FIYTAHOLDINGSLTD.2018AnnualReport,FullText
FIYTA HOLDINGS LTD.
2018 Annual Report
February, 2019
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section1 ImportantNotice,TableofContentsandDefinition
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 ofthisreport andconfirmthat thereare neithermaterialomissionsnorerrors whichwouldrenderany statementmisleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report enclosedinthisAnnualReport.
AllthedirectorsattendedtheboardmeetingforreviewingtheAnnualReport.
Any perspective description, such as the future plan, development strategy, etc. involved in the Annual ReportshallnotconstitutetheCompany’ssubstantialcommitmenttotheinvestorsandtheinvestorsshouldpleasepay attentiontotheirinvestmentrisks.
Inthisreport,theCompanyhasdescribedindetailtheexistingmacro-economicrisksaswellasoperationrisks. Investors are advised to refer to the contents concerning risk factors possibly to be confronted with and the countermeasures in the Company's future development prospect in Section 4 Discussion andAnalysis of the Management
TheprofitdistributionpreplanreviewedandapprovedbytheBoardofDirectorsissummarizedasfollows:With theCompany’s total share capital of 438,744,881 shares as the base, the Company would distribute cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to the whole shareholders and capitalize no capital reserve to the whole shareholders.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
TableofContents
Section1ImportantNotice,TableofContentsandDefinitions
Section2CompanyProfileandFinancialHighlights
Section3BusinessSummary
Section4DiscussionandAnalysisoftheManagement
Section5SignificantEvents
Section6ChangesinSharesandParticularsabouttheShareholders
Section7AboutthePreferredShares
Section8Directors,Supervisors,OfficersandEmployees
Section9CorporateGovernance
Section10BondRelatedInformation
Section11FinancialReport
Section12ListofDocumentsAvailableforInspection
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Definitions
||||
|-|-|-|
|Termstobedefined|Refersto|Definition|
|ThisCompany,theCompanyorFIYTA|Refersto|FIYTAHOLDINGSLTD.|
|AVIC|Refersto|AviationIndustryCorporationofChina,Ltd.|
|AVICInternational|Refersto|AVICInternationalHoldingCorporation|
|AVICInternationalShenzhen|Refersto|AVICInternationalShenzhenCo.,Ltd.|
|AVICIHL|Refersto|AVICInternationalHoldingLimited|
|TheSalesCo.|Refersto|FIYTASalesCo.,Ltd.|
|Harmony|Refersto|ShenzhenHarmonyWorldWatchesCenterCo.,Ltd.|
|theManufactureCo.|Refersto|ShenzhenFIYTASophisticatedTimepiecesManufactureCo.,Ltd.|
|theTechnologyCo.|Refersto|ShenzhenFIYTATechnologyDevelopmentCo.,Ltd.|
|theHongKongCo.|Refersto|FIYTA(HongKong)Limited|
|SHIYUEHUI|Refersto|ShiyuehuiBoutique(Shenzhen)Co.,Ltd.|
|Hengdarui|Refersto|LiaoningHengdaruiCommerce&TradeCo.,Ltd.|
|HarbinCo.|Refersto|HarbinHarmonyWorldWatchDistributionCo.,Ltd.|
|AVICSUNDA|Refersto|AVICSUNDACo.,Ltd.|
|RainbowLtd.|Refersto|RainbowDepartmentStoreCo.,Ltd.|
|ShennanCircuit|Refersto|ShennanCircuitCo.,Ltd.|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|-|-|-|
|AVICProperty|Refersto|AVICPropertyManagementCo.,Ltd.|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 2 Company Profile and Financial Highlights
I.CompanyInformation
|||||
|-|-|-|-|
|Shortformofthestock|FIYTA A, FIYTA B|StockCodes:|000026and200026|
|StockExchangeListedwith|ShenzhenStockExchange|||
|CompanyNameinChinese|FIYTAHOLDINGSLTD.|||
|AbbreviationoftheCompanyNameinChinese|飞亚达公司|||
|CompanynameinEnglish(ifany)|FIYTA HOLDINGS LTD.|||
|Abbreviationof theCompanynameinEnglish(ifany)|FIYTA|||
|LegalRepresentative|HuangYongfeng|||
|Registeredaddress:|FIYTATechnologyBuilding,GaoxinS.RoadOne,NanshanDistrict,Shenzhen|||
|PostalCodeoftheRegisteredAddress|518057|||
|OfficeAddress|20thFloor,FIYTATechnologyBuilding,GaoxinS.RoadOne,NanshanDistrict,Shenzhen|||
|PostalCodeoftheRegisteredAddress|518057|||
|Website:|www.fiytagroup.com|||
|E-mail:|investor@fiyta.com.cn|||

II.LiaisonPersonsandCommunicationInformation
||||
|-|-|-|
||SecretaryoftheBoard|SecuritiesAffairsRepresentative|
|Name|LuWanjun|ZhangYong|
|LiaisonAddress|20thFloor,FIYTATechnologyBuilding,GaoxinS.RoadOne,NanshanDistrict,Shenzhen|20thFloor,FIYTATechnologyBuilding,GaoxinS.RoadOne,NanshanDistrict,Shenzhen|
|Tel.|0755-86013669|0755-86013669|
|Fax|0755-83348369|0755-83348369|
|Email|investor@fiyta.com.cn|investor@fiyta.com.cn|

III.InformationDisclosureandPlacewheretheRegularReportsarePrepared
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|-|-|
|NameofthemediaselectedbytheCompanyfordisclosinginformation|SecuritiesTimesandHongKongCommercialDaily|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|InternetWebSiteDesignatedbyChinaSecuritiesRegulatoryCommissionforPublishingtheannualreport:|www.cninfo.com.cn|
|PlacewheretheCompany’sAnnualReportwaspreparedandisplacedforinquiry|TheCompany'sStrategicOperationDepartment|

IV.ChangesinRegistration
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|-|-|
|OrganizationCode|91440300192189783K|
|Changesinprincipalbusinessactivitiessincelisting(ifany)|Nochange|
|Changesinthecontrollingshareholderoverthepastyears(ifany)|Nochange|

V.OtherRelevantInformation
TheCPAsappointedbytheCompany
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|-|-|
|NameoftheCPAs|RuihuaCertifiedPublicAccountants(SpecialGeneralPartnership)|
|Officeaddress|9thFloor,TaipingFinancialBuilding,FutianDistrict,Shenzhen|
|NamesoftheCPAsastheauthorizedsignatories|WangYuqiaoandLiuXin|

ThesponsorperformingpersistentsupervisiondutiesengagedbytheCompanyinthereportingperiod
Inapplicable
ThefinancialadvisorperformingpersistentsupervisiondutiesengagedbytheCompanyinthereportingperiod
Inapplicable
VI.SummaryofAccounting/FinancialData
DoestheCompanyneedtomakeretroactiveadjustmentorrestatementoftheaccountingdataofthepreviousyears No
||||||
|-|-|-|-|-|
||2018|2017|Increase/Decreaseofthereportingyearoverthepreviousyear|2016|
|Revenue inCNY|3,400,450,599.90|3,345,809,703.98|1.63%|2,993,864,561.43|
|NetprofitattributabletotheCompany’sshareholders,inCNY|183,835,095.29|140,216,258.28|31.11%|110,662,681.59|
|NetprofitattributabletotheCompany’sshareholderslessthenon-recurringitems,inCNY|162,758,061.00|123,918,527.75|31.34%|97,200,540.64|
|Netcashflowsarisingfromoperatingactivities,inCNY|331,627,789.62|564,954,561.97|-41.30%|455,759,094.15|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|-|-|-|-|-|
|Basicearningpershare(CNY/share)|0.4190|0.3196|31.10%|0.2522|
|Dilutedearningpershare(CNY/share)|0.4190|0.3196|31.10%|0.2522|
|Returnonequity,weightedaverage|7.30%|5.79%|1.51%|4.74%|
||Endof2018|Endof2017|Increase/Decreaseoftheendofthereportingyearovertheendofthepreviousyear|Endof2016|
|Totalassets(inCNY)|3,599,691,650.26|3,579,789,692.90|0.56%|4,004,897,562.72|
|NetprofitattributabletotheCompany’sshareholders,inCNY|2,570,134,782.90|2,467,967,361.20|4.14%|2,371,370,535.17|

VII.DiscrepancyinaccountingdatabetweenIASandCAS
1. Differences in the net profit disclosed in the financial report& the net assets attributable to theCompany’s shareholdersrespectivelyaccordingtotheIASandtheCAS.
Inapplicable
2. Differences in the net profit disclosed in the financial report& the net assets attributable to theCompany’s shareholdersaccordingtoboththeIASandtheCAS
Inapplicable
VIII.FinancialDataSummarybasedonQuarters
InCNY
||||||
|-|-|-|-|-|
||Thefirstquarter|Thesecondquarter|Thethirdquarter|Thefourthquarter|
|Operatingrevenue|851,815,980.69|844,075,452.03|868,796,654.10|835,762,513.08|
|NetprofitattributabletotheCompany’sshareholders|59,518,000.75|52,849,920.69|50,293,172.83|21,174,001.02|
|Netprofitlessthenon-recurringprofit/lossattributabletotheCompany’sshareholders|54,825,312.90|44,934,058.26|48,421,717.55|14,576,972.29|
|Netcashflowsarisingfromoperatingactivities|67,632,201.86|157,040,072.23|65,916,200.63|41,039,314.90|

Doesthereexistanysignificantdifferencebetweentheabovefinancialindicatorsortheirsumtotalandthecorresponding financialindicatorsasdisclosedbytheCompanyinitsquarterlyreportsorsemi-annualreport
No
IX.Extraordinaryitemsandamount
InCNY
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|-|-|-|-|-|
|Items|Amountin2018|Amountin2017|Amountin2016|Notes|
|Gain/lossfromdisposalofnon-currentassets,includingthepartoffsetfromtheprovisionforimpairmentofassets.|-180,302.24|7,321,993.36|-660,129.92|Itwasmainlytheincomefromdisposalofthenon-operatingrealestateofStation68Ltd.in2017.|
|Government subsidies included in currentprofit orloss, other than on-going governmentsubsidieswhicharecloselyrelatedtotheCompany’snormaloperation, meet the requirements ofgovernmentpoliciesandaresubjecttocertainlimitsandconditions.|19,375,618.48|17,508,255.98|17,234,482.25||
|Reversal of the impairment provision forreceivableswhicharetestedindividuallyforimpairment|7,533,121.86|1,903,056.74|0.00||
|Othernon-operatingincomeandexpensesapartfromtheaforesaiditems|792,842.56|1,238,972.99|935,294.98||
|Less:Amountaffectedbytheincometax|6,444,246.37|8,669,699.37|4,047,506.36||
|Amountaffectingtheminorityshareholders’equity(aftertax)||3,004,849.17|0.00||
|Total|21,077,034.29|16,297,730.53|13,462,140.95|--|

FortheCompany’snon-recurringgain/lossitemsasdefinedintheExplanatoryAnnouncementNo.1onInformationDisclosureforCompaniesOfferingtheirSecuritiestothePublic–Non-recurringGainsandLossesanditsnon-recurring gain/lossitemsasillustratedintheExplanatoryAnnouncementNo.1onInformationDisclosureforCompaniesOfferingtheirSecuritiestothePublic–Non-recurringGainsandLosseswhichhavebeendefinedasrecurringgainsandlosses,it isnecessarytoexplainthereason.
Inapplicable
Section 3 Business Summary
I.PrincipalBusinessesintheReportingPeriod
(1)PrincipalBusinessandOperationModel
FIYTAconcentrates itself in watch industry, takes the brand strategy as the guidance, integrates watch R& D, design, manufacture, salesandservices,andhasformedtwo corebusinesses-watchbrandmanagementandwatchretailand services.TheCompanypossessesitsproprietarywatchbrands,includingFIYTA,EmileChouriet,JONAS&VERUSand licenced cooperative brands - JEEP and BEIJING, which have different styles and can satisfy segmentized market demands; has watch retail andservice brands - HARMONY and BRAND GALLERY,whichcover the nationwide market
andsatisfyhighandmediumandfashionconsumptiondemands.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2)DevelopmentStatusofWatchIndustryandtheCompany'sPositionintheIndustry
Modernwatchindustryisanadvancedmanufacturewithhighprecisionmachineryintegratedwithinformationtechnology andisaspecialhighlysophisticatedandaccuratetime-keepingproduct.Watchisalsoaconsumerproductwithaesthetic and fashion character and cultural connotation, as well as high quality consumer goods with outstanding brand value. Under a favorable trend of thepeople’s pursuance for better life and consumption upgrading, watch industry, which integrateshigh-endsophisticatedmanufactureandbrandaesthetics,enjoysagooddevelopmentprospect.
In2018,underthebackgroundthatthemacroeconomyheldpressureandtheconsumptionmarketwasweakingrowth, theCompanyconductedin-depthstudyontheconsumptiondemandandfashiontrendinitsbrandmanagementbusiness, worked hard on breakthrough and innovation in technology, process and product design and constantly improved the product quality and continuously satisfied thecustomers’ demand. Meanwhile, in light of the segmented market, the Company continued to increase the input in multi-brand strategical planning, channel construction, marketing and promotion,etc,continuouslyenrichthebrandconnotationandbuildbrandswithdifferentiation.Duringthereportingperiod, the Company constantly maintained powerful competition superiority with it brand businesses in the domestic watch marketofwhichFIYTABrandfurthertooktheleadingpositionintheindustryintermsofitsinfluence.Inrespectofretail services,theCompanyseizedtheopportunityofsalesrecoveryofmedium-andhigh-endbrands,positivelyadjustedthe shopbrandstructureandchannellayout,continuouslydevelopedthemedium-andhigh-endqualitychannels,keptdoing agoodjobinservicequalityimprovementandarrangementofthetechnicalservicenetwork.Duringthereportingperiod, the Company's superiority in retail service business competition was further consolidated; where Harmony World Watch kept the leading position inthe industryin termsof sales size and channel arrangement.The Company createdagain a new historical record in annual revenue and total profit and kept advancing towards the vision of “becoming a leading internationalizedwatchbrandenterprise”.
II.SignificantChangesinthePrimeAssets
1.SignificantChangesinthePrimeAssets
Inapplicable
2.PrimeAssetsAbroad
Inapplicable
III.AnalysisonCoreCompetitiveness
I.UniqueBusinessLayoutof“WatchBrandManagement+WatchRetailServices”intheIndustry
Incorporatedin1987,FIYTAexperiencedoverthreedecades’accumulationandinnovationbreakthrough,constructedthe brandmanagementbusinesswithFIYTABrandasthecoreandwatchretailbusinesswithHarmonyasthecoreandthe
two businesses supplemented each other and developed in a coordinated way; both take the leading position in the
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
domestic market at present. The unique business layout of “Watch Brand Management+ Watch Retail Services” have providedaguaranteefortheCompany'ssustainabledevelopmentand“becomingaleadinginternationalizedwatchbrand enterprise”.
II.ProfoundBrandManagementExperienceandClearSetmentedMarketPositioning
With reference to the experience of brand management experience of various world watches distributed by HARMONY retailbusinessaswellasitsown FIYTABrandmoldingexperience,theCompanytookaleadinconstructingmulti-brand tribe with watchbrands of FIYTA, Emile Chouriet,JONAS&VERUS, JEEPandBEIJING asthe key brands, constantly constructed brand identities of professional watch manufacture, classic and elegance, young fashion, intelligence and outdoors,orientalaethetics,etc.Thesebrandshavebecometheleadingbrandsinthesegmentedmarket.
III.NationalWatchBaseandFirstClassProductDesignAbility
The Company is a national technological innovation demonstration enterprise, national industrial design center and nationaltechnologycertificationcenterforenterprises,and anorganizationintegratingandimplementingthestandards for informationization and industrialization by the Ministry of Industry and Information Technology. All its subordinative manufacturers arenationalhi-techenterprises;hasconstructed itsprofessionalwatchmanufactureabilityinrespectof drivingunitmanufacture,spacewatchdevelopment,high-endwatchmanufactureteniques,etc.Meanwhile,theCompany haskeptaleadingpositionintheindustryintermsofproductqualityandcreativedesignability.
IV.HighQualityBrand,ChannelResourcesandNationwideRetailServiceNetwork
InwatchretailbusinesswithHARMONYasthecore,theCompanyhasestablishedclosecooperativerelationshipwitha great many world top brands and mainstream brands, including Omega, Breguet, Blancpain, Glashutte Original, Jaquet Droz, Longines, Tissot, etc. subordinate to Swatch Group; Rolex and TUDOR subordinate to Rolex; A.LANGE& SOHNE,JAEGER LE-COULTRE,CARTIER,PIAGET,IWC,etc.subordinatetoRichemontGroup;GIRARDPERREGAUX and ULYSSE NARDIN subordinate to Kering Group; as well as such independent brands as CHOPARD, Bucherer, BREITLING, etc.TheCompanyhasalsoestablishedstrategiccooperativerelationshipwithvarioushighgradeshopping malls,suchasMIXCaswellasvarioushighgradedepartmentstoresinChina,possessestopqualitybrandsandchannel resourcesintheindustry.TheCompanyhasestablishednationwidewatchretailservicenetwork.
V.ProfoundManagementExperienceandSustainableTalentsReserve
The Company constantly enhanced construction of the “Brand People” team, continuously improved the profession and comprehensive qualification of the team, actively created a team atmosphere of progressiveness, struggle, continuous improvement and devotion to work. The major members of the management and business backbones of the Company havebeenengagedinwatchindustryforlongtimeandhaverichexperienceinbrandmanagementandchanneloperation, enjoy good professional qualification and have profound understanding of watch industry. In addition, the Company has establishedlongtermandstableenterprise-schoolcooperativerelationshipwithvariousfamouscollegesanduniversities inChina.TheCompanyisabletocontinuouslyandsteadilyobtainagreatnumberofhighqualityprofessionalsandinfuse new blood for the Company's development. The Company has continued to hold the honorable title of “Yearly Best Employer”grantedbyInternalAssociationofHumanResourcesandCHINACHR.COMsuccessivelyfor12years.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 4 Discussion and Analysis of the Management
I.General
In China, the domestic economy slowed down in growth, the Sino-US trade conflict was full of complications, the consumption market demand was bearish, and the watch industry was confronted with seriousmarket pressure. During thereportingperiod,theCompanyfocusedonvaluecreation,sparedineffortincarryingforwardrefinedmanagementand specialized operation, exerted itself on upgrading the brand identity and customer services, improved the operation efficiency;underthesituationofrelativelyweakmarket,theCompanystillrealizedcontinuousincreaseofprofit.In2018,theCompanyrealizedrevenueamountingtoCNY3400.4506millionwithyear-on-yeargrowthof1.63%andrealizedtotal profit amounting to CNY 231.1969 million with a year-on-year growth of21.87%; realized net profit amounting to CNY 183.8351 million with a year-on-year growth of31.11%. The Company has once again achieved a historical record in operationperformance.
Duringthereportingperiod,theCompanycarriedoutthefollowingkeywork.
I.PuttingfortheffortinpromotingupgradingofFIYTABrandandcontinuouslysupportingquickdevelopmentof variousbrands
FIYTA Brand closely followed the trend of upgrading consumption and thecustomers’ consumption demand of “quality-orientation and personalization” and carried forward in depth upgrading of the brands based on products, marketingandchannels,etc.In2018,FIYTABrandadheredtothespiritofbeingspecializedinwatchmaking,insistedonindependentaestheticdesign,launched“FENGZHI”,“SOLO”Series,etc.andenrichedtheserialproductsof“QUORRA’S CORD”, “CLOVER”, etc. Meanwhile, for the purpose of satisfying thecustomers’ demand on high quality and customization, the Company announced a high-end customized designer brand - MOONYANG at Basellworld; for the purpose of complying with the life style of rejuvenation and intelligence of consumers, the Company enhanced the digitalized new media marketing; for the purpose of pressing close to the change ofcustomers’ consumption scene, vigorouslydeveloping the channels of brandflagship store and shopping center andthe proportion of sales in shopping center was continuously increasing. In 2018, in light of FIYTA Brand's outstanding performance in specialized watch makingandinnovativedesign,FIYTABrandSpaceWatchseriesandtheapplicationprojectwererewardedwithanumber of “the Fifth ChinaIndustrialAward” and many modelsof FIYTABrandwere rewarded with principal industrial awards, including “2018 China Design Red Star Award”, “Honorable Mention of China Design” and “Governor Cup Industrial DesignAward”, “Shenzhen Gift”, etc. During the reporting period, the Company complied withconsumers’ consumption demand of personalization and diversification, continued to reinforce the influence of the brands of “Emile Chouriet”,“JONAS&VERUS”,“JEEP”and“BEIJING”,improvedthecompetitionsuperiorityonthesegmentedmarket;theproportion of sales of multiple brands exceeded25% of the total of the watch brand management business and still kept quick development.
II.Continuingtooptimizethewatchretailservicenetworkandconstantlyupgradingcustomerservicequality Harmony World Watch Center firmly grasped the opportunity of revived growth of medium- and high-end watches, deepenedstrategiccooperationwithSwatch,Rolex,Richemont,Kering,etc.andindividualwatchmakers,acquiredmore highqualityinternationalbrandresources;andatthesametime,keptcarryingforwardtheworkofchannelupgradingand development of key medium- and high-end channels. In 2018, the unit price of Harmony world watch customers was
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
significantly improved and the channels were further concentrated on medium- and high-end. So far, Harmony World WatchCenterhas190channelsoffamousbrandwatchesofmedium-andhigh-end.Atthesametime,forthepurposeof satisfyingcustomers’ new demand of consuming online international brands, Harmony accelerated layout of online channelsbyunitinginternationalbrands;basedontheexistingbrands,includingOris,Titoni,whichhavebeenauthorized foronlinesale,HarmonyhasopenedCarlF.BuchererBrandJDofficialflagshipstoreandTISSOTBrandT-MallFranchise Store.For the purpose of continuouslyimprovingcustomer servicequality andsharingthehugespace of famousbrand watchinventorymarket,Harmonycontinuedtodeveloptechnicalservicebusiness.In2018,HarmonyandSwatchGroup jointly opened the first brand comprehensive after-sale service center. Now the said technical service center has 150 channels.Inthereportingperiod,theCompanycontinuedtocarryforwardupgradingofBRANDGALLERYoperationand channeldevelopment work, haspossessed 150BRAND GALLERYfamousbrANd channelsbased on medium endand fashionandthechannelinfluencehasbeenfurtherimproved.
III.EnthusiasticallyMakingLayoutofNewBusinessesandStartingIntelligentRetailinaCooperativeWay Based on the quick growth of smart watch market, the Company speeded up layout of smart watch business and promoted business innovation. In 2018, FIYTA Brand launched the first pointer type aerobic capacity smart watch -JOYUPseriesandJEEPBrandlaunchedsmartall-realmwatch； where,theCompanyachievedinnovativebreakthrough in the field of heavy smart watch by JEEP Brand smart watch, in which the Company applied QUALCOMM radio technology and created 4G all-net independent communication with the functions of sports, navigation, payment, etc. It enjoysfirstmoveradvantageintermsoffunctionsandtechnologyintheindustry,hasreceivedgoodresponseinmarket salesandmorethan10,000unitsweresoldinthreemonthsaftercomingintothemarket.
In light of the new development trend of intelligent retail, for the purpose of bring the superiority of the Company's retail networkandprofoundmedium-andhigh-endmemberresourceintobetterplay,in2018,theCompany,centeringthetrend ofcustomers’ experience, improvement of operation efficiency and whole-channel integration development, etc, startedtheintelligentretailprojectwithcooperationofOC&C,aninternationalconsultinginstitution.
IV.InsistingonIndependentScience&TechnologyInnovationandConsolidatingtheCoreTechnologyPower In 2018, the Company brought the advantage of the watch manufacture bases in Shenzhen and Switzerland into good play,integrateddomesticandforeignresources,constantlyincreasedinvestmentinthefieldofkeytechnologies,including thedrivingunitsofmechanicalwatches,researchonapplicationofnewmaterials,spacewatchandsmartwatches,kept enhancing its leading position of independent innovation in China watch brands, achieved quite a number of scientificresearchresultsandachievedgreatprogressinpartialkeytechnologyR&Dofdrivingunits,materials,etc.In2018,the Company accumulatively applied for 57 patents, including 15 invention and utility model patents. Relying on the accumulationinaspects ofinnovationmechanism, innovation abilityandinnovationtalents, theCompanywas electeda nationalconsumergoodsstandardizationdemonstrationbaseandapost-doctorialinnovationpracticebaseinShenzhen. V.FocusingonCreationofEnterpriseValuesandCarryingforwardRefinedOperationManagement
In2018,theCompanyfocusedonvaluecreationandsparednoeffortincarryingforwardrefinedoperationmanagement. Inthebrandmanagementbusiness,theCompanyactivelyadjustedthebusinessandorganizationstructure,compressed the management levels, vigorously carried forward cost and expenditure control, further improved the organization efficiency,removedlowefficiencyandloss-makingshopswithfirmdetermination,andeffectivelycontrolledtheoperation cost; in the retail service business, the Company brought the advantage of channel size into play, carried out sales discount and improved comparable unit shop output. As a result, the gross profit of Harmony world watch business
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
increased by1.96% and comparable unit shop output grew by4%. In 2018, the Company, with the help of scientific managementtools,systematicallysolvedthekeyandtoughproblemsexistingintheoperationmanagement,continuously carried forward process optimization and construction of precise supply chain, further optimized the inventory structure, withthetotalamountdroppedbyCNY38.2204millionovertheyearbeginningandinterest-bearingliabilitiesdroppedby CNY88.8778millionovertheyearbeginning.
VI. Carrying forward Construction of the Incentive Mechanism and Culture and Further Improving Organization Vitality
For the purpose adapting itself to the change of the market environment and customers, the Company insisted on the enterprise spirit of inheritance and innovation and established and released the new cultural system. In addition, the Company practicedA-share restrictive stockincentive program with a valid termof 5 years(Phase I)and granted4.224 million A-share restrictive stock to 128 backbone employees. By means of construction of the new culture system and long-termincentivemechanism,theCompanyfurtherimprovedthevitalityoftheorganization,supportedthenewturnof developmentstrategyinlandingandarrivalofvariousoperationobjectives.
MovementoftheMajorFinancialItemsin2018:
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|-|-|-|-|-|
|StatementItems|2018|2017|Increase/Decrease(%)|Notetothemovement|
|Balancesheetitems|||||
|Advancepayments|13,666,816.33|24,663,314.53|-44.59%|Itwasmainlyduetodecreaseofadvancepaymentforgoodsattheendofthereportingperiod|
|Otherreceivables|45,870,582.26|34,990,539.09|31.09%|Itwasmainlyduetoincreaseofthedepositinsecurityandcashdepositattheendofthereportingperiodovertheyearbeginning.|
|Othercurrentassets|73,703,312.24|24,616,815.21|199.40%|ItwasmainlyduetoincreaseoftheinputVATtobeoffsetattheendofthereportingperiodovertheyearbeginning.|
|Interestpayable|772,351.26|1,464,729.11|-47.27%|Itwasmainlyduetobankloanattheendofthereportingperiodandthecorrespondingdecreaseoftheinterestpayableattheendofthereportingperiod.|
|Non-currentliabilitiesduewithinayear|347,470.00|35,000,000.00|-99.01%|Itwasmainlyduetothatthelong-termloanduewithinayearwasrepaidattheendofthereportingperiod.|
|Long-termborrowings|4,517,110.00|79,870,353.00|-94.34%|Itwasmainlyduetothatthespecial-purposeloanforthewatchindustrybaseinGuangmingNewZonewasrepaidinthereportingyear.|
|Deferredincome|3,672,855.36|5,904,000.00|-37.79%|Itwasmainlyduetothatthepartialgovernmentsubsidytoberecognizedattheyearbeginningwasrecognizedasotherincomeduringthereportingyear.|
|ProfitStatementItems|||||
|Interestcost|27,552,558.81|41,825,035.34|-34.12%|Itwasmainlyduetothatasthebankloandecreasedinthereportingyearandthepaymentforinterestcostdecreasedcorrespondingly.|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|Lossfromimpairmentofassets|3,264,956.18|62,427,499.61|||
|Incomefromdisposalofassets|-181,302.24|7,321,993.36|-102.48%|Theincomefromdisposalofassetsinthesameperiodofthepreviousyearwasmainlytheincomefromdisposalofthenon-operatingrealestateofStation68Ltd.,oneoftheCompany'ssolely-fundedsubsidiaries,andthereexistednosuchcaseinthereportingyear.|
|CashFlowStatementItems|||||
|Rebatedtaxesreceived|4,793,245.20|886,252.20|440.84%|ItwasmainlyduetoincreaseoftherebatedinputVATinthereportingyearoverthesameperiodofthepreviousyear.|
|Netcashfromdisposaloffixedassetsandintangibleassetandrecoveryofotherlongtermassets|53,280.03|10,678,135.25|-99.50%|Itwasmainlytheincomefromdisposalofthenon-operatingrealestateofStation68Ltd.inthesameperiodofthepreviousyear.|

II. Analysis on Principal Businesses
1. General
Referto“I.General”of“DiscussionandAnalysisofBusinessConditions”
2. IncomeandCosts
(1) Compositionof operatingrevenue
InCNY
|||||||
|-|-|-|-|-|-|
||2018||2017||Year-on-yearincrease/decrease|
||Amount|Proportionintheoperatingrevenue|Amount|Proportionintheoperatingrevenue||
|Totaloperatingrevenue|3,400,450,599.90|100%|3,345,809,703.98|100%|1.63%|
|Sectors||||||
|Watches|3,193,280,311.30|93.91%|3,182,377,477.24|95.12%|0.34%|
|Sophisticatedmanufacture|70,742,449.85|2.08%|34,886,779.43|1.04%|102.78%|
|Leases|118,323,969.04|3.48%|109,451,504.76|3.27%|8.11%|
|Others|18,103,869.71|0.53%|19,093,942.55|0.57%|-5.19%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
||2018||2017||Year-on-yearincrease/decrease|
||Amount|Proportionintheoperatingrevenue|Amount|Proportionintheoperatingrevenue||
|Products||||||
|Watchretailandservices|2,090,970,707.50|61.49%|2,039,729,647.67|60.96%|2.51%|
|Watchbrandbusiness|1,102,309,603.80|32.42%|1,142,647,829.57|34.15%|-3.53%|
|Sophisticatedmanufacture|70,742,449.85|2.08%|34,886,779.43|1.04%|102.78%|
|Leases|118,323,969.04|3.48%|109,451,504.76|3.27%|8.11%|
|Others|18,103,869.71|0.53%|19,093,942.55|0.57%|-5.19%|
|Regions||||||
|SouthChina|1,536,911,140.58|45.20%|1,490,763,984.16|44.56%|3.10%|
|NorthwestChina|588,628,213.03|17.31%|546,462,280.48|16.33%|7.72%|
|NortheastChina|249,884,958.89|7.35%|270,574,447.95|8.09%|-7.65%|
|EastChina|439,292,101.70|12.92%|422,998,372.46|12.64%|3.85%|
|Northeast China|269,671,243.83|7.93%|285,363,830.58|8.53%|-5.50%|
|SouthwestChina|316,062,941.87|9.29%|329,646,788.35|9.85%|-4.12%|

 (2) Sector, product or region which takes over10% of the Company's operation revenue or operationprofit
InCNY
||||||||
|-|-|-|-|-|-|-|
||Operatingrevenue|Operatingcost|Grossprofitrate|Year-on-yearincrease/decreaseofoperatingrevenueoverthesameperiodofpreviousyear|Year-on-yearincrease/decreaseofoperatingcostoverthesameperiodofpreviousyear|Year-on-yearincrease/decreaseofgrossprofitrateoverthesameperiodofpreviousyear|
|Sectors|||||||
|Watches|3,193,280,311.30|1,910,998,452.65|40.16%|0.34%|-1.18%|0.92%|
|Sophisticatedmanufacture|70,742,449.85|59,432,940.99|15.99%|102.78%|89.07%|6.09%|
|Leases|118,323,969.04|22,474,447.92|81.01%|8.11%|26.37%|-2.74%|
|Others|18,103,869.71|903,932.64|95.01%|-5.19%|-75.55%|14.37%|
|Products|||||||
|Watchretailandservices|2,090,970,707.50|1,576,862,763.43|24.59%|2.51%|-0.65%|2.40%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||
|-|-|-|-|-|-|-|
|Watchbrandbusiness|1,102,309,603.80|334,135,689.22|69.69%|-3.53%|-3.57%|0.01%|
|Sophisticatedmanufacture|70,742,449.85|59,432,940.99|15.99%|102.78%|89.07%|6.09%|
|Leases|118,323,969.04|22,474,447.92|81.01%|8.11%|26.37%|-2.74%|
|Others|18,103,869.71|903,932.64|95.01%|-5.19%|-75.55%|14.37%|
|Regions|||||||
|SouthChina|1,536,911,140.58|875,599,755.20|43.03%|3.10%|2.64%|0.25%|
|NorthwestChina|588,628,213.03|353,457,194.81|39.95%|7.72%|7.23%|0.27%|
|NortheastChina|249,884,958.89|137,166,812.45|45.11%|-7.65%|-10.46%|1.72%|
|EastChina|439,292,101.70|262,001,509.80|40.36%|3.85%|1.29%|1.51%|
|Northeast China|269,671,243.83|187,589,738.67|30.44%|-5.50%|-7.03%|1.15%|
|SouthwestChina|316,062,941.87|177,994,763.27|43.68%|-4.12%|-6.49%|1.43%|

AsthecalculationspecificationoftheCompany’sprincipalbusinessdataunderwentadjustmentduringthereporting period,theprincipalbusinessdataofthepastyearwerethedatabasedonthatafterthespecificationadjustmentatthe endofthereportingyear.
||||||||
|-|-|-|-|-|-|-|
||Operatingrevenue|Operatingcost|Grossprofitrate|Year-on-yearincrease/decreaseofoperatingrevenueoverthesameperiodofpreviousyear|Year-on-yearincrease/decreaseofoperatingcostoverthesameperiodofpreviousyear|Year-on-yearincrease/decreaseofgrossprofitrateoverthesameperiodofpreviousyear|
|Sectors|||||||
|Watches|3,182,377,477.24|1,933,734,832.90|39.20%|12.71%|11.96%|0.40%|
|Sophisticatedmanufacture|34,886,779.43|31,434,866.13|9.90%|-11.77%|11.22%|-18.62%|
|Leases|109,451,504.76|17,785,254.56|83.80%|2.31%|31.31%|-3.59%|
|Others|19,093,942.55|3,697,637.98|80.60%|-19.78%|-4.85%|-3.04%|
|Products|||||||
|Watchretailandservices|2,039,729,647.67|1,587,232,279.88|22.20%|12.73%|10.87%|1.31%|
|Watchbrandbusiness|1,142,647,829.57|346,502,553.02|69.70%|12.68%|17.28%|-1.19%|
|Sophisticatedmanufacture|34,886,779.43|31,434,866.13|9.90%|-11.77%|11.22%|-18.62%|
|Leases|109,451,504.76|17,785,254.56|83.80%|2.31%|31.31%|-3.59%|
|Others|19,093,942.55|3,697,637.98|80.60%|-19.78%|-4.85%|-3.04%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||
|-|-|-|-|-|-|-|
|Regions|||||||
|SouthChina|1,490,763,984.16|853,045,559.52|42.80%|23.43%|24.62%|-0.55%|
|NorthwestChina|546,462,280.48|329,631,915.00|39.70%|3.31%|0.75%|1.53%|
|NortheastChina|270,574,447.95|153,182,543.86|43.40%|-2.17%|-3.33%|0.68%|
|EastChina|422,998,372.46|258,663,712.98|38.80%|7.68%|9.00%|-0.74%|
|Northeast China|285,363,830.58|201,782,412.95|29.30%|1.46%|5.02%|-2.40%|
|SouthwestChina|329,646,788.35|190,346,447.25|42.30%|7.56%|9.90%|-1.23%|

 Reasonofthechangeofthespecifications
TheCompanyreclassifiedandadjustedthedisclosingspecificationsbasedondifferentsectors,productsandregions accordingtothepracticalconditionsofbusinessoperationandrequirementsofsegmentedmanagement.Therelevant dataofthereportingperiodofthepreviousyearunderwentadjustmentaccordingtothesamespecifications;wherethe specificationsbasedonsectorsandproductshavebeenadjustedfromtheoriginalclassificationbasedonbusiness managementplateintoclassificationbasedonbusinessattributioncategories;thespecificationsforclassificationbased onregionshavebeenadjustedfromtheoriginalclassificationbasedonthelocationofbranchcompaniesintothe classificationbasedonthelocationofshops.
(3) Isthephysical salesincome greater thantheserviceincome
Yes
|||||||
|-|-|-|-|-|-|
|Classifiedbasedonsectors|Items|InCNY|2018|2017|Year-on-yearincrease/decrease|
|Brandwatches|Salesvolume|pcs|1,032,886|1,169,341|-12.00%|
||Output|pcs|1,085,929|1,443,902|-25.00%|
||Inventory|pcs|1,326,997|1,273,954|4.00%|

Notetothecauseoftheyear-on-yearmovementoftherelevantdatabyover30%
Inapplicable
(4) Implementation ofImportant SaleContracts Concludedat theEnd of theReporting Period Inapplicable
(5) Compositionof OperatingCosts
Classifiedbasedonsectorsandproducts
InCNY
||||||||
|-|-|-|-|-|-|-|
|Classifiedbasedonsectors|Items|2018||2017||Year-on-yearincrease/decrease|
|||Amount|Proportionintheoperatingcosts|Amount|Proportionintheoperatingcosts||
||Goodspurchase|1,576,862,763.43|79.09%|1,587,232,279.88|79.89%|-0.65%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||
|-|-|-|-|-|-|-|
|Classifiedbasedonsectors|Items|2018||2017||Year-on-yearincrease/decrease|
|||Amount|Proportionintheoperatingcosts|Amount|Proportionintheoperatingcosts||
||cost||||||
||Rawmaterials|298,467,328.86|14.97%|318,023,289.64|16.01%|-6.15%|
||Laborcosts|25,602,142.25|1.28%|23,200,389.66|1.17%|10.35%|
||Depreciationexpense|1,124,500.75|0.06%|1,025,084.88|0.05%|9.70%|
||Waterandelectricityfees|582,727.38|0.03%|462,540.76|0.02%|25.98%|
||Rent|2,100,422.82|0.11%|466,825.54|0.02%|349.94%|
||Others|6,258,567.16|0.31%|3,324,422.53|0.17%|88.26%|
|Sophisticatedmanufacture|Rawmaterials|39,129,570.45|1.96%|13,450,268.43|0.68%|190.92%|
||Laborcosts|12,770,838.35|0.64%|10,882,923.92|0.55%|17.35%|
||Depreciationexpense|1,440,723.29|0.07%|1,511,974.62|0.08%|-4.71%|
||Waterandelectricityfees|1,443,140.38|0.07%|1,204,598.61|0.06%|19.80%|
||Rent|275,118.68|0.01%|125,227.28|0.01%|119.70%|
||Others|4,373,549.85|0.22%|4,259,873.27|0.21%|2.67%|
|Leases|Depreciationexpense|13,170,394.47|0.66%|10,568,722.86|0.53%|24.62%|
||Laborcosts|2,983,488.04|0.15%|2,992,768.29|0.15%|-0.31%|
||Others|6,320,565.41|0.32%|4,223,763.41|0.21%|49.64%|
|Others|Purchasecost|903,932.64|0.05%|3,697,637.98|0.19%|-75.55%|

 InCNY
||||||||
|-|-|-|-|-|-|-|
|Classifiedbasedonproducts|Items|2018||2017||Year-on-yearincrease/decrease|
|||Amount|Proportionintheoperatingcosts|Amount|Proportionintheoperatingcosts||
|Watchretailandservices|Goodspurchasecost|1,576,862,763.43|79.09%|1,587,232,279.88|79.89%|-0.65%|
||Rawmaterials|298,467,328.86|14.97%|318,023,289.64|16.01%|-6.15%|
||Laborcosts|25,602,142.25|1.28%|23,200,389.66|1.17%|10.35%|
||Depreciationexpense|1,124,500.75|0.06%|1,025,084.88|0.05%|9.70%|
||Waterandelectricityfees|582,727.38|0.03%|462,540.76|0.02%|25.98%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||
|-|-|-|-|-|-|-|
|Classifiedbasedonproducts|Items|2018||2017||Year-on-yearincrease/decrease|
|||Amount|Proportionintheoperatingcosts|Amount|Proportionintheoperatingcosts||
||Rent|2,100,422.82|0.11%|466,825.54|0.02%|349.94%|
||Others|6,258,567.16|0.31%|3,324,422.53|0.17%|88.26%|
|Sophisticatedmanufacture|Rawmaterials|39,129,570.45|1.96%|13,450,268.43|0.68%|190.92%|
||Laborcosts|12,770,838.35|0.64%|10,882,923.92|0.55%|17.35%|
||Depreciationexpense|1,440,723.29|0.07%|1,511,974.62|0.08%|-4.71%|
||Waterandelectricityfees|1,443,140.38|0.07%|1,204,598.61|0.06%|19.80%|
||Rent|275,118.68|0.01%|125,227.28|0.01%|119.70%|
||Others|4,373,549.85|0.22%|4,259,873.27|0.21%|2.67%|
|Leases|Depreciationexpense|13,170,394.47|0.66%|10,568,722.86|0.53%|24.62%|
||Laborcosts|2,983,488.04|0.15%|2,992,768.29|0.15%|-0.31%|
||Others|6,320,565.41|0.32%|4,223,763.41|0.21%|49.64%|
|Others|Purchasecost|903,932.64|0.05%|3,697,637.98|0.19%|-75.55%|

 (6) Isthereanychange intheconsolidationscope inthereporting period
No
(7) Is there any significant change or adjustment related situation taken place in theCompany’s business,products or servicesinthe reportingperiod
Inapplicable
(8) Majorsales customersandmajor suppliers
Informationaboutthemajorsalescustomers
|||
|-|-|
|Totalsalestothetopfivecustomers,inCNY|466,297,023.36|
|Proportionofthetotalsalestothetopfivecustomersinthetotalsalesoftheyear,|13.72%|
|Proportionofthesalesvolumetothetopfivecustomersinthetotalsalestotherelatedpartiesintheyear|2.11%|

Note:Thecustomerscontrolledbythesameactualcontrollershouldbepresentedafterconsolidationexceptthatactually
controlledbythesamestate-ownedassetsmanagementinstitution.
Informationofthetop5customers
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|SerialNo.|Customers|Sales(inCNY)|Proportioninthetotalsalesoftheyear|
|1|ChinaResources(Shenzhen)Co.,Ltd|143,815,196.14|4.23%|
|2|VIP.COM|106,605,479.95|3.14%|
|3|ChinaResources(Shenyang)RealEstateCo.,Ltd.|73,398,392.21|2.16%|
|4|YonganDepartmentStoreCo.,Ltd.|70,713,098.56|2.08%|
|5|RainbowDepartmentStoreCo.,Ltd.|71,764,856.50|2.11%|
|Total|--|466,297,023.36|13.72%|

 OtherInformationaboutthemajorcustomers
Inapplicable
Majorsuppliers
|||
|-|-|
|Totalamountofpurchasefromtopfivesuppliers,inCNY|1,214,053,934.87|
|ProportionofthepurchaseamountfromthetopfivesuppliersintheCompany’stotalpurchaseamount|61.06%|
|Proportionofpurchaseamountfromthetop5suppliersinthetotalpurchaseamountfromtherelatedpartiesintheyear|0.00%|

Note:Thesupplierscontrolledbythesameactualcontrollershouldbepresentedafterconsolidationexceptthatactually controlledbythesamestate-ownedassetsmanagementinstitution.
Informationaboutthetop5suppliers
|||||
|-|-|-|-|
|SerialNo.|Suppliers|Purchaseamount,inCNY|Proportioninthetotalpurchasesoftheyear(%)|
|1|SMHSwissWatchTrading(Shanghai)Co.,Ltd.|603,264,969.67|30.34%|
|2|NingboShanghengWatchesCo.,Ltd.|280,192,821.62|14.09%|
|3|Rolex(Guangzhou)Ltd.|178,191,143.82|8.96%|
|4|LifengCommerceCo.,Ltd.|93,139,200.03|4.68%|
|5|SMHBusinessServices(Shanghai)PtyLtd.|59,265,799.73|2.98%|
|Total|--|1,214,053,934.87|61.06%|

 Otherinformationaboutthemajorsuppliers
Inapplicable
3. Expenses
InCNY
||||||
|-|-|-|-|-|
||2018|2017|Year-on-yearincrease/decrease|Notetosignificantchanges|
|Salescosts|856,970,173.10|811,437,932.01|5.61%|Inapplicable|
|Administrativeexpenses|224,796,280.12|190,589,582.24|14.99%|Inapplicable|
|Financialexpenses|35,916,240.16|49,186,742.91|-26.98%|Inapplicable|
|R&Dexpenditures|47,350,342.82|49,453,899.35|-4.25%|Inapplicable|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
4. InvestmentinR& D
InvestmentinR&DwasmainlyforconsolidatingtheCompany'sleadingpositioninself-dependentinnovationinChina's watchbrands.The Companycontinuouslyincreasedinvestmentinpersonnel,equipment,researchbudget,etc.forsuch keytechnologyfieldsasspacewatches,drivingunitsofmechanicalwatches,industrialdesign,smartwatches,research on application of new materials, etc., and had created a number of scientific research achievements. In 2018, theCompany’stotalinvestmentinR&DamountedtoCNY47,350,342.82,taking1.84%ofthenetassetsasauditedinthemostrecentperiodandtaking1.39%oftheoperationrevenueasauditedinthemostrecentperiod.In2018,theCompany appliedfor57patents,ofwhich15werepatentsofinventionandutilitymodels.Byvirtueoftheaccumulationininnovation mechanism, innovation ability, innovative talents and innovation achievements, etc., in addition to the existing titles of "National Certified Enterprise Technology Center", "National Industrial Design Center", "National Technology Innovation Demonstration Enterprise", the Company has been elected an national consumer goods standardization demonstration baseandapost-doctarialinnovationpracticebaseinShenzhen.
SummaryofInvestmentinR&D
|||||
|-|-|-|-|
||2018|2017|Proportionofmovements|
|NumberofR&Dstaff(persons)|47|45|4.44%|
|ProportionofR&Dstaffintotalemployees|0.91%|0.84%|0.07%|
|AmountofinvestmentinR&D,inCNY|47,350,342.82|49,453,899.35|-4.25%|
|ProportionofinvestmentinR&Dinoperatingrevenue|1.39%|1.48%|-0.09%|
|AmountofcapitalizedinvestmentinR&D(inCNY)|0.00|0.00|0.00%|
|ProportionofcapitalizedinvestmentinR&DinthetotalinvestmentinR&D|0.00%|0.00%|0.00%|

