FIYTA HOLDINGS LTD.
2014 Annual Report
March, 2015
Chapter 1 Important Notice, Table of Contents and Definition The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are neither material omissions nor errors which would render any statement misleading.
Except the following directors, all the other directors personally attended the board meeting for reviewing the Annual Report.
|||||
|-|-|-|-|
|Names of the directorsfailed in attending theboard meeting personally|Titles of the directorsfailed in attending theboard meeting personally|Cause of failure inattending the boardmeeting personally|Names of the attorneys|
|Huang Yongfeng|Director|Business trip|Zhong Sijun|
|Liu Aiyi|Director|Health problem|Wang Mingchuan|
|Zhang Hongguang|Independent director|Business trip|Wang Yan|

The profit distribution preplan reviewed and approved by the said board meeting is summarized as follows: With theCompany’s total share capital 392767870 as the base, the Company would distribute cash dividend at the rate of CNY 1.00 for every 10 shares (with tax inclusive) and bonus share at the rate of ) 0 share to the whole shareholders and no reserve would be converted into share capital.
Mr. Xu Dongsheng, the Company leader, Mr. Hu Xinglong, chief financial officer, and Mr. Hu Xinglong, the manager of the accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report enclosed in this Annual Report.
Any perspective description, such as future plan, development strategy, etc. involved in the Annual Report shall not constitute theCompany’s substantial commitment to the investors and the investors should please pay attention to their investment risks.
Table of Contents
2014 Annual Report
Chapter 1 Important Notice, Table of Contents and Definitions
Chapter 2 Company Profile
Chapter 3 Financial Highlights
Chapter 4 Report of the Board of Directors
Chapter 5 Significant Events 41
Chapter 6 Changes in Shares and Particulars about the Shareholders
Chapter 7 About the Preferred Shares
Chapter 8 Directors, Supervisors, Senior Executives and Staff
Chapter 9 Corporate Governance
Chapter 10 Internal Control
Chapter 11 Financial Report
Chapter 12 List of Documents Available for Inspection
Definition
||||
|-|-|-|
|Terms to be defined|Refers to|Definition|
|This Company, the Company or Fiyta|Refers to|FIYTA Holdings Ltd.|
|AVIC International Holdings|Refers to|AVIC International Holdings Limited|
|HARMONY|Refers to|Shenzhen Harmony World Watches Center Co., Ltd.|
|Rainbow Supermarket|Refers to|Rainbow Supermarket Co., Ltd.|
|CATIC Real Estate|Refers to|CATIC Real Estate Co., Ltd.|
|CATIC Property|Refers to|CATIC Property Management Co., Ltd.|

Important Risk Notice
Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn are the media designated for disclosing our information for the year 2014. All theCompany’s information is subject to the information disclosed in the aforesaid media as designated. Investors are requested to pay attention to the risks involved in your investment.
Chapter 2 Company Profile
I. Company Information
||||||
|-|-|-|-|-|
|Short form of the stock:||FIYTA A, FIYTA B|Stock Codes:|000026 and 200026|
|Stock Exchange Listed|||||
|||Shenzhen Stock Exchange|||
|with|||||
|Company Name In|飞亚达（集团）股份有限公司||||
|Chinese|||||
|Abbreviation of|||||
|Registered Company||飞亚达公司|||
|Name in Chinese|||||
|Company name in foreign|||||
|||FIYTA HOLDINGS LTD.|||
|language (if any)|||||
|Short form of the|||||
|Company name in foreign||FIYTA|||
|language (if any)）|||||
|Legal Representative|Xu Dongsheng||||
|Registered address:||FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen|||
|Postal Code of the|||||
|||518057|||
|Registered Address|||||
|Office Address||20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen|||
|Postal Code of the Office|||||
|||518057|||
|Address|||||
|Internet Web Site||www.fiytagroup.com|||
|E-mail||investor@fiyta.com.cn|||

II. Liaison Persons and Communication Information
||||
|-|-|-|
||Secretary of the Board|Securities Affairs Representative|
|Names|Lu Wanjun|Zhang Yong|
||20th Floor, FIYTA Technology|20th Floor, FIYTA Technology|
|Liaison Address|Building, Gaoxin S. Road One,|Building, Gaoxin S. Road One,|
||Nanshan District, Shenzhen|Nanshan District, Shenzhen|
|Tel.|0755－86013198|0755－86013669|
|Fax|0755－83348369|0755－83348369|
|E-mail|investor@fiyta.com.cn|investor@fiyta.com.cn|

III. Information Disclosure and Place of Regular Reports Prepared for Inquiry
|||
|-|-|
|Newspapers Designated for Disclosing the|Securities Times|
|Information:|and Hong Kong Commercial Daily|
|Internet Web Site Designated by China||
||www.cninfo.com.cn|
|Securities Regulatory Commission for||

|||
|-|-|
|Publishing the Company’s semi-annual report:||
|Place of the Company’s Semi-annual Report||
||Office of the Board of Directors|
|Prepared for Inquiry||

IV. Changes in Registration
|||||||
|-|-|-|-|-|-|
||||Number of|||
||||Business|||
||Date of|Authority||Taxation|Organization|
||||License of|||
||Registration|Registered with||Registration No.:|Code|
||||Enterprise as|||
||||Legal Person|||
|||Shenzhen||||
|||Municipal l||||
|||||4403015201000||
|Initial registration|March 30, 1990|Administration|19218978-3||19218978-3|
|||||18||
|||for Industry and||||
|||Commerce||||
|||Market||||
|Registration at||Supervision||||
||||4403011031960|4403011921897||
|the end of the|April 03, 2013|Administration of|||19218978-3|
||||89|83||
|reporting period||Shenzhen||||
|||Municipality||||
|Changes in principal business||||||
|||Nil||||
|activities since listing (if any)||||||
|Changes in the controlling||||||
|||Nil||||
|shareholder in the past (if any)||||||

V. Other Relevant Information
CPAs engaged
|||
|-|-|
|Name of the CPAs|Grant Thornton Certified Public Accountants (Special General Partnership)|
||5th Floor, Scitech Tower, 22 Jianguomen Wai Avenue, Chaoyang District, Beijing|
|Office address||
||100004|
|Names of the Certified Public||
||Su Yang and Chen Zhifang|
|Accountants as the signatories||

The sponsor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
The financial advisor performing persistent supervision duties engaged by the Company in the reporting period
Inapplicable
Chapter 3 Financial Highlights
I. Summary of Accounting/Financial Data
May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to change of the accounting policy and correction of accounting errors?
No
||||||||
|-|-|-|-|-|-|-|
||||||Year-on-year||
|||2014||2013|increase/decrease|2012|
||||||(%)||
|Turnover in CNY|3,278,142,785.87||3,103,496,962.22||5.63%|3,023,962,527.25|
|Net profit attributable to the|145,591,136.39||130,125,124.48||||
|Company’s shareholders, in|||||11.89%|116,003,746.03|
|CNY|||||||
|Net profit attributable to the|||||||
|Company’s shareholders less|||||||
|||136,799,116.72||127,158,503.02|7.58%|113,231,625.62|
|the non-recurring items, in|||||||
|CNY|||||||
|Net cash flows arising from|289,189,630.97||79,047,490.92||||
||||||265.84%|45,846,659.76|
|operating activities, in CNY|||||||
|Basic earning per share|0.3710||0.3310||||
||||||12.08%|0.295|
|(CNY/share)|||||||
|Diluted earning per share|0.3710||0.3310||||
||||||12.08%|0.295|
|(CNY/share)|||||||
|Return on equity, weighted|||||||
|||8.62%||8.69%|-0.07%|8.18%|
|average (%)|||||||
||||||Increase/decrease||
||||||at the end of the||
|||End of 2014||End of 2013|year over the end|End of 2012|
||||||of the previous||
||||||year (%)||
|Total assets, in CNY|3,657,781,647.20||3,558,702,591.28||2.78%|3,326,763,824.86|
|Net assets attributable to the|1,633,401,930.64||1,536,434,684.56||||
|Company’s shareholders|||||||
|(owner’s equity attributable to|||||6.31%|1,446,677,625.13|
|the Company’s shareholders,|||||||
|in CNY)|||||||

II. Difference in the Accounting Data based respectively on the Chinese Accounting Standards (CAS) and
International Accounting Standards (IAS)
(I) Differences in the net profit disclosed in the financial report& the net assets attributable to theCompany’s shareholders
respectively according to the IAS and the CAS.
Inapplicable
(II) Didfferences in the net profit disclosed in the financial report& the net assets attributable to theCompany’s shareholders according to both the IAS and the CAS
Inapplicable
III. Non-recurring gain/loss items and the amount involved
In CNY
||||||||
|-|-|-|-|-|-|-|
|Items||Amount in 2014|Amount in 2013|Amount in 2012||Notes|
|Gain/Loss from disposal of|-44,920.98||||||
|non-current assets, including the part|||||||
||||388,966.99|-236,304.20|||
|offset with the provision for impairment|||||||
|of assets|||||||
|Tax rebate or reduction with approval|||||||
|by overstepping authority, or without|||0.00|0.00|||
|formal approval document|||||||
||10,344,542.00||||For the detail,refer to NoteVII.69:Non-operatingincome:Governmentsubsidyrecognized incurrent gain andloss||
|Government subsidy recognized in|||||||
|current gain and loss (excluding those|||||||
|closely related to the Company’s|||||||
||||3,610,593.36|5,176,129.77|||
|business and granted under the state’s|||||||
|policies according to certain quota of|||||||
|amount or volume)|||||||
|Fund occupancy consideration|||||||
|received from non-financial institution|||||||
||||0.00|0.00|||
|counted to the current gains and|||||||
|losses|||||||
|Income from the costs of the|||||||
|investments in the subsidiaries,|||||||
|associates and joint ventures as|||||||
|acquired less than the fair value of the|||||||
||||0.00|0.00|||
|enjoyable recognizable net assets of|||||||
|the investees at the time of investment|||||||
|acquired.|||||||
|Exchange gain/loss from|||||||
||||0.00|0.00|||
|non-monetary assets|||||||
|Gain/loss from entrusted investment or|||||||
||||0.00|0.00|||
|asset management|||||||

||||
|-|-|-|
|Provision for impairment of various|||
|assets arising from force majeure,|0.00|0.00|
|such as natural disaster|||
|Gains and losses from debts|||
||0.00|0.00|
|reorganization|||
|Enterprise reorganization fee, such as|||
|expenses for arrangement for|0.00|0.00|
|employees, integration fee, etc.|||
|Gains/losses exceeding the fair value|||
|arising from transactions with|0.00|0.00|
|obviously unfair prices|||
|Net gain and loss of the subsidiary|||
|under the common control and|||
|produced from enterprise|0.00|-2,130,265.54|
|consolidation from the beginning of the|||
|period to the consolidation date|||
|Gain and loss arising from contingent|||
|matters irrelevant with the Company’s|0.00|0.00|
|normal operation business|||
|Gain and loss from change of the fair|||
|value arising from transactional|||
|monetary assets, transactional|||
|financial liabilities as held as well as|||
|the investment income arising from|||
|disposal of the transactional monetary|0.00|0.00|
|assets, transactional financial liabilities|||
|and financial assets available for sale|||
|excluding the effective hedging|||
|transaction in connection with the|||
|Company’s normal business|||
|Reverse of the provision for|||
|impairment of accounts receivable|||
||0.00|0.00|
|undergoing impairment test|||
|individually|||
|Gain/loss from external entrusted loan|0.00|0.00|
|Gain and loss arising from change in|||
|the fair value of the investment based|||
||0.00|0.00|
|real estate measured afterwards by|||
|means of fair value model|||
|Influence upon the current gains and|||
|losses from the once-and-for-all|||
|adjustment over the current gains and|0.00|0.00|
|losses according to the taxation and|||
|accounting laws and regulations|||

||||||
|-|-|-|-|-|
|Income from custodian charge|||||
|||0.00|0.00||
|obtained from entrusted operation|||||
|Operating income and expenses other|||||
|||-153,915.17|1,389,127.26||
|than the aforesaid items|||||
|Other gains/losses in compliance with|1,149,979.86||||
|the definition of non-recurring||0.00|0.00||
|gain/loss|||||
|Less: Amount affected by the income|2,657,581.21||||
|||873,382.95|1,425,666.23||
|tax|||||
|Amount affected by minority equity|||||
|(after tax)||5,640.77|900.65||
|Total|8,792,019.67|2,966,621.46|2,772,120.41|--|

For theCompany’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Gains and Losses which have been defined as recurring gains and losses, it is necessary to explain the reason.
Inapplicable
In the reporting period, there existed no item of recurring gain/loss defined as non-recurring gain/loss as defined and illustrated according to the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public– Non-recurring Gains and Losses.
Chapter 4 Report of the Board of Directors
I. General
During the reporting period, affected by the factors of domestic and foreign policies and economy, etc., the domestic market maintained a cautious attitude towards the consumption of high-end famous brand watches and consumption of high-end brands tended to be rational and mature day after day and develops towards a real and sustainable orientation. The domesticconsumers’ demand on medium and lower end watch brands was gradually discharging. As a result, the sales of medium end Swiss watch brands and home-made watch brands grew significantly. There existed new opportunity in profit growth in the industry. Meanwhile, such factors as the new urbanization, especially the rise of the third- and fourth-tier cities, accelerated release of benefits from the reform, etc. led to bigger consumption growth expectation of the domestic watch brand enterprises. Under such a background, the Company, focusing on the annual strategic theme of “deepening the values, elevating the benefits and enhancing integration”, continued to improve the nation-wide channel operation platform system, organized implementation of per-unit yield promotion work, persistently improved the sustaining power of the resource service platform, and promoted integration and developmebnt of various businesses. In the reporting period, theCompany’s overall earning power, the assets structure was continuously optimized and the operating cash flow was constantly improved. As a result, the Company realized sales amounting to CNY 3,278,142,785.87, a5.63% growth over the previous year; realized net profit attributable theCompany’s shareholders amounting to CNY 145,591,136.39, a11.89% growth over the previous year and the net cash flow arising from the operation activities amounting to CNY 289,189,630.97. II. Analysis on Principal Business
1. General
Review and Summary of the Development Strategy as Disclosed in the Previous Period and Progress of the Business Plan in the Reporting Period
Increase/De
Items 2014 2013 crease Cause of Movements(%)
Revenue 3,278,142.87 3,103,496,962.22 5.63%
Operating costs 2,054,714,957.45 1,990,125,145.74 3.25%
Sales expenses 722,839,956.11 649,297,842.92 11.33%
Administrative
208,452,027.58 186,296,159.43 11.89%
expenses
Financial
105,819,460.82 100,268,241.55 5.54%
expenses
Net cash flow
arising from 289,189,630.97 79,047,490.92 265.84%
operation activities
Net cash flow Facing the increasingly arising from complicated market -187,249,034.66 -118,283,033.43 -
investment environment, the activities Company has controlled
the network development speed and inventory procurement in a proper way, enhanced the management of cash flow. The increased investment in Guangming New Zone and the watch industry network has led to decrease of the net cash flow of the investment activities.
With improvement of the Net cash flow
operational cash flow, the arising from -94,503,209.83 7,030,524.33 -
newly added loan has financing activities
been reduced.
In the reporting year, the Company realized operation revenue amounting to CNY 3,278.1428 million, increased by CNY 3,103.497 million with growth rate of5.63%, where (1) in the situation that the famous brand watch, especially high-end famous brand watch market in Mainland China declined, the brand and channel structure was continuously adjusted, the promotion activities with various themes were carried out. By focusing on such key factors as the brand, staff, customers, channels, etc., the Company tried its best to construct the staff team with “high aspiration, high standard and high performance”, continuously carried forward the construction of “HARMONY” brand, further improved the quality service ability, enthusiastically propelled the work of improving the customer satisfaction and customer recommendation rate. Unfortunately, as the domestic famous brand watch consumption market experienced poor overall performance, the income from sales of famous brand watches amounted to CNY 2,298.4383 million, a0.15% drop over the previous year; (2) FIYTA Watches fully caught hold of the opportunity of quick development of medium-end watches, enhanced communication with the customers, continuously enriched the product lines directing at theconsumers’ demand, improved the success rate of launching the products, quickly upgraded the brand identity by means of spokesperson and market promotion and carried out various activities of supporting sales by taking the advantage of the occasions of festivals and important events. Meanwhile, the Company continuously enriched sales channels, quickly expanded the channels in the third- and fourth-tier cities, enthusiastically developed the e-commerce, improved the effectiveness of customer experience and communications, thecustomers’ satisfaction continued to be improved. As a result, the Company realized sales income amounting to CNY 856.4791 million in the year, a25.46% growth over the previous year; (3) the Company did good business in property operation. By means of enhancing communications and collaboration with the external property management companies and the day-to-day communications with the customers, the overall property management service level was further improved. Despite of continuous increase of the building area used by the Company itself, the rent from the new and renewed tenants increased. In the reporting year, the Company realized the rent income amounting to CNY 90.453 million, a11.39% growth over the previous year.
In the reporting year, theCompany’s net profit attributable to the parent company amounted to CNY 145.5911 million, increased by CNY 130.1251 million with growth rate of11.89% over the previous year. This was mainly due to that the sales income of theCompany’s own brand increased, the gross profit rate was raised, and at the same time various expenditures were brought under effective control and the earning power was enhanced.
In the reporting year, the net cash flow arising from theCompany’s operation activities amounted to CNY 289.18.96 million, increased by CNY 210.1421 million over CNY79.0475 million of the previous year. This was mainly due to that facing the increasingly complicated market environment, the Company controlled the network development speed in a proper way, optimized the inventory procurement structure and enhanced the management of the cash flow.
Reason of theCompany’s actual operation results lower or higher than predicted profit by20% or more as pubilically disclosed in the reporting year
Inapplicable
Change of the major operation models
Inapplicable
2. Revenue
Note:
Increase/Decrease Items 2014 2013
(%)
Income from the principal
3,245,370.15 3,065,746,163.46 5.86% business
Other business income 32,772,494.72 37,750,798.76 -13.19% Total 3,278,142,785.87 3,103,496,962.22 5.63% Is the income from sales in kind greater than the service income?
Yes
|||||||
|-|-|-|-|-|-|
||||||Year-on-year|
|Classification of||||||
||Items|Unit|2014|2013|increase/decreas|
|Sectors||||||
||||||e (%)|
||Sales volume|pcs|841,978|629,021|39.10%|
|Sales of FIYTA||||||
||Productin output|pcs|977,480|768,500|27.19%|
|watches||||||
||Inventory|pcs|782,592|647,090|20.94%|

 Note to the year-on-year change rate of the relevant data by over30%
In the reporting period, FIYTA Watches fully caught hold of the opportunity of quick development of medium-end watches, the sales volume of retails and partial buying in groups increased.
Significant Orders in Hand:
Inapplicable
Significant change in or adjustment of the products or services in the reporting period:
Inapplicable
TheCompany’s major trade debtors
|||
|-|-|
|Total sales to the top five customers, in CNY|305,039,621.37|
|Proportion of the total sales to the top five||
||9.31%|
|customers in the total sales of the year, %||

Information of the top 5 customers
|||||
|-|-|-|-|
||||Proportion in the total sales of the|
|No.|Customers|Sales (in CNY)||
||||year|
|1|NO.1|86,355,276.80|2.63%|
|2|NO.2|70,058,788.03|2.14%|
|3|NO.3|54,574,265.30|1.66%|
|4|NO.4|48,307,085.72|1.47%|
|5|NO.5|45,744,205.52|1.40%|
|Total|--|305,039,621.37|9.31%|

 Other Information about the major customers
Inapplicable
3. Costs
Classification of Sectors
In CNY
||||||||
|-|-|-|-|-|-|-|
|||2014||2013|||
|||||||Year-on-year|
|Classification|||Proportion in||Proportion in||
||Items|||||increase/decrea|
|of Sectors||Amount|operation|Amount|operation||
|||||||se (%)|
||||costs (%)||costs (%)||
|||2,030,149,89||1,957,755,88|||
|Watch|Watch||98.80%||98.37%|0.43%|
|||4.46||8.80|||
|||12,959,975.8||13,967,490.2|||
|Lease|Lease||0.63%||0.70%|-0.07%|
|||8||5|||

Classification of Products
In CNY
||||||||
|-|-|-|-|-|-|-|
|||2014||2013|||
|||||||Year-on-year|
|Classification of|||Proportion in||Proportion in||
||Items|||||increase/decreas|
|products||Amount|operation costs|Amount|operation costs||
|||||||e|
||||(%)||(%)||
|Famous brand|Famous brand|1,753,276,107.3||1,733,324,366.4|||
||||85.33%||87.10%|-1.77%|
|watches|watches|9||7|||
|FIYTA Watch|FIYTA Watch|276,873,787.07|13.48%|224,431,522.33|11.28%|2.20%|
|Lease|Lease|12,959,975.88|0.63%|13,967,490.25|0.70%|-0.07%|

Note
Inapplicable
Principal Suppliers
|||
|-|-|
|Total amount of purchase from top five suppliers, in||
||1,193,724,466.39|
|CNY||
|The purchase amount from the top five suppliers||
|accounting in the Company’s total purchase|58.71%|
|amount, %||

Information about the top 5 suppliers
|||||
|-|-|-|-|
||||Proportion in the total purchases of|
|No.|Suppliers|Purchase amount, in CNY||
||||the year (%)|
|1|NO.1|607,918,762.14|29.90%|
|2|NO.2|251,781,010.67|12.38%|
|3|NO.3|178,670,031.13|8.79%|
|4|NO.4|85,332,953.15|4.20%|
|5|NO.5|70,021,709.30|3.44%|
|Total|--|1,193,724,466.39|58.71%|

 Other information about the major suppliers
Inapplicable
4. Expenses
|||||
|-|-|-|-|
|Statement items|2014|2013|Increase/Decrease (%)|
|Sales expenses|722,839,956.11|649,297,842.92|11.33%|
|Administrative expenses|208,452,027.58|186,296,159.43|11.89%|
|Financial expenses|105,819,460.82|100,268,241.55|5.54%|
|Income tax expenses|24,291,386.77|21,351,677.67|13.77%|

5. R& D Expenses
The Company has attached importance on technology innovation work all the time, enhances its core competitiveness through innovation of the technology with own intellectual property, consolidate its leading position of self-innovation inChina’s clock and watch brands so as to realize its vision of becoming an international brand and improve its international competitiveness in the industry. In the year 2014, theCompany’s total R& D expenses amounted to CNY 49.5595 million, a33.26% growth over the previous year, taking3.22% of the net assets as audited in the most recent period and taking1.51% of the operation revenue as audited in the most recent period. The main reason was that FIYTA Enterprise Technology Center was certified as a national enterprise technology center in 2013, for the purpose of consolidating theCompany’s leading position of self-innovation inChina’s clock and watch brands and leading the industry for innovative development, the Company increased investment in such key technology fields as space watches, timekeeping technology, research on application of new materials, etc., greatly increased personnel, equipment, research budget, etc., and achieved a number of scientific research achievements. In 2014, the number of patents for invention granted was quadrupled over the previous year and such patents have been applied in our products. By virtue of the accumulation in innovation mechanism, innovation ability, innovative talents and innovation products, etc., FIYTA has been certified as a national technology innovation demonstrative enterprise by the Ministry of Industry and Information Technology.
6. Cash Flow
in CNY
|||||||
|-|-|-|-|-|-|
||||||Year-on-year|
|Items||2013||2012||
||||||Increase/Decrease|
|Sub-total of cash flow|3,792,449,143.86||3,501,829,105.59|||
|received from operation|||||8.30%|
|activities||||||
|Subtotal of cash flow paid|3,503,259,512.89||3,422,781,614.67|||
||||||2.35%|
|for operating activities||||||
|Net cash flow arising from|289,189,630.97||79,047,490.92|||
||||||265.84%|
|operating activities||||||
|Sub-total of cash flow-in|51,919.04||681,892.51|||
|received from investing|||||-92.39%|
|activities||||||
|Sub-total of cash flow paid|187,300,953.70||118,964,925.94|||
||||||57.44%|
|for investment activities||||||
|Net cash flow arising from|-187,249,034.66||-118,283,033.43|||
||||||-58.31%|
|investment activities||||||
|Sub-total cash flow|1,573,439,386.01||1,791,109,369.63|||
|received from financing|||||-12.15%|
|activities||||||
|Sub-total cash flow paid for|1,667,942,595.84||1,784,078,845.30|||
||||||-6.51%|
|financing activities||||||
|Net cash flow arising from|-94,503,209.83||7,030,524.33|||
||||||-1,444.18%|
|financing activities||||||
|Net increase in cash and|7,216,959.80||-32,757,883.97|||

||
|-|
|cash equivalents|

Note to the year-on-year change of the relevant data by over30%
In the reporting period, the year-on-year growth of the net cash flow arising from operating activities by265.84% was mainly due to that facing the increasingly complicated market environment, the Company controlled the network extension speed and inventory procurement in a proper way and enhanced the cash flow management.
In the reporting period, the year-on-year drop of the net cash flow arising from investment activities by58.31% was mainly due to increase of investment in Guangping New Zone and FIYTA watch industrial network.
In the reporting period, the year-on-year drop of the net cash flow arising from financing activity by CNY 101,533,734.16 was mainly due to that the Company improved the operational cash flow and the new loan decreased.
Note to the big difference between cash flow from operating activities and net profit in the reporting year:
Inapplicable
III. Composition of Principal Businesses
In CNY
||||||||
|-|-|-|-|-|-|-|
||||||Increase/decr||
|||||Increase/decr||Increase/decr|
||||||ease of||
|||||ease of||ease of gross|
||||||principal||
||Operating|Operating|Gross profit|revenue in the||profit rate over|
||||||business cost||
||revenue|costs|rate (%)|same period||the same|
||||||over the same||
|||||of the||period of the|
||||||period of||
|||||previous year||previous year|
||||||previous year||
|Sectors|||||||
||3,154,917,32|2,030,149,89|||||
|Watches|||35.65%|5.71%|3.70%|1.25%|
||8.23|4.46|||||
||90,452,962.9|12,959,975.8|||||
|Lease|||85.67%|11.40%|-7.21%|2.87%|
||2|8|||||
|Products|||||||
|Foreign top|||||||
||2,298,438,26|1,753,276,10|||||
|brand|||23.72%|-0.15%|1.15%|-0.98%|
||9.08|7.39|||||
|watches|||||||
|FIYTA|856,479,059.|276,873,787.|||||
||||67.67%|25.46%|23.37%|0.55%|
|watches|15|07|||||
||90,452,962.9|12,959,975.8|||||
|Lease|||85.67%|11.40%|-7.21%|2.87%|
||2|8|||||
|Regions|||||||
||1,033,845,16|612,581,751.|||||
|South China|||40.75%|5.85%|0.78%|2.98%|
||9.19|95|||||
|Northwest|565,700,125.|367,811,265.8|34.98%|1.32%|1.32%|0.00%|

||||||||
|-|-|-|-|-|-|-|
|China|97|2|||||
||539,995,688.|352,347,650.|||||
|North China|||34.75%|9.47%|9.29%|0.11%|
||23|86|||||
||447,079,002.|281,649,017.|||||
|East China|||37.00%|3.31%|0.18%|1.97%|
||18|63|||||
|Northeast|310,178,526.|200,041,144.|||||
||||35.51%|9.73%|8.24%|0.89%|
|China|39|79|||||
|Northwest|348,571,779.|228,679,039.|||||
||||34.40%|8.26%|7.61%|0.40%|
|China|19|29|||||

Under the circumstance that the statistic specifications for theCompany’s principal business data experienced adjustment in the reporting period, the principal business data upon adjustment of the statistic specifications at the end of the reporting period in the latest year.
Inapplicable
IV. Analysis on Assets and Liabilities
1. Significant Change in Assets
In CNY
||||||||||
|-|-|-|-|-|-|-|-|-|
|||End of 2014|||End of 2013||||
||||||||Proportion||
||||Proportion in||||||
||||||||increase/dec|Note to the significant change|
|||Amount|the total||||||
||||||||rease||
||||assets||||||
|Monetary fund|116,455,070.54||3.18%|107,663,110.74||3.03%|0.15%|Inapplicable|
|Accounts|351,276,905.53|||324,457,339.19|||||
||||9.60%|||9.12%|0.48%|Inapplicable|
|receivable|||||||||
||2,133,791,024.32|||2,123,342,820.93|||||
|Inventories|||58.34%|||59.67%|-1.33%|Inapplicable|
|Investment|226,091,938.89|||235,235,684.76|||||
||||6.18%|||6.61%|-0.43%|Inapplicable|
|based real estate|||||||||
|Long-term equity|42,389,759.91|||43,237,940.12|||||
||||1.16%|||1.21%|-0.05%|Inapplicable|
|investment|||||||||
|Fixed assets|323,732,870.58||8.85%|306,888,964.31||8.62%|0.23%|Inapplicable|
|Construction-in-p|51,389,263.53|||6,608,187.55|||||
||||1.40%|||0.19%|1.21%|Inapplicable|
|rocess|||||||||

2. Significant Change in Liabilities
In CNY
||||||||||
|-|-|-|-|-|-|-|-|-|
|||2014|||2013||Proportion||
||||Proportion in||||increase/d||
|||||||||Note to the significant change|
|||Amount|the total||||ecrease||
||||assets||||(%)||
|Short-term|989,445,000.00|||1,023,000,000.00|||||
||||27.05%|||28.75%|-1.70%|Inapplicable|
|borrowing|||||||||
|Long term|139,952,425.65|||173,274,950.01|||||
||||3.83%|||4.87%|-1.04%|Inapplicable|
|borrowings|||||||||

3. Assets and Liabilities Measured Based on Fair Value
Inapplicable
4. Major Overseas Assets
Inapplicable
V. Analysis on Core Competitiveness
FIYTA’s core competitiveness is a collection consisting of a set of techniques and technology which enables the Company to provide customers with particular values, is the competitive power on which a series of products or services rely in achieving the leading position. It consists of the ability of brand building, ability of offering top quality services, ability of product innovation, ability of knowledge management and ability of management of strategic human resources.
In the reporting period, the Company achieved great success in technology platform construction and innovation of science and technology. In addition to that theCompany’s enterprise technology center was certified as a national enterprise technology center in 2013, by virtue of the accumulation in innovation mechanism, innovation ability, innovative talents and innovation products, etc., FIYTA has been certified as a national technology innovation demonstrative enterprise by the Ministry of Industry and Information Technology. The stereoscopic reading watch developed by the Company was honorably awarded the Red Dot Design Award and it was the second time FIYTA has been awarded with this prize. The Company has kept its leading position in the domestic watch industry. Meanwhile, theCompany’s design center has been certified as a municipal industry design center of Shenzhen. TheCompany’s science and technology projects were awarded one second prize of the Award for Scientific and Technological Advancement of Guangdong Province and one honorable mention for science and technology progress of China National Light Industry Council; the special version of charity of FIYTA PHOTOGRAPHER SERIES WATCH was awarded 5 prizes of 2014 Provincial Governor Cup Industrial Design. In the whole year, the Company submitted application for 3 invention patents, 4 utility model patents and 21 design patents and the Company was granted 5 invention patents, 3 utility model and 22 design; the Company took lead or participated in preparation or revision of 4 national industrial standards and 15 national industrial standards which the Company took lead or participated in preparation or revision of were promulgated in the reporting year.
During the reporting period, HARMONY took the “Tri-level Marketing” as the guidance and focused on
BSC2. The high quality services and chain shop operation ability was continuously improved and the project operated by its chain shops
was awarded the second prize of management innovation achievement by Scientific Industrial Association of National
Defense.
VI. Analysis on Investment Status
1. External Equity Investment
(1) External Investment
Inapplicable
(2) Holding of the Equipty in Financial Enterprises
Inapplicable
(3) Investment in Securities
Inapplicable
(4) Equity in other Listed Company Held by the Company
Inapplicable
2. Entrusted Financing, Investment in Derivative Products and Entrusted Loan
(1) Entrusted Financing
Inapplicable
(2) Investment in Derivative Products
Inapplicable
(3) Entrusted Loan
Inapplicable
3. Application of the Proceeds Raised through Share Offering
(1) General Application of the Raised Capital
In CNY10,000
|||
|-|-|
|Total raised capital|40,000|
|Total raised capital invested in the reporting||
||40,000|
|period||
|Total raised capital accumulatively invested|40,000|
|Total raised capital whose application has been||
||0|
|changed in the reporting period||

|||
|-|-|
|Total raised capital whose application has been||
||0|
|changed accumulatively||
|Proportion of the total raised capital whose||
||0.00%|
|application has been changed accumulatively||
|Note to Application of the Raised Capital||
|The Company held the 33rd meeting of the Sixth Board of Directors on June 19, 2012. The meeting reviewed and||
|approved the Proposal of Issuing Company Bonds, etc. according to which, the Company planned to issue company||
|bonds with a size not exceeding CNY400 million and with a term not exceeding 5 years (with 5 years inclusive) which||
|would be used for replacing bank loan and replenishing the working capital. On September 9, 2012, approved through||
|verification by China Securities Regulatory Commission (CSRC) with Document ZHENG JIAN XU KE [2012] No.||
|1209, the Company was approved to issue company bonds with the size not exceeding CNY 400 million. The||
|Company issued CNY 400 million of bonds in the current period. After deduction of the issuing costs, the net raised||
|capital amounting to CNY396.9 million was remitted to the bank account designated by the Company on March 5,||
|2013.||
|RSM China CPAs, the CPAs engaged by the Company issued the capital verification reports of ZHONG RUI YUE HUA||
|YAN ZI [2013] No. 0053, ZHONG RUI YUE HUA YAN ZI [2013] No. 0054 and ZHONG RUI YUE HUA YAN ZI [2013]||
|No. 0055 respectively for the frozen capital for subscription of the on-line bond issuing, the frozen capital for||
|subscription of the off-line placement and the actual raised capital conditions. Approved by Shenzhen Stock Exchange||
|with Document SHEN ZHENG SHANG [2013] No. 99, the bonds have been listed for trading with both SZSE||
|Centralized Bidding System and the Comprehensive Agreement Based Transaction Platform commencing from March||
|29, 2013 with the abbreviation of the security as “12 YADA BOND” and security code as “112152”. The issuing of the||
|company bonds has been completed. The capital raised from the issuing was remitted to the bank account designated||
|by the Company on March 5, 2013. Up to now, the Company had used up all the raised capital and no change has||
|taken place in the application purpose of the raised capital.||

(2) Promised Projects with Raised Capital
In CNY10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||||||||Date||||
||||||Amount|Investm||||Has|
||||||||when||||
||Has the|Total|||accumul|ent|||Has the|significa|
||||||||the||||
||project|promise|||atively|progres|||predicte|nt|
||||Total|Amount|||project|Result|||
|Promised investment|been|d|||invested|s by the|||d|change|
||||investm|invested|||has|realized|||
|projects and|change|investm|||up to|end of|||operatio|taken|
||||ent after|in the|||reached|in the|||
|investment with the|d|ent|||the end|the|||n result|place in|
||||adjustm|report|||the|reportin|||
|over-raised capital|(includin|with|||of the|report|||been|the|
||||ent (1)|period|||predicte|g period|||
||g partial|raised|||report|period|||reached|feasibilit|
||||||||d||||
||change)|capital|||period|(%) (3)|||?|y of the|
||||||||applicab||||
||||||(2)|= (2)/(1)||||project?|
||||||||le status||||
|Investment projects as promised|||||||||||
|Repayment of bank||||||100.00|||||
||No|30,000|30,000|30,000|30,000|||0|Yes|No|
|loan||||||%|||||
|Replenishing the|No|10,000|10,000|10,000|10,000|100.00||0|Yes|No|

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|working capital.||||||%|||||
|Sub-total of investment|||||||||||
||--|40,000|40,000|40,000|40,000|--|--|0|--|--|
|projects as promised|||||||||||
|Investment with over-raised capital|||||||||||
|Sub-total of investment|||||||||||
||--|0|0|0|0|--|--|0|--|--|
|with over-raised capital|||||||||||
|Total|--|40,000|40,000|40,000|40,000|--|--|0|--|--|
|Note to failure to|||||||||||
|comply with the|||||||||||
|planned progress and|||||||||||
||Inapplicable||||||||||
|predicted earnings and|||||||||||
|the cause(s) (based on|||||||||||
|the specific projects)|||||||||||
|Explanation of the|||||||||||
|significant change in|Inapplicable||||||||||
|project feasibility|||||||||||
|Amount of over-raised|Inapplicable||||||||||
|capital, application and|||||||||||
|progress of use|||||||||||
|Change of the|||||||||||
|implementation site of|||||||||||
|the projects invested|||||||||||
|with the raised capital|||||||||||
|Change of the|Inapplicable||||||||||
|implementation site of|||||||||||
|the projects invested|||||||||||
|with the raised capital|||||||||||
|Adjustment of the|Inapplicable||||||||||
|implementation method|||||||||||
|of the projects invested|||||||||||
|with the raised capital|||||||||||
|About the initial|Inapplicable||||||||||
|investment in the|||||||||||
|projects planned to be|||||||||||
|invested with the|||||||||||
|raised capital and the|||||||||||
|replacement|||||||||||
|Using the idle raised|Inapplicable||||||||||
|capital to supplement|||||||||||
|the working capital on|||||||||||
|temporary basis|||||||||||
|Balance of the raised|Inapplicable||||||||||

||||
|-|-|-|
|capital incurred in|||
|process of project|||
|implementation and the|||
|cause|||
|About application and|||
|status of the raised|I|napplicable|
|capital unused|||
|Problems existing in|||
|application of the|||
|raised capital and the|I|napplicable|
|information disclosure|||
|or other issues|||

(3) Change of the Projects Invested with the Raised Capital
Inapplicable
4. Analysis on Principal Subsidiaries and Mutual Shareholding Companies
Particulars about the Principal Subsidiaries and Mutual Shareholding Companies
In CNY
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Leading|||||||
|||Sectors|||Total|Net assets||Operating||
|Company|Company||products|Registere|||Turnover||Net profit|
|||engaged|||assets, in|(CNY)||profit (in||
|Names|type||and|d capital|||in CNY||(in CNY)|
|||in|||CNY|||CNY)||
||||services|||||||
||||Mainly|||||||
||||engaged in|||||||
||||sales of|||||||
||||world|||||||
||||famous|||||||
|Shenzhen||||||||||
||||brand|||||||
|Harmony||||||||||
||||watch,|||||||
|World||||600,000,0|2,145,523,|700,743,9|2,373,036,|19,266,40|17,629,66|
||Subsidiary|Retail|including|||||||
|Watches||||00(RMB)|160.19|89.28|121.85|3.68|5.66|
||||purchase,|||||||
|Center||||||||||
||||sales and|||||||
|Co., Ltd.||||||||||
||||maintenan|||||||
||||ce service|||||||
||||of|||||||
||||timepieces|||||||
||||and parts|||||||
||||Sales and|||||||
|FIYTA|||repairing of|||||||
|||||50,000,00|672,693,3|36,636,94|794,088,3|3,703,175.|1,075,349.|
|Sales Co.,|Subsidiary|Retail|clocks and|||||||
|||||0(RMB)|11.48|1.47|95.88|00|68|
|Ltd.|||watches|||||||
||||and parts,|||||||

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||sales of|||||||
||||jewelry and|||||||
||||ornaments.|||||||
||||Mainly|||||||
||||engaged in|||||||
||||production|||||||
||||and sales|||||||
||||of FIYTA|||||||
||||watches,|||||||
|Shenzhen|||including|||||||
|FIYTA|||production|||||||
|Sophisticat|||and|||||||
|ed||Manufactu|maintenan|10,000,00|224,245,5|161,941,1|480,107,7|170,017,4|145,986,8|
||Subsidiary|||||||||
|Timepiece||re|ce of|0(RMB)|28.90|97.34|29.54|54.04|22.87|
|s|||clocks and|||||||
|Manufactu|||watches,|||||||
|re Co., Ltd.|||and driving|||||||
||||units,|||||||
||||spares and|||||||
||||parts,|||||||
||||sophisticat|||||||
||||ed|||||||
||||timepieces.|||||||
||||R & D,|||||||
||||production|||||||
||||and sales|||||||
|Shenzhen||||||||||
||||of watches,|||||||
|FIYTA||||||||||
||||production,|||||||
|Technolog||||||||||
|||Manufactu|machining,|10,000,00|58,961,50|39,902,12|169,514,4|18,053,62|17,498,15|
|y|Subsidiary|||||||||
|||re|sales and|0(RMB)|8.38|2.51|12.57|2.26|0.09|
|Developm||||||||||
||||technology|||||||
|ent Co.,||||||||||
||||developme|||||||
|Ltd.||||||||||
||||nt of|||||||
||||sophisticat|||||||
||||ed parts.|||||||
||||Mainly|||||||
||||engaged in|||||||
|FIYTA|||trade and|||||||
|(Hong|||overseas|65,060,00|400,029,7|128,298,1|146,448,8|10,016,66|6,321,887.|
||Subsidiary|Retail||||||||
|Kong)|||market|0(HKD)|85.79|79.19|72.79|8.03|27|
|Limited|||developme|||||||
||||nt of FIYTA|||||||
||||watches|||||||
|Shenzhen|Subsidiary|Retail|Sales of|5,000,000|25,132,38|-2,504,668|11,994,90|413,699.9|84,635.61|

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Symphony|||clocks and|(RMB)|7.16|.91|8.91|8||
|Trading|||watches|||||||
|Co., Ltd.|||and gifts|||||||
||||and|||||||
||||consultatio|||||||
||||n of|||||||
||||relevant|||||||
||||information|||||||
||||and other|||||||
||||domestic|||||||
||||trading|||||||
|Shanghai|Mutual||Sales of|||||||
|Watch|shareholding|Manufactu|watches|15,350,00|111,055,5|92,336,92|105,335,0|12,345,99|10,080,27|
|Industry|company|re|and spares|0(RMB)|67.20|5.34|16.70|7.69|0.97|
|Co., Ltd.|||and parts|||||||

Particulars about the Principal Subsidiaries and Mutual Holding Companies:
Inapplicable
Acquisition and disposal of subsidiaries in the reporting period
Inapplicable
5. Projects Invested with Funds not Raised through Share Offering
Inapplicable
VII. Prediction of the Operation Performances from January to March 2015
Inapplicable
VIII. Entities Controlled by the Company for Special Purpose
Inapplicable
IX. Development Prospect
(I) Development Trend of the Industry
In 2015, it is predicted that the macro-economic environment and retail consumption industry shall still keep a “new normalcy” of low speed steady growth. Meanwhile, consumption upgrading of the third- and fourth-tier cities shall continue and the growth of excellent consumption brands shall still be expectable. At the beginning of 2015, the Ministry of Industry and Information Technology, the Ministry of Commerce, General Administration of Quality Supervision, Inspection and Quarantine and State Intellectual Property Office jointly promulgated the Guiding Instructions on speeding up of promoting construction of proprietary brand ofChina’s watches, putting forward the strategy of developing watch brands and
enhancing capacity of independent innovation and optimizing watch product structure, etc. The Company shall try its best
to seize new growth opportunity emerged from the watch industry, especially the home-made watch brands of
self-ownership under the favorable policy environment, further carry forward theCompany’s brand development strategy,
sustainably develop and optimize the construction of commercial channels and consolidate the competition status and development superiority in the industry.
(II) Development Strategy
In 2015, the Company shall cope with the change of the market environment, continue to lead various jobs with the brand strategy, through the business model of “Product+ Channel”, carry forward integration of key value chain, promote quality service capacity, take the “Values, Innovation, Adjustment and Profit-Making” as the annual strategy theme, focus on optimizing and improving the sales channel structure with HARMONY as the subject, consolidate profit growth of the own brand with FIYTA watch as the subject, devote great efforts to explore innovative study on porducts, servics and business model and the practice, improve the innovation driving mechanism, dig and cultivate new profit growth points, enthusiastically carry forward self-development of the key value links and merger and acquisition layout and strive to improve overall earning power.
(III) Annual Business Plan of the Year 2015
1. Abiding by theenterprise’s value idea and carrying forward the innovation work of the whole platform
Improve the innovation mechanism and platform construction, construct milieux of innovation, expand the knowledge accumulation and application of management practice; continue to deepen communication and application of the We Media, upgrade the marketing management of the e-commerce channel, speed up O2O exploration of the brand and channel business, pay close attention to resources and expand the business of after-sale technical services of famous brand watches; explore reconstruction of business model centering on the supply chain and value chain, foster new brands of its own, integrate the application management of the customer data in an innovative way; enhance capacity construction of the key resources of industrial value chain, enthusiastically look for cooperation with external high quality resources; based on the all-involvement innovation, enthusiastically explore innovative practice of products, services, business model, etc., enhance stimulation force and resource support for creation of originality and innovative practice.
2. Greeting Change of the Industry and Promoting Healthy Development of Business by means of Optimization and Structural Adjustment
(1) Channel structure optimization and adjustment: Optimize and improve the shopfront structure of HARMONY, HENGLIANDA, BRAND GALLERY and various self-owned brands so as to more comply with the consumption demands of the market. Adjust the shops with bigger performance pressure in a timely way, set up new shops mainly in the third- and fourth-tier cities, continue to expand the share of FIYTA watches in the high qualitydealers’ channel; (2) brand structure optimization and adjustment: to comply with the market demand, optimize combination of the imported brands of various shops, focus on investment in the resources of enlarging the brand of main force; (3) optimization and adjustment of inventory structure: gradually improve the inventory structure to comply withcustomers’ consumer preference and clear up the brands of long age or unsalable and stocks; (4) optimization and adjustment of financial structure: optimize the financial structure so as to satisty the fund demand in process of theCompany’s development.
3. To excavate the market opportunities and business potential and continuously improve the earning power
Comprehensively carry forward the work of raising the output of individual shops of different channels and various brands, accumulate the best practical experience and organize sharing and promotion by analyzing the key factors and breaking through the key points, strive to expand the sales and increase the amount of profit; sustainably enhance the gross profit rate of own brand and expand the profit space; vigorously explore and foster new profit growth points in respect of technical services, BRAND GALLERY and own new brands, etc.; enhance follow-up of the market and business trends and reinforce the risk control management of the accounts receivable, inventories, investment, etc.
(IV) Capital Necessary for Future Development
According to theCompany’s business development plan and financial budget planning in 2015, for the purpose of satisfying the demand on investment and operation fund and at the same time seizing the opportunity of merging and acquisition possibly brought about from the market change, the Company plans to apply for the financing credit line not exceeding CNY 2.2 billion by means of different ways, such as secured loan, loan through subsidiaries, mortgage, etc. in 2015.
(V) Risks Possibly to be Confronted with
1. As the overall economic growth remains at the lower level, the retail consumption industry in connection with watches is expected to be confronted with a hard environment, especially the retail business of theCompany’s high-end watches shall be confronted with pressure in operation.
2. The feature of the consumer group intergeneration shall become more obvious. The trend of socialization, localization and mobilization caused by the rapid development of the Internet and smart phones shall become outstanding and the brand marketing work needs to be more quickly changed and innovated.
3. Facing the change of the market environment, the major competitors have made different countermeasures in strategy one after another, and the Company shall be confronted with bigger challenge in maintaining the market share and improvement in permeability while ensuring sustainable growth in performance.
4. With smart watches from domestic and foreign series companies cutting in watch industry, new challenges and change in thinking shall be brought about to enterprises of traditional watches and clocks.
5. Based on theCompany’s business development model, the extensive demand on capital and fast turn-around of inventories shall continue to be key support to theCompany’s business development.
X. Explanation of the Board of Directions and the Supervisory Committee on the QualifiedAuditor’s Report Issued by the CPAs
Inapplicable
XI. Change in accounting policy, accounting estimate and way of accounting in comparison with the latest annual report
||
|-|
|In accordance with the Accounting Standards for Enterprises No. 2: A. An investee not under control or joint control or not|
|significantly influenced, not quoted in an active market and whose fair value of the equity investment cannot be reliably|
|measured, shall be handled according to the Accounting Standards for Enterprises No. 22 – Recognition and Measurement|
|of Financial Instruments.|

The Group handles the change of the aforesaid policy by means of the retrospective adjustment method. The accounting items and the amount involved are as follows:
Items in the statement affected Amount affected in the previous period Amount affected in the reporting period
Financial assets available for sale 85,000.00 85,000.00
Long term equity investment -85,000.00 -85,000.00 XII. Retrospective Restatement Necessary for Correction of Significant Accounting Errors during the Reporting Period
Inapplicable
XIII. Changes in Range of the Consolidated Statements in Comparison with the Financial Report of the Previous Year.
Shenzhen World Watch Center Co., Ltd. (“World Watch Center”) used to be a joint venture of the Group. According to the agreement signed by the Group and Shenzhen Shenhang Avionics Co., Ltd.(Shenhang Avionics), another shareholder of World Watch Center, commencing from year 2003, Shenhang Avionics would enjoy the defined benefit every year and would not participate in operation of the joint venture. Therefore, the Group became the actual controller of World Watch Center in terms of finance and business operation and World Watch Center was incorporated in theGroup’s consolidated statements. World Watch Center wound up its business due to demolition of its premises in 2008.
In the reporting period, World Watch Center completed the procedures of registration cancellation on May 5, 2014 and has been no longer incorporated in theGroup’s consolidated statements. This event produced no significant influence upon theCompany’s overall production and operation as well as the formances in the reporting period.
XIV. Dividend Distribution
Preparation, Implementation or Adjustment of theCompany’s Profit Distribution Policy, Especially Cash Dividend
Distribution Policy in the Reporting Period
TheCompany’s profit distribution plan for 2013 was reviewed and approved at the
8th
meeting of the Seventh Board of Directors held on February 27, 2014 and 2013 Annual General Meeting held on June 10, 2014 and determined that with the total share capital totaling 392,767,870 shares as at December 31, 2013 as the base the Company distributed cash dividend at the rate of CNY 1.00 for every 10 shares (with tax inclusive) to the whole shareholders. As a result, totally CNY 39,276,787.00 of cash dividend was distributed. The profit distribution plan was finished in implementation by July 31, 2014.
|||
|-|-|
|Special description of the cash dividend distribution policy||
|Whether the plan complies with the Articles of Association and||
||Yes|
|resolution of the General Meeting:||
|Whether the dividend distribution rate and proportion are clear and||
||Yes|
|definite:||
|Whether the relevant decision making procedures and mechanism||
||Yes|
|are complete:||
|Have the independent directors have done their duty and brought|Yes|

|||
|-|-|
|their due role into full play:||
|Have the minority shareholders fully expressed their opinions and||
|been given the opportunity of fully expressing their opinions and|Yes|
|appeal and has their legal interests have been fully protected:||
|Are any adjustment or alteration, conditions and procedures of the||
||Yes|
|cash dividend policy in compliance or transparent:||

The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into share capital in the past three years (with the reporting period inclusive):
According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared specific cash dividend distribution plan after the Board of Directors and theShareholders’ General Meeting have reviewed strictly according to the requirements. In the past three years, the Company has well implemented the cash dividend distribution policy, fully asked for the independentdirectors’ opinions, effectively ensured the minorityshareholders’ benefit and made timely and accurate disclosure in its annual report and the relevant media, where the cash dividend distributed in 2012 amounted to CNY 39,276,787.00 (with tax inclusive), taking33.86% of the net profit attributable to theCompany’s sharehodlers as stated in the consolidated statement; the cash dividend distributed in 2013 amounted to CNY 39,276,787.00 (with tax inclusive), taking30.18% of the net profit attributable to theCompany’s sharehodlers as stated in the consolidated statement; the cash dividend distributed in 2014 amounted to CNY 39,276,787.00 (with tax inclusive), taking26.98% of the net profit attributable to theCompany’s sharehodlers as stated in the consolidated statement; the accumulative amount of cash dividend distributed in the past three years taking90.24% of the latest annual average net profit complies with the regulations.
Cash dividends distributed in the past three years:
In CNY
||||||||
|-|-|-|-|-|-|-|
|||||||Proportion of the|
|||||Rate of the net|Amount for||
||||Net profit|||amount for|
|||||profit attributable|buy-back of the||
||||attributable to|||buy-back of the|
||Amount of Cash|||to the|stock fund by||
|Year of Dividend|||the shareholders|||stock fund by|
||Dividend|||Company’s|means of offer in||
|Distribution|||in the|||means of offer in|
||(including tax)|||shareholders in|cash counted to||
||||consolidated|||cash counted to|
|||||the consolidated|the cash||
||||statement|||the cash|
|||||statement (%)|dividend||
|||||||dividend|
|2014|39,276,787.00|145,591,136.39||26.98%|0.00|0.00%|
|2013|39,276,787.00|130,125,124.48||30.18%|0.00|0.00%|
|2012|39,276,787.00||116,003,746.03|33.86%|0.00|0.00%|

 In the reporting period, both theCompany’s profit and the parentcompany’s retained earnings were positive however not cash dividend distribution proposal has been put forward.
Inapplicable
XV. Preplan for Profit Distribution and Conversion of Capital Reserve into Share Capital in the Reporting
Period
|||
|-|-|
|Bonus shares distributed at the rate of ___|0|

|||
|-|-|
|(share) for every 10 shares||
|Dividend distributed at the rate of CNY___||
||1.00|
|for every 10 shares (with tax inclusive)||
|Number of shares converted for every 10||
||0|
|shares (shares)||
|Share capital base for the dividend||
||392,767,870|
|distribution preplan (shares)||
|Total cash dividend distributed (with tax||
||39,276,787.00|
|inclusive)||
|Profit available for distribution (CNY)|384,669,884.08|
|Proportion of the cash dividend in the total||
||100.00%|
|profit available for distribution (%)||
|Cash Dividend Policy:||
|Others||
|Detailed information for profit distribution or conversion of capital reserve into share capital preplan||
|The Company’s profit distribution plan for 2014 was reviewed and approved at the 17th meeting of the Seventh Board||
|of Directors held on March 10, 2015 and is going to be submitted to 2014 Annual General Meeting for review.||
|According to the plan, the Company is going to distribute cash dividend at the rate of CNY 1.00 for every 10 shares||
|(with tax inclusive) to the whole shareholders with the total share capital as at December 31, 2014 totaling||
|392,767,870 shares as the base, and totally CNY 39,276,787.00 of cash dividend is going to be distributed. The profit||
|distribution plan is subject to review and approval of the General Meeting before implementation.||

XIV. Social Responsibility
The Social Responsibility Report was published on www.cninfo.com.cn on March 12, 2015.
Do the Company and its subsidiaries belong to the industry of serious pollution as specified by the environmental protection authority of the state?
Does there exist any significant social safety issue in the Company and its subsidiaries?
No.
Has the Company or any of its subsidiaries been punished adminitratively in the reporting period?
No
XVII Statement of such activities as reception, research, communication, interview in the reporting period
|||||||
|-|-|-|-|-|-|
||||||Discussion topics and|
|Reception Time|Reception place|Way of reception|Types of Visitors|Visitors received||
||||||provision of materials|
|||||Shangcheng|Development trend of the|
|||||Assets|domestic luxury goods|
|January 3, 2014|Company|On-Site Survey|Institution|||
|||||Management Co.,|sector, some measures|
|||||Ltd.,|concerning the Company’s|

|||||||
|-|-|-|-|-|-|
|||||Zhongzhao|strategic development,|
|||||Investment|brand construction, channel|
|||||Management Co.,|management in the past|
|||||Ltd., China|three years. Provision of|
|||||Merchants Fund|the Company’s public|
|||||Management Co.,|brochures in 2014.|
|||||Ltd., Sunshine &||
|||||Fortuneguard||
|||||Asset||
|||||Management Co.,||
|||||Ltd., and Minsheng||
|||||Securities Co., Ltd.||
|||||Huaxi Securities||
|||||Co., Ltd.,||
|||||Greenwoods||
|||||Assets||
|||||Management Co.,||
|||||Ltd., Great Wall||
|||||Securities Co.,||
|||||Ltd., Huashang||
|||||Fund Management||
|||||Co., Ltd., Guotai|Development trend of the|
|||||Junan Securities|domestic luxury goods|
|||||Co., Ltd., UBS|sector, some measures|
|||||Securities Co.,|concerning the Company’s|
|||||Ltd., IVY Assets|strategic development,|
|March 7, 2014|Company|On-Site Survey|Institution|Management Co.,|brand construction, channel|
|||||Ltd., Soochow|management in the past|
|||||Asset|three years. Provision of|
|||||Management Co.,|the Company’s public|
|||||Ltd., Infore Capital|brochures in 2014.|
|||||Management Co.,||
|||||Ltd., Guangzhou||
|||||Guangheng||
|||||Securities||
|||||Research Institute||
|||||Co., Ltd. and||
|||||Haitong Securities||
|||||Assets||
|||||Management Co.,||
|||||Ltd.||
|||||Shenzhen|Development trend of the|
|May 7, 2014|Company|On-Site Survey|Institution|Jingliang|domestic luxury goods|
|||||Investment|sector, some measures|

|||||||
|-|-|-|-|-|-|
|||||Management Co.,|concerning the Company’s|
|||||Ltd., China Galaxy|strategic development,|
|||||Securities Co.,|brand construction, channel|
|||||Ltd., Minsheng|management in the past|
|||||Securities Co.,|three years. Provision of|
|||||Ltd., Rongtong|the Company’s public|
|||||Fund Management|brochures in 2014.|
|||||Co., Ltd.,||
|||||Guangdong New||
|||||Value Investment||
|||||Co., Ltd., China||
|||||Southern Fund||
|||||Management Co.,||
|||||Ltd., First Capital||
|||||Securities Co.,||
|||||Ltd., Penghua||
|||||Fund Management||
|||||Co., Ltd., Shanghai||
|||||Right Share||
|||||Investment||
|||||Management Co.,||
|||||Ltd. and Lion Fund||
|||||Management Co.,||
|||||Ltd.||
|||||Boshi Fund||
|||||Management Co.,||
|||||Ltd., Fanglian||
|||||Securities Co.,||
|||||Ltd., Shenzhen||
||||||Development trend of the|
|||||Yujin Investment||
||||||domestic luxury goods|
|||||Co., Ltd., China||
||||||sector, some measures|
|||||Investment||
||||||concerning the Company’s|
|||||Securities Co.,||
||||||strategic development,|
|||||Ltd., Venus||
|May 15, 2014|Company|On-Site Survey|Institution||brand construction, channel|
|||||Investment||
||||||management in the past|
|||||Management Co.,||
||||||three years. Provision of|
|||||Ltd., Bank of China||
||||||the Company’s public|
|||||Fund Management||
||||||brochures in 2014.|
|||||Co., Ltd., Infore||
|||||Capital||
|||||Management Co.,||
|||||Ltd., Guotai Junan||
|||||Securities Co.,||
|||||Ltd., Changjiang||

|||||||
|-|-|-|-|-|-|
|||||Securities Co.,||
|||||Ltd., E Fund||
|||||Management Co.,||
|||||Ltd., Chinese||
|||||Insurance Assets||
|||||Management Co.,||
|||||Ltd., Dongguan||
|||||Securities Co.,||
|||||Ltd., Pacific Assets||
|||||Management Co.,||
|||||Ltd. and Shanghai||
|||||Point Assets||
|||||Management Co.,||
|||||Ltd.||
|||||Great Wall Fund||
|||||Management Co.,||
|||||Ltd., Shenzhen||
|||||Brightstar||
|||||Investment||
|||||Management Co.,||
|||||Ltd., Lion Fund||
|||||Management Co.,||
|||||Ltd., Haitong||
|||||Securities Co.,|Development trend of the|
|||||Ltd., Dacheng|domestic luxury goods|
|||||Fund Management|sector, some measures|
|||||Co., Ltd.,|concerning the Company’s|
||||||strategic development,|
|||||Shenzhen Runfast||
|July 16, 2014|Company|On-Site Survey|Institution|||
||||||brand construction, channel|
|||||Capital Investment||
|||||Co, Ltd., UBS|management in the past|
||||||three years. Provision of|
|||||SDIC Fund Manag||
|||||ement Co.,Ltd.,|the Company’s public|
|||||BOSERA Funds|brochures in 2014.|
|||||Management Co.,||
|||||Ltd.,||
|||||Baoying Fund Man||
|||||agement Co.,Ltd.,||
|||||Pingan Securities||
|||||Co., Ltd. and||
|||||Shenzhen||
|||||Minsen Investment||
|||||Co.Ltd.||
|September 24,||||FOUNDER SECU|Development trend of the|
||Company|On-Site Survey|Institution|||
|2014|||||domestic luxury goods|
|||||RITIES CO.,LTD.,||

||||||||
|-|-|-|-|-|-|-|
|||||||sector, some measures|
||||||Shenzhen Oriental||
|||||||concerning the Company’s|
||||||Harbor Investment||
||||||Management|strategic development,|
||||||Co.,Ltd.,|brand construction, channel|
||||||China Galaxy|management in the past|
|||||||three years. Provision of|
||||||Securities Co.Ltd.,||
|||||||the Company’s public|
||||||Dacheng Fund Ma||
||||||nagement|brochures in 2014.|
||||||Co.,Ltd. ,||
||||||China||
||||||Investment Securiti||
||||||es Co., Ltd.,||
||||||Shenzhen Zongyi||
||||||Runbang||
||||||Investment Co.,||
||||||Ltd., and||
||||||Shanghai Tongshe||
||||||ng||
||||||Asset Managemen||
||||||t Co.,Ltd.||
||||||Invesco Great||
|||||||Development trend of the|
||||||Wall Fund Manage||
|||||||domestic luxury goods|
||||||ment Company||
|||||||sector, some measures|
||||||Limited, China||
|||||||concerning the Company’s|
||||||Post Securities Co.||
|December 25,||||||strategic development,|
||Company|On-Site Survey||Institution|Ltd., Shenzhen||
|2014||||||brand construction, channel|
||||||Goldport Capital||
|||||||management in the past|
||||||Management Co.,||
|||||||three years. Provision of|
||||||Ltd. and||
|||||||the Company’s public|
||||||China Galaxy||
|||||||brochures in 2014.|
||||||Securities Co.Ltd.||
|Number of reception|||7||||
|Number of institutions received|||52||||
|Number of persons received|||0||||
|Number of others received|||0||||
|Is there any important information|||||||
||||No||||
|disclosed, revealed or leaked to the public?|||||||

Chapter 5 Significant Events
I. Major Lawsuits and Arbitration Affairs
Inapplicable
II. Media Query
Inapplicable
III. Non-operation Oriented Fund Occupancy by the Controlling Shareholder and/or Related Parties
Inapplicable
IV. Bankruptcy or Reorganization Related Events
Inapplicable
V. Asset Transactions
1. Acquisition of Assets
Inapplicable
2. Sales of Assets
Inapplicable
3. Enterprise Consolidation
Inapplicable
VI. Implementation of theCompany’s Equity Incentive Plan and its Influences
Inapplicable
VII. Material Related Transactions
1. Related transactions in connection with daily operation
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||Principle||Amount|Proporti|Way of||||
||||Descripti|of||of the|on in the|settleme||||
||||||Price of|||||||
|||Type of|on of|pricing||related|amount|nt for||||
|Related|Relation||||related||||Market|Disclosu|Disclosu|
|||related|Related|of the||transacti|of the|the||||
|Parties|ship||||transacti||||price|re date|re index|
|||parties|Transact|related||on (in|similar|related||||
||||||ons|||||||
||||ions|transacti||CNY|transacti|transacti||||
|||||ons||10,000)|ons (%)|on||||
|China||||||||||||
|||Revenu||||||||||
|National|Commo|||||||Bank||||
|||e from||||||||March|www.cni|
|Aviation|n||Sale of|Market||||account||||
|||principal||||107.5|0.03%|||12,|nfo.com|
|Industry|controlle||goods|price||||transfer||||
|||busines||||||||2015|.cn|
|Group|r|||||||ence||||
|||s||||||||||
|Co.||||||||||||
|||Revenu||||||||||
|Rainbo|Commo|||||||Bank||||
|||e from||||||||March|www.cni|
|w|n||Sale of|Market||8,184.1||account||||
|||principal|||||2.50%|||12,|nfo.com|
|Superm|controlle||goods|price||7||transfer||||
|||busines||||||||2015|.cn|
|arket|r|||||||ence||||
|||s||||||||||
|||Revenu||||||||||
||Commo|||||||Bank||||
|Shenna||e from||||||||March|www.cni|
||n||Sale of|Market||2,436.3||account||||
|n Circuit||principal|||||52.79%|||12,|nfo.com|
||controlle||goods|price||5||transfer||||
|Co., Ltd.||busines||||||||2015|.cn|
||r|||||||ence||||
|||s||||||||||
|||Revenu||||||||||
||Commo|||||||Bank||||
|CATIC||e from||||||||March|www.cni|
||n||Property|Market||||account||||
|Real||principal||||150.88|0.01%|||12,|nfo.com|
||controlle||lease|price||||transfer||||
|Estate||busines||||||||2015|.cn|
||r|||||||ence||||
|||s||||||||||
|||Revenu||||||||||
||Commo|||||||Bank||||
|||e from||||||||March|www.cni|
|CATIC|n||Property|Market||||account||||
|||principal||||728.3|0.01%|||12,|nfo.com|
|Property|controlle||lease|price||||transfer||||
|||busines||||||||2015|.cn|
||r|||||||ence||||
|||s||||||||||
|||Revenu||||||||||
|CATIC|Commo|||||||Bank||||
|||e from||||||||March|www.cni|
|Securiti|n||Property|Market||||account||||
|||principal||||108.84|0.01%|||12,|nfo.com|
|es, Co.,|controlle||lease|price||||transfer||||
|||busines||||||||2015|.cn|
|Ltd.|r|||||||ence||||
|||s||||||||||
|Shenzh|Commo|Revenu|Property|Market||2.23|0.01%|Bank||March|www.cni|

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|en|n|e from|lease|price|||account|12,|nfo.com|
|CATIC|controlle|principal|||||transfer|2015|.cn|
|City|r|busines|||||ence|||
|Property||s||||||||
|Develop||||||||||
|ment||||||||||
|Co., Ltd.||||||||||
|Shenzh||||||||||
|en||Revenu||||||||
||Commo||||||Bank|||
|CATIC||e from||||||March|www.cni|
||n||Property|Market|||account|||
|City||principal|||2.23|0.01%||12,|nfo.com|
||controlle||lease|price|||transfer|||
|Develop||busines||||||2015|.cn|
||r||||||ence|||
|ment||s||||||||
|Co., Ltd.||||||||||
|Shenzh||||||||||
|en||||||||||
|CATIC||Revenu||||||||
||Commo||||||Bank|||
|Guanlan||e from||||||March|www.cni|
||n||Property|Market|||account|||
|Real||principal|||8.93|0.01%||12,|nfo.com|
||controlle||lease|price|||transfer|||
|Estate||busines||||||2015|.cn|
||r||||||ence|||
|Develop||s||||||||
|ment||||||||||
|Co., Ltd.||||||||||
|Shenzh||||||||||
|en||||||||||
|CATIC||||||||||
|||Revenu||||||||
|Changta|Commo||||||Bank|||
|||e from||||||March|www.cni|
|i|n||Property|Market|||account|||
|||principal|||128.56|0.01%||12,|nfo.com|
|Investm|controlle||lease|price|||transfer|||
|||busines||||||2015|.cn|
|ent|r||||||ence|||
|||s||||||||
|Develop||||||||||
|ment||||||||||
|Co., Ltd.||||||||||
|||Revenu||||||||
|Xi’an|Commo||||||Bank|||
|||e from||||||March|www.cni|
|Tianyue|n||Property|Market|||account|||
|||principal|||449.99|0.01%||12,|nfo.com|
|Hotel|controlle||lease|price|||transfer|||
|||busines||||||2015|.cn|
|Co., Ltd.|r||||||ence|||
|||s||||||||
|||Revenu||||||||
|Rainbo|Commo||||||Bank|||
|||e from||||||March|www.cni|
|w|n||Property|Market|||account|||
|||principal|||45.28|0.01%||12,|nfo.com|
|Superm|controlle||lease|price|||transfer|||
|||busines||||||2015|.cn|
|arket|r||||||ence|||
|||s||||||||
|Shenzh|Commo|Revenu|Property|Market|9|0.01%|Bank|March|www.cni|

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|en|n|e from|lease|price|||account|12,|nfo.com|
|CATIC|controlle|principal|||||transfer|2015|.cn|
|City|r|busines|||||ence|||
|Investm||s||||||||
|ent Co.,||||||||||
|Ltd.||||||||||
|Shenzh||||||||||
|en||||||||||
|||Revenu||||||||
|CATIC|Commo||||||Bank|||
|||e from||||||March|www.cni|
|Jiufang|n||Property|Market|||account|||
|||principal|||36.36|0.01%||12,|nfo.com|
|Assets|controlle||lease|price|||transfer|||
|||busines||||||2015|.cn|
|Manage|r||||||ence|||
|||s||||||||
|ment||||||||||
|Co., Ltd.||||||||||
|Shenzh||||||||||
|en||Revenu||||||||
||Commo||||||Bank|||
|CATIC||e from||||||March|www.cni|
||n||Property|Market|||account|||
|Theme||principal|||94.56|0.01%||12,|nfo.com|
||controlle||lease|price|||transfer|||
|Real||busines||||||2015|.cn|
||r||||||ence|||
|Estate||s||||||||
|Co., Ltd.||||||||||
|AVIC||||||||||
|||Revenu||||||||
|Internati|Commo||||||Bank|||
|||e from||||||March|www.cni|
|onal|n||Property|Market|||account|||
|||principal|||21.03|0.01%||12,|nfo.com|
|Holding|controlle||lease|price|||transfer|||
|||busines||||||2015|.cn|
|s|r||||||ence|||
|||s||||||||
|Limited||||||||||
||Commo|Administ|||||Bank|||
||||Property|||||March|www.cni|
|CATIC|n|rative||Market||100.00|account|||
||||manage||135.61|||12,|nfo.com|
|Property|controlle|expense||price||%|transfer|||
||||ment fee|||||2015|.cn|
||r|s|||||ence|||
|Ganzho||||||||||
|u CATIC||||||||||
||Commo||||||Bank|||
|Real||||||||March|www.cni|
||n|Sales||Market|||account|||
|Estate|||Rent||99.54|0.01%||12,|nfo.com|
||controlle|costs||price|||transfer|||
|Develop||||||||2015|.cn|
||r||||||ence|||
|ment||||||||||
|Co., Ltd.||||||||||
|Chengd||||||||||
|u CATIC|Commo||||||Bank|||
|||||||||March|www.cni|
|Real|n|Sales||Market|||account|||
||||Rent||81.6|0.01%||12,|nfo.com|
|Estate|controlle|costs||price|||transfer|||
|||||||||2015|.cn|
|Develop|r||||||ence|||
|ment||||||||||

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Co., Ltd.||||||||||||
|Rainbo|Commo|||||||Bank||||
||||Market|||||||March|www.cni|
|w|n|Sales||Market||||account||||
||||expense|||354.96|6.78%|||12,|nfo.com|
|Superm|controlle|costs||price||||transfer||||
||||s|||||||2015|.cn|
|arket|r|||||||ence||||
|Shenzh||||||||||||
||Commo|Administ||||||Bank||||
|en||||||||||March|www.cni|
||n|rative|Training|Market||||account||||
|CATIC||||||14.64|2.19%|||12,|nfo.com|
||controlle|expense|fees|price||||transfer||||
|Training||||||||||2015|.cn|
||r|s||||||ence||||
|Center||||||||||||
|Shangh|Joint||Procure|||||Bank||||
|||Cost|||||||||www.cni|
|ai Watch|stock||ment of|Market||||account||March,||
|||rative||||255.43|0.13%||||nfo.com|
|Industry|compan||material|price||||transfer||2015||
|||expense|||||||||.cn|
|Co.,Ltd.|y||s|||||ence||||
|||||||13,455.||||||
|Total||||--|--||--|--|--|--|--|
|||||||99||||||
|Details of the rejection of the goods already||||||||||||
|||||Inapplicable||||||||
|sold in big amount||||||||||||
|Necessity, persistence and choice of related||||All the above related transactions are favorable to the Company’s principal business and||||||||
|transactions and causes of the transaction||||belong to normal business of the Company. For the related transaction, the transaction price||||||||
|with the related parties (non-market other||||is determined with reference to the market price of the same category. It is fair and||||||||
|transaction party)||||reasonable and has not caused any harm to the Company’s interests.||||||||
|||||The aforesaid transactions have not affected independence of the Company and the||||||||
|Influence of the related transaction upon the||||||||||||
|||||Company shall not be dependent on or be controlled by the related parties due to such||||||||
|independence of the listed company||||||||||||
|||||transactions.||||||||
|Dependence of the Company on the related||||||||||||
|party and the corresponding measures for||||Inapplicable||||||||
|solution (if any)||||||||||||
|In case the total amount of the regular||||||||||||
|related transaction incurred in the reporting||||||||||||
|period has been predicted based on||||||||||||
|||||Inapplicable||||||||
|categories, state the actual implementation||||||||||||
|of the in the reporting period (if any)||||||||||||
|Cause of the big difference between the||||||||||||
|transaction price and the market reference||||Inapplicable||||||||
|price. (if applicable)||||||||||||

2. Related transactions concerning assets acquisition/sales
Inapplicable
3. Important Related Transitions with Joint Investments
Inapplicable
4. Current Associated Rights of Credit and Liabilities
Did there exist any non-operational related rights of credit and liabilities
Yes
|||||||||
|-|-|-|-|-|-|-|-|
|||||Does there||||
|||||||Amount||
|||Types of||exist||||
||||||Opening|incurred in|Ending|
|||rights of|Reasons of|non-operatio||||
|Related Parties|Relationship||||balance (in|the reporting|balance (in|
|||credit and|formation|n oriented||||
||||||CNY 10,000)|period (in|CNY 10,000)|
|||liabilities||fund||||
|||||||CNY 10,000)||
|||||occupancy?||||
|||Related||||||
||Common|party’s rights||||||
|CATIC Property|||Lease|No|0.67|-0.67|0|
||controller|of credit||||||
|||receivable||||||
|||Related||||||
|Xi’an Tianyue Hotel|Common|party’s rights||||||
||||Rent|No|175|-175|0|
|Co., Ltd.|controller|of credit||||||
|||receivable||||||
|||Related||||||
||Common|party’s rights|Payment for|||||
|Rainbow Supermarket||||No|215.41|-1.97|213.44|
||controller|of credit|goods|||||
|||receivable||||||
|||Related||||||
||Common|party’s rights|Shopping|||||
|Rainbow Supermarket||||No|16.79|14.01|30.8|
||controller|of credit|mall deposit|||||
|||receivable||||||
|||Related||||||
|Shenzhen CATIC||||||||
||Common|party’s rights||||||
|Enterprise Group|||Training fees|No|1.14|-1.14|0|
||controller|of credit||||||
|Training Center||||||||
|||receivable||||||
|||Related||||||
|China National||||||||
||Eventual|party’s rights|Payment for|||||
|Aviation Industry||||No|64.41|-11.98|52.43|
||controller|of credit|goods|||||
|Group||||||||
|||receivable||||||
|||Related||||||
|Shennan Circuit Co.,|Common|party’s rights|Payment for|||||
|||||No|1,088.43|-940.7|147.73|
|Ltd.|controller|of credit|goods|||||
|||receivable||||||
|Zhonghang Electronic|Common|Related|Payment for|||||
|||||No|19.74|-19.74|0|
|Measuring|controller|party’s rights|goods|||||

|||||||||
|-|-|-|-|-|-|-|-|
|Instruments Co., Ltd.||of credit||||||
|||receivable||||||
|||Related||||||
|Chengdu CATIC Real||||||||
||Common|party’s rights|Payment for|||||
|Estate Development||||No|0|0.79|0.79|
||controller|of credit|goods|||||
|Co., Ltd.||||||||
|||receivable||||||
|||Related||||||
|Chengdu CATIC Real||||||||
||Common|party’s rights|Rental|||||
|Estate Development||||No|11.56|0|11.56|
||controller|of credit|deposit|||||
|Co., Ltd.||||||||
|||receivable||||||
|||Related||||||
|Ganzhou CATIC Real||||||||
||Common|party’s rights|Rental|||||
|Estate Development||||No|12.27|5|17.27|
||controller|of credit|deposit|||||
|Co., Ltd.||||||||
|||receivable||||||
|||Related||||||
|Shennan Circuit Co.,|Common|party’s rights|Payment for|||||
|||||No|700|-83.72|616.28|
|Ltd.|controller|of credit|goods|||||
|||receivable||||||
|||Related||||||
|Zhonghang Electronic||||||||
||Common|party’s rights|Payment for|||||
|Measuring||||No|10|-10|0|
||controller|of credit|goods|||||
|Instruments Co., Ltd.||||||||
|||receivable||||||
|||Related||||||
|Shenzhen CATIC||||||||
||Common|parties’|Rental|||||
|Building Technology||||No|0.82|-0.82|0|
||controller|liabilities|deposit|||||
|Co., Ltd.||||||||
|||payable||||||
|||Related||||||
|Shenzhen CATIC||||||||
||Common|parties’|Rental|||||
|Nanguang Elevator||||No|0.34|-0.34|0|
||controller|liabilities|deposit|||||
|Engineering Co., Ltd.||||||||
|||payable||||||
|||Related||||||
|Shenzhen CATIC City|Common|parties’|Rental|||||
|||||No|3.77|0|3.77|
|Investment Co., Ltd.|controller|liabilities|deposit|||||
|||payable||||||
|||Related||||||
|CATIC Securities Co.,|Common|parties’|Rental|||||
|||||No|17.89|0.85|18.74|
|Ltd.|controller|liabilities|deposit|||||
|||payable||||||
|||Related||||||
||Common|parties’|Rental|||||
|CATIC Real Estate||||No|42.48|0|42.48|
||controller|liabilities|deposit|||||
|||payable||||||
|Shenzhen CATIC|Common|Related|Rental|||||
|||||No|22.17|0|22.17|
|Changtai Investment|controller|parties’|deposit|||||

|||||||||
|-|-|-|-|-|-|-|-|
|Development Co., Ltd.||liabilities||||||
|||payable||||||
|||Related||||||
|Shenzhen CATIC||||||||
||Common|parties’|Rental|||||
|Jiufang Assets||||No|6.06|0|6.06|
||controller|liabilities|deposit|||||
|Management Co., Ltd.||||||||
|||payable||||||
|||Related||||||
||Common|parties’|Rental|||||
|Rainbow Supermarket||||No|6|0|6|
||controller|liabilities|deposit|||||
|||payable||||||
|||Related||||||
|Zhonghang Electronic||||||||
||Common|parties’|Payment for|||||
|Measuring||||No|4.55|-4.55|0|
||controller|liabilities|goods|||||
|Instruments Co., Ltd.||||||||
|||payable||||||
|||Related||||||
|Chengdu CATIC Real||||||||
||Common|parties’|Rental|||||
|Estate Development||||No|0.44|11.02|11.46|
||controller|liabilities|deposit|||||
|Co., Ltd.||||||||
|||payable||||||
|||Related||||||
|China National||||||||
||Eventual|parties’|Payment for|||||
|Aviation Industry||||No|1.55|-1.55|0|
||controller|liabilities|goods|||||
|Group||||||||
|||payable||||||
|||Related||||||
|China National||||||||
||Eventual|parties’||||||
|Aviation Industry|||Loan|No|0|15,000|15,000|
||controller|liabilities||||||
|Group||||||||
|||payable||||||
|||Related||||||
|Shanghai Watch|Joint stock|parties’|Payment for|||||
|||||No|13.12|51.65|64.77|
|Industry Co., Ltd.|company|liabilities|goods|||||
|||payable||||||
|Influence of the related rights of credit||||||||
|and liabilities upon the Company’s||Inapplicable||||||
|operation results and financial position.||||||||

5. Other Material Related Transactions
The 10th meeting of the Seventh Board of Directors held on May 23, 2014 reviewed and approved the Proposal on Application for Loan from the Controlling Shareholder. For the detail, refer to the Announcement on the Resolution of the 10th Meeting of the Seventh Board of Directors (2014-016) and the Announcement on the Related Transaction concerning Application for Loan from the Controlling Shareholder (2014-017).
The 13th meeting of the Seventh Board of Directors held on September 22, 2014 reviewed and approved the Proposal on
Application for Loan from Catic International Finance Limited. For the detail, refer to the Announcement on the Resolution
of the 13th Meeting of the Seventh Board of Directors (2014-024) and the Announcement on the Related Transaction concerning Application for Loan from Catic International Finance Limited (2014-025).
The 15th meeting of the Seventh Board of Directors held on December 3, 2014 reviewed and approved the Proposal on the Prediction on the Newly Added Normal Related Transactions in 2014. For the detail, refer to the Announcement on the Resolution of the 15th Meeting of the Seventh Board of Directors (2014-035) and the Announcement on the Newly Added Day-to-Day Related Transactions in 2014 (2014-036).
The 16th meeting of the Seventh Board of Directors held on December 29, 2014 reviewed and approved the Proposal on the Framework Contract on the Predicted Normal Related Transactions from 2015 to 2017 Signed with the Related Parties. For the detail, refer to the Announcement on the Resolution of the 16th Meeting of the Seventh Board of Directors (2014-041) and the Announcement on the Framework Contract on the Predicted Normal Related Transactions from 2015 to 2017 Signed with the Related Parties (2014-042). The proposal is subject to submission to the General Meeting for review. Relevant inquiry with the Internet website for disclosing provisional report on material related transactions
|||||
|-|-|-|-|
|||Date of disclosing|Description of the website for disclosing|
||Description of provisional announcement|||
|||provisional announcement|provisional announcements|
|Announcement on the Related Transactionconcerning Application for Loan from theControlling Shareholder (2014-017)||||
|||May 23, 2014|www.cninfo.com.cn|
|Announcement on the Related Transactionconcerning Application for Loan fromCatic International Finance Limited(2014-025)||||
|||September 23, 2014|www.cninfo.com.cn|
|Announcement on the Newly AddedDay-to-Day Related Transactions in 2014(2014-036)||||
|||December 4, 2014|www.cninfo.com.cn|
|Announcement on the Framework Contracton the Predicted Normal RelatedTransactions from 2015 to 2017 Signed withthe Related Parties (2014-042)||||
|||December 30, 2014|www.cninfo.com.cn|

VIII. Important Contracts and Implementation
1. Custody, Contacting and Leases
(1) Custody
Inapplicable
(2) Contracts
Inapplicable
(3) Leases
Inapplicable
2. Guarantees
In CNY10,000
||||||||||
|-|-|-|-|-|-|-|-|-|
|Outward guarantees (excluding guarantee to the subsidiaries)|||||||||
||Date of the||||||||
||||Date of||||||
||announce|||||||Guarant|
||||occurrence||||Impleme||
||ment on|Guarantee||Actual amount|Type of|Guarantee||ee to|
|Names of Gurantees|||(date of||||ntation||
||the|line||of guarantee|guarantee|period||related|
||||agreement||||status||
||guarantee|||||||party?|
||||execution)||||||
||line||||||||
|Inapplicable|||||||||
|||||Total amount of outward|||||
|Total amount of outward guarantee|||||||||
|||0||guarantee actually incurred in||0|||
|approved in the report period (A1)|||||||||
|||||the report period (A2)|||||
|Total amount of outward guarantee||||Total ending balance of|||||
|already approved at the end of the||0||outward guarantee at the end||0|||
|report period (A3)||||of the report period (A4)|||||
|Guarantees to the Subsidiaries|||||||||
||Date of the||||||||
||||Date of||||||
||announce|||||||Guarant|
||||occurrence||||Impleme||
|Names of|ment on|Guarantee||Actual amount|Type of|Guarantee||ee to|
||||(date of||||ntation||
|Guarantees|the|line||of guarantee|guarantee|period||related|
||||agreement||||status||
||guarantee|||||||party?|
||||execution)||||||
||line||||||||
|Shenzhen|||||Guarantee||||
|Harmony World|March 1,||February 2,||with joint||||
|||30,000||6,000||3 Years|No|No|
|Watches Center|2013||2014||responsibil||||
|Co., Ltd.|||||ity||||
|Shenzhen|||||Guarantee||||
|Harmony World|March 1,||||with joint||||
|||30,000|May 9, 2014|3,000||3 Years|No|No|
|Watches Center|2014||||responsibil||||
|Co., Ltd.|||||ity||||
|Shenzhen|||||Guarantee||||
|Harmony World|March 1,||May 27,||with joint||||
|||30,000||2,700||3 Years|No|No|
|Watches Center|2014||2014||responsibil||||
|Co., Ltd.|||||ity||||
|Shenzhen|||||Guarantee||||
|Harmony World|March 1,||October 29,||with joint||||
|||30,000||10,000||3 Years|No|No|
|Watches Center|2014||2014||responsibil||||
|Co., Ltd.|||||ity||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|Shenzhen|||||Guarantee||||
|Harmony World|March 1,||December||with joint||||
|||30,000||5,000||3 Years|No|No|
|Watches Center|2014||8, 2014||responsibil||||
|Co., Ltd.|||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||October 6,||with joint||||
|||3,945||3,945||1 Years|No|No|
|Kong) Ltd.|2014||2014||responsibil||||
||||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||July 11,||with joint||||
|||11,834||3,945||3 Years|No|No|
|Kong) Ltd.|2013||2013||responsibil||||
||||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||January 6,||with joint||||
|||11,834||1,578||3 Years|No|No|
|Kong) Ltd.|2013||2014||responsibil||||
||||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||January 27,||with joint||||
|||11,834||789||3 Years|No|No|
|Kong) Ltd.|2013||2014||responsibil||||
||||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||August 5,||with joint||||
|||11,834||3,945||3 Years|No|No|
|Kong) Ltd.|2013||2013||responsibil||||
||||||ity||||
||||||Guarantee||||
|Fiyta (Hong|March 1,||March 3,||with joint||||
|||11,834||1,578||3 Years|No|No|
|Kong) Ltd.|2014||2014||responsibil||||
||||||ity||||
|Total guarantee quota to the||||Total amount of guarantee to|||||
|subsidiaries approved in the||||the subsidiaries actually|||||
|||37,889||||34,590|||
|reporting period (B1)||||incurred in the reporting period|||||
|||||(B2)|||||
|||||Total balance of actual|||||
|Total guarantee quota to the|||||||||
|||||guarantee to the subsidiaries|||||
|subsidiaries approved at the end of||45,778||||42,478|||
|||||at the end of the reporting|||||
|the reporting period (B3)|||||||||
|||||period (B4)|||||
|The Company’s total guarantee (i.e. total of the first two main items)|||||||||
|||||Total amount of guarantee|||||
|Total guarantee quota approved in|||||||||
|||37,889||actually incurred in the||34,590|||
|the reporting period (A1+B1)|||||||||
|||||reporting period (A2+B2)|||||
|Total guarantee quota already||||Total balance of the actual|||||
|approved at the end of the||45,778||guarantee at the end of the||42,478|||
|reporting period (A3+B3)||||reporting period (A4+B4)|||||
|Proportion of the actual guarantees in the Company’s net assets||||26.01%|||||

|||
|-|-|
|(namely A4+B4) (%)||
|Including:||
|Amount of guarantees offered to the shareholders, actual controller||
||0|
|and its related parties (C)||
|Amount of guarantee for liabilities directly or indirectly offered to the||
||0|
|guarantees with the asset-liability ratio exceeding 70%. (D)||
|Guarantee with total amount exceeding 50% of the net assets (E)|0|
|Total amount of the aforesaid three guarantees (C+D+E)|0|
|Description of the possibility of bearing joint repayment liability due||
||Inapplicable|
|to undue guarantee||
|Description of external guarantee against the specified procedures|Inapplicable|

 Description of the guarantee with complex method
Inapplicable
Inapplicable
(1) Outward guarantee against law
Inapplicable
3. Other Important Contracts
Inapplicable
4. Other Important Transactions
Inapplicable
IX. Implementation of Commitments
1.The commitments of the Company and its shareholders holding over5% of theCompany’s total shares in the report year or extending to the report year from previous year(s).
|||||||
|-|-|-|-|-|-|
||||Commitment|||
|Commitments|Promiser|Description||Commitment term|Implementation|
||||time|||
|Commitment for Equity Separation Reform||||||
|Commitments in the acquisition report or the||||||
|written report on change of equity||||||
|Commitment made at the time of asset||||||
|reorganization||||||

|||||||
|-|-|-|-|-|-|
|||The Company||||
|||commits that in case||||
|||it is predicted that||||
|||the Company may||||
|||be unable to duly||||
|||pay the principal and||||
|||interest of the bond||||
|||or fail to duly pay the||||
|||principal and interest||||
|||of the bond when it||Deadline of the||
|||is due, the Company||bonds (The valid||
|||shall at least take the||term of the bonds||
|||following measures:||is 5 years attached||
|||1. not profit||with the investors’||
||AVIC|distribution to the||option of selling||
||Internation|shareholders shall||back, the|In process of|
||||February 27,|||
|Commitment made at IPO or re-financing|al|be conducted. 2.||Company’s option|impementatio|
||||2013|||
||Holdings|implementation of||of redemption and|n|
||Limited|any capital||option of||
|||expenditure projects,||up-regulation of||
|||such as material||the nominal||
|||external investment,||interest rate at the||
|||acquisition and||end of the 3rd||
|||merger, etc. shall be||year).||
|||suspended. 3.||||
|||salaries and bonus||||
|||to the directors and||||
|||senior executives||||
|||shall be adjusted||||
|||down or suspended.||||
|||4. None of the key||||
|||officers may be||||
|||transferred out.||||
|Other commitments to the minority||||||
|shareholders||||||
|Has the commitment been timely||||||
||Yes|||||
|implemented?||||||
|The specific cause of failure in||||||
||Inapplicable|||||
|implementation and the next plan (if any)||||||

2. There existed profit anticipation for theCompany’s assets or projects while the reporting period was still within the duration of the profit anticipation. The Company made explanation on whether the assets or projects reached the anticipated profit and the cause
Inapplicable
X. Engagement/Disengagement of CPAs
CPAs currently engaged
||||
|-|-|-|
||Grant Thornton Certified Public Accountants (Special GeneralPartnership)||
|Name of the domestic CPAs|||
|Remuneration to the domestic CPAs (in|||
|CNY10,000)||95|
|Successive years of the domestic CPAs|||
|||1|
|offering auditing services|||
|Names of the certified public accountants from|||
|||Su Yang and Chen Zhifang|
|the domestic CPAs|||

Has the CPAs been changed in the current period?
Yes
Was the CPAs changed during auditing?
No
Did the Company implement the approval process in change of the CPAs?
Yes
Description of Renewal or Change of the CPAs
2014
1st
extraordinary general meeting held on January 24, 2014 reviewed and approved the Proposal on Changing to Appoint Ruihua Certified Public Accounants (Special General Partnership) as theCompany’s Auditor for the Year 2013 and agreed to appoint Ruihua Certified Public Accounants (Special General Partnership) as theCompany’s auditor for the year 2013 for a term of one year. On February 27, 2014, Ruihua Certified Public Accounants (Special General Partnership) successfully completed various audit work of the year 2013. As Mr. Xing Xiangzong, one of the signatory CPA from Ruihua Certified Public Accounants (Special General Partnership) had worked for the Company successively for four years and at the same time with consideration that partial auditors used to work for theCompany’s audit have left Ruihua Certified Public Accounants (Special General Partnership) and joined Grant Thornton Certified Public Accountants (Special General Partnership) for the sake of work, for the purpose of keeping theCompany’s audit independent and stable and better fulfilling various audit work of the year 2014, the
14th
meeting of the Seventh Board of Directors held on October 23, 2014 and 2014
2nd
extraordinary general meeting held on November 12, 2014, reviewed and approved the Proposal on Appointing by Selection the CPAs, according to which Grant Thornton Certified Public Accountants (Special General
Partnership) was appointed as theCompany’s independent auditing agent and the auditor of the internalcontrol for the year
Description of the CPAs, financial adiver or sponsor engaged for internal control auditing
The Company has appointed Grant Thornton Certified Public Accountants (Special General Partnership) as theCompany’s auditor for the year 2014. The audit work for the year 2014 was finished and the Company is going to pay service charge for auditing the financial report amounting to CNY 0.65 million and that for auditing the internal control amounting to CNY 0.30 million to Grant Thornton Certified Public Accountants (Special General Partnership).
XI. Explanation of the Supervisory Committee and Independent Directors (if applicable) on the QualifiedAuditor’s Report Issued by the CPAs
Inapplicable
XII. Punishment and Rectification
Inapplicable
XIII. Situation of being Confronted of Suspension or Termination of Listing upon Disclosure of the Annual Report
Inapplicable
XIV. Notes to Other Significant Events
The
14th
meeting of the Seventh Board of Directors held on October 23, 2014 and 2014
2nd
extraordinary general meeting held on November 12, 2014, reviewed and approved the Proposal on Appointinf by Selection the CPAs, according to which Grant Thornton Certified Public Accountants (Special General Partnership) was appointed as theCompany’s independent auditing agent and the auditor of the internalcontrol for the year 2014. For the detail, refer to the Announcement on the Resolution of the
14th
meeting of the Seventh Board of Directors (2014-026), the Announcement on the Proposal on Appoint by Selection the CPAs (2014-029) and the Announcement on the Resolution of 2014
2nd
Extraordinary General Meeting (2014-033);
The
15th
meeting of the Seventh Board of Directors held on December 3, 2014 and 2014
3rd
extraordinary general meeting held on December 19, 2014, reviewed and approved the Proposal on Amendment of the Articles of Association. For the detail, refer to the Announcement on the Resolution of the
15th
meeting of the Seventh Board of Directors (2014-035) and the Announcement on the Resolution of 2014
3rd
Extraordinary General Meeting (2014-040).
XV. Significant Events of Subsidiaries
The
15th
meeting of the Seventh Board of Directors held on December 3, 2014 reviewed and approved the Proposal on Increasing Capital in FIYTA (Hong Kong) Limited, according to which the Company would increase the registered capital of FIYTA (Hong Kong) Limited toHK$ 100 million. For the detail, refer to the Announcement on the Resolution of the 15th meeting of the Seventh Board of Directors (2014-035) and the Announcement on Increasing the Capital in FIYTA (Hong Kong) Limited (2014-037).
XVI. Issuing of Company Bonds
The 33rd meeting of the Sixth Board of Directors held on June 19, 2012 reviewed and approved the Proposal on Issuing
Company Bonds, etc., according to which the Company planned to issued company bonds with amount not exceeding
CNY 400 million and the term not exceeding 5 years (with 5 years inclusive). The proceeds would be used for substituting bank loan and replenishing the working capital. On September 9, 2012, approved by China Securities Regulatory Commission with Document ZHENG JIAN XU KE[2012] No. 1209, the Company was permitted to issue company bonds with amount not exceeding CNY 400 million. The Company issued totally CNY 400 million of bonds in the current period. After deduction of the issuing costs, the new proceeds raised therefrom amounted to CNY 396.9 million, which was remitted to the bank account designated by the Company on March 5, 2013. RSM China CPAs, the CPAs appointed by the Company respectively issued the capital verification reports ZHONG RUI YUE HUA YAN ZI[2013] No. 0053, ZHONG RUI YUE HUA YAN ZI[2013] No. 0054 and ZHONG RUI YUE HUA YAN ZI[2013] No. 0055 for the frozen funds for subscription of the on-line issued bonds, the frozen fund for subscription of the off-line placement and the proceeds actually raised. Approved by Shenzhen Stock Exchange with Document SHEN ZHENG SHANG[2013] No. 99, the bonds were listed for trading with both SZSE centralized bidding system and the comprehensive agreement based trading platform with the abbreviation the securities “12 YA DA ZHAI” and security code of “112152”. For the detail, refer to “Announcement on Issuing Company Bond 2013-003” disclosed on February 25, 2013. The Company finished the first and second interest payment for the company bond on February 27, 2014. For the detail, refer to “Announcement on Interest Payment for “12 YA DA ZHAI” No 2014-006” and “Announcement on Interest Payment for “12 YA DA ZHAI” No. 2015-001.
Chapter 6 Change of Shares and Particulars about Shareholders I. Change of Shares
In Shares
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Increase / Decrease (+/ -)|||||After the change||
||||||Shares|||||
|||Proportio|New|Bonus|converte||||Proporti|
||Quantity|||||Others|Sub-total|Quantity||
|||n (%)|issuing|shares|d from||||on (%)|
||||||reserve|||||
|I. Restricted shares|49,733|0.01%|0|0|0|0|0|49,733|0.01%|
|1. Shares held by the state|0|0.00%|0|0|0|0|0|0|0.00%|
|2. State corporate shares|0|0.00%|0|0|0|0|0|0|0.00%|
|3. Other domestic shares|49,733|0.01%|0|0|0|0|0|49,733|0.01%|
|Including: Domestic||||||||||
||0|0.00%|0|0|0|0|0|0|0.00%|
|corporate shares||||||||||
|Shares held by domestic||||||||||
||49,733|0.01%|0|0|0|0|0|49,733|0.01%|
|natural persons||||||||||
|4、Foreign invested shares|0|0.00%|0|0|0|0|0|0|0.00%|
|Including: Foreign||||||||||
||0|0.00%|0|0|0|0|0|0|0.00%|
|corporate shares||||||||||
|Shares held by||||||||||
||0|0.00%|0|0|0|0|0|0|0.00%|
|foreign natural persons||||||||||
||392,718,|||||||392,718,||
|II. Unrestricted shares||99.99%|0|0|0|0|0||99.99%|
||137|||||||137||
||311,070,|||||||311,070,||
|1. CNY ordinary shares||79.20%|0|0|0|0|0||79.20%|
||137|||||||137||
|2. Foreign invested shares|81,648,0|||||||81,648,0||
|||20.79%|0|0|0|0|0||20.79%|
|listed in Mainland China|00|||||||00||
|3、Foreign invested shares||||||||||
||0|0.00%|0|0|0|0|0|0|0.00%|
|listed abroad||||||||||
|4. Others|0|0.00%|0|0|0|0|0|0|0.00%|
||392,767,|||||||392,767,||
|III. Total shares||100.00%|0|0|0|0|0||100.00%|
||870|||||||870||

Cause of change in shares
Inapplicable
Approval of change in shares
Inapplicable
Ownership transfer involved in change in shares
Inapplicable
Influence from change in shares on such financial indicators as basic EPS and diluted EPS of the latest year and the latest
period, and net asset value per share attributable to theCompany’s ordinary shareholders
Inapplicable
Other details the Company considers necessary or the securities regulatory authority requires to disclose
Inapplicable
2. Change of Restricted Shares
Inapplicable
II. Issuing and Listing
1. Issuing Activities over the Past Three Years
||||||||
|-|-|-|-|-|-|-|
|Description of|||||||
||||||Quantity||
|stock and its||Issuing price (or||||Expiration date|
||Issuing date||Issuing quantity|Listing Date|approved for||
|Derivative||interest rate)||||of transaction|
||||||listing||
|Securities|||||||
|Types of ordinary shares|||||||
|Convertible company bonds, detachable convertible bond and corporate bonds|||||||
||February 27,||||||
|Corporate bonds||5.04%|4,000,000|March 29, 2013|4,000,000||
||2013||||||
|Warrants|||||||

Issuing Activities over the Past Three Years
The 33rd meeting of the Sixth Board of Directors held on June 19, 2012 reviewed and approved the Proposal on Issuing Company Bonds, etc., according to which the Company planned to issued company bonds with amount not exceeding CNY 400 million and the term not exceeding 5 years (with 5 years inclusive). The proceeds would be used for substituting bank loan and replenishing the working capital. On September 9, 2012, approved by China Securities Regulatory Commission with Document ZHENG JIAN XU KE[2012] No. 1209, the Company was permitted to issue company bonds with amount not exceeding CNY 400 million. The Company issued totally CNY 400 million of bonds in the current period. After deduction of the issuing costs, the new proceeds raised therefrom amounted to CNY 396.9 million, which was remitted to the bank account designated by the Company on March 5, 2013. RSM China CPAs, the CPAs appointed by the Company respectively issued the capital verification reports ZHONG RUI YUE HUA YAN ZI[2013] No. 0053, ZHONG RUI YUE HUA YAN ZI[2013] No. 0054 and ZHONG RUI YUE HUA YAN ZI[2013] No. 0055 for the frozen funds for subscription of the on-line issued bonds, the frozen fund for subscription of the off-line placement and the proceeds actually raised. Approved by Shenzhen Stock Exchange with Document SHEN ZHENG SHANG[2013] No. 99, the bonds were listed for trading with both SZSE centralized bidding system and the comprehensive agreement based trading platform with the abbreviation the securities “12 YA DA ZHAI” and security code of “112152”. For the detail, refer to “Announcement on Issuing Company Bond 2013-003” disclosed on February 25, 2013.
2. Change of theCompany’s Total Shares and the Strucutre and the Change of theCompany’s Asset and Liability
Structure Arising Therefrom
Inapplicable
3. About the existingemployees’ shares
Inapplicable
III. Shareholders and Actual Controlling Shareholder
1. Number of Shareholders and Shareholding
In shares
||||||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||||||||Total preference||||
||||||||Total ordinary||||||||||||||
||||||||||||||||||shareholders||||
||||||||shareholders as||||||||||||||
||||||||||||||||||with the vote||||
||Total ordinary||||||at the 5th trading||||||||||||||
||||||||||||||||||recovered at the||||
||shareholders in the|||26,158|||day before the|||||25,189|||||||0||
||||||||||||||||||end of the||||
||reporting period||||||date of||||||||||||||
||||||||||||||||||reporting period||||
||||||||disclosing the||||||||||||||
||||||||||||||||||(if any) (refer to||||
||||||||annual report||||||||||||||
||||||||||||||||||Note 8)||||
||Shares held by the shareholders holding over 5% shares or the top ten shareholders||||||||||||||||||||
|||||||Shares||||||||||Number||Pledging or freezing|||
||||||||||Quantity||||||||||||
|||||||held by|||||Increase|||Number||of the|||||
||||Shares held by|||the top|||at the||/decreas|||of the||non-restri|||||
||Shareholder||||||||end of||||||||||||
||||the top ten|||ten|||||e in the|||restricte||cted|||||
||names||||||||the|||||||||Status of the|||
||||shareholders|||sharehol|||||reportin|||d shares||shares||||Quantity|
||||||||||reportin|||||||||shares|||
|||||||ders|||||g period|||held||held|||||
||||||||||g period||||||||||||
|||||||(%)|||||||||||||||
|AVICInternationalHoldings Limited||State-ownedcorporate|||41.49%|||162,977,327||0|||0||162,977,327||||||
|Penghua Assets－ IndustrialBank － JinrunNo. 16 AssetsManagementPlan||Domesticnon-state|||1.24%|||4,864,140||4,864,140|||0||4,864,140||||||
|YunnanInternationalTrust Co., Ltd. -－Snub-nosedMonkeySecuritiesInvestment.Ruiyuan||Domesticnon-state|||0.89%|||3,484,780||3,484,780|||0||3,484,780||||||

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|ESSENCEINTERNATIONAL SECURITIES(HONG KONG)LIMITED||Foreign corporate|0.79%||3,103,200|0|0|3,103,200|||
|GREENWOODSCHINA ALPHAMASTER FUND||Foreign corporate|0.68%||2,666,297|0|0|2,666,297|||
|CMS (HK)||Foreign corporate|0.66%||2,582,565|-703,724|0|2,582,565|||
|Dai Wen||Domestic naturalperson|0.53%||2,080,271|27,003|0|2,080,271|||
|Zhongrong International TrustCo.,Ltd.－Zhongrong－Goldtouch No. 11SecuritiesInvestmentAssembledFunds Trust Plan||Domesticnon-state|0.52%||2,050,200|2,050,200|0|2,050,200|||
|Harvest Capital－ICBC－Harvest Capital－ Haitong MOM－JOVE LIFENo. 1 AssetsManagementPlan||Domesticnon-state|0.36%||1,414,000|1,414,000|0|1,414,000|||
|Li Wenrong||Domestic naturalperson|0.33%||1,300,000|1,300,000|0|1,300,000|||
||About the fact that a strategic investor||||||||||
||or ordinary corporate became one of||||||||||
|||||Inapplicable|||||||
||the top ten shareholders due to||||||||||
||placement of new shares (if any)||||||||||
||(Refer to Note 3)||||||||||
||Explanation on associated relationship|||The Company has found neither affiliation among the aforesaid shareholders nor concerted actor|||||||
||or consistent action of the above|||as specified in the Measures for Administration of Information on the Shareholder Equity Change of|||||||
||shareholders|||Listed Companies.|||||||
||Shareholding of top 10 shareholders of unrestricted shares||||||||||
|||||Quantity of unrestricted shares held at the end of the|||||Share type||
||Shareholder’s Name|||reporting period|||||||
||||||||||Share type|Quantity|
|AVIC International Holdings Limited|||162,977,327||||||A-shares|162,977,327|

|||||||
|-|-|-|-|-|-|
|Penghua Assets－ Industrial Bank －Jinrun No. 16 Assets ManagementPlan||4,864,140||||
|||||A-shares|4,864,140|
|Yunnan International Trust Co., Ltd. -－Snub-nosed Monkey SecuritiesInvestment.Ruiyuan||3,484,780||||
|||||A-shares|3,484,780|
|ESSENCE INTERNATIONALSECURITIES (HONG KONG)LIMITED||3,103,200||||
|||||B-shares|3,103,200|
|GREENWOODS CHINA ALPHAMASTER FUND||2,666,297||||
|||||B-shares|2,666,297|
|CMS (HK)||2,582,565||B-shares|2,582,565|
|Dai Wen||2,080,271||A-shares|2,080,271|
|Zhongrong International Trust Co.,Ltd.－Zhongrong－Goldtouch No. 11Securities Investment AssembledFunds Trust Plan||2,050,200||||
|||||A-shares|2,050,200|
|Harvest Capital－ICBC－ HarvestCapital－ Haitong MOM－JOVE LIFENo. 1 Assets Management Plan||1,414,000||||
|||||A-shares|1,414,000|
|Li Wenrong||1,300,000||A-shares|1,300,000|
||Explanation to the associated|||||
||relationship or consistent action|||||
||among the top 10 shareholders of||The Company has found neither affiliation among the aforesaid shareholders nor concerted actor|||
||non-restricted negotiable shares and||as specified in the Measures for Administration of Information on the Shareholder Equity Change of|||
||that between the top 10 shareholders||Listed Companies.|||
||of non-restricted negotiable shares|||||
||and top 10 shareholders.|||||
||Note to the top 10 shareholders|||||
||involved in margin financing &|||||
||||Inapplicable|||
||securities lending (if any) (Refer to|||||
||Note 4)|||||

Did the top ten ordinary shareholders or top ten shareholders of unrestricted ordinary shares conduct contractual repurchase during the reporting period?
No
2. Controlling Shareholder
Corporate
|||||||
|-|-|-|-|-|-|
||Legal|||||
|Name of the Controlling||Date of|||Principal business|
||Representative||Organization code|Registered Capital||
|Shareholder||incorporation|||activities|
||/Leader|||||
||||||Investing and initiating|
||||||entities (separate|
||||||application is to be|
|China National Aviation||||CNY 1110.631996||
||Wu Guangquan|June 20, 1997|27935122-9||submitted for a specific|
|Industry Group||||million||
||||||project); domestic|
||||||commerce, supply and|
||||||sales of goods and|

||||
|-|-|-|
|||materials (excluding the|
|||goods for exclusive sale,|
|||under special control|
|||and monopolized|
|||goods); import and|
|||export (excluding the|
|||goods forbidden by law,|
|||administrative rules and|
|||regulations, decision of|
|||the State Council; the|
|||restrictive goods is not|
|||allowed for operation|
|||until permit is granted)|
||Aiming at being the leader of the industry, to build itself into an enterprise group with the core business size||
||exceeding CNY 10 billion; to promote innovation of the business model, improve the enterprise’s core ability;||
|Future Development|||
||with the organic growth of the core business as the key, to pay attention to the opportunity of merger in the||
|Strategy|||
||strategic new industries; with the quick growth as the principal line, to promote effective sustainable||
||development.||
|Operation result, financial|||
||AVIC International Holdings Limited has not yet completed the auditing work for year 2014.||
|position, cash flow, etc.|||
|Equity in other domestic|||
|and foreign listed|||
|companies held by the|||
|controlling shareholder by|Holding 22.35% equity in CATIC Real Estate（000043）; holding 25.76% equity in SHEN TIANMA A（000050）.||
|means of control and|||
|mutual shareholding in the|||
|reporting period|||

Change of the controlling shareholder in the reporting period
Inapplicable
3. Actual Controller
Corporate
||||||||
|-|-|-|-|-|-|-|
|||Legal|||||
|Name of the Actual|||Date of|Organization|||
|||Representative|||Registered Capital|Principal business activities|
|Controller|||incorporation|code|||
|||/Leader|||||
|||||||International aviation,|
|||||||trading and logistic, retail|
|CATIC International||||||and high-end consumption|
|||Wu Guangquan||10000099-9|CNY 8459 million||
|Holdings Limited|||April 12, 1983|||goods, real estate and hotel,|
|||||||electronics and hi-tech,|
|||||||resource development, etc.|
|Future Development|i|To implement the strategy of “Surpassing Commerce.Leading in the Industry” and build itself|||||
|Strategy||nto a first class enterprise group and become a transnational corporation with international|||||

|||
|-|-|
||competitiveness; to integrate the businesses by means of the holistic listing and become a|
||comprehensive platform of exploiting the international market for China’s aviation industry,|
||develop the relevant industries and expand the international investment.|
|Operation result,||
|financial position, cash|AVIC International Holdings Limited has not yet completed the auditing work for year 2014.|
|flow, etc.||
|Equity in other domestic||
|and foreign listed||
|companies held by the||
|actual controler by|Holding 22.35% equity in CATIC Real Estate（000043）; holding 25.76% equity in SHEN TIANMA A（000050）.|
|means of control and||
|mutual shareholding in||
|the reporting period||

Change of the actual controller in the reporting period
Inapplicable
Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller
State-owned Assets Supervision and Administration
Commission of the State Council
100%
National Council for Aviation Industry AVIC CCB Aviation Industry Beijing Putuo
Social Security Fund Corporation of China Equity Investment (Tianjin) Co., Hanhua
Ltd.
Investment
14.31% 14.31% 62.52% 8.86% Management
Center
CATIC International Holdings Limited
100%
AVIC International Shenzhen Company Limited
39.37%
35.63%
AVIC International Holdings Limited
41.49%
Fiyta Holdings Ltd.
The actual controller controls the Company by means of trust or managing the assets in other ways:
Inapplicable
4. Other Corporate Shareholder Holding over10% of theCompany’s Shares
Inapplicable
IV. Share Acquisition Plan Proposed or Implemented by theCompany’s Shareholder and its Concerted Actor in the Reporting Period
Inapplicable
Chapter 7 About the Preferred Shares
Inapplicable
Chapter 8 Directors, Supervisors, Senior Executives and Staff I. Change in Shares Held by Directors, Supervisors and Senior Executives
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||||||||Number|Volume|Volume|Number|
||||||||of shares|of shares|of shares|of shares|
||||||||acquired|acquired|sold|held at|
||||||Starting|Expiry|||||
|||Office|||||at end of|during|during|end of|
|Names|Positions||Gender|Age|date of|date of|||||
|||Status|||||the|the|the|the|
||||||tenure|tenure|||||
||||||||reporting|reporting|reporting|reporting|
||||||||period(sh|period(sh|period(sh|period|
||||||||ares)|ares)|ares)|(shares)|
|Diao|||||Decembe|Septemb|||||
|Weichen|Chairman|In office|Male|52|r 19,|er 10,|||||
|g|||||2014|2015|||||
|Xu|||||Septemb|Septemb|||||
||Managin||||||||||
|Dongshe||In office|Male|49|er 10,|er 10,|||||
||g Director||||||||||
|ng|||||2012|2015|||||
|Wang|||||Septemb|Septemb|||||
|Mingchu|Director|In office|Male|49|er 10,|er 10,|||||
|an|||||2012|2015|||||
||||||Septemb|Septemb|||||
|Huang|||||||||||
||Director|In office|Male|41|er 10,|er 10,|||||
|Yongfeng|||||||||||
||||||2012|2015|||||
|||||||Septemb|||||
||||||June 10,||||||
|Liu Aiyi|Director|In office|Male|43||er 10,|||||
||||||2014||||||
|||||||2015|||||
|||||||Septemb|||||
|Zhong|||||June 10,||||||
||Director|In office|Male|39||er 10,|||||
|Sijun|||||2014||||||
|||||||2015|||||
|Zhang|Independ||||Septemb|Septemb|||||
|Honggua|ent|In office|Male|59|er 10,|er 10,|||||
|ng|Director||||2012|2015|||||
||Independ||||Septemb|Septemb|||||
|Zhang|||||||||||
||ent|In office|Male|49|er 10,|er 10,|||||
|Shunwen|||||||||||
||Director||||2012|2015|||||
||Independ||||Septemb|Septemb|||||
|Wang|||||||||||
||ent|In office|Male|58|er 10,|er 10,|||||
|Yan|||||||||||
||Director||||2012|2015|||||
||Chairman||||Septemb|Septemb|||||
|Sui Yong|of the|In office|Male|57|er 10,|er 10,|||||
||Supervis||||2012|2015|||||

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||ory||||||||||
||Committe||||||||||
||e||||||||||
||||||Septemb|Septemb|||||
|Chen|Supervis||||||||||
|||In office|Male|39|er 10,|er 10,|||||
|Zhuo|or||||||||||
||||||2012|2015|||||
||||||Septemb|Septemb|||||
|Tang|Supervis||||||||||
|||In office|Male|54|er 10,|er 10,|||||
|Boxue|or||||||||||
||||||2012|2015|||||
|||||||Septemb|||||
|Chen|Deputy||||October||||||
|||In office|Male|51||er 10,|||||
|Libin|GM||||22, 2012||||||
|||||||2015|||||
|Lu||||||Septemb|||||
||Deputy||||October||||||
|Bingqian||In office|Male|54||er 10,|66,311|0|0|66,311|
||GM||||22, 2012||||||
|g||||||2015|||||
|||||||Septemb|||||
||Deputy||||August 5,||||||
|Du Xi||In office|Male|40||er 10,|||||
||GM||||2014||||||
|||||||2015|||||
||Deputy||||||||||
||GM &|||||Septemb|||||
|Lu|||||August 5,||||||
||Secretary|In office|Male|48||er 10,|||||
|Wanjun|||||2014||||||
||of the|||||2015|||||
||Board||||||||||
||Chief|||||Septemb|||||
|Hu|||||August 5,||||||
||Accounta|In office|Male|51||er 10,|||||
|Xinglong|||||2014||||||
||nt|||||2015|||||
||||||Septemb|Novembe|||||
|Lai|||||||||||
||Chairman|Retired|Male|51|er 10,|r 25,|||||
|Weixuan|||||||||||
||||||2012|2014|||||
||||||Septemb||||||
|Wang||||||February|||||
||Director|Retired|Female|44|er 10,||||||
|Xiaohua||||||27, 2014|||||
||||||2012||||||
||Deputy||||||||||
||GM &||||||||||
||||||October|August 5,|||||
|Li Dehua|Chief|Retired|Male|55|||||||
||||||22, 2012|2014|||||
||Accounta||||||||||
||nt||||||||||
||Deputy||||October|August 5,|||||
|Li Bei||Retired|Male|60|||||||
||GM||||22, 2012|2014|||||
|Fang|Deputy||||October|August 5,|||||
|||Retired|Female|56|||||||
|Juan|GM||||22, 2012|2014|||||
|Total|--|--|--|--|--|--|66,311|0|0|66,311|

II. Posts Holding
Work Experience in the Past Five Years of Directors, Supervisors and Senior Executives in Current Office
Mr. Diao Weicheng, born in June, 1963, research fellow senior engineer, bachelor of physics of Sun Yat-sen University, MBA and PhD of management science and engineering of Tongji University. Mr. Diao is a member of the Party Leadership Group and deputy general manager of CATIC International Holdings Limited, the chairman of Rainbow Supermarket Co., Ltd. He used to be the general manager of China National Aero-technology Import& Export Corp. Beijing Co., deputy general manager of China National Aero-technology Import& Export Corp., director, deputy general manager and a member of the Party Committee of Shenzhen Pengji Holdings Co., Ltd. and deputy general manager of Shun Yip Holdings Company Limited.
Mr. Xu Dongsheng, born in April 1966 research fellow senior economist, MBA of Tongji University. and PhD of Beijing University of Aeronautics& Astronautics. He is now the managing director of the Company, vice president of China Timepieces Association and chairman of Shenzhen Timepieces Association. Mr. Xu used to the secretary of CYL Committee of CATIC Shenzhen Company Limited, GM of the Collective Life Service Co., Ltd. of Shenzhen CATIC Enterprise Group, vice secretary of the discipline committee, manager and president assistant of the supervision and audit department of CATIC Shenzhen Company Limited.
Mr. Wang Mingchuan, born in December 1966, senior accountant, master of management engineering of Tongji University. Mr. Wang is a director of the Company, vice chief accountant of CATIC International Holdings Limited, chief accountant of CATIC Shenzhen Company Limited, director of Tianma Microelectronics Co., Ltd., director of CATIC Real Estate Co., Ltd. and director of Rainbow Supermarket Co., Ltd. He used to be a financial supervisor of the finanical division of Chengdu Engine Company, manager of the financial department of Shenzhen Shenrong Engineering Plastic Company, manager of the comprehensive management department and chief financial officer of Shenzhen CATIC Trading Co., Ltd., deputy manager of the financial and audit department, deputy manager and manager of the financial department and vice chief accountant of CATIC Shenzhen Company Limited.
Mr. Huang Yongfeng, born in May 1974, senior engineer, master of management engineering of Beijing University of Aeronautics& Astronautics and EMBA of China Europe International Business School. He is now a director of the Company, secretary of the Board of AVIC International Holdings Limited, director of CATIC Real Estate Co., Ltd., director of Rainbow Supermarket Co., Ltd., director of Tianma Microelectronics Co., Ltd. and chairman of Shenzhen Zhongshi Machinery Equipment Co., Ltd. He used to be manager of the enterprise strategy and management department and GM assistant of CATIC Shenzhen Company Limited, and managing director of Shenzhen Zhongshi Machinery Equipment Co., Ltd. Mr. Liu Aiyi, born in February, 1972, senior administrator, master of public relations management of Peking University. Mr. Liu is the director of the human resource department of AVIC International Holdings Limited and director of Tianma Micro-electronics Co., Ltd. He used to be the senior business manager of the human resource department, chief of the division of leading cadres of the human resource department of China Aviation Industry Corporation I and chief of the division of senior executives& talents of the human resource department of China National Aviation Industry Group Co. Mr. Zhong Sijun, born in December 1976, economist, master of management of Northwestern Polytechnical University. Mr. Zhong is deputy manager of the operating management department of China National Aviation Industry Group, director of Shenzhen CATIC Commerce and Trade Co., Ltd. and director of Shenzhen CATIC Resources Co., Ltd.. He used to be the
secretary of the board of Shenzhen CATIC Real Estate Co., Ltd., the secretary of the board of Shenzhen CATIC Hotel Management Co., Ltd. and the secretary of the board of Shanghai Tianma Microelectronics Co., Ltd.
Mr. Zhang Hongguang, born in March 1956, senior engineer, bachelor of light industry machinery of Dalian Polytechnic University. He is now an independent director of the Company, vice president of China Timepieces Association. He used to be GM of Shenzhen Qixin Construction Group, deputy GM of Shenzhen Zhongyin Industrial Co., Ltd., manager of Shenzhen Xinghua Co., Ltd. and deputy chief of the education department of the Ministry of Light Industry.
Mr. Zhang Shunwen, born in May, 1966, senior accountant, a CPA, and master of Zhongnan University of Economics and Law. He is now an independent director of the Company, a partner of Lixin Certified Public Accountants (special general partnership), an expert member of the Third Assessment Committee of Guangdong Senior Accountants, vice president of Shenzhen Service Trade Association, practicing tutor of College of Economics of Shenzhen University, independent director of Shenzhen Gongjin Electronics Co., Ltd., AVIC Sanxin Co., Ltd. and Shenzhen Special Economic Zone RealEstate&Properties (Group).Co.,Ltd. He used to be a vice president of Shenzhen Association of CPAs and a member of CPPCC of Shenzhen Municipality.
Mr. Wang Yan, born in February 1957 senior economist, master of business administration of State University of New York. He is now an independent director of the Company, professor of Intellectual Property Academy of South China University of Technology, deputy director of South China Training Base of the State Intellectual Property Bureau, independent director of Shenzhen Maxonic Automation Control Co., Ltd. He used to be assistant to the director of the Management Department of the State Intellectual Property Bureau, chief economist of the domestic listing company of China Merchants Group (China Merchants Harbor Service), senior executive of First State China Fund Management Co., Ltd., associate professor of Southwest University of Political Science& Law and deputy director of Shenzhen Intellectual Property Bureau.
Mr. Sui Yong, born in January 1958, senior accountant, bachelor of management engineering of Beijing University of Aeronautics& Astronautics. He is the Chairman of the Supervisory Committee of the Company, deputy GM of CATIC Shenzhen Company Limited. He used to be deputy manager and manager of the financial department, manager of the settlement center, manager of the financial department, vice chief accountant and chief accountant of China National Aero-Technology Import& Export Corporation Shenzhen Company and chairman of the supervisory committee of CATIC Real Estate Co., Ltd.
Mr. Chen Zhuo, born in September 1976, accountant, MBA of Wuhan University, on-campus EMBA China Europe International Business School. He is now a supervisor of the Company and manager of the strategy and information department. He used to be deputy manager of the strategy and information department of the Company, deputy GM and manager of the financial information department of FIYTA Sales Co., Ltd. and securities affairs representative of the Company.
Mr. Tang Boxue, born in July 1961, accountant, graduated from university. He is now a supervisor and the manager of the audit department of the Company. He used to be deputy manager of the audit deparment and project manager of the financial department of the Company and GM of Shenzhen Pengmen Restaurant Co., Ltd.
Mr. Chen Libin, born in June 1964, postgraduate of economics of the Party School of Guangdong Provincial CPC Committee and EMBA of Sun Yat-Sen University. He is now the Secretary of the CPC Committee and deputy GM of the Company. Mr. Chen used to be deputy director and director of theParty’s affairs of the Party-masses Work Department and
senior commissioner, deputy manager and manager of the enterprise culture department of AVIC Shenzhen and the Secretary of the Board of the Company.
Mr. Lu Bingqiang, born in December 1961, senior economist, bechalor of Guangzhou Jinan University. Mr. Lu is deputy GM of the Company and Managing Director of FIYTA (Hong Kong) Limited. He used to be the president secretary of AVIC Shenzhen, GM assistant amd director of the Company, and GM and chairman of Shenzhen Harmony World Watches Center.
Mr. Du Xi, born in July 1975, engineer, bachelor of mechatronic engineering of University of Electronic Science and Technology of China, and EMBA of Sino-European International Management Institute. He is now a deputy GM of the Company. Mr. Du used to be the assistant to the GM of the Company and the GM of FIYTA Brand, the deputy GM and GM of FIYTA Sales Co., Ltd. and manager of FIYTA South China Branch.
Mr. Lu Wanjun, born in February, 1967, accountant and EMBA of Sino-European International Management Institute. Mr. Lu is now a deputy GM and the Secretary of the Board of the Company. He used to be the assistant to the GM of the Company, executive deputy GM and deputy GM, the assistant to the GM and concurrently the manager of the financial department of Shenzhen Harmony World Watches Center Co.
Mr. Hu Xinglong, born in May, 1964, accountant, Chinese CPA, international certified internal auditor, EMBA of Sino-European International Management Institute. Mr. Hu is now the Chief Accountant of the Company. He used to be deputy chief accountant, management of the financial department and manager of the audit department of the Company. Office taking in shareholder companies
|||||||
|-|-|-|-|-|-|
|||Titles|||Does he/she receive|
|Names of the||engaged in|||remuneration or|
||||Starting date|Expiry date of||
|persons in|Names of the Shareholders|the|||allowance from the|
||||of office term|office term||
|office||shareholder|||shareholder?|
|||s||||
|Diao||||||
||AVIC International Holdings Limited|Deputy GM|Feb. 29, 2012||Yes|
|Weicheng||||||
|||Deputy||||
|Wang||||||
||AVIC International Holdings Limited|Chief|Nov. 3, 2010||No|
|Mingchuan||||||
|||Accountant||||
|Wang||Chief||||
||AVIC International Holdings Limited||Aug. 6, 2010||Yes|
|Mingchuan||Accountant||||
|Huang||Secretary of||||
||China National Aviation Industry Group||Jul. 20, 2012|June 18, 2015|Yes|
|Yongfeng||the Board||||
|||Director of||||
|||the Human||||
|Liu Aiyi|AVIC International Holdings Limited||Jul. 1, 2010||Yes|
|||Resources||||
|||Dept.||||
|||Deputy||||
|Zhong Sijun|China National Aviation Industry Group|manager of|Aug. 22, 2012||Yes|
|||the||||

||||||
|-|-|-|-|-|
|||Operation|||
|||Managemen|||
|||t Dept.|||
|Sui Yong|AVIC International Holdings Limited|Deputy GM|Aug. 6, 2010|Yes|
|Explanation to|||||
|the office|||||
|taking in|Nil||||
|shareholder|||||
|companies|||||

Offices Taken in Other Organizations
|||||||
|-|-|-|-|-|-|
|||Titles||||
||||||Does he/she receive|
|||engaged in||||
|Names of the|||Starting date|Expiry date of|remuneration or|
||Names of Other Organizations|the other||||
|persons in office|||of office term|office term|allowance from|
|||organization||||
||||||other organization?|
|||s||||
|Zhang||Vice||||
||China Timepieces Association||Jan. 1, 2010||Yes|
|Hongguang||chairman||||
||Lixin Certified Public Accountants|||||
|Zhang Shunwen||Partner|Jan. 1, 2011||Yes|
||(Special Ordinary Partnership)|||||
||Intellectual Property Academy of South|Full-time||||
|Wang Yan|||Aug. 1, 2010||Yes|
||China University of Technology|professor||||
|Explanation to the||||||
|office taking in||||||
|other|Nil.|||||
|organizations||||||

III. Remuneration to Directors, Supervisors and Senior Executives
Decision-making procedures, basis for determination and actual payment of the remuneration to directors, supervisors and senior executives
1. Decision-making procedures of the remuneration to directors, supervisors and senior executives: Remuneration to directors and supervisors was reviewed and approved by theCompany’s General Meeting and remuneration to senior executives was reviewed and approved by the Board of Directors.
2. Basis for determining the remuneration to directors, supervisors and senior executives:
(1) Basis for Determining Remuneration to Directors: Remuneration to the directors appointed by the controlling shareholder is determined and distributed by the controlling shareholder. Allowance to independent directors is subject to the proposal prepared by the Board of Directors and reviewed and approved by the General Meeting and disclosed in the
Company’s annual report. Except the aforesaid allowance, independent directors received no extra and undisclosed benefit
from the Company, theCompany’s principal shareholders or other organization or personnel with stakeholding.
(2) Basis for Determining Remuneration to Supervisors: Remuneration to the supervisors appointed by the controlling shareholder is determined and distributed by the controlling shareholder. Remuneration to the staff representative supervisor is determined by the Company based on the specific job he/she is engaged in.
(3) Basis for Determining Remuneration to senior executives: The Company brought into full play and mobilized the seniorexecutives’ work enthusiasm and creativeness based on theCompany’s operating results and with reference to the average remuneration level in the trade, better improved theCompany’s operating ability and result and ensured realization of theCompany’s strategic targets. The Company worked out the Measures for Administration of Remuneration to the Senior Executives in 2009, insisted on the principle of distribution according to work and combination of power, responsibility and benefit. The major orientation was “market based”, “full amount based” and “broadband based”. Commencing from 2007 on, the Company has introduced Balance Scorecard Strategic Management Structure, based on the establishment of the incentive and restriction mechanism adaptable to the modern enterprise system, improved the corporate governance structure, decomposed theCompany’s strategy to every department and post through the balance scorecard to determine seniorexecutives’ performance indicators and action plan on this basis, conducted regular strategic review, work report and assessment on quarterly basis, and decided their total remuneration and renewal of engagement according to the assessment results and fulfillment of performances.
3. Actual payment of the remuneration to directors, supervisors and senior executives:
The Company practiced the annual salary system for its senior executives. The annual salary structure consists of the basic annual salary and performance based annual salary. The annual salary assessment for the GM was carried out according to the assessment methods worked out by the shareholder. The assessment basis is mainly in accordance with a series of indicators systems prepared based on the balance scorecard. The assessment for other senior executives was conducted based on the indicators in the balance scorecard prepared at year beginning and the work report at year end.
Remuneration to directors, supervisors and senior executives in the reporting period
In CNY10,000
|||||||||
|-|-|-|-|-|-|-|-|
||||||||Remuneration|
|||||||Total||
||||||Total||actually|
|||||||remuneration||
||||||remuneration||received at the|
|Names|Positions|Gender|Age|Office Status||received from||
||||||received from||end of the|
|||||||the||
||||||the Company||reporting|
|||||||shareholder||
||||||||period|
|Diao||||||||
||Chairman|Male|52|In office|0||0|
|Weicheng||||||||
|Xu|Managing|||||||
|||Male|49|In office|183.33||116.27|
|Dongsheng|Director|||||||
|Wang||||||||
||Director|Male|49|In office|0||0|
|Mingchuan||||||||
|Huang||||||||
||Director|Male|41|In office|0||0|
|Yongfeng||||||||
|Liu Aiyi|Director|Male|43|In office|0||0|
|Zhong Sijun|Director|Male|39|In office|0||0|
|Zhang|Independent|||||||
|||Male|59|In office|9||7.56|
|Hongguang|Director|||||||

|||||||||
|-|-|-|-|-|-|-|-|
|Zhang|Independent|||||||
|||Male|49|In office|9||7.56|
|Shunwen|Director|||||||
||Independent|||||||
|Wang Yan||Male|58|In office|9||7.56|
||Director|||||||
||Chairman of|||||||
||the|||||||
|Sui Yong||Male|57|In office|0||0|
||Supervisory|||||||
||Committee|||||||
|Chen Zhuo|Supervisor|Male|39|In office|98.63||72.78|
|Tang Boxue|Supervisor|Male|54|In office|86.74||64.29|
|Chen Libin|Deputy GM|Male|51|In office|150.12||106.19|
|Lu Bingqiang|Deputy GM|Male|54|In office|148.16||104.98|
|Du Xi|Deputy GM|Male|40|In office|148.29||106.54|
||Deputy GM|||||||
|Lu Wanjun|&Secretary of|Male|48|In office|120.5||89.19|
||the Board|||||||
||Chief|||||||
|Hu Xinglong||Male|51|In office|121.11||89.16|
||Accountant|||||||
|Lai Weixuan|Chairman|Male|51|Retired|0||0|
|Wang Xiaohua|Director|Female|44|Retired|0||0|
||Deputy GM &|||||||
|Li Dehua|Chief|Male|55|Retired|98.49||71.43|
||Accountant|||||||
|Li Bei|Deputy GM|Male|60|Retired|91.71||67.83|
|Fang Juan|Deputy GM|Female|56|Retired|107.81||79.73|
|Total|--|--|--|--|1,381.89|0|991.07|

 Incentive equity to directors, supervisors or/and senior executives in the reporting period
Inapplicable
IV. Change in Directors, Supervisors and Senior Executives
||||||
|-|-|-|-|-|
|Names|Titles|Types|Date|Causes|
|||||Mr. Lai resigned director and Chairman of the|
||||November 25,||
|Lai Weixuan|Chairman|Retired||Seventh Board of Directors and director member|
||||2014||
|||||of the Strategy Committee for the reason of work|
|||||Mr. Wang resigned director and the title in the|
|Wang|||February 27,||
||Director|Retired||Nomination, Remuneration and Assessment|
|Xiaohua|||2014||
|||||Committee of the Company for the reason of work|
||Deputy GM||||
|||||Mr. Li resigned the posts of the Deputy GM and|
|Li Dehua|& Chief Acc|Resigned|August 5, 2014||
|||||the Chief Accountant of the Company|
||ountant||||
|||||Mr. Li resigned the post of Deputy GM of the|
|Li Bei|Deputy GM|Resigned|August 5, 2014||
|||||Company for the reason of age.|

||||||
|-|-|-|-|-|
|||||Ms. Fang Juan resigned the post of Deputy GM of|
|Fang Juan|Deputy GM|Resigned|August 5, 2014||
|||||the Company for the reason of age.|
||Secretary of||October 23,|Mr. Chen resigned the post of the Secretary of the|
|Chen Libin||Resigned|||
||the Board||2014|Board for the reason of work|
|||||Mr. Diao was appointed as a director of the|
|||||Company at the 15th meeting of the Seventh Board|
|Diao|||December 19,|of Directors and 2014 3rd Extraordinary General|
||Chairman|Elected|||
|Weicheng|||2014|Meeting and elected the Chairman of the|
|||||Company at the 16th meeting of the Seventh Board|
|||||of Directors|
|||||Mr. Liu was appointed as a director of the|
|||||Company at the the 8th meeting of the Seventh|
|Liu Aiyi|Director|Elected|June 10, 2014||
|||||Board of Directors and 2013 Annual General|
|||||Meeting.|
|||||Mr. Zhong was appointed as a director of the|
|||||Company at the the 8th meeting of the Seventh|
|Zhong Sijun|Director|Elected|June 10, 2014||
|||||Board of Directors and 2013 Annual General|
|||||Meeting.|
|||||Mr. Du was appointed as a Deputy GM of the|
|Du Xi|Deputy GM|Elected|August 5, 2014|Company at the 11th meeting of the Seventh Board|
|||||of Directors|
|||||Mr. Lu was appointed as a Deputy GM of the|
||Deputy GM &||||
|||||Company at the 11th meeting of the Seventh Board|
|Lu Wanjun|Secretary of|Elected|August 5, 2014||
|||||of Directors and as the Secretary of the Board at|
||the Board||||
|||||the 14th meeting of the Seventh Board of Directors|
|||||Mr. Hu was appointed as the Chief Accountant of|
||Chief||||
|Hu Xinglong||Elected|August 5, 2014|the Company at the 11th meeting of the Seventh|
||Accountant||||
|||||Board of Directors.|

V. Change of the Core Team of Technology or Key Technical Personnel (other than director, supervisor or senior executive) in the Reporting Period
Inapplicable
VI. About Staff
Ended the reporting period, there were altogether 5112 employees in the Company. The composition of their education background, age structure and job structure are indicated as follows:
1. Age Structure
||||||
|-|-|-|-|-|
|Age Composition|Below 30|30 - 40|over 40|Total|
|Number of persons|3,312|1,567|665|5,544|
|Proportion %|59.74%|28.26%|12.00%|100.00%|

2. Education Background
|||||||
|-|-|-|-|-|-|
|Education backgroundcomposition|Master’s degreeor higher|Universitygraduation|Junior collegegraduation|below juniorcollege|Total|
|Number of persons|54|791|1,359|3,340|5544|
|Proportion%|0.97%|14.27%|24.51%|60.25%|100.00%|

3. Job Structure
|||||||
|-|-|-|-|-|-|
|Job composition|Management|Operation|Financial|Production|Total|
|Number|498|4,601|139|306|5,544|
|Proportion|8.98%|82.99%|2.51%|5.52%|100.00%|

4. Remuneration Policy for Staff
TheCompany’s remuneration policy is based on strategy, market, performances and job value. The Company has established a remuneration and benefit system with external competitiveness and internal fairness according to theCompany’s strategic target, ensuring the attractiveness to high quality talents of the industry, retaining the core and key talents of the Company, activating the human resource, mobilizingstaff’s enthusiasm and improving theCompany’s core competitiveness.
5. Training Program
The Company is concentrated on watch industry, insists on the principle of guiding various businesses with the brand strategy, takes a broad view of the world and has established its vision of “moulding an international brand and becoming a globalized enterprise”. While speeding up development, the Company firmly believes that “to build brand is to integrate the brand work and life style”, the core speciality of the organization and staff and the qualification of the staff as brand personnel are the key elements determining the future development. For the purpose of creating the core competitiveness based on “brand building”, meeting the strategy challenge, promoting realization of the long and short term plan, the Company determined the talent standard and qualification model based on the brand strategy by means of strategy analysis, internal and external environment analysis, talent supply analysis andemployees’ ability gap analysis, kept building a training system integrated with talent development model, improved comprehensive, multi-level, targeted and comprehensive accomplishment bearing, promoted overall and quick growth of employees and senior officers and enhanced theCompany’s core competitiveness.
Chapter 9 Corporate Governance
I. General
In the year 2014, the Company kept improving theCompany’s corporate governance structure strictly according to the PRC Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission concerning governance of listed companies, and tried to enhance construction of modern enterprise system, upgraded the level of regulatory operation of the Company. As a result, there was no discrepancy between the situation of theCompany’s corporate governance and the regulatory documents of China Securities Regulatory Commission concerning governance of listed companies.
The Company established and improved relatively standardized corporate governance structure and rules of procedures strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of Association of the Company, formed a decision-making and operation management system with theShareholders’ Meeting, the Board of Directors, the Supervisory Committee and the management of the Company as the principal structure. They implemented their respective duties according to the PRC Company Law and the Articles of Association.
The General Meeting is theCompany’s supreme organ and has the power of deciding theCompany’s operation policy and investment plan, reviewing and approving theCompany’s annual fincial budget scheme, settlement scheme, profit distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makes resolution on increase and decrease of theCompany’s registered capital, issuing bond, etc., election and replacement of directors, non-staff supervisors and decision on their remuneration and way of payment.
The Board of Directors is theCompany’s decision-making organ, takes charge of implementing the decisions made by theShareholders’ General Meeting, assumes responsibility to theShareholders’ General Meeting and reports the work to it; within the authorization from the General Meeting, decides theCompany’s external investment, acquisition and sales of assets, assets pledgement, 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 other senior executives, etc. The Board of Directors consists of nine directors, including three independent directors. The Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit Committee and Nomination, Emolument and Assessment Committee.
The Supervisory Committee is theCompany’s supervisory organ in charge of supervising the directors, managers and other senior executives in performaning duties according to the law and proposes dismissal of any director or senior executive who breaches the law, the administrative rules and regulations, the Articles of Association or the GeneralMeeting’s resolutions. The Supervisory Committee consists of three supervisors including two staff supervisors. The management assumes responsibility to the Board of Directors and the General Manager takes full responsibility for 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 coordinate the relationship of all departments.
Does there exist any difference in compliance with the corporate governance, the PRC Company Law and the relevant
provisions of CSRC.
No
Implementation of the Campaign of Corporate Governance and Preparation and Implementation of the Registration Management System for Insiders
1. Campaign of Corporate Governance
With a view to implementing the Basic Regulations of Internal Control of the Enterprises and the relevant supplementary guiding work and in accordance with the requirements of China Securities Regulatory Commission and Shenzhen Securities Regulatory Bureau, the Company formally started the basic rule-compliance project of internal control of the enterprise (hereinafter referred to as the “Internal Control Project”). In the reporting period, the Company engaged Grant Thornton Certified Public Accountants (Special General Partnership) to make independent audit of theCompany’s internal control. In the reporting period, the Company established the internal control on the business and matters which have been put in the assessment range, which has been effectively implemented and has reached the target of theCompany’s internal conrol. There exists no material defect. No significant change has taken place in the internal control resulting in substantial affect upon the assessment conclusion during the period from the base date of the internal control assessment report to the date of issuing the internal control assessment report.
In the reporting period, the Company participated in “Shenzhen Second Insider Trading Warning Education Show” organized by China Securities Regulatory Commission Shenzhen Office (CSRC Shenzhen Office) on November 7, 2014, learned the law, regulations and the relevant cases concerning insider trading, had better understanding of the specific requirements on prevention and control of the insider trading; the Company consciously established an internal control self-inspection system according to the Guide Manual for Listed Companies on Internal Audit and Self-inspection promulgated for trial implementation by CSRC Shenzhen Office and reviewed and combed the internal control; the Company carried ou the special work of making commitments and implementation on comprehensive basis called by CSRC Shenzhen Office for the purpose of protecting theinvestors’ lawful rights and interests, coordinated the combing work, reported all the commitments and the implementation and improved the consciousness on implementation of the commitments in a standard way.
2. Preparation and Implementation of the System for Administration of the Information Insiders
In order to further regulate theCompany’s inside information and theinsiders’ activity of trading of theCompany’s shares, the Company reviewed and approved the System for Administration of the Inside Information and Insiders at the 6th meeting of the Sixth Board of Directors dated October 26, 2009 according to the Company Law, the Securities Law and the Share Listing Rules of Shenzhen Stock Exchange. In the reporting period, the Company has strictly implemented the System for Administration of the Inside Information and Insiders in different activities.
II. Annual General Meeting and Extraordinary General Meetings in the Reporting Period
1. Annual General Meeting
|||||||
|-|-|-|-|-|-|
|||Description of||||
|Sessions|Meeting Date||Resolution|Disclosure date|Disclosure index|
|||Proposals||||
|||2013 Annual Report|||Announcement on|
|2013 Annual|||Reviewed and|||
||June 10, 2014|and Summary, 2013||June 10, 2014|Resolutions of 2013|
|General Meeting|||approved|||
|||Work Report of the|||Annual General|

|||
|-|-|
|Board of Directors,|Meeting|
|2013 Work Report of|(2014-018)www.cnin|
|the Supervisory|fo.com.cn|
|Committee, 2013||
|Financial Settlement||
|Report, 2013 Profit||
|Distribution||
|Proposal, Proposal||
|on Implementation||
|of Regular Related||
|Transactions in||
|2013 and Prediction||
|of Regular Related||
|Transactions in||
|2014, Proposal on||
|Application for Total||
|Bank Credit Line in||
|2014, Proposal on||
|Application for the||
|Guarantee Quota to||
|Subsidiaries in||
|2014, 2013 Work||
|Report of||
|Independent||
|Directors,||
|Proposal on||
|Nominating Director||
|Candidates,||
|Plan for Returns to||
|the Shareholders in||
|the Future Three||
|Years (2014 to||
|2016)||

2. Extraordinary General Meetings
|||||||
|-|-|-|-|-|-|
|||Description of||||
|Sessions|Meeting Date||Resolution|Disclosure date|Disclosure index|
|||Proposals||||
|||Proposal on|||Announcement on|
|||Changing to Appoint|||Resolutions of 2014|
|2014 1st||||||
|||Ruihua Certified|reviewed and||1st Extraordinary|
|Extraordinary|January 24, 2014|||January 24, 2014||
|||Public Accounants|approved||General Meeting|
|General Meeting||||||
|||(Special General|||(2014-004)|
|||Partnership) as the|||www.cninfo.com.cn|

|||||||
|-|-|-|-|-|-|
|||Company’s Auditor||||
|||for Year 2013||||
||||||Announcement on|
||||||Resolutions of 2014|
|2014 2nd||Proposal on||||
||||reviewed and||2nd Extraordinary|
|Extraordinary|November 12, 2014|Appointing by||November 12, 2014||
||||approved||General Meeting|
|General Meeting||Selection the CPAs||||
||||||(2014-033)|
||||||www.cninfo.com.cn|
|||Proposal on||||
|||Nominating Mr. Diao||||
||||||Announcement on|
|||Weicheng as||||
||||||Resolutions of 2014|
|2014 3rd||Director Candidate||||
||||reviewed and||2nd Extraordinary|
|Extraordinary|December 19, 2014|and||December 19, 2014||
||||approved||General Meeting|
|General Meeting||Proposal on||||
||||||(2014-040)|
|||Amendment of the||||
||||||www.cninfo.com.cn|
|||Articles of||||
|||Association||||

3. Request for an Extraordinary General Meeting conerning the Preference Shareholders with the Vote Recovered
Inapplicable
III. Duty Performance of Independent Directors
1. Attendance of Board Meetings and General Meetings
||||||||
|-|-|-|-|-|-|-|
|Independent Directors’ Attendance at Board Meetings|||||||
||Number of||||||
|||||||Failure to|
||Board||||||
||||Number of|Number of||personally|
||meetings||||||
|||Number of|Meetings|attendances||attend board|
|Independent|necessary to||||Number of||
|||Spot|Attended by|by||meetings|
|directors|be attended||||Absence||
|||Attendances|Communicati|representativ||successively|
||in the||||||
||||on|e||twice|
||reporting||||||
|||||||(Yes/No)|
||period||||||
|Zhang|||||||
||10|2|8|0|0|No|
|Hongguang|||||||
|Zhang Shunwen|10|1|8|1|0|No|
|Wang Yan|10|2|8|0|0|No|
|Number of general meetings|||||||
|||4|||||
|attended by independent directors|||||||

||
|-|
|as non-voting delegates|

Notes to Failure to Personally Attend Board Meetings Successively Twice
Inapplicable
2. Objection of independent directors on some relevant issues
No
3. Other Note to Duty Performance of Independent Directors
Inapplicable
IV Duty Performance of Special Committees under the Board of Directors in the Reporting Period Summary Report on Performances of the Strategy Committee of the Board of Directors
During the reporting period, the Strategy Committee performed its duties strictly according to the law and regulations, the Articles of Association and the Rules for Implementation of the Strategy Committee of the Board of Directors, continued to do research work on the strategic planning for theCompany’s long term development and supervised the Company in implementation of various strategies. The Strategy Committee held its first meeting of year 2014 on April 23, 2014. The meeting reviewed and approved the Plan for Returns to the Shareholders in the Future Three Years (2014 to 2016). The second meeting for year 2014 was held on December 3, 2014. The meeting reviewed and approved the plan for increasing capital in FIYTA (Hong Kong) Limited.
Summary Report on Performances of the Audit Committee of the Board of Directors
In accordance with China Securities Regulatory Commission, Contents and Formats for Information Disclosure by Companies that Offer Securities to the Public Guideline (No. 2): Contents and Format of Annual Reports (Revision 2012), Shenzhen Stock Exchange: Circular on Doing a Good Job in 2014 Annual Report and the Relevant Work in Listed Companies, Basic Regulations on Enterprise Internal Control, Memorandum of Information Disclosure No. 21– Information to be Disclosed in the Annual Report and theCompany’s Rules for the Work of the Audit Committee, the Audit Committee of the Company conducted overall review of theCompany’s audit work in 2014. The following is the summary of the performances of the Audit Committee and the work of Grant Thornton Certified Public Accountants (Special General Partnership) (hereinafter referred to as the “CPAs”).
1. Collecting General Information of the Company in the Report Period and Reviewing the Financial Statements Prepared by the Company and Progress of Internal Control Implementation
On January 16, 2015, the Audit Committee themanagement’s overall report on the production and operation and progress of significant events during the reporting period and reviewed 2014 Financial and Accounting Statements prepared by the Company and heard the progress of implementation of theCompany’s internal control. In its opinion, the data in the financial and accounting statements prepared by the Company basically reflected the financial position and operation results of the Company as ended at December 31, 2014, and approved to carry out the audit work for the year 2014 with the financial statements as the base and issued auditing opinion in writing. The internal control implementation work carried out by the Company has been duly carried forward according to the Basic Standards for Enterprise Internal Control and
other relevant laws and regulations. It has basically reflected theCompany’s internal control construction work ended
December 31, 2014 and approved to prepare the Self-Assessment Report on the Internal Control on this basis and carry
out the internal control audit work in 2014.
2. Decision on Overall Audit Plan
Before the CPAs started auditing, the audit committee, after consultation with the CPAs, decided the time schedule of the audit work in 2014.
3. Supervision of the Audit Work
On January 16, 2015, the CPAs formally started the audit work. During the auditing, the Audit Committee issued three Letters of Urging Audit respectively on January 16, February 20 and March 2, 2015, demanding the CPAs to complete the audit work according to the time schedule of audit for three times in succession and ensure timely disclosure of theCompany’s annual report and relevant documents.
4. PreliminaryAuditor’s Opinion after Reviewing the Financial and Accounting Statements
On March 2, 2015, 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, these financial statements truly, accurately and completely reflected the financial position and operation result of the Company ended December 31, 2014 and approved 2014 Annual Report and Summary prepared on the basis of these statements. The said internal control assessment report has truly, accurately and entirely reflected theCompany’s achievement in internal control construction ended December 31, 2014 and approved to complete the internal control assessment report and internal control audit report based on said report. Meanwhile, the audit committee demanded the CPAs to complete the audit work according to the plan as soon as possible so as to ensure the Company to disclose 2014 Annual Report as scheduled.
5. Summary Work after the Formal Report
On March 10, 2015, the CPAs completed the auditing procedures as scheduled and issued a standard unqualifiedauditor’s report and other relevant documents to the Audit Committee. The Audit Committee held 2015
1st
Meeting of the Audit Committee on the very day and concluded a resolution and submitted it to the Board of Directors for review and at the same submitted the Summary Report on the Performances of the Audit Committee and the Audit Work of the Certified Public Accountants in 2014. In the opinion of the Audit Committee, Grant Thornton Certified Public Accountants (Special General Partnership), the domestic and international auditor engaged by the Company honestly performed the duties in process of offering audit performances according to the professional principle of independence, objectiveness and fairness and did a good job in auditing 2014 Annual Accounting Statements and the internal control auditing.
6.CPAs’ Performance of Basic Principle of the Professional Ethics
(1) Independence
None of the staff from the CPAs worked for the Company; the CPAs received neither cash nor economic interest in any other form from the Company other than the statutory audit fee. There existed neither direct or indirect mutual investment between the CPAs and the Company nor close operation relationship; there existed no self-assessment on 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 professional ethics.
(2) Professional Competence
All the members of the auditing team possessed the professional knowledge and relevant professional qualification
certificates necessary for the auditing work, were competent for the auditing work and at the same time maintained necessary attention and professional cautiousness.
Summary Report on Performances of the Committees of Nomination, Remuneration and Assessment of the Board of Directors
In the reporting period, the Committees of Nomination, Remuneration and Assessment of the Board of Directors performed its functions strictly according to the law and regulations, the Articles of Association, the Rules for Implementation of the Committees of Nomination, Remuneration and Assessment of the Board of Directors. 2014
1st
meeting of the Committees of Nomination, Remuneration and Assessment held on February 27, 2014 reviewed and approved the emoluments to the senior executives in the year 2013 and the proposal on nominating the director candidates; 2014
2nd
meeting of the Committees of Nomination, Remuneration and Assessment held on August 22, 2014 reviewed and approved the proposal on change of theCompany’s partial senior executives; 2014
3rd
meeting of the Committees of Nomination, Remuneration and Assessment held on August 22, 2014 reviewed and approved the proposal on adjustment of partial members of the special committees of the Board of Directors; 2014
4th
meeting of the Committees of Nomination, Remuneration and Assessment held on October 23, 2014 reviewed and approved the proposal on change of the Secretary of the Board; 2014 5th
meeting of the Committees of Nomination, Remuneration and Assessment held on December 3, 2014 reviewed and approved the proposal on nominating Mr. Diao Weicheng as director candidate.
V. Work of the Supervisory Committee
Did the Supervisory Committee find any risk existing in performing the supervision activities in the reporting period No
The Supervisory Committee has no objection against any matters under supervision in the reporting period.
VI. Independence and Completeness in business, personnel, assets, organization and finance
The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder. The Company has complete and independent business and the ability of autonomous operation.
Business. The Company is mainly engaged in timepiece businesses and has independent production, auxiliary production system and complementary facilities, and possesses its own procurement and sales systems. There exists no competition in the same sector between the Company and its controlling shareholder.
Personnel: The Company is completely independent in organization and has sound systems in labor, personnel and salaries management. Except Mr. Lai Weixuan, the Chairman, Mr. Wang Mingchuan, Mr. Huang Yongfeng, Mr. Wu Xiaohua and Madam Wang Xiaohua, the four directors, and Mr. Sui Yong, the chairman of the Supervisory Committee, none of other senior executives takes any concurrent office in the shareholders and none of the financial staff works concurrently for any related parties.
Assets: The assets of the Company and its controlling shareholder are highly distinct. The Company enjoys the corporate ownership over its assets and the assets are completely independent from its controlling shareholder. In addition, the Company enjoys sole ownership of the Trademark FIYTA.
Organization: The Company has established its own intra-company organizations independent from the controlling shareholder. The Board, the Supervisory Committee and the other internal departments and offices work independently. There exist neither subordinate relations between the controlling shareholder/its functional departments nor doing joint office work. The controlling shareholder enjoys its rights and undertakes the corresponding obligations according to the law and has never been involved in any action which directly or indirectly interferes theCompany’s business activities surpassing the authority of the General Meeting.
Finance: The Company has established independent financial department, worked out sound and independent financial and accounting system and financial management system and independently opened bank accounts. The controlling shareholder has never interfered the Company in its financial and accounting activities.
VII. Horizontal Competitions
Inapplicable
VIII. Assessment and Incentive Mechanism for Senior Executives
The Company brought into full play and mobilized the seniorexecutives’ work enthusiasm and creativeness based on theCompany’s operating results and with reference to the average remuneration level in the trade, better improved theCompany’s operating ability and result and ensured realization of theCompany’s strategic targets. The Company worked out the Measures for Administration of Remuneration to the Senior Executives in 2009, insisted on the principle of distribution according to work and combination of power, responsibility and benefit. The major orientation was “market based”, “full amount based” and “broadband based”. Since 2007, the Company has introduced the balance scorecard as the strategic management instrument. Based on the establishment of the incentive and binding mechanism corresponding to the modern enterprise system and improvement of the corporate governance structure, the Company disintegrated theCompany’s strategy to various departments and posts by means of the balance scorecard so as to determine seniorexecutives’ performance targets and plan of action, and regularly conducted strategic review and work report assessment on quarterly basis, and decided the total remuneration and office renewal based on the assessment results and performances. The remuneration to theCompany’s senior executives is the annual salary system. The annual salary structure consists of the basic annual salary and performance based annual salary. The annual salary assessment for the GM was carried out according to the assessment methods worked out by the shareholder. The assessment basis is mainly based on a series of indicators systems prepared based on the balance scorecard, in which the performance indicators of the surplus revenue rate were the main indicators. The assessment for other senior executives was conducted based on the indicators in the balance scorecard prepared at year beginning and the work report and assessment were carried out at year end.
Chapter 10 Internal Control
I. Internal Control Construction
The Company has prepared its internal control implementation work plan according to the Circular of China Securities Regulatory Commission on the Relevant Issues Concerning Properly Handling the Pilot Work of Internal Control Regulations of Listed Companies (SHANG SHI BU HAN[2011] No. 031) and the Circular of Shenzhen Securities Regulatory Office on the Relevant Issues Concerning Properly Handling the Pilot Work of International Control Regulations of the Listed Companies in the Jurisdiction of Shenzhen([2011] No. 31).
The Company has prepared its internal control implementation work plan according to the laws, regulations and normative documents, including the Company Law, the Securities Law, the Basic Standard for Enterprise Internal Control and Guidelines for the Evaluation of Enterprise Internal Controls with consideration of theCompany’s Internal Control Manual and the requirements of its own operation management and sustainable development.
For the purpose of ensuring to smoothly carry out the work of construction of the internal control standardized system, the Company appointed the General Manager as the first responsible person in implementation of internal control, established an internal control implementation leading group with the GM as the group leader. The leading group consists of the working team and business module team. The working team and module team consisted of the carefully selected professional staff familiar with the conditions of the Company with high professional competence. They worked together to carry out the internal control construction work in the organization.
The audit department, as the leading department of the internal control regulations, was the organ in charge of carrying out the work and coordination.
Based on the internal control construction in 2013 with combination of the change of the organization structure in 2014, it also took charge of revision of the regulations and rectification of the problems concerning internal control, and carrying out work of overall assessment of the internal control.
In 2014, the Company appointed Grant Thornton Certified Public Accountants (Special General Partnership) to offer internal control consulting services for theCompany’s internal control.
II. Statement of the Board of Directors on the Responsibility of Internal Control The Board of Directors and directors hereby individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions or errors which would render any statement misleading. To establish, implement and effectively implement the internal control is the responsibility of the Board of Directors; the Supervisory Company conducts supervision over the Board of Directors in establishment and implementation of the internal control; the management is in charge of organizing and leading daily operation of theCompany’s internal control. The objective of theCompany’s internal control is: to reasonably ensure the operation in compliance with the law, safety of the assets and authenticity and completeness of the financial report and relevant information, to improve operation efficiency and result and to promote realization of the development strategy. As there exits inherent limitation in internal control, it therefore can only provide reasonable assurance for realization of the aforesaid objective.
III. Basis for Establishment of Internal Control of the Financial Report
This assessment report aims at making assessment of the effectiveness of the internal control design and operation ended December 31, 2014 in accordance with the Basic Regulatoins for Enterprise Internal Control (“the Basic Regulations”), the Guide on Application of the Enterprise Internal Control (“the Application Guide”), the Guide on Assessment of Enterprise Internal Control (“the Assessment Guide”) jointly promulgated by the five ministries and commissions of the P.R. China including the Minisry of Finance and the Guide of Shenzhen Stock Exchange for Standardized Operation of Companies Listed on the Main Board (SZSE Standardization Guide) with reference to theCompany’s internal control system, internal control manual and assessment method based on the daily supervision and specialized supervision of the international control.
IV. Self-assessment Report of the Internal Control
|||
|-|-|
|About the Significant Defects of the Internal Control Found in the Internal Control||
|Self-assessment Report in the Reporting Period||
|No significant defect of internal control was found in the reporting period.||
|Date of disclosing the internal||
|control self-assessment|March 12, 2015|
|report, full text||
|Disclosure reference of the full||
|text of the internal control|www.cninfo.com.cn|
|assessment report||

V. Internal Control Audit Report or Authentication Report
|||
|-|-|
|Review Opinions in the Internal Control Audit Report||
|In our opinion, FIYTA Holdings Limited maintained effective internal control on the financial report in all material aspect||
|according to the Basic Regulatoins for Enterprise Internal Control and the relevant provisions ended December 31,||
|2014.||
|Date of disclosing the internal||
||March 12, 2015|
|control audit report in full text||
|Disclosure reference of the full||
|text of the internal control|www.cninfo.com.cn|
|assessment report||

Has the CPAs issued a qualifiedauditor’s report of internal control.
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors Yes
VI. Establishment and Implementation of the Responsibility Investigation System for Serious Errors in the Annual Report
In order to further improve the corporate governance and standardize theCompany’s systems, the
7th
meeting of the
Seventh Board of Directors in the reporting period worked out the System for Looking into the Responsibility for Serious
Mistakes in Information Disclosure and the system has been strictly implemented. In the reporting period, no serious error
has been found in disclosure of the annual report information.
Chapter 11 Financial Report (Attached Hereinafter)
Auditors’ Report
FIYTA Holdings Ltd.
For the Year Ended 31 December 2014
Grant Thornton
CONTENTS
Auditors’ report
Consolidated and company balance sheets 1-2
Consolidated and company income statements 3
Consolidated and company cash flow statements 4
Consolidated and company statements of changes inshareholders’
5-8
equity
Notes to the financial statements 9-87
Grant Thornton
5/F Scitech Place
22 JianguomenWai Avenue Beijing 100004, China T+86 10 8566 5588 F+86 10 8566 5120 www.grantthornton.cn (English Translation for Reference Only)
Auditor’s Report
GTCSZ（2015） No.441ZA1806 To the shareholders of FIYTA Holdings Ltd.,
We have audited the accompanying financial statements of FIYTA Holdings Ltd. (―FIYTAHoldings‖), which comprise the consolidated and company balance sheets as at 31 December 2014, and the consolidated and company income statements, the consolidated and company cash flow statements and consolidated and company statements of change inshareholders’ equity for the year then ended, and notes to the financial statements.
I. Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
II.Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. Those standards require that we comply with Chinese Certified PublicAccountants’ ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to theentity’s
Grant Thornton
5/F Scitech Place
22 JianguomenWai Avenue Beijing 100004, China T+86 10 8566 5588 F+86 10 8566 5120 www.grantthornton.cn preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the accompanying financial statements of FIYTA Holdings present fairly, in all material respects, the consolidated and thecompany’s financial position of FIYTA Holdings as at 31 December 2014, and of their consolidated and thecompany’s financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises.
Grant Thornton Chinese Certified Public Accountant Su Yang
Chinese Certified Public Accountant Chen Zhifang Beijing, China 12 March 2015
Consolidated and company balance sheets
As at 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||As at 31/12/2014|||||||
|Item||Notes||||||||
|||||Consolidated||Company||Consolidated|Company|
||V. 1V. 2V. 3V. 4V. 5V. 6V. 7V. 8V. 9V. 10V. 11V. 12V. 13V. 14V. 15V. 16V. 17||116,455,070.54-6,162,768.29351,276,905.5343,054,642.06--41,525,719.272,133,791,024.32-14,421,516.432,706,687,646.4485,000.00--42,389,759.91226,091,938.89323,732,870.5851,389,263.53----35,502,525.72--149,733,566.0390,669,076.1031,500,000.00951,094,000.763,657,781,647.20||37,060,566.79--11,735,787.90---1,524,513,111.66--503,071.741,573,812,538.0985,000.00--773,189,479.91226,091,938.89117,256,223.8051,389,263.53----29,165,984.08--4,813,767.341,198,606.77-1,203,190,264.322,777,002,802.41||107,663,110.74-7,100,000.00324,457,339.1943,487,613.07--40,436,640.102,123,342,820.93-30,811,991.072,677,299,515.1085,000.00--43,237,940.12235,235,684.76306,888,964.316,608,187.55----36,168,611.72--146,542,685.5874,159,134.2932,476,867.85881,403,076.183,558,702,591.28|||

Consolidated and company balance sheets (continued)
As at 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
|||||
|-|-|-|-|
|Notes|As at 31/12/2014|||
||Consolidated|Company|Consolidated|
|V. 18V. 19V. 20V. 21V. 22V. 23V. 24V. 25V. 26V. 27V. 28V. 29V. 30V. 31V. 32V. 33|989,445,000.00--147,119,118.8112,087,368.1738,648,432.4177,602,770.0619,420,893.75-188,574,900.45-5,482,521.271,478,381,004.92139,952,425.65398,767,929.40----4,200,000.00--542,920,355.052,021,301,359.97392,767,870.00525,508,281.60--17,609,265.22-165,915,466.89566,819,577.371,633,401,930.643,078,356.591,636,480,287.233,657,781,647.20|683,000,000.00--211,339.763,484,435.9810,307,200.183,505,501.0518,139,997.63-165,507,426.74--884,155,901.3415,361,928.00398,767,929.40----4,200,000.00--418,329,857.401,302,485,758.74392,767,870.00531,163,822.70---165,915,466.89384,669,884.081,474,517,043.67-1,474,517,043.672,777,002,802.41|1,023,000,000.00--222,347,620.479,667,278.3031,173,812.1557,628,175.2619,422,859.82-38,454,934.3039,310,000.004,924,394.221,445,929,074.52173,274,950.01397,728,975.00----2,950,000.00--573,953,925.012,019,882,999.53392,767,870.00525,506,952.78--8,260,833.09-156,714,094.20469,706,600.671,536,434,684.562,384,907.191,538,819,591.753,558,702,591.28|

Head of
Legal representative:Xu
Principal in charge of accounting:Hu Xinglong accountingdepartment.:Hu
Dongsheng
Xinglong
Consolidated and company income statements
For the year ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
|||||
|-|-|-|-|
|Notes|Year ended 31/12/2014|||
||Consolidated|Company|Consolidated|
|V. 34V. 34V. 35V. 36V. 37V. 38V. 39V. 40V. 41V. 42V. 43|3,278,142,785.872,054,714,957.4523,901,881.30722,839,956.11208,452,027.58105,819,460.822,621,303.29--848,180.21-848,180.21158,945,019.1112,541,095.8670,124.761,091,494.98115,045.74170,394,619.9924,291,386.77146,103,233.22145,591,136.39512,096.83-9,354,879.56-9,348,432.13--9,348,432.13-9,348,432.13-6,447.43136,748,353.66136,242,704.26505,649.400.371|108,183,860.4530,576,403.185,072,072.03-53,365,686.4922,482,320.07441,201.26-87,893,120.21-848,180.2184,139,297.638,530,541.1457,532.85212,482.7732,482.7792,457,356.00443,629.1192,013,726.89--------92,013,726.89|3,103,496,962.221,990,125,145.7422,745,047.53649,297,842.92186,296,159.43100,268,241.558,722,671.08-1,589,198.331,589,198.33147,631,052.304,854,127.40465,627.901,008,482.2276,660.91151,476,697.4821,351,677.67130,125,019.81130,125,124.48-104.67-1,113,864.13-1,091,278.05--1,091,278.05-1,091,278.05-22,586.08129,011,155.68129,033,846.43-22,690.750.331|

Head of accounting department:
Legal representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong
Hu Xinglong
Consolidated and company cash flow statements
For the year ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
|||||
|-|-|-|-|
|Notes|Year ended 31/12/2014|||
||Consolidated|Company|Consolidated|
|V. 44V. 44V. 44V. 44V. 44V. 45V. 45|3,753,155,046.51-39,294,097.353,792,449,143.862,491,056,383.84450,944,736.29199,704,011.66361,554,381.103,503,259,512.89289,189,630.97--51,919.04--51,919.04185,725,953.70--1,575,000.00187,300,953.70-187,249,034.66--1,383,754,987.79-189,684,398.221,573,439,386.011,489,909,721.41135,784,422.03-42,248,452.40-1,667,942,595.84-94,503,209.83-220,426.687,216,959.80107,663,110.74114,880,070.54|342,112,116.63-12,452,134.93354,564,251.5621,692,373.0542,583,354.078,053,948.98137,085,829.65209,415,505.75145,148,745.811,400,000.0088,741,300.4241,000.00--90,182,300.4247,533,744.89--1,575,000.0049,108,744.8941,073,555.53--838,000,000.00-150,001,328.82988,001,328.821,050,000,000.00115,502,648.61-1,165,383.00-1,166,668,031.61-178,666,702.79-7,555,598.5527,929,968.2435,485,566.79|3,469,499,424.20-32,329,681.393,501,829,105.592,510,572,073.55397,723,297.50169,245,745.69345,240,497.933,422,781,614.6779,047,490.92--681,892.51--681,892.51118,964,925.94---118,964,925.94-118,283,033.43--1,791,109,369.63--1,791,109,369.631,669,312,002.72113,063,856.58-1,702,986.00-1,784,078,845.307,030,524.33-552,865.79-32,757,883.97140,420,994.71107,663,110.74|

Head of
Legal representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong accountingdepartment.:Hu
Xinglong
Consolidated statements of changes inshareholders’ equity
for the Year Ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan Year ended 31/12/2014
||||||||||
|-|-|-|-|-|-|-|-|-|
|Attributable to shareholders' equity of the parent company||||||||Minority interest|
|Share capital|Capital reserves|Minus:treasurystocks|Other comprehensiveincome|Specialreserves|Surplus Reserves|General risk reserve|Undistributed profit||
|392,767,870.00————-392,767,870.00-------------------392,767,870.00|525,506,952.78————-525,506,952.781,328.82-1,328.82--1,328.82-------------525,508,281.60|-————----------------------|-8,260,833.09————--8,260,833.09-9,348,432.13-9,348,432.13------------------17,609,265.22|-————----------------------|156,714,094.20————-156,714,094.209,201,372.69-----9,201,372.699,201,372.69-----------165,915,466.89|-————----------------------|469,706,600.67————-469,706,600.6797,112,976.70145,591,136.39-----48,478,159.69-9,201,372.69-39,276,787.00----------566,819,577.37|2,384,907.19————-2,384,907.19693,449.40505,649.40187,800.00187,800.00---------------3,078,356.59|

 Legal Representative: Xu Dongsheng Principal in charge of accounting:Hu Xinglong Head of accounting dept.:Hu Xinglong
Consolidated statements of changes inshareholders’ equity (continued)
for the Year Ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan Year ended 31/12/2013
||||||||||
|-|-|-|-|-|-|-|-|-|
|Attributable to shareholders' equity of the parent company||||||||Minority interest|
|Share capital|Capital reserves|Minus:treasurystocks|Othercomprehensiveincome|Special reserves|Surplus Reserves|General risk reserve|Undistributed profit||
|392,767,870.00————-392,767,870.00-------------------392,767,870.00|525,506,952.78————-525,506,952.78-------------------525,506,952.78|-————----------------------|-7,169,555.04————--7,169,555.04-1,091,278.05-1,091,278.05------------------8,260,833.09|-————----------------------|148,587,680.61————-148,587,680.618,126,413.59-----8,126,413.598,126,413.59-----------156,714,094.20|-————----------------------|386,984,676.78————-386,984,676.7882,721,923.89130,125,124.48-----47,403,200.59-8,126,413.59-39,276,787.00----------469,706,600.67|2,407,597.94————-2,407,597.94-22,690.75-22,690.75-----------------2,384,907.19|

 Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong Head of accounting department.:Hu Xinglong
Company statements of changes inshareholders’ equity
for the Year Ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan Year ended 31/12/2014
||||||||
|-|-|-|-|-|-|-|
|Share capital|Capital reserves|Minus:treasurystocks|Other comprehensiveincom|Special reserves|Surplus Reserves|Undistributed profits|
|392,767,870.00————-392,767,870.00-------------------392,767,870.00|531,162,493.88————-531,162,493.881,328.82-1,328.82--1,328.82-------------531,163,822.70|-————----------------------|-————----------------------|-————----------------------|156,714,094.20————-156,714,094.209,201,372.69-----9,201,372.699,201,372.69-----------165,915,466.89|341,134,316.88————-341,134,316.8843,535,567.2092,013,726.89-----48,478,159.69-9,201,372.69-39,276,787.00----------384,669,884.08|

Head of accounting department:Hu Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong
Xinglong
Company statements of changes inshareholders’ equity (continued)
for the Year Ended 31 December 2014
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan Year ended 31/12/2013
||||||||
|-|-|-|-|-|-|-|
|Share capital|Capital reserve|Minus:treasurystocks|Other comprehensiveincome|Special reserve|Surplus reserve|Undistributed profit|
|392,767,870.00————-392,767,870.00-------------------392,767,870.00|531,162,493.88————-531,162,493.88-------------------531,162,493.88|-————----------------------|-————----------------------|-————----------------------|148,587,680.61————-148,587,680.618,126,413.59-----8,126,413.598,126,413.59-----------156,714,094.20|307,273,381.61————-307,273,381.6133,860,935.2781,264,135.86-----47,403,200.59-8,126,413.59-39,276,787.00----------341,134,316.88|

Head of accounting department:Hu Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong
Xinglong
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Notes to the Financial Statements
I. Company information
1. Company Profile
FIYTA Holdings Ltd. (the―Company‖) was founded, under the approval of Shen Fu Ban Fu (1992) 1259 issued by the General Office of Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time Industrial Company by the promoter of China National Aero-Technology Import and Export Shenzhen Industry& Trade Center (name changed to―China National Aero-Technology Shenzhen Co.,Ltd‖ lately) on 25 December 1992, and the name changed to―Shenzhen FIYTA HoldingsLtd‖.
Pursuant to the approval of ShenRen Yin Fu Zi (1993) 070 issued by thePeople’s Bank of China Shenzhen Special Economic Zone Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi special shares (B shares) publicly on 10 March 1993. On 3 June 1993, both theCompany’s A shares and B shares were listed and traded on Shenzhen Stock Exchange pursuant to the approval of ShenZheng BanFu[1993]20 issued by Shenzhen Securities Regulatory Office and ShenZheng Shi Zi (1993)16 issued by Shenzhen Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of Shenzhen Municipal Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company") transferred 72,360,000 corporate shares (accounting 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", hereinafter referred to as "China National Aviation Group") according to share transfer agreement signed by both parties. As a result, theCompany’s controlling shareholder changed from CATIC Shenzhen Company to China National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the premise of maintaining the Company's total of 249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid 3.1 shares per 10 tradable shares to all the tradable share shareholders registered on option registration date designated by the split-share reform program. At that point, after the reform, the shares held by China National Aviation Group reduced to44.69% from52.24%.
On 29 February 2008, due to expanding the scope of business, theCompany’s corporate business license was altered from Shen Si Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen Municipal Administration for Industry and Commerce.
With the approval of China Securities Regulatory Commission (CSRC) about non-public offering of stocks of Shenzhen FIYTA HoldingsLimited‖(ZhengJianXuKe[2010]1703) and the approval of State-owned Assets Supervision and Administration Commission of the State Council (SASAC) about non-public offering of stocks of Shenzhen FIYTA HoldingsLimited‖ (SASAC(2010)430) in 2010, the Company was approved to issue not more than 50,000,000 ordinary shares (A shares) through non-public offering. After the completion of the non-public offering of stocks on 9 December 2010, theCompany’s registered capital was increased to RMB280,548,479.00 and the equity capital of the Company held by China National Aviation Group reduced to41.49%.
On 8 April 2011, at the basis of 280,,548,479 equity shares on 31 December 2010, the Company transferred 4 shares by per 10 shares from capital reserves. Total shares of the Company were increased to 392,767,870 shares after then on.
Up to 31 December 2014, the Company has accumulatively issued 392,767,870 shares in total (refer to Notes V. 29 for details).
The business scope of the Company and its subsidiaries (collectively referred to as the―Group‖) mainly includes: producing and selling of analogue quartz watches and its movements, components, various timing devices, processing and wholesaling karat gold jewelry watches (production sites are to be declared separately);
domestic commercial and material supply and distributing business (excluding goods under exclusive
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
operational rights, special control and exclusive sales); property management and leasing; import and export business of self-design, construction; import and export business (according to Shen Mao Guan Deng ZhengZi No.2007-072).The legal representative of the Company is Wu Guangquan. The residence of the Company is FIYTA Hi-Tech Building located at GaoXin Nan Yi Dao, Nanshan District, Shenzhen.
Corporate governance stucture that are established by the Company include general meeting of shareholders, board of directors, board of supervisors, audit committee, strategy committee and nomination, remuneration and evaluation committee. The Company has administration, human resources, finance, property, innovative design, strategy and information department, general office of board of directors, audit,R&D, and other functional departments.
The financial statements and notes to the financial statements have been approved by t the 17th meeting of the 7th Board of Directors of the Company on 10 March 2015.
2. Scope of consolidated financial statements
Within the reporting period, Shenzhen World Watch Center Co., Ltd, one of the subsidiaries of the Company, was deregistered. Refer to Notes VI, Change of consolidation scope, and Notes VII, Equity in other entities for more details.
II. Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises issued by the Ministry of Finance and their application guidelines, interpretations and other relevant requirements (collectively, " Accounting Standards for Business Enterprises ").Besides, the Group discloses the relevant financial information in accordance with Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports (2014 Revision)announced by China Securities Regulatory Commission.
The financial statements of the Company have been prepared on going concern basis.
The Group follows the accrual basis of accounting. The financial statements are prepared under the historical cost convention except for certain financial instruments. If impaired, the assets shall provide for impairment in accordance with the relevant regulations.
III. Significant accounting policies and accounting estimates
The Group determines the policies of depreciation of fixed asset, amortization of intangible assets, capitalized conditions ofR&D expenses and revenue recognition according to the characteristics of its production and operation. Refer to Notes III. 16, 19, 20 and 25 for specific accounting policies.
1. Representation of compliance with the Accounting Standards for Business Enterprises
The financial statements are in accordance with the requirements of the Accounting Standards for Business Enterprises, which have truly and completely presented the financial position of the consolidated and company as of 31 December 2014 and their operating results and cash flows and other relevant information for the year ended 31 December 2014
2. Accounting period
Accounting year starts on 1 January and ends on 31 December.
3. Operating Cycle
The operating cycle of the Group is 12 months.
4. Functional currency
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
The Company and its domestic subsidiaries adopt Renminbi (RMB) as functional currency.
Except for the Swiss-based subsidiary MontresChouriet SA (the―SwissCompany‖), which is a subsidiary of FIYTA (Hong Kong) Limited (the―FIYTA HongKong‖), uses Swiss Franc as the functional currency on the basis of the primiary economic environment in which the Swiss Company operates, all other subsidiaries outside of the mainland China, including HARMONY World Watches International Limited (the―World WatchesInternational)‖, a subsidiary of Shenzhen HARMONY World Watches Centre Co., Ltd (the―HARMONYCompany‖), FIYTA Hong Kong and its subsidiary Station 68 Limited ( the―Station68‖) as well as Nature Art Limited and ProTop Limited, which are special purpose vehicles controlled by Station 68, use Hong Kong Dollar (HKD) as the functional currency and their financial statements are translated into RMB when preparing the financial statements.
The currency used in preparing theGroup’s financial statements is RMB.
5. Accounting treatment for business combinations involving entities under common control and not under common control
(1) Business combinations involving entities under common control
For a business combination involving enterprises under common control, assets and liabilities that are obtained in a business combination shall be measured at the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date, except for the adjustments of different accounting policies. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or total par value of shares issued) shall be adjusted to capital reserve, if the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Business combinations involving entities under common control achieved in stages that involves multiple transactions
In the separate financial statements, the initial investment cost is the absorbingparty’s share of the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between initial investment cost and original investment carrying amount plus additional investment cost at the combination date shall be adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
In the consolidated financial statements, assets and liabilities that are obtained in a business combination shall be measured at the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date, except for the adjustments of different accounting policies. The difference between the original investment carrying amount plus additional investment cost at the combination date and the carrying amount of the net assets obtained shall be adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. The long-term equity investment of the absorbing party prior to combination, profit or loss, other comprehensive income and changes of otherowners’ equity recognized between the later of obtaining date and when the absorbing party and the absorbed party are under common ultimate control and combination date shall offset the opening retained earnings or profit or loss for the current period in the comparative statement.
(2) Business combination involving entities not under common control
For business combinations involving entities not under common control, the consideration for each combination is measured at the aggregate of the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are measured at their fair value.
Where the cost of combination exceeds theacquirer’s interest in the fair value of theacquiree’s identifiable net
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
assets, the difference is recognized as goodwill, and measured on the basis of its costs minus the accumulative impairment provisions. Where the cost of combination is less than theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognized in profit or loss for the current period after reassessment.
Business combinations involving entities not under common control achieved in stages that involves multiple transactions.
In the separate financial statements, the initial investment cost is the sum of the carrying amount of equity investment of the acquiree held prior to the acquisition date and the additional investment cost at the acquisition date. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted fot on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities.Theowners’ equity recognized as the changes of theinvestee’s otherowners’ equity except for net profit or loss, other comprehensive income and profit distribution shall be transferred to profit or loss for the current period when disposing the investment. For the previously-held equity investment which was accounted for in accordance with―Accounting Standard for Business Enterprises No.22– Financial Instruments:Recognition andMeasurement‖, the accumulated changes in fair value included in other comprehensive income shall be transferred to profit or loss for the current period upon commencement of the cost method.
In the consolidated financial statements, the cost of combination amount to the consideration paid at the acquisition date plus the fair value of equity investment of the acquiree held prior to the acquisition date. The cost of equity investment of the acquiree held prior to the acquisition date shall be re-measured at the fair value at the acquisition date, the difference between the fair value and par value shall be recognized as profit or loss for the current period. Other comprehensive income and changes of otherowners’ equity involving theacquiree’s previously-held equity except for other comprehensive income due to the movement of net liabilities or assets in theinvestee’s re-measurement defined benefit plan.
(3) Transaction costs for business combination
The intermediary and other relevant administrative expenses such as audit, legal and valuation advisory for business combinations are recognized in profit or loss when incurred. Transaction costs of equity or debt securities issued as the considerations of business combination are included in the initial recognition amounts. 6. Preparation of consolidated financial statements
(1) The scope of consolidated financial statements
The scope of consolidated financial statements shall be determined on the basis of control. Control exists when the investor has all the following: power over the investee; exposure, or rights to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of theinvestor’s returns. A subsidiary is an entity that is controlled by the Company (such as enterprises, deemed separate entities, and structured entities controlled by the enterprises).
(2) Preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company, based on the financial statements of the Company and its subsidiaries, according to other relevant information. The accounting policies and accounting periods of the subsidiaries should be in accordance with those established by the Company, all significant intercompany accounts and transactions are eliminated on consolidation.
Where a subsidiary or business has been acquired through a business combination involving enterprises under common control in the reporting period, the subsidiary and its business are included in the consolidated financial statements from when they are controlled together under the ultimate party , and operation results and cash flows are included in the consolidated income statement and consolidated cash flow statement from when they are controlled together under the ultimate party.
where a subsidiary or business has been acquired through a business combination not involving enterprises
under common control, thesubsidiary’s or business income, expenses and profits are included in the
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
consolidated income statement, and cash flows are included in the consolidated cash flow statement from the acquisition date to the end of the reporting date.
The portion of asubsidiary’s equity that is not attributable to the parent is treated as minority interests and presented in the consolidated balance sheet withinshareholders’ equity. That portion of net profit or loss of subsidiaries for the period attributable to minority interests shall be presented in the consolidated income statement below the―netprofit‖ line item as―minorityinterests‖. When the amount of loss for th current period attributable to the minorityshareholders’ portion of the opening balance ofowners’ equity of the subsidiary, the excess shall be allocated against the minority interests.
Transactions that acquire the minority interests of subsidiaries or dispose part of equity investment but not lose control of this subsidiary are accounted for equity transactions that adjust shareholders' equity attributable to the parent and minority interests to reflect the changes of equity in subsidiaries. The difference between the adjustment of minority interests and the fair value of consideration paid/received shall be adjusted to capital reserve, if the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
(3) Losing control over the investee
When an enterprise loses control over investee because of disposing part of equity investment or other reasons, the remaining part of the equity investment should be re-measured at fair value at the date when losing control over the investee; the cash received in disposal of the equity investment and the fair value of remaining part of the equity investment, deducting net assets proportion calculated by original share percentage since the acquisition date should be recorded in profit or loss for current period of disposal and the goodwill related to the subsidiary shall also be derecognised; other comprehensive income related to the equity investment in subsidiaries before disposal date shall be transferred to profit or loss for the current period of disposal.
Other comprehensive income and the movement of otherowners’ equity related to the originalsubsidiary’s equity investment shall be transferred to profit or loss for the current period of disposal. except for other comprehensive income due to the movement of net liabilities or assets in theinvestee’s re-measurement defined benefit plan.
(4) Disposing equity investment until losing control step by step
Multiple transactions resulting in a loss of control are considered as a single transaction, when any of the following conditions is satisfied:
① The transactions are entered into at the same time or in contemplation of each other;
② The transactions form a single transaction designed to achieve an overall commercial effect;
③ The occurrence of one transaction is dependent on the occurrence of at least one other transaction;④ One transaction considered on its own is not economically justified, but it is economically justified when considered together with other transactions
For multiple transactions by disposing equity investment until losing control step by step, the carrying amount of long-term equity investments related to each disposal of equity is transferred in the separate financial statements, the difference between the consideration and the carrying amount of disposed long-term equity investments shall be recognized as investment income.
In the consolidated financial statements, for disposing equity investment until losing control step by step, the measurement of remaining equity and accounting for profit or loss of disposing equity refer to the above―(3)Losing control over theinvestee‖. The difference between each consideration and the share of thesubsidary’s equity related to disposing investment before losing control:
①Belong to―a bundledtransaction‖, is recognized as other comprehensive income and is transferred to profit
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
or loss for the current period when losing control.
②Not belongto―a bundledtransaction‖, is recognized as equity transactions and capital reserve andisn’t allowed to be transferred to profit or loss for the current period when losing control.
7. Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. The Group classifies joint arrangements into joint operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement.
The Group shall recognize the following items in the relation to its interest in a joint operation, and account for them in accordance with relevant accounting standards:
A、its solely-held assets, and its share of any liabilities incurred jointly;
B、its soly-assumed liabilities, and its share of any liabilities incurred jointly;
C、its revenue from the sale of its share of the output arising from the joint operation;
D、its share of the revenue from the sale of the output by the joint operation; and
E、its soly-incurred expenses, and its share of any expenses incurred jointly.
(2)Joint ventures
A joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement.
The Group shall account for its investment in a joint venture in accordance with the requirement of long-term equity investments relating to equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily drawn on demand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency statement
(1) Foreign currency transactions
If foreign currency transactions occur, translate them into the amount of functional currency by applying the spot exchange rate at the dates of the transactions.
At the end of the period, foreign currency monetary items are translated to RMB using the spot exchange rate at the balance sheet date. Exchange differences arising from the differences between the spot exchange rate prevailing at the balance sheet date and those spot rates used on initial recognition or at the previous balance sheet date are recognized in profit or loss for the current period; foreign currency non-monetary items carried at historical cost continue to be measured at the amounts in functional currency translated using the spot exchange rates at the dates of the transactions; foreign currency non-monetary items carried at fair value are translated using the spot exchange rates at the date when the fair value was determined. Differences between
the translated amount and the original amount of functional currency are included in profit or loss for the
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
current period.
（2）Translation of foreign currency statement
At the balance sheet date, when translating the foreign currency financial statements of overseas subsidiaries, the assets and liabilities of the balance sheet are translated to RMB using the spot exchange rate at the balance sheet date; all items except for "undistributed profits" of theshareholders’ equity are translated at the spot exchange rate.
The revenue and expenses in the income statement are translated using the average exchange rate for the period.
All items of the cash flow statement are translated using the average exchange rate for the period. As an adjustment item, the impact of exchange rate changes on cash amount is reflected separately in the cash flow as "the impact of exchange rate changes on cash and cash equivalents".
Differences arising from the translation of financial statements are separately presented as the―other comprehensiveincome‖ in theshareholders’ equity of the balance sheet.
When disposing overseas operations and losing control, the―difference of translation of foreign currencystatement‖ related to the overseas operation presented inshareholders’ equity in the balance sheet shall be transferred together or as the percentage of disposing the overseas operation to profit or loss for the current period of disposal.
10. Financial instruments
Financial instruments refer to the contracts of forming enterprise financial assets and otherentities’ financial liabilities or equity instruments.
(1)Recognition and derecognition of financial instruments
A financial asset or financial liability is recognized when the Company becomes one party of financial instrument contracts.
If one of the following conditions is met, the financial assets are terminated:
①The right of the contract to receive the cash flows of financial assets terminates;
②The financial asset has been transferred, and is in accordance with the following conditions for derecognition.
If the obligations of financial liability have been discharged in total or in part, derecognize all or part of it. If the Company (debtor) makes an agreement with the creditor to replace the current financial liability of assuming new financial liability which contract provisons are different in substance, derecognize the current financial liability and meanwhile recognize as the new financial liability.
If the financial assets are traded routinely, recognize and derecognize them at the transaction date.
(2) Classification and measurement of financial assets
Financial assets are, upon initial recognition, classified into the following four categories: financial assets at fair value through profit or loss(―FVTPL‖ financial assets), held-to-maturity investments, loans and receivables, available-for-sale financial assets(―AFS‖ financial assets). Financial assets are initially recognized at fair value. In the case of financial assets at fair value through profit or loss(―FVTPL‖ financial assets), the related transaction costs are recognized in profit or loss for the current period. For other financial assets, transaction costs that are attributable to the acquisition of the financial assets are included in the initial recognition amounts.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Financial assets at fair value through profit or loss include financial assets held for trading and those designated upon initial recognition as at fair value through profit or loss. This kind of financial assets are subsequently measured at fair value, all realized and unrealized gains and losses are recognized in profit or loss for the current period.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intention and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method; gains and losses arising from derecognition, impairment or amortization is recognized in profit or loss for the current period. Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market including account receivables and other receivables (NoteIII、12). Receivables are subsequently measured at amortized cost using the effective interest method; gains and losses arising from derecognition, impairment or amortization is recognized in profit or loss for the current period.
Available-for-sale financial assets (AFS financial assets)
AFS financial assets are those non-derivative financial assets that are designated as available for sale and those financial assets in addition to those above mentioned. AFS financial assets are subsequently measured at fair value, the discount or premium are amortized using the effective interest method and recognized as interest income. The gains and losses arising from changes in fair value of AFS financial assets (other than impairment losses and foreign exchange gains and losses resulted from foreign currency monetary assets which are recognized in profit or loss for the current period) are recognized as other comprehensive income, until the financial assets are derecognized, are transferred to profit or loss for the current period. Interest income and dividends related to the AFS financial assets are recognized as profit or loss for the current period.
Equity instrument investment with no quoted price in active markets and with not reliably measured fair value, and derivative financial assets for the equity instrument and settled by paying the equity instrument are measured at cost.
(3)Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair value through profit or loss (FVTPL) or other financial liabilities. For financial liabilities not classified as at fair value through profit or loss financial liabilities, the transaction costs are recognized in the initially recognized amount.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include transaction financial liabilities and financial liabilities designated as at fair value through profit or loss in the initial recognition. Such financial liabilities are subsequently measured at fair value, all realized and unrealized gains and losses are recognized in profit or loss for the current period. Other financial liabilities
Derivative financial liabilities which are linked to equity instrument that is not quoted in an active market and its fair value cannot be reliably measured and settled by delivering the equity instrument are subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method; gains and losses arising from derecognition or amortization is recognized in profit or loss for the current period.
(4)Derivative financial instruments and embedded derivative instruments
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Derivative financial instruments of the Group are initially measured at the fair value of the date a derivative contract entered into and subsequently measured at their fair value. Derivative financial instruments of positive fair value are recognized as assets; those of negative fair value are recognized as liabilities. Any gains or losses arising from changes in fair value which do not meet the requirements of hedge accounting are directly recognized to profit or loss for the current period.
For hybrid instruments including embedded derivative instruments such as designated financial assets or liabilities measured at fair value through profit or loss that thereisn’t close relationship between embedded derivative instruments and their principal contract in the aspects of economic features and risks and is the same as the conditions fo embedded derivatives and individual instruments satisfy the definition of derivative instruments, embedded derivative instruments are separated from hybrid instruments and treated as separate derivative financial instruments. If embedded derivative instrumentsisn’t separately measured initially or subsequently at balance sheet date, hybrid instruments as a whole is designated as financial assets or liabilities measured at fair value through profit or loss.
（5）Fair value of financial instruments
Determination of fair value of financial assets and financial liabilities refers to Note III.11.
（6）Impairment of financial assets
The Company assesses the carrying amount of financial assets at each balance sheet date other than those at fair value through profit or loss, if there is objective evidence that financial assets are impaired, the Company determines the amount of impairment loss. Objective evidence of impairment of financial assets are the matters that occurred after the initial recognition of financial assets which has impact on the expected future cash flows of financial assets, and can be reliably measured by the Company.
There’s objective evidence that the financial assets are impaired including the following observable situations:① The issuer or debtor has severe financial difficulties;
② The debtor has violated terms of the contract, such as the payment of the interest or principal is default or overdue;
③ Considering economic or legal factors, the Company made concessions to a debtor in financial difficulties;④ The debtor has probably bankruptcy or other financial reorganization;
⑤ The issuer has so sever financial difficulties that financial assetscan’t continue to be traded in an active market;
⑥The cash flow of some asset in a group of financial assets can not be identified to be reduced, but after evaluating it as a whole according to the public data, the expected future cash flow of the group of financial assets since its initial recognition has definitely been reduced and measurable, including:
- The group of financial assets of the debtor’s ability to pay gradually deteriorates;
- The economy in thedebtor’s country or region appears likely to lead to the situation that the group of financial assets can not pay
⑦The adverse changes of technology, market, economic or other legal environment the debtor operates in cause investors in equity instrument may not recover the investment cost;
⑧The fair value of equity instrument declines seriously or untemporarily, such as the fair value of equity instrument at the balance sheet date is over50% less than the initial investment cost (including50%) or the period that is less than the initial investment cost lasts more than 12 months (including 12 months).
The period that is less than the initial investment cost lasts more than 12 months (including 12 months) refers
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
to that the average fair value of equity investment is less than the initial investment cost monthly for 12 months.
⑨There are other objective evidences that financial assets are impaired.
Financial asset measured at amortized cost.
Ifthere’s objective evidence that the financial assets are impaired, then the carrying amount of financial assets shall be reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred), with the reduced amount recognized to profit or loss for the current period. The present value of estimated future cash flows is carried according to the financial asset's original effective interest rate, and considers the value of collateral.
For a financial asset that is individually significant, the Company assesses the asset individually for impairment, if there is objective evidence that it has been impaired; recognize the impairment loss in profit or loss for the current period. For a financial asset that is not individually significant, the Company assesses the asset by including the asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. For an individually assessed financial asset (whether the financial asset is individually significant or not individually significant), the Company includes the asset in a group of financial assets with similar credit risk characteristics and collectively assessment for impairment. Asset for which an impairment loss is individually recognized is not included in a collective assessment of impairment.
If, after an impairment loss has been recognized on financial assets measured at amortized cost, there is objective evidence of a recovery in value of the financial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss. A reversal of an impairment loss will not result in theasset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years.
Available-for-sale financial assets
Ifthere’s objective evidence that AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized directly in other comprehensive income are reversed and charged to profit or loss for the current period. The reversed accumulated losses are the asset's initial acquisition costs after deducting amounts recovered and amortized, current fair value and impairment losses previously recognized in profit or loss.
If, in a subsequent period, the fair value of financial assets increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment losses are reversed and charged to profit or loss for the current period. The impairment losses of AFS equity instruments shall not be reversed through profit or loss.
Financial assets measured at cost
Ifthere’s objective evidence that the financial assets are impaired, the difference between the carrying amount and the present value discounted at the market rate of return on future cash flows of the similar financial assets shall be recognized as impairment loss in profit or loss. The impairment loss recognized shall no longer be reversed.
(7) Transfer of financial assets
Transfer of financial assets refers to the transference or deliverance of financial assets to the other party (the transferee) other than the issuer of financial assets.
The Group derecognizes a financial asset only if it transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; the Group should not derecognize a financial asset if it retains substantially all the risks and rewards of ownership of the financial asset.
The Group neither transfers nor retains substantially all the risks and rewards of ownership, shows as the
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
following circumstances: if the Group has forgone control over the financial assets, derecognize the financial assets and verify the assets and liabilities; if the Group retains its control of the financial asset, recognize the financial asset to the extent of its continuing involvement in the transferred financial asset and recognize an associated liability.
(8) Offset between financial assets and financial liabilities
When the Group has the legal right of offset the recognized financial assets and financial liabilities, by now is able to carry out the legal right and the Group plans to settle by net amount or meanwhile realise the financial assets and pay off financial liabilities, the amount after offsetting financial assets and financial liabilities each other is presented in the balance sheet. Besides, financial assets and financial liabilities are presented separately in the balance sheet and not allowed to offset each other.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Group measures the related assets or liabilities at fair value assuming the assets or liabilities are exchanged in an orderly transaction in the principal market; in the absence of a principal market, in the most advantageous market for the assets or liabilities.
For financial assets or financial liabilities in active markets, the Group uses the quoted prices in active markets as their fair value. Otherwise, the Group uses valuation technique to determine their fair value.
A fair value measurement of a non-financial asset takes into account a marketparticipant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and if the observable inputsaren’t available or impractical, using unobservable inputs.
Assets and liabilities measured or disclosed at fair value in the financial statements are determined which level of fair value according to the significant lowest level input to the entire measurement: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; Level 3 inputs are unobservable inputs for the asset or liability.
At the balance sheet date the Group revalues assets and liabilities continuing to be measured at fair value in the financial statements to determine whether to convert among the levels of fair value measurement.
12. Receivables
Receivables include accounts receivable and other receivables.
(1) Individually significant receivable and provision for bad and doubtful debts individually
Criteria of individually significant receivables: the carrying amount of accounts receivables of over RMB 800,000.00 and other receivables of over RMB500,000.00 are recognized as individually significant receivable. Measurement of individually recognized bad and doubtful debts provision of individually significant receivables: Receivables that are individually significant are subject to separate impairment assessment, if there is objective evidence that the impairment occurred, recognize the provision for bad and doubtful debts according to the difference between the present value of future cash flows, which is lower, and the carrying amount.
If impairment of financial asset tested individually is not established, recognize the provision of bad and
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
doubtful debts in combination.
（2）Individually insignificant receivables but provision for bad and doubtful debts individually.
Litigation funds, deterioration of customer credit receivables; Reasons for provision individually receivables that there is obvious indication that the amount is likely un-collectible.
Recognize the provision for bad and doubtful debts according to the Method of provision difference between the present value of future cash flows, which is lower, and the carrying amount.
（3）Receivables with provision for bad and doubtful debts collectively.
For individually insignificant receivables, and individually insignificant receivables which are not impaired in individual test, recognize the provision for bad and doubtful debts according to the following credit risk combination
Method of provision Type of group Basis of group for bad and doubtful debts collectively Group of ageing Ageing state Ageing analysis method I receivables such asemployee pretty cash
receivables, accounts receivable due from
subsidiaries included in consolidation scope, No need for bad debt Specific fund portfolio
accounts receivable for the sales between the last provision
date of settlement with department store and the
date of balance sheet
A. For group of ageing (and XX group), the rate of provision for bad and doubtful debts in ageing analysis method is as follows:
Percentage of provision for Percentage of provision for Aging
accounts receivable% other receivables% Within 1 year (including 1 year) 5 5
1 to 2 years 10 10
2 to 3 years 30 30
Over 3 years 50 50
B. For other groups, the description of provision for bad and doubtful debts in other methods are as follows: Name of group Description of provision method
No bad debt provision is recognized as the risk of Portfolio of specific accounts impairment does not exist according to its credit risk characteristics
Based on historical experience, theGroup’s receivables due from petty cash paid to employees, receivables due from subsidiaries of the Company and accounts receivable for the sales between the last settlement date of the same department store and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no bad debt provisions are provided for such receivables.
13. Inventories
(1) Classification
Inventory mainly includes raw material, work-in-process and finished goods.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
(2) Determination of cost
Inventories are determined at the actual cost when acquired. Costs of raw materials, work in progress, finished goods are calculated in weighted average costing (for finished goods of watches with FIYTA brand name), specific identification method (for finished goods of branded watches), and first-in-first-out method (for raw material for FIYTA watches)when issued.
（3）Recognition of the net realizable value and provision for decline in value of inventorie
Net realizable value(―NRV‖) is based on the estimated selling price deducting the estimated costs to be incurred when completed, the estimated selling expenses and related taxes amount. Recognition of the net realizable value is based on the verified evidences and considers the purpose of holding inventories and the effect of post balance sheet events. In particular:
① the NRV of inventories that are available for sale such as finished goods and materials held for trading are determined using the estimated selling price less estimated selling expenses and related taxes if the business is in the ordinary course of operation;
the NRV of materials that need to be processed are determined using estimated selling price of finished goods which is manufactured from the material less estimated cost of completion, estimated selling expenses and related taxes if the business is in the ordinary course of operation.
The Company recognizes inventory impairment provision for FIYTA brand watches based on models category.
Impairment provisions for branded watches are recognized on an item-by-item basis.
Impairment provisions for raw materials of FIYTA watches are recognized by categories based on ultimate-customer selling status of FIYTA finished watches taking into considerations of the exchangeability of the spare parts and the special usage of materials.
If the cost of closing inventory of the Company exceeds its net realizable value at balance sheet date, recognize provision for decline in value of inventories. The Company usually recognize provision for decline in value of inventories by a single inventory item. If the factors of value of inventory previously written-down have disappeared, reverse provision for decline in value of inventories in the amount originally made.
（4）Inventory system
The Group adopts perpetual inventory system
（5）Amortization method of low-value consumables and packaging material
The Groupd uses one-off amortization method when low-value consumables and packaging material are received for use.
14. Long-term equity investments
Long-term equity investments refer to equity investments where an investor has control of, or significant influence over, an investee, as well as equity investments in joint ventures. Where the Group can exercise significant influence over the investee, the investee is its associate.
(1)Recognization of investment cost
For a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be the absorbingparty’s share of the carrying amount of theowners’ equity
of the party being absorbed in the consolidated financial statements of the ultimate controlling party at
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
combination date;for a business combination not involving enterprises under common control, the initial investment cost of the long-term equity investment acquired shall be the cost of acquisition.
For a long-term equity investment acquired by paying cash, the initial investment cost shall be the actual purchase price has been paid; for a long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the fair value of the equity securities issued.
(2)Subsequent measurement and recognition of profit or loss
Where the Group is able to exercise control over an investee, the long-term equity investment shall be accounted for using the cost method; where the Group has investment in associates and operation ventures, the long-term equity investment is accounted for using the equity method.
For long-term equity investment which is accounted for using the cost method, investment income is recognized in profit or loss for the current period as the cash dividend or profit announced and distributed, except for those cash dividend or profit which have already included in the actual payment or consideration of offer when the investment was made.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds theGroup’s interest in the fair values of theinvestee’s identifiable net assets, no adjustment is made to the initial investment cost; where the initial investment cost is less than theGroup’s interest in the fair values of theinvestee’s identifiable net assets, the difference is charged to profit or loss for the current period, and the carrying amount of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group shall recognize its share of theinvestee’s net profit or losses, as well as its share of theinvestee’s other comprehensive income, as investment income or losses and other comprehensive income, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributable to the Group.TheGroup’s share of theinvestee’sowners’ equity changes,other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, shall be recognized in theGroups’ equity, and the carrying amount of the long-term equity investment shall be adjusted accordingly.The share of theinvestee’s net profit or loss for the current period is recoginised after adjusting theinvestee’s net profit in accordance with theGroup’s accounting policies and accounting period based on the fair value of the identifiable assets when the investment is made.
When the Group becomes capable of exercising joint control or significant influence (but not control) over an investee due to additional investment or other reasons, the Group shall change to the equity method and use the fair value of the previously-held equity investment, together with additional investment cost, as the initial investment cost under the equity method.Where the previously-held equity investment is classified as available–for– sale financial assets, the diffences between the fair value and carrying amount and the accumulated changes in fair value included in other comprehensive income shall be transferred to profit or loss for the current period upon commencement of the equity method.
When the Group can no longer exercise joint control of or significant influence over an investee due to partial disposal of equity investment or other reasons, the remaining equity investment shall be charged to profit or loss for the current period for the difference between the fair value and the carrying amount at the date of the loss of joint control or significant influence in accordance with Accounting Standard for Business Enterprises No.22 - Recognization and Measurement of Financial Instruments. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have bee required if the Group had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method;Other movement ofowner’s equity related to original equity investment is transferred in profit or loss for the current period. When the Group can no longer exercise control over an investee due to partial disposal of equity investment or other reasons and the remaining equity after disposal can exercise joint control of or significant influence over an investee, the remaining equity is adjusted as using equity method from acquisition under equity method; when the remaining equity can no longer exercise joint control of or significant influence over an investee, the remaining equity investment shall be charged to profit or loss for the current period for the difference between
the fair value and the carrying amount at the date of the loss of control n accordance with Accounting
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Standard for Business Enterprises No.22-Recognization and Measurement of Financial Instruments.
For the unrealized profit or loss between the Group and an associate or joint venture, the part belongs to the Group, calculated with the percentage held by the Group, should be offset, and accordingly, the Group recognizes the investment income or loss. Any losses resulting from transactions between the the Group and the investee, which are attributable to asset impairment shall not be eliminated.
For the long-term equity investments of associates and joint ventures held before January 1, 2007, if there exists equity investment debit balance related to the investment, recognize investment income or loss after deducting the equity investment debit balance in the original straight-line basis over the remaining period. (3) Basis for recognition of joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. In assessing whether an enterprise has joint control of an arrangement, the Group shall first assess whether all the parties, a group of the parties, control the arrangement collectively. All the parties, or a group of the parties, control the arrangement collectively when they must act together to direct the relevant activities. Then assess whether decisions about the relevant activities require the unanimous consent of those parties that control the arrangement collectively. When more than one combination of the parties can control an arrangement collectively, joint control does not exist. A party that holds only protective rights does not have joint control of the arrangement.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. When determining whether an investor can exercise significant influence over an investee, the effect of potential voting rights (for example, warrants, share optionsand convertible bonds) held by the investors or other parties that are currently exercisable or convertible shall be considered.
Significant influence refers to the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. When the Company, directly or indirectly through subsidiaries, owns20% of the investee (including20%) or more but less than50% of the voting shares, it has significant impact on the investee unless there is clear evidence to show that in this case the Company cannot participate in the production and business decisions of the investee, and cannot form a significant influence; when the Company owns20% (excluding) or less of the voting shares, generally itisn’t considered to have a significant impact on the investee, unless there is clear evidence to show that in this case the Company can participate in the production and business decisions of the investee so as to form a significant influence.
(4)Method of impairment testing and impairment provision
For investment of subsidiaries, associates and joint ventures, refer to Note III. 21 for theGroup’s method of asset impairment.
15. Investment property
Investment property is a property held to earn rentals or for capital appreciation or both, comprising a land use right that is leased out, a land use right held and ready to transfer after appreciation, a building that is leased out.
TheGroup’s investment property is initially measured at acquisition cost, and is depreciated or amortized on schedule in accordance with the relevant rules of fixed assets or intangible assets.
Refer to Note III. 21 for asset impairment method of investment property subsequently measured using the cost model.
Disposal consideration of sale, transfer, retirement or damage of investment property after deducting its carrying amount and related taxes amount is recognized in profit or loss for the current period.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Useful years Annual Category Residual rate%
（year） depreciation rate% Plant& buildings 20-35 5 2.7-4.8 16. Fixed asset
（1）Recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of services, for rental to others, or for administrative purposes and have useful lives more than one accounting year.
A fixed asset shall be recognized only when it is probable that economic benefits associated with the asset will flow into the enterprise and the cost of the asset can be measured reliably.
A fixed asset shall be initially measured at actual cost.
（2）Depreciation methods
The Group uses the straight line method for depreciation. Fixed assets begin to be depreciated from the state of intended use, and stop being depreciated when derecognized or classified as held for sale non-current assets. Without considering impairment provision, theGroup’s annual depreciation rates are shown as follows according to the category, expected useful lives and estimated net residual values rates:
Useful years Annual Category Residual rate%
（year） depreciationrates% Plant& buildings
20-35 5 2.7-4.8 Machinery& equipment
10 5-10 9-9.5
Motor vehicles
5 5 19
Electronic equipment
5 5 19
Others
5 5 19
Among these, fixed assets which have been impaired should deduct the cumulative amount of impairment provision to determine the depreciation rate.
（3）For impairment test and the impairment provision of fixed asset, refer to Note III. 21.
（4）The Group conduct reviews to the useful life, estimated net residual rate and depreciation method at least at each end of the accounting year.
Adjust the useful lives of fixed assets if their expected useful lives are different with the original estimates; adjust the estimated net residual values if they are different from the original estimates.
（5）Overhaul costs
The overhaul costs occurred in regular inspection of fixed assets are recognized in the cost of fixed assets if there is undoubted evidence to confirm that this part meets the recognition criteria of fixed assets, otherwise, the overhaul costs are recognized in profit or loss for the current period. Fixed assets are depreciated at the intervals of the regular overhaul.
17. Construction in progress
The cost of construction in progress is determined according to the actual expenditure incurred for the construction, including all necessary construction expenditures incurred during the construction period, borrowing costs that shall be capitalized before the construction reaches the condition for intended use and
other relevant expenses.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Construction in progress is transferred to fixed assets when the asset is ready for its intended use.
For provision for impairment of construction in progress, refer to Note III.21.
18. Borrowing cost
（1）Recognition principle of borrowing cost capitalization
For borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, they shall be capitalized and included in the cost of related assets; other borrowing costs are recognized as expenses and included in profit or loss when incurred. Capitalization of such borrowing costs can commence only when all of the following conditions are satisfied:
①Expenditures for the asset are being incurred, capital expenditure includes the expenditure in the form of cash payment, transfer of non-cash assets or the interest bearing liabilities for the purpose of acquiring or constructing assets eligible for capitalization;
②Borrowing costs are being incurred; and
③Activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalization period of borrowing costs
Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or produced become ready for their intended use or sale. The borrowing cost incurred after that is recognized as an expense in the period in which they are incurred and included in profit or loss for the current period. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally and when the interruption is for a continuous period of more than 3 months; the borrowing costs in the normally interrupted period continue to capitalize.（3）Capitalization rate of borrowing costs and calculation of capitalization amount
Interest expenses of special borrowings incurred actually for the current period less interest income from borrowings at bank or investment income from temporary investments is capitalized; capitalization amount is determined as accumulative asset expenditure of general borrowings over weighted average asset expenditure of special borrowings multiples capitalization rate of general borrowings. Capitalization rate is determined as calculating weighted average interest rate of general borrowings.
In the capitalization period, exchange differences of special borrowings in foreign currency is totally capitalized; exchange differences of general borrowings in foreign currency is recognized in profit or loss for the current period.
19. Intangible assets
Intangible assets of the Group include land use rights, software system, trademark rights etc.
The Group initially measures the intangible asset at cost, and analyzes and judges its service life when obtained. An intangible asset with a finite useful life is amortized using the method which can reflect the expected realization of economic benefits related to the asset over its expected useful life from when the asset is available for use; an intangible asset whose expected realizationcan’t be reliably determined is amortized using straight-line amortization; an intangible asset with an indefinite useful life is not amortized.
Amortization methods of an intangible asset with a finite useful life are shown as follows:
Category Useful life Note
amortization
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
method
Land use right 45-50 years straight-line method - Software system 5 years straight-line method - trademark rights 5-10 years straight-line method - For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of each financial year, if it is different from the previous estimates, adjust the previous estimates and deal with it according to changes in accounting estimates.
The Group estimates an intangible asset can no longer bring future economic benefits to the Group at the end of a period, the carrying amount of which should be reversed to profit or loss for the current period.
Refer to Note III. 21 for impairment provision method for intangible assets.
20. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase.
Expenditure on the research phase is recognized in profit or loss when incurred.
Expenditure on the development phase is capitalized only when the Group can satisfy all of the following conditions: the technical feasibility of completing the intangible asset so that it will be available for use or sale; its intention to complete the intangible asset is to use or sell it; how the intangible asset will generate economic benefits. Among other things, the Group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; its ability to measure reliably the expenditure attributable to the intangible asset during its development phase. Otherwise, it is charged to profit or loss.
The research and development projects of the Group will enter into the development stage after meeting the above conditions and passing through the technical feasibility and economic feasibility studies and the formation of the project.
Capitalized expenditure on the development phase is presented as―developmentcosts‖ in the balance sheet and shall be transferred to intangible assets when the project is completed to its intended use state.
21. Impairment of assets
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments, investment property subsequently measured at cost model, fixed assets, construction in progress, intangible assets, goodwill and related facilities, etc. (Excluding inventories, investment property measured at fair value model, deferred income tax assets and financial assets) are determined as follows:
At the balance sheet date, the Group determines whether there may be evidence of impairment, if there is any, the Group will estimate the recoverable amount for impairment, and then test for impairment.
For goodwill arising from a business combination, intangible assets with indefinite useful life and the intangible assets that have not yet ready for use are tested for impairment annually regardless of whether such evidence exists.
The recoverable amount of an asset is determined by the higher amount of fair value deducting disposal costs and net present value of future cash flows expected from the assets.
The Group estimates the recoverable amount based on individual asset; for individual asset which is difficult to estimate the recoverable amount, the recoverable amount of the asset group is determined based on the asset group involving the asset. The identification of the asset group is based on whether the cash flow generated
from the asset group is independent of the major cash inflows from other assets or asset groups.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
When the asset or asset group's recoverable amount is lower than its carrying amount, the Group reduces its carrying amount to its recoverable amount, the reduced amount is included in profit or loss, while the provision for impairment of assets is recognized.
For tests of goodwill impairment, the carrying amount of goodwill arising from a business combination shall be amortized to the related asset group at reasonable method; that which is difficult to be amortized to the related asset group shall be amortized to the group of asset groups. Related asset group or group of asset groups is asset group or group of asset groups which can benefit from synergies of a business combination and is not greater than the reportable segment of the Group.
When testing impairment, if asset group or group of asset groups relating to goodwill exists evidence of impairment, first of all, the Group shall conduct impairment testing for asset group or group of asset groups which does not include goodwill, and recognize corresponding impairment losses. Then asset group or group of asset groups which includes goodwill shall be conducted impairment testing and compare its carrying amount and recoverable amounts. If the recoverable amount is less than the carrying amount, then recognize the impairment loss of goodwill.
Once impairment loss is recognized, itcan’t be reversed in subsequent accounting periods.
22. Long-term deferred expenses
Long-term unamortized expenses occurred shall be priced at actual cost and averagely amortized during the predicted benefit period. The long-term unamortized expenses that would not benefit the future accounting periods, the amortization value shall be fully recorded in current profits and losses.
23. Employee benefits
（1）Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided to theGroup’s spouse, children, dependants, family members of deceased employees, or other beneficiaries are also employee benefits.
According to liquidity employee benefits is presented as―employee benefitspayable‖ and―long-term employee benefitspayable‖ on the balance sheet.
（2）Short-term employee benefit
The Group shall recognize employee wages or salaries incurred, bonus, social security contributions such as premiums or contributions on medical insurance, work injury insurance and maternity insurance and housing funds as liabilities through profit or loss or related cost of assets for the financial year in which the employees render the related services. If the liability is not expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services and have significant financial effects, it shall be measured at the discounted value.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate fund and will have no obligation to pay further contributions. Defined benefit plans are post-employment benefit plans other than defined contribution plans.
Defined contribution plans
Defined contribution plans include primary endowment insurance and unemployment insurance.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
The Group shall recognize, in the accounting period in which an employee provides service, the contribution payable to a defined contribution plan as a liability, with a corresponding charge to the profit or loss for the current period or the cost of a relevant asset.
For defined benefit plans, independent actuaries shall actuarial value at the balance sheet date to determine the cost of rendering welfare under estimated accumulated welfare unit method. The Group shall recognize the following components of employee benefits cost arising form defined benefit plan:
①service cost, comprising current service cost, past service cost and any gain or loss on settlement. Current service cost is the increase in the present value of the defined benefit plan obligation resulting from employee service in the current period. Past service cost is the increase or decrease in the present value of the defined benefit plan obligation for employee service in prior periods, resulting from a plan amendment.
② net interest on the net defined benefit plan liabilities(asset), including interest income on plan assets, interest cost on the defined benefit plan obligation and interest on the effect of the asset ceiling.
③ changes as a result of remeasurement of the net defined benefit liability(asset).
Item①anditem② above should berecognized in profit or loss for the current period unless another Accounting Standard requires or permits the inclusion of the employee benefit costs in the cost of assets.Item③ shall be recognized in other comprehensive income and shall not reclassified to profit or loss in a subsequent period.However, the Group may transfer those amounts recognized in other comprehensive income within equity.
(4) Termination benefits
The group which provides termination benefits to employees shall recognize an employee benefits liability for termination benefits, with a corresponding charge to the profit or loss for the current period, at the earlier of the following dates: When the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; When the Group recognizes costs or expenses related to a restructuring that involves the payment of termination benefits.
For retirement plans within the Group and economic compensation before the formal retirement date attributable to termination benefits, the salaries to pay retirement within the Group and social securities is recognized one-off in profit or loss for the current period between theemployees’ stop rendering service and formal retirement. Economic compensation after formal retirement date (such as formal endowment insurance) shall be accounted for as post-employment benefits.
(5) Other long-term employee benefits
When other long-term employee benefits provided by the Group to the employees satisfied the conditions for classifying as a defined contribution plan, those benefits shall be accounted for in accordance with the above requirements relating to defined contribution plan, but the movement of net liabilities or assets in theinvestee’s re-measurement defined benefit plan in the cost of relevant employee benefits shall be recognized in profit or loss for the current period or the relevant cost of assets.
24. Provisions
An obligation for additional losses of investees related to a contingency is recognized as a provision when all of the following conditions are satisfied:
(1) The obligation is a present obligation of the Group;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be measured reliably.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Provisions are initially measured at the best estimate of the payment to settle the associated obligations and consider the relevant risk, uncertainty and time value of money. If the impact of time value of money is significant, the best estimate is determined as its present value of future cash outflow. The Group reviews the carrying amount of provisions at the balance sheet date and adjusts the carrying amount to reflect the best estimate.
If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and the compensated amount can be definitely received, it is recognized separated as asset. The compensated amount shall not be greater than the carrying amount of the predictive liability.
25. Revenue
（1）General
①Sale of goods
Revenue from the sale of goods is recognized only when all of the following conditions are satisfied: the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, the Group retains neither continuing managerial involvement nor effective control over the goods sold, and related income has been achieved or evidences of receivable have been obtained, and the associated costs can be measured reliably.
②Providing of services
Where the outcome of a transaction involving the providing of services can be estimated reliably, at the end of the period, revenue associated with the transaction is recognized using the percentage of completion method. The stage of completion of a transaction involving the providing of services is determined according to the proportion of the services performed to the total services to be performed.
The outcome of a transaction involving the providing of services can be estimated reliably only when all of the following conditions can be satisfied at the same time:
A. The amount of revenue can be measured reliably;
B. The associated economic benefits are likely to flow into the enterprise;
C. The stage of completion of the transaction can be measured reliably;
D. The costs incurred and to be incurred in the transaction can be measured reliably.
If the outcome of a transaction involving the providing of servicescan’t be estimated reliably, the revenue of providing of services is recognized at the service cost that incurred and is estimated to obtain compensation and the service cost incurred is recognized in profit or loss for the current period. If the service cost incurred is estimated to obtain compensation, revenueisn’t recognized.
③Transfer of the right to use assets
The Group will recognize revenue when the economic benefits related to transfer of the right to use assets can flow in and the amount of revenue can be measured reliably.
④Interest income
The interest income shall be calculated based on the tenure of theGroup’s monetary funds used by others and the actual interest rates used.
⑤Revenue from property leasing
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
The amount of revenue from property leasing are recognized when the rentals are collected or evidence of receipt of payments are obtained in accordance with the tenure (consider rental-free period, if any) and rental stated in the leasing contract or agreement.
（2）Detailed method of revenue recognition
The watches sold by the Group includes two types, one is the self-manufactured FIYTA watch, the sales of which is managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a subsidiary of the Company. The other is brand watches, the sales of which are controlled by HARMONY Company, a subsidiary of the Company, and we act as agent Regarding to sales modes, a small portion of the sales of self-manufactured FIYTA watches is sold through direct sales to customer and consignment sales while most self-manufactured FIYTA watches and brand watches under agent are under two sales modes, namely exclusive shop and shop-in-shop. Detailed method of revenue recognition as follows:
A. Direct sales to the customers
Under direct sales to the customers mode, the Group delivers products to customers and recognizes sales income after customers check and accept.
B. Exclusive shop
Under exclusive shop mode, the Group delivers products to customers and recognizes sales income after customers check, accept and pay.
C. Shop-in-shop
Under shop-in-shop mode, the Group delivers products to customers, sales staff issues notes to retail customers and recognizes sales income after customers check and accept and department store collects the payment from the customers.
D. Consignment sales
Under consignment sales mode, the Group receives the detail of the sales list from consignee and recognizes revenue while issuing invoice to distributors.
26. Government grants
A government grant is recognized only when the Group can comply with the conditions attaching to the grant and the Group can receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. Where there is undoubted evidence that the Group can comply with the conditions attaching to the grants and the Group will receive the grants, they can be measured in accordance with the receivable amount; otherwise, they shall be measured according to the amount actually received.
A government grant related to an asset is a grant obtained by the Group used for purchase or construction, or forming the long-term assets by other ways. Otherwise, the government grant is treated as a government grant related to income.
A government grant related to an asset value that the government document does not specify the grantee and can form the long-term asset is treated as a government grant related to an asset. Otherwise, the government grant is treated as a government grant related to income.If it is difficult to distinguish, the government grant as a whole is treated as a government grant related to income.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset. For a government grant related to income, if the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or
loss for the current period; if the grant is a compensation for related expenses or losses to be incurred in
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
subsequent periods, the grant is recognized as deferred income, and then recognized in profit or loss over the periods in which the costs are recognized. Government grants measured at nominal amounts are directly recognized in profit or loss for the period.
For repayment of a government grant already recognized, if there is related deferred income, the repayment is offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for the period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for the period.
27. Deferred tax assets and deferred tax liabilities
Tax expense comprises current tax expense and deferred tax expense. Current tax and deferred tax are included in profit or loss for the current period as tax expense, except for deferred tax related to transactions or events that are directly recognized inshareholders’ equity which are recognized directly inshareholders’ equity, and deferred tax arising from a business combination, which is adjusted against the carrying amount of goodwill. Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base are recognized as deferred tax using the balance sheet liability method.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in the following transactions:
(1)The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transaction occurs;
(2)The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, and the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The Group recognizes a deferred tax asset for the carry forward of deductible temporary differences, deductible losses and tax credits to subsequent periods, to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, deductible losses and tax credits can be utilized, except for those incurred in the following transactions:
(1)The transaction is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) when the transaction occurs;
(2)The deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, the corresponding deferred tax asset is recognized when both of the following conditions are satisfied: it is probable that the temporary difference will reverse in the foreseeable future, it is probable that taxable profits will be available in the future, against which the temporary difference can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, and their tax effect is reflected.
At the balance sheet date, the Group reviews the carrying amount of a deferred tax asset. If it is probable that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
28. Operating leases and finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incidental to ownership of an asset. An operating lease is a lease other than a finance lease.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
(1) As lessor
In finance leases, at the beginning date of lease period, the Group will recognize the sum of minimum lease collection and initial direct costs as the recorded value of finance leases receivable and meanwhile is recorded as unguaranteed residual value; the difference between the sum of minimum lease collection, initial direct costs and unguaranteed residual value and their present value is recorded as unrecognized financing charges. Unrecognized financing charges are measured at amortized cost using the effective interest method in the periods of leasing and recognized in financing charges for the current period.
Lease from operating leases is recognized in profit or loss on a straight-line basis over the lease term. The initial direct costs incurred are recognized in profit or loss for the current period.
(2) As lessee
In finance leases, at the beginning date of lease period, the Group will recognize the lower of the fair value of leased asset of the beginning date of lease period and the present value of minimum lease payment as the recorded value of the leased asset, their difference is recorded as unrecognized financing charges. Initial direct costs are recognized in leasedassets’ value. Unrecognized financing charges are measured at amortized cost using the effective interest method in the periods of leasing and recognized in financing charges for the current period. The Group depreciates the leased assets by adopting the depreciation policy consistent with self-owned fixed assets.
Lease from operating leases is recognized in the cost of relevant assets or profit or loss on a straight-line basis over the lease term. The initial direct costs incurred are recognized in profit or loss for the current period 29. Critical accounting judgments and estimates
The Group gives continuous assessment of the reasonable expectations of future events and the critical accounting estimates and key assumptions based on its historical experience and other factors.
The critical accounting estimates and key assumptions that are likely to lead to significant adjusted risks of the carrying amount of assets and liabilities for the next financial year are listed as follows:
（1）Bad debt provision
The allowance method is adopted by the Group to account for losses on bad debts for receivables. Impairment of accounts receivable is made based on estimation of its recoverability, which requires the management to make judgments and estimates. The difference between the actual outcome and the estimates will have effects on the carrying amounts of accounts receivable and on provision or reversal of the provision for bad debts of the accounting period in which the estimates will be changed.
（2）Iinventory provision for branded watches
For the brand watches through distribution channel with stock aging of over 3 years, theGroup’s management believes it is with an up going trend for its price and the sales of branded watches is promising in the future. TheGroup’s management checked the branded watches for its NRV at the end of the accounting period, and believed that the full amount of value of branded watches can be recovered even in the case that the stock aging of the branded watches increase. If there is any evidence indicated that the NRV is lower than its carrying amount, adjustments will be made in the period when such indicators appear. Impairment to branded watches requires the management to make judgements and estimation on the basis of obtaining reliable evidences and taking consideration of the intention of holding the branded watches and events after the balance sheet date. The difference between actual outcome and the previous estimation will affect the carrying amount of the inventory and recognizing or reversal of inventory impairment provision.
TheGroup’s management believes the method of recognizing and reviewing impairment provision for branded watches is appropriate.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
（3）Impairment provision for non-current non-financial assets
At the balance sheet date, the Group judges whether there are indicators of impairment for non-current assets other than financial assets. For an intangible asset with an indefinite useful life except for annually impairment test, an impairment test will be conducted if there are any indicators of impairment occur. For non-current assets other than financial assets, an impairment test shall be made if there are evidences indicating the carrying amounts cannot be recovered in full amount.
An asset or asset group is impaired when its carrying amount is higher than its recoverable amount (i.e. the higher of its fair value less the disposal expenses and the present value of the estimated future cash flows). The net amount of fair value less the disposal expenses are determined with reference to the quoted price of similar assets in a sales agreement in anarm’s length transaction or an observable market price less incremental costs directly attributable to disposal of the asset.
When estimating the present value of future cash flows, significant judgments are involved to the production output, selling price, relevant business costs of the asset (or asset group) and the discount rate adopted in calculating the present value. In estimating the recoverable amount, the Group will adopt all information available, such as forecasts for the production output, the selling price and relevant business costs, which are made according to reasonable and supportive assumptions.
The Group conducts impairment test to goodