income on the temporary investment of those funds, the above mentioned amount
shall be capitalized. The weighted average asset disbursement of general borrowing multiplies the capitalization
rate to determine the amount of capitalization based on the accumulative asset disbursements of special loans.
The capitalization rate is the weighted average interest rate of the general borrowing.
During the capitalization period, exchange differences on foreign currency borrowings are all capitalized;
Exchange differences on foreign currency borrowings are generally included into current profit or loss.
The assets which have qualified condition of capitalization is the assets necessarily take a substantial period of
time after the acquisition, construction or production activities in order to achieve their intended use or sale of
fixed assets, investment property, inventories and other assets.
If the process of acquiring, constructing or producing of the assets that are capable for capitalization is interrupted
abnormally and the interruption lasts more than three months, the capitalization of borrowing costs shall be
suspended until the acquisition, construction or production resumes.
17. Intangible assets
(1) Intangible assets
An Intangible asset is the identifiable non-monetary asset without physical substances that is owned or controlled
by the Company.
An intangible asset is initially measured at its cost. Expenditures related to the intangible asset are included in its
cost if it is probable that the related economic benefit will flow into the Company and the cost can be measured
reliably. Other expenditures apart from this will be charged to profit or loss in corresponding period at the time it
incurred.
Land use right is generally accounted for as intangible asset. When the plants or buildings are constructed by the
Group, expenditures on the land use right and on the buildings shall be recognized as the intangible asset and the
fixed asset respectively. When the plants or buildings are purchased, the consideration paid shall be allocated
between the land use right and the buildings. If it can be allocated reasonably, recognize entirely as fixed assets.
An intangible asset with a finite useful life shall be amortized by using the straight-line method over its estimated
useful life when it is available for use. The depreciable amount of an intangible asset is its cost less estimated
residual value and impairment provision. An intangible asset with an indefinite useful life is not amortized.
Method of amortization for intangible asset with finite useful life is as follows:
Category Useful life (year) Method of amortization
Land use right 50 straight-line
Software 5 straight-line
Brand use right 5-10 straight-line
For an intangible asset with a finite useful life, its useful life and amortize method are reviewed at the end of
each accounting period. Any changes will be treated under changes in accounting estimates. Besides, the useful
life of the intangible assets with indefinite useful life will be reviewed at the end of each accounting period. If there
is evidence indicating that it is foreseeable that the period during which the economic benefit associated with the
asset would flow into the entity, its useful life will be estimated and the asset will be amortized in accordance to the
amortization policies applicable for an intangible asset with finite useful life.
(2) Research and development expenditure
The Company’s expenditure on internal research and development projects are classified into expenditure
on the research phase and expenditure on the development phase.
Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred.
Expenditure on the development phase is capitalized and recognized as intangible asset only when all of the
following conditions are satisfied. Expenditures on the development phase, failing to meet the below conditions,
are recognized in profit or loss in the period it is incurred:
① The technical feasibility of completing the intangible asset so that it will be available for use or sale;
② The intention to complete the intangible asset and use or sell it;
③ The intangible asset will generate economic benefits. Among other things, the Company can demonstrate the
existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset;
④ The availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset; and
⑤ The expenditure attributable to the intangible asset during its development phase can be measured reliably.
Expenditures which cannot be divided into expenditures on research phase and expenditures on development
phase are charged entirely in current profit or loss.
If the Company’s R&D projects fulfil above criteria and filed for approval after technology and economic feasibility
study, the projects will be in development phase.
Capitalized development expenditure are shown as Development expenditure and will be transferred into
Intangible asset at the date it reaches the estimated useful condition.
(3) Impairment test and impairment provision recognition for intangible assets
For impairment test and impairment provision recognition for intangible asset, please refer to Note IV. 19
“Impairment of Long-term asset”.
18. Long-term deferred expenses
Long-term deferred expenses refer to expenditures which are incurred but shall be expensed over the beneficiary
period of more than one year. The Company’s long-term deferred expenses mainly include counter fabrication
and decoration expenses. Long-term deferred expenses shall be amortized on straight-line basis over its
beneficiary period.
19. Impairment of Long-term assets
The Group assesses, on balance sheet date, whether there are indicators for impairment to fixed assets,
construction in process, intangible assets with finite useful life, investment property measured at cost, and
long-term equity investment to subsidiaries, joint ventured companies and associated companies. If there are any
indictors of impairment, recoverable amount is estimated and impairment test is conducted. Impairment tests are
conducted each year to goodwill, intangible assets that with indefinite useful life and intangible assets that have
not reached its useful condition despite whether there is indicators of impairment.
If the recoverable amount of an asset is less than its carrying amount in the impairment test, provision for
impairment shall be made for the difference and recognized as an impairment loss. The recoverable amount of an
asset is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be
derived from the asset. The fair value of an asset is determined according to the price in a sale agreement in an
arm’s length transaction. If there is no sale agreement but an active market for the asset, the fair value shall be
determined according to the current bid price. If there is no sale agreement or active market for the asset, the fair
value shall be based on the best information available. Costs of disposal include legal costs related to the disposal
of the asset, related taxes, cost of removing the asset and direct cost to bring the asset into its condition of sale.
The present value of expected future cash flows of an asset shall be determined by estimating the future cash
flows to be derived from continuing use of the asset and from its ultimate disposal and applying the appropriate
discount rate to those future cash flows. Provision for impairment shall be made and recognized on an individual
basis. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine
the recoverable amount of the asset group to which the asset belongs. An asset group is the minimum group of
assets which can generate cash flows independently.
When conducting impairment test on goodwill, which is presented separately in balance sheet, the carrying
amount of goodwill will be allocated to asset group or combination of asset group which are expected to enjoy
benefit from the synergy effect in a business combination. If the test results indicate that the recoverable amount
of the asset group or combination of asset group, which consist goodwill allocated, is lower than its carrying
amount, impairment loss is recognized accordingly. The impairment loss reduces the carrying amount of goodwill
that allocated to the asset group or combination of asset group. If the goodwill is insufficient to deduct, then
offsetting other assets within the asset group or combination of asset group proportionately based on the weight
of the carrying amount of assets other than goodwill in the asset group or combination of group.
Once an impairment loss is recognized, it shall not be reversed in subsequent periods.
20. Employee remuneration
Employee remuneration include short-term employee remuneration, post-employment benefits and termination
benefits.
Short-term remuneration mainly includes employee salary, bonus, allowance, employee welfare, maternity
insurance, work injury insurance, housing fund, labor union fee, employee education fund and non-monetary
welfare etc… The Company recognize short-term remuneration as liabilities through profit or loss or related cost
of assets for the financial year in which the employees render the related services. Non-monetary welfare is
measured at fair value.
Post-employment benefit mainly include basic endowment insurance, unemployment insurance and annuity etc…
Post-employment benefit plan includes defined contribution plans. Defined contribution plans are
post-employment benefit plans under which an entity pays fixed contributions into an escrow fund and the amount
shall be charged to cost of related asset or current period profit or loss.
When the Company terminates the employment relationship with employees before the employment contracts
expire or provides compensation as an offer to encourage employees to accept voluntary redundancy, a provision
shall be recognized at the date earlier of the Company cannot unilaterally withdraw from the termination plan or
the redundancy offer and the Company determined the reconstruction cost related with the payment of
termination benefit. Termination benefit shall be recognized as employee remuneration payable and charged to
the profit or loss for the current accounting period. If the termination benefit cannot be paid within 12 month after
the balance sheet date, it shall be treated as long-term employee remuneration.
The earlier retirement plan shall be accounted for in accordance with the accounting principles for compensation
for termination of employment. The salaries or wages and the social contributions to be paid for the employees
who retire before schedule from the date on which the employees stop rendering services to the Company to the
scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current
profit or loss if the recognition principles for provisions are satisfied.
If other long-term employee welfare provided by the Company meets the criteria of defined contribution plan, it
shall be accounted for according to defined contribution plan, otherwise, defined benefit plan accounting
treatment is applicable.
21. Provisions
A provision is recognized when obligation related to contingencies satisfies following condition: (1) the obligation
is a present obligation of the Company; (2) it is probable that an outflow of economic benefits will be required to
settle the obligation; and (3) and the amount of the obligation can be measured reliably.
At the balance sheet date, a provision shall be initially measured at the best estimate of the expenditure required
to settle the related present obligation, taking the risks, uncertainties and time value of money that related to the
contingencies into consideration.
When all or part of the expenditure that needed for settling a provision is expected to be reimbursed by a third
party, the reimbursement shall be recognized as an asset separately only when it is virtually certain that
reimbursement will be received. The amount recognized for the reimbursement shall not exceed the carrying
amount of the provision.
22. Revenue
(1) General principal
① Revenue from sale of goods
Revenue from the sale of goods shall be recognized only when all of the following conditions are satisfied: (a)
significant risk and rewards of ownership of the goods have been transferred to the buyer; (b) the seller retains
neither continuing managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold; (c)the amount of revenue can be measured reliably; (d) it is probable that the associated
economic benefits will flow to the seller, and (e) the associated costs incurred or to be incurred can be measured
reliably.
② Revenue from rendering of service
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction are recognized using the percentage of completion method on balance sheet date.
The percentage of completion is calculated based on the proportion of services performed to date to the total
volume of services to be performed.
The outcome of a transaction involving the rendering of services can be estimated reliably when all of the
following conditions are satisfied: (a) the amount of revenue can be measured reliably; (b) it is probable that the
associated economic benefits will flow to the entity: (c) the percentage of completion can be measured reliably;
and (d) the costs incurred and to be incurred for the transaction can be measured reliably.
When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue shall
be recognized to the extent of costs incurred and expected to be recovered. Costs of service provided are
charged to the current profit or loss as service costs. If the costs incurred are not expected to be recoverable, no
revenue is recognized.
③ Revenue from rendering usage rights
The revenue is recognized on accrual basis and based on related contracts or agreements.
④ Interest income
The interest income shall be calculated based on the tenure of the Company’s monetary funds used by others and
the actual interest rates used.
(2) Detailed method of revenue recognition
The watches sold by the Company includes two types, one is the self-manufactured FIYTA watch, the sales of
which is managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a
subsidiary of the Company. The other is brand watches, the sales of which are controlled by HARMONY Company,
a subsidiary of the Company, and the Company act as agent Regarding to sales modes, a portion of the sales of
self-manufactured FIYTA watches is sold through direct sales to customer and consignment sales while most of
the self-manufactured FIYTA watches and brand watches are sold under two sales modes, namely exclusive shop
and shop-in-shop. Detailed method of revenue recognition as follows:
1 Direct sales to the customer
Under direct sales to the customer mode, the Company delivers products to customers and recognizes sales
income after customer inspection and acceptance.
2 Exclusive shop
Under exclusive shop mode, the Company delivers products to customers and recognizes sales income after
customer inspection, acceptance and pay.
3 Shop-in-shop
Under shop-in-shop mode, the Company delivers products to customers, sales staff issues notes to retail
customers and recognizes sales revenue after customer inspection and acceptance and the department store
collects the payment from the customer.
4 Consignment sales
Under consignment sales mode, the Company receives the detail of the sales list from distributors and recognizes
revenue while issuing invoice to distributors.
23. Government grants
Government grants are monetary assets or non-monetary assets obtained by the Company from the government
free of charge. It does not include capital contributions from the government as an owner. Government grants are
classified into government grants related to assets and government grants related to income.
If a government grant is in form of monetary asset, it is measured at the amount received or receivable. If a
government grant is in the form of non-monetary asset, is measured at fair value. If the fair value cannot be
measured reliably, it is measured at a nominal amount and recognize directly in the current profit or loss.
A government grant related to asset is recognized as deferred income, and evenly amortized and charged to profit
or loss over its useful life. If a government grant related to income is used to compensate related expenses and
losses in subsequent periods, it is recognized as deferred income. If it is used to compensate related expenses
and losses that are already incurred, it is charged to current profit or loss directly.
If a government grant already recognized needs to be repaid, the carrying amount of related deferred income, if
any, is to be reduced. Any excess are charged to current profit or loss. If there is no deferred income, the
repayment is charged to current profit or loss directly.
24. Deferred tax asset / deferred tax liability
(1) Current period corporate income tax
At the balance sheet date, current income tax liabilities (or assets) for the current period and prior periods shall be
measured at the amount expected to be paid (refunded) according to the requirement of taxation laws. The
taxable income used to calculate current period income tax expenses is calculated by making corresponding
adjustments to current period profit before tax in accordance with relevant taxation regulations.
(2) Deferred tax asset and deferred tax liability
Temporary differences can be recognized as deferred tax asset and deferred tax liability using balance sheet
liability method. Temporary differences arise from: the difference between the carrying amount and tax base of
certain assets and liabilities; the difference between the carrying amount and the tax base of an item which are not
recognized as assets and liabilities but its tax base can be determined according to relevant taxation laws.
A deferred tax liability shall not be recognized for the taxable temporary differences arising from the following
events: (a) the initial recognition of goodwill; (b) the initial recognition of an asset or liability in a transaction which
contains both of the following characteristics: (i) the transaction is not a business combination; (ii) at the time of
the transaction, it affects neither accounting profit nor taxable profit (or deductible loss). For taxable temporary
differences associated with investment in subsidiaries, associates and interests in jointly controlled enterprises, a
deferred tax liability shall not be recognized if both of the following conditions are satisfied: (a) the Company is
able to control the timing of the reversal of the temporary differences; and (b) it is probable that the temporary
difference will not reverse in the foreseeable future. Except for exceptions mentioned above, the Company
recognizes all other taxable temporary difference as deferred tax liability.
A deferred tax asset shall not be recognized for the deductible temporary differences associated with the initial
recognition of an asset or liability in a transaction which contains both of the following characteristics: (a) the
transaction is not a business combination; (b) at the time of the transaction, it affects neither accounting profit nor
taxable profit (or deductible loss). For deductible temporary differences associated with investment in subsidiaries,
associates and interests in jointly controlled enterprises, a deferred tax asset shall not be recognized if one of the
following conditions is satisfied: (a) it is probable that the temporary difference will not reverse in the foreseeable
future; and (b) taxable profits will not be available in the future, against which the temporary difference can be
utilized. Except for exceptions mentioned above, the Company recognizes deductible temporary difference as
deferred tax asset to the extent of the future taxable profit which is probably achieved by the Company.
A deferred tax asset shall be recognized for the carry forward of unused deductible losses and tax credits to the
extent that it is probable that future taxable profit will be available against which the deductible losses and tax
credits can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities shall be measured at the tax rates that
are expected to apply to the period when the asset is realized or the liability is settled, according to the
requirement of tax laws.
At the balance sheet date, the carrying amount of a deferred tax asset shall be reviewed. The Company shall
reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable
profit will be available in future periods to allow the benefit of the deferred tax asset to be utilized. Any such
reduction in amount shall be reversed to the extent that it becomes probable that sufficient taxable profit will be
available.
(3) Corporate income tax
The corporate income tax includes current period income tax and deferred income tax.
The current income tax and deferred income tax shall be recognized in the current profit or loss except for: (a) the
income tax arising from events or transactions which are recognized in the comprehensive income or owners’
equity are recognized in the comprehensive income or owners’ equity accordingly; and (b) the income tax arising
from business combinations which are adjusted to the carrying amount of goodwill.
(4) Offsetting of income tax
When legal right to netting settlement is owned, net settlement or intent to acquire the assets and settle the
liabilities happen simultaneously, the Group had net current tax assets against current tax liabilities are netting
presentation after offset.
When the legal right to offset current tax assets against current tax liabilities is owned and the deferred tax assets
and deferred tax liabilities relate to the same taxation authority on the same taxable income levied by or related to
different taxable entities, but within the reverse period of significant amounts of deferred tax assets and liabilities
in each future period, and the tax payer's intention to offset current tax assets and liabilities or both to obtain
assets or repay debts, the deferred income tax and deferred tax assets and liabilities of the Group to netting
presentation after offset.
25. Leasing
A finance lease is a lease that transfers substantially all the risks and rewards associated with the ownership of an
asset. Title of the asset may or may not eventually be transferred. An operating lease is a lease other than a
finance lease.
(1) Accounting treatment for the Company as lessee under operating leases
Lease payments under an operating lease are recognized as cost of relevant assets or charged to profit or loss for
the current period on straight-line basis over the lease term. Initial direct costs incurred are charged to profit or
loss for the current period directly. Contingent rentals are charged to profit or loss in the period in which they are
actually incurred.
(2) Accounting treatment for the Company as lessor under operating leases
Lease receipts under an operating lease are recognized by the in the current profit or loss on a straight-line basis
over the lease term. Significant initial direct costs are capitalized when they are incurred, and are recognized in
profit or loss over the lease term on the basis on which the lease income is recognized. Insignificant initial direct
costs shall be charged to the current profit or loss directly. Contingent rentals are charged to profit or loss in the
period in which they are actually incurred.
(3) Accounting treatment for the Company as lessee under finance leases
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the
present value of the minimum lease payments on the lease beginning date as the entering value in an account,
recognize the amount of the minimum lease payments as the entering value in an account of long-term account
payable, and treat the balance between the recorded amount of the leased asset and the long-term account
payable as unrecognized financing charges. Besides, the initial direct costs directly attributable to the leased item
incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset
value of the current period. The balance through deducting unrecognized financing charges from the minimum
lease payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to
calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and
losses of the current period in which they actually arise.
(4) Accounting treatment for the Company as lessor under finance leases
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on
the lease beginning date and the initial direct costs as the entering value in an account of the financing lease
values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of
the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their
present values shall be recognized as unrealized financing income. The balance through deducting unrealized
financing incomes from the finance lease accounts receivable shall be respectively stated in long-term claims and
long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to
calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and
losses of the current period in which they actually arise.
26. Changes in main accounting policies and estimates
(1) Change of accounting policies
There was no any change of accounting policies of the Company in the reporting period.
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the reporting period.
27. Significant accounting judgments and estimates
When adopting the accounting policies, the Company needs to make judgments, estimates and assumptions for
the carrying amount of items which are presented in financial statements and cannot be measured accurately due
to internal uncertainties of business. The judgments, estimates and assumptions that are made according to
historical experience of the management and with consideration of other relevant factors will have effects on the
reported amounts of revenue, expenses, assets as well as liabilities and the disclosure of contingent liabilities at
the balance sheet date. The uncertainties of these estimates will probably result in significant adjustments on the
carrying amounts of assets or liabilities which will be affected by those judgments, estimates and assumptions in
future accounting periods.
The judgments, estimates and assumptions are reviewed by the Company periodically on going concern basis. If
the changes in accounting estimates affect current period only, the amounts affected are recognized in current
period. If the change affects both current and future periods, the amounts affected are recognized in the current
accounting period as well as subsequent accounting periods.
At the balance sheet date, significant areas that require the Company to make judgments, estimates and
assumptions to the amounts of financial statements items are as follows:
(1) Bad debt provision recognition
The allowance method is adopted by the Company to account for losses on bad debts in accordance with the
accounting policies for receivables. Impairment of accounts receivable is made based on estimation of its
recoverability, which requires the management to make judgments and estimates. The difference between the
actual outcome and the estimates will have effects on the carrying amounts of accounts receivable and on
provision or reversal of the provision for bad debts of the accounting period in which the estimates will be
changed.
(2) Provision for impairment of inventories
According to the accounting policies of inventories, it is measured at lower of cost and the net realizable value
(NRV). For inventory cost that is higher than its NRV and obsolete and slow moving inventory, impairment
provision shall be accrued. Evaluating the impairment of inventories needed the management level gain the valid
evidence and take full consideration of the purpose of inventories, influence of events after balance sheet date
and other factors, and then made relevant judgments and estimates. The actual amount and the difference of
previous estimate would affect the book value of inventories and the accrual and reversal of provision.
(3) The impairment of financial assets available for sale
Whether an available-for-sale financial asset is impaired relies largely on the judgment and assumption of the
management, so as to decide whether recognized the impairment losses in the income statement. During the
process of making the judgment and assumption, the Company needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and business forecast in a short
period, including the industrial situation, technical reform, credit level, default rate and risk of counterparty.
(4) Impairment provision for long-term asset
At the balance sheet date, the Company judges whether there are indicators of impairment for non-current assets
other than financial assets. For an intangible asset with an indefinite useful life except for annually impairment test,
an impairment test will be conducted if there are any indicators of impairment occur. For non-current assets other
than financial assets, an impairment test shall be made if there are evidences indicating the carrying amounts
cannot be recovered in full amount.
An asset or asset group is impaired when its carrying amount is higher than its recoverable amount i.e. the higher
of its fair value less the disposal expenses and the present value of the estimated future cash flows.
The net amount of fair value less the disposal expenses are determined with reference to the quoted price of
similar assets in a sales agreement in an arm’s length transaction or an observable market price less incremental
costs directly attributable to disposal of the asset.
When estimating the present value of future cash flows, significant judgments are involved to the production
output, selling price, relevant business costs of the asset (or asset group) and the discount rate adopted in
calculating the present value. In estimating the recoverable amount, the Company will adopt all information
available, such as forecasts for the production output, the selling price and relevant business costs, which are
made according to reasonable and supportive assumptions.
The Company conducts impairment test to goodwill at least once a year. This requires estimating the present
value of future cash flows of asset group or combination of asset group to which goodwill has been allocated. In
estimating the present value of future cash flows, the Company needs estimate future cash flows generated from
the asset group or the combination of asset groups and choose appropriate discount rates.
(5) Depreciation and amortization
Taking the residual value into consideration, an investment property, fixed asset and intangible asset are
depreciated or amortized on a straight-line basis over its useful life. The Company reviews the useful life
periodically to determine the amount of depreciation or amortization which shall be recognized in each accounting
period. The useful life is determined according to historical experience of similar assets and technological
renovation estimated. The amount of depreciation or amortization shall be adjusted in future accounting periods if
there are material changes in estimates made before.
(6) Deferred income tax asset
A deferred tax asset shall be recognized for the unused deductible losses to the extent that it is probable that
future taxable profit will be available against which the deductible losses can be utilized. Taking the taxation
planning into consideration, the management of the Company is required to make significant amount of
judgments to estimate the time and the amount of future taxable profit in order to determine the amount of
deferred income tax assets to be recognized.
(7) Corporate income tax
For some transactions in the Company’s ordinary course of business, uncertainties exist in their tax treatment and
calculation. An approval from the tax authority is needed to determine whether an item is deductible before tax. If
the final confirmation from the tax authority differs with the original estimation, the difference will have effects on
the current income tax and deferred income tax of the period in which the final confirmation is made by the tax
authority.
(8) After-sale quality warranty
The Company estimates and accrue related provision on its after-sale quality warranty commitment to customers
with respect to the goods sold, estimated onerous contract and penalty for delay in delivery based on contract
terms, current knowledge and historical experience. In case that the contingent event becomes a current
obligation and performance of the current obligation may be very likely to cause economic benefit flow out of the
Company, the Company recognizes provision based on the best estimates for fulfilling the related current
obligation. Recognition and measurement of contingent liability is largely depend on the management’s judgment.
In the course of making judgement, the Company need to evaluate factors of risk, uncertainty and time value of
money related to the contingent event.
The Company will make provision for after sale quality commitment for product sold, maintenance and
re-fabrication of product sold. When accruing the provision, it needs to consider the recent maintenance data
which may not be likely to reflect the future maintenance situations. Any increase or reduction of the provision may
possibly affect the profit or loss in the future year.
V. Taxation
1. Main taxes and tax rates
Tax Tax rate
Tax Tax rate
Output tax is calculated at 17% of taxable income and VAT is paid after offset the output
Value-added tax tax with input tax allowed at current period
Consumption tax is applicable for imported or manufactured luxury watches with unit
Consumption tax price above 10,000 (inclusive).
Business tax（Note（3）） 5% of taxable income
Urban maintenance and construction tax 7% on the turnover tax actually paid
Property tax（Note（1）） 1.2% on the basis of 70% of the original cost of the property and 12% for rental income.
Corporate income tax See Note (2) for detail.
Note (1): Property Tax
In accordance with Article 5 of “Notice to Publish “Reply to Issues Related to Property Tax and Vehicle and Vessel
Usage Tax””, Shen Di Shui Fa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased out by
manufacturing or business entity are taxed at 1.2% on the bases of 70% of the original cost of the property.
Properties of the Company that situated in Shenzhen are taxed according to this notice. Properties situated in
other cities are taxed according to local regulations.
Note (2): Corporate income tax
Name of entity subject to corporate income tax Applicable tax rate
The Company（Note ①②） 25.00%
HARMONY Company（Note ①） 25.00%
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company)
（Note ②③） 15.00%
FIYTA Hong Kong（Note ④） 16.50%
Station 68（Note ④） 16.50%
Nature Art Limited（Note ④） 16.50%
World Watches International（Note ④） 16.50%
Shenzhen FIYTA Technology Development Co., Ltd (Technology Company) （ Note
②③） 15.00%
TEMPORAL (Shenzhen) Co., Ltd. （ TEMPORAL Company, previously known as
25.00%
Shenzhen Xiangji Commercial & Trade Co., Ltd）（Note ⑤）
Beijing Henglianda Watch Center Co., Ltd (Henglianda Company)（Note ⑤） 25.00%
Kunming Lishan Department Store Co., Ltd. (Lishan Department Store)（Note ⑤） 25.00%
Harbin Harmony World Watches Distribution Co., Ltd. (Harbin Company)（Note ⑤） 25.00%
Name of entity subject to corporate income tax Applicable tax rate
Shenzhen Harmony Culture Communication Co., Ltd (Culture Company)（Note ⑦） 10.00%
Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit Shenzhen Company) （Note
25.00%
⑤）
FIYTA Sales Co., Ltd (Sales Company)（Note ①⑤） 25.00%
Liaoning Hengdarui Commercial & Trade Co., Ltd (Hengdarui Company)（Note ⑤） 25.00%
Swiss Company（Note ⑥） 30.00%
Note ① :According to the regulations stated in Guo Shui Fa (2008) No. 28, “Interim Administration Method for
Levy of Corporate Income Tax to Enterprise that Operates Cross-regionally”, the head office of the Company and
its branch offices, the head office of HARMONY Company and its branch offices, and the head office of Sales
Company and its branch offices adopt tax submission method of “unified calculation, managing by classes,
pre-paid in its registered place, settlement in total, and adjustment by finance authorities” starting from 1 January
2008. Branch offices mentioned above share 50% of the enterprise income tax and prepay locally; and 50% will
be prepaid by the head offices mentioned above.
Note ② : According to “Notice of Ministry of Finance, State Administration of Taxation and Ministry of Science
and Technology on Perfection of Pre-tax Super Deduction of Enterprise Research and Development Expense
Policy”, Cai Shui (2015) No. 119, research and development expenses, which are charged to profit or loss instead
of being capitalized as intangible assets, that incurred by the Company ， the Manufacture Company and
Technology Company for developing new technology, new product and new technique can be deducted by 50%
extra on top of actual expensed charged in profit or loss.
Note ③:The company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New
Technology Enterprises that Require Key Support from the State”.
Note ④ : These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is
16.50% this year.
Note ⑤ : According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25% for
residential enterprises since 1 January 2008.
Note ⑥ : The tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
Note ⑦ : According to Cai Shui (2015) No. 99 “Notice of Ministry of Finance and State Administration of Taxation
on Further Expanding Applicable Scope of Preferential Corporate Income Tax Policy to Small and Low-profit
Enterprises”, only 50% of the income of Culture Company is included in taxable income calculation and the
corporate income tax is paid at 20% on taxable income.
Note (3): The Company’s income from business of leasing and service promoting are taxed for business tax at 5%
previously. According to “Notice on Fully Implementing the Pilot Program of Replacing Business Tax with
Value-added Tax” circulated by the Ministry of Finance and State Administration of Taxation (Cai Shui (2016) No.
36) and related regulations, house rental income from the Company and one of its subsidiary, Hengdarui
Company, is levied VAT (using simplified method) at 5% since 1 May 2016. Amongst the service promotion
income of HARMONY Company, advertising promotion service income is levied VAT at 6% since 1 May 2014 and
service promotion income is levied VAT at 6% since 1 May 2016. Real estate management income of Hengdarui
Company is levied VAT at 11% since 1 May 2016.
2. Preferential treatment and corresponding approval
(1) According to Cai Shui (2015) No. 99 “Notice of Ministry of Finance and State Administration of Taxation on
Further Expanding Applicable Scope of Preferential Corporate Income Tax Policy to Small and Low-profit
Enterprises”, only 50% of the income of Culture Company is included in taxable income calculation and the
corporate income tax is paid at 20% on taxable income.
(2) According to clause 2 in Shen Dishui Fa (2003) No. 676 “Notice of Forwarding State Administration of
Taxation on Policies Related to Property Tax and Urban Lan Usage Tax”, for newly constructed or purchased
property by tax payer, property tax is exempted for 3 years from the next month it is constructed or purchased.
The property tax for FIYTA Watch Building owned by the Company located in Shenzhen Guangming New District
is exempted for 3 years since the construction is completed in September 2016.
VI. Notes to main items of the consolidated financial statements
Unless otherwise indicated, the beginning of the year for items (including notes for the Company’s financial
statements) list below refers to 31 December 2015 and the end of the year refers to 31 December 2016. Prior year
refers to year 2015 and current year refers to year 2016.
1. Cash and bank balances
Item 31 Dec 2016 31 Dec 2015
Cash on hand 478,898.11 387,241.40
Bank deposit 426,743,336.84 636,995,113.67
Other monetary funds 1,580,520.86 1,580,520.86
Total 428,802,755.81 638,962,875.93
Incl: deposit outside Mainland China 18,354,710.70 7,003,062.87
Note (1): Amount of RMB1,575,000.00 (RMB1,575,000.00 as at 31 Dec 2015) in other monetary funds is the
security deposit with Bank for issuing of irrevocable letter of guarantee.
2. Notes receivable
Item 31 Dec 2016 31 Dec 2015
Item 31 Dec 2016 31 Dec 2015
Banker's acceptance bill 854,616.60 5,697,788.08
Commercial acceptance bill 6,807,939.68 1,500,000.00
Total 7,662,556.28 7,197,788.08
Note: (1) There is no pledge of notes receivable at the end of the period.
(2)There is no endorsed or discounted notes receivable that is not yet due at the end of the period.
(3)There is no notes receivable transferred to receivables due to issuer’s default at the end of the period.
3. Accounts receivable
(1) Accounts receivables presented by types
31 Dec 2016
Types Carrying amount Bad debt provision Book Value
Amount Percentage (%) Amount Percentage (%)
Receivables that are individually significant in
8,962,179.22 2.77 8,962,179.22 100.00 -
amount and provided for bad debt separately
Receivables provided for bad debt by portfolio 314,212,795.04 97.04 7,541,773.35 2.40 306,671,021.69
Receivables that are individually insignificant
604,140.59 0.19 604,140.59 100.00 -
in amount but provided for bad debt separately
Total 323,779,114.85 100.00 17,108,093.16 5.28 306,671,021.69
(continued)
31 Dec 2015
Types Carrying amount Bad debt provision
Book Value
Amount Percentage (%) Amount Percentage (%)
Receivables that are individually significant in
- - - - -
amount and provided for bad debt separately
Receivables provided for bad debt by portfolio 312,581,896.15 100.00 7,856,219.86 2.51 304,725,676.29
Receivables that are individually insignificant
- - - - -
in amount but provided for bad debt separately
Total 312,581,896.15 100.00 7,856,219.86 2.51 304,725,676.29
① Year-end balance of receivables that are individually significant in amount and provided for bad debt
separately
Accounts 31 Dec 2016
Accounts Bad debt
Percentage % Reason
receivable provision
Taiyuan Guidu Department Store 3,152,376.79 3,152,376.79 100.00
Ginwa Xinjiang Time Squire
2,605,287.95 2,605,287.95 100.00
Shopping Center Co., Ltd
Chances of recovering is
Ginwa Xian Qujiang Shopping
remote
Center Co., Ltd. 1,702,371.94 1,702,371.94 100.00
Ginwa Urumqi Shopping Center
Co., Ltd. 1,502,142.54 1,502,142.54 100.00
Total 8,962,179.22 8,962,179.22 — —
② Amongst portfolio, accounts receivable that are provided for bad debt based on aging analysis
31 Dec 2016
Ageing
Accounts receivable Bad debt provision Percentage %
Within 1 year 131,218,417.39 6,560,920.87 5.00
1~2 years 1,940,912.58 194,091.26 10.00
2~3 years 722,044.06 216,613.22 30.00
over 3 years 1,140,296.00 570,148.00 50.00
Total 135,021,670.03 7,541,773.35 5.59
③ Among the portfolio, accounts receivable that are provided for bad debt using other method
31 Dec 2016
Name of portfolio
Carrying amount Accrual Percentage (%) Bad debt provision
Portfolio of specific accounts 179,191,125.01 - -
Note: Based on historical experience, the Company’s receivables from petty cash advanced to employees, from
subsidiaries of the Company and sales revenue between the last settlement date of the same department store
and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no
bad debt provisions are provided for such receivables.
(2) Status of bad debt accrual, recovery or reversed in current year
In 2016, bad debt accrual is RMB9,251,873.30. No recovery or reversal of bad debt provision.
(3) Top 5 receivable accounts
The amount of top 5 receivables based on year-end receivable balance is RMB23,707,418.00, accounts for
7.32% of total receivables as at 31 Dec 2016. Corresponding bad debt provision is RMB1,185,370.91.
4. Prepayments
(1) Prepayments presented by ageing
31 Dec 2016 31 Dec 2015
Account aging
Amount Percentage (%) Amount Percentage (%)
within 1 year 24,129,365.63 71.58 34,301,121.88 70.19
1~2 years 2,634,183.83 7.81 7,684,834.45 15.73
2~3 years 62,500.00 0.19 2,306,019.95 4.72
over 3 years 6,883,607.27 20.42 4,577,587.32 9.37
Total 33,709,656.73 100.00 48,869,563.60 100.00
(2) Top 5 prepayment accounts
The amount of top 5 prepayment accounts based on year-end balance is RMB23,511,570.73, accounts for
69.75% of total prepayments as at 31 Dec 2016.
5. Other receivables
(1) Other receivables presented by types
31 Dec 2016
Types Carrying amount Bad debt provision
Percentage