Cause(s)ofsignificantchangeofthetotalinvestmentinR&Dintheoperatingrevenue
Inapplicable
NotetothecauseofsignificantchangeinthecapitalizationrateofinvestmentinR&Dandnotetothereasonability Inapplicable
5. CashFlow
InCNY
|||||
|-|-|-|-|
|Items|2018|2017|Year-on-yearincrease/decrease|
|Subtotalofcashflowinfromoperatingactivity|3,864,826,375.05|3,849,407,740.68|0.40%|
|Subtotalofcashflowoutfrom|3,533,198,585.43|3,284,453,178.71|7.57%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|operatingactivity||||
|Netcashflowsarisingfromoperatingactivities|331,627,789.62|564,954,561.97|-41.30%|
|Subtotalofcashflowinfrominvestmentactivity|53,280.03|10,448,081.56|-99.49%|
|Subtotalofcashflowoutfrominvestmentactivity|146,877,130.29|136,914,522.99|7.28%|
|Netcashflowsarisingfrominvestmentactivities|-146,823,850.26|-126,466,441.43|16.10%|
|Subtotalofcashflowinfromfundraisingactivity|741,192,340.23|575,282,350.00|28.84%|
|Sub-totalcashflowpaidforfinancingactivities|949,023,364.54|1,255,793,728.74|-24.43%|
|Netcashflowsarisingfromfinancingactivities|-207,831,024.31|-680,511,378.74|-69.46%|
|Net increase of cash and cashequivalents|-22,324,831.35|-242,279,864.49|-90.79%|

Notetothemajorinfluencefactorsforthesignificantchangeintherelevantyear-on-yeardata:
1. Net cash flow arising from operating activities amounting to CNY 331,627,789.62 was mainly due to increase of the recovered receivables brought about from revenue growth in the reporting year; and in addition, the inventory size effectively reducedat theyear endbyenhancing controlover inventory; inthe reportingyear,the Companyrealized the netcashflowfromoperatingactivitiesgreaterthanthenetprofitoftheCompany.
2.NetcashflowarisingfrominvestmentactivitiesamountingtoCNY-146,823,850.26,increasedbyCNY20,357,408.83 overthesameperiodofthepreviousyear,wasmainlyduetoincreaseoftherenewedinvestmentinshopsandcounters inthereportingyearoverthesameperiodofthepreviousyear.
3.NetcashflowarisingfromfinancingactivitiesamountingtoCNY-207,831,024.31inthereportingyearwasmainlydue to repayment of the bank loans and payment of dividends and interest, where the cash flow-out from repayment of the interest-bearing liabilities amounted to CNY 91,140,868.40, payment of the dividends amounted to CNY 87,748,976.20 andpaymentoftheloaninterestamountedtoCNY28,941,179.71.
4. Net increase of cash and cash equivalent in the reporting year amounting to CNY -22,324,831.35 was mainly due to repayment of partial bank loans with monetary capital in the reporting year and as a result the size of interest-bearing liabilitieswasreducedattheendofthereportingyear.
Cause(s)ofsignificantdifferenceinthenetcashflowarisingfromtheoperatingactivitiesandthenetprofitinthereporting year
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
III. Analysis on Non-Principal Businesses
Inapplicable
IV. Assets and Liabilities
1. Significant Changes inAssetsComposition
InCNY
||||||||
|-|-|-|-|-|-|-|
||Endof2018||Endof2017||Proportionincreased/decreased|Notetosignificantchanges|
||Amount|Proportionintotalassets|Amount|Proportionintotalassets|||
|Monetaryfund|164,828,059.97|4.58%|187,152,891.32|5.23%|-0.65%|Inapplicable|
|Accountsreceivable|370,545,656.61|10.29%|326,254,624.94|9.11%|1.18%|Inapplicable|
|Inventories|1,782,306,301.70|49.51%|1,820,526,676.26|50.86%|-1.35%|Inapplicable|
|Investmentrealestate|377,319,433.03|10.48%|305,493,987.77|8.53%|1.95%|Inapplicable|
|Long-termequityinvestment|44,881,063.15|1.25%|43,879,518.09|1.23%|0.02%|Inapplicable|
|Fixedassets|425,649,562.85|11.82%|523,699,592.65|14.63%|-2.81%|Inapplicable|
|Construction-in-process|12,041,126.00|0.33%|10,947,300.53|0.31%|0.02%|Inapplicable|
|Shorttermloans|547,118,452.97|15.20%|525,990,510.00|14.69%|0.51%|Inapplicable|
|Long-termborrowings|4,517,110.00|0.13%|79,870,353.00|2.23%|-2.10%|Inapplicable|

2. Assets and liabilities measuredbased onfair value
Inapplicable
3. Restrictiononrights intheassets ended thereporting period
ApropertyownedbySwitzerlandbasedMontresChourietSAwithnetvalueofCNY14,978,058.57wasusedasa collateral fortheoverseaslongtermloanamountingtoCNY4,517,110.00.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
V. Investment
1. General
Inapplicable
2. Significant equityinvestment acquiredinthe reportingperiod
Inapplicable
3. Significant non-equityinvestment inprocess inthereporting period
InCNY
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Description|Wayofinvestment|Isitaninvestmentinfixedassets?|Industryinvolvedbytheinvestmentproject|Amountinvestedduringthereportingperiod|Accumulativeamountactuallyinvestedbytheendofthereportingperiod|Capitalsource|Projectprogress|Predictedearning|Earningsaccumulativelyrealizedbytheendofthereportingperiod|Causeofthefailureinarrivingattheplannedprogressandpredictedearnings|Dateofdisclosure(ifany)|Disclosureindex(ifany)|
|ThesupportingengineeringworksatthewatchindustrybaseinGuangmingNewZone|Self-built|Yes|Manufacture|1,093,825.47|12,041,126.00|Self-raisedcapital|35.36%|0.00|0.00|Inapplicable|March10,2017|http://www.cninfo.com.cn/|
|Total|--|--|--|1,093,825.47|12,041,126.00|--|--|0.00|0.00|--|--|--|

4. Financialassets investment
(1) Portfolioinvestment
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2) Investment inderivatives
Inapplicable
5. Applicationof the raisedcapital
(1) Generalapplicationof theraised capital
InCNY10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Yearofraising|Wayofraising|Totalcapitalraised|Totalamountofraisedcapitalusedinthereportingperiod|Totalaccumulativeamountofraisedcapitalusedaccumulated|Totalraisedcapitalwhoseapplicationpurposehasbeenchangedinthereportingperiod|Totalaccumulativeraisedcapitalwhoseapplicationpurposehasbeenchanged|Proportionofthetotalaccumulativeraisedcapitalwhoseapplicationpurposehasbeenchanged|Totalraisedcapitalnotyetused|Applicationandstatusoftheraisedcapitalunused|Amountoftheraisedcapitalidledformorethan2years|
|2015|Non-publicissuingofA-shares|60,000|3,119.79|58,583.07|0|0|0.00%|0|Inapplicable|0|
|Total|--|60,000|3,119.79|58,583.07|0|0|0.00%|0|--|0|
|NotetoGeneralApplicationoftheRaisedCapital|||||||||||
|TheCompanyheldthe18thsessionoftheSeventhBoardofDirectorsand2014AnnualGeneralMeetingrespectivelyonApril16,2015andJune17,2015.ThemeetingsreviewedandapprovedtheProposalonthePlanforNon-publicIssuingofA-sharestotheSpecifiedInvestors,etc.,accordingtowhichtheCompanyplannedtoissueinanon-publicwayA-sharestonomorethan10(with10inclusive)specifiedinvestorswiththetotalraisedcapitalnotexceedingCNY600million,whichwouldbeappliedforfourprojects,includingtheprojectoflaunchingnewFIYTAwatchesandsupplementtheworkingcapital.Theapplicationfornon-publicissuingofA-shareswasreviewedandapprovedbyCSRCSecuritiesIssuanceExaminationCommittee(CSIEC)onOctober30,2015.OnNovember17,2015,theCompanyreceivedOfficialReplytoFIYTAHoldingsLtd.onApprovalforNon-publicIssuing(ZHENGJIANXUKE[2015]No.2588whichauthorizedtheCompanytoissuenomorethan46,911,649newsharesinnon-publicway.TheactualnumberofA-sharesactuallyissuedinthenon-publicissuingactivitywas45,977,011sharesandtheraisedcapitalamountedtoCNY599million.Afterdeductionoftheunderwritingfee,theraisedcapitalamountedtoRMB585million.Afterdeductionoftheissuingcosts,thenetraisedcapitalamountingtoCNY583millionwasremittedtothebankaccountdesignatedbytheCompanyonDecember18,2015.GrantThorntonCertifiedPublicAccountants(SpecialGeneralPartnership)issuedtheCapitalVerificationReportsZHITONGYANZI(2015)No.441ZC0653,ZHITONGYANZI(2015)No.441ZC0652respectivelyfortheraisedcapital.Uptonow,thecapitalraisedfromnon-publicissuingofA-sharesisgoingtobeappliedfortheoriginallydesignatedapplicationpurposeandthereexistsnosuchacasethattheapplicationpurposehasbeenchanged.Theconcernedfollow-upcommitmentshavebeencompletedinimplementation.|||||||||||

(2) PromisedProjectswithRaised Capital
InCNY10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Promisedinvestmentprojectsandinvestmentwith|Hastheprojectbeen|Totalpromisedinvestmen|Totalinvestmentafter|Amountinvestedduringthe|Amountaccumulatively|Investmentprogress|Datewhentheproject|Resultrealizedinthe|Hasthepredictedoperation|Hassignificantchange|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|theover-raisedcapital|changed(includingpartialchange)|t withraisedcapital|adjustment(1)|reportingperiod|investeduptotheendofthereportperiod(2)|bytheendofthereportperiod(%)(3)=(2)/(1)|hasreachedthepredictedapplicablestatus|reportingperiod|resultbeenreached?|takenplaceinthefeasibilityoftheproject?|
|Investmentprojectsaspromised|||||||||||
|1.ProjectofLaunchingNewFIYTAWatches|No|18,000|18,000|0|18,000|100.00%||0|Inapplicable|No|
|2.FIYTAE-commerceproject|No|12,000|12,000|1,523.44|12,068.85|100.00%||2,511.51|Yes|No|
|3.FIYTABrandMarketingPromotionProject|No|10,000|10,000|0|10,000|100.00%||0|Inapplicable|No|
|4.TechnicalServiceWebsiteConstructionProject|No|5,000|5,000|1,572.87|5,022.62|100.00%||254.49|Yes|No|
|5.Replenishingworkingcapital|No|15,000|15,000|23.48|13,491.6|89.94%||0|Inapplicable|No|
|Subtotalofinvestmentprojectsascommitted|--|60,000|60,000|3,119.79|58,583.07|--|--|2,766|--|--|
|Intendedinvestmentwiththeover-raisedcapital|||||||||||
|Inapplicable|||||||||||
|Subtotaloftheintendedinvestmentwiththeover-raisedcapital|--|0|0|0|0|--|--|0|--|--|
|Total|--|60,000|60,000|3,119.79|58,583.07|--|--|2,766|--|--|
|Causeoffailuretosatisfytheplanprogressorpredictedrevenueandthecause(basedonspecificproject)|Inapplicable||||||||||
|Notetothesignificantchangeinthefeasibilityofaproject|Inapplicable||||||||||
|Amount,applicationandapplicationprogressoftheover-raisedcapital|Inapplicable||||||||||
|Changeofthesiteforimplementationoftheprojectinvestedwiththe|Inapplicable||||||||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|raisedcapital||
|Adjustmentofthewayofimplementationoftheprojectinvestedwiththeraisedcapital|Inapplicable|
|Earlierinvestmentinandreplacementoftheprojectinvestedwiththeraisedcapital|TheCompanyprovidedCNY63.5839millionoftheself-raisedfundintheprojecttobeinvestedwiththeraisedcapital.Aftertheraisedcapitalwasavailablefortheproject,accordingtothespecialauditor'sreportandtheresolutionoftheBoardofDirectorsandasagreedbythesponsor,theraisedcapitalwasappliedintheprojectrespectivelyonJanuary20,2016andJanuary21,2016andtheself-raisedfundasinvestedpreviouslywasreplaced.|
|Theidledraisedcapitalusedtoreplenishworkingcapitalfortimebeing|Inapplicable|
|Amountofthebalanceoftheraisedcapitalincurredinprojectimplementationandthecause|Inapplicable|
|Applicationandstatusoftheraisedcapitalunused|EndedDecember31,2018,theCompany'sraisedfund hadbeenusedup.|
|Applicationoftheraisedcapitalandtheissuesexistingintheinformationdisclosureorotherinformation|Inapplicable|

Note:The accumulative investment with theraisedcapitalamountedto CNY 585.8307millionwhilethenetraise capital asreceivedamountedtoCNY582.9244million.ThebalancebetweenthetwoamountingtoCNY2.9063millionwasdue to that 1) the Company had invested the net interest income amounting to CNY 0.9509 million arising from the account depositoftheraisedcapitalintheprojectsinvestedwiththeraisedcapital;2)theCompanypaidtheissuingexpensesfor raisingthecapitalamountingtoCNY1.9554millionfromtheownfund.
(3) Change ofthe Projects Investedwiththe RaisedCapital
Inapplicable
VI. Sales of Significant Assets and Equity
1. Salesof Significant Assets
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
2. Salesof Significant Equity
Inapplicable
VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
ParticularsabouttheprincipalsubsidiariesandmutualshareholdingcompanieswhichmayaffecttheCompany’snetprofitbyover10%.
InCNY
||||||||||
|-|-|-|-|-|-|-|-|-|
|CompanyNames|Companytype|Principalbusiness|Registeredcapital|Totalassets|Netassets|Operatingrevenue|Operatingprofit|Netprofit|
|ShenzhenHarmonyWorldWatchesCenterCo.,Ltd.|Subsidiaries|Purchase&saleandrepairingserviceofwatchesandcomponents|600,000,000|1,525,299,380.86|771,047,827.36|2,107,171,019.37|117,994,574.06|92,675,275.97|
|FIYTASalesCo.,Ltd.|Subsidiaries|Design,R&Dandsalesofwatchesandcomponents&parts|450,000,000|742,574,904.27|401,872,117.88|1,027,778,790.49|-13,350,224.65|-10,380,652.52|
|ShenzhenFIYTASophisticatedTimepiecesManufactureCo.,Ltd.|Subsidiaries|Manufactureandproductionofwatchesandcomponents|10,000,000|199,287,290.22|126,817,895.59|391,743,894.54|92,231,635.04|79,917,680.30|
|ShenzhenFIYTATechnologyDevelopmentCo.,Ltd.|Subsidiaries|Productionandmachiningofsophisticatedcomponentsandparts|10,000,000|93,175,666.69|66,854,230.98|107,109,049.70|7,673,840.30|7,552,309.14|
|FIYTA(HongKong)Limited|Subsidiaries|Tradingofwatchesandaccessoriesandinvestment|137,737,520|250,553,071.46|166,857,380.72|127,815,302.37|-9,991,088.62|-13,926,872.13|
|ShiyuehuiBoutique(Shenzhen)Co.,Ltd.|Subsidiaries|Design,R&Dandsalesofwatchesandcomponents&|5,000,000|20,074,338.88|-3,792,098.52|27,288,251.21|217,825.72|-252,234.02|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||||
|-|-|-|-|-|-|-|-|-|
|||parts|||||||
|LiaoningHengdaruiCommerce&TradeCo.,Ltd.|Subsidiaries|Purchase&saleofwatchesandcomponents&parts|51,000,000|143,835,959.26|40,062,997.77|9,111,983.83|1,220,621.29|914,215.97|
|HarbinHarmonyWorldWatchDistributionCo.,Ltd.|Subsidiaries|Purchase&saleofwatchesandcomponents&parts|500,000|14,804,401.11|3,632,411.43|38,734,268.74|196,739.56|66,430.83|
|EmileChouriet(Shenzhen)Limited|Subsidiaries|Design,R&Dandsalesofwatchesandcomponents&parts|41,355,200|126,442,604.19|62,866,037.60|107,143,080.33|1,885,427.05|1,361,927.90|
|ShanghaiWatchIndustryCo.,Ltd.|Mutualshareholdingcompany|Productionandsalesofwatchesandcomponents&parts|15,350,000|115,360,493.17|104,526,575.69|97,282,978.95|4,487,189.00|4,006,180.22|

Subsidiariesacquiredanddisposedinthereportingperiod
Inapplicable
Notetotheprincipalmutualshareholdingcompanies
Inapplicable
VIII. Structurized Entities Controlled by the Company
Inapplicable
IX. Development Prospect
I.DevelopmentTrendoftheIndustry
In 2019, the situation that the domestic economic growth may further slow down and there may exist uncertainty in the consumer market shall become “the new normal”; superposition of such technologies as Internet of Things, AI, communication, etc. shall further promote transformation of the commercial ecology and watch industry shall still be confronted with various challenges. On the other hand, however, in the long run, benefited by growth of the people's disposable income, rise of middle class and rise of high quality consumption demand, the medium- and high-end consumergoodsshallenterthefasttrafficlaneofdevelopment.Thefavorablepolicies,suchasthepreferentialpoliciesof
adjustmentofcustomsduties,taxreduction,tobeintroduced,shallbeexpectabletospeedupthisprogress.Inaddition,
with rise of China's comprehensive strength,consumers’ recognition of excellent home-made brands and the products
which can be better integrated in China's traditional culture shall be quickly raised. In a word, in 2019, the Chinese
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
consumer market shall breed and prompt more development opportunities. The domestic watch market shall present a situationofgeneralstabilitywithconstantgrowthofthemedium-andhigh-endmarket.
II.DevelopmentStrategy
The Company takes “to create quality life” as its mission, focuses on watch business, insists on brand strategy and persists in innovation and development, and devotes itself to build the Company into a “leading internationalized watch brandenterprise”andcreatesatisfactoryvaluereturnforitsshareholders.
III.KeyWorkin2019
In2019,theCompanyshall,centeringonleanoperationofthetwoprincipalcorebusinesses-watchbrandmanagement andwatchretailservices,ensurestablegrowthoftheCompany'sbusinessperformances.Thekeyworkissummarizedas follows:
1.Complywiththeconsumptionupgradingtrend,continuetocarryforwardthebrandupgradingworkwithFIYTABradas thecore, speedupdevelopment ofthebrands,includingFIYTA,EmileChouriet,JONAS&VERUS, JEEP,BEIJING, etc., consolidatethecompetitionsuperiorityandimprovethesegmentedmarketshareandbrandinfluence.
2. Seize thegrowth opportunityof medium-andhigh-endbrands,carryforward channelupgradingwithHarmonyasthe core and service upgrading, speed up optimization and development of the watch retail services of HARMONY and BRAND GALLERY, continuously improve the channel operation efficiency, stabilize the position of HARMONY in the industryandimprovethechannelinfluenceofBRANDGALLERY.
3. Quickly integrate modern information technology, speed up promoton of whole-channel integration development and intelligentretailworkandconstruct“BigData”ofbrandoperationmanagement.
4. Continue to explore integration of the Internet of Things,AI technology and communication technology with modern watchindustryandspeedupbusinessinnovationdevelopmentofsmartwatches,etc.
IV.CapitalNecessaryforFutureDevelopment
According to the Company's business development plan and financial budget planning in 2019 and for the purpose of satisfying the demand on investment and operation capital and at the same time timely seizing the development opportunity possibly brought about from the market change, the Company plans to apply for financing credit line with amountnotexceedingCNY900millionbyvariousmeans,includingcredit,guarantee,loantosubsidiaries,mortgage,etc. in2019.
V.RisksPossiblytobeConfrontedwith
1.In2019,itisnotoptimisticforgrowthofmacro-economyandtheconsumptionconfidenceisstillinprocessofrecovery, which may cause the consumers to be more cautious in shopping, and consumer discretionary industry may be confrontedwithgrowthpressure.
2.Youngconsumergroup'sdemandtendstobepersonalizedanddiversifiedanditismoredifficulttofocuswhatbrands consumers may choose. The industrial competition and fighting for seizing consumers among various brands shall becomemorefierce.
3. Great change may take place in off-line shopping environment due to quick development of shopping center and it
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
would be more difficult to guide flow for off-line sales channels; online costs and expenses increase constantly and the performanceofonlinechannelsmaybeaffected.
4.Thereexistsbigdifferenceinproductfeatures,operationmodelandinvestmentbetweensmartwatchesandtraditional watches.TheCompanyshallberequiredtohave higherresourcesintegrationcapability,investmentinkeytechnologies andtalentsreserve.
X. Statement of Such Activities as Reception of Survey, Communications, Interview, etc.
1. RegistrationForm of the Activities, such as Reception of Survey, Communications, Interviews, etc.in theReportingPeriod
||||||
|-|-|-|-|-|
|Receptiontime|Wayofreception||Typesofvisitorsreceived|Indexofbasicinformationofsurvey|
|January11,2018|Fieldsurvey||Institution|http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForSzse.do?stockcode=000026|
|January23,2018|Fieldsurvey||Institution|http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForSzse.do?stockcode=000026|
|March22,2018|Fieldsurvey||Institution|http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForSzse.do?stockcode=000026|
|October23,2018|Fieldsurvey||Institution|http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForSzse.do?stockcode=000026|
|Numberofreception||4|||
|Numberofinstitutionsreceived||25|||
|Numberofpersonsreceived||28|||
|Numberofothervisitorsreceived||0|||
|Isthereanyimportantinformationdisclosed,revealedorleakedtothepublic?||No|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 5 Significant Events
I.ProfitDistributionforCommonStockandConversionofCapitalReserveintoShareCapital
Preparation,ImplementationorAdjustmentofthePolicyforCommonStockProfitDistribution,EspeciallythePolicyfor CashDividendDistribution
TheCompany's2017 ProfitDistributionPlanwasreviewedandapprovedatthe24thsessionoftheEighthBoardof DirectorsheldonMarch8,2018and2017AnnualGeneralMeetingheldonJune21,2018.ItwasresolvedthatwiththeCompany’stotalsharecapitalof438,744,881sharesasatDecember31,2017asthebase,theCompanywoulddistribute cashdividendattherateofCNY2.00forevery10shares(withtaxinclusive),bonusshareattherateof0shareforevery 10shares(withtaxinclusive)tothewholeshareholdersandcapitalizenocapitalreservetothewholeshareholders.The implementationoftheprofitdistributionplanwasfinishedonAugust1,2018.Forthedetail,refertotheAnnouncementon ImplementationoftheProfitDistributionforYear2017(2018-014).
|||
|-|-|
|SpecialNotetoCashDividendDistributionPolicy||
|DoesitcomplywiththeArticlesofAssociationortheresolutionoftheGeneralMeeting?|Yes|
|Aretheprofitdistributioncriteriaandproportionsdefiniteandclear?|Yes|
|Aretherelevantdecision-makingprocessandmechanismcomplete?|Yes|
|Doindependentdirectorsdotheirbestinperformingtheirdutiesandbringtheirdutiesintodueplay?|Yes|
|Dominorityshareholdershaveopportunitytomakefullexpressionoftheiropinionsandappeal?Havetheirlawfulrightsandinterestsbeenfullyprotected?|Yes|
|Incaseofadjustmentorvariationofthecashdividenddistributionpolicy,dotheconditionsandprocedurescomplywiththeregulationsandtransparent?|Inapplicable|

Theprofitdistributionplanorproposalandthepreplanorproposalofconversionofthecapitalreserveintosharecapitalin thepastthreeyears(withthereportingperiodinclusive):
AccordingtotheprovisionsconcerningcashdividenddistributionintheArticlesofAssociation,theCompanypreparedspecificcashdividenddistributionplanaftertheBoardofDirectorsandtheShareholders’GeneralMeetinghavereviewed strictlyaccordingtotherequirements.Inthepastthreeyears,theCompanyhaswellimplementedthecashdividenddistributionpolicy,fullyaskedfortheindependentdirectors’opinions,effectivelyensuredtheminorityshareholders’benefit andmadetimelyandaccuratedisclosureinitsannualreportandtherelevantmedia.
ProfitDistributionPlanin2016:Withthetotalsharecapitalof438,744,881sharesasatDecember31,2016asthebase,
theCompanyisgoingtodistributetothewholeshareholderscashdividendatCNY1.00forevery10shares(withtax
inclusive),0bonusshareforevery10shares;convertednoreserveintosharecapital.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
ProfitDistributionPlanin2017:Withthetotalsharecapitalof438,744,881sharesasat December31,2017asthebase, theCompanyisgoingtodistributetothewholeshareholderscashdividendatCNY2.00forevery10shares(withtax inclusive),0bonusshareforevery10shares;convertednoreserveintosharecapital.
ProfitDistributionPlanin2018:Withthetotalsharecapitalof438,744,881sharesasat December31,2018asthebase, theCompanyisgoingtodistributetothewholeshareholderscashdividendatCNY2.00forevery10shares(withtax inclusive),0bonusshareforevery10shares;convertednoreserveintosharecapital.
Theaccumulativeamountofcashdividenddistributedinthepastthreeyearstook151.39%oftheannualaveragenet profitinthepastthreeyears,whichcomplieswiththerulesandregulations.
Statementofcashdividendsdistributedinthepastthreeyears(withthereportingperiodinclusive)
InCNY
|||||||||
|-|-|-|-|-|-|-|-|
|YearofDividendDistribution|AmountofCashDividend(includingtax)|NetprofitattributabletotheCompany’sshareholdersintheconsolidatedstatementsoftheyearofdividenddistribution|RatioofthenetprofitattributabletotheCompany’sshareholderstakenintheconsolidatedstatements|Amountofcashdividenddistributedinotherway(s)(suchassharesrepurchased)|Proportionofthecashdividenddistributedinotherway(s)inthenetprofitattributabletotheCompany’sshareholdersofordinarysharesintheconsolidatedstatements|Totalamountofcashdividend(includingotherway(s))|Ratioofthetotalamountofcashdividend(includingotherway(s))inthenetprofitattributabletotheCompany’sshareholdersofordinarysharesintheconsolidatedstatements|
|2018|87,748,976.20|183,835,095.29|47.73%|0.00|0.00%|87,748,976.20|47.73%|
|2017|87,748,976.20|140,216,258.28|62.58%|0.00|0.00%|87,748,976.20|62.58%|
|2016|43,874,488.10|110,662,681.59|39.65%|0.00|0.00%|43,874,488.10|39.65%|

Inthereportingperiod,boththeCompany’sprofitandtheparentcompany’sprofitavailableforshareholdersofordinary shareswerepositivebutnocommonstockcashdividenddistributionproposalhasbeenputforward.
Inapplicable
II.PreplanforProfitDistributionandConversionofCapitalReserveintoShareCapitalintheReportingPeriod
|||
|-|-|
|Bonussharesdistributedattherateof___ (share)forevery10shares|0|
|DividenddistributedattherateofCNY___forevery10shares(withtaxinclusive)|2.00|
|Numberofsharesconvertedforevery10shares(shares)|0|
|Sharecapitalbaseforthedividenddistributionpreplan(shares)|438,744,881|
|Totalcashdividenddistributed(withtaxinclusive)|87,748,976.20|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Amountofcashdividenddistributedinotherway(s)(suchassharesrepurchased)|0.00|
|Totalamountofcashdividend(includingotherway(s))|87,748,976.20|
|Profitavailablefordistribution(CNY)|683,798,086.83|
|Proportionofthecashdividendinthetotalprofitavailablefordistribution(%)|100%|
|CashDividendDistributionfortheReportingYear||
|Others||
|Detailedinformationforprofitdistributionorconversionofcapitalreserveintosharecapitalpreplan||
|TheCompany's2018 ProfitDistributionPlanwasreviewedandapprovedatthe6thsessionoftheNinthBoardofDirectorsheldonMarch13,2019andbroughtto2018AnnualGeneralMeetingforreview.ItwasplannedthatwiththeCompany’stotalsharecapitalof438,744,881sharesasatDecember31,2018asthebase,theCompanywoulddistributecashdividendattherateofCNY2.00forevery10shares(withtaxinclusive),bonusshareattherateof0shareforevery10shares(withtaxinclusive)tothewholeshareholdersandcapitalizenocapitalreservetothewholeshareholders.TheprofitdistributionplanissubjecttoreviewandapprovaloftheGeneralMeetingbeforeimplementation.||

III. Implementation of Commitments
1. Commitments finished in implementation by the Company, shareholders, actual controller, acquirer, directors,supervisors, senior executives or other related parties inthe reporting period andcommitmentsunfinished inimplementationat theendof thereportingperiod
||||||||
|-|-|-|-|-|-|-|
|Commitments|Promiser|Commitmenttype|Description|Commitmenttime|Commitmentdeadline|Implementationstatus|
|CommitmentforEquitySeparationReform|||||||
|Commitmentsintheacquisitionreportorthewrittenreportonchangeofequity|||||||
|Commitmentmadeatthetimeofassetreorganization|||||||
|CommitmentmadeatIPOorre-financing|||||||
|Equityincentivecommitment|||||||
|Othercommitmentstotheminorityshareholders|HuangYongfeng,ChenLibin,LuBingqiang,LuWanjun,LiuXiaoming,PanBo,LiMing,ChenZhuo|Commitmentforsalesrestrictiononshares|ThesaiddirectorsandseniorexecutivesincreasedholdingoftheCompany'ssharesandcommittedthatwithinsix|December16,2017|6months|Completedinimplementation|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|||monthsoftheincreasetheyshallnotreducetheholdingsizeinitiatively,shallnotbeengagedinanyinsidetrading,tradingthesharesduringsensitiveperiodorshortswingtrading.|
|Hasthecommitmentbeentimelyimplemented|Yes||
|Ifthecommitmenthasnotbeenimplementedattheendofthereportingperiod,itisnecessarytoexplainthespecificreasonoffailureinimplementationandthefutureworkplan.|Inapplicable||

2. There existed profit anticipation for theCompany’s assets or projects while the reporting period was still within the durationof the profit anticipation. The Company made explanation on whether the assets or projects reachedtheanticipatedprofitandthecause
Inapplicable
IV.Non-operationalOccupancyoftheCompany’sCapitalbytheControllingShareholderanditsRelatedParties Inapplicable
V. Explanation of the Board of Directors, the Supervisory Committee and Independent Directors (if any) on the“QualifiedAuditor’sReport”issuedbytheCPAsintheReportingPeriod
Inapplicable
VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and Accounting Method in ComparisonwiththeFinancialReportofthePreviousYear
Inapplicable
VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period Necessary to be Restated Retrospectively
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
VIII.Explanationon theChangesinthe Scope oftheConsolidatedStatements inComparisonwiththeFinancial ReportofthePreviousYear
Inapplicable
IX.Engagement/DisengagementofCPAs
CPAscurrentlyengagedbytheCompany
|||
|-|-|
|NameofthedomesticCPAs|RuihuaCertifiedPublicAccountants(SpecialGeneralPartnership)|
|SuccessiveyearsofthedomesticCPAsofferingauditingservices|3|
|NameofthecertifiedpublicaccountantsfromthedomesticCPAs|WangYuqiaoandLiuXin|
|SuccessiveyearsofthedomesticCPAsofferingauditingservices|3|

HastheCPAsbeenchangedforthereportingperiod?
No
EmploymentofCPAs,financialconsultantorsponsorforauditingtheinternalcontrol
The24thSessionoftheEighthBoardofDirectorsheldonMarch8,2018and2017AnnualGeneralMeetingheldonJune 21,2018reviewedandapprovedtheProposalforPaymentoftheAuditingFeeofYear2017andEngagementoftheCPAs astheAuditorofYear2018,anddecidedtorenewRuihuaCertifiedPublicAccountants(SpecialGeneralPartnership)as the Company'sAuditor for auditing the Company's 2018 Financial Report and Internal Control for a term of one year. During the reporting period, the Company paid the audit fee amounting to CNY 700,000.00 to Ruihua Certified Public Accountants (SpecialGeneral Partnership) for auditing the financial report and CNY300,000.00 for auditing the internal control.
X.ListingSuspensionorDelistingPossiblytobeConfrontedwithafterDisclosureoftheAnnualReport
Inapplicable
XI.MattersconcerningBankruptcyReorganization
Inapplicable
XII.SignificantLawsuitsandArbitrations
Inapplicable
XIII.PenaltyandRectification
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
XIV.IntegrityoftheCompanyanditsControllingShareholderandActualController
Inapplicable
XV.ImplementationoftheCompany’sEquityIncentivePlan,EmployeeStockOwnershipPlanorotherEmployee IncentiveMeasures
The3rdsessionoftheNinthBoardofDirectorsheldonNovember12,2018and20191stExtraordinaryGeneralMeeting heldonJanuary11,2019decidedtostart2018A-ShareRestrictiveStockIncentiveProgram(PhaseI),whichwaslateron reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Companyeventuallygranted4.224millionrestrictiveA-sharesto128personseligiblefortheincentive。 Forthedetail,refertothe relevant announcement disclosed in the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on January12,2019.
ThispartofA-sharerestrictivestockwasallgrantedandregisteredforlistingbyJanuary31,2019.
XVI.SignificantRelatedTransactions
1.RelatedTransactionsRelatedwithDay-to-DayOperations
Inapplicable
2.Relatedtransactionsconcerningacquisitionandsalesofassetsorequity
Inapplicable
3.Relatedtransactionsconcerningjointinvestmentinforeigncountries
Inapplicable
4.CurrentAssociatedRightsofCreditandLiabilities
Inapplicable
5.OtherSignificantRelatedTransactions
The4thsessionoftheNinthBoardofDirectorsheldonDecember25,2018and20191stExtraordinaryGeneralMeeting held on January 11, 2019 reviewed and approved the Proposal for Conclusion of the Financial ServiceAgreement with AVICFinanceCo.,Ltd.,anddecidedtoterminatetheoriginalagreementwithAVICFinanceCo.,Ltd.andconcludeanew FinanceServiceAgreement.Forthedetail,refertotheAnnouncementontheResolutionofthe4thSessionof theNinth Board of Directors No. 2018-029, Announcement on the Conclusion of the Financial Service Agreement with AVIC Finance Co., Ltd. - RelatedTransaction No. 2018-031 andAnnouncement of the Resolution of 2019 1st Extraordinary GeneralMeeting No.2019-008).
Inquiryonthewebsitefordisclosingtheprovisionalreportconcerningsignificantrelatedtransactions
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Descriptionoftheprovisionalannouncements|Dateofdisclosure|Disclosurewebsite|
|AnnouncementontheResolutionofthe4thSessionoftheNinthBoardofDirectors,2018-029|December27,2018|www.cninfo.com.cn|
|AnnouncementontheFinancialServiceAgreementwithAVICFinanceCo.,Ltd.aRelatedTransaction,2018-031|December27,2018|www.cninfo.com.cn|
|AnnouncementonResolutionof20191stExtraordinaryGeneralMeeting2019-008|January12,2019|www.cninfo.com.cn|

XVII.ImportantContractsandImplementation
1.Custody,ContactingandLeases
(1)Custody
Inapplicable
(2)Contracting
Inapplicable
(3)Leases
Inapplicable
2.SignificantGuarantees
(1)Guarantees
InCNY10,000
||||||||||
|-|-|-|-|-|-|-|-|-|
|OutwardguaranteesOfferedbytheCompanyanditsSubsidiaries (excludingguaranteetothesubsidiaries)|||||||||
|NamesofGuarantees|Dateoftheannouncementontheguaranteeline|Guaranteeline|Dateofoccurrence|Actualamountofguarantee|Typeofguarantee|Guaranteeperiod|Implementationstatus|Guaranteetorelatedparty?|
|Inapplicable|||||||||
|Totalamountofoutwardguaranteeapprovedinthereportperiod(A1)||0||Totalamountofoutwardguaranteeactuallyincurredinthe||0|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||reportperiod(A2)|||||
|Totalamountofoutwardguaranteealreadyapprovedattheendofthereportperiod(A3)||0||Totalendingbalanceofoutwardguaranteeattheendofthereportperiod(A4)||0|||
|Guaranteetothesubsidiaries|||||||||
|NamesofGuarantees|Dateoftheannouncementontheguaranteeline|Guaranteeline|Dateofoccurrence|Actualamountofguarantee|Typeofguarantee|Guaranteeperiod|Implementationstatus|Guaranteetorelatedparty?|
|Harmony|March10,2018|20,000|December30,2018|8,000|Guaranteewithjointresponsibility|1year|No|No|
|theHongKongCo.|March10,2018|7,016.8|April26,2018|2,631.3|Guaranteewithjointresponsibility|1year|No|No|
|theHongKongCo.|March10,2018|3,508.4|September10,2018|348.67|Guaranteewithjointresponsibility|1year|No|No|
|theHongKongCo.|March10,2018|0|October15,2018|557.86|Guaranteewithjointresponsibility|1year|No|No|
|theHongKongCo.|March10,2018|0|November13,2018|418.4|Guaranteewithjointresponsibility|1year|No|No|
|theHongKongCo.|March10,2018|0|November27,2018|263.13|Guaranteewithjointresponsibility|1year|No|No|
|Totalguaranteequotatothesubsidiariesapprovedinthereportingperiod(B1)||30,525.2||Totalamountofguaranteetothesubsidiariesactuallyincurredinthereportingperiod(B2)||12,219.36|||
|Totalguaranteequotatothesubsidiariesapprovedattheendofthereportingperiod(B3)||30,525.2||Totalbalanceofactualguaranteetothesubsidiariesattheendofthereportingperiod(B4)||12,219.36|||
|Guaranteeamongthesubsidiaries|||||||||
|NamesofGuarantees|Dateoftheannouncementontheguaranteeline|Guaranteeline|Dateofoccurrence|Actualamountofguarantee|Typeofguarantee|Guaranteeperiod|Implementationstatus|Guaranteetorelatedparty?|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|Inapplicable||||
|Totalguaranteequotatothesubsidiariesapprovedinthereportingperiod(C1)|0|Totalamountofguaranteetothesubsidiariesactuallyincurredinthereportingperiod(C2)|0|
|Totalguaranteequotatothesubsidiariesapprovedattheendofthereportingperiod(C3)|0|Totalbalanceofactualguaranteetothesubsidiariesattheendofthereportingperiod(C4)|0|
|Totalamountofguarantees(i.e.Totalofthepreviousthreemajoritems)||||
|Totalguaranteequotatothesubsidiariesapprovedinthereportingperiod (A1)|30,525.2|Totalamountofoutwardguaranteeactuallyincurredinthereportperiod(A2)|12,219.36|
|Totalamountofguaranteesalreadyapprovedattheendofthereportperiod(A3)|30,525.2|Totalendingbalanceofguaranteesattheendofthereportperiod(A4)|12,219.36|
|ProportionoftheactualguaranteesintheCompany’snetassets(namelyA4+B4+C4)||4.75%||
|Including:||||
|Amountofguaranteesofferedtotheshareholders,actualcontrolleranditsrelatedparties(D)||0||
|Amountofguaranteeforliabilitiesdirectlyorindirectlyofferedtotheguaranteeswiththeasset-liabilityratioexceeding70%(E)||0||
|Guaranteewithtotalamountexceeding50%ofthenetassets(F)||0||
|Totalamountoftheaforesaidthreeguarantees(D+E+F)||0||
|Fortheguaranteenotyetdue,guaranteeresponsibilityincurredinthereportingperiodordescriptionofthepossiblerelateddischargeduty(ifany)||Inapplicable||
|Notetotheoutwardguaranteeagainsttheestablishedprocedures(ifany)||Inapplicable||

Descriptionoftheguaranteewithcomplexmethod
Inapplicable
(2) Outwardguaranteeagainst regulations
Inapplicable
3. EntrustingaThirdPartytoManagethe CashAssets
(1) FinanceManagement on Commission
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2)EntrustedLoan
Inapplicable
4.OtherImportantContracts
Inapplicable
XVIIISocialResponsibilities
1.Implementationofsocialresponsibilities
"TheSocialResponsibilityReport"waspublishedonwww.cninfo.com.cnonMarch15,2019.
2.Implementationofthesocialresponsibilityofprecisepovertyrelief
Duringthereportingperiodofhalfayear,theCompanyhadneitherprecisepovertyreliefworknorfollow-upprecise povertyreliefplannecessarytobecarriedout.
3.EnvironmentalProtection
DoestheCompanyoranyofitssubsidiariesbelongtoakeypollutantdischargingunitasannouncedtothepublicbythe environmentalprotectionauthority?
Yes
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|NameoftheCompanyoritsSubsidiary|Descriptionofthemajorpollutantsorspecificpollutant|Wayofdischarging|Numberofdischargingoutlets|Distributionofthedischargingoutlets|Dischargingconcentration|PollutantDischargeStandardsinForce|Totaldischargevolume|Totaldischargevolumeverified|Over-discharging|
|ShanghaiWatchIndustryCo.,Ltd.|Nickelandchromiumeffluent|Intermittentandinterruption|1|Attheportofeffluenttreatmentequipment|Nickel﹤0.01,|Nickel:0.1;chromium:0.3|2640tons/year|3960tons/year|None|

Constructionandoperationofthepollutionpreventionandcontrolfacilities
ShanghaiWatchCo.,Ltd.reconstructedthecleanproductionfacilityin2016andadded2setsofequipmentin2018for thepurposeofensuringdischargingofnickelandchromiumeffluenttocomplywiththeEmissionStandardofPollutants forElectroplatingduring2018.Sofar,thefacilityhasbeenrunningnormallyandhasneverover-dischargedthepollutants; andhasnownetworkedtheplatformofthelocalenvironmentalprotectionauthority.
Environmentalimpactassessmentonconstructionprojectsandotherenvironmentalprotectionadministrativelicensing
In2018YangpuDistrictEnvironmentalProtectionBureauofShanghaiorganizedandheldtheCleanProductionAuditing
andAssessmentSeminarofShanghaiWatchCo.,Ltd.wherethecompany'scleanproductionworkwasassessed,
auditedandapproved.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Shanghai Watch Co., Ltd.has passed the pollution discharge verification organized by Yangpu District Environmental Protection Bureau of Shanghai with the Notice of Pollution Discharging Verification No.:YANG HUAN JIAN HUAN JIANFEIHEZI[2007]No.05363;
In accordance with the provisions of Shanghai Environmental Protection Bureau, the Company is going to apply for the pollutantdischarginglicencebeforetheendof2019.Atpresent,thecompanyismakingtherelevantpreparationworkfor applicationforthepollutantdischarginglicence.
ContingencyPlanforEmergentEnvironmentalIncidents
Shanghai Watch Co., Ltd. prepared the Emergency Response Plan against Emergent Environmental Incidents and regularly organizes training and exercise every year. The aforesaid plan has been approved and filed for record by YangpuDistrictEnvironmentalProtectionBureauofShanghaiandhasbeenpublishedontheEnvironmentalInformation DisclosurePlatformofEnterprisesandInstitutionsofShanghai.
EnvironmentSelf-MonitoringProgram
Yangpu District Environmental Protection Bureau of Shanghai conducts supervision once every quarter. The company entrusts Shanghai Light Industry Environment Protection and Pressure Vessel Monitoring General Station, a competent independentagent,toconductthemonitoringeveryyear.Thecompanyisitselfequippedwithmonitoringinstrumentsand conductsself-monitoringatleast4timeseverymonth.
Otherenvironmentinformationnecessarytobedisclosed
The company has disclosed the concerned information on the Environmental Information Disclosure Platform of Enterprises and Institutions of Shanghai according to the requirements of the local environmental protection authorities. Website:http://xxgk.eic.sh.cn
Otherinformationinconnectionwiththeenvironmentalprotection
None
XIX.NotestoOtherSignificantEvents
1.AmendmentoftheArticlesofAssociation
The26thSessionoftheEighthBoardofDirectorsheldonAugust21,2018and20182ndExtraordinaryGeneralMeeting held onSeptember 11, 2018reviewed andapproved theProposal onAmendment of theArticlesofAssociation. For the detail, refer to theAnnouncement onthe Resolution of the 26th Session of the Eighth Board of DirectorsNo. 2018-015, the Announcement on the Resolution of 2018 2nd Extraordinary General Meeting No. 2018-021 and the Proposal on Amendment of the Articles of Association disclosed on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
2.ElectionfortheNewBoardofDirectorsandtheNewSupervisoryCommittee
The26thSessionoftheEighthBoardofDirectorsheldonAugust21,2018and20182ndExtraordinaryGeneralMeeting held on September 11, 2018 reviewed and approved the Proposal on Election for the New Board of Directors and Nomination of on-independent Director Candidates and the Proposal on Election for the New Board of Directors and
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Nomination of Independent Director Candidates. Mr. Huang Yongfeng, Mr. Wang Mingchuan, Mr. Fu Debin, Mr. Xiao Zhanglin,Mr.WangBo,Mr.ChenLibinwereelectednon-independentdirectorsoftheNinthBoardofDirectors;Mr.Wang Jianxin,Mr.ZhongHongmingandMr.TangXiaofeiwereelectedindependentdirectorsoftheNinthBoardofDirectors.For thedetail,refertotheAnnouncementontheResolutionofthe26thSessionoftheEighthBoardofDirectorsNo.2018-015, the Announcement on the Resolution of 2018 2nd Extraordinary General Meeting No. 2018-021 disclosed on the SecuritiesTimes,HongKongCommercialDailyandwww.cninfo.com.cn.
The 19th Session of theSupervisory Committee held onAugust 21,2018 and 2018 2nd Extraordinary General Meeting heldonSeptember11,2018reviewedandapprovedtheProposalonElectionfortheNewSupervisoryBoard;Mr.Wang Baoyingwaselectednon-staffsupervisoroftheNinthSupervisoryCommittee.Forthedetail,refertotheAnnouncement on the Resolution of the Ninth Supervisory Committee No. 2018-016 and theAnnouncement on the Resolution of 2018 2nd Extraordinary General Meeting No. 2018-021 disclosed on the Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.
2018 Staff Representative Congress held on August 30, 2018 reviewed and approved the Proposal on Election of the Staff Representative Supervisors of the Ninth Supervisory Committee; Madam Sheng Qing and Mr. Zou Zhixiang were elected staff representative supervisors the Ninth Supervisory Committee. For the detail, refer to theAnnouncement on the Resolution of the Staff Representative Congress No. 2018-019 disclosed on the Securities Times, Hong Kong CommercialDailyandwww.cninfo.com.cn.
XX.SignificantEventsoftheCompany'sSubsidiaries
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 6 Change of Shares and Particulars about Shareholders
I.ChangeofShares
1.ChangeofShares
Inshares
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Beforethechange||Increase/Decrease(+/-)|||||Afterthechange||
||Quantity|Proportion|Newissuing|Bonusshares|Sharesconvertedfromreserve|Others|Sub-total|Quantity|Proportion|
|I.Restrictedshares|380,513|0.09%|||||0|380,513|0.09%|
|1.Sharesheldbythestate|0|0.00%|||||0|0|0.00%|
|2.Statecorporateshares|0|0.00%|||||0|0|0.00%|
|3.Otherdomesticshares|380,513|0.09%|||||0|380,513|0.09%|
|Including:Domesticcorporateshares|0|0.00%|||||0|0|0.00%|
|Sharesheldbydomesticnaturalpersons|380,513|0.09%|||||0|380,513|0.09%|
|4、Foreigninvestedshares|0|0.00%|||||0|0|0.00%|
|Including:Foreigncorporateshares|0|0.00%|||||0|0|0.00%|
|Sharesheldbyforeignnaturalpersons|0|0.00%|||||0|0|0.00%|
|II.Unrestrictedshares|438,364,368|99.91%|||||0|438,364,368|99.91%|
|1.CNYordinaryshares|356,716,368|81.30%|||||0|356,716,368|81.30%|
|2.ForeigninvestedshareslistedinMainlandChina|81,648,000|18.61%|||||0|81,648,000|18.61%|
|3、Foreigninvestedshareslistedabroad|0|0.00%|||||0|0|0.00%|
|4.Miscelleneous|0|0.00%|||||0|0|0.00%|
|III.Totalshares|438,744,881|100.00%|||||0|438,744,881|100.00%|

Causeofthechangeofshares
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
ApprovalofChangeoftheShares
Inapplicable
TransferoftheSharesChanged
Inapplicable
Progressofimplementationofthestockrepurchase
Inapplicable
Progressofimplementationof reductionoftheholdingsizeofthesharesrepurchasedbycentralizedbidding
Inapplicable
Influence of thechangeof theshares uponsuch financialindicatorsas thebasic EPS anddilutedEPS, net assetvalue pershareattributabletothecommonstockholdersinthepastyearandthelatestperiod
Inapplicable
OtherinformationtheCompanyconsidersnecessaryorrequiredbythesecuritiesregulatoryauthoritytobedisclosed. The3rdsessionoftheNinthBoardofDirectorsheldonNovember12,2018and20191stExtraordinaryGeneralMeeting heldonJanuary11,2019decidedtostart2018A-ShareRestrictiveStockIncentiveProgram(PhaseI),whichwaslateron reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company eventuallygranted4.224millionrestrictiveA-sharesto128personseligiblefortheincentive。 The dateofgrantingthis partofrestrictiveshareswasJanuary11,2019(Thelock-upperiodoftheserestrictiveshareswastwoyearscommencing fromthedateofgranting).ByJanuary302019,theworkofgrantingthesharesandregistrationforlistingwascompleted. Afterthesharegranting,theCompany'stotalcapitalstockincreasedto442,968,881shares.
2.ChangeoftheRestrictedShares
Inapplicable
II.IssuingandListing
1.Issuingofsecurities(withpreferredstockexclusive)inthereportingperiod
Inapplicable
2. Note to changes of thecompany’s total shares and the structure of shareholders as well as the structure of assetsandliabilities
Inapplicable
3.ExistingEmployeeShares
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
III.ShareholdersandActualControllingShareholder
1.NumberofShareholdersandShareholding
Inshares
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Totalcommonshareholdersattheendofthereportingperiod|31,855||Totalcommonshareholdersattheendofthemonthbefore thedateofdisclosingtheannualreport||31,352||Totalpreferenceshareholderswiththevotingpowerrecoveredattheendofthereportingperiod(ifany)(RefertoNote8)|||0||TotalpreferenceshareholderswiththevotingpowerrecoveredattheendofthemonthbeforethedayofdisclosingtheAnnualReport(ifany)(RefertoNote8)||0|
|Sharesheldbytheshareholdersholdingover5%sharesorthetoptenshareholders|||||||||||||||
|NameoftheShareholder||Natureoftheshareholder||Shareholdingproportion|Numberofsharesheldattheendofthereportingperiod|Increase/decreaseinthereportingperiod||Numberoftherestrictedsharesheld|Quantityofunrestrictedsharesheld||Pledgingorfreezing||||
||||||||||||Statusoftheshares||Quantity||
|AVICInternationalHoldingLimited||Statecorporate||37.15%|162,977,327|0||0|162,977,327||||||
|ChongqingInternationalTrustCo.,Ltd.-YUXINNo.2Trust||Domesticnaturalpersons||4.19%|18,389,227|6,904,000||0|18,389,227||||||
|MoJiadong||Domesticnaturalpersons||2.90%|12,703,968|12,703,968||0|12,703,968||||||
|#YangZugui||Domesticnaturalpersons||2.52%|11,069,727|1,568,758||0|11,069,727||||||
|NationalSocialSecurityFund114Portfolio||Statecorporate||2.20%|9,657,744|0||0|9,657,744||||||
|XizangInvestmentCo.,Ltd.||Statecorporate||1.13%|4,976,551|0||0|4,976,551||||||
|MANULIFETEDAFund－ MinshengBank－MANULIFE||Domesticnon-state-ownedcorporate||1.12%|4,893,559|0||0|4,893,559||||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||||||
|-|-|-|-|-|-|-|-|-|
|TEDAValueGrowthOrientedAdditionalIssueNo.351AssetsManagementProgram|||||||||
|ShenzhenHeliFengyuanCommerce&TradeCo.,Ltd.|Domesticnon-state-ownedcorporate|0.62%|2,704,000|-596,000|0|2,704,000|||
|ShenzhenRongliyuanCommercialInformationCo.,Ltd.|Domesticnon-state-ownedcorporate|0.37%|1,630,500|1,030,500|0|1,630,500|||
|ChinaConstructionBankCo.,Ltd.-INVESCOGREATWALLQuantizedSelectedStockTypeSecuritiesInvestmentFund|Domesticnon-state-ownedcorporate|0.31%|1,376,533|-1,531,100|0|1,376,533|||
|Aboutthefactthatastrategicinvestororordinarycorporatebecameoneofthetoptenshareholdersduetoplacementofnewshares(ifany)(RefertoNote3)||Inapplicable|||||||
|Explanationonassociatedrelationshiporconsistentactionoftheaboveshareholders||Inapplicable|||||||
|Sharesheldbytop10shareholdersofunrestrictedshares|||||||||
|NameoftheShareholder||Quantityofunrestrictedsharesheldattheendofthereportingperiod|||||Sharetype||
||||||||Sharetype|Quantity|
|AVICInternationalHoldingLimited||162,977,327|||||CNYordinaryshares|162,977,327|
|ChongqingInternationalTrustCo.,Ltd.-YUXINNo.2Trust||18,389,227|||||CNYordinaryshares|18,389,227|
|MoJiadong||12,703,968|||||CNYordinaryshares|12,703,968|
|#YangZugui||11,069,727|||||CNYordinaryshares|11,069,727|
|NationalSocialSecurityFund114Portfolio||9,657,744|||||CNYordinaryshares|9,657,744|
|XizangInvestmentCo.,Ltd.||4,976,551|||||CNYordinaryshares|4,976,551|
|MANULIFETEDAFund－ MinshengBank－MANULIFETEDAValueGrowthOriented||4,893,559|||||CNYordinaryshares|4,893,559|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|AdditionalIssueNo.351AssetsManagementProgram||||
|ShenzhenHeliFengyuanCommerce&TradeCo.,Ltd.|2,704,000|CNYordinaryshares|2,704,000|
|ShenzhenRongliyuanCommercialInformationCo.,Ltd.|1,630,500|CNYordinaryshares|1,630,500|
|ChinaConstructionBankCo.,Ltd.-INVESCOGREATWALLQuantizedSelectedStockTypeSecuritiesInvestmentFund|1,376,533|CNYordinaryshares|1,376,533|
|Explanationtotheassociatedrelationshiporconsistentactionamongthetop10shareholdersofnon-restrictednegotiablesharesandthatbetweenthetop10shareholdersofnon-restrictednegotiablesharesandtop10shareholders.|Inapplicable|||
|Notetothetop10shareholdersinvolvedinmarginfinancing&securitieslending(ifany)(RefertoNote4)|Inapplicable|||

Did the top ten common shareholders or top ten shareholders of unrestricted common shares conduct contractual repurchaseduringthereportingperiod?
No
2.ControllingShareholder
Natureofthecontrollingshareholder:State-ownedshareholdingdirectlyunderthecentralgovernment
Typeofthecontrollingshareholder:corporate
||||||
|-|-|-|-|-|
|NameoftheControllingShareholder|LegalRepresentative/Leader|Dateofincorporation|OrganizationCode|Leadingbusinessactivities|
|AVICInternationalHoldingLimited|LiuHongde|June20,1997|91440300279351229A|Investingandinitiatingentities(separateapplicationistobesubmittedforaspecificproject);domesticcommerce,supplyandsalesofgoodsandmaterials(excludingthegoodsforexclusivesale,underspecialcontrolandmonopolizedgoods);importandexport.|
|Equityinotherdomesticandforeignlistedcompaniesheldbythecontrollingshareholderbymeansofcontrolandmutualshareholdingin|AVICInternationalHoldingLimitedholds22.35%equityinAVICSundaHoldingCompanyLimited(AVICSUNDA000043);14.24%equityinTianmaMicro-electronicsCo.,Ltd.(SHENTIANMAA000050);69.74%equityinShennanCircuitsCo.,Ltd.(ShennanCircuits002916); and73.87%equityinAVICInternationalMaritimeHoldingsLimited(aSingaporelistedcompany,O2I).||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|thereportingperiod.|

Changeofthecontrollingshareholderinthereportingperiod
Inapplicable
3.ActualControlleranditsConcertedParties
Natureoftheactualcontroller:State-ownedassetsregulatoryagencydirectlyunderthecentralgovernment
Typeoftheactualcontroller:corporate
||||||
|-|-|-|-|-|
|NameoftheActualController|LegalRepresentative/Leader|Dateofincorporation|OrganizationCode|Leadingbusinessactivities|
|AVICInternationalHoldingCorporation|LiuHongde|April12,1983|911100001000009992|Import&export;warehousing;investmentandmanagementofindustry,hotel,property,realestate;development,salesandrepairingserviceofnewenergyequipment;exhibition;transferoftechnologyandtechnicalservicesinconnectionwiththeaforesaidbusinesses;dispatchcontractworkerstoimplementoverseasengineeringworks;salesofpoisonablechemicals.|
|Equityinotherdomesticandforeignlistedcompaniescontrolledbytheactualcontrollerinthereportingperiod|AVICInternationalholds8.40%equityinTianmaMicro-electronicsCo.,Ltd.(SHENTIANMAA000050).||||

Changeoftheactualcontrollerinthereportingperiod
Inapplicable
BlockDiagramoftheOwnershipandControlRelationsbetweentheCompanyandtheActualController
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
State-ownedAssetsSupervisionandAdministration
CommissionoftheStateCouncil
100%
National Council for Beijing Putuo Hanhua Aviation Industry AVIC CCB Aviation Industry SocialSecurityFund Investment Management CorporationofChina Equity Investment (Tianjin) Co.,14.31% 14.31% 62.52% 8.86%
AVICInternationalHoldingCorporation
100%
AVICInternationalShenzhenCompanyLimited
37.50%
33.93%
AVICInternationalHoldingsCorporation
37.15%
FiytaHoldingsLtd.
TheactualcontrollercontrolstheCompanybymeansoftrustormanagingtheassetsinotherways:
Inapplicable
4.OtherCorporateShareholderHoldingover10%oftheCompany’sShares
Inapplicable
5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the Reorganizing PartyandotherCommittingParty
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 7 About the Preferred Shares
Inapplicable
Section 8 Directors, Supervisors, Senior Executives and Employees
I.ChangeinSharesHeldbyDirectors,SupervisorsandSeniorExecutives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Title|OfficeStatus|Gender|Age|Startingdateoftenure|Expirydateoftenure|Numberofsharesheldatthebeginningofthereportingperiod(shares)|Shareholdingincreasedinthereportingperiod(shares)|Shareholdingdecreasedinthereportingperiod(shares)|Otherincrease/decrease(shares)|Numberofsharesheldatendofthereportingperiod(shares)|
|HuangYongfeng|Chairman|Inoffice|Male|45|September11,2018|September11,2021|80,000|0|0|0|80,000|
|WangMingchuan|Director|Inoffice|Male|53|September11,2018|September11,2021|0|0|0|0|0|
|FuDebin|Director|Inoffice|Male|42|September11,2018|September11,2021|0|0|0|0|0|
|XiaoZhanglin|Director|Inoffice|Male|43|September11,2018|September11,2021|0|0|0|0|0|
|WangBo|Director|Inoffice|Male|40|September11,2018|September11,2021|0|0|0|0|0|
|ChenLibin|Director&GM|Inoffice|Male|55|September11,2018|September11,2021|80,000|0|0|0|80,000|
|WangJianxin|Independentdirector|Inoffice|Male|49|September11,2018|September11,2021|0|0|0|0|0|
|Zhong|Independ|Inoffice|Male|44|||0|0|0|0|0|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Hongming|entdirector||||September11,2018|September11,2021||||||
|TangXiaofei|Independentdirector|Inoffice|Male|45|September11,2018|September11,2021|0|0|0|0|0|
|WangBaoying|ChairmanoftheSupervisoryCommittee|Inoffice|Male|55|September11,2018|September11,2021|0|0|0|0|0|
|ShengQing|Supervisor|Inoffice|Female|43|September11,2018|September11,2021|0|0|0|0|0|
|ZouZhixiang|Supervisor|Inoffice|Male|35|September11,2018|September11,2021|0|0|0|0|0|
|LuBingqiang|DeputyGM|Inoffice|Male|58|October08,2018|October08,2021|96,311|0|0|0|96,311|
|LuWanjun|DeputyGMandSecretaryoftheBoard|Inoffice|Male|52|October08,2018|October08,2021|50,000|0|0|0|50,000|
|LiuXiaoming|DeputyGM|Inoffice|Male|48|October08,2018|October08,2021|50,000|0|0|0|50,000|
|PanBo|DeputyGM|Inoffice|Male|43|October08,2018|October08,2021|50,000|0|0|0|50,000|
|LiMing|DeputyGM|Inoffice|Male|46|October08,2018|October08,2021|50,040|0|0|0|50,040|
|ChenZhuo|ChiefAccountant|Inoffice|Male|43|October08,2018|October08,2021|51,000|0|0|0|51,000|
|ZhangHongguang|Independentdirector|Retired|Male|63|August31,2015|September11,2018|0|0|0|0|0|
|ZhangShunwen|Independentdirector|Retired|Male|53|August31,2015|September11,2018|0|0|0|0|0|
|WangYan|Independ|Retired|Male|62|August||0|0|0|0|0|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||entdirector||||31,2015|September11,2018||||||
|WangJingqi|Supervisor|Retired|Male|39|October14,2016|September11,2018|0|0|0|0|0|
|Total|--|--|--|--|--|--|507,351|0|0|0|507,351|

 II.PersonnelChangeinDirectors,SupervisorsandSeniorExecutives
||||||
|-|-|-|-|-|
|Name|OfficeTaken|Type|Date:|Cause|
|WangJianxin|Independentdirector|Appointment&removal|September11,2018|ElectedindependentdirectoroftheNinthBoardofDirectorsatthe26thSessionoftheEighthBoardofDirectorsand20182ndExtraordinaryGeneralMeeting.|
|ZhongHongming|Independentdirector|Appointment&removal|September11,2018|ElectedindependentdirectoroftheNinthBoardofDirectorsatthe26thSessionoftheEighthBoardofDirectorsand20182ndExtraordinaryGeneralMeeting.|
|TangXiaofei|Independentdirector|Appointment&removal|September11,2018|ElectedindependentdirectoroftheNinthBoardofDirectorsatthe26thSessionoftheEighthBoardofDirectorsand20182ndExtraordinaryGeneralMeeting.|
|ZouZhixiang|Supervisor|Appointment&removal|September11,2018|ElectedstaffsupervisoroftheNinthSupervisoryCommitteeat20181stStaffRepresentativeCongress.|
|ZhangHongguang|Independentdirector|Retireduponexpiryofthetenure|September11,2018|RetireduponexpiryofthetenureoftheEighthBoardofDirectors|
|ZhangShunwen|Independentdirector|Retireduponexpiryofthetenure|September11,2018|RetireduponexpiryofthetenureoftheEighthBoardofDirectors|
|WangYan|Independentdirector|Retireduponexpiryofthetenure|September11,2018|RetireduponexpiryofthetenureoftheEighthBoardofDirectors|
|WangJingqi|Supervisor|Retireduponexpiryofthetenure|September11,2018|RetireduponexpiryofthetenureoftheEighthSupervisoryCommittee|

III. Profile of Senior Executives
ProfessionalBackground,CVandMajorDutiesofDirectors,SupervisorsandSeniorExecutivesinOffice
Mr. Huang Yongfeng, born in May, 1974, senior engineer, master of management engineering of Beijing University of Aeronautics&Astronautics, and EMBAof China Europe International Business School. He is now the Secretary of the CPCCommitteeandChairmanoftheBoardoftheCompany.Mr.Huangusedtobethechairmanandgeneralmanagerof AVICINTLZhuhaiCo.,Ltd.,assistanttothe generalmanagerofAVICInternationalHoldingCorporation,deputygeneral manager, assistant to the general manager, manager of the enterprise strategy and management department of AVIC
International Shenzhen Co., Ltd., director of AVIC Sunda Holding Company Limited, director of Rainbow Department
StoreCo.,Ltd.,directorofTianmaMicroelectronicsCo.,Ltd.andchairmanofShenzhenZhongshiMechanicalEquipment
Co.,Ltd.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Mr.WangMingchuan,borninDecember1966,senioraccountant,masterofmanagementengineeringofTongjiUniversity. He is a director of the Company, deputy GM and chief accountantAVIC International Shenzhen Co., Ltd., a director of Tianma Microelectronics Co., Ltd., a director of Rainbow Department Store Co., Ltd. and a director of Shennan Circuits Co., Ltd. He used to be a financial supervisor of the financial division of Chengdu Engine Company, manager of the financialdepartmentofShenzhenShenrongEngineeringPlasticCompany,managerofthecomprehensivemanagement department and chief financial officer of Shenzhen CATIC Trading Co., Ltd., manager of the financial and audit department,managerofthefinancialdepartmentandvicechiefaccountantofAVICInternationalShenzhenCo.,Ltd.and chiefofthefinancialdepartmentandvicechiefaccountantofAVICInternationalHoldingCorporation.
Mr.FuDebin,borninFebruary1977,masterofengineeringanddoctorofengineeringofBeijingUniversityofAeronautics&Astronautics. Heis adirectorin office oftheCompanyandthe headof H.R. departmentofAVICInternationalHolding Corporation,adirectorofTianmaMicroelectronicsCo.,Ltd.andadirectorofShennanCircuitsCo.,Ltd.Heusedtobethe 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 PartybranchofPowerSchoolofBeijingUniversityofAeronautics&Astronautics.
Mr.XiaoZhanglin,borninJanuary1976,seniorengineer,MBAofShanghaiJiaotongUniversity.Heisadirectorinoffice of the Company, company secretary of AVIC International Holding Limited, director of AVIC Sunda Holding Company Limited,directorofShennanCircuitsCo.,Ltd. adirectorofRainbowDepartmentStoreCo.,Ltd.,adirectorofShenzhen Aero Fasteners MFG Co., Ltd. Mr. Xiao used to be the chief of the retail and high-end consumer goods office, deputy section chief ofthe strategy development department ofAVICInternational Holding Corporation and the assistantto the sectionchiefoftheenterprisestrategyandmanagementdepartmentofAVICInternationalShenzhenCo.,Ltd.,adirector ofShenzhenAVICCommerceandTradeCo.,Ltd.AndadirectorofTianmaMicroelectronicsCo.,Ltd.
Mr.Wang Bo, born in July,1979, MBAof Renmin University of China. He is a director in office of the Company,section chiefoftheHRdepartmentofAVICInternationalShenzhenCo.,Ltd.,adirectorofShennanCircuitsCo.,Ltd,adirectorof ShenzhenAero Fasteners MFG Co., Ltd., a director of Shenzhen Grand Skylight Hotel Management Company Limited and a director of Shenzhen Shanghai Hotel. Mr. Wang used to be deputy section chief of the HR department ofAVIC InternationalHoldingCorporation,adirectorofAVICINTLGuangzhouCo.,Ltd.,andadirectorofAVICINTLZhuhaiCo., Ltd.andadirectorofShenzhenAVICCommerceandTradeCo.,Ltd.
Mr. Chen Libin, born in June 1964, master of economics of the Party School of Guangdong Provincial CPC Committee andEMBAofSunYat-SenUniversity.Heisadirectorinoffice,ViceSecretaryoftheCPCCommitteeandtheGMofthe Company.Mr.ChenusedtobethedeputyGeneralManagerandSecretaryoftheBoardoftheCompany,deputysection chief and section chief of theParty’s affairs of the Party-masses Work Department and senior commissioner, deputy managerandmanageroftheenterpriseculturedepartmentofCATICShenzhen.
Mr. Wang Baoying, born in July, 1964, senior engineer at research fellow level, bachelor of Beijing University ofAeronautics&Astronautics,EMBAofChinaEuropeInternationalBusinessSchool.HeistheChairmanoftheSupervisory Committee, managing director ofAVIC International Shenzhen Co., Ltd., the chairman of the supervisory committee of TianmaMicroelectronicsCo.,Ltd.,thechairmanofthesupervisorycommitteeofRainbowDepartmentStoreCo.,Ltd.and the chairman of the supervisory committee of Shennan Circuits Co., Ltd. He used to be a director of the Company, section-chief ofAVIC TianjinAviation Electro-mechanical Co., Ltd., deputy GM of Shenzhen Rainbow Department Store
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Co., Ltd., first deputy GM of Shenzhen Nam Kwong (Group) Company Limited, manager of the enterprise strategy and management department and assistant of the GM of CATIC Shenzhen, executive director ofAVIC International Holding Limited,managingdirectorofShenzhenAVICResourcesCo.,Ltd.,managingdirectorofAVICNewEnergyDevelopment Co.,Ltd.andmanagingdirectorofAVICInternationalHoldingCorporation.
Ms. Sheng Qing, born in April, 1976, accountant, senior HR administrator,bachelor of international accounting specialization of Jiangxi University of Finance and Economics, master of organization and HR management of the University of Hong Kong. She is the manager of the discipline inspection, supervision and audit department of the Company. She used to be a supervisor of the Eighth Supervisory Committee, manager of HR department and senior businessmanageroftheauditdepartmentoftheCompany.
Mr. Zou Zhixiang, born in March 1984, medium auditor, accountant and bachelor of financial management of Hunan University. He is now an assistant to the manager of the descipline inspection, supervision and audit department of the Company. Mr. Zou used to be the senior business manager of the audit department of the Company and the auditing commissionerofthesupervisionandauditdepartmentofAVICInternationalHoldingLimited.
Mr.WangJianxin,borninJune,1970,graduatedfromZhongnanUniversityofEconomicsandLaw,aChineseCPA.Mr. Wang is a partner of ShineWing Certified PublicAccountants (Special General Partnership) and independent director of Chongqing Fuling Zhacai Group Co.,Ltd.
Mr.ZhongHongming, bornin January1975, graduatedfromRenmin Universityof China,doctor of law.Mr.Zhong isan associate researchfellow of LawResearch Institute of SichuanAcademyof Social Sciences, a researcher of the united post-doctorial research center of Sichuan Academy of Social Sciences, a member of China Securities Law Research Council,anindependentdirectorofMangoExcellentMediaCo.,Ltd.andXianDagangRoadMachineryCo.,Ltd. Mr.TangXiaofei,borninMay,1974,graduatedfromSouthwestJiaotongUniversity,professoranddoctorialtutor.Mr.Tang is a professor and doctorial tutor of the Business School of Southwest Jiaotong University, director of Urban Brand StrategyResearchInstituteofSouthwestUniversityofFinanceandEconomics,enjoyingthetitleofOutstandingTalentof the New Century granted by the Ministry of Education, Secretary-general and executive council member of the International Brand Strategy Society, a council member of Chinese Association of Market Development, consultant of APEX Ogilvy, expert consultant of brand development of Chengdu Municipal Government, expert of Chengdu Famous Trademark Determination Board, executive director of CCTV WDY, independent director of Sichuan Languang DevelopmentCo.,Ltd.
Mr. Lu Bingqiang, born in December 1961, senior economist, bachelor of Guangzhou Jinan University. Mr. Lu is the managingdirectorofFIYTA(HongKong)Limited.ShenzhenCo.,Ltd.HeusedtobetheassistanttotheGManddirector oftheCompany,andGMandchairmanofShenzhenHarmonyWorldWatchesCenterCo.,Ltd.,thepresidentsecretaryof AVICInternationalShenzhenCo.,Ltd.
Mr.LuWanjun,borninFebruary,1967,accountant,EMBAofSino-EuropeanInternationalManagementInstitute.Mr.Luis the Secretary of Committee for Discipline Inspection, a deputy GM and the Secretary of the Board of the Company. He used to be theassistant to the GMof theCompany,executive deputy GMand deputyGM, the assistant to theGM and concurrentlythemanagerofthefinancialdepartmentofShenzhenHarmonyWorldWatchesCenterCo.,Ltd.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Mr. Liu Xiaoming, born in 1971, engineer, economist, bachelor of mechanical engineering of Beijing University of Aeronautics& Astronautics, and EMBA of China Europe International Business School. He is a deputy GM of the Company,the managing director of Shenzhen Harmony World Watches Center Co., Ltd. He used to be the assistant to theGMoftheCompany,adeputyGMandtheassistanttotheGMofShenzhenHarmonyWorldWatchesCenterCo.,Ltd. Mr. Pan Bo, born in March, 1976, bachelor of electromechanical engineering of Beijing University of Aeronautics& Astronautics,andEMBAofChinaEuropeInternationalBusinessSchool.HeisnowadeputyGMoftheCompanyandthe managingdirectorofFIYTASalesCo.,Ltd.Mr.PanusedtobetheassistanttotheGMoftheCompany,executivedeputy GM,deputyGM,theassistanttotheGM,managerofthesalesdepartment,managerofthelogisticdepartment,manager oftheafter-saledepartment,etc.ofFIYTASalesCo.,Ltd.
Mr.LiMing,borninSeptember,1973,bachelorofmarketingofZhongnanUniversityofEconomicsandLawandEMBAof ChinaEuropeInternationalBusinessSchool.Heisnowa deputyGMoftheCompany.Mr.Liusedtobetheassistantto theGMandchiefHRofficeroftheCompany,adeputyGM,theassistanttotheGMandmangeroftheHRdepartmentof Shenzhen Harmony World Watches Center Co., Ltd.; chief HR officer and the GM of the marketing center of China NetcomShenzhen;managerofbigcustomermarketplanningofChinaTelecomShenzhen.
Mr. Chen Zhuo, born in September 1976, accountant, MBA of Wuhan University, EMBA of China Europe International BusinessSchool.HeisthechiefaccountantoftheCompany.Mr.Chenusedtobeasupervisor,theassistanttotheGM, 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 FIYTASalesCo.,Ltd.
Officetakinginshareholdercompanies
|||||||
|-|-|-|-|-|-|
|Namesofthepersonsinoffice|NamesoftheShareholders|Titlesengagedintheshareholders|Startingdateoftenure|Expirydateoftenure|Doeshe/shereceiveremunerationorallowancefromtheshareholder|
|WangMingchuan|AVICInternationalShenzhenCo.,Ltd.|DeputyGMandChiefAccountant|January23,2017||Yes|
|FuDebin|AVICInternationalHoldingCorporation|HeadoftheHRDept.|July01,2016||Yes|
|XiaoZhanglin|AVICInternationalHoldingLimited|Companysecretary|February05,2018||Yes|
|WangBo|AVICInternationalShenzhenCo.,Ltd.|HeadoftheHRDept.|April25,2017||Yes|
|WangBaoying|AVICInternationalShenzhenCo.,Ltd.|Specialcommissioner|April11,2017||Yes|
|Explanationontheofficetakinginshareholder|Inapplicable|||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|companies|

Officetakinginotherorganizations
|||||||
|-|-|-|-|-|-|
|Namesofthepersonsinoffice|Namesofotherorganizations|Titlesengagedintheotherorganizations|Startingdateoftenure|Expirydateoftenure|Doeshe/shereceiveremunerationorallowancefromotherorganizations|
|WangJianxin|ShineWingCertifiedPublicAccountants|Partner|December01,2006||Yes|
|ZhongHongming|LawResearchInstituteofSichuanAcademyofSocialSciences|Associateresearchfellow|November24,2017||Yes|
|ZhongHongming|MangoExcellentMediaCo.,Ltd.|Independentdirector|June14,2017||Yes|
|ZhongHongming|XianDagangRoadMachineryCo.,Ltd.|Independentdirector|October27,2017||Yes|
|TangXiaofei|BusinessSchoolofSouthwestJiaotongUniversity|Doctorialtutor|September01,2008||Yes|
|TangXiaofei|BusinessSchoolofSouthwestJiaotongUniversity|Professor|December01,2011||Yes|
|Explanationontheofficetakinginotherorganizations|Inapplicable|||||

Punishmentimposedbythesecuritiesregulatoryauthorityonthedirectors,supervisorsandseniorexecutivesbothin officeandhavinglefttheirpostsinthereportingperiod.
Inapplicable
IV.RemunerationtoDirectors,SupervisorsandSeniorExecutives
Decision-makingprocedures,basisfordeterminingtheremunerationandactualpaymenttodirectors,supervisorsand seniorexecutive todirectors,supervisorsandseniorexecutives:
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;and performance based annual salary consists of financial performanceannualsalaryandnon-financialperformanceannualsalary.Wheretheassessmentfortheannualsalaryto theChairmanisconductedaccordingto theassessment measuresconcludedbytheshareholderorganization while the assessment of senior executives is conducted according to the Measures for Administration of the Remuneration to SeniorExecutives.
RemunerationtoDirectors,SupervisorsandSeniorExecutivesduringtheReportingPeriod
InCNY10,000
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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|-|-|-|-|-|-|-|
|Name|Title|Gender|Age|OfficeStatus|TotalpretaxremunerationreceivedfromtheCompany|IstheremunerationfromoneoftheCompany'srelatedparties|
|HuangYongfeng|Chairman|Male|45|Inoffice|102.25|No|
|WangMingchuan|Director|Male|53|Inoffice|0|No|
|FuDebin|Director|Male|42|Inoffice|0|No|
|XiaoZhanglin|Director|Male|43|Inoffice|0|No|
|WangBo|Director|Male|40|Inoffice|0|No|
|ChenLibin|Director&GM|Male|55|Inoffice|153.02|No|
|WangJianxin|Independentdirector|Male|49|Inoffice|3.48|No|
|ZhongHongming|Independentdirector|Male|44|Inoffice|3.48|No|
|TangXiaofei|Independentdirector|Male|45|Inoffice|3.48|No|
|WangBaoying|ChairmanoftheSupervisoryCommittee|Male|55|Inoffice|0|No|
|ShengQing|Supervisor|Female|43|Inoffice|101.43|No|
|ZouZhixiang|Supervisor|Male|35|Inoffice|31.76|No|
|LuBingqiang|DeputyGM|Male|58|Inoffice|129.14|No|
|LuWanjun|DeputyGMandSecretaryoftheBoard|Male|52|Inoffice|135.89|No|
|LiuXiaoming|DeputyGM|Male|48|Inoffice|144.23|No|
|PanBo|DeputyGM|Male|43|Inoffice|148.89|No|
|LiMing|DeputyGM|Male|46|Inoffice|135.89|No|
|ChenZhuo|ChiefAccountant|Male|43|Inoffice|135.89|No|
|ZhangHongguang|Independentdirector|Male|63|Retired|4.5|No|
|ZhangShunwen|Independentdirector|Male|53|Retired|6.21|No|
|WangYan|Independentdirector|Male|62|Retired|6.21|No|
|WangJingqi|Supervisor|Male|39|Retired|66.56|No|
|Total|--|--|--|--|1,312.31|--|

 EquityincentivetodirectorsandseniorexecutivesoftheCompanyduringthereportingperiod
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
V.Employees
1.Number,JobCompositionandEducationBackgroundofEmployees
|||
|-|-|
|Numberofemployeesworkingfortheparentcompany|125|
|Numberofemployeesworkingforthemajorsubsidiaries|5,037|
|Totalemployeesonactiveduty|5,162|
|Totalemployeesreceivingremunerationinthereportingperiod|5,162|
|Numberoftheretiredemployeesforwhomtheparentcompanyandthemajorsubsidiariesneedtosharethepension|0|
|JobComposition||
|JobCompositionCategories|Numberofpersonsinvolvedinthejobcomposition|
|Production|339|
|Sales|3,842|
|Technical|352|
|Financial|148|
|Administrative|481|
|Total|5,162|
|Educationbackground||
|Educationlevels|Numberofpersons|
|Master'sdegreeorhigher|77|
|Undergraduate|774|
|Juniorcollege|1,279|
|Belowjuniorcollege|3,032|
|Total|5,162|

 2.RemunerationPolicyforStaff
TheCompany’sremunerationpolicyisbasedontheprincipleofpostvalueorientation,performanceorientation,efficiency priority, is based on the principle of strategy, market, performances and job value with consideration of fairness, sustainable development and market orientation. The Company aims to establish a remuneration system which may match the Company's strategy, comply with the Company's development strategy and correspond to the Company's overallefficiency,cansurelyattract high qualitytalents, retain thekeytalents, activatethehumanresourceandimprovetheCompany’scorecompetitiveness.
3.TrainingProgram
The Company is concentrated on watch industry, insists on the principle of guiding various businesses with the brand
strategy, takes a broad view of the world and has established its vision of “becoming a leading internationalized watch
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
brand enterprise”. While speeding up development, the Company firmly believes that “to build brand is to integrate the brand work and life style”, the core speciality of the organization and staff and the qualification of the staff as brand personnelarethekeyelementsdeterminingthefuturedevelopment.Forthispurpose,inrespectofemployeetraining,the Companyhas establishedFIYTACollegeand takesthecollege asan important base for popularizingandimplementing theenterpriseculture,promotingpracticeofthestrategyandmoldingbrandpeople.Basedonthecollege,theCompany constructs a training system of various talents, focuses on the echelon leadership,cultivating young generations, and professional ability training of various key talents. Through the projects, such as reservoir of master craftsmen,sales training, CSSGB training and mediumand high-levelleadership training, young general power camp, etc., carryforward the construction of integrated talents cultivation system of the Company and assist the Company to become a learning organizationwithpowerfulvitality.
4.LaborOutsourcing
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 9 Corporate Governance
I. General
In year2018,theCompanykeptimprovingtheCompany’scorporategovernancestructurestrictlyaccordingto thePRC 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 theCompany’s corporategovernanceandtheregulatorydocumentsofChinaSecuritiesRegulatoryCommissionconcerninggovernance oflistedcompanies.
TheCompanyestablishedandimprovedrelativelystandardizedcorporategovernancestructureandrulesofprocedures strictly according to law, rules and regulations, including the PRC Company Law, and theArticles ofAssociation of the Company, formed a decision-making and operation management system with theShareholders’ Meeting, the Board of Directors,theSupervisoryCommitteeandthemanagementoftheCompanyastheprincipalstructure.Theyimplemented theirrespectivedutiesaccordingtothePRCCompanyLawandtheArticlesofAssociation.
The General Meeting is theCompany’s supreme organ and has the power of deciding theCompany’s operation policyandinvestmentplan,reviewingandapprovingtheCompany’sannualfinancialbudgetscheme,settlementscheme,profit distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makesresolutiononincreaseanddecreaseoftheCompany’sregisteredcapital,issuingbond,etc.,electionandreplacementof directors,non-staffsupervisorsanddecisionontheirremunerationandwayofpayment.
TheBoardofDirectorsistheCompany’sdecision-makingorgan,takeschargeofimplementingthedecisionsmadebytheShareholders’General Meeting,assumesresponsibilityto theShareholders’General Meeting andreports thework toit. Withinthe authorizationfromtheGeneralMeeting,decidestheCompany’sexternalinvestment,acquisitionandsalesof assets, assets pledge, external guarantee, related transactions, etc., decides establishment of theCompany’s internal management organs, engagement and disengagement of theCompany’s general manager, the Board secretary and otherseniorexecutives,etc.TheBoardofDirectorsconsistsofninedirectors,includingthreeindependentdirectors.The Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit CommitteeandNomination,EmolumentandAssessmentCommittee.
The Supervisory Committee is theCompany’s supervisory organ in charge of supervising the directors, managers and other senior executives in performing duties according to the law and proposes dismissal of any director or senior executive who breaches the law, the administrative rules and regulations, the Articles of Association or the GeneralMeeting’sresolutions.TheSupervisoryCommitteeconsistsofthreesupervisorsincludingtwostaffsupervisors.
The management assumes responsibilityto theBoard of Directors and the General Manager takes fullresponsibilityfor theCompany’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 coordinatetherelationshipofalldepartments.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Doesthereexistanydifferenceincompliancewiththecorporategovernance,thePRCCompanyLawandtherelevant provisionsofCSRC.
No
II.IndependenceinBusiness,Personnel,Assets,Organization,Finance,etc.fromtheControllingShareholders The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder. TheCompanyhascompleteandindependentbusinessandtheabilityofautonomousoperation.
Business.TheCompanyismainlyengagedintimepiecebusinessesandhasindependentproduction,auxiliaryproduction systemandcomplementaryfacilities,andpossessesitsownprocurementandsalessystems.Thereexistsnocompetition inthesamesectorbetweentheCompanyanditscontrollingshareholder.
Personnel: The Company is completely independent in organization and has sound systems in labor, personnel and salariesmanagement.ExceptMr.WangMingchuan,Mr.FuDebin,Mr.XiaoZhanglinandMr.WangBo,thefourdirectors, andMr.WangBaoying,thechairmanoftheSupervisoryCommittee,noneofotherseniorexecutivestakesanyconcurrent officeintheshareholdersandnoneofthefinancialstaffworksconcurrentlyforanyrelatedparties.
Assets:TheassetsoftheCompanyanditscontrollingshareholderarehighlydistinct.TheCompanyenjoysthecorporate ownership over its assets and the assets are completely independent from its controlling shareholder. In addition, the CompanyenjoyssoleownershipofsuchtrademarksasFIYTA,HARMONY,etc.
Organization:TheBoardofDirectors,theSupervisoryCommitteeandtheotherinternalorgansarewellestablishedand 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 theCompany’sbusinessactivitiessurpassingtheauthorityoftheGeneralMeeting.
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 shareholderhasneverinterferedtheCompanyinitsfinancialandaccountingactivities.
III.HorizontalCompetitions
Inapplicable
IV.AnnualGeneralMeetingandExtraordinaryGeneralMeetingsintheReportingPeriod
1.GeneralMeetings
|||||||
|-|-|-|-|-|-|
|Sessions|Meetingtype|Proportionofattendanceoftheinvestors|Meetingdate|Dateofdisclosure|Disclosureindex|
|20181stExtraordinaryGeneralMeeting|ExtraordinaryGeneralMeeting|7.37%|January16,2018|January17,2018|http://www.cninfo.com.cn/|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|2017Annualgeneralmeeting|Annualgeneralmeeting|39.07%|June21,2018|June22,2018|http://www.cninfo.com.cn/|
|20182ndExtraordinaryGeneralMeeting|ExtraordinaryGeneralMeeting|37.76%|September11,2018|September12,2018|http://www.cninfo.com.cn/|

2. Extraordinary general meeting requested for holding by the preferred shareholders with the voting power recovered.
Inapplicable
V.DutyPerformanceofIndependentDirectorsintheReportingPeriod
1.AttendanceforBoardMeetingsandGeneralMeetings
|||||||||
|-|-|-|-|-|-|-|-|
|AttendanceforBoardMeetingsandGeneralMeetings||||||||
|Namesofindependentdirector|NumberofBoardmeetingswhichshouldbebeattendedinthereportingperiod|NumberofSpotAttendances|NumberofMeetingsAttendedbyCommunication|Numberofattendancesofboardmeetingbyrepresentative|Numberofabsence|Failuretopersonallyattendboardmeetingssuccessivelytwice|NumberofattendanceoftheGeneralMeeting|
|ZhangHongguang|3|2|1|0|0|No|0|
|ZhangShunwen|3|2|1|0|0|No|3|
|WangYan|3|1|1|1|0|No|0|
|WangJianxin|4|1|3|0|0|No|1|
|ZhongHongming|4|1|3|0|0|No|0|
|TangXiaofei|4|1|3|0|0|No|0|

 Notetofailuretoattendtheboardmeetingsuccessivelytwice
Inapplicable
2.Objectionofindependentdirectorsonsomerelevantissues
Havetheindependentdirectorsproposedanyobjection ontherelevantissuesoftheCompany
No
3.OtherNotetoDutyPerformanceofIndependentDirectors
Inapplicable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
VIDutyPerformanceofSpecialCommitteesundertheBoardofDirectorsintheReportingPeriod
SummaryReportonPerformancesoftheStrategyCommitteeoftheBoardofDirectors
Duringthereportingperiod,theStrategyCommitteeperformeditsdutiesstrictlyaccordingtothelawandregulations,the ArticlesofAssociationandtheRulesforImplementationoftheStrategyCommitteeoftheBoardofDirectors,continuedto do research work on the strategic planning for theCompany’s long term development and supervised the Company in implementation ofvariousstrategies.The Strategy Committeehelditsfirst meeting ofyear 2018on March8,2018.The meetingreviewedandapprovedtheWorkReportoftheBoardofDirectorsofYear2017andtheProfitDistributionforYear 2017; the second meeting of the Strategy Committee for year 2018 was held on November 12, 2018. The meeting reviewedandapproved2018A-ShareRestrictiveStockIncentivePlan(PhaseI)(Draft),etc.
SummaryReportonPerformancesoftheAuditCommitteeoftheBoardofDirectors:
In accordance with the Rules on the Content and Format of Information Disclosure of Companies that Publicly Offer Securities No. 2 (Contents and Format ofAnnual Reports) (Revision 2017) promulgated by China Securities Regulatory Commission,theBasicRegulationsonEnterpriseInternalControl,MemorandumofMainboardInformationDisclosureNo. 1– Relevant Information to be Disclosed in the Regular Report promulgated by Shenzhen Stock Exchange and theCompany’s Enforcement Regulations of the Special Committees of the Board of Directors, the Audit Committee of the Board of Directors carried out comprehensive examination of the Company's financial report and internal control audit work of year 2018. The following is the summary of the performances of theAudit Committee and the work of Ruihua CertifiedPublicAccountants(SpecialGeneralPartnership)(hereinafterreferredtoasthe“CPAs”):
1. Collecting General Information of the Company in the Reporting Period and Reviewing the Financial Statements PreparedbytheCompanyandProgressofInternalControlImplementation
On February 1, 2019, theAudit Committee heard themanagement’s overallreport on the production andoperation and progress of significant events during the reporting period and reviewed 2018 Financial and Accounting StatementspreparedbytheCompanyandheardtheprogressofimplementationoftheCompany’sinternalcontrol.Initsopinion,the data in the financial and accounting statements prepared by the Company basically reflected the financial position and operationresultsoftheCompanyasendedatDecember31,2018,andapprovedtocarryouttheauditworkforyear2018 withthefinancialstatementsasthebase.TheinternalcontrolimplementationworkcarriedoutbytheCompanyhasbeen dulycarried forward according to the CompanyLaw,the Securities Law,Basic Standardsfor Enterprise Internal Controlandotherrelevantlawsandregulations.IthasbasicallyreflectedtheCompany’sinternalcontrolconstructionworkended December31,2017andapprovedtopreparetheSelf-AssessmentReportontheInternalControlonthisbasisandcarry outtheinternalcontrolauditworkin2018.
2.DeterminationoftheOverallAuditPlan
On December 5, 2018, theAudit Committee reviewed the Report of FIYTAonArrangement of theAudit Work of 2018 submittedbytheCPAsanddeterminedthetimescheduleoftheauditworkof2018.
3.SupervisionoftheAuditWork
On December 26, 2018, the CPAs formally started the audit work. During the auditing, theAudit Committee frequently urgedtheCPAstocompletetheauditworkaccordingtothetimescheduleofauditsoastoensuretimelydisclosureoftheCompany’sannualreportandrelevantdocuments.OnFebruary1,2019,theAuditCommitteereviewedtheReportonthe ProgressoftheAuditWorkof2018submittedbytheCPAs.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
4.PreliminaryAuditor’sOpinionsafterReviewingtheFinancialandAccountingStatements
On March 11, 2019, the CPAs issued a preliminaryauditor’s opinions on the financial and accounting statements and internal control assessment, and the Audit Committee once again reviewed theCompany’s financial and accounting statements and internal control assessment report as preliminarily audited by the CPAs. In the opinion of the Audit Committee,thesefinancialstatementstruly,accuratelyandcompletelyreflectedthefinancialpositionandoperationresult of the Company ended December 31, 2018 and approved 2018Annual Report and Summary prepared on the basis of thesestatements.Thesaidinternalcontrolassessmentreporthastruly,accuratelyandentirelyreflectedtheCompany’s achievement in internal control construction ended December 31, 2018 and approved to complete the internal control assessmentreportandinternalcontrolauditreportbasedonsaidreport.Meanwhile,theauditcommitteedemandedthe CPAstocompletetheauditworkaccordingtotheplanassoonaspossiblesoastoensuretheCompanytodisclose2017 AnnualReportasscheduled.
5.SummaryWorkaftertheFormalReport
On March 13, 2019, the CPAs completed the auditing procedures as scheduled and issued a standard unqualifiedauditor’sreportandotherrelevantdocumentstotheAuditCommittee.TheAuditCommitteeheld20191stSessionofthe AuditCommitteeontheverydayandconcludedaresolutionandsubmittedittotheBoardofDirectorsforreview;andat the same time submitted the Summary Report on the Performances of theAudit Committee and theAudit Work of the CertifiedPublicAccountantsin2018.IntheopinionoftheAuditCommittee,RuihuaCertifiedPublicAccountants(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 fairnessanddidagoodjobinauditing2018AnnualAccountingStatementsandtheinternalcontrolauditing.
6.CPAs’PerformanceofBasicPrincipleoftheProfessionalEthics
(1)Independence
None of the stafffrom theCPAs workedfor the Company; the CPAsreceived neither cash nor economicinterest inany otherformfromtheCompanyotherthanthestatutoryauditfee.Thereexistedneitherdirectorindirectmutualinvestment between the CPAs and the Company nor close operation relationship; there existed no self-assessment on theCompany’s audit work and there existed no related relation between the member of the auditing team and theCompany’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 professionalethics.
(2)ProfessionalCompetence
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 necessaryattentionandprofessionalcautiousness.
Summary Report onPerformance of theCommittee ofNomination, RemunerationandAssessment of theBoard ofDirectors
Inthereportingperiod,theCommitteeofNomination,RemunerationandAssessmentoftheBoardofDirectorsperformed itsfunctionsstrictly accordingto thelawandregulations, theArticlesofAssociation andtheRulesfor Implementationof the Committees of Nomination, Remuneration and Assessment of the Board of Directors. 2018 1st session of the
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
CommitteesofNomination,RemunerationandAssessmentheldonMarch8,2018reviewedandapprovedtheproposals on emoluments to the senior executives for year 2017; 2018 2nd session of the Committees of Nomination, RemunerationandAssessmentheldonAugust21,2018reviewedandapprovedtheproposalonelectionandnomination of non-independent director candidates for the new Board of Directors and independent director candidatesfor the new BoardofDirectors;20183rdsessionoftheCommitteeofNomination,RemunerationandAssessmentheldonOctober8, 2018reviewedandapprovedtheproposalonelectionoftheChairmanoftheBoard,appointmentoftheGM,deputyGMs, chief accountant, the Board secretary, etc.; 2018 4th session of the Committee of Nomination, Remuneration and Assessment held on November 12, 2018 reviewed and approved 2018A-Share Restrictive Stock Long Term Incentive Plan(Draft),2018A-ShareRestrictive StockIncentivePlan(PhaseI) (Draft),etc.;20185thsessionoftheCommitteeof Nomination, Remuneration and Assessment held on December 25, 2018 reviewed and approved 2018 A-Share Restrictive Stock Long Term Incentive Plan (Revised Draft), 2018 A-Share Restrictive Stock Incentive Plan (Phase I) (RevisedDraft),etc.
VII.WorkSummaryoftheSupervisoryCommittee
DidtheSupervisoryCommitteefindanyriskexistinginperformingthesupervisionactivitiesinthereportingperiod No
VIII.AssessmentandIncentiveMechanismforSeniorExecutives
(1)AssessmentofSeniorExecutives
The 5th session of the Sixth Board of Directors held on September 18, 2009 reviewed and approved the Measures for Management of Remuneration to Senior Executives. During the reporting period, the Company strictly implemented the MeasuresforManagementofRemunerationtoSeniorExecutives.
(2)IncentivetoSeniorExecutives
The3rdsessionoftheNinthBoardofDirectorsheldonNovember12,2018and20191stExtraordinaryGeneralMeeting heldonJanuary11,2019decidedtostart2018A-ShareRestrictiveStockIncentiveProgram(PhaseI),whichwaslateron reviewed and approved at the 5th session of the Ninth Board of Directors held on January 11, 2019, and the Company decidedtogrant4.224millionrestrictiveA-sharesto128personseligiblefortheincentive,including7directorsandsenior executives who were granted 600,000 restrictive A-shares, taking0.14% of the Company's total capital stock with the detailsasfollows:
||||||
|-|-|-|-|-|
|Name|Title|Quantityofrestrictivesharesreceived(in10,000shares)|EquityreceivedProportioninthetotalquantitygranted(%)|EquityreceivedProportioninthetotalcapitalstock(%)|
|HuangYongfeng|Chairman|10|2.37%|0.02%|
|ChenLibin|Director&GM|10|2.37%|0.02%|
|LuWanjun|DeputyGMandSecretaryoftheBoard|8|1.89%|0.02%|
|LiuXiaoming|DeputyGM|8|1.89%|0.02%|
|PanBo|DeputyGM|8|1.89%|0.02%|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||
|-|-|-|-|-|
|LiMing|DeputyGM|8|1.89%|0.02%|
|ChenZhuo|ChiefAccountant|8|1.89%|0.02%|
|Othercoremanagement,business,professionalandtechnicalbackbones(121persons)||362.4|85.81%|0.83%|
|Total(128persons)||422.4|100%|0.97%|

 The price of this part of restrictive shares granted was CNY 4.40/share; the granting date was January 11, 2019 (The lock-upperiodoftheserestrictiveshareswastwoyearscommencingfromthedateofgranting).ByJanuary302019,the workofgrantingthesharesandregistrationforlistingwascompleted.
IX. Internal Control
1. Particular case found involving material defects in the internal control during the reporting period
No
2. Self-assessment Report ofthe Internal Control
||||
|-|-|-|
|Dateofdisclosingthefulltextoftheinternalcontrolassessmentreport|March15,2019||
|Indexofdisclosureofthefulltextoftheinternalcontrolassessmentreport|www.cninfo.com.cn||
|ProportionofthetotalassetsoftheorganizationsinvolvedintheassessmentinthetotalassetsoftheCompany’sconsolidatedfinancialstatements|99.00%||
|ProportionoftheoperationrevenueoftheentitledinvolvedintheassessmentinthetotaloperationrevenueoftheCompany’sconsolidatedfinancialstatements|99.00%||
|Criteriaforaffirmingthedefects|||
|Categories|Financialreport|Non-financialReport|
|Qualitativecriteria|(1)Thedefectinvolvingfraudofthedirectors,supervisorsandseniorexecutives;(2)correctionofthefinancialstatementsalreadypublished;(3)TheCPAfoundthatthereexistedseriousmisstatementinthefinancialstatementsofthereportingperiodwhiletheinternalcontrolfailedtofindthemisstatementinprocessofoperation;(4)TheCompany'sauditingcommitteeandsupervisionandauditdepartmentconductedineffectivesupervisionoftheinternalcontrol.|(1)seriouslyviolatingthePRClaws,administrativeregulationsandnormativedocuments;(2)"decisiononmajorissues,importantofficerappointmentand/orremovalandarrangementofimportantprojectsaswellasapplicationofbigsumoffundhavenotundergonecollectivedecision-makingprocedures;(3)seriousrunningoffofofficersandtechniciansofthekeypositions;(4)thereisnosystemcontrolavailablefortheCompany’sproductionandoperationpracticeorthesystemno|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|||longerworks;(5)theinternalcontrolforinformationdisclosurenolongerworks,havingcausedtheCompanycensuredpubliclybytheregulatoryauthority;(6)theresultsoftheinternalcontrolassessments,especiallythematerialdefectsorimportantdefectshavenotbeenrectified.|
|Quantitativecriterion|(1)Materialdefects：Misstatement≥5%ofthepre-taxprofit；(2)Importantdefects：1%ofprofitbeforetax≤Misstatement＜5%ofprofitbeforetax;(3)Commondefects：Misstatement＜1%ofprofitbeforetax.|(1)Materialdefects：Misstatement≥5%ofthepre-taxprofit；(2)Importantdefects：1%ofprofitbeforetax≤Misstatement＜5%ofprofitbeforetax;(3)Commondefects：Misstatement＜1%ofprofitbeforetax.|
|Numberofmaterialdefectsinthefinancialstatements(pcs)|0||
|Numberofmaterialdefectsinthenon-financialstatements(pcs)|0||
|Numberofimportantdefectsinthefinancialreport(pcs)|0||
|Numberofimportantdefectsinthefinancialreport(pcs)|0||

X.InternalControlAuditReport
|||
|-|-|
|DeliberationOpinionsintheInternalControlAuditReport||
|Inouropinion,FIYTAHoldingsLimitedmaintainedeffectiveinternalcontrolonthefinancialreportinallmaterialaspectaccordingtotheBasicRegulationsforEnterpriseInternalControlandtherelevantprovisionsendedDecember31,2017.||
|Disclosureoftheinternalcontrolauditreport|Disclosed|
|Dateofdisclosingthefulltextoftheinternalcontrolassessmentreport|March15,2019|
|Indexofdisclosingthefulltextoftheinternalcontrolauditreport|www.cninfo.com.cn|
|Typeoftheonionsintheinternalcontrolauditreport|Standardunqualifiedauditor’sreport|
|Arethereanymaterialdefectsinthenon-financialreport|No|

HastheCPAsissuedaqualifiedauditor’sreportofinternalcontrol
No
DoestheinternalcontrolauditreportissuedbytheCPAsagreewiththeself-assessmentreportoftheBoardofDirectors
Yes
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Section 10 Bond Related Information
Didthereexistanycompanybondswhichwereissuedtothepublicandlistedwiththestockexchangefortradingandwas duebythedatewhentheAnnualReportwasapprovedforissuingorfailedtobefullycashedbytheendofthereporting period.
Section 11 Financial report
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
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9层
PostalAddress:9/F,WestTowerofChinaOverseasPropertyPlaza,Building7,NO.8,YongdingmenXibinheRoad, DongchengDistrict,Beijing
邮政编码（PostCode）：100077
电话（Tel）：+86(10)88095588传真（Fax）：+86(10)88091199
AUDITORS’ REPORT
Ruihua Shen Zi[2019] No. 01210010 Tothe Shareholders ofFIYTAHoldingsLtd.:
I. Opinion
Wehave auditedthefinancialstatementsofFIYTAHoldingsLtd.(“FIYTALtd.”orthe“Company”), whichcomprise the consolidated and theCompany’s balance sheet as at 31 December 2018, the consolidated and theCompany’s income statement, the consolidated and theCompany’s cash flow statement for the year then ended and consolidated and theCompany’s statement of changesinshareholders’equity, andnotes tothe financialstatements.
In our opinion, the financial statements give a fair presentation of the consolidated and theCompany’s financial position of FIYTALtd. as at 31 December 2018, and of its consolidated and theCompany’s financial performance and its consolidated and theCompany’s cash flows for the year then ended in all material aspects in accordance with Accounting Standards for Business Enterprises.
II. Basis forOpinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are further described in theAuditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the FIYTALtd. in accordance with the Code of Ethics for Chinese Certified Public Accountants, and we have fulfilled our other ethical responsibilities in professional ethics. We believe that the audit evidence we have obtained issufficientand appropriateto provideabasis forour opinion.
III.Key Audit Matters
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Key audit matters are those matters that, in our professional judgment, were of most significance inour auditof the financialstatements ofthe currentperiod.These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters that need to communicateinour auditreportare identified asfollows:
1.Existence,valuationand allocation ofinventories
(1) Description
As described in Note IV 11 and Note VI. 5 Inventory,the balance and provision of inventory were RMB1,870,015,903.32 and RMB87,709,601.62 respectively. The carrying amount of inventory wasRMB1,782,306,301.70 as at 31December 2018.
(i)As the main business of FIYTALtd is selling FIYTAbrand watches and branded watches, the main inventory of FIYTA Ltd are finished watches and watch components. The inventories are distributed in stores, regional warehouses,resellers’ warehouses and theCompany’s warehouses which increasedthe difficultyofstock observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net realizable value (NRV) at balance sheet date. Where the cost of an inventory exceeds its NRV, the difference is recognized as provision. The determination of NRV involves material management judgment and estimates.
The inventories have significant impact to theCompany’s assets, as a result, we identified existence,valuationand allocation ofinventoriesas akeyaudit matter.
(2) How our auditaddressed the keyaudit matter
(i) Understanding, assessing and testing the design and operating effectiveness of internal controls of purchase and payment, production and storage, and the accrual of inventory provision;
(ii) Understanding and evaluating the appropriateness of theCompany’s inventory provision policy;
(iii) Understanding locations of inventory storage, accounting method of inventory and determiningthe scope ofinventoryobservation;
(iv) Discussing physical stocktaking status with the management and attending the physical stocktaking to the locations and inventories within the scope of inventory observation and conductingobservation andtestcount onsite;
(v) Performing alternative procedures of confirmation and inspecting contracts, goods delivery
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
notes and account statements for the inventories outside the scope of inventory observation and storedinreseller's warehouses;
(vi) Obtaining schedule of inventory provision calculation, reviewing whether the provision was made according to relating accounting policies and re-calculating the provision to evaluate the accuracyofinventory provision;
(vii) Reviewing and evaluating the appropriateness of the material estimates made by the managementindetermining theNRV ofinventory;
(viii) Agreeing current period purchases in large amount to corresponding contract, tax invoice andinspectingpurchaserequisition form andgoods receiptnotesetc...
2.Revenuerecognition
(1) Description
TheCompany’s revenue mainly comes from sales of FIYTA brand watches and distribution of branded watches. FIYTA brand watches and branded watches are mainly sold through shops in department store except for minor direct sale and consignment sale. Refer to Note IV. 24 for accountingpoliciesrelatingto revenuerecognition.
As described in Note VI. 30 Operating revenue and operating cost, theCompany’s revenue from main business was RMB3,382,346,730.19 in year 2018. Operating revenue represents major line item in income statement and is main source of profit. Accuracy and completeness of revenue recognition have significant impact to theCompany’s profit, as a result, we identified revenue recognitionas akey auditmatter.
(2) How our auditaddressed the keyaudit matter
(i) Understanding, assessing and testing the design and operating effectiveness of internal controlsrelatingto revenuerecognition;
(ii) Checking whether the condition, method and timing of revenue recognition is in conformance withprinciple ofAccountingStandards forBusinessEnterprises;
(iii) Selecting samples from currentyear’s transaction record, agreeing to supporting documents such as contract, tax invoice and goods dispatch noteetc… to evaluate occurrence of revenue recognition;
(iv) In connection with audit of accounts receivable, selecting major customers and confirming corresponding salesincurrentyear toevaluate the completenessofrevenue recognition;
(v) Conducting cut-off test to sales transactions before and after the balance sheet date to evaluate whether the revenue was recordedin appropriateaccountingperiod;
IV.Other Information
The management of FIYTALtd are responsible for the Other Information. The Other Information comprises all of the information included in theCompany’s 2018 annual report other than the
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
financialstatementsandourauditors’reportthereon.
Our opinion expressed on the financial statements does not cover the Other Information and we donotexpress anyform ofassuranceconclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and those Charged with Governance for the Financial Statements
The management of the FIYTA Ltd (the “Management”) is responsible for the preparation of the financial statements that give a fair view in accordance with Accounting Standards for Business Enterprises and design, implementing and maintaining necessary internal controls to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud orerror.
In preparing the financial statements, the Management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Those who charged with governance is responsible for overseeing theCompany’s financial reportingprocess.
VI.Auditors’Responsibilities fortheAuditof theFinancial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a wholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with China Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influencethe economicdecisionsofusers taken on thebasis ofthese financialstatements. As part of an audit in accordance with China Standards on Auditing, we exercise professional judgmentandmaintainprofessionalskepticism throughoutthe audit.Wealso:
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the overrideofinternalcontrol.
2. Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate inthe circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates andrelated disclosures madeby the Management.
4. Conclude on the appropriateness of theManagement’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required,according toChina Standards onAuditing,to draw attentionin ourauditors’reportto the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors’ report. However, future events or conditions may cause the Company to ceaseto continue asagoing concern.
5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions andevents inamanner thatachievesfair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within FIYTALtd to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsiblefor our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficienciesin internalcontrolthatwe identifyduringour audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable,related safeguards.
From the matters communicated with those charged with governance, we determine those matters thatwere of mostsignificance inthe auditof the financial statements of thecurrent period
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefitsof suchcommunication.
RuihuaCertifiedPublicAccountants ChineseCPA
(SpecialGeneral Partnership) (EngagementPartner):___________
YuqiaoWang
Beijing,China ChineseCPA: ____________
XinLiu
15March,2019
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Financial Statements
ThecurrencyappliedinthefinancialnotesandstatementsisRenminbi(CNY)
1.ConsolidatedBalance Sheet
PreparedbyFIYTAHOLDINGSLTD.
December31,2018
InCNY
||||
|-|-|-|
|Items|Endingbalance|Openingbalance|
|Currentassets:|||
|Monetarycapital|164,828,059.97|187,152,891.32|
|Settlementreserve|||
|Inter-banklending|||
|Financialassetswhichismeasuredbasedonthefairvalueandwhosemovementiscountedtothecurrentgain/loss|||
|Derivativefinancialassets|||
|Notesreceivableandaccountsreceivable|377,597,503.46|335,948,508.62|
|Where:Notesreceivable|7,051,846.85|9,693,883.68|
|Accountsreceivable|370,545,656.61|326,254,624.94|
|Advancepayments|13,666,816.33|24,663,314.53|
|Receivablepremium|||
|Reinsuranceaccountsreceivable|||
|Reserveforreinsurancecontractreceivable|||
|Otherreceivables|45,870,582.26|34,990,539.09|
|Including:Interestreceivable|||
|Dividendsreceivable|||
|Redemptorymonetarycapitalforsale|||
|Inventories|1,782,306,301.70|1,820,526,676.26|
|Held-for-saleassets|||
|Non-currentassetsduewithinayear|||
|Othercurrentassets|73,703,312.24|24,616,815.21|
|Totalcurrentassets|2,457,972,575.96|2,427,898,745.03|
|Non-currentassets:|||
|Loanissuingandadvanceincash|||
|Available-for-salefinancialassets|85,000.00|85,000.00|
|Held-to-dueinvestments|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Longtermaccountsreceivable|||
|Long-termequityinvestment|44,881,063.15|43,879,518.09|
|Investmentrealestate|377,319,433.03|305,493,987.77|
|Fixedassets|425,649,562.85|523,699,592.65|
|Construction-in-process|12,041,126.00|10,947,300.53|
|Productivebiologicalasset|||
|Oilandgasassets|||
|Intangibleassets|43,545,477.61|44,223,280.21|
|Developmentexpenses|||
|Goodwill|||
|Long-termexpensestobeapportioned|128,572,545.15|109,409,785.49|
|Deferredincometaxasset|100,675,706.09|105,905,944.80|
|Othernon-currentassets|8,949,160.42|8,246,538.33|
|Totalnon-currentassets|1,141,719,074.30|1,151,890,947.87|
|Totalassets|3,599,691,650.26|3,579,789,692.90|
|Currentliabilities:|||
|Shorttermborrowings|547,118,452.97|525,990,510.00|
|Borrowingsfromcentralbank|||
|Depositstakingand interbankplacement|||
|Loansfromotherbanks|||
|Financialliabilitiesmeasuredbasedonthefairvalueandwhosechangewaschargedtothecurrentgainandloss.|||
|Derivativefinancialliabilities|||
|Notespayableandaccountspayable|259,913,612.34|263,256,495.65|
|Advancesfromcustomers|16,459,445.00|15,141,587.79|
|Fundsfromsellingoutandrepurchasingfinancialassets|||
|Servicechargeandcommissionpayable|||
|Salariespayabletotheemployees|69,779,037.83|71,564,367.14|
|Taxespayable|55,923,171.92|55,857,236.59|
|Otherpayables|71,819,930.30|59,232,265.75|
|Including:interestpayable|772,351.26|1,464,729.11|
|Dividendspayable|||
|Payablereinsurance|||
|Reserveforinsurancecontract|||
|Actingtradingsecurities|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Incomefromsecuritiesunderwritingoncommission|||
|Held-for-saleliabilities|||
|Non-currentliabilitiesduewithinayear|347,470.00|35,000,000.00|
|Othercurrentliabilities|||
|Totalcurrentliabilities|1,021,361,120.36|1,026,042,462.92|
|Non-currentliabilities:|||
|Long-termborrowings|4,517,110.00|79,870,353.00|
|Bondspayable|||
|Including:preferredshares|||
|Perpetualbond|||
|Long-termaccountspayable|||
|Longtermaccruedpayroll|||
|Predictedliabilities|||
|Deferredincome|3,672,855.36|5,904,000.00|
|Deferredincometaxliability|||
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|8,189,965.36|85,774,353.00|
|Totalliabilities|1,029,551,085.72|1,111,816,815.92|
|Owner’sequity:|||
|CapitalStock|438,744,881.00|438,744,881.00|
|Otherequityinstruments|||
|Including:preferredshares|||
|Perpetualbond|||
|CapitalReserve|1,062,455,644.22|1,062,455,644.22|
|Less:sharesinstock|||
|Othercomprehensiveincome|-5,442,139.78|-11,523,442.39|
|Specialreserve|||
|SurplusReserve|223,015,793.80|206,805,713.35|
|Reserveagainstgeneralrisks|||
|Retainedearnings|851,360,603.66|771,484,565.02|
|Totalowners’equityattributabletotheparentcompany|2,570,134,782.90|2,467,967,361.20|
|Minorityshareholders’equity|5,781.64|5,515.78|
|Totalowner’sequity|2,570,140,564.54|2,467,972,876.98|
|Totalliabilitiesandowners’equity|3,599,691,650.26|3,579,789,692.90|

Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
PersoninchargeoftheAccountingDepartment:TianHui
2.BalanceSheet(ParentCompany)
InCNY
||||
|-|-|-|
|Items|Endingbalance|Openingbalance|
|Currentassets:|||
|Monetarycapital|137,175,466.27|131,163,944.43|
|Financialassetswhichismeasuredbasedonthefairvalueandwhosemovementiscountedtothecurrentgain/loss|||
|Derivativefinancialassets|||
|Notesreceivableandaccountsreceivable|737,636.38|6,832,006.11|
|Where:Notesreceivable|||
|Accountsreceivable|737,636.38|6,832,006.11|
|Advancepayments|||
|Otherreceivables|870,739,378.37|831,952,437.86|
|Including:Interestreceivable|||
|Dividendsreceivable|||
|Inventories|||
|Held-for-saleassets|||
|Non-currentassetsduewithinayear|||
|Othercurrentassets|10,081,272.94|9,089,170.12|
|Totalcurrentassets|1,018,733,753.96|979,037,558.52|
|Non-currentassets:|||
|Available-for-salefinancialassets|85,000.00|85,000.00|
|Held-to-dueinvestments|||
|Longtermaccountsreceivable|||
|Long-termequityinvestment|1,376,129,654.08|1,375,128,109.02|
|Investmentrealestate|297,042,937.87|270,241,724.52|
|Fixedassets|297,517,472.81|340,765,873.45|
|Construction-in-process|12,041,126.00|10,947,300.53|
|Productivebiologicalasset|||
|Oilandgasassets|||
|Intangibleassets|35,337,052.82|36,932,963.95|
|Developmentexpenses|||
|Goodwill|||
|Long-termexpensestobeapportioned|4,500,638.97|4,418,287.94|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Deferredincometaxasset|952,857.33|1,499,126.32|
|Othernon-currentassets|4,493,971.35|2,687,910.84|
|Totalnon-currentassets|2,028,100,711.23|2,042,706,296.57|
|Totalassets|3,046,834,465.19|3,021,743,855.09|
|Currentliabilities:|||
|Shorttermborrowings|505,000,000.00|470,000,000.00|
|Financialliabilitiesmeasuredbasedonthefairvalueandwhosechangewaschargedtothecurrentgainandloss.|||
|Derivativefinancialliabilities|||
|Notespayableandaccountspayable|52,324,191.98|60,520,874.66|
|Advancesfromcustomers|1,636,520.02|4,212,930.07|
|Salariespayabletotheemployees|11,589,634.34|9,291,422.00|
|Taxespayable|943,919.26|1,038,481.26|
|Otherpayables|57,997,397.28|21,596,100.44|
|Including:interestpayable|685,419.80|929,155.39|
|Dividendspayable|||
|Held-for-saleliabilities|||
|Non-currentliabilitiesduewithinayear||35,000,000.00|
|Othercurrentliabilities|||
|Totalcurrentliabilities|629,491,662.88|601,659,808.43|
|Non-currentliabilities:|||
|Long-termborrowings||74,861,928.00|
|Bondspayable|||
|Including:preferredshares|||
|Perpetualbond|||
|Long-termaccountspayable|||
|Longtermaccruedpayroll|||
|Predictedliabilities|||
|Deferredincome|3,672,855.36|5,904,000.00|
|Deferredincometaxliability|||
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|3,672,855.36|80,765,928.00|
|Totalliabilities|633,164,518.24|682,425,736.43|
|Owner’sequity:|||
|CapitalStock|438,744,881.00|438,744,881.00|
|Otherequityinstruments|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Including:preferredshares|||
|Perpetualbond|||
|CapitalReserve|1,068,111,185.32|1,068,111,185.32|
|Less:sharesinstock|||
|Othercomprehensiveincome|||
|Specialreserve|||
|SurplusReserve|223,015,793.80|206,805,713.35|
|Retainedearnings|683,798,086.83|625,656,338.99|
|Totalowner’sequity|2,413,669,946.95|2,339,318,118.66|
|Totalliabilitiesandowners’equity|3,046,834,465.19|3,021,743,855.09|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
3.ConsolidatedProfit Statement
InCNY
||||
|-|-|-|
|Items|Amountincurredinthereportingperiod|Amountincurredinthepreviousperiod|
|I.Turnover|3,400,450,599.90|3,345,809,703.98|
|Including:operatingincome|3,400,450,599.90|3,345,809,703.98|
|Interestincome|||
|Earnedinsurancepremium|||
|Servicechargeandcommissionincome|||
|II.Totaloperatingcosts|3,190,243,356.71|3,182,619,506.27|
|Including:Operatingcosts|1,993,809,774.20|1,986,652,591.57|
|Interestpayment|||
|Servicechargeandcommissionpayment|||
|SurrenderValue|||
|Compensationexpenses,net|||
|Provisionofreserveforinsurancecontract,net|||
|Paymentofpolicydividend|||
|Reinsuranceexpenses|||
|Taxesandsurcharges|33,769,344.40|32,871,258.58|
|Salescosts|856,970,173.10|811,437,932.01|
|Administrativeexpenses|219,162,525.85|190,589,582.24|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|R&Dexpenditures|47,350,342.82|49,453,899.35|
|Financialexpenses|35,916,240.16|49,186,742.91|
|Where:Interestcost|27,552,558.81|41,825,035.34|
|Interestincome|2,269,447.05|2,915,602.99|
|Lossfromimpairmentofassets|3,264,956.18|62,427,499.61|
|Plus:Otherincome|19,375,618.48|17,508,255.98|
|Investmentincome(lossisstatedwith“-“)|1,001,545.06|455,893.22|
|Including:returnoninvestmentinassociateandjointventure|1,001,545.06|455,893.22|
|Incomefromchangeoffairvalue(lossisstatedwith“-”)|||
|Exchangeincome(lossstatedwith“-”)|||
|Incomefromdisposalofassets(lossstatedwith“-”)|-181,302.24|7,321,993.36|
|III.OperatingProfit(lossisstatedwith“-“)|230,403,104.49|188,476,340.27|
|Plus:Non-operatingincome|1,446,357.53|2,607,653.91|
|Less:Non-operatingexpenses|652,514.97|1,368,680.92|
|IV.Totalprofit(totallossisstatedwith“-”)|231,196,947.05|189,715,313.26|
|Less:Incometaxexpense|47,361,851.76|47,098,954.06|
|V.NetProfit(netlossisstatedwith“-“)|183,835,095.29|142,616,359.20|
|(I)NetProfitfromsustainableoperation(netlossisstatedwith“-“)|183,835,095.29|142,616,359.20|
|(II)Netprofitfromterminationofbusinessoperation(netlossisstatedwith“-“)|||
|Netprofitattributabletotheparentcompany’sowner|183,835,095.29|140,216,258.28|
|Minorityshareholders’gain/loss||2,400,100.92|
|VI.Netofothercomprehensiveincomeaftertax|6,081,568.47|-28,676.16|
|Netofothercomprehensiveincomeaftertaxattributabletotheparentcompany’sowner|6,081,302.61|255,055.85|
|(I)Othercomprehensiveincomewhichcannotbere-classifiedintogainandloss|||
|1.Movementofthenetliabilitiesandnetassetsre-measuredforsettingthebeneficialplan|||
|2.Othercomprehensiveincomewhichcannotbeconvertedintogainandlossbasedontheequitymethod|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|(II)Othercomprehensiveincomewhichshallbere-classifiedintogainandloss|6,081,302.61|255,055.85|
|1.Othercomprehensiveincomewhichcanbeconvertedintogainandlossbasedontheequitymethod|||
|2.Gain/lossfromchangeinthefairvalueofthefinancialassetsavailableforsale|||
|3.Gain/lossfromwhichtheheld-to-maturityinvestmentisre-classifiedasavailable-for-salefinancialassets|||
|4.Validpartofthegain/lossfromcashflowhedge|||
|5.Conversiondifferenceinforeigncurrencystatements|6,081,302.61|255,055.85|
|6.Others|||
|Netamountofothercomprehensiveincomeaftertaxattributabletominorityshareholders|265.86|-283,732.01|
|VII.Totalcomprehensiveincome|189,916,663.76|142,587,683.04|
|Totalcomprehensiveincomeattributabletotheparentcompany’sowner|189,916,397.90|140,471,314.13|
|Totalcomprehensiveincomeattributabletominorityshareholders|265.86|2,116,368.91|
|VIII.Earningspershare:|||
|(I)Basicearningspershare|0.4190|0.3196|
|(II)Dilutedearningspershare|0.4190|0.3196|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo Personinchargeofthe AccountingDepartment:TianHui
4.Statement of Profit,Parent Company
InCNY
||||
|-|-|-|
|Items|Amountincurredinthereportingperiod|Amountincurredinthepreviousperiod|
|I.Revenue|130,901,823.99|117,746,387.79|
|Less:Operatingcost|19,010,293.07|17,785,254.56|
|Taxesandsurcharges|4,340,938.33|4,244,709.29|
|Salescosts||5,024,222.36|
|Administrativeexpenses|62,841,044.26|56,597,226.83|
|R&Dexpenditures|24,155,557.54|24,358,700.54|
|Financialexpenses|9,231,733.69|11,051,564.46|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Where:Interestcost|10,189,512.00|12,432,288.90|
|Interestincome|1,756,834.88|1,384,504.01|
|Lossfromimpairmentofassets|46,068.70|62,283.14|
|Plus:Otherincome|7,689,684.27|11,482,400.00|
|Investmentincome(lossisstatedwith“-“)|144,001,545.06|117,455,893.22|
|Including:returnoninvestmentinassociateandjointventure|1,001,545.06|455,893.22|
|Incomefromchangeoffairvalue(lossisstatedwith“-”)|||
|Incomefromdisposalofassets(lossstatedwith“-”)|-51,942.13|-54,661.87|
|II.OperatingProfit(lossisstatedwith“-“)|162,915,475.60|127,506,057.96|
|Plus:Non-operatingincome|38,080.00|231,994.49|
|Less:Non-operatingexpenses|446,782.97|320,029.00|
|III.Totalprofit(totallossisstatedwith“-“)|162,506,772.63|127,418,023.45|
|Less:Incometaxexpense|405,968.14|-1,022,105.57|
|IV.NetProfit(netlossisstatedwith“-“)|162,100,804.49|128,440,129.02|
|(I)NetProfitfromsustainableoperation(netlossisstatedwith“-“)|162,100,804.49|128,440,129.02|
|(II)Netprofitfromterminationofbusinessoperation(netlossisstatedwith“-“)|||
|V.Netofothercomprehensiveincomeaftertax|||
|(I)Othercomprehensiveincomewhichcannotbere-classifiedintogainandloss|||
|1.Movementofthenetliabilitiesandnetassetsre-measuredforsettingthebeneficialplan|||
|2.Othercomprehensiveincomewhichcannotbeconvertedintogainandlossbasedontheequitymethod|||
|(II)Othercomprehensiveincomewhichshallbere-classifiedintogainandloss|||
|1.Othercomprehensiveincomewhichcanbeconvertedintogainandlossbasedontheequitymethod|||
|2.Gain/lossfromchangeinthefairvalueofthefinancialassetsavailableforsale|||
|3.Gain/lossfromwhichtheheld-to-maturityinvestmentisre-classifiedas|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|available-for-salefinancialassets|||
|4.Validpartofthegain/lossfromcashflowhedge|||
|5.Conversiondifferenceinforeigncurrencystatements|||
|6.Others|||
|VI.Totalcomprehensiveincome|162,100,804.49|128,440,129.02|
|VII.Earningspershare:|||
|(I)Basicearningspershare|||
|(II)Dilutedearningspershare|||

Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
5.ConsolidatedCash Flow Statement
InCNY
||||
|-|-|-|
|Items|Amountincurredinthereportingperiod|Amountincurredinthepreviousperiod|
|I.Cashflowsarisingfromoperatingactivities|||
|Cashreceivedfromsalesofgoodsandsupplyoflaborservice|3,810,404,536.16|3,799,342,843.85|
|Netincreaseofcustomers’depositandduefrombanks|||
|Netincreaseofborrowingsfromthecentralbank|||
|Netincreaseofborrowingsfromotherfinancialinstitutions|||
|Cashreceivedfromthepremiumoftheoriginalinsurancecontract|||
|Netcashreceivedfromthereinsurancebusiness|||
|Netincreaseofthereservefrompolicyholdersandinvestment|||
|Netincreasefromdisposalof financialassetswhichismeasuredbasedonthefairvalueandwhosemovementiscountedtothecurrentgain/loss|||
|Cashreceivedfrominterest,servicechargeandcommission|||
|Netincreaseofloanfromotherbanks|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Netincreaseoffundfromrepurchasebusiness|||
|Rebatedtaxesreceived|4,793,245.20|886,252.20|
|Otheroperationactivityrelatedcashreceipts|49,628,593.69|49,178,644.63|
|Subtotalofcashflowinfromoperatingactivity|3,864,826,375.05|3,849,407,740.68|
|Cashpaidforpurchaseofgoodsandreceptionoflaborservices|2,189,921,981.01|2,070,318,097.62|
|Netincreaseofloansandadvancestocustomers|||
|Netincreaseofduefromcentralbankandduefrombanks|||
|Cashfrompaymentforsettlementoftheoriginalinsurancecontract|||
|Cashpaidforinterest,servicechargeandcommission|||
|Cashforpaymentofpolicydividend|||
|Cashpaidtoandforstaff|583,417,253.40|516,928,806.69|
|Taxespaid|305,622,391.83|285,279,057.38|
|Otherbusinessactivityrelatedcashpayments|454,236,959.19|411,927,217.02|
|Subtotalofcashflowoutfromoperatingactivity|3,533,198,585.43|3,284,453,178.71|
|Netcashflowarisingfromoperatingactivities|331,627,789.62|564,954,561.97|
|II.Cashflowsarisingfrominvestmentactivities:|||
|Cashreceivedfromrecoveryofinvestment|||
|Cashreceivedfrominvestmentincome|||
|Netcashfromdisposaloffixedassets,,intangibleassetsandrecoveryofotherlongtermassets|53,280.03|10,678,135.25|
|Netcashreceivedfromdisposalofsubsidiariesandotheroperatingunits||-230,053.69|
|Otherinvestmentrelatedcashreceipts|||
|Subtotalofcashflowinfrominvestmentactivity|53,280.03|10,448,081.56|
|Cashpaidforpurchase/constructionoffixedassets,Intangibleassetsandotherlongtermassets|146,877,130.29|136,914,522.99|
|Cashpaidforinvestment|||
|Netincreaseofthepledgedloan|||
|Netcashpaidforacquisitionofsubsidiariesandotheroperationunits|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Otherinvestmentrelatedcashpayments|||
|Subtotalofcashflowoutfrominvestmentactivity|146,877,130.29|136,914,522.99|
|Netcashflowsarisingfrominvestmentactivities|-146,823,850.26|-126,466,441.43|
|III.Cashflowsarisingfromfundraisingactivities|||
|Cashreceivedfromabsorbinginvestment|||
|Incl.:Cashreceivedfromthesubsidiaries’absorptionofminorityshareholders’investment|||
|Cashreceivedfromloans|741,192,340.23|575,282,350.00|
|Cashreceivedfrombondissuing|||
|Otherfund-raisingrelatedcashreceipts|||
|Subtotalofcashflowinfromfundraisingactivity|741,192,340.23|575,282,350.00|
|Cashpaidfordebtrepayment|832,333,208.63|1,167,061,934.80|
|Cashpaidfordividend/profitdistributionorrepaymentofinterest|116,690,155.91|85,355,204.78|
|Including:Dividendandprofitpaidbythesubsidiariestominorityshareholders|||
|Cashpaidforotherfinancingactivities||3,376,589.16|
|Sub-totalcashflowpaidforfinancingactivities|949,023,364.54|1,255,793,728.74|
|Netcashflowsarisingfromfundraisingactivities|-207,831,024.31|-680,511,378.74|
|IV.Changeofexchangerateinfluencingthecashandcashequivalent|702,253.60|-256,606.29|
|V.Netincreaseofcashandcashequivalents|-22,324,831.35|-242,279,864.49|
|Plus:Openingbalanceofcashandcashequivalents|184,947,891.32|427,227,755.81|
|VI.Endingbalanceofcashandcashequivalents|162,623,059.97|184,947,891.32|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
6.CashFlow Statement,Parent Company
InCNY
||||
|-|-|-|
|Items|Amountincurredinthereportingperiod|Amountincurredinthepreviousperiod|
|I.Cashflowsarisingfromoperatingactivities|||
|Cashreceivedfromsalesofgoodsandsupplyoflaborservice|116,016,128.07|118,206,419.70|
|Rebatedtaxesreceived|||
|Otheroperationactivityrelatedcashreceipts|3,085,141,911.13|938,657,962.92|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Subtotalofcashflowinfromoperatingactivity|3,201,158,039.20|1,056,864,382.62|
|Cashpaidforpurchaseofgoodsandreceptionoflaborservices|300,000.00||
|Cashpaidtoandforstaff|58,785,131.65|52,908,089.08|
|Taxespaid|10,909,143.22|13,645,601.66|
|Otherbusinessactivityrelatedcashpayments|3,050,352,344.19|560,857,112.69|
|Subtotalofcashflowoutfromoperatingactivity|3,120,346,619.06|627,410,803.43|
|Netcashflowarisingfromoperatingactivities|80,811,420.14|429,453,579.19|
|II.Cashflowsarisingfrominvestmentactivities:|||
|Cashreceivedfromrecoveryofinvestment|||
|Cashreceivedfrominvestmentincome|143,000,000.00|117,000,000.00|
|Netcashfromdisposaloffixedassets,intangibleassetsandrecoveryofotherlongtermassets|1,430.00|30,112.00|
|Netcashreceivedfromdisposalofsubsidiariesandotheroperatingunits|||
|Otherinvestmentrelatedcashreceipts|||
|Subtotalofcashflowinfrominvestmentactivity|143,001,430.00|117,030,112.00|
|Cashpaidforpurchase/constructionoffixedassets,Intangibleassetsandotherlongtermassets|27,763,546.06|47,230,065.02|
|Cashpaidforinvestment|||
|Netcashpaidforacquisitionofsubsidiariesandotheroperationunits||114,299,236.67|
|Otherinvestmentrelatedcashpayments|||
|Subtotalofcashflowoutfrominvestmentactivity|27,763,546.06|161,529,301.69|
|Netcashflowsarisingfrominvestmentactivities|115,237,883.94|-44,499,189.69|
|III.Cashflowsarisingfromfundraisingactivities|||
|Cashreceivedfromabsorbinginvestment|||
|Cashreceivedfromloans|700,000,000.00|540,000,000.00|
|Cashreceivedfrombondissuing|||
|Otherfund-raisingrelatedcashreceipts|||
|Subtotalofcashflowinfromfundraisingactivity|700,000,000.00|540,000,000.00|
|Cashpaidfordebtrepayment|774,861,928.00|986,000,000.00|
|Cashpaidfordividend/profitdistributionorrepaymentofinterest|115,249,277.23|79,277,672.20|
|Cashpaidforotherfinancingactivities|||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Sub-totalcashflowpaidforfinancingactivities|890,111,205.23|1,065,277,672.20|
|Netcashflowsarisingfromfundraisingactivities|-190,111,205.23|-525,277,672.20|
|IV.Changeofexchangerateinfluencingthecashandcashequivalent|73,422.99|-90,699.34|
|V.Netincreaseofcashandcashequivalents|6,011,521.84|-140,413,982.04|
|Plus:Openingbalanceofcashandcashequivalents|128,958,944.43|269,372,926.47|
|VI.Endingbalanceofcashandcashequivalents|134,970,466.27|128,958,944.43|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
7.ConsolidatedStatement ofChangesinOwner’sEquity
Amountinthereportingperiod
InCNY
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Reportingperiod|||||||||||||
||Owners’equityattributabletotheparentcompany|||||||||||Minorityshareholders’equity|Totalowner’sequity|
||CapitalStock|Otherequityinstruments|||CapitalReserve|Less:sharesinstock|Othercomprehensiveincome|Specialreserve|SurplusReserve|Reserveagainstgeneralrisks|Retainedearnings|||
|||Preferredshares|Perpetualbond|Others||||||||||
|I.Endingbalanceofthepreviousyear|438,744,881.00||||1,062,455,644.22||-11,523,442.39||206,805,713.35||771,484,565.02|5,515.78|2,467,972,876.98|
|Plus:Changeinaccountingpolicy||||||||||||||
|Correctionofpreviouserrors||||||||||||||
|Consolidationofenterprisesunderthesamecontrol||||||||||||||
|Others||||||||||||||
|II.Openingbalanceofthereportingyear|438,744,881.00||||1,062,455,644.22||-11,523,442.39||206,805,713.35||771,484,565.02|5,515.78|2,467,972,876.98|
|III.Decrease/increaseofthereportyear(decreaseisstated|||||||6,081,302.61||16,210,080.45||79,876,038.64|265.86|102,167,687.56|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|with“-“)||||||
|(I)Totalcomprehensiveincome|6,081,302.61||183,835,095.29|265.86|189,916,663.76|
|(II)Owners’inputanddecreaseofcapital||||||
|1.Commonsharescontributedbytheowner||||||
|2.Capitalcontributedbyotherequityinstrumentsholders||||||
|3.Amountofpaymentforsharescreditedtoowners’equity||||||
|4.Others||||||
|(III)ProfitDistribution||16,210,080.45|-103,959,056.65||-87,748,976.20|
|1.Provisionofsurplusreserve||16,210,080.45|-16,210,080.45|||
|2.Provisionofreserveagainstgeneralrisks||||||
|3.3.Distributiontotheowners(orshareholders)|||-87,748,976.20||-87,748,976.20|
|4.Others||||||
|(IV)Internalcarry-overofowners’equity||||||
|1.Conversionofcapitalreserveintocapital(orcapitalstock)||||||
|2.Conversionofsurplusreserveintocapital(orcapitalstock)||||||
|3.Lossmadeupwithsurplusreserve||||||
|4.Settingoftheamountinvolvedin||||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||||
|-|-|-|-|-|-|-|-|
|themovementofthebeneficialplancarriedovertotheretainedearnings||||||||
|5.Others||||||||
|(V)Specialreserve||||||||
|1.Provisioninthereportingperiod||||||||
|2.Appliedinthereportingperiod||||||||
|(VI)Others||||||||
|IV.Endingbalanceofthereportingperiod|438,744,881.00|1,062,455,644.22|-5,442,139.78|223,015,793.80|851,360,603.66|5,781.64|2,570,140,564.54|

 Amountinthepreviousperiod
InCNY
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Previousperiod|||||||||||||
||Owners’equityattributabletotheparentcompany|||||||||||Minorityshareholders’equity|Totalowner’sequity|
||CapitalStock|Otherequityinstruments|||CapitalReserve|Less:sharesinstock|Othercomprehensiveincome|Specialreserve|SurplusReserve|Reserveagainstgeneralrisks|Retainedearnings|||
|||Preferredshares|Perpetualbond|Others||||||||||
|I.Endingbalanceofthepreviousyear|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|
|Plus:Changeinaccountingpolicy||||||||||||||
|Correctionofpreviouserrors||||||||||||||
|Consolidationofenterprisesunderthesamecontrol||||||||||||||
|Others||||||||||||||
|II.Openingbalanceofthereportingyear|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|
|III.Decrease/increaseofthereportyear(decreaseisstatedwith“-“)|||||||255,055.85||12,844,012.90||83,497,757.28|-3,572,138.78|93,024,687.25|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|(I)Totalcomprehensiveincome|255,055.85||140,216,258.28|2,116,368.91|142,587,683.04|
|(II)Owners’inputanddecreaseofcapital||||-5,688,507.69|-5,688,507.69|
|1.Commonsharescontributedbytheowner||||||
|2..Capitalcontributedbyotherequityinstrumentsholders||||||
|3.Amountofpaymentforsharescreditedtoowners’equity||||||
|4.Others||||-5,688,507.69|-5,688,507.69|
|(III)ProfitDistribution||12,844,012.90|-56,718,501.00||-43,874,488.10|
|1.Provisionofsurplusreserve||12,844,012.90|-12,844,012.90|||
|2.Provisionofreserveagainstgeneralrisks||||||
|3.Distributiontotheowners(orshareholders)|||-43,874,488.10||-43,874,488.10|
|4.Others||||||
|(IV)Internalcarry-overofowners’equity||||||
|1.Conversionofcapitalreserveintocapital(orcapitalstock)||||||
|2.Conversionofsurplusreserveintocapital(orcapitalstock)||||||
|3.Lossmadeupwithsurplusreserve||||||
|4.Settingoftheamountinvolvedinthemovementofthe||||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||||
|-|-|-|-|-|-|-|-|
|beneficialplancarriedovertotheretainedearnings||||||||
|5.Others||||||||
|(V)Specialreserve||||||||
|1.Provisioninthereportingperiod||||||||
|2.Appliedinthereportingperiod||||||||
|(VI)Others||||||||
|IV.Endingbalanceofthereportingperiod|438,744,881.00|1,062,455,644.22|-11,523,442.39|206,805,713.35|771,484,565.02|5,515.78|2,467,972,876.98|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
8.ConsolidatedStatement ofChangesinOwner’sEquity, Parent Company
Amountinthereportingperiod
InCNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Reportingperiod|||||||||||
||CapitalStock|Otherequityinstruments|||CapitalReserve|Less:sharesinstock|Othercomprehensiveincome|Specialreserve|SurplusReserve|Retainedearnings|Totalowner’sequity|
|||Preferredshares|Perpetualbond|Others||||||||
|I.Endingbalanceofthepreviousyear|438,744,881.00||||1,068,111,185.32||||206,805,713.35|625,656,338.99|2,339,318,118.66|
|Plus:Changeinaccountingpolicy||||||||||||
|Correctionofpreviouserrors||||||||||||
|Others||||||||||||
|II.Openingbalanceofthereportingyear|438,744,881.00||||1,068,111,185.32||||206,805,713.35|625,656,338.99|2,339,318,118.66|
|III.Decrease/increaseofthereportyear(decreaseisstatedwith“-“)|||||||||16,210,080.45|58,141,747.84|74,351,828.29|
|(I)Totalcomprehensive||||||||||162,100,804.49|162,100,804.49|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|income||||
|(II)Owners’inputanddecreaseofcapital||||
|1.Commonsharescontributedbytheowner||||
|2.Capitalcontributedbyotherequityinstrumentsholders||||
|3.Amountofpaymentforsharescreditedtoowners’equity||||
|4.Others||||
|(III)ProfitDistribution|16,210,080.45|-103,959,056.65|-87,748,976.20|
|1.Provisionofsurplusreserve|16,210,080.45|-16,210,080.45||
|2.Distributiontotheowners(orshareholders)||-87,748,976.20|-87,748,976.20|
|3.Others||||
|(IV)Internalcarry-overofowners’equity||||
|1.Conversionofcapitalreserveintocapital(orcapitalstock)||||
|2.Conversionofsurplusreserveintocapital(orcapitalstock)||||
|3.Lossmadeupwithsurplusreserve||||
|4.Settingoftheamountinvolvedinthemovementofthebeneficialplancarriedovertotheretainedearnings||||
|5.Others||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|(V)Specialreserve||||||
|1. Provisioninthereportingperiod||||||
|2.Appliedinthereportingperiod||||||
|(VI)Others||||||
|IV.Endingbalanceofthereportingperiod|438,744,881.00|1,068,111,185.32|223,015,793.80|683,798,086.83|2,413,669,946.95|

 Amountinthepreviousperiod
InCNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Items|Previousperiod|||||||||||
||CapitalStock|Otherequityinstruments|||CapitalReserve|Less:sharesinstock|Othercomprehensiveincome|Specialreserve|SurplusReserve|Retainedearnings|Totalowner’sequity|
|||Preferredshares|Perpetualbond|Others||||||||
|I.Endingbalanceofthepreviousyear|438,744,881.00||||1,068,111,185.32||||193,961,700.45|553,934,710.97|2,254,752,477.74|
|Plus:Changeinaccountingpolicy||||||||||||
|Correctionofpreviouserrors||||||||||||
|Others||||||||||||
|II.Openingbalanceofthereportingyear|438,744,881.00||||1,068,111,185.32||||193,961,700.45|553,934,710.97|2,254,752,477.74|
|III.Decrease/increaseofthereportyear(decreaseisstatedwith“-“)|||||||||12,844,012.90|71,721,628.02|84,565,640.92|
|(I)Totalcomprehensiveincome||||||||||128,440,129.02|128,440,129.02|
|(II)Owners’inputanddecreaseofcapital||||||||||||
|1.Commonsharescontributedbytheowner||||||||||||
|2.Capitalcontributedbyotherequityinstrumentsholders||||||||||||
|3.Amountofpaymentforsharescreditedto||||||||||||

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|owners’equity||||||
|4.Others||||||
|(III)ProfitDistribution|||12,844,012.90|-56,718,501.00|-43,874,488.10|
|1.Provisionofsurplusreserve|||12,844,012.90|-12,844,012.90||
|2.Distributiontotheowners(orshareholders)||||-43,874,488.10|-43,874,488.10|
|3.Others||||||
|(IV)Internalcarry-overofowners’equity||||||
|1.Conversionofcapitalreserveintocapital(orcapitalstock)||||||
|2.Conversionofsurplusreserveintocapital(orcapitalstock)||||||
|3.Lossmadeupwithsurplusreserve||||||
|4.Settingoftheamountinvolvedinthemovementofthebeneficialplancarriedovertotheretainedearnings||||||
|5.Others||||||
|(V)Specialreserve||||||
|1.Provisioninthereportingperiod||||||
|2.Appliedinthereportingperiod||||||
|(VI)Others||||||
|IV.Endingbalanceofthereportingperiod|438,744,881.00|1,068,111,185.32|206,805,713.35|625,656,338.99|2,339,318,118.66|

 Legalrepresentative: HuangYongfeng ChiefFinancialOfficer:ChenZhuo
PersoninchargeoftheAccountingDepartment:TianHui
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Notes to the Financial Statements
for the Year Ended 31 December 2018
(ExpressedinRMBYuanunlessotherwiseindicated)
I. Companystatus
FIYTAHoldingsLtd.(the“Company”)wasfounded,undertheapprovalofShenFuBanFu(1992)1259issuedby theGeneralOfficeofShenzhenMunicipalGovernment,throughtherestructuringofformerShenzhenFIYTATime IndustrialCompanybythepromoterof ChinaNationalAero-TechnologyImportandExportShenzhenIndustry& Trade Center (name changed to “China NationalAero-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-TechBuilding,GaoXinNanYiDao,NanshanDistrict,Shenzhen,GuangdongProvince.
Pursuant to the approval of Shen Ren Yin Fu Zi (1993) 070 issued by thePeople’s Bank of China Shenzhen SpecialEconomicZoneBranch,theCompanyissuedRenminbiordinaryshares(Ashares)andRenminbispecialshares(Bshares)publiclyon10March1993.On3June1993,boththeCompany’sAsharesandBshareswerelistedandtradedonShenzhenStockExchangepursuanttotheapprovalofShenZhengBanFu[1993]20issued byShenzhenSecuritiesRegulatoryOfficeandShenZhengShiZi(1993)16issuedbyShenzhenStockExchange. On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of ShenzhenMunicipalAdministrationforIndustryandCommerce.
On4 July1997, ChinaNationalAero-TechnologyShenzhenCo.,Ltd.("CATICShenzhen Company")transferred 72,360,000 corporate shares (accounting for52.24% of the Company's total share capital) to Shenzhen China Aviation Group Company Limited (previously known as "Shenzhen China Aviation Industry Company Limited", hereinafterreferredtoas"ChinaNationalAviationGroup")accordingtosharetransferagreementsignedbyboth parties.As a result, theCompany’s controlling shareholder changed from CATIC Shenzhen Company to China NationalAviationGroup.
On 26 October 2007, the Company implemented split-share reform. Under the premise of maintaining the Company'stotalof249,317,999sharesunchanged,theCompany'sshareholdersofnon-tradablesharespaid3.1 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 NationalAviationGroupreducedto44.69%from52.24%.
On 29 February 2008, dueto expanding the scope of business, theCompany’s corporate business license was alteredfromShen Si Zi No. 4403011001583 to No. 440301103196089with the approval of Shenzhen Municipal AdministrationforIndustryandCommerce.
With the approval of “Reply of China Securities Regulatory Commission (CSRC) to the Approval of Private
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Placement of Shenzhen FIYTA Holdings Limited” (Zheng Jian Xu Ke[2010]1703) and “Reply of State-owned AssetsSupervisionandAdministrationCommissionoftheStateCouncil(SASAC)onIssuesinPrivatePlacement ofShenzhenFIYTAHoldingsLimited” (SASAC (2010)430) in2010, the Companyis approvedto issuenot more than 50,000,000 ordinary shares (A shares) by private placement. After the completion of the placement on 9December2010,theCompany’sregisteredcapitalincreasedtoRMB280,548,479.00andtheequitycapitaloftheCompanyheldbyChinaNationalAviationGroupreducedto41.49%.
On 3 March 2011, the company name changed to FIYTA Holdings Limited with the approval of Shenzhen MunicipalAdministrationforIndustryandCommerce.
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 Companychangedto392,767,870sharesaftertheincrease.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply ofnon-publicofferingofstocksofShenzhenFIYTAHoldingsLimited”(ZhengJianXuKe[2015]2588)andtheapproval 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, theCompany’s registered capital was increased to RMB438,744,881.00 and the equity capital of the Company held by China NationalAviation Groupreducedto37.15%.
Asat31December2018,theCompanyhasaccumulativelyissued438,744,881sharesintotal(refertoNotesVI. 25“Sharecapital”fordetail).
Corporate governance institutions that were established by the Company include General Meeting of Shareholders,BoardofDirectors,BoardofSupervisors, StrategyCommittee,AuditCommittee,andNomination, Remuneration and Evaluation Committee. TheCompany’s functional departments includeAdministration, Party Affairs, Discipline Inspection and Audit, Finance, Human Resources, Strategy and Operating, Data andInformation,InnovativeDesignCenter,R&D,andPropertyManagementdepartments.
ThefinancialstatementshavebeenapprovedandauthorisedforissuebytheBoardofDirectorsoftheCompany on13March2019.
Thereare11subsidiariesthatareincludedintheCompany’sscopeofconsolidationforyear2018,seeNoteVIII “Equity inother entities” for detail.Comparing with prioryear,thestatusof changesin scopeofconsolidationis: zeroadditionandonedecrease.SeeNoteVII“Changesinscopeofconsolidation”fordetail.
The business scope of the Company and its subsidiaries mainly includes: producing and selling of analogue indication mechanical watches, quartz watches and its movements, components, various timing devices, processingandwholesalingkarat goldjewellerywatches,intelligent watches;domesticcommercialandmaterial
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
supply and distributing business (excluding goods under exclusive operational rights, special control and exclusive sales); property management and leasing; providing design service. Import and export business of self-design and construction; import and export business (according to Shen Mao Guan Deng Zheng Zi No.2007-072).ThelegalrepresentativeoftheCompanyisHuangYongfeng.
II. Basisofpreparation
ThefinancialstatementsoftheCompanyhavebeenpreparedbasedongoingconcernassumptionandbasedon 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 42 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 FinancialReports”(revisedin2014)issuedbyChinaSecuritiesRegulatoryCommission(CSRC).
According to Accounting Standards for Business Enterprises, accrual basis is adopted for theCompany’s accountingactivity.Exceptforsomefinancialinstruments,thefinancialstatementsaremeasuredusinghistorical cost. In case of impairment occurred on assets, provisions for impairment are provided for in accordance with relatedrules.
III. Statementofcompliancewithcorporateaccountingstandards
ThefinancialstatementsoftheCompanyhavebeenpreparedinaccordancewiththerequirementsofAccounting StandardsforBusinessEnterprises.Thesefinancialstatementspresenttrulyandcompletelythefinancialposition asat31December2018,theresultsofoperationsandthecashflowsfortheyearthenendedoftheCompany.In addition, the financial statements of the Company comply with, in all material respects, the disclosure requirementsforfinancialstatementsandnotestothefinancialstatementsunder“RegulationonthePreparation of Information Disclosures of Companies Issuing Public Shares, No. 15: General Requirements for Financial Reports”asrevisedbyCSRCin2014.
IV. Significantaccountingpoliciesandestimates
The Company and each subsidiaries determines specific accounting policies and estimates for revenue recognition, depreciation of fixed asset, amortization of intangible assets andR&D expenses according to the characteristicsoftheirproductionandoperationandbasedonCAS.RefertoNotesIV.24“Revenue”,NoteIV15
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
“FixedAsset”,NoteIV18(1)“IntangibleAsset”andNoteIV18(2)“R&DExpenses”fordetail.Forexplanationof significant accounting judgement and estimate made by the management, refer to Note IV 30 “Significant accountingjudgementandestimate”fordetail.
1. Accountingperiod
TheaccountingperiodoftheCompanyincludesaccountingyearandinterimaccountingperiod.Aninterimperiod referstoareportingperiodwhichisshorterthanafullaccountingyear.TheaccountingyearoftheCompanyisthe calendaryear,i.e.from1Januaryto31Decemberofeachyear.
2. Operatingcycle
Normaloperatingcyclerefertotheperiodstartfrompurchasingassetformanufacturinguntilrealizationofcashor cashequivalent.TheoperatingcycleoftheCompanyis12months,whichisthebasisfordistinguishingliquidityof assetsandliabilities.
3. Recordingcurrency
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 (FIYTAHong 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,includingFIYTAHongKonganditssubsidiaryStation68Limited(Station68)useHongKongDollar(HKD) astherecordingcurrencyandtranslatetoRenminbiwhenpreparingfinancialstatements.
ThecurrencyusedinpreparingtheCompany’sfinancialstatementsisRenminbi.
4. Accounting treatment for business combinations involving entities under common control and not undercommoncontrol
Business combination refers to transactions or events that combine two or more separate enterprises and form onereportingentity.Businesscombinationsareclassifiedintobusinesscombinationsinvolvingenterprisesunder commoncontrolandbusinesscombinationsinvolvingenterprisesnotundercommoncontrol.
(1) Businesscombinationinvolvingentitiesundercommoncontrol
Iftheenterprisesinvolvedinacombinationaresubjecttocontrolofthesamepartyorpartiesbothbeforeandafter the combination, and that control is not temporary in nature, it is business combination under common control. Thepartywhoobtainscontroloverotherparticipatingenterprisesonthecombinationdateisthecombiningparty, 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.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Assets and liabilities that the combining party obtained are measured using book value of the combinedparty’s accounts on combination date. Difference between book value of net assets the combining party obtained and bookvalueofcombinationconsiderationpaid(ortheaggregatenominalamountofsharesissued)isrecognized in capital reserve (share premium). If the capital reserve (share premium) is insufficient to offset, retained earningswillbeadjustedaccordingly.
Alldirectexpensesincurredbytheacquirerinrelationtothecombinationareincludedinthecurrentprofitorloss atthetimesuchexpensesincurred.
(2) Businesscombinationsinvolvingentitiesnotundercommoncontrol
Iftheenterprisesinvolvedinacombinationarenotsubjecttocontrolofthesamepartyorpartiesbothbeforeand afterthecombination,itisthebusinesscombinationinvolvingentitiesnotundercommoncontrol.The partywho 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 dateisthedateonwhichtheacquireractuallyobtainsthecontrolovertheacquirees.
Asforbusinesscombinationsinvolvingenterprisesnotunder commoncontrol,combinationcostincludesassets paid,liabilitiesincurredorassumed,andthefairvalueofequitysecuritiesissuedbytheacquirertoobtaincontrol overtheacquireeontheacquisitiondate.Feesforauditing,legalservice,evaluationandconsultation,andother administrative expensesincurredfor the combinationare recognized inprofit or loss in theperiod 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. Contingentconsideration,ifany,isincludedinacquisitioncostatitsfairvalueontheacquisitiondate.If,within12 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. Foracquisitionthatrealizedstepbystepthroughmultipletransfertransactions,theequityoftheacquireeheldby theacquirer before the acquisition date arere-measured using fair value on the acquisition date.Anydifference 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 ofacquiree’s equity held by the acquirer before the acquisitiondateandfairvalueofadditionalequityacquiredontheacquisitiondate.
Acquisition cost incurred by the acquirer and identifiable net assets acquired in the acquisition are measured at fairvalueontheacquisitiondate.Iftheacquisitioncostisgreaterthanthefairvalueofthepartofidentifiablenet assetsacquired onthe acquisitiondate, the differenceis recognized as goodwill. If theacquisition costis lesser than the fair value of the part of identifiable net assets acquired on the acquisition date, review the fair value of eachidentifiableasset,liabilityandcontingentliabilitythatacquiredandthecalculationofacquisitioncost.If,after thereview,theacquisitioncostisstilllesserthanthefairvalueofthepartofidentifiablenetassetsacquired,the
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
differenceisrecognizedinprofitorlossincorrespondingperiod.
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 deferredtaxassetsandcorrespondinglydeductgoodwillifneworfurtherevidenceshows,within12monthsafter 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 tothe deduction,theexcess part isrecognized in profitor loss incorresponding period.Deferred tax assetsrecognizedinrelationtoacquisitionthatotherthanthecircumstancesmentionedabovearerecognizedin profitorlossincorrespondingperiod.
For business combination involving entities not under common control that achieved in stages that involves multipletransactions,judgementofwhetheratransactionbelongsto“abaskettransaction”requirestobecarried outinaccordancewiththe“Notice oftheMinistry ofFinanceon Circulatingthe FifthInterpretationtoAccounting StandardsforBusinessEnterprise”(CaiKuai(2012)No.19)andcriteriaof“abaskettransaction”statedinclause51of“AccountingStandardsforBusinessEnterpriseNo.33–FinancialStatementsConsolidation”(seeNoteIV5 (2) for detail). If it is “a basket transaction”, the accounting treatment shall be referred to descriptions in above paragraphs and Note IV 13 “Long-term equity investment”. If itisn’t “a basket transaction”, the accounting treatmentshallbedifferentiatedforindividualandconsolidatedfinancialstatements.
In the individual financial statements, the initial investment cost is the sum of the carrying amount of equity investmentoftheacquiree heldpriortotheacquisitiondateandtheadditionalinvestmentcostattheacquisition 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 investeehaddirectlydisposedoftherelatedassetsorliabilities(i.e.exceptfortheportionresultedfromchanges in re-measuring theacquiree’s net liability or net asset of a defined benefit plan according to equity method accounting,therestshallberecordedincurrentperiodinvestmentgain).
Intheconsolidatedfinancialstatements,thecostofequityinvestmentoftheacquireeheldpriortotheacquisition date is re-measured at the fair value on the acquisition date, the difference between the fair value and carrying valueisrecognizedasinvestmentgainforthecurrentperiod.
Foranequityheldpriortheacquisitiondatethatinvolvingothercomprehensiveincome,theothercomprehensive income shall be accounted for on the same basis as would have been required if the investee had directly disposedofthe relatedassetsor liabilities(i.e.exceptfor theportion resultedfromchangesinre-measuringtheacquiree’snetliabilityornetassetofadefinedbenefitplanaccordingtoequitymethodaccounting,therestshall berecordedincurrentperiodinvestmentgain).
5. Methodofpreparingconsolidatedfinancialstatements
(1) Principlesindeterminingthescopeoftheconsolidation
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
The scopeof consolidationisdetermined on thebasisof control. Controlrefersto therightthatthe Companyis abletomakedecisiononfinancialandoperationalpoliciesoftheinvestedcompany,andreceivingbenefitsfrom thebusinessactivitiesconductedbytheinvestedcompany.ThescopeoftheconsolidationincludestheCompany andallitssubsidiaries.SubsidiarymeansenterpriseorentitythatiscontrolledbytheCompany.
TheCompanywillre-evaluatethescopeofconsolidationoncerelatedfactsandsituationchanges,whichinturn resultsinchangestokeyfactorsthatdefinecontrol.
(2) Methodofpreparingconsolidatedfinancialstatements
TheGroupbeginstoincludeasubsidiaryinthescopeofconsolidationfromthedatethattheCompanyacquires the net assets and effective control over the operation and business decisions of the subsidiary.Asubsidiary isexcludedoutofthescopeoftheGroup’sconsolidationfromthedatetheCompanylosseseffectivecontroloverit. Forsubsidiarythatisdisposed,theoperatingperformanceandcashflows before thedisposaldateareproperly includedintheconsolidatedincomestatementandconsolidatedcashflowstatement.Theopeningbalanceofthe consolidatedbalancesheetisnotadjustedifthedisposaloccursinthesameperiod.The businessperformance andcashflowsoftheadditionofsubsidiarythroughcombinationinvolvingentitiesnotundercommoncontrolafter the acquisition date have been properly included in the consolidated income statement and consolidated cash flowstatement,andnoadjustmentsaremadetotheopeningbalanceandcomparativefiguresoftheconsolidated financialstatements.Foradditionofsubsidiary 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 andcomparativefiguresoftheconsolidatedfinancialstatementsareadjustedatthesametime.
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 theCompany’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 valueofitsidentifiablenetassetsontheacquisitiondate.
All material intra-group current account balances, transactions and unrealized profits are offset when preparing theconsolidatedfinancialstatements.
The part of subsidiaryshareholders’ equity and current period net profit or loss that do not attribute to theCompanyarepresentedseparatelyundershareholders’equityandnetprofitinconsolidatedfinancialstatements as minorityshareholders’ equity and minorityshareholders’ profit or loss respectively. Portion ofsubsidiaries’ current net profit or loss attributable to minorityshareholder’s equity are presented under the title of “minorityshareholders’ profit or loss” under net profit in consolidated income statement. Ifsubsidiary’s losses that attributable to minority shareholders exceed the openingowners’ equity attributable to minority shareholders,minorityshareholders’equityisdeducted.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
IftheCompanylossescontroloverasubsidiaryduetopartialdisposalofequityinvestmentorotherreasons,the remainingequityismeasured atfairvalue onthedatewhenthecontrollost.The differencebetweenthe sumof 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 comprehensiveincomerelatedtoequityinvestmentinthesubsidiaryistransferredtoinvestmentgainatthetime 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 “Financialinstrument”orNoteIV.13“Long-termequityinvestment”fordetails.
IftheCompanylossescontroloverasubsidiarystepbystepthroughmultipledisposaltransactions,judgmentof whether these transactions belong to “a basket transaction”.It’s typically considered to account the multiple transactionas“abaskettransaction”iftheterms,conditionsoreconomiceffectsofeachofthetransactionsmeet oneormorecriterialistbelow:
a.Thetransactionsareenteredintoatthesametimeorincontemplationofeachother;
b.Thetransactionstogethercanachieveacompletecommercialeffect;
c.Theoccurrenceofonetransactionisdependentontheoccurrenceofatleastoneothertransaction;
d. Onetransactionisnoteconomicallyjustified,butitiseconomicallyjustifiedwhenconsideredtogetherwith othertransactions.
Ifthetransactionsdonotbelongto abaskettransaction,each transactionsshallbeaccountedforasa disposal transactionthatdoesnotresultedinlossofcontrol(refertoNoteIV.13(2)④ fordetail)andapplicableprinciple of loss of control over a subsidiary because of partial disposal of equity investment or other reason (refer to previousparagraph).However,thedifferencebetweeneachconsiderationreceivedfordisposalandportionofnet asset related to the disposal shall be accounted as other comprehensive income in consolidated financial statementandchargedtoprofitorlossatthetimecontrollossesandintheperiodoflossofcontrol.
6. Categorizingofjointarrangementandaccountingtreatmentforjointoperation
Ajoint arrangement is an arrangement of which two or more parties have joint control. The Company classifies joint arrangements into joint operations and joint ventures.Ajoint 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 ventureisajointarrangementwherebythejointventureshaverightstothenetassetsofthearrangement. TheCompanyadoptsequitymethodtojointventureinvestmentandaccountedforinaccordancewithaccounting policiesstatedinNoteIV13(2)②“Long-terminvestmentaccountedforusingequitymethod”.
As a party in a joint operation, the Company recognize the followings: asset held independently; liability undertaken independently; theCompany’s share of asset held commonly and liability undertaken commonly;
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
revenuefromsellingoutputofthejointoperationthatenjoyedbytheCompany;revenuefromsellingoutputofthe joint operation based ontheCompany’s share; expensesincurred independently bythe Companyand common expensesincurredandshallbebornebytheCompanyaccordingtoitsshares.
WhentheCompany,asapartyinajointoperation,investorsellasset(theassetdoesnotconstitutebusiness)to thejointoperationorpurchaseassetfromthejointoperation,theCompanyonlyrecognizetheportionofprofitor lossthatattributetootherpartiesinthejointoperationarisesfromthetransactionbeforetheassetissoldtothirdparty.Iftheassetimpairedaccordingto“CASNo.8–Assetimpairment”,theCompanyrecognizethelossinfullif theassetisinvestedorsoldtothejointoperationbytheCompany,oronlyrecognizetheportionattributabletothe CompanyshouldberecognizediftheassetispurchasedbytheCompanyfromthejointoperation.
7. Determinationofcashandcashequivalents
The Company's cash and cash equivalents include cash on hand, deposit that can be used for immediate payment, andCompany’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 insignificantrisksofchangesinvalue.
8. Foreigncurrencytransactionsandfinancialstatementstranslation
(1) Translationofforeigncurrencytransactions
Initialrecognition of foreign currencytransactions incurred by the Companyare translated to recording currency usingthespotexchangerateatthetradingdate(usuallyreferstomiddlerateofforeignexchangerateonthatday publishedbythePeople'sBankofChina).Forforeigncurrencyexchangetransactionsandtransactionsrelatedto foreigncurrencyexchange,theyaretranslatedintorecordingcurrencyusingactualexchangerate.
(2) Translationofmonetaryitemsandnon-monetaryitemsdenominatedinforeigncurrencies
Atthebalancesheetdate,monetaryitemsdenominatedinforeigncurrenciesaretranslatedusingthespotrateat thebalancesheetdate.Translationdifferencesarisingfromthetranslationarerecognizedincurrentprofitorloss exceptfor:①Capitalized exchange difference attributable to assets purchased or constructed, which can be capitalized, using foreign currency specified loan;②Exchange differences on hedging instruments used for effective hedging of net investments in overseas operations (the difference is included in other comprehensiveincomeuntilthenetinvestmentisdisposedoftoberecognizedascurrentgainsandlosses;③Amortizedcostof availablefor sale monetary items denominated in foreign currency.The exchange differencearose fromthe two scenario mentioned above shall be treated under the principal of capitalizing of borrowing cost and charged to othercomprehensiveincomerespectively.
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 differencearisingfromexchangeratevariationisrecognizedinothercomprehensiveincomeandwillbecharged
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toprofitorlossattheperiodtheinvestmentisdisposed.
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 denominatedinforeigncurrencywhicharemeasuredusingfairvaluearetranslatedatspotrateofthedaythefair valueisdetermined.The differencesbetweenamountofrecording currencyafter thetranslationandtheoriginal amount of recording currency are treated as changes in fair value (including exchange rate change) and are recognizedincurrentprofitorlossorrecognizedincapitalreservesasothercomprehensiveincome.
(3) Translationoffinancialstatementspreparedinforeigncurrencies
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” underowners’ equity in balancesheet.Incaseofdisposalofoverseasoperation,itischargedtotheprofitandlossoftheperiod.
Financial statements of foreign businesses that denominated in foreign currencies are translated to financial statementsin RMB using following rules: asset andliability items in balance sheet are translated using the spotrateonbalancesheetdate;exceptfor“undistributedprofit”,allotheritemsinowners’equityaretranslatedusing the spot rate on the date the corresponding transactions occurred. Revenue and expenses items in income statementaretranslatedusingtheaveragerateonthetransactiondate.Theundistributedprofitatthebeginning 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 andowners’ equity is recognized in other comprehensive income as translation differences and is presented separately underowners’ equity in balance sheet. When disposing overseas operations and losing controlsover theoperations,relevanttranslationdifferenceswhichareoriginallypresentedunderowners’equity arechargedtoprofitorlossentirelyorproportionatelyaccordingtopercentageofdisposal.
CashflowsdenominatedinforeigncurrencyandcashflowsofsubsidiariesoutsideMainlandChinaaretranslated using the average exchange rate on the date when cash flows occur. The amount of cash changes due to exchangeratevariationsarerecognizedasadjustmentitemandpresentedinthecashflowstatementseparately. The balance at the beginning of the year and amount actually incurred prior year are presented using figures inprioryear’stranslatedfinancialstatements.
Allforeignexchangetranslationdifferenceofanoverseainvestmentrecordedunderequityandattributabletothe shareholders of the parent company shall be charged to current period profit or loss when the Company losses controloverthisoverseainvestmentduetodisposalofallequityownedorpartialdisposalorotherreasons. Iftheequityholdinginanoverseainvestmentdecreasedbutstillmaintaincontrolduetopartialdisposalorother 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
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overseaassociateorjointventuredenterprise,foreignexchangedifferencerelatedtotheoverseaoperationshall bechargedtoprofitorlosswhenthedisposaloccurredbasedonthepercentagedisposed.
9. Financialinstruments
AfinancialassetorfinancialliabilityisrecognizedwhentheCompanybecomesonepartyoffinancialinstrument contracts.Financialassetandfinancialliabilityareinitiallyrecognizedatfairvalue.Transactionexpensesfor fair value through profit or loss financial asset and liability shall be charged to the profit or loss directly.Transaction expensesforfinancialassetandliabilityotherthanthatshallbeincludedintheinitialrecognitionamount.
(1) Determinationoffairvaluesforfinancialassetsandfinancialliabilities
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,willingpartiesinanarm’slengthtransaction.Ifthereisanactivemarketforafinancialinstrument,thequotedprice in the active market shall be used to establish the fair value of the financial instruments. Quoted pricesfrom an activemarketarepricesthatarereadilyandregularlyavailablefromanexchange,broker,industryassociationorpricingserviceagencyetc…andrepresentpricesusedinactualmarkettransactionsonanarm’slengthbasis.If noactivemarketexistsforafinancialinstrument,theGroupestablishesfairvaluesbyusingvaluationtechniques. Valuationtechniquesincludeusingthepricesquotedinlatestmarkettransactionsbetweenknowledgeable,willing parties for reference, referencing to the current fair value of another instrument that is substantially the same in nature,discountedcashflowmethodandoptionpricingmodel,etc...
(2) Classification,recognitionandmeasurementoffinancialassets
Financialassetswhicharetradedinconventionalmannerarerecognizedorderecognizedonthetransactiondate. On initial recognition, financial assets are classified into fair value through profit or loss financial assets, held-to-maturityfinancialassets,loansandreceivables,andavailable-for-salefinancialassets.
1 Fairvaluethroughprofitorlossfinancialasset
Fairvaluethroughprofitor lossfinancialassetincludesfinancialassetheldfortradeanddesignateduponinitial recognitionasatfairvaluethroughprofitorloss.
Financialassetmeetoneofthefollowingcriteriaiscategorizedasfinancialassetheldfortrade:A.thepurposeof acquiringthefinancialassetisforsellinginshort-term;B.belongstoidentifiablefinancialinstrumentportfoliothat iscentralized managedand objective evidence proofed thatthe Companymanagesthe portfolio in a manner to makeprofitinshort-term;C.belongstoderivativeinstrumentexceptforderivativeinstrumentsthataredesignated aseffectivehedgingtools,financialguaranteecontractorconnectedwithequityinstrumentinvestmentthatdonot have quotation in an active market and that the fair value cannot be measured reliably and the settlement of derivativeinstrumentmustinvolvedeliveryofthisequityinstrument.
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Financialassetcan berecognized initially asdesignated fair value throughprofit or loss financialasset ifone 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 theCompany’s risk management or investment strategy state that the financial asset portfolioorportfoliocombinesfinancialassetandfinancialliabilitythatcontainsthefinancialassetaremanaged, evaluatedandreportedtokeymanagementbasedonfairvalue.
Fairvaluethroughprofitorlossfinancialassetismeasuredconsequentlyusingfairvalue.Profitorlossarosefrom changesinfairvalueanddividendandinterestincomerelatedtotheassetarerecordedincurrentperiodprofitor loss.
2 Held-to-maturityinvestment
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturitydatesthattheCompanyhasthepositiveintentionandabilitytoholdtomaturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method; gains and losses arising from de-recognition, impairment or amortization is recognized in profit or loss for the currentperiod.
Effectiveinterestratemethodreferstothemethodthatcalculatesamortizedcostandinterestincomeorexpenses foreachperiodbasedonactualinterestrateofafinancialassetorfinancialliability(oragroupoffinancialasset orfinancialliability).Effectiveinterestrateistheratethatusedtodiscountfuturecashflowsofafinancialassetor financialliabilityinitsholdingperiodorashortertimeapplicabletoitscurrentbookvalue.
Whencalculatingeffectiveinterest, theCompanyestimatesfuturecashflows(donotconsiderfuturecreditloss) basedonallcontractualtermsofthefinancialassetorfinancialliability,andtakingintoconsiderationofexpenses, transactionfeeanddiscountorpremium,whichconsistpartoftheactualinterestrate,thatarepaidtoorreceived fromdifferentpartiesofthefinancialassetorfinancialliabilitycontract.
③Loanandreceivables
Loanandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.TheCompany’sassetsfallunderthiscategoryincludenotesreceivable,accountsreceivable,interestreceivable,dividendsreceivableandotherreceivablesetc…
Loan and receivables are subsequently measured at amortized cost using the effective interest method; gains and losses arising from de-recognition, impairment or amortization is recognized in profit or loss for the current period.
④Available-for-salefinancialasset(AFSfinancialasset)
AFSfinancialassetsarethosenon-derivativefinancialassetsthataredesignatedasavailableforsaleandthose financialassetsinadditiontothoseabovementioned.
ThecostofAFSdebtinstrumentinvestmentatperiodendisdeterminedaccordingtoamortizedcost,i.e.theinitial
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recognized amount minus principal repaid plus or minus the accumulated amortization of difference between initialrecognizedamountandamountatthematuritydate,andminusimpairmentlossincurred.ThecostofAFS equityinstrumentatperiodendistheinitialcostwhenitisacquired.
AFSfinancialassetsaresubsequentlymeasuredatfairvalue.Gainandlossesarisingfromchangesinfairvalue of AFS financial assets (other than impairment losses and foreign exchange gains and losses resulted from foreigncurrencymonetaryassetswhicharerecognizedinprofitorlossforthecurrentperiod)arerecognizedas other comprehensive income, until the financial assets are derecognized, are transferred to profit or loss for the currentperiod.Equityinstrumentinvestmentwithnoquotedpriceinactivemarketsandwithnotreliablymeasured fairvalue,andderivativefinancialassetsfortheequityinstrumentandsettledbypayingtheequityinstrumentare subsequentlymeasuredatcost.
Interest income and dividends related to the AFS financial assets are recognized as investment gain for the currentperiod.
(3) Impairmentoffinancialassets
The Company assessesthe carrying amount of financial assetsat each balancesheet date other than those at fair value through profit or loss, if there is objective evidence that financial assets are impaired, the Company determinestheamountofimpairmentloss.
The Company conducts impairment test on individually significant financial assets separately. Financial assets thatarenotindividuallysignificantinamountaretestedforimpairmentseparatelyorgroupedintodifferentasset portfolios based on similarity and correlation of the credit risk characteristics. Financial assets that are not impairedafterstandaloneimpairmenttestswillbetestedagainbyincludingitinaportfoliooffinancialassetswith similar credit risk characteristics. Financial assets that have been impaired in standalone test will not be tested againbyincludingitinaportfoliooffinancialassetswithsimilarcreditriskcharacteristics.
①Impairmenttoheld-to-maturity,loanandreceivables
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 chargedto current period profit or loss. If there is objective evidence shows that the value of the financial asset recoveredafterimpairmentlosswasrecognized,andtherecoveryisconnectedwithmattershappenedafterthe recognitionof impairment loss, the loss recognized previously could be reversed.The carrying amount after the reversalshallnotexceedtheamortizedcostatthereversaldateasifthereisnoimpairmentbefore.
②Available-for-salefinancialassets
ItindicatedthatimpairmentincurredtotheAFS financialassetiftheairvaluedecrease isjudgedassevereand nottemporarybyconsideringallrelevantfactors.
If AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized
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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,currentfairvalueandimpairmentlossespreviouslyrecognizedinprofitorloss.
If,inasubsequentperiod,thefairvalueoffinancialassetsincreasesandtheincreasecanberelatedobjectively toan event occurring after the impairment was recognized,the previouslyrecognized impairmentlossescanbe reversed.ThereversalofimpairmentlossesofAFSequityinstrumentsaretobeincludedinothercomprehensive incomeandtheAFSdebtinstrumentimpairmentsaretobereversedthroughcurrentperiodprofitorloss.
Theimpairmentforderivativefinancialassetthatdonothavequotationinanactivemarketandthatthefairvalue cannot be measured reliably and the settlement of derivative instrument must involve delivery of this equity instrumentarenotallowedtobereversed.
(4) Conditionofrecognitionandmeasurementoftransferoffinancialassets
Financialassetisderecognizedifoneofthefollowingconditionsissatisfied:①thecontractualrightsofreceiving cash flows from the financial asset is terminated;②financial asset has been transferred, and substantially all risksandrewardassociatedwiththeownershipofthefinancialassethavebeentransferredtotransferee;③the 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.
Iftheenterpriseneithertransfersnorretainssubstantiallyalltherisksandrewardsassociatedwiththeownership ofafinancialasset,anditretainscontroloverthefinancialasset,itrecognizesthefinancialassettotheextentof its continuing involvement in the transferred financial asset and recognizing associated liability. The extent of continuinginvolvementinthetransferredassetistheextenttowhichtheenterpriseisexposedtorisksofchanges inthevalueofthetransferredasset.
For an entire transfer of a financial asset that satisfies the de-recognition criteria, the difference between the carryingamountofthefinancialassettransferredandthesumoftheconsiderationreceivedfromthetransferand any cumulative gain or loss that had been recognized in other comprehensive income is recognized in current profitorloss.
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 allocatedtothe partderecognizedandthe sumofthe considerationreceivedfor thepart derecognizedandany cumulativegainorlossattributabletoitthathadbeenrecognizedinothercomprehensiveincomeisrecognizedin currentprofitorloss.
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Forfinancialassetsoldwithrecourseorendorsed,itneedstoassurethatalmostallriskandrewardsassociated with the financial asset have been transferred. If almost all risk and rewards associated with the financial asset havebeentransferredtotherecipient,thefinancialassetshallbede-recognized.IftheCompanyretainsalmost 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 Companyretainscontrolovertheassetneedstobecarriedoutanditshallbeaccountedforbasedonprincipals statedinaboveparagraphs.
(5) Classificationandmeasurementoffinancialliabilities
Oninitialrecognition, financialliabilitiesare classifiedinfinancialliabilitiesat fairvaluethroughprofit or lossand other financial liabilities. A financial liability is initially recognized at fair value. Transaction costs for financial liabilityatfairvaluethroughprofitorlossarechargedtocurrentprofitorloss.Transactioncostsforotherfinancial liabilitiesareincludedintheirinitialrecognitionamounts.
①Fairvaluethroughprofitorlossfinancialliability
Theconditionofcategorizingfairvaluethroughprofitorlossfinancialliabilityanddesignatedasfairvaluethrough profit or loss financial liability is the same as fair value through profit or loss financial asset and designated fair valuethroughprofitorlossasset.
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 chargedtocurrentperiodprofitorloss.
②Otherfinancialliability
Derivative financial liabilities, which connected with equity instrument without quotation in an active market and thatthefairvaluecannotbemeasuredreliablyandthesettlementofsuchfinancialliabilitiesrequiredeliveryofthe 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 currentprofitorloss.
③Financialguaranteecontract
Financialguaranteecontractsthatarenotbelongtofinancialliabilitiesdesignatedasfairvalueandrecord changesinprofitorlossareinitiallyrecognizedatfairvalue,andinitiallyrecognizedatthedeterminedamountin accordancewiththe"CASNo.13-Contingencies"andthehigheroftheinitialbalanceafterdeductingthe accumulatedamortizationaccordingtothe"CASNo.14-Income".
(6) De-recognitionoffinancialliability
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 indicatesthat the present financial
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liability are to be replaced with a new financial liability which has substantially different terms compare with the presentfinancialliability,thepresentfinancialliabilityisderecognizedandthenewfinancialliabilityisrecognized. 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 financialliabilitiesundertook)ischargedtocurrentprofitorloss.
(7) Derivativeinstrumentandembeddedderivativeinstrument
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 valueofderivativeinstrumentthatdesignatedhedginginstrumentandhighlyeffectivearechargedtoprofitorloss based on hedging accounting. Any gains or losses arising from changes in fair value which do not meet the requirementsofhedgeaccountingaredirectlyrecognizedtoprofitorlossforthecurrentperiod.
For hybrid instrument with embedded derivative, where financialassets or liabilities not designated as fair value throughprofitorloss,theeconomicfeaturesandrisksoftheembeddedderivativearenotcloselyrelatedtothatof 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 throughprofitorloss.
(8) Offsettingoffinancialassetsandfinancialliabilities
Financialassetsandfinancialliabilitiescanbepresentedinthebalancesheetusingnetfigureafteroffsettingonly when the Group has the legal rights to offset the financial assets and liabilities that are already recognized and planstoexecutesuchrights,andtheGroupintendstosettlecorrespondingfinancialassetsandliabilitiesonnet basis or to realize the financial asset and settle the financial liability simultaneously. Other than situations mentionedabove,financialassetsandliabilitiesarepresentedseparatelyinbalancesheetandcannotbeoffset. (9) EquityInstrument
AnequityinstrumentisacontractthatevidencesanyresidualinterestintheassetsoftheGroupafterdeducting all of its liabilities. The equity instrument will increase theowners’ equity by deducting transaction costs from considerationreceivedfortheissuanceoftheequityinstrument.
All kinds of distributions to the owners of equity instrument (excluding stock dividends) decrease theowners’ equity.TheCompanydoesnotrecognizefairvaluechangesofequityinstrument.
10. Accountsreceivable
Receivablesincludeaccountsreceivableandotherreceivables.
(1) Recognitionprincipleforbaddebtsprovision
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The Company examines, at the balance sheet date, the carrying amounts of receivables and impairment provisionisrecognizediffollowingobjectiveevidencesthatindicatingimpairmenttoreceivablesoccurs:①severe financialdifficultiesofthedebtor;②abreachofcontractbythedebtor(suchasadefaultorbreachofcontractin interest or principle repayments);③it is probable that the debtor will be bankrupted or conduct other financial reorganization;and④otherobjectiveevidencesindicatingthereisanimpairmentofthereceivables.
(2) Methodofrecognizingbaddebtprovision
①Determinationandprovidingbaddebtprovisionforreceivableswhichareindividuallysignificantinamountand providedforbaddebtindividually
The Company identifies single accounts receivable item that above RMB800,000.00 (inclusive) and single other receivable itemthat above RMB500,000.00 (inclusive) asreceivables thatindividuallysignificant inamount.The Companyconductsimpairmenttestonindividuallysignificantreceivablesseparately.Financialassetsthatarenot impairedafterstandaloneimpairmenttestswillbetestedagainbyincludingitinaportfoliooffinancialassetswith similarcreditriskcharacteristics.Receivablesthathavebeenimpairedinstandalonetestwillnotbetestedagain byincludingitinaportfoliooffinancialassetswithsimilarcreditriskcharacteristics.
②Determinationofreceivablesthatrecognizebaddebtprovisionundercreditriskportfolioandbaddebtprovision recognition.
A.Basisofdeterminingportfoliowithsimilarcreditriskcharacteristics
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 similarityandcorrelationofthecreditriskcharacteristics.Thesecreditriskcharacteristicsreflecttheabilityofthe debtor to repay all amounts due according to terms of contracts related to the assets under test and are in connectionwithestimationoffuturecashflowsexpectedtobegeneratedbytheseassets.
Basisofportfoliodetermination
Item Basisofportfoliodetermination
Portfolioofaging Basedonagingofreceivables
Receivablesfrompettycashadvancedtoemployees,fromsubsidiariesoftheCompany Portfolioofspecificaccounts andsalesrevenuebetweenthelastsettlementdatewiththedepartmentstoreandthe balancesheetdate
B.Recognizingbaddebtprovisionbasedoncreditriskportfolio
Iftheimpairmenttestiscarriedoutforaportfolioofassets,theamountofbaddebtprovisionisrecognizedbased 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,currenteconomiccondition,andlossesthatarealreadyexistintheportfolio.
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Methodofrecognizingbaddebtprovisionfordifferentportfolios
Item Method
Portfolioofaging Analyzingtheagingofreceivables
Portfolioofspecificaccounts Nobaddebtprovisionisrecognized
a.Recognizingbaddebtprovisionbasedonaginganalysismethodwithintheportfolio
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|Percentageofprovisionrecognizedforaccountsreceivable(%)|
|5|
|10|
|30|
|50|

b.Recognizingbaddebtprovisionatapercentagebasedonbalancewithintheportfolio
Percentageofprovisionrecognizedfor Percentageofprovisionrecognizedfor Nameofportfolio
accountsreceivable(%) otherreceivables(%)
Nobaddebtprovisionisrecognizedastheriskofimpairmentdoesnotexistaccording Portfolioofspecificaccounts
toitscreditriskcharacteristics
Based on historical experience, theCompany’s receivables from petty cash advanced to employees, from subsidiariesof the Company andsales revenue between the last settlement date ofthe same department store and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no baddebtprovisionsareprovidedforsuchreceivables.
③Receivablesthatareinsignificantinamountindividuallybutrecognizebaddebtprovisionindividually
The Company conducts impairment test to receivables that insignificant in amount individually but with the followingcharacteristics:receivablesthatinvolvingdisputeorlegalcase,arbitrationwith theotherparty;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 presentvalueofestimatedfuturecashflows.Baddebtprovisionisrecognizedaccordingly.
(3) Reversalofbaddebtprovision
If, subsequent to the recognition of an impairment loss on a receivable, there are objective evidences of a
recoveryinvalueofthereceivableandtherecoveryisrelatedobjectivelytoeventsoccurredaftertheimpairment
was recognized, the impairment loss recognized previously is reversed and recognized in profit or loss. The
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carryingamountafterthereversalshallnotexceedtheamortizedcostofthereceivableonthereversaldateasif thereisnoimpairmentpreviously.
AccountsreceivabletransferredbytheCompanytofinancialinstitutionswithoutrecourse,thedifferencebetween transactionamountminusthecarryingamountofreceivableandrelatedtransactiontaxesandfeesischargedto currentperiodprofitorloss.
11. Inventory
(1) Classificationofinventory
Inventorymainlyincludesrawmaterial,work-in-processandstoredgoods.
(2) Costingmethodofacquiringanddeliveringofinventory
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 (except for branded watches), specific identification method (for stored goods of branded watches).
(3) Determinationofnetrealizablevalueoftheinventoryandmethodofrecognizingimpairmentprovision Netrealizablevalue(NRV)equalstoestimatedsellingpricelessestimatedcostsofcompletion,estimatedselling 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 impactsofeventsafterthebalancessheetdate.Inparticular:(a)theNRVofinventoriesthatareavailableforsale such as finished goods and materials held for trading are determined using the estimated selling price less estimatedsellingexpensesandrelatedtaxesifthebusinessisintheordinarycourseofoperation;(b)theNRVof materials that need to be processed are determined using estimated selling price of finished goods which is manufacturedfromthemateriallessestimatedcostofcompletion,estimatedsellingexpensesandrelatedtaxesif thebusinessisintheordinarycourseofoperation.
TheCompanyrecognizesinventoryimpairmentprovisionforFIYTAbrandwatchesbasedonmodels.
Impairmentprovisionsforbrandedwatchesarerecognizedbyspecificitem.
ImpairmentprovisionsforrawmaterialsofFIYTAwatchesarerecognizedbycategoriesbasedonterminalselling status of FIYTA finished watches taking into considerations of the exchangeability of the spare parts and the specialusageofmaterials.
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.Theamountreversedistoberecognizedincurrentprofitorloss.
(4) Theinventorysystemisperpetualinventorysystem
(5) Amortizationoflow-valueconsumablesandpackagingmaterial
Thelow-valueconsumablesandpackagingmaterialareamortizedusingone-offmethodatthetimeitisused.
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12. Assetheldforsaleanddisposalgroup
If the Company mainly recovers a non-current asset or disposal group by disposal (including non-monetary transaction with commercial substance, the same below) rather than continuously usage. The asset is then classifiedasassetsheldforsale.Thefollowingconditionsaretobemetatthesametime:Anon-currentassetor disposalgroupcanbeimmediatelysoldundercurrentconditionsbasedonthepracticeofsellingsuchassetsor disposal group in a similar transaction; the Company has already decided on the sales plan and has been confirmed the purchase commitment; the sale is expected to be completed within one year. Among them, the disposal group refers to a group of assets that are disposed of by the sale or other means together in a transaction, and the liabilities directly related to these assets transferred in the transaction. The disposal groupbelongstotheassetgrouportheassetgroupcombinationinaccordancewith"CASNo.8–Assetimpairment"to sharethegoodwillacquiredinthebusinesscombination,thedisposalgroupshallincludethegoodwillallocatedto thedisposalgroup.
WhentheCompanyinitiallymeasuresorre-measuresthenon-currentassetsheldforsaleandthedisposalgroup on the balance sheet date, if the book value is higher than the net amount after the fair value minus the selling expenses, then the book value is reduced to the net amount after deducting the selling expenses from the fair valueshallberecognizedastheassetimpairmentlossandrecordedinthecurrentprofitsandlosses,andatthe same time, provision shall be made for the impairment of assets held for sale. For the disposal group, the recognizedimpairmentlossonassetsisoffsetagainstthecarryingamountofthegoodwillinthedisposalgroup, andthenreducedinproportiontotheapplicable"CASNo.42-Non-currentAssetsHeldforSale,DisposalGroup andDiscontinuedOperations"("Held-for-SaleStandard")measurementrequirementsofthenon-currentassetsof thebookvalue.Onthesubsequentbalancesheetdate,ifthefairvalueminusthesellingexpensesincreases,the amount previously written-down should be restored and the applicable sale-for-sale criterion should be applied afterclassificationasheld-for-salecategoryreversaloftheamountoftheassetimpairmentlossrecognizedinthe measurement of non-current assets shall be recorded into the profits and losses of the current period; and accordingtothebookvalueofthenon-currentassetsheldbythedisposalgroupotherthangoodwill,thecarrying amountofthegoodwillthathasbeenoffsetagainstandthenon-currentassetssubjecttothemeasurementofthe heldforsalecriteriacannotbereversed.
Non-current assets held for sale or disposal of non-current assets in the disposal group are not subject to depreciationoramortization.Theinterestonliabilitiesheldinthedisposalgroupforsaleandotherexpensesare continuouslyrecognized.
Non-current assets or disposal group no longer meet the classified conditions for holding the sale category, the Company will no longer be classified as held for sale or remove non-current assets from held-for-sale disposal group,andshallbemeasuredatthelowerofthefollowing:(1)The carryingamountbeforeclassificationasheld forsaleisadjustedaccordingtothedepreciation,amortizationorimpairmentthatshouldberecognizedifitisnot
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classifiedasheldforsale;(2)recoverableamount.
13. Long-termequityinvestment
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 acompany’s finance and business policies, but could not control or jointly control with other parties to the policy making.
(1) Determinationofinvestmentcost
For a long-term equity investment acquired through a business combination involving entities under common control,theinvestmentcostofthelong-termequityinvestmentistheattributableshareofthecarryingamountof theshareholders'equityoftheacquireeatthedateofcombination.Thedifferencebetweentheinitialcostofthe long-termequity 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,retainedearningsshallbeadjusted.Iftheconsiderationispaidbyissuingequitysecurities,itshall,onthe date of acquisition, regard the share of the book value of the shareholder's equity of the acquiree on the consolidatedfinancialstatementoftheultimatecontrolpartyastheinitialcostofthelong-termequityinvestment. Thetotalfacevalueofthestocksissuedshallberegardedasthecapitalstock,whilethedifferencebetweenthe initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capitalreserve.Ifthecapitalreserveisinsufficienttodilute,theretainedearningsshallbeadjusted.Theequities of the combined party which respectively acquired through multiple transaction under the same control that ultimatelyformintothecombinationoftheenterprisesunderthecommoncontrol,shouldbedisposedaccording whetherbelongstoabaskettransaction.Ifitbelongstoabaskettransaction,eachtransactionshallbeaccounted forbytheCompanyasatransactionofacquiringthecontrolright.Ifnotbelongstopackagedeal,itshall,onthe dateof merger,regardtheenjoyed shareofthebookvalueoftheshareholder'sequityofthemergedenterprise 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 considerationofthenewpaymentthatfurtherrequiredonthecombinationdate,shouldadjustthecapitalreserve. If the capital reserve is insufficient to dilute, the retainedearnings shall be adjusted.The equity investment held
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beforethecombinationdatewhichadoptedtheequitymethodforaccounting,ortheothercomprehensiveincome confirmedfortheavailable-for-salefinancialassets,shouldnothaveanyaccountingdisposalforthemoment. 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 accordingtothecombinationcost,thecombinationcostsshallbethesumofthefairvaluesoftheassetspaid,the liabilitiesincurredorassumedandtheequitysecuritiesissuedbytheCompany.Theequityoftheacquireeswhich respectivelyacquiredthroughmultipletransactionsthatultimatelyformintothecombinationoftheentitiesunder commoncontrol,shouldbedisposedaccordingwhetherbelongstoabaskettransaction.Ifitbelongstoabasket transaction, each transaction would be accounted for by the Company as a transaction of acquiring the control right.Ifitdoesnotbelongtoabaskettransaction,thesumofthebookvalueoftheoriginalheldequityinvestment of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the long-termequityinvestmentthatchangedtobeaccountedbycostmethod.Iftheoriginalheldequityiscalculated by cost method, the other relevant comprehensive income would not have any accounting disposal for the moment.Iftheoriginalheldequityinvestmentisthefinancialassetsavailableforsale,itsdifferencebetweenthe fair value and the book value as well as the accumulative changes of the fair value that include in the other comprehensiveincome,shouldtransferintothecurrentgainsandlosses.
Agentfeesincurredbytheacquirerforthebusinesscombinationsuchasaudit,legalservice,andvaluationand consultationfees,andotherrelatedadministrationexpensesarechargedtocurrentprofitorlossatthetimesuch expensesincurred.
Equityinvestmentsthatotherthanthekind originatedfrombusinesscombinationsaremeasuredatcostinitially. The investment cost differs based on ways of acquiring the long-term equity investment. It can be determined basedoncashconsiderationactuallypaidbytheCompany,fairvalueofequitysecuritiesissuedbytheCompany, value stimulated in investment contract or agreement reached, fair value or carrying amount of assets that is exchangedinanon-monetaryassettransfertransaction,orthefairvalueofthelong-termequityinvestmentitself. 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 influencesovertheinvesteesbecauseofadditionoftheinvestmentorexecutejointcontrol,shallbeaccountedfor basedonthesumofthefairvalueoftheequityinvestmentoriginalheldaccordingto“CASNo.22–Recognition andMeasurementofFinancialInstrument”andthenewlyaddedinvestmentcost.
(2) Subsequentmeasurementandrecognitionofgainorlosses
Equity method is used for measurement of long-term equity investment if there is common control (except joint operation)withorsignificantinfluenceovertheinvestedentity.Costmethodisusedformeasurementoflong-term equityinvestmentifthereiscontrolovertheinvestedentity.
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①Long-termequityinvestmentsthataremeasuredusingcostmethod
Undercostmethod,long-termequityinvestmentismeasuredatinitialinvestmentcost.Currentperiodinvestment gain or losses are recognized according to the cash dividend or profit distribution that is announced by the investedentity,exceptforcashdividendorprofitdistributionthatisalreadyannouncedbutnotdistributedwhichis includedintheconsiderationthatactuallypaid.
②Long-termequityinvestmentsthataremeasuredusingequitymethod
Iftheinitialinvestmentcostofa long-termequityinvestment,whichismeasuredusingequitymethod,isgreater thanthe portionof fair valueof the identifiable net assets of theinvested entity attributableto the Company,the initialinvestmentcost of thelong-termequityinvestment isnotadjusted. Otherwise,the difference ischargedto currentprofitorloss,andthecostoflong-termequityinvestmentisadjustedaccordingly.
Whenmeasuredbyadoptingequitymethod,respectivelyrecognizeinvestmentincomeandothercomprehensive incomeaccordingtothenetgainsandlossesaswellastheportionofothercomprehensiveincomewhichshould be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; correspondingreducethebookvalueofthelong-termequityinvestmentaccordingtoprofitswhichbedeclaredto distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for theotherchangesexceptforthenetgainsandlosses,othercomprehensiveincomeandtheowners’equityexceptfor theprofitsdistributionoftheinvestees,shouldadjustthebookvalueofthelong-termequityinvestmentaswellas include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assetsoftheinvestedentitywhenitobtainstheinvestment,recognizetheattributableshareofthenetprofitsand lossesoftheinvestedentityafteritadjuststhenetprofitsoftheinvestedentity.Iftheaccountingpoliciesadopted bytheinvesteesisnotaccordwiththatoftheCompany,shouldbeadjustedaccordingtotheaccountingpolicies oftheCompanyandthefinancialstatementoftheinvesteesduringtheaccountingperiodandaccordingwhichto recognizetheinvestmentincomeaswellasothercomprehensiveincome.Forthetransactionhappenedbetween 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 accordingto the calculationof the enjoyed proportion, shouldrecognize theinvestment gains andlosseson the basis. But the losses of the unrealized internal transaction happened between the Company and the investees whichbelongstotheimpairmentlossesofthetransferredassets,shouldnotbeneutralized.Theassetslaunched 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 intothecurrentgainsandlosseswithfullamount.TheassetssoldbytheCompanytotheassociatedenterprises orthejointventuresifcouldformintobusiness,thedifferencebetweentheacquiredconsiderationandthebook valueofthebusinessshouldbeincludedinthecurrentgainsandlosseswithfullamount.Theassetspurchased
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by the Company to the associated enterprises or the joint ventures if could form into business, should beaccountingdisposedaccordingtotheCAS-No.20–“BusinessCombination”,andshouldberecognizedgainsor lossesrelatedtothetransactionwithfullamount.
TheCompanyshallrecognizethenetlossesoftheinvestedenterpriseuntilthebookvalueofthelong-termequity investment and other long-term rights and interests which substantially form the net investment made to the investedentityarereducedtozero.However,iftheCompanyhastheobligationtoundertakeextralosses,itshall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investmentlossesatcurrentperiod.Iftheinvestedentityrealizesanynetprofitslater,theCompanyshall,afterthe amountofitsattributableshareofprofitsoffsetsagainstitsattributableshareoftheun-recognizedlosses,resume recognizingitsattributableshareofprofits.
For the long-term equity investment in the associates and joint ventures held by the Company for the first time before the implementation of the new accounting standards, if there is a debit balance of the equity investment relatedtotheinvestment,thedifferenceshallbeamortizedandchargedtocurrentprofitorlossusingstraightline methodbasedonoriginalremainingperiod.
③Purchasingminorityequity
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, adjustingretainedearnings.
④Disposaloflong-termequityinvestment
Inconsolidatedfinancialstatements,theparentcompanycandisposepartofthelong-termequityinvestmenttoa subsidiary given thatthe parent doesnot 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 inowners’ 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 financialstatements”.
For long-term equity investment disposal other than situations mentioned above, the difference of carrying amountofdisposedequityandtheconsiderationactuallyreceivedischargedtocurrentprofitorloss.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposalstilladoptstheequitymethodformeasurement,theothercomprehensiveincomeoriginallyrecordedintoowners’ equityshouldadoptthesamebasisoftheaccountingdisposaloftherelevantassetsorliabilitiesdirectlydisposedbytheinvesteesaccordingtothecorrespondingproportion.Theowners’equityrecognizedowningtothechanges of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits
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distributionoftheinvestees,shouldbetransferredintothecurrentgainsandlossesaccordingtotheproportion. 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 measurementor therecognitionandmeasurementstandardsoffinancialinstrumentbeforeacquiringthecontrol 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 totheproportion;thechangesoftheotherowners’equityexceptforthenetgainsandlosses,othercomprehensive incomeandtheprofitsdistributionamongthenetassetsoftheinvesteeswhichrecognizedbyadoptingtheequity methodformeasurement,shouldbecarriedforwardintothecurrentgainsandlossesaccordingtotheproportion. IftheCompanylostcontrolovertheinvesteebydisposingpartoftheequityinvestmentandtheremainedequity afterdisposalcouldexecutejointcontrolorsignificantinfluencesovertheinvestees,itshouldchangetomeasure by equity method when preparing the individual financial statement and should adjust the measurement of the remainedequitytoequitymethodasadoptedsincethetimeacquired.Iftheremainingequityafterdisposalcould not execute joint control or significant influences on the investees, it should change the accounting disposal accordingto therelevant regulationsof the recognition andmeasurement standardsof 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 acquiredthecontroloftheinvestees,shouldexecutetheaccountingdisposalbyadoptingthesamebasisofthe accountingdisposaloftherelevantassetsorliabilitiesdirectlydisposedbytheinvesteeswhenlosethecontrolof them, while the changes of the otherowners’ equity except for the net gains and losses, other comprehensive incomeandtheprofitsdistributionamongthenetassetsoftheinvesteeswhichrecognizedbyadoptingtheequity methodformeasurement,shouldbecarriedforwardintothecurrentgainsandlossesaccordingtotheproportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the othercomprehensiveincomeandtheotherowners’equityshouldbecarriedforwardaccordingtotheproportion;forthe 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 otherowners’ equity shouldbechargedtoprofitorlossinfull.
ForthosetheCompanylostthecontroloftheinvesteesbydisposingpartoftheequityinvestment,thedisposed remainedequityshouldchangetocalculateaccordingtotherecognitionandmeasurementstandardsoffinancial instrument, and difference between the fair value and book value on the date lose the control right should be includedinthecurrentgainsandlosses.Fortheothercomprehensiveincomerecognizedfromtheoriginalequity investmentbyadoptingtheequitymethod,shouldexecutetheaccountingdisposalbyadoptingthesamebasisof theaccountingdisposaloftherelevantassetsorliabilitiesdirectlydisposedbytheinvesteeswhenterminatethe
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equity method for measurement, while for theowners’ equity recognized owning to the changes of the otherowner’sequityexceptforthenetgainsandlosses,othercomprehensiveincomeandtheprofitsdistributionofthe investees,shouldbetransferredintothecurrentinvestmentincomewithfullamountwhenterminateadoptingthe equitymethod.
The Company respectively disposesthe equity investment ofthe subsidiaries through multiple transactions until lose the control right, if the above transactions belongs to the package deal, should execute the accounting disposalbyregardingeachtransactionasadealof disposingtheequityinvestmentofthesubsidiariesuntillose thecontrolright,whilethedifferencebetweeneachexpensesofthedisposalandthebookvalueofthelong-term equityinvestmentinaccordwiththedisposedequitybeforelosingthecontrolright,shouldfirstlyberecognizedas othercomprehensiveincomethenbetransferredintothecurrentgainsandlossesoflosingthecontrolrightalong untilthetimewhenloseit.
14. Investmentproperty
Investmentpropertyispropertyheldtoearnrentalsorforcapitalappreciationorboth.Itincludesbuildingsthatare alreadyleasedout.Besides,forthevacantbuildingsheldbytheCompanyforthepurposeofoperatingleases,if theboardofdirectors(orsimilarinstitution)makesawrittenresolutionthatexpresslyindicatesthatitwillbeused foroperatingleasesandtheintentiontokeepnolongerchangesintheshort-term,italsocanserveasan investmentrealestate.
An investment property is measured initially at cost. If it is probable that the benefit related to subsequent expenditures incurredfor an investment property will flow into the Companyand thatthe cost canbe measured reliably, the expenditure is included in the cost of investment property. Other subsequent expenditures are chargedtoprofitorlossintheperiodinwhichtheyareincurred.
The Company adopts cost method for subsequent measurement to investment property. Depreciation or amortizationpolicyforinvestmentpropertiesarethesameastheoneforplantsandbuildingsorlanduserights. Please refer to Note IV. 20 “Impairment of Long-term assets” for details of impairment test and impairment provisionrecognitionforinvestmentproperty.
Iftheusageofapropertychangedfromself-usetoinvestmentorviceversa,thecarryingamountbeforechange shallbeusedasinitialrecognitionamountafterthechange.
Whentheusageofthepropertychangedfrominvestmentpropertytoself-useproperty,thepropertyistransferred from investment property to fixed asset or intangible asset on the changing date. If the usage of the property changesfromself-usetoearnrentalorcapitalappreciation,thepropertyisswitchedtoinvestmentpropertyfrom fixed asset or intangible asset. If it switched to investment property that measured using cost method, it is recognizedusingthecarryingamountbeforetheswitch.Ifitswitchedtoinvestmentpropertythatmeasuredusing fairvaluemethod,itisrecognizedusingthefairvalueontheswitchingdate.
The investment property is derecognized when it is disposed or ceased usage permanently and it is estimated
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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 profitorloss.
15. Fixedasset
(1) Recognitionprinciples
Fixedassetsrefertotangibleassetsthatareheldforthepurposeofgoodsproduction,providingservices,lease, or for administrative purposes with useful life of more than one accounting year. Fixed asset is recognized only whentheeconomicbenefitassociatedwiththefixedassetisprobabletoflowintotheCompanyandthecostcan bemeasuredreliably.Fixedassetisrecognizedinitiallyatcostbyconsideringestimateddisposalexpenses. (2) Depreciationmethod
The fixed asset is depreciated on straight-line basis over its estimated useful life from the next month after it reachedestimated useful condition.The usefullives, estimated residual ratios and annual depreciation rates for eachcategoryoffixedassetsareasfollows:
||||
|-|-|-|
|Methodofdepreciation|Estimatedusefullives(year)|Estimatednetresidualvalueratios(%)|
|straight-line|20-35|5.00|
|straight-line|10|5.00-10.00|
|straight-line|5|5.00|
|straight-line|5|5.00|
|straight-line|5|5.00|

 Estimatednetresidualvalueofafixed assetistheestimatedamountthattheGroupwouldcurrentlyobtainfromdisposaloftheasset,afterdeductingtheestimatedcostsofdisposal,iftheasset’susefullifeispassedandinthe conditionexpectedattheendofitsusefullife.
(3) Impairmenttestandimpairmentprovisionrecognitionforfixedasset
Forimpairmenttestandimpairmentprovisionrecognitionforfixedasset,pleaserefertoNoteIV.20“Impairment ofLong-termasset”.
(4) Recognitionbasisandpricingmethodoffinancingleasedfixedassets
A financing lease is a lease that transfers all the risks and rewards incidental to the ownership of the asset in substanceandtheownershipmayormaynoteventuallybetransferred.Thedepreciationaccruedmethodofthe
fixed assets rented out under financing leases using a same policy as its own fixed assets. If it is reasonably
certain that the ownership of the leased asset can be acquired when the lease term expires, depreciation is
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accruedovertheusefullifeoftheleasedasset.Ifitcannotreasonablydeterminethattheownershipoftheleased assetcanbeacquiredwhentheleasetermexpires,thedepreciationwillbeaccruedintheshorterofleaseterm andtheusefullifeofleasedasset.
(5) 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 flowintheentityandthecostcanbemeasuredreliably.Subsequentexpendituresotherthanthisarechargedto currentprofitorloss.
Whenafixedassetissold,transferred,retiredordamaged,thedisposalproceednetofthecarryingamountand relatedtaxesischargedinprofitorlossforthecurrentperiod.
The Companyconductreviews totheusefullife, estimatednetresidual rateanddepreciationmethodatleastat eachendoftheaccountingyear.Anychangeswillbetreatedaschangesinaccountingestimates.
16. Constructioninprogress
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. Constructioninprogressistransferredtofixedassetwhentheassetreachesitsestimatedusefulcondition. Forimpairmenttestandimpairmentprovisionrecognitionforconstructioninprogress,pleaserefertoNoteIV.20 “ImpairmentofLong-termasset”.
17. Borrowingcost
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 attributabletotheacquisition,constructionorproductionofaqualifyingassetcanbecapitalizedstartingfromthe 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 whentheassetreachesitsestimatedusefulorsellableconditions.Otherborrowingcostsarechargedtoprofitor lossatthetimetheyareincurred.
The interest expenses actually incurred current-period special borrowing less unused borrowing funds in bank interestearnedorinvestmentincomeonthetemporaryinvestmentofthosefunds,theabovementionedamount shallbe capitalized.The weighted averageasset disbursementof generalborrowing multipliesthe capitalization rate to determine the amount of capitalization based on the accumulative asset disbursements of special loans. Thecapitalizationrateistheweightedaverageinterestrateofthegeneralborrowing.
During the capitalization period, exchange differences on foreign currency borrowings are all capitalized; Exchangedifferencesonforeigncurrencyborrowingsaregenerallyincludedintocurrentprofitorloss.
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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 fixedassets,investmentproperty,inventoriesandotherassets.
Iftheprocessofacquiring,constructingorproducingoftheassetsthatarecapableforcapitalizationisinterrupted abnormally and the interruption lasts more than three months, the capitalization of borrowing costs shall be suspendeduntiltheacquisition,constructionorproductionresumes.
18. Intangibleassets
(1) Intangibleassets
AnIntangibleassetistheidentifiablenon-monetaryassetwithoutphysicalsubstancesthatisownedorcontrolled bytheCompany.
Anintangibleassetisinitiallymeasuredatitscost.Expendituresrelatedtotheintangibleassetareincludedinits cost ifit is probable that therelated economicbenefit willflowintothe Companyand the cost can be measured reliably.Other expendituresapartfromthis will becharged to profitor loss incorresponding period at thetime it incurred.
Landuserightisgenerallyaccountedforasintangibleasset.Whentheplantsorbuildingsareconstructedbythe Group,expendituresonthelanduserightandonthebuildingsshallberecognizedastheintangibleassetandthe fixed asset respectively. When the plants or buildings are purchased, the consideration paid shall be allocated betweenthelanduserightandthebuildings.Ifitcanbeallocatedreasonably,recognizeentirelyasfixedassets. Anintangibleassetwithafiniteusefullifeshallbeamortizedbyusingthestraight-linemethodoveritsestimated useful life when it is available for use. The depreciable amount of an intangible asset is its cost less estimated residualvalueandimpairmentprovision.Anintangibleassetwithanindefiniteusefullifeisnotamortized.
Methodofamortizationforintangibleassetwithfiniteusefullifeisasfollows:
||
|-|
|Usefullife(year)|
|50|
|5|
|5-10|

Foranintangibleassetwithafiniteusefullife,itsusefullifeandamortizemethodarereviewedattheendof eachaccountingperiod.Anychangeswillbetreatedunderchangesinaccountingestimates.Besides,theuseful lifeoftheintangibleassetswithindefiniteusefullifewillbereviewedattheendofeachaccountingperiod.Ifthere isevidenceindicatingthatitisforeseeablethattheperiodduringwhichtheeconomicbenefitassociatedwiththe assetwouldflowintotheentity,itsusefullifewillbeestimatedandtheassetwillbeamortizedinaccordancetothe
amortizationpoliciesapplicableforanintangibleassetwithfiniteusefullife.
(2) Researchanddevelopmentexpenditure
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TheCompany’s expenditure on internal research and development projects are classified into expenditure ontheresearchphaseandexpenditureonthedevelopmentphase.
Expenditureontheresearchphaseisrecognizedinprofitorlossintheperiodinwhichitisincurred.
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, arerecognizedinprofitorlossintheperioditisincurred:
①Thetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale;
②Theintentiontocompletetheintangibleassetanduseorsellit;
③The intangible assetwill generate economicbenefits.Among other things,the Companycandemonstratethe existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally,theusefulnessoftheintangibleasset;
④Theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopmentandtheability touseorselltheintangibleasset;and
⑤Theexpenditureattributabletotheintangibleassetduringitsdevelopmentphasecanbemeasuredreliably. Expenditures which cannot be divided into expenditures on research phase and expenditures on development phasearechargedentirelyincurrentprofitorloss.
(3) Impairmenttestandimpairmentprovisionrecognitionforintangibleassets
For impairment test and impairment provision recognition for intangible asset, please refer to Note IV. 20 “ImpairmentofLong-termasset”.
19. Long-termdeferredexpenses
Long-termdeferredexpensesrefertoexpenditureswhichareincurredbutshallbeexpensedoverthebeneficiary period of more than one year. TheCompany’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 beneficiaryperiod.
20. ImpairmentofLong-termassets
The Company 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-termequityinvestmenttosubsidiaries,jointventuredcompaniesandassociatedcompanies.Ifthereareany indictorsofimpairment,recoverableamountisestimatedandimpairmenttestisconducted.Impairmenttestsare conductedeach year to goodwill, intangibleassetsthat with indefiniteuseful life and intangibleassets that have notreacheditsusefulconditiondespitewhetherthereisindicatorsofimpairment.
If the recoverable amount of an asset is less than its carrying amount in the impairment test, provision for impairmentshallbemadeforthedifferenceandrecognizedasanimpairmentloss.Therecoverableamountofan
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assetisthehigherofitsfairvaluelesscoststosellandthepresentvalueofthefuturecashflowsexpectedtobe derivedfromtheasset.Thefairvalueofanassetisdeterminedaccordingtothepriceinasaleagreementinanarm’s length transaction. If thereis no sale agreement but anactive market for the asset,the fair valueshall be determinedaccordingtothecurrentbidprice.Ifthereisnosaleagreementoractivemarketfortheasset,thefair valueshallbebasedonthebestinformationavailable.Costsofdisposalincludelegalcostsrelatedtothedisposal oftheasset,relatedtaxes,costofremovingtheassetanddirectcosttobringtheassetintoitsconditionofsale. 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 fromits ultimate disposal and applying the appropriate discountratetothosefuturecashflows.Provisionforimpairmentshallbemadeandrecognizedonanindividual basis.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,theCompanyshalldetermine therecoverableamountof theassetgroupto which theassetbelongs.An assetgroupisthe minimumgroupof assetswhichcangeneratecashflowsindependently.
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 benefitfromthesynergyeffectinabusinesscombination.Ifthetestresultsindicatethattherecoverableamount of the asset group or combination of asset group, which consist goodwill allocated, is lower than its carrying amount,impairmentlossisrecognizedaccordingly.Theimpairmentlossreducesthecarryingamountofgoodwill that allocated to the asset group or combination of asset group. If the goodwill is insufficient to deduct, then offsettingotherassetswithintheassetgrouporcombination ofassetgroupproportionatelybasedontheweight ofthecarryingamountofassetsotherthangoodwillintheassetgrouporcombinationofgroup.
Onceanimpairmentlossisrecognized,itshallnotbereversedinsubsequentperiods.
21. Employeebenefit
Employeebenefitincludeshort-termemployeebenefit,post-employmentbenefitsandterminationbenefits. Short-term benefit mainly includes employee salary, bonus, allowance, employee welfare, maternity insurance, work injury insurance, housing fund, labor union fee, employee education fund and non-monetary welfareetc… The Company recognize short-term benefit 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-employmentbenefitmainlyincludebasicendowmentinsurance,unemploymentinsuranceandannuityetc… Post-employment benefit plan includes defined contribution plans. Defined contribution plans are post-employmentbenefitplansunderwhichanentitypaysfixedcontributionsintoanescrowfundandtheamount shallbechargedtocostofrelatedassetorcurrentperiodprofitorloss.
When the Company terminates the employment relationship with employees before the employment contracts expireorprovidescompensationasanoffertoencourageemployeestoacceptvoluntaryredundancy,aprovision
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shallbe recognized at the date earlierof theCompany cannot unilaterally withdraw fromthe termination plan or the redundancy offer and the Company determined the reconstruction cost related with the payment of terminationbenefit.Terminationbenefitshallberecognizedasemployeebenefitpayableandchargedtotheprofit or loss for the current accounting period. If the termination benefit cannot be paid within 12 month after the balancesheetdate,itshallbetreatedaslong-termemployeebenefit.
Theearlierretirementplanshallbeaccountedforinaccordancewiththeaccountingprinciplesforcompensation for termination of employment. The salaries or wages and the social contributions to be paid for the employees whoretirebeforeschedulefromthedateonwhichtheemployeesstoprenderingservicestotheCompanytothe scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current profitorlossiftherecognitionprinciplesforprovisionsaresatisfied.
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 treatmentisapplicable.
22. Provision
Aprovisionisrecognizedwhen obligationrelatedtocontingenciessatisfiesfollowingcondition:(1)theobligation isapresentobligationoftheCompany; (2)itisprobablethatanoutflowof economicbenefitswill berequiredto settletheobligation;and(3)andtheamountoftheobligationcanbemeasuredreliably.
Atthebalancesheetdate,aprovisionshallbeinitiallymeasuredatthebestestimateoftheexpenditurerequired tosettletherelatedpresentobligation,takingtherisks,uncertaintiesandtimevalueofmoneythatrelatedtothe contingenciesintoconsideration.
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 amountoftheestimatedliability.
(1)Onerouscontract
An onerous contract is a contract in which the aggregate cost required to fulfil the agreement is higher than the economic benefit to be obtained from it. If the contract to be executed becomes an onerous contract, and the obligation arising from the onerous contract meets the conditions for the recognition of the above-mentioned provision,theportionofthecontract'sestimatedlossthatexceedstherecognizedimpairmentloss(ifany)ofthe contractedassetisrecognizedasaprovision.
(2)Restructuringobligations
For detailed and formal restructuring plans that have been publicly announced, if it meets the recognition conditions of a liability mentioned above, a provision is determined based on the direct expenses related to the
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restructuring.
23. Share-basedpayment
(1)Accountingtreatmentofshare-basedpayment
Ashare-basedpaymentisatransactionthatgrantsanequityinstrumentorassumesaliabilitydeterminedonthe basisofanequityinstrumentinordertoobtainservicesfromemployeesorotherparties.Share-basedpayments aredividedintoequity-settledshare-basedpaymentsandcash-settledshare-basedpayments.
1 Equity-settledshare-basedpayments
The equity-settled share-based payment in exchange for theservices provided bythe employee ismeasured at thefairvalueoftheequityinstrumentsgrantedtoemployeesatthegrantdate.Iftheoptioncanonlybeexercised aftercompletingtheservicewithinthevestingperiodormeetingtherequiredperformanceconditions,theamount of the fair value shall be charged to cost or expenses based on straight-line method during the vesting period usingthebestestimateoftheamountofexercisableequityinstrument.Iftherightcanbeexercisedimmediately after the grant, the relevant costs or expenses are included in the grant date, and the capital reserve are increasedaccordingly.
Oneachbalancesheetdateduringthewaitingperiod,theCompanymakesthebestestimatebasedonthelatest informationonthechangesinthenumberofemployeeswithvestingrights,andcorrectsthenumberofequity instrumentsthatareexpectedtobeexercised.Theimpactoftheaboveestimatesisrecognizedinthecurrent relatedcostsorexpenses,andthecapitalreserveisadjustedaccordingly.
Equity-settledshare-basedpaymentsinexchangeforotherparties'services,ifthefairvalueofotherparties' servicescanbereliablymeasured,ismeasuredatthefairvalueofotherservicesonthedateofacquisition.Ifthe fairvaluecannotbemeasuredreliably,itismeasuredatthefairvalueoftheequityinstrumentontheacquisition date,andisincludedintherelevantcostorexpense,whichincreasestheshareholders'equityaccordingly. Cash-settledshare-basedpayments
②Thecash-settledshare-basedpaymentismeasuredatthefairvalueoftheliabilitiesdeterminedbytheCompany basedonsharesorotherequityinstruments.Iftherightcanbeexerciseimmediatelyafterthegrant,therelevant costs or expenses are included in the grant date, and the liabilities are increased accordingly. If the option can only be exercised after completing the service within the vesting period or meeting the required performance conditions,theserviceobtainedbytheCompanyincurrentperiodshallbechargedtoprofitorlossbasedonfair valueoftheliabilitiesundertakebytheCompany,calculatedonthebasisofthebestestimationoftheexercisable optiononeachbalancesheetdateofthevestingperiod.Theliabilitiesshallbeincreasedaccordingly.
Thefairvalueoftheliabilityisre-measuredateachbalancesheetdateandsettlementdatebeforethesettlement ofrelatedliabilities,thechangesareincludedinthecurrentprofitandloss.
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(2)Modifyingandterminatingtherelevantaccountingtreatmentoftheshare-basedpaymentplan
WhentheCompanychangestheshare-basedpaymentplan,ifthemodificationincreasesthefairvalueofthe grantedequityinstruments,theincreaseinthefairvalueoftheequityinstrumentsisrecognizedaccordingly.The increaseinthefairvalueofequityinstrumentsreferstothedifferencebetweenthefairvalue,measuredonthe modificationdate,oftheequityinstrumentsbeforeandafterthemodification.Ifthemodificationreducesthetotal fairvalueoftheshare-basedpaymentoradoptsothermethodsthatarenotinfavorofemployees,theaccounting treatmentofitwillnotbechanged,asifthemodificationneverhappenedunlesstheCompanycancelledpartorall ofthegrantedequityinstruments.
Duringthevestingperiod,ifthegrantedequityinstrumentiscancelled,theCompanyshalltreatthecancelled equityinstrumentasacceleratedexercise,andshallimmediatelychargetheamountthatshouldberecognizedin theremainingvestingperiodintothecurrentprofitandlossandadjustingthecapitalreservesatthesametime.If theemployeeorotherpartycanchoosetomeetthenon-vestingconditionsbutfailsduringthevestingperiod,the Companywilltreatitasacancellationoftheequityinstrument.
(3) Accountingtreatmentinvolvingshare-basedpaymenttransactionsbetweentheCompanyandits
shareholdersoractualcontrollersoftheCompany
Inrespectoftheshare-basedpaymenttransactionbetweentheCompanyanditsshareholdersoractual
controllersoftheCompany,ifoneofthesettlementcompanyandtheservicerecipientisintheCompany,andthe otherisoutsidetheCompany,theaccountingtreatmentiscarriedoutintheconsolidatedfinancialstatementsof theCompanyaccordingtothefollowingrules:
1 Ifthesettlementcompanysettleswithitsownequityinstrument,theshare-basedpaymenttransactionshall betreatedasequity-settledshare-basedpayment;otherwise,itshallbetreatedasacash-settledshare-based payment.
Ifthesettlementcompanyistheinvestoroftheservicerecipient,itshallrecognizedasthelong-termequity investmenttotheservicerecipientaccordingtothefairvalueoftheequityinstrumentatthegrantdateorthefair valueoftheliabilitytobeundertaken.Thecapitalreserve(othercapitalreserve)orliabilitiesshallberecognized atthesametime.
2 Iftheservicerecipientdoesnothaveasettlementobligationortheequityinstrumentsgrantedtoits
employeesareitsownequityinstruments,theshare-basedpaymenttransactionshallbetreatedasequity-settled share-basedpayment.Iftheenterprisethatacceptsservicehasthesettlementobligationandtheequity
instrumentgrantedtoemployeesarenotitsownequityinstrument,thesharepaymenttransactionshallbetreated asacash-settledshare-basedpayment.
Forshare-basedpaymenttransactionsoccurredbetweencompanieswithintheCompany,iftheservicerecipient andthesettlementcompanyarenotthesameentity,therecognitionandsubsequentmeasurementofthe share-basedpaymenttransactionintheirindividualfinancialstatementsshallbetreatedinaccordancewith
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principlesabove.
24. Revenue
(1) Generalprincipal
①Revenuefromsaleofgoods
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 economicbenefitswillflowtotheseller,and(e)theassociatedcostsincurredortobeincurredcanbemeasured reliably.
②Revenuefromrenderingofservice
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associatedwiththetransactionarerecognizedusingthepercentageofcompletionmethodonbalancesheetdate. The percentage of completion is calculated based on the proportion of services performed to date to the total volumeofservicestobeperformed.
The outcome of a transaction involving the rendering of services can be estimated reliably when all of the followingconditionsaresatisfied:(a)the amountof revenuecanbe measuredreliably;(b) itisprobablethatthe associated economic benefits will flow to the entity: (c) the percentage of completion can be measured reliably; and(d)thecostsincurredandtobeincurredforthetransactioncanbemeasuredreliably.
Whentheoutcomeofatransactioninvolvingtherenderingofservicescannotbeestimatedreliably,revenueshall be recognized to the extent of costs incurred and expected to be recovered. Costs of service provided are chargedtothecurrentprofitorlossasservicecosts.Ifthecostsincurredarenotexpectedtoberecoverable,no revenueisrecognized.
③Revenuefromrenderingusagerights
Therevenueisrecognizedonaccrualbasisandbasedonrelatedcontractsoragreements.
④Interestincome
TheinterestincomeshallbecalculatedbasedonthetenureoftheCompany’smonetaryfundsusedbyothersand theactualinterestratesused.
(2) Detailedmethodofrevenuerecognition
The watches sold by the Company includes two types, one is the self-manufactured FIYTAwatch, the sales of which is managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a subsidiary of the Company. The other is brand watches, the sales of which are controlled by Shenzhen HARMONY World Watch Center Co., Ltd., a subsidiary of the Company, and the Company act as agent Regardingtosalesmodes,aportionofthesalesofself-manufacturedFIYTAwatchesissoldthroughdirectsales
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to customerand consignment sales while most of the self-manufactured FIYTAwatches andbrand watchesare soldundertwosalesmodes,namelyexclusiveshopandshop-in-shop.Detailedmethodofrevenuerecognitionas follows:
1 Directsalestothecustomer
Under direct sales to the customer mode, the Company delivers products to customers and recognizes sales incomeaftercustomerinspectionandacceptance.
2 Exclusiveshop
Under exclusive shop mode, the Company delivers products to customers and recognizes sales income after customerinspection,acceptanceandpay.
③Shop-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 collectsthepaymentfromthecustomer.
④Consignmentsales
Underconsignmentsalesmode,theCompanyreceivesthedetailofthesaleslistfromdistributorsandrecognizes revenuewhileissuinginvoicetodistributors.
25. Governmentgrants
Governmentgrantsaremonetaryassetsornon-monetaryassetsobtainedbytheCompanyfromthegovernment freeofcharge.Itdoesnotincludecapitalcontributionsfromthegovernmentasanowner.Governmentgrantsare classified into government grants related to assets and government grants related to income. The Company defines the government grants obtained for the acquisition or other formation of long-term assets as the governmentgrantsrelatedtotheassets;theremaininggovernmentgrantsaredefinedasthegovernmentgrants relatedto income.If the government documentsdo notclearlydefine theobjectof subsidy,thesubsidyshall be divided intothe government grant related to income andthe government grantrelated to assets in the following ways:(1)Ifthegovernmentdocumentspecifiesthespecificprojectforwhichthesubsidyistargeted,thebudgetof theproject will be divided intothe relative proportionof theexpenditure amountof the assetsandthe expenses includedintheexpenses,andthedivisionratioshallbereviewedoneachbalancesheetdateandchangedwhen necessary;(2)Ifthegovernmentdocumentsuseonlyforgeneralstatement,andnotspecifyaspecificproject,it willbeasincome-relatedgovernmentgrants.Ifagovernmentgrantisinformofmonetaryasset,itismeasuredat theamountreceivedorreceivable.Ifagovernmentgrantisintheformofnon-monetaryasset,ismeasuredatfair value.Ifthefairvaluecannotbemeasuredreliably,itismeasuredatanominalamountandrecognizedirectlyin thecurrentprofitorloss.
The Company usually confirms and measures government grants according to the actual amount received.
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However,whenthereisconclusiveevidencethatcanmeetthefinancialsupportpoliciesandregulationsrelatedto the conditions expected to be able to receive financial support funds for the end of the year, it will measure according to the actual amount received.The government grants measured according to the receivable amount shallmeetthefollowingconditionsatthesametime:(1)Theamountofthegrantsreceivablehasbeenauthorized bythegovernmentdepartmenttoissuethedocumentsorcanbereasonablymeasuredaccordingtotherelevant provisions of the formally promulgated financial capital management measures; (2) It is based on the financial supportitemsformallypromulgatedbythelocalfinancedepartmentandproactivelydisclosedinaccordancewith the provisions of the "Regulations Governing the Disclosure of Government Information" and the fiscal fund management measures, and the management measures should be generalized (any eligible enterprises can apply),ratherthanspecificallyforaspecificcompany;(3)therelevantgrantapprovalhasbeenclearlycommitted to the deadline for disbursement, and the disbursement of funds has corresponding budget as a guarantee, so thatitcanreasonablyensurethatitcanbereceivedwithintheprescribedtimelimit;(4)Otherrelevantconditions (ifany)thatshouldbesatisfiedaccordingtotheCompanyandthespecificcircumstancesofthegrants.
Agovernmentgrantrelatedtoassetisrecognizedasdeferredincome,andevenlyamortizedandchargedtoprofit orlossover itsusefullife. Ifa governmentgrantrelatedto incomeisusedto compensate relatedexpensesand losses in subsequent periods, it is recognized as deferred income and charged to current profit or loss when recognizetherelevantcostandexpenseorloss.Ifitisusedtocompensaterelatedexpensesandlossesthatare alreadyincurred,itischargedtocurrentprofitorlossdirectly.
Government grants including assets-related parts and income-related parts at the same time should be treated separately. If it is difficult to distinguish them, they will be classified as income-related government grants completely.
The government grants related to the daily activities of the Company are included in other gain or offset the relatedcostsaccordingtotheessenceof theeconomicbusiness.Thegovernmentgrantsthatarenotrelatedto thedailyactivitiesareincludedinthenon-operatingincomeandexpenses.
Ifagovernmentgrantalreadyrecognizedneedstoberepaid,thecarryingamountofrelateddeferredincome,if any,istobereduced.Anyexcessarechargedtocurrentprofitorloss.Ifthereisnodeferredincome,the
repaymentischargedtocurrentprofitorlossdirectly.
26. Deferredtaxasset/deferredtaxliability
(1) Currentperiodcorporateincometax
Atthebalancesheetdate,currentincometaxliabilities(orassets)forthecurrentperiodandpriorperiodsshallbe 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 adjustmentstocurrentperiodprofitbeforetaxinaccordancewithrelevanttaxationregulations.
(2) Deferredtaxassetanddeferredtaxliability
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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 certainassetsandliabilities;thedifferencebetweenthecarryingamountandthetaxbaseofanitemwhicharenot recognizedasassetsandliabilitiesbutitstaxbasecanbedeterminedaccordingtorelevanttaxationlaws. A deferred tax liability shall not be recognized for the taxable temporary differences arising from the following events:(a)theinitialrecognitionofgoodwill;(b)theinitialrecognitionofanassetorliabilityinatransactionwhich contains bothof the following characteristics: (i) the transaction is not a businesscombination; (ii) at the time of the transaction, it affects neither accounting profit nor taxable profit (or deductible loss). For taxable temporary differencesassociatedwithinvestmentinsubsidiaries,associatesandinterestsinjointlycontrolledenterprises,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 recognizesallothertaxabletemporarydifferenceasdeferredtaxliability.
Adeferred 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 transactionisnotabusinesscombination;(b)atthetimeofthetransaction,itaffectsneitheraccountingprofitnor taxableprofit(ordeductibleloss).Fordeductibletemporarydifferencesassociatedwithinvestmentinsubsidiaries, associatesandinterestsinjointlycontrolledenterprises,adeferredtaxassetshallnotberecognizedifoneofthe followingconditionsissatisfied:(a)itisprobablethatthetemporarydifferencewillnotreverseintheforeseeable 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 deferredtaxassettotheextentofthefuturetaxableprofitwhichisprobablyachievedbytheCompany.
Adeferredtaxassetshallberecognizedforthecarryforward ofunuseddeductiblelossesandtaxcreditstothe extent that it is probable that future taxable profit will be available against which the deductible losses and tax creditscanbeutilized.
Atthebalancesheetdate,deferredtaxassetsanddeferredtaxliabilitiesshallbemeasuredatthetaxratesthat are expected to apply to the period when the asset is realized or the liability is settled, according to the requirementoftaxlaws.
At the balance sheet date, the carrying amount of a deferred tax asset shall be reviewed. The Company shall reducethecarryingamountofadeferredtaxassettotheextentthatitisnolongerprobablethatsufficienttaxable 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) Corporateincometax
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Thecorporateincometaxincludescurrentperiodincometaxanddeferredincometax.
Thecurrentincometaxanddeferredincometaxshallberecognizedinthecurrentprofitorlossexceptfor:(a)the income tax arising from events or transactions which are recognized in the comprehensive income orowners’equityarerecognizedinthecomprehensiveincomeorowners’equityaccordingly;and(b)theincometaxarising frombusinesscombinationswhichareadjustedtothecarryingamountofgoodwill.
(4) Offsettingofincometax
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 presentationafteroffset.
Whenthelegalrighttooffsetcurrenttaxassetsagainstcurrenttaxliabilitiesisownedandthedeferredtaxassets anddeferredtaxliabilitiesrelatetothesametaxationauthorityonthesametaxableincomeleviedbyorrelatedto differenttaxableentities,butwithinthereverseperiodofsignificantamountsofdeferredtaxassetsandliabilities 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 presentationafteroffset.
27. Leasing
Afinanceleaseisaleasethattransferssubstantiallyalltherisksandrewardsassociatedwiththeownershipofan asset. Title of the asset may or may not eventually be transferred. An operating lease is a lease other than a financelease.
(1) AccountingtreatmentfortheCompanyaslesseeunderoperatingleases
Leasepaymentsunderanoperatingleasearerecognizedascostofrelevantassetsorchargedtoprofitorlossfor the current period on straight-line basis over the lease term. Initial direct costs incurred are charged to profit or lossforthecurrentperioddirectly.Contingentrentalsarechargedtoprofitorlossintheperiodinwhichtheyare actuallyincurred.
(2) AccountingtreatmentfortheCompanyaslessorunderoperatingleases
Leasereceiptsunderanoperatingleasearerecognizedbytheinthecurrentprofitorlossonastraight-linebasis over the lease term. Significant initial direct costs are capitalized when they are incurred, and are recognized in profitorlossovertheleasetermonthebasisonwhichtheleaseincomeisrecognized.Insignificantinitialdirect costsshall bechargedtothecurrent profitor lossdirectly.Contingentrentalsare chargedtoprofit orloss inthe periodinwhichtheyareactuallyincurred.
(3) AccountingtreatmentfortheCompanyaslesseeunderfinanceleases
Ontheleasebeginningdate,theCompanyshallrecordtheloweroneofthefairvalueoftheleasedassetandthe
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presentvalue of theminimumlease paymentson the leasebeginning dateas the entering valuein an account, recognize theamountoftheminimumlease paymentsastheenteringvalueinan accountof long-termaccount payable, and treat the balance between the recorded amount of the leased asset and the long-term account payableasunrecognizedfinancingcharges.Besides,theinitialdirectcostsdirectlyattributabletotheleaseditem incurredduringtheprocessofleasenegotiatingandsigningtheleasingagreementshallberecordedintheasset value of the current period. The balance through deducting unrecognized financing charges from the minimum leasepaymentsshallberespectivelystatedinlong-termliabilitiesandlong-termliabilitiesduewithin1year. Unrecognizedfinancingchargesshallbeadoptedbytheeffectiveinterestratemethodintheleaseterm,soasto calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and lossesofthecurrentperiodinwhichtheyactuallyarise.
(4) AccountingtreatmentfortheCompanyaslessorunderfinanceleases
Onthebeginningdateoftheleaseterm,theCompanyshallrecognizethesumoftheminimumleasereceiptson the lease beginning date and the initial direct costs as the entering value in an account of the financing lease valuesreceivable,andrecordtheunguaranteedresidualvalueatthesametime.Thebalancebetweenthesumof 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 financingincomesfromthefinanceleaseaccountsreceivableshallberespectivelystatedinlong-termclaimsand long-termclaimsduewithin1year.
Unrecognizedfinancingincomesshallbeadoptedbytheeffectiveinterestratemethodintheleaseterm,soasto calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and lossesofthecurrentperiodinwhichtheyactuallyarise.
28. Othermainaccountingpoliciesandestimates
Discontinuedoperation
Discontinued operation refer to the components that can be separated and disposed of or classified as held for saleseparatelybyoneofthe followingconditions:①The componentrepresentsanindependentmain business or a separate main operation area;②This component is part of a related plan to be disposed of by an independent major business or a separate major operating area;③This component is a subsidiary acquired exclusivelyforresale.
RefertoNoteIV.12"DescriptionofAssetsHeld-for-SaleandDisposalGroup"for detailsofaccountingtreatment ofdiscontinuedoperations.
29. Changesinmainaccountingpoliciesandestimates
(1) Changeofaccountingpolicies
TherewasnochangesofaccountingpoliciesoftheCompanyinthereportingperiod.
(2) Changesofaccountingestimates
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TherewasnochangesofaccountingestimateoftheCompanyinthereportingperiod.
30. Significantaccountingjudgmentandestimates
Whenadoptingtheaccountingpolicies,theCompanyneedstomakejudgments,estimatesandassumptionsfor thecarryingamountofitemswhicharepresentedinfinancialstatementsandcannotbemeasuredaccuratelydue to internal uncertainties of business. The judgments, estimates and assumptions that are made according to historicalexperienceofthemanagement andwith considerationofotherrelevantfactorswillhaveeffectsonthe reportedamountsofrevenue,expenses,assetsaswellasliabilitiesandthedisclosureofcontingentliabilitiesat thebalancesheetdate.Theuncertaintiesoftheseestimateswillprobablyresultinsignificantadjustmentsonthe carryingamountsofassetsorliabilitieswhichwillbeaffectedbythosejudgments,estimatesandassumptionsin futureaccountingperiods.
Thejudgments,estimatesandassumptionsarereviewedbytheCompanyperiodicallyongoingconcernbasis.If the changes in accounting estimates affect current period only, the amounts affected are recognized in current period.If thechangeaffectsbothcurrent andfutureperiods, theamountsaffected arerecognized inthe current accountingperiodaswellassubsequentaccountingperiods.
At the balance sheet date, significant areas that require the Company to make judgments, estimates and assumptionstotheamountsoffinancialstatementsitemsareasfollows:
(1) Theclassificationoflease
Accordingtothe“CASNo.21–Leasing”,theCompanyclassifiesleasesasoperatingleasesandfinanceleases. When categorizing, management needs to make analysis and judgment on whether all the risks and rewards associatedwiththeownershipoftheleasedassetbetransferredsubstantiallytolessee,orwhethertheCompany tookalltherisksandrewardsassociatedwiththeownershipoftheleasedassetssubstantially.
(2) Baddebtprovisionrecognition
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.
(3) Provisionforimpairmentofinventories
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 provisionshallbeaccrued.Evaluatingtheimpairmentofinventoriesneededthemanagementlevelgainthevalid 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
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previousestimatewouldaffectthebookvalueofinventoriesandtheaccrualandreversalofprovision.
(4) Theimpairmentofavailable-for-salefinancialassets
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 processofmakingthejudgmentandassumption,theCompanyneededtoappraisethebalanceofthecostofthe investmentexceedingitsfairvalueandthecontinuousperiod,thefinancialstatusandbusinessforecastinashort period,includingtheindustrialsituation,technicalreform,creditlevel,defaultrateandriskofcounterparty. (5) Impairmentprovisionforlong-termasset
Atthebalancesheetdate,theCompanyjudgeswhetherthereareindicatorsofimpairmentfornon-currentassets otherthanfinancialassets.Foranintangibleassetwithanindefiniteusefullifeexceptforannuallyimpairmenttest, animpairmenttestwillbeconductedifthereareanyindicatorsofimpairmentoccur.Fornon-currentassetsother than financial assets, an impairment test shall be made if there are evidences indicating the carrying amounts cannotberecoveredinfullamount.
Anassetorassetgroupisimpairedwhenitscarryingamountishigherthanitsrecoverableamounti.e.thehigher ofitsfairvaluelessthedisposalexpensesandthepresentvalueoftheestimatedfuturecashflows.
The net amount of fair value less the disposal expenses are determined with reference to the quoted price ofsimilarassetsinasalesagreementinanarm’slengthtransactionoranobservablemarketpricelessincremental costsdirectlyattributabletodisposaloftheasset.
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 madeaccordingtoreasonableandsupportiveassumptions.
The Company conducts impairment test to goodwill at least once a year. This requires estimating the present valueoffuturecashflows ofassetgrouporcombinationofassetgrouptowhichgoodwillhasbeenallocated.In estimatingthepresentvalueoffuturecashflows,theCompanyneedsestimatefuturecashflowsgeneratedfrom theassetgrouporthecombinationofassetgroupsandchooseappropriatediscountrates.
(6) Depreciationandamortization
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 periodicallytodeterminetheamountofdepreciationoramortizationwhichshallberecognizedineachaccounting period. The useful life is determined according to historical experience of similar assets and technological renovationestimated.Theamountofdepreciationoramortizationshallbeadjustedinfutureaccountingperiodsif
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therearematerialchangesinestimatesmadebefore.
(7) Deferredincometaxasset
Adeferred 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 deferredincometaxassetstoberecognized.
(8) Corporateincometax
ForsometransactionsintheCompany’sordinarycourseofbusiness,uncertaintiesexistintheirtaxtreatmentand calculation.Anapprovalfromthetaxauthorityisneededtodeterminewhetheranitemisdeductiblebeforetax.If thefinalconfirmation fromthe taxauthoritydifferswiththeoriginalestimation, thedifferencewill haveeffectson the current income tax and deferred income tax of the period in which the final confirmation is made by the tax authority.
(9) Provision
TheCompanyestimatesandaccruesrelatedprovisiononitsafter-salequalitywarrantycommitmenttocustomers 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 obligationandperformanceofthecurrentobligationmaybeverylikelytocauseeconomicbenefitflowoutofthe Company, the Company recognizes provision based on the best estimates for fulfilling the related currentobligation.Recognitionandmeasurementofcontingentliabilityislargelydependonthemanagement’sjudgment. Inthecourse ofmakingjudgement,the Companyneed toevaluate factorsof risk,uncertaintyand timevalueof moneyrelatedtothecontingentevent.
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 whichmaynotbelikelytoreflectthefuturemaintenancesituations.Anyincreaseorreductionoftheprovisionmay possiblyaffecttheprofitorlossinfutureyears.
V. Taxation
1. Maintaxesandtaxrates
Tax Taxrate
Outputtaxiscalculatedat3%、5%、6%、10%、16%oftaxableincomeandVATValue-addedtax（Note（1））
ispaidafteroffsettheoutputtaxwithinputtaxallowedatcurrentperiod
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Tax Taxrate
Consumptiontaxisapplicableforimportedormanufacturedluxurywatcheswith Consumptiontax
unitpriceabove10,000(inclusive).
Urbanmaintenanceandconstructiontax 5%、7%ontheturnovertaxactuallypaid
1.2%onthebasisof70%oftheoriginalcostofthepropertyand12%forrentalPropertytax（Note（2））
income.
Corporateincometax SeeNote(3)fordetail.
Note(1):Value-addedtax
Value-addedtaxrateoriginallyappliedto17%,11%whentheCompanyhaveVATtaxablesalesorimportgoods. According to “Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting theValue-AddedTaxRate”（withCaiShui(2018)No.32）,applicabletaxrateadjustedto16%,10%sinceMay1st, 2018
OthertaxableincomearisingfromtheCompanyiscalculatedonthebasisoftheapplicabletaxrate.
Note(2):PropertyTax
InaccordancewithArticle5of“NoticetoPublish“ReplytoIssuesRelatedtoPropertyTaxandVehicleandVessel UsageTax””,ShenDiShuiFa(1999)No.374issuedbyShenzhenLocalTaxationBureau,propertyleasedoutbymanufacturingorbusinessentityaretaxedat1.2%onthebasesof70%oftheoriginalcostoftheproperty. Properties of the Company that situated in Shenzhen are taxed according to this notice. Properties situated in othercitiesaretaxedaccordingtolocalregulations.
Note(3):Corporateincometax
Nameofentitysubjecttocorporateincometax Applicabletaxrate
TheCompany（Note①②⑤） 25.00%
ShenzhenHARMONYWorldWatchCenterCo.,Ltd.（HARMONYCompany）（Note①
25.00%
⑤）
ShenzhenFIYTAPrecisionTimerManufacturingCo.,Ltd.(ManufacturingCompany（) Note
15.00%
②③）
FIYTAHongKong（Note④） 16.50%
Station68（Note④） 16.50%
ShenzhenFIYTATechnologyDevelopmentCo.,Ltd(TechnologyCompany（) Note②③） 15.00%
TEMPORAL(Shenzhen)Co.,Ltd.（TEMPORALCompany）（Note⑤） 25.00%
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Nameofentitysubjecttocorporateincometax Applicabletaxrate
HarbinHarmonyWorldWatchesDistributionCo.,Ltd.(HarbinCompany)（Note⑤） 25.00%
EmileChoureitTiming(Shenzhen)Ltd.(EmileChoureitShenzhenCompany)（Note⑤） 25.00%
FIYTASalesCo.,Ltd(SalesCompany)（Note①⑤） 25.00%
LiaoningHengdaruiCommercial&TradeCo.,Ltd(HengdaruiCompany)（Note⑤） 25.00%
SwissCompany（Note⑥） 30.00%
Note①:According to the regulations stated in Guo Shui Fa (2008) No. 28, “InterimAdministration Method for LevyofCorporateIncomeTaxtoEnterprisethatOperatesCross-regionally”,theheadofficeoftheCompanyand 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-paidinitsregisteredplace,settlementintotal,andadjustmentbyfinanceauthorities”startingfrom1January 2008.Branchofficesmentionedaboveshare50%oftheenterpriseincometaxandprepaylocally;and50%will beprepaidbytheheadofficesmentionedabove.
Note②: According to “Notice of the Ministry of Finance, the State Administration of Taxation and Ministry of Science on Improving the Pre-tax Super Deduction Ratio of Research and Development Expenses” (Cai Shui (2018)No.99),iftheresearchanddevelopmentcosts,whichwereincurredfordevelopingnewtechnologies,new products, and new processes by the Company, the Manufacturing Company and the Technology Company, are not capitalized as intangible assets but charged to current profits and losses, the companies can enjoy a75% super deduction on top of theR&D expenses that allowed to deduct before income tax during the period from January1,2018toDecember31,2020.
Note③:The company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and New TechnologyEnterprisesthatRequireKeySupportfromtheState”.
Note④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is16.50%thisyear.
Note⑤:AccordingtothePeople'sRepublicofChinaEnterpriseIncomeTaxLaw,theincometaxrateis25%for residentialenterprisessince1January2008.
Note⑥:Thecomprehensivetaxrateof30%isapplicableforSwissCompanyasitregisteredinSwitzerland. 2. Preferentialtreatmentandcorrespondingapproval
Accordingtoclause2inShenDishuiFa(2003)No.676“NoticeofForwardingStateAdministrationofTaxationon PoliciesRelatedtoPropertyTaxandUrbanLanUsageTax”,fornewlyconstructedorpurchasedpropertybytax payer,propertytaxisexemptedfor3yearsfromthenext monthitisconstructedorpurchased.Thepropertytax forFIYTAWatchBuildingownedbytheCompanylocatedinShenzhenGuangmingNewDistrictisexemptedfor3 yearsfromthenextmonthwhenconstructioniscompleted.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
VI. Notestotheconsolidatedfinancialstatements
Unless otherwise indicated, the beginning of the year for items (including notes for theCompany’s financial statements) list belowrefersto 1 January2018and theend of theyear refers to 31December 2018. Prior year referstoyear2017andcurrentyearreferstoyear2018.
1. Cash and bank balances
||
|-|
|31Dec2018|
|420,783.85|
|160,135,454.62|
|4,271,821.50|
|164,828,059.97|
|9,192,653.31|

 Note:AmountofRMB1,575,000.00(RMB1,575,000.00asat31Dec2017)inothermonetaryfundsisthesecurity depositwithBankforissuingofunconditionalandirrevocableletterofguarantee;amountofRMB630,000.00was judicialfreezeduetothelegalproceedings.
2. Note and accounts receivables
||
|-|
|31Dec2018|
|7,051,846.85|
|370,545,656.61|
|377,597,503.46|

 (1) Notes receivable
①Notesreceivableclassification
||
|-|
|31Dec2018|
|-|
|7,051,846.85|
|7,051,846.85|

②Thereisnopledgeofnotesattheendoftheperiod.
③Endorsednotesthatisnotyetdueattheendoftheperiod.
||
|-|
|Amountderecognizedatyearend|
|1,294,584.13|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
④Thereisnonotesreceivabletransferredtoreceivablesduetoissuer’sdefaultattheendoftheperiod.
(2) Accounts receivable
① Accountsreceivablespresentedbytypes
31Dec2018
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Percentage（%）|Amount|Percentage（%）|
|1,702,371.94|0.44|1,702,371.94|100.00|
|381,434,944.02|99.53|10,889,287.41|2.85|
|189,655,491.08|49.49|10,889,287.41|5.74|
|191,779,452.94|50.04|-|-|
|97,147.84|0.03|97,147.84|100.00|
|383,234,463.80|100.00|12,688,807.19|3.31|

 (Continued)
1Jan2018
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Percentage(%)|Amount|Percentage(%)|
|6,985,493.80|2.04|6,985,493.80|100.00|
|334,903,968.85|97.93|8,649,343.91|2.58|
|160,056,201.19|46.80|8,649,343.91|5.40|
|174,847,767.66|51.13|-|-|
|97,147.84|0.03|97,147.84|100.00|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
1Jan2018
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Percentage(%)|Amount|Percentage(%)|
|341,986,610.49|100.00|15,731,985.55|4.60|

 A. Year-end balance of receivables that are individually significant in amount and provided for bad debt separately
31Dec2018
Accountsreceivable
||||
|-|-|-|
|Accountsreceivable|Baddebtprovision|Percentage(%)|
|1,702,371.94|1,702,371.94|100.00|

 B. Amongstportfolio,accountsreceivablethatareprovidedforbaddebtbasedonaginganalysis
31Dec2018
Aging
|||
|-|-|
|Accountsreceivable|Baddebtprovision|
|176,490,750.08|8,818,234.89|
|10,632,348.03|1,063,234.80|
|1,291,893.89|387,568.17|
|1,240,499.08|620,249.55|
|189,655,491.08|10,889,287.41|

 C. Amongtheportfolio,accountsreceivablethatareprovidedforbaddebtusingothermethod
31Dec2018
|||
|-|-|
|Accountsreceivable|Baddebtprovision|
|191,779,452.94|-|

Note:Basedonhistoricalexperience,theCompany’sreceivablesincludingpettycashreceivablefromemployees, accountsreceivablefromsubsidiariesoftheCompanyandsalesrevenuebetweenthelastsettlementdateofthe
samedepartmentstoreandthebalancesheetdatearewithhighrecoverabilityandlowpossibilityofincurringbad
debt,asaresult,nobaddebtprovisionsareprovidedforsuchreceivables.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
②Statusofbaddebtaccrual,recoveryorreversedincurrentyear
In 2018, bad debt accrualis RMB4,506,633.93, and the amount of recovery or reversal of bad debt provision is RMB7,549,812.29.
Incl.theamountofsignificantrecoveryorreversalofbaddebtprovisionthisyear
||
|-|
|Theamountofrecoveryorreversal|
|2,250,000.00|
|5,283,121.86|
|7,533,121.86|

③Noaccountsreceivablewaswritten-offduringtheyear
④Top5receivableaccounts
The amount of top 5 receivables based on year-end receivable balance is RMB65,652,234.68, accounts for17.13%oftotalreceivablesasat31Dec2018.CorrespondingbaddebtprovisionisRMB602,002.24.
3. Prepayments
(1) Prepaymentspresentedbyaging
||||
|-|-|-|
|31Dec2018|||
|Amount|Percentage(%)|Amount|
|12,886,273.93|94.29|20,284,829.30|
|-|-|2,034,407.41|
|780,542.40|5.71|2,344,077.82|
|-|-|-|
|13,666,816.33|100.00|24,663,314.53|

 (2) Top5prepaymentaccounts
Theamountoftop5prepaymentaccountsbasedonyear-endbalanceisRMB9,393,700.19,accountsfor68.73% oftotalprepaymentsasat31Dec2018.
4. Other receivables
||
|-|
|31Dec2018|
|45,870,582.26|

(1) Other receivables
①Otherreceivablespresentedbytypes
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
31Dec2018
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Percentage(%)|Amount|Percentage(%)|
|7,093,237.65|12.69|7,093,237.65|100.00|
|48,249,486.72|86.30|2,378,904.46|4.93|
|45,771,039.24|81.87|2,378,904.46|5.20|
|2,478,447.48|4.43|-|-|
|565,400.00|1.01|565,400.00|100.00|
|55,908,124.37|100.00|10,037,542.11|17.95|

 (Continued)
1Jan2018
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Percentage(%)|Amount|Percentage(%)|
|6,847,372.68|15.23|6,847,372.68|100.00|
|38,090,257.88|84.73|3,099,718.79|8.14|
|33,690,435.20|74.94|3,099,718.79|9.20|
|4,399,822.68|9.79|-|-|
|20,000.00|0.04|20,000.00|100.00|
|44,957,630.56|100.00|9,967,091.47|22.17|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
A.
Year-end balance of other receivables that are individually significant in amount and provided for bad debt separately
31Dec2018
Accounts
||||
|-|-|-|
|Otherreceivable|Baddebtprovision|Percentage(%)|
|800,000.00|800,000.00|100.00|
|4,041,632.05|4,041,632.05|100.00|
|2,251,605.60|2,251,605.60|100.00|
|7,093,237.65|7,093,237.65|—|

B.
Amongtheportfolio,otherreceivablesthatareprovidedforbaddebtbasedonaginganalysis
Ageing 31Dec2018
|||
|-|-|
|Otherreceivable|Baddebtprovision|
|44,291,589.79|2,214,579.51|
|1,438,499.45|143,849.95|
|-|-|
|40,950.00|20,475.00|
|45,771,039.24|2,378,904.46|

 C.
Amongtheportfolio,otherreceivablesthatareprovidedforbaddebtusingothermethods
31Dec2018
Nameofportfolio
|||
|-|-|
|Otherreceivable|Baddebtprovision|
|2,478,447.48|-|

Note:Basedon historicalexperience,theCompany’sreceivables frompetty cashadvancedtoemployees, from
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
subsidiariesof the Company andsales revenue between the last settlement date ofthe same department store and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no baddebtprovisionsareprovidedforsuchreceivables.
②Amongtheportfolio,otherreceivablesthatareprovidedforbaddebtusingothermethods
||
|-|
|31Dec2018|
|2,478,447.48|
|38,091,767.87|
|7,827,524.03|
|7,510,384.99|
|55,908,124.37|

③Statusofbaddebtaccrual,recoveryorreversedincurrentyear:
In2018,baddebtaccrualisRMB70,450.64.Therewasnorecoveryorreversalofbaddebtprovisionthisyear.④Therewasnootherreceivablesactuallywritten-offduringthisyear
⑤Top5otherreceivableaccounts
|||||
|-|-|-|-|
|Nature|Amount|Aging|Percentageoftotalotherreceivables(%)|
|Tradereceivables|4,041,632.05|Over3years|7.23|
|Deposit|3,010,024.00|Within1year|5.38|
|Tradereceivables|2,251,605.60|Over3years|4.03|
|Deposit|1,906,697.76|Within1year|3.41|
|Deposit|1,497,003.00|Within1year|2.68|
|——|12,706,962.41|——|22.73|

 5. Inventory
(1) Inventoryclassification
31Dec2018
Item
|||
|-|-|
|Bookbalance|Provision|
|183,679,226.95|28,296,729.51|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
31Dec2018
Item
|||
|-|-|
|Bookbalance|Provision|
|10,787,777.81|-|
|1,675,548,898.56|59,412,872.11|
|1,870,015,903.32|87,709,601.62|

 (Continued)
1Jan2018
Item
|||
|-|-|
|Bookbalance|Provision|
|192,872,336.46|26,899,506.29|
|16,744,428.79|-|
|1,708,413,402.70|70,603,985.40|
|1,918,030,167.95|97,503,491.69|

 (2) Provision
||||||
|-|-|-|-|-|
|1Jan2018|Increase||Decrease||
||Accrual|Others|Reversed|Others|
|26,899,506.29|3,625,562.93|-|2,228,339.71|-|
|70,603,985.40|5,922,928.30|-|17,114,041.59|-|
|97,503,491.69|9,548,491.23|-|19,342,381.30|-|

 (3) Reasons for accruing inventory impairment provision and the reason for reversal of provision or written-off thisyear.
|||
|-|-|
|Basisforrecognizing provision|Reasonforreversalofprovisionthisyear|
|NRVislowerthancost|－|
|NRVislowerthancost|－|

6. Other current assets
||
|-|
|31Dec2018|
|52,444,448.67|
|7,846,471.11|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|31Dec2018|
|13,412,392.46|
|73,703,312.24|

 7. AFS financial assets
(1) StatusofAFSfinancialassets
||||||
|-|-|-|-|-|
|31Dec2018|||||
|Bookbalance|Impairmentprovision|Carryingamount|Bookbalance|Impairmentprovision|
|385,000.00|300,000.00|85,000.00|385,000.00|300,000.00|
|385,000.00|300,000.00|85,000.00|385,000.00|300,000.00|
|385,000.00|300,000.00|85,000.00|385,000.00|300,000.00|

 (2) AFSfinancialassetsmeasuredatcost
||||||||||
|-|-|-|-|-|-|-|-|-|
|Bookbalance||||Provision||||%ofequityheldininvestee|
|1Jan2018|increase|decrease|31Dec2018|1Jan2018|increase|decrease|31Dec2018||
|300,000.00|-|-|300,000.00|300,000.00|-|-|300,000.00|15.00|
|85,000.00|-|-|85,000.00|-|-|-|-|0.10|
|385,000.00|-|-|385,000.00|300,000.00|-|-|300,000.00|—|

 (3) MovementsofimpairmentprovisionforAFSfinancialasset
||
|-|
|AFSequityinstrument|
|300,000.00|
|-|
|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|-|
|——|
|300,000.00|

 8. Long-term equity investment
||||||
|-|-|-|-|-|
|1Jan2018|||||
||Addition|Withdraw|Investmentgainrecognizedunderequitymethod|Adjustmentofothercomprehensiveincome|
|43,879,518.09|-|-|1,001,545.06|-|

(Continued)
|||||
|-|-|-|-|
|Changesduring2018|||31Dec2018|
|Cashdividenddeclaredorprofitdistribution|Impairmentprovisionaccrued|Others||
|-|-|-|44,881,063.15|

9. Investment property
(1) Detailsofinvestmentpropertymeasuredatcost
Item Propertyandbuildings
I.Totaloriginalcost
1. Balanceatthebeginningoftheyear 449,153,501.16
2. Increasedincurrentyear 97,541,932.65
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Item Propertyandbuildings
(1)purchased - (2)Transferredfromfixedasset 97,541,932.65 (3)increasedduetobusinesscombination - 3. Decreasedincurrentyear - (1)Disposal - (2)Otherdecrease - 4. Balanceattheendoftheyear 546,695,433.81 II.Totalaccumulateddepreciationandamortization
1. Balanceatthebeginningoftheyear 143,659,513.39 2. Increasedincurrentyear 25,716,487.39 (1)Accrualoramortization 13,170,394.47 (2)Transferredfromfixedasset 12,546,092.92 3. Decreasedincurrentyear - (1)Disposal - (2)Otherdecrease - 4. Balanceattheendoftheyear 169,376,000.78 III. Impairmentprovision
1. Balanceatthebeginningoftheyear - 2. Increasedincurrentyear - (1)Accrual - 3. .Decreasedincurrentyear - (1)Disposal - (2)Otherdecrease - 4. Balanceattheendoftheyear - IV.Totalbookvalue
1. Bookvalueattheendoftheyear 377,319,433.03 2. Bookvalueatthebeginningoftheyear 305,493,987.77
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2) Reasonoftheinvestmentpropertywithoutthecertificateforpropertyright:
Asof31December2018,investmentpropertywithoutthecertificateforpropertyrightdidnotexist.
(3) Changesofpurposeofproperty
In July 2018, the Company leases out a property previously used itself. The property is transferred from fixed assettoinvestmentpropertyandaccountedforusingcostmethod.The bookvalueofitwasRMB84,995,839.73 atthetimechanged.
10. Fixed asset
||
|-|
|31Dec2018|
|425,649,562.85|

 (1) Fixed asset
①Detailoffixedasset
||||||
|-|-|-|-|-|
|Propertyandbuildings|Machinery|Transportationvehicles|Electronicdevices|Otherequipments|
|548,203,064.99|76,359,195.91|15,572,717.72|43,168,802.82|56,767,439.55|
|7,960,183.62|4,481,681.31|-|3,481,827.98|3,127,468.34|
|7,960,183.62|4,481,681.31|-|3,481,827.98|3,127,468.34|
|-|-|-|-|-|
|-|-|-|-|-|
|97,541,932.65|41,222.22|-|2,513,094.39|1,472,743.27|
|-|41,222.22|-|2,513,094.39|1,472,743.27|
|97,541,932.65|-|-|-|-|
|458,621,315.96|80,799,655.00|15,572,717.72|44,137,536.41|58,422,164.62|
|94,955,404.27|36,106,695.76|12,805,115.03|25,960,630.90|46,543,782.38|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||
|-|-|-|-|-|
|Propertyandbuildings|Machinery|Transportationvehicles|Electronicdevices|Otherequipments|
|15,490,407.34|6,940,310.81|859,797.03|5,027,186.68|3,372,846.73|
|15,490,407.34|6,940,310.81|859,797.03|5,027,186.68|3,372,846.73|
|12,546,092.92|34,032.10|-|2,280,132.22|1,298,092.83|
|-|34,032.10|-|2,280,132.22|1,298,092.83|
|12,546,092.92|-|-|-|-|
|97,899,718.69|43,012,974.47|13,664,912.06|28,707,685.36|48,618,536.28|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|360,721,597.27|37,786,680.53|1,907,805.66|15,429,851.05|9,803,628.34|
|453,247,660.72|40,252,500.15|2,767,602.69|17,208,171.92|10,223,657.17|

②Fixedassetsthatdonothavecertificateforpropertyright
||
|-|
|Bookvalue|
|287,345.82|
|6,138,196.00|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
11. Construction in progress
||
|-|
|31Dec2018|
|12,041,126.00|

 (1) Construction in progress
①Detailsofconstructioninprogress
||||||
|-|-|-|-|-|
|31Dec2018|||||
|Bookbalance|Impairmentprovision|Carryingamount|Bookbalance|Impairmentprovision|
|12,041,126.00|-|12,041,126.00|10,947,300.53|-|

②Changesformaterialconstruction-in-progressprojects
||||||
|-|-|-|-|-|
|Budget|31Dec2017|Increase|Transferredtofixedassetincurrentyear|Otherdecrease|
|34,050,900.00|10,947,300.53|1,093,825.47|-|-|

(Continued)
||||||
|-|-|-|-|-|
|Percentageofinvestmenttobudget(%)|Progress(%)|Totalcapitalizedinterest|Incl.capitalizedincurrentyear|Rateofcapitalizationincurrentyear(%)|
|35.36|35.36|-|-|-|

12. Intangible assets
(1) Detailsofintangibleassets
||||
|-|-|-|
|Land-useright|Softwaresystem|Righttousetrademarks|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Land-useright|Softwaresystem|Righttousetrademarks|
|34,854,239.40|19,904,736.57|9,547,313.86|
|79,583.00|3,982,478.51|545,994.75|
|79,583.00|3,982,478.51|545,994.75|
|-|-|-|
|-|-|-|
|-|-|-|
|-|-|-|
|34,933,822.40|23,887,215.08|10,093,308.61|
|9,887,164.24|6,951,113.14|3,244,732.24|
|3,694,544.65|1,124,998.55|466,315.66|
|3,694,544.65|1,124,998.55|466,315.66|
|-|-|-|
|-|-|-|
|13,581,708.89|8,076,111.69|3,711,047.90|
|-|-|-|
|-|-|-|
|-|-|-|
|-|-|-|
|-|-|-|
|-|-|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|Land-useright|Softwaresystem|Righttousetrademarks|
|21,352,113.51|15,811,103.39|6,382,260.71|
|24,967,075.16|12,953,623.43|6,302,581.62|

13. Long-term deferred expenses
|||||
|-|-|-|-|
|1Jan2018|Increase|Amortization|Otherdecrease|
|49,334,415.56|49,200,596.00|49,230,011.46|-|
|58,392,053.11|50,885,181.89|34,625,947.87|-|
|1,683,316.82|7,333,478.59|4,400,537.49|-|
|109,409,785.49|107,419,256.48|88,256,496.82|-|

 14. Deferred income tax assets/Deferred income tax liabilities
(1) Detailofdeferredincometaxbeforeoffsetting
||||
|-|-|-|
|31Dec2018|||
|DeductibletemporaryDdifferences|eferredincometaxasset|Deductibletemporarydifferences|
|79,775,704.17|17,676,690.28|93,805,178.33|
|272,840,911.63|67,717,517.83|309,982,920.90|
|3,672,855.36|918,213.84|5,904,000.00|
|61,529,125.81|14,363,284.14|27,342,976.03|
|417,818,596.97|100,675,706.09|437,035,075.26|

 (2) Detailsofunrecognizeddeferredincometaxasset
||
|-|
|31Dec2018|
|30,660,246.75|
|65,181,936.05|
|95,842,182.80|

 Note:DeductiblelossesofSwissCompany,whicharesubsidiariesoftheCompany,isnotrecognizedasdeferred
incometaxassetasit’suncertainthatthecompaniescangetsufficienttaxableincomeinfuture.
HongKong Company,a subsidiaryof the Company,doesnotneed to recognize thedeferred incometax assets
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
forimpairmentprovisionaccordingtothelocaltaxpolicy.
15. Other non-current asset
||
|-|
|31Dec2018|
|8,949,160.42|

 16. Short-term loan
(1) Short-termloanclassification
||
|-|
|31Dec2018|
|187,118,452.97|
|360,000,000.00|
|547,118,452.97|

 (2) Therearenooverdueshort-termloans.
(3) RefertoNoteXIV.2fordetailsofguaranteedloansbetweenparentcompaniesandsubsidiaries.
17. Note and accounts payables
||
|-|
|31Dec2018|
|259,913,612.34|

 (1) Accounts payables
||
|-|
|31Dec2018|
|188,957,240.00|
|18,632,180.36|
|52,324,191.98|
|259,913,612.34|

 18. Advances from customer
(1) Presentationofadvancesreceived
||
|-|
|31Dec2018|
|14,822,924.98|
|1,636,520.02|
|16,459,445.00|

19. Employee benefit payable
(1) Presentationofemployeebenefitpayable
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|1Jan2018|Increase|Decrease|
|67,145,581.32|533,345,700.37|536,685,964.81|
|4,418,785.82|46,014,765.45|44,459,830.32|
|-|2,271,458.27|2,271,458.27|
|-|-|-|
|71,564,367.14|581,631,924.09|583,417,253.40|

 (2) Short-termemployeebenefits
||||
|-|-|-|
|1Jan2018|Increase|Decrease|
|66,712,129.20|477,129,729.95|480,534,845.69|
|-|9,959,168.00|9,959,168.00|
|-|19,465,988.82|19,465,988.82|
|-|17,305,121.22|17,305,121.22|
|-|814,287.85|814,287.85|
|-|1,346,579.75|1,346,579.75|
|-|17,311,498.67|17,311,498.67|
|433,452.12|9,479,314.93|9,414,463.63|
|-|-|-|
|67,145,581.32|533,345,700.37|536,685,964.81|

 (3) Definedcontributionplans
||||
|-|-|-|
|1Jan2018|Increase|Decrease|
|1,044.89|42,071,562.15|41,599,355.66|
|-|1,136,009.40|1,136,009.40|
|4,417,740.93|2,807,193.90|1,724,465.26|
|4,418,785.82|46,014,765.45|44,459,830.32|

20. Taxes payable
Item 31Dec2018 1Jan2018
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|31Dec2018|
|32,344,121.18|
|21,599,264.54|
|248,795.56|
|321,914.01|
|998,190.73|
|229,955.09|
|180,930.81|
|55,923,171.92|

 21. Other payables
||
|-|
|31Dec2018|
|772,351.26|
|71,047,579.04|
|71,819,930.30|

 (1) Interest payable
||
|-|
|31Dec2018|
|-|
|772,351.26|
|772,351.26|

 (2) Other payables
①Otherpayablespresentedbynature
||
|-|
|31Dec2018|
|22,954,307.95|
|17,461,589.65|
|3,058,122.71|
|6,096,460.99|
|612,659.73|
|20,864,438.01|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|31Dec2018|
|71,047,579.04|

②Significantotherpayableswithagingover1year:
||
|-|
|Balanceasat31Dec2018|
|4,693,429.16|
|903,166.80|
|804,000.00|
|791,320.00|
|734,775.68|
|654,532.30|
|519,007.36|
|506,358.16|
|678,154.06|
|10,284,743.52|

22. Non-current liabilities that fall due within one year
||
|-|
|31Dec2018|
|347,470.00|

 23. Long-term loan
||
|-|
|31Dec2018|
|4,864,580.00|
|-|
|347,470.00|
|4,517,110.00|

 Note:(1)Thereisnooverduelong-termloans.
(2) SeeNoteVI.46fortypeandamountofpledgedassets.
(3) Thereisnoguaranteeinthebalanceoflong-termloan.
(4)Theinterestrateforlong-termloanis3.00%.
24. Deferred income
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|1Jan2018|Increase|Decrease|31Dec2018|
|5,904,000.00|66,037.74|2,297,182.38|3,672,855.36|

Incl:itemsinvolvinggovernmentgrant
|||||||
|-|-|-|-|-|-|
|1Jan2018|Increase|Recognizedinnon-operatingIncome|Recognizedinothergains|OtherChanges|31Dec2018|
|2,000,000.00|-|-|1,066,988.78|-|933,011.22|
|2,000,000.00|-|-|488,578.43|-|1,511,421.57|
|480,000.00|-|-|480,000.00|-|-|
|124,000.00|-|-|124,000.00|-|-|
|1,300,000.00|-|-|137,615.17|-|1,162,384.83|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|1Jan2018|Increase|Recognizedinnon-operatingIncome|Recognizedinothergains|OtherChanges|31Dec2018|
|-|66,037.74|-|-|-|66,037.74|
|5,904,000.00|66,037.74|-|2,297,182.38|-|3,672,855.36|

 Note(1):SpecialfundforShenzhenindustrialdesignindustrydevelopmentwasobtainedaccordingtothe Shen Jingmao Xinxi Jishu Zi (2013) No. 227 - Operating Specification for Affirmation and Fund Plan of Shenzhen Industrial Design Center (Trial) which is jointly issued by Economy, Trade and Information Commission of ShenzhenMunicipalityandFinanceCommissionofShenzhenMunicipality.
Note(2)：FundingprojectforconstructionofShenzhenEnterpriseTechnologyCenterwasobtainedaccordingto the Notice for the 1st Supportive Project in 2015 of Funding Project for Construction of Shenzhen Enterprise TechnologyCenterwhichwasissuedbyShenzhenDevelopmentandReformCommission(ShenJingMaoXinXiYu[2015]No.129).
Note(3)：Special fund for university-industry cooperation in 2013 was obtained according to Yue Ke Gong Shi[2014]No.13–PublicityaboutProjectswhichwouldbeSupportedbySpecialFundofComprehensiveStrategic Cooperation between Province and College and Special Fund of Province-Ministry University-Industry Cooperationin2013,issuedbyGuangdongScienceandTechnologyDepartment.
Note(4):AccordingtotheNoticeofGuangdongProvincialEconomicandInformationTechnologyCommissionon Doing a Good Job of Applying for Provincial Special Projects in Production and Service Industry in 2017 (the CircularoftheMinistryofEconomicAffairsandInformationTechnologyofGuangdongProvinceandGuangdong Provincial Department of Finance) Guangdong Letter of Manufacture[2016] No. 53) obtained provincial 2017 specialfundsforindustrialandinformatization.
25. Share capital
|||||||
|-|-|-|-|-|-|
|1Jan2018|Additionsorreduction(+,-)|||||
||Issuanceofnewshare|Bonusshares|Capitalizationofcapitalreserves|Others|Subtotal|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||||
|-|-|-|-|-|-|
|1Jan2018|Additionsorreduction(+,-)|||||
||Issuanceofnewshare|Bonusshares|Capitalizationofcapitalreserves|Others|Subtotal|
|438,744,881|-|-|-|-|-|

 26. Capital reserve
||||
|-|-|-|
|1Jan2018|Increase|Decrease|
|1,047,963,195.57|-|-|
|14,492,448.65|-|-|
|1,062,455,644.22|-|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
27. Other comprehensive income
|||||||
|-|-|-|-|-|-|
|1Jan2018|Movement|||||
||Amountincurredbeforeincometaxincurrentperiod|Less:recordedinothercomprehensiveincomeinpriorperiodandtransferredtoprofitorlossincurrentperiod|Less:Incometaxexpenses|Attributetoparentcompanyaftertax|Attributetominorityshareholdersaftertax|
|-|-|-|-|-|-|
|-11,523,442.39|6,081,568.47|-|-|6,081,302.61|265.86|
|-11,523,442.39|6,081,568.47|-|-|6,081,302.61|265.86|
|-11,523,442.39|6,081,568.47|-|-|6,081,302.61|265.86|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
28. Surplus reserve
||||
|-|-|-|
|1Jan2018|Increase|Decrease|
|144,820,819.35|16,210,080.45|-|
|61,984,894.00|-|-|
|206,805,713.35|16,210,080.45|-|

 Note:accordingtotheCompanyLawandArticlesofAssociation,theCompanydrawsstatutorysurplusreserveat10% of net profit. If the statutory surplus reserve is over50% of theCompany’s registered capital, drawing of statutorysurplusreservestopped.
The Company can draw discretionary surplus reserve after drawing statutory surplus reserve. If approved, discretionarysurplusreservecanbeusedtomakeupforlossesinpreviousyearsorincreasesharecapital. 29. Undistributed profit
||
|-|
|2018|
|771,484,565.02|
|-|
|771,484,565.02|
|183,835,095.29|
|16,210,080.45|
|87,748,976.20|
|851,360,603.66|

 Note:Informationondistributionofdividend
Pursuant to the “Resolution of Equity Distribution for Year 2017” approved at the 2017Annual General Meeting heldon21June 2018,theCompanydistributedto allshareholderscashdividendofRMB2.00 (taxinclusive) for every 10 shares held based on total shares of 438,744,881 as at 31 December 2017. Total cash dividend distributedwasRMB87,748,976.20.
30. Operating revenue and operating cost
||||
|-|-|-|
|2018|||
|Operatingrevenue|Operatingcost|Operatingrevenue|
|3,382,346,730.19|1,992,905,841.56|3,326,715,761.43|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|2018|||
|Operatingrevenue|Operatingcost|Operatingrevenue|
|18,103,869.71|903,932.64|19,093,942.55|
|3,400,450,599.90|1,993,809,774.20|3,345,809,703.98|

 31. Tax and surcharges
||
|-|
|2018|
|14,746,181.35|
|6,338,803.59|
|4,221,251.51|
|3,858,983.33|
|2,216,200.85|
|387,741.44|
|56,184.87|
|7,785.00|
|1,936,212.46|
|33,769,344.40|

 Note:ThecriteriaofbusinesstaxesandsurchargesaccruedandpaidrefertoNoteV.Taxation.
32. Selling and distribution expenses
||
|-|
|2018|
|284,754,162.08|
|5,639,512.33|
|11,646,901.18|
|45,976,594.63|
|137,788,340.17|
|186,814,362.00|
|91,323,930.38|
|17,013,895.11|
|18,464,692.62|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|2018|
|12,444,864.89|
|10,934,189.89|
|12,076,624.12|
|22,092,103.70|
|856,970,173.10|

 33. Administrative expenses
||
|-|
|2018|
|132,152,678.81|
|11,333,830.56|
|23,465,976.86|
|2,318,455.78|
|4,967,113.07|
|2,817,832.13|
|7,436,745.07|
|4,411,920.54|
|4,217,069.96|
|2,397,253.16|
|2,908,900.50|
|20,734,749.41|
|219,162,525.85|

 34. R& D expenses
||
|-|
|2018|
|24,158,997.53|
|466,603.29|
|2,270,552.06|
|705,146.39|
|3,062,922.51|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|2018|
|2,042,439.14|
|2,150,154.58|
|4,869,828.83|
|1,254,524.99|
|6,369,173.50|
|47,350,342.82|

 35. Finance expenses
||
|-|
|2018|
|27,552,558.81|
|-|
|2,269,447.05|
|713,080.72|
|9,920,047.68|
|35,916,240.16|

 36. Impairment losses
||
|-|
|2018|
|-5,488,944.07|
|8,753,900.25|
|3,264,956.18|

 37. Other gains
|||
|-|-|
|2018|2017|
|19,375,618.48|17,508,255.98|

 For detailsof governmentgrants,refer toNote VI.48.
38. Investment gain
||
|-|
|2018|
|1,001,545.06|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|2018|

39. Gain on disposal of assets
|||
|-|-|
|2018|2017|
|-181,302.24|7,321,993.36|

40. Non-operating income
|||
|-|-|
|2018|2017|
|1,000.00|-|
|2,810.50|2,256,661.00|
|1,442,547.03|350,992.91|
|1,446,357.53|2,607,653.91|

 41. Non-operating expenses
|||
|-|-|
|2018|2017|
|154,626.88|-|
|380,000.00|399,250.00|
|117,888.09|969,430.92|
|652,514.97|1,368,680.92|

 42. Income tax expenses
(1) Detailsofincometaxesexpenses
||
|-|
|2018|
|42,131,613.05|
|5,230,238.71|
|47,361,851.76|

(2) Reconciliationbetweenincometaxexpensesandaccountingprofitsisasfollows:
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Item 2018
Profitbeforetax 231,196,947.05 Incometaxexpensescalculatedatlegal(orapplicable)taxrate 57,799,236.76 Impactofdifferenttaxrateincertainsubsidiaries -12,360,815.15 Adjustmentforincometaxinprioryear 413,122.52 Incomenotsubjecttotax -250,386.27 Expensesnotdeductiblefortaxpurposes 1,286,216.68 Taxationinfluencebyusingunrecognizeddeductiblelossanddeductibletemporarydifference
-250,920.28 ofpriorperiods
Taxationinfluenceofunrecognizeddeductiblelossanddeductibletemporarydifference 7,158,514.85 Effectoftaxratechangeoncarryingamountofopeningdeferredincometaxasset -EffectofsuperdeductionofR&Dexpenses -6,433,117.35 Incometaxexpenses 47,361,851.76 43. Other comprehensive income
Details of other comprehensive income refer to Note VI. 27.
44. Notes to cash flow statement
(1) Cashreceivedfromotheroperatingactivities
||
|-|
|2018|
|17,144,473.84|
|7,388,696.14|
|9,977,697.98|
|2,269,447.05|
|4,066,408.69|
|8,781,869.99|
|49,628,593.69|

 (2) Cashpaidforotheroperatingactivities
||
|-|
|2018|
|158,123,421.13|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|2018|
|88,198,420.82|
|27,617,954.29|
|25,754,222.71|
|16,716,869.03|
|18,696,076.85|
|14,807,127.70|
|13,966,858.83|
|7,794,285.04|
|1,284,007.36|
|3,881,281.50|
|2,123,627.83|
|18,131,634.75|
|5,131,463.98|
|3,417,891.86|
|1,856,933.80|
|2,447,666.64|
|19,915,997.96|
|1,296,416.06|
|9,723,496.15|
|13,351,304.90|
|454,236,959.19|

 45. Supplement to cash flow statement
(1) SupplementtoCashFlowStatement
||
|-|
|2018|
|183,835,095.29|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|2018|
|3,264,956.18|
|44,860,943.06|
|5,285,858.86|
|88,256,496.82|
|181,302.24|
|-1,000.00|
|-|
|27,552,558.81|
|-1,001,545.06|
|5,230,238.71|
|-|
|30,900,223.04|
|-36,309,812.09|
|-20,427,526.24|
|-|
|331,627,789.62|
|-|
|-|
|-|
|162,623,059.97|
|184,947,891.32|
|-|
|-|
|-22,324,831.35|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2) Cashandcashequivalents
||
|-|
|31Dec2018|
|162,623,059.97|
|420,783.85|
|160,135,454.62|
|2,066,821.50|
|-|
|162,623,059.97|

 Note: Restricted cash and cash equivalents for the Company are not included in cash and cash equivalents amounts.
46. Assets of restricted ownership or use rights
||
|-|
|Amountasof31Dec2018|
|2,205,000.00|
|14,978,058.58|
|17,183,058.58|

47. Monetary item denominated in foreign currency
(1) Monetaryitemdenominatedinforeigncurrency
|||
|-|-|
|Balancedenominatedinforeigncurrencyasat31Dec2018|Exchangerate|
|634,531.28|6.8632|
|3,646,197.04|0.8762|
|620,245.24|6.9494|
|1,943.58|7.8473|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Balancedenominatedinforeigncurrencyasat31Dec2018|Exchangerate|
|688,191.90|6.8632|
|6,007,034.35|0.8762|
|34,266.75|7.8473|
|185,687.50|6.9494|
|681,143.82|6.9494|
|299,737.08|0.8762|
|4,250.00|7.8473|
|905,580.00|6.9494|
|3,030,447.60|0.8762|
|74,499.32|0.8762|
|42,812.50|0.8762|
|65,094.65|6.9494|
|33,000,000.00|0.8762|
|1,900,000.00|6.9494|
|50,000.00|6.9494|
|650,000.00|6.9494|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(2) Overseasoperationalentity
Formainbusinesslocationandrecordingcurrencyofimportantoverseasoperationalentity,refertoNoteIV.3. 48. Government grant
(1) Thestatusofthegovernmentgrants
|||
|-|-|
|Amount|Accountingsubject|
|496,000.00|Otherincome|
|50,000.00|Otherincome|
|1,890,000.00|Otherincome|
|2,000.00|Otherincome|
|500,000.00|Otherincome|
|4,480,000.00|Otherincome|
|6,000.00|Otherincome|
|479,200.00|Otherincome|
|400,000.00|Otherincome|
|128,920.00|Otherincome|
|779,907.74|Otherincome|
|30,000.00|Otherincome|
|6,000.00|Otherincome|
|57,605.00|Otherincome|
|28,301.89|Otherincome|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Amount|Accountingsubject|
|250,000.00|Otherincome|
|208,000.00|Otherincome|
|600,000.00|Otherincome|
|50,000.00|Otherincome|
|2,882.30|Otherincome|
|360,000.00|Otherincome|
|50,000.00|Otherincome|
|2,000.00|Otherincome|
|6,154.00|Otherincome|
|1,000,000.00|Otherincome|
|103,267.00|Otherincome|
|1,155,000.00|Otherincome|
|200,000.00|Otherincome|
|100,000.00|Otherincome|
|250,000.00|Otherincome|
|360,800.00|Otherincome|
|724,900.00|Otherincome|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Amount|Accountingsubject|
|549,500.00|Otherincome|
|215,100.00|Otherincome|
|21,500.00|Otherincome|
|10,000.00|Otherincome|
|330,000.00|Otherincome|
|200,000.00|Otherincome|
|60,000.00|Otherincome|
|229,106.17|Otherincome|
|159,810.00|Otherincome|
|128,008.00|Otherincome|
|128,008.00|Otherincome|
|100,000.00|Otherincome|
|16,000.00|Otherincome|
|60,000.00|Otherincome|
|114,466.00|Otherincome|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Amount|Accountingsubject|
|2,000,000.00|Deferredincome|
|2,000,000.00|Deferredincome|
|480,000.00|Deferredincome|
|124,000.00|Deferredincome|
|1,300,000.00|Deferredincome|
|66,037.74|Deferredincome|
|23,048,473.84|—|

 Note (1): The 2017 Shenzhen Standard special funds obtained according to “The Publicity for the 2017 Constructionof the ShenzhenStandard Special Fund StandardsProject” issued byShenzhenMunicipal Market andQualitySupervisionandManagementCommittee.
Note (2): The 2017 Shenzhen Enterprise Research and Development Funding obtained according to “Management Measures of Shenzhen Science and Technology Research and Development Fund” issued byShenzhenFinanceCommitteeandShenzhenScienceandTechnologyInnovationCommittee(ShenCaike[2012] No.168).
Note (3): The special funds for industrial transformation and upgrading obtained according to the Notice of the Shenzhen Economic and Trade and Informatization Commission on the “Application of 2018 Annual Industrial Transformation and Upgrading Special Funds for Developing Industrial Zone of Community Joint-stockCompanies”(ShenJingmaoXinxiGuihuaZi[2017]No.243)
Note(4):The2018annualindustrialtransformationandupgradingspecialfundandinnovationrewardsobtained accordingtotheNoticeissuedbytheShenzhenEconomicandTradeInformationCommission,onthepublicityof projectstobefundedby2018annualindustrialtransformationandupgradingofspecialfund(ShenJingmaoXinxiXinxingZi[2018]No.208).
Note (5): Special Fund for the Development of Independent Innovation Industry, Nanshan District, obtained
accordingtothe“ManagementMeasuresforSpecialFundsforIndependentInnovationIndustryDevelopmentin
NanshanDistrict(Trial)”(ShenNanFubanGui[2018]No.3).issuedbytheOfficeofthePeople'sGovernmentof
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
NanshanDistrict,Shenzhen.
Note (6): Fund for Informatization and Industrialization Integration project obtained according to the “Shenzhen City Industrial Transformation and Special Fund Management Measures” (Shen Caigui[2016] No. 9), issued by Shenzhen Municipal Finance Committee and the Shenzhen Municipal Commission of Economy, Trade and InformationTechnology.
Note(7):InternationalTradeDevelopmentFundgrantedbyShenzhenMunicipalGovernment,obtainedaccording tothe“NoticeontheRelevantWorkontheSpecialFundforForeignEconomicandTradeDevelopmentin2017” issued by the Ministry of Commerce (Shang Caihan[2017] No. 314) and “Implementation Rules for the Administration of Funds for Enhancing International Operational Capabilities of LessthanUS$65 Million” issued by the Municipal Economic and Trade Information Committee and the Municipal Finance Committee (ShenJingmaoXinxiYusuanZi[2015]No.180).
Note(8):Patentawardobtainedaccordingtothe“DecisionontheAwardofthe18thChinaPatentAward”issuedbytheStateIntellectualPropertyOffice(GuoZhiFaGuanZi[2016]No.95).
Note(9):ProjectfundingfortheEconomicDevelopmentSpecialFundStandardizationStrategicProjectinthefirst halfof2018,GuangmingNewDistrict,theInternationalCertificationProjectandactivitysupportforeconomicand trade exhibition funded by Economic Development Special Fund in Guangming District. Funds are obtained according to the “Guangming New District Economic Development Special Fund Management Measures and Supporting Implementation Rules” issued by the Shenzhen Guangming New District Management Committee(ShenGuanggui[2017]No.16)
Note (10): 2017 GuangmingNew District Economic Development Special Fund forR&D Investment and activity support for Domestic Trade Exhibition obtained according to "Shenzhen Guangming New District Economic Development Special Fund Management Measures and Supporting Implementation Rules" (Shen Guang Gui[2017]No.16)issuedbyShenzhenGuangmingNewDistrictManagementCommittee.
Note (11): The second batch of Shenzhen City e-commerce development special fund project award in 2018 obtained according to “Notice of the Municipal Economic and Trade Information Commission on the Public Announcement of the Second Batch of Shenzhen E-Commerce Development Special Fund Projects” issued bytheShenzhenEconomicandTradeInformationCommission(ShenJingmaoXinxiShengchanZi[2018]No.100) Note (12): Subsequent subsidies for corporate research and development grants obtained according to the"ShenzhenCity-levelIndustrySpecialFundsDisbursementOperationRegulations"(ShenCaike[2010]No.173)and"Releaseof<ShenzhenCitySpecialFundsEntrustedCommercialBankSupervisionScheme>"(ShenCaike[2012]No.1)issuedbyShenzhenMunicipalScienceandTechnologyInnovationCommittee.
Note(13):SpecialfundsforNanshandistrictindependentinnovationindustrydevelopmentobtainedaccordingto “Nanshan District Independent Innovation Industry Development Special Fund Management Measures (Trial)”issuedbytheOfficeofthePeople'sGovernmentofNanshanDistrict,Shenzhen(ShennanFubanGui[2017]No. 2)
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Note(14):Patentawardobtainedaccordingto“NoticeoftheShenzhenMunicipalMarketandQualitySupervision CommissionondistributingtheFifthGuangdongPatentAwardandthe19thChinaPatentAwardforGuangdong ProvinceIntellectualPropertySupportA
Note(15): Fund for Enterprise Intellectual Property Management Standard Certification obtained according to“ShenzhenMunicipalPeople'sGovernmentofShenzhenMunicipality’snoticeonSeveralMeasuresforPromoting Scientific and Technological Innovation" issued by the Shenzhen Municipal Market and Quality Supervision andManagementCommittee(Shenfa[2016] No.7)andtheShenzhenMunicipalPeople'sGovernmentof Shenzhen MunicipalCommitteeoftheCommunistPartyofChinaPrintingandDistributingtheNoticeonSeveralMeasurestoSupportEnterprisestoEnhanceTheirCompetitiveness(Shenfa[2016]No.8)
Note (16): 2018 Small and Medium Enterprises Development Special Fund (Under “Innovation and Entrepreneurship” Strategy), Enterprise Domestic Market Development Project Funding, obtained according to the "Interim Measures for the Administration of Special Funds for the Development of Private and SMEs in Shenzhen" issued by Shenzhen Municipal Commission of Economy, Trade and Information and Shenzhen Municipal Finance Committee (Shen Jingmao Xinxi Gui[2017] No. 8), and “The Detailed Rules for the Implementation of the Special Demonstration Fund for the Small and Medium Enterprise Entrepreneurship Innovation Base in Shenzhen” issued by Shenzhen Economic and Trade and Information Commission (ShenJingmaoXinxiZhongxiaoZi[2016]No.217).
VII.Changesofconsolidationscope
1. Changes of consolidation scope for other reasons
On 9 March, 2018, World Watches International obtained the company revocation announcement (No. 1554) issued by the Hong Kong Companies Registry.At the end of the period, the Company did not include it in the scopeofconsolidation.
VIII. Equityinotherentities
1. Equity in subsidiaries
(1) Structureofenterprisegroup
||||||
|-|-|-|-|-|
|Mainbusinesslocation|Placeofregistration|Natureofbusiness|Shareholdingratio%||
||||Direct|Indirect|
|Shenzhen|Shenzhen|Commerce|100.00|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||
|-|-|-|-|-|
|Mainbusinesslocation|Placeofregistration|Natureofbusiness|Shareholdingratio%||
||||Direct|Indirect|
|Shenzhen|Shenzhen|Manufacture|90.00|10.00|
|HongKong|HongKong|Commerce|100.00|-|
|HongKong|HongKong|Commerce|-|60.00|
|Harbin|Harbin|Commerce|100.00|-|
|Shenzhen|Shenzhen|Manufacture|100.00|-|
|Shenzhen|Shenzhen|Commerce|100.00|-|
|Shenzhen|Shenzhen|Commerce|100.00|-|
|Shenzhen|Shenzhen|Commerce|100.00|-|
|Shenyang|Shenyang|Commerce|100.00|-|
|Switzerland|Switzerland|Commerce|-|100.00|

2. Equity in joint arrangement or associates
(1) Significantassociates
||||||
|-|-|-|-|-|
|Principalplaceofbusiness|Registrationplace|Businessnature|Shareholdingratio(%)||
||||Direct|Indirect|
|Shanghai|Shanghai|Manufacture|25.00|-|

 (2) Principalfinancialinformationofsignificantassociatecompany:
||
|-|
|Balanceasof31Dec2018or2018|
|99,901,286.09|
|15,459,207.08|
|115,360,493.17|
|10,833,917.48|
|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|Balanceasof31Dec2018or2018|
|10,833,917.48|
|-|
|104,526,575.69|
|26,131,643.92|
|-|
|-|
|-|
|44,881,063.15|
|97,282,978.95|
|4,006,180.22|
|-|
|4,006,180.22|
|-|

IX. Riskrelatedtofinancialinstruments
Main financial instruments of the Company include monetary fund, note and accounts receivable, other receivables, available-for-sale financial assets, equity investment, note and accounts payable, other payables, and loans etc. Details of financial instruments refer to related items in Note VI. The risks associated with these financial instruments and the risk management policies adopted by the Company to mitigate these risks are described below.The management of the Company manages and monitors these exposures to ensure that the aboverisksarecontrolledinalimitedextent.
The Company adopts sensitivity analysis technique to analyse the reasonability of risk variables, impact of
possiblechangeoncurrentprofitandlossorshareholder’sequity.Sinceriskvariablesbarelychangeinisolation,
and correlation between variables have significant impact on the final amount affected by one variable, the
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
followingcontentisbasedontheassumptionthateachvariablechangesinisolation.
1. Risk management goals and policies
The goal of risk management isto keep proper balancebetween risk and profit, to reduce negative influence of financialrisktofinancialperformanceoftheCompanytotheminimumandmaximizethebenefitofshareholders andotherequityinvestors.Basedonthegoal,thefundamentalriskmanagementpoliciesoftheCompanyareto identifyandanalyseriskstheCompanyfaces,setproperacceptableriskleveltomanagerisk,supervisevarious riskreliablyandtimelyandcontrolriskwithinlimitedrange.
(1) MarketRisk
① Exchangeraterisk
Exchange rate risk refers to the risk of loss caused by exchange rate change. The main exchange rate risk the company undertakes is relevant to Hong Kong dollar and Swiss Franc. Except several subsidiaries which purchaseandsellwithHongKongdollarandSwissFranc,othermajorbusinesstransactionsaresettledinRMB. On 31 December, 2018, except balance of following assets and liabilities shown in the table are in Hong Kong dollar, Swiss Franc and US dollar, balance of other assets and liabilities of the company are in RMB. The exchange rate risk due to these assets and liabilities with balance in foreign currency could have impact on the financialperformanceoftheCompany.
||
|-|
|Balanceasof31Dec2018|
|11,875,297.06|
|11,545,880.33|
|4,733,540.86|
|6,589,218.31|
|2,655,278.19|
|65,276.30|
|489,881.07|
|42,118,460.00|
|347,470.00|
|4,517,110.00|

The Company closely monitors the impact of exchange rate changes on the Company's foreign exchange risk.
TheCompanyhasnottakenanymeasurestoavoidforeignexchangerisks.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Foreignexchangeraterisksensitivityanalysis:
Foreignexchangeraterisksensitivityanalysisassumption：allthehedgesofthenetinvestmentinanoverseas operation and cash flow hedging are highly effective. Under this assumption, controlling other variables, thepre-taximpactoncurrentprofitandshareholders’equityduetoreasonablechangeofexchangerate,areshown asfollowing.
|||||
|-|-|-|-|
|Fluctuationinexchangerate|2018|||
||Impactonprofit|Impactonshareholders’equity|Impactonprofit|
|AppreciateagainstRMBby5%|593,764.85|593,764.85|455,165.96|
|DepreciateagainstRMBby5%|-593,764.85|-593,764.85|-455,165.96|
|AppreciateagainstRMBby5%|577,294.02|577,294.02|559,684.72|
|DepreciateagainstRMBby5%|-577,294.02|-577,294.02|-559,684.72|
|AppreciateagainstRMBby5%|236,677.04|236,677.04|643,626.05|
|DepreciateagainstRMBby5%|-236,677.04|-236,677.04|-643,626.05|
|AppreciateagainstRMBby5%|329,460.92|329,460.92|314,524.58|
|DepreciateagainstRMBby5%|-329,460.92|-329,460.92|-314,524.58|
|AppreciateagainstRMBby5%|-132,763.91|-132,763.91|-66,520.16|
|DepreciateagainstRMBby5%|132,763.91|132,763.91|66,520.16|
|AppreciateagainstRMBby5%|-3,263.82|-3,263.82|-9,255.07|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|Fluctuationinexchangerate|2018|||
||Impactonprofit|Impactonshareholders’equity|Impactonprofit|
|DepreciateagainstRMBby5%|3,263.82|3,263.82|9,255.07|
|AppreciateagainstRMBby5%|-24,494.05|-24,494.05|-39,709.53|
|DepreciateagainstRMBby5%|24,494.05|24,494.05|39,709.53|
|AppreciateagainstRMBby5%|-2,105,923.00|-2,105,923.00|-2,549,525.50|
|DepreciateagainstRMBby5%|2,105,923.00|2,105,923.00|2,549,525.50|
|AppreciateagainstRMBby5%|-17,373.50|-17,373.50|-|
|DepreciateagainstRMBby5%|17,373.50|17,373.50|-|
|AppreciateagainstRMBby5%|-225,855.50|-225,855.50|-250,421.25|
|DepreciateagainstRMBby5%|225,855.50|225,855.50|250,421.25|

②Interestrisk-riskofchangeincashflow
The risk of change in cash flow in the Company due to the change of interest rate is mainly relevant to floating interestratebankloans.ThestrategyoftheCompanyistomaintainthefloatingrateoftheseloans.
Interestratesensitivityanalysis:
Interestratesensitivityanalysisisbasedonfollowingassumption:
• Theincomeandexpenseoffinancialinstrumentswithvariableinterestrateisinfluencedbychangeofmarket interestrate
• For fixed interest rate financial instruments measured by fair value, change of market interest rate only
influencestheinterestincomeandexpense
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
• For derivative financial instruments that designated as hedging instruments, change of market interest rate influencethefairvalueandinterestratehedgingisestimatedtobehighlyeffective
• The change in fair value of derivative financial instruments and other financial assets and liabilities is calculatedwithmarketinterestrateonbalancesheetdateunderdiscountcashflowmethod
On the basis of above assumptions, with other variables not changed, the pre-tax impact on current profit andshareholders’equityduetoreasonablechangeofinterestrateisasfollows:
OnDecember31,2018,theCompanydidnothavealoanwithfloatinginterestrate(On31December2017,ifthe borrowingrate calculatedwith floatinginterestrate increasesof decreasesby50 basispoints, andother factors remain unchanged, the net profit andshareholders’ equity was estimated to decrease or increase by around RMB326,300yuan)
③Otherpricerisk.
Available-for-salefinancialassetsheldbytheCompanyaremeasuredatcostonbalancesheetdate,sothereis nopricerisktobedisclosed
(2) Creditrisk
The biggestcreditriskexposurewhichpossiblyleadstofinanciallossof theCompanyon 31December 2018is default of contract obligation of transaction counterparty, which may lead to the loss on financial assets of the Company.Specifically,itincludesthebookbalanceoffinancialassetsrecognized inconsolidatedbalancesheet andthefailureofnotsettinganyguaranteestoanyothercreditrisksthattheCompanymaybear.
Toreduce credit risk, based on the financial status of debtor, external rating, guarantee possibility, credit record gained from the third party and other factors including current market status and that the Company evaluates credit qualification of debtor and set corresponding debt limit and credit period. The Company will regularly supervisecreditrecordofdebtor.Fordebtorwithbadcreditrecord,theCompanywillensurethewholecreditrisk of the Company within controllable range in the forms of written reminder letter, reducing credit period and cancellingcreditperiod.Additionally,theCompanyexaminesthecollectionofreceivablesoneverybalancesheet datetoensuresufficientprovisionforbaddebts.Hence,themanagementoftheCompanysupposethatthecredit riskundertakenbytheCompanyhasbeenreducedsignificantly.
The working capital of the Company is deposited in bank with high credit rating, so the credit risk of working capitalislow.
For amount of accounts receivable, the amount of top 5 accounts receivable accounts for17.13% of total accountsreceivableoftheCompany.Inotherreceivables,theamountoftop5accountsreceivableaccountsfor22.73%oftotalotherreceivableoftheCompany.
(3) Liquidityrisk
Inmanagingliquidityrisk,theCompanykeepsthecashandcashequivalentsthattheCompanydeemssufficient
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
and controls them to meet operating needs, reduce influence of cash liquidity fluctuation. The Company managementmonitorstheuseofbankloansandensurestocomplywithborrowingagreement.
ThemainsourceofcapitalisgeneratedbythecashfromCompany’sbusinessoperationsandbankloans.Asat 31 December 2018, bank borrowing facility that the Company has not yet used is about RMB1,981,030,000(31 December2017:RMB2,723,970,000).
The maturity of financial assets and financial liabilities held by the Company according to the undiscounted remainingcontractualobligationsisasfollows(Unit:inRMBtenthousands):
|||||
|-|-|-|-|
|Within1year|1to2years|2to3years|Over3years|
|16,482.81|-|-|-|
|38,848.67|-|-|-|
|705.18|-|-|-|
|38,143.49|-|-|-|
|4,824.95|-|-|-|
|60,156.43|-|-|-|
|54,711.85|-|-|-|
|25,991.36|-|-|-|
|25,991.36|-|-|-|
|7,181.99|-|-|-|
|77.23|-|-|-|
|7,104.76|-|-|-|
|34.75|-|-|-|
|-|34.75|34.75|382.21|
|26,711.85|-|-|-|
|114,631.80|34.75|34.75|382.21|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||||
|-|-|-|-|
|Within1year|1to2years|2to3years|Over3years|

2. Transfer of financial assets
(1) Notesreceivablethathavebeenendorsedattheendoftheyearandhavenotexpiredonthebalancesheet date
||
|-|
|Amountderecognizedattheendof2018|
|1,294,584.13|

 X. Fairvalue
1. Financial assets and liabilities measured at fair value
On31December2018,theCompanydidnothaveassetsandliabilitiesmeasuredatfairvalue.
2. Financial assets and liabilities not measured at fair value
TheCompany’sfinancialassetsandfinancialliabilitiesmeasuredatamortizedcostmainlyinclude:cashandbank balances,noteandaccountsreceivables,otherreceivables,short-termloans,noteandaccountspayables,otherpayables,andlong-termloans,etc…
The difference between the book value and fair value of financial assets and liabilities that are not measured at fairvalueissmall.
XI. Relatedpartyrelationshipandtransactions
1. Details of the parent company of the Company
|||||
|-|-|-|-|
|Registrationplace|Typeofbusiness|Registeredcapital|ShareholdingratioofparentcompanytotheCompany%|
|Shenzhen|Investment inindustries, domestictrade, materialsupply anddistribution|1,166,161,996|37.15|

Note:CATICShenzhenCompanyholds33.93%shareholdingofChinaNationalAviationGroup.CATICShenzhen
Company is a wholly owned subsidiary of ChinaAero Space International Holdings Limited (CASI), and China
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Aviation Industry Corporation (AVIC) directly holds62.52% of the equity of CASI. Therefore, the ultimate controllingpartyoftheCompanyisAVIC.
2. Subsidiaries
DetailsofsubsidiariesrefertoNoteVIII.1“Equityinsubsidiary”.
3. Joint venture and association
DetailsofjointventuresandassociatesrefertoNoteVIII.2“Equityinjointarrangementorjointventure”.
4. Other related parties
Name RelationshipwiththeCompany ShenzhenCATICPropertyManagementLimited(CATICPropertyManagement) Controlledbythesameparty ShenzhenCATICBuildingEquipmentCo.,Ltd.(CATICBuildingCompany) Controlledbythesameparty RainbowDepartmentStoreCo.,Ltd.(RainbowDepartmentStore) Controlledbythesameparty ShennanCircuitsCo.,Ltd.(ShennanCircuits) Controlledbythesameparty CATICRealEstateCompany Controlledbythesameparty AVICSecuritiesCo.,Ltd.(AVICSecuritiesCompany) ControlledbythesamepartyXi’anSkytelHotelCo.,Ltd.(SkytelHotel) Controlledbythesameparty ShenzhenCATICCityRealEstateDevelopmentCo.,Ltd.(CATICCityRealEstateCompany) Controlledbythesameparty ShenzhenCATICCityDevelopmentCo.,Ltd.(CATICCityDevelopmentCompany) Controlledbythesameparty CATICGuanlanPropertyDevelopmentCo.,Ltd.（CATICGuanlanProperty） Controlledbythesameparty CATICChangtaiInvestmentDevelopmentCo.,Ltd.(CATICChangtaiCompany) Controlledbythesameparty ShenzhenCATICJiufangAssetManagementLimited(CATICJiufangAssetMgmtCompany) Controlledbythesameparty ShenzhenCATICCityInvestmentCo.,Ltd(CATICCityInvestment) Controlledbythesameparty AVICTrainingCenter Controlledbythesameparty GanzhouCATIC9SquareTradingCo,Ltd(Ganzhou9SquareCompany) Controlledbythesameparty CATICCityEstate(Kunshan)Co,Ltd(KunshanCompany) Controlledbythesameparty ShenzhenCATICHuachengRealEstateDevelopmentCo,Ltd(CATICHuachengCompany) Controlledbythesameparty AVICFinanceCo.,Ltd.(AVICFinanceCompany) ControlledbythesamepartyShenzhenAVICSecurityServiceCo.,Ltd(AVICSecurityService)） Controlledbythesameparty ShenzhenAVICPropertyAssetManagementCo.,Ltd.(AVICPropertyAssetManagement) Controlledbythesameparty Jiujiang9SquareBusinessManagementCo.,Ltd(JiufangBusinessManagement) Controlledbythesameparty
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Name RelationshipwiththeCompany ShenzhenCATICGrandSkylightHotelCo.,Ltd(GrandSkylightHotel) Controlledbythesameparty ShenzhenCATICCityParkingManagementCo,Ltd(CATICCityParkingManagementCompany) Controlledbythesameparty ShenzhenGrandSkylightHotelManagementCo.,Ltd(GrandSkylightHotelManagement
Controlledbythesameparty Company)
ShenzhenCATICTechnicalTestingInstitute(CATICTechnicalTestingInstitute) Controlledbythesameparty GongqingchengCATICCultureInvestmentCo.,Ltd(GongqingchengCATICCultureInvestment
Controlledbythesameparty Company)
AVIC-INTLProjectEngineeringCo.,Ltd(AVIC-INTLProjectEngineeringCompany) Controlledbythesameparty ShenzhenCATICPropertyDevelopmentCo.,Ltd(CATICProperty) Controlledbythesameparty JiujiangCIATICCityRealEstateDevelopmentCo.,Ltd(JiujiangCATICRealEstateCompany) Controlledbythesameparty HuangYongfeng Keymanagementmember WangMingchuan Keymanagementmember FuDebin Keymanagementmember XiaoZhanglin Keymanagementmember WangBo Keymanagementmember ChenLibin Keymanagementmember WangJianxin Keymanagementmember ZhongHongming Keymanagementmember TangXiaofei Keymanagementmember WangBaoying Keymanagementmember ShengQing Keymanagementmember ZouZhixiang Keymanagementmember LuBingqiang Keymanagementmember LuWanjun Keymanagementmember LiuXiaoming Keymanagementmember PanBo Keymanagementmember LiMing Keymanagementmember ChenZhuo Keymanagementmember
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Name RelationshipwiththeCompany ZhangHongguang Keymanagementmember ZhangShunwen Keymanagementmember WangYan Keymanagementmember WangJingqi Keymanagementmember 5.Transactions with related parties
(1) Relatedtransactionsforthepurchaseandsaleofgoods,provisionandreceiptofservices
①Purchasinggoodsandreceivingservices
|||
|-|-|
|Typeoftransaction|2018|
|Propertymanagement|8,208,102.96|
|Departmentstoreexpenses/Commoditypurchase|5,865,816.91|
|Training|273,596.25|
|Testing|-|
|Materialpurchase|29,914.50|
|Departmentstoreexpenses|177,372.93|
|Departmentstoreexpenses|76,674.66|
|Departmentstoreexpenses|58,322.11|

②Sellingproductsandprovidingservices
|||
|-|-|
|Typeoftransaction|2018|
|Productsalesandservices|71,764,856.50|
|Productsalesandservices|5,982.91|
|Productsalesandservices|960,563.85|
|Materialsalesandservices|5,883,132.72|
|Productsales|655,161.45|
|Productsales|10,215.52|
|Productsales|4,051.28|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Typeoftransaction|2018|
|Productsales|15,351.72|

 (2) Leasebetweenrelatedparty
①TheCompanyasalessor
|||
|-|-|
|Typeofleasedassets|Recognizedrentalincomeincurrentyear|
|Property|6,997,899.09|
|Property|4,190,476.18|
|Property|1,813,948.87|
|Property|364,293.91|
|Property|1,231,342.83|
|Property|342,330.05|
|Property|529,166.26|
|Property|257,234.48|
|Property|1,560,410.13|
|Property|1,160,868.75|
|Property|119,748.00|
|Property|57,154.70|
|Property|2,428.57|
|Property|165,612.56|
|Property|9,916.44|

②TheCompanyasalessee
|||
|-|-|
|Typeofleasedassets|Rentalexpenseschargedincurrentyear|
|Property|894,582.84|
|Property|-|
|Property|156,942.79|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
|||
|-|-|
|Property|337,541.02|

 (3) Relatedpartyfundslending
||||
|-|-|-|
|Amount|Effectivedate|Expiringdate|
|150,000,000.00|2018-5-14|2019-5-14|

 (4) Benefitforkeymanagementmembers
||
|-|
|2018|
|13,123,100.00|

 (5) Otherrelatedtransactions
Theyear-endbalanceoftheCompany’scashwasRMB128,255,699.54,whichwasdepositedwithAVICFinance Company.InterestsreceivedfromthedepositduringtheyearwereRMB365,094.51.
6.Receivables from and payables to related parties
(1) Receivables
||||
|-|-|-|
|31Dec2018|||
|Carryingamount|Baddebtprovision|Carryingamount|
|2,305,867.79|115,293.39|1,782,356.36|
|1,659,077.38|82,953.87|786,443.94|
|4,000.00|200.00|115,742.00|
|28,269.36|1,413.47|-|
|4,288.00|214.40|-|
|101,428.57|5,071.43|-|
|3.00|0.15|-|
|33,331.01|1,666.55|-|
|8,315.43|415.77|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||
|-|-|-|
|31Dec2018|||
|Carryingamount|Baddebtprovision|Carryingamount|
|148,915.46|7,445.77|-|
|0.52|0.03|-|
|4,293,496.52|214,674.83|2,684,542.30|
|-|-|2,398,579.72|
|-|-|2,398,579.72|
|761,860.00|38,093.00|832,774.30|
|10,100.00|505.00|100.00|
|122,665.60|6,133.28|122,665.60|
|-|-|50,000.00|
|50,400.00|2,520.00|35,000.00|
|32,000.00|1,600.00|32,000.00|
|-|-|150,000.00|
|-|-|126,598.73|
|5,500.00|275.00|-|
|50,000.00|2,500.00|-|
|54,923.00|2,746.15|-|
|11,101.80|555.09|-|
|1,098,550.40|54,927.52|1,349,138.63|

 (2) Payables
||
|-|
|31Dec2018|
|24,000.00|
|40,821.05|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|31Dec2018|
|64,821.05|
|-|
|-|
|-|
|-|
|-|
|1,131,164.13|
|442,407.92|
|309,732.00|
|213,000.00|
|116,960.23|
|99,052.32|
|73,819.68|
|378,483.84|
|60,000.00|
|-|
|4,064.81|
|51,014.88|
|25,401.60|
|10,533.44|
|3,446.22|
|150,000.00|
|3,069,081.07|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
XII. Commitmentsandcontingencies
1.Significant commitments
(1) Operatingleasecommitment
Asofthebalancesheetdate,theirrevocableoperatingleasecontractssignedbytheCompanyareasfollows:
||
|-|
|31Dec2018|
|54,382,100.37|
|28,501,337.58|
|12,406,400.37|
|9,533,027.43|
|104,822,865.75|

 (2) Othercommitments
Asof31December,2018,theCompanyhasnocommitmentthatshallbedisclosed.
2. Contingencies
(1)Contingentliabilitiesandfinancialinfluenceformedbyprovidingliabilityguaranteetootherunits
RefertoNoteXIV.2fordetailsofguaranteebetweenparentcompanyandsubsidiaries.
(2) Othercontingentliabilitiesanditsfinancialinfluence
Asof31December2018,thereisnoothercontingencythatshallbedisclosedbytheCompany.
XIII. Postbalancesheetdateevents
1. Restrictedstockincentiveplan
In2018,theCompanyimplementedarestrictedstockincentiveplan(the“IncentivePlan”)tomotivateandreward individuals who contribute to the Company's operations. Incentives includecompany’s directors, senior management, middle management, core technical staff and senior management and core backbone of subsidiaries.
On11January,2019,afterthefirstextraordinarygeneralmeetingof2019andthefifthmeetingoftheninthboard of directors, the Company intends to grant 4,224,000A-share restricted shares to 128 incentive individuals at a price of RMB4.40 per share.As of 11 January, 2019 (grant date), the actual number of individual received the grantwas128,andatotalof4,224,000restrictedstocksweregranted.Thetotalamountofsubscriptionsreceived
by the incentive individuals was RMB18,585,600.00, of which RMB4,224,000.00 increased share capital and
RMB14,361,600.00wasincludedincapitalreserve(sharepremium).
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Theincentiveprogramisvalidfor5years(60months),includingalock-upperiodof2years(24months)andan unlockperiodof3years(36months).
2. Profitdistribution
Theresolutionof2018profitdistributionproposalhasbeenpassedonthe6thBoardMeetingofthe9thBoardof Directors on 13 March 2019. It proposed to distribute cash dividend of RMB2.00 (tax inclusive) for every 10 sharesheldbyshareholdersbasedonthetotal438,744,881sharesasat31December2018.Cashdividendthat proposed to be distributed amounts to RMB87,748,976.20, no bonus shares and no capitalization of reserves.TheproposalissubjecttoapprovalfromAnnualGeneralShareholders’Meeting.
3. Impactoftheimplementationofthenewaccountingstandardsfrom1January,2019
On31March,2017,theMinistryofFinanceissuedthe"AccountingStandardsforBusinessEnterprisesNo.22- Recognition and Measurement of Financial Instruments (Revised in 2017)" (Caikuai[2017] No. 7) and "AccountingStandardsforBusinessEnterprisesNo.23"TransferofFinancialAssets(Revisedin2017) (Caikuai[2017] No. 8), "Accounting Standards for Business Enterprises No. 24 - Hedge Accounting (Revised in 2017)" (Caikuai[2017] No. 9), and issued the “Accounting Standards for Business Enterprises No. 37– Financial Instruments Presentation (Revised in 2017)” (Caikuai[2017] No. 14) in 2 May, 2017, (the above-mentioned standards are collectively referred to as the “New Financial Instruments Standards”), and the domestic list companies shall adopt the new guidelines from 1 January, 2019. The Company will implement the above New Financial Instruments Standards from 1 January, 2019, and will change the relevant accounting policies in accordancewiththeNewFinancialInstrumentStandards.
Thefollowingarethemaincontentsoftheaccountingpolicychangesthatwillbeinvolved:
Allfinancialassetscurrentlyrecognizedshallbesubsequentlymeasuredatamortisedcostorfairvalueunderthe NewFinancialInstrumentStandards.
OntheimplementationdateoftheNewFinancialInstrumentStandards,thebusinessmodelofmanagingfinancial assetsisevaluatedbasedonthefactsandcircumstancesoftheCompanyontheday,andthecontractualcash flow characteristics on the financial assets are evaluated based on the facts and circumstances at the initial confirmation ofthe financialassets. Financial assetsare classifiedinto three categories: measured at amortised cost,fairvaluethroughothercomprehensiveincome,andfairvaluethroughprofitorloss.Whenfairvaluethrough other comprehensive income equity instrument is derecognised, the accumulated gain or loss previously recognised in other comprehensive income shall be transferred from other comprehensive income to retained earnings,butnotincludedincurrentprofitandloss.
Under the New Financial Instrument Standard, the Company adopts expected credit losses model to make provision and recognize impairment of credit losses for financial assets measured at amortized cost, debt instrumentinvestmentsmeasuredatfairvaluethroughothercomprehensiveincome,leasereceivables,contract assetsandthefinancialguaranteecontract.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
4.Othersignificantnon-adjustingeventsafterbalancesheetdate
(1)On13March,2019,approvedbythe6thmeetingofthe9thBoardofDirectorsoftheCompany,theCompany intends to apply credit facility for no more than RMB900,000,000 from banks in various ways including credit, guaranteeandmortgagein2019.Theabove-mentioned proposalofthetotalcreditlineofthebankissubject to theapprovalofthegeneralmeetingoftheCompany.
(2)On13March,2019,approvedbythe6thmeetingofthe9thBoardofDirectorsoftheCompany,theCompany intends to apply for a guarantee loan of not exceeding RMB 600,000,000 for the wholly owned subsidiary at relevant banksin 2019.The line of credit isincluded in the actuallineof bank loansapplied bythe Companyin 2019,whichisRMB900,000,000.Theaboveguaranteeamountissubjecttotheapprovalofthegeneralmeeting oftheCompany.
XIV. Othersignificantevents
1. Deregistrationofsubsidiary
Station68Companyisgoingthroughthederegistrationprocedureandhasnotfinisheduntil31December2018 2. Guaranteesituation
In2018, theCompanyandChinaMerchantsBankCo., Ltd.ShenzhenBranchsignedacreditfacilityagreement with a credit limit of RMB200,000,000.The Company's subsidiary, Harmony Company,provided guarantee, and the guarantee method is joint liability guarantee. The guarantee period is from the date of the guarantee agreement(2July,2018)toeachdebtmaturitydateunderthecreditagreementplusthreeyears.Theagreement credit limit is valid from 18 June, 2018 to 17 June, 2019.As of 31 December, 2018, the total balance of loans underthecreditagreementwasRMB110,000,000.
In May 2018, the Company and China Agricultural Bank of China Shenzhen Central Branch signed a comprehensivecreditfacilityagreementwithacreditlimitofRMB200,000,000(canbeusedinformofbankloan,bankguaranteeetc…).Thecreditlimitisvalidfrom21May2018to21May2019.Asof31Dec2018,balanceof bank loans under this facility was RMB10,000,000. In November 2018, the Company applied to open a RMB80,000,000performance guarantee letter with joint liability.The beneficiaries of the performance guarantee letter are suppliers of HARMONY Company, one of theCompany’s subsidiary. The valid period of the performanceguaranteeletterisfrom30December2018to29December2019.
InJuly2018,theCompany'ssubsidiary,FIYTAHongKongCo.,Ltd.andChinaTrustCommercialBankCo.,Ltd. signedacreditlinecontractwithacreditlimitofHKD40,000,000.TheguaranteeisprovidedbytheCompany,and theexpirationdateoftheguaranteeis31May,2020.Thecontractmaturitydateis31May,2020.AsofDecember 31,2018,thetotalloanbalanceunderthecreditagreementisHKD18,070,000.
InDecember2018,theCompany'ssubsidiary,FIYTAHongKongCo.,Ltd.andNanyangCommercialBank(China)
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
Co., Ltd. Shenzhen Branch signed a credit line agreement with a credit limit of HKD80,000,000. The Company provided guarantee, and the guarantee method was joint liabilityguarantee.The term of guaranteeshall be two yearsfromthedateofexpirationoftherepaymentperiodoftheprincipalclaim.Thecreditfacilityisvalidfrom17 December, 2018 to 12 November, 2020. As of December 31, 2018, the total loan balance under the credit agreementisHKD30,000,000.
InDecember 2018,theCompanysignedacomprehensivefinancingcontract withChinaConstructionBankCo., Ltd. Shenzhen Branch with a credit limit of RMB300,000,000. The Company's subsidiary, Harmony Company, provided guarantee, and the guarantee method is joint liability guarantee. The guarantee period starts from the dateofthesinglecreditextensionandendsthreeyearsafterthematurityofthedebt.Thecontractcreditfacilityis validfrom4December,2018to8March,2020.Asof31December,2018,thetotalloanbalanceunderthecredit agreementisRMB35,000,000.
3. Others
The proposal about acquiring wholly-owned sub-subsidiary Montres Chouriet SA has been passed in the 16thBoardMeetingoftheeighthBoardofDirectorson2June2017.TheCompanyisgoingtoacquire100%shareof SwissCompany,ownedbythesubsidiaryoftheCompany,FIYTAHongKong.TheconsiderationofCHF12million wasmadeonthebasisofauditednetassetasat31December2016.Theacquisitionhasnotbeenfinalizedasof 31December2018.
XV.NotestotheCompany’sfinancialstatements
1．Noteandaccountsreceivables
||
|-|
|31Dec2018|
|737,636.38|

 (1) Accounts receivable
①Accountsreceivablepresentedbycategories:
31Dec2018
|||||
|-|-|-|-|
|Bookbalance||Provisionforbaddebts||
|Amount|Percentage%|Amount|Percentage%|
|-|-|-|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
31Dec2018
|||||
|-|-|-|-|
|Bookbalance||Provisionforbaddebts||
|Amount|Percentage%|Amount|Percentage%|
|776,459.35|100.00|38,822.97|5.00|
|776,459.35|100.00|38,822.97|5.00|
|-|-|-|-|
|-|-|-|-|
|776,459.35|100.00|38,822.97|5.00|

 (Continued)
1Jan2018
|||||
|-|-|-|-|
|Bookbalance||Provisionforbaddebt||
|Amount|Percentage%|Amount|Provisionrate%|
|-|-|-|-|
|6,871,446.35|100.00|39,440.24|0.57|
|788,804.75|11.48|39,440.24|5.00|
|6,082,641.60|88.52|-|-|
|-|-|-|-|
|6,871,446.35|100.00|39,440.24|0.57|

A. Accountsreceivablethatareprovidedforbaddebtbasedonaginganalysisinagingportfolio:
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
1Jan2018
|||
|-|-|
|Amount|Provision|
|776,459.35|38,822.97|

② Baddebtprovisionsaccrued,receivedorreversedinthecurrentperiod
The amount of Bad debtprovision accruedin current year is RMB16,073.16;The amount of the reversal of bad debtprovisionincurrentyearisRMB16,690.43.
③ Top5accountsreceivableasattheyearend
The amount of top 5 receivables based on year-end receivable balance is RMB776,458.78, accounts for100%oftotalreceivablesasat31Dec2018.CorrespondingbaddebtprovisionisRMB38,822.93.
2．
Otherreceivables
||
|-|
|31Dec2018|
|870,739,378.37|

 (1) Other receivable
①Otherreceivablesdisclosedbycategories:
31Dec2018
|||||
|-|-|-|-|
|Bookbalance||Provisionforbaddebt||
|Amount|Percentage%|Amount|Provisionrate%|
|-|-|-|-|
|870,839,129.37|100.00|99,751.00|0.01|
|1,426,516.07|0.16|99,751.00|6.99|
|869,412,613.30|99.84|-|-|
|-|-|-|-|
|870,839,129.37|100.00|99,751.00|0.01|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(Continued)
Category 1Jan2018
|||||
|-|-|-|-|
|Bookbalance||Provisionforbaddebt||
|Amount|Percentage%|Amount|Provisionrate%|
|-|-|-|-|
|832,005,502.89|100.00|53,065.03|0.01|
|727,550.50|0.09|53,065.03|7.29|
|831,277,952.39|99.91|-|-|
|-|-|-|-|
|832,005,502.89|100.00|53,065.03|0.01|

 A. Otherreceivablesthatareprovidedforbaddebtbasedonaginganalysis:
31Dec2018
Aging
|||
|-|-|
|Otherreceivable|Provision|
|1,178,412.07|58,920.60|
|208,054.00|20,805.40|
|-|-|
|40,050.00|20,025.00|
|1,426,516.07|99,751.00|

 B. Otherreceivablesthatareprovidedforbaddebtbasedonothermethods:
31Dec2018
Portfolioofspecificaccounts
|||
|-|-|
|Otherreceivable|Provision|
|431,623.24|-|
|868,980,990.06|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
31Dec2018
Portfolioofspecificaccounts
|||
|-|-|
|Otherreceivable|Provision|
|869,412,613.30|-|

 Note: Based on historical experience, theCompany’s receivables from petty cash advanced to employees, subsidiary funds within the scope of consolidation and sales revenue between the last settlement date of the samedepartmentstoreandthebalancesheetdatearewithhighrecoverabilityandlowpossibilityofincurringbad debt,asaresult,nobaddebtprovisionsareprovidedforsuchreceivables.
②Otherreceivablesclassifiedbynature
||
|-|
|31Dec2018|
|868,980,990.06|
|431,623.24|
|248,104.00|
|1,178,412.07|
|870,839,129.37|

③Baddebtprovisionaccrued,receivedorreversedinthecurrentperiod
TheamountofBaddebtprovisionaccruedisRMB46,685.97incurrentyear.Thereisnoreceivedorreversedof baddebtprovisionincurrentyear.
④Thetop5otherreceivableaccountsasattheyearend
|||||
|-|-|-|-|
|Nature|Balance|Aging|Percentageintotalclosingbalanceofotherreceivables(%)|
|Inter-groupmovement|20,819,991.24|Within1year|2.39|
|Inter-groupmovement|229,966,446.75|Within1year|26.41|
|Inter-groupmovement|488,575,998.73|Within1year|56.10|
|Inter-groupmovement|100,860,500.00|Within1year|11.58|
|Inter-groupmovement|28,758,053.34|Within1year|3.30|
|—|868,980,990.06|—|99.78|

3．
Long-termequityinvestments
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
(1) Typesoflong-termequityinvestment
||||||
|-|-|-|-|-|
|31Dec2018|||||
|Bookbalance|Provision|Carryingamount|Bookbalance|Provision|
|1,331,248,590.93||1,331,248,590.93|1,331,248,590.93|-|
|44,881,063.15|-|44,881,063.15|43,879,518.09|-|
|1,376,129,654.08||1,376,129,654.08|1,375,128,109.02|-|

 (2) Investmentinsubsidiaries
||||||
|-|-|-|-|-|
|1Jan2018|Increase|Decrease|31Dec2018|Provisionaccruedin2018|
|601,307,200.00|-|-|601,307,200.00|-|
|2,184,484.39|-|-|2,184,484.39|-|
|9,000,000.00|-|-|9,000,000.00|-|
|10,000,000.00|-|-|10,000,000.00|-|
|137,737,520.00|-|-|137,737,520.00|-|
|5,000,000.00|-|-|5,000,000.00|-|
|450,000,000.00|-|-|450,000,000.00|-|
|36,867,843.96|-|-|36,867,843.96|-|
|79,151,542.58|-|-|79,151,542.58|-|
|1,331,248,590.93|-|-|1,331,248,590.93|-|

 (3) Investmenttoassociatesandjointventurecompanies
Investedunits 1Jan2018 Changesin2018
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||||||
|-|-|-|-|-|
||Addition|Withdraw|Investmentincome/lossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|43,879,518.09|-|-|1,001,545.06|-|

 (Continued)
|||||
|-|-|-|-|
|Changesin2018|||31Dec2018|
|Cashdividendorprofitannouncedtobeissued|Provisionforimpairment|Other||
|-|-|-|44,881,063.15|

4．
Operatingrevenueandoperatingcost
||||
|-|-|-|
|2018|||
|Revenue|Cost|Revenue|
|130,886,023.99|19,010,293.07|117,673,738.22|
|15,800.00|-|72,649.57|
|130,901,823.99|19,010,293.07|117,746,387.79|

5．
Investmentincome
||
|-|
|2018|
|143,000,000.00|
|1,001,545.06|
|144,001,545.06|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
XVI. Supplementaryinformation
1．
Detailsofnon-recurringgainorlossfortheyear
||
|-|
|Amount|
|-180,302.24|
|-|
|19,375,618.48|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|-|
|7,533,121.86|
|-|
|-|
|-|

FIYTAHOLDINGSLTD.2018AnnualReport,FullText
||
|-|
|Amount|
|-|
|792,842.56|
|-|
|27,521,280.66|
|6,444,246.37|
|-|
|21,077,034.29|

Note:“+”refertogainorincomeand“-”meanslossorexpense.
TheCompanyrecognizenon-recurringgainorlossaccordingto“InterpretationAnnouncementtoInformationDisclosureofCompanieswithSharesOfferedPubliclyNo.1–Non-recurringgainorloss”(CSRC(2008)No.43.)
2．
ReturnonEquity(ROE)andEarningspershare(EPS)
|||
|-|-|
|WeightedaverageROE%||
||BasicEPS|
|7.30|0.4190|
|6.46|0.3710|

Section 12 Documents Available for Inspection
I.FinancialStatementssignedbyandunderthesealofthelegalrepresentative,chiefaccountantandaccounting supervisors;
II.OriginaloftheAuditors’Reportunderthesealoftheaccountingfirmandsignedbyandunderthesealsofcertified publicaccountants.
III. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities Times and HongKongCommercialDailyasdesignatedbyChinaSecuritiesRegulatoryCommission.
FIYTAHOLDINGSLTD.2018AnnualReport,FullText
BoardofDirectorsof FIYTAHOLDINGSLTD. March15,2019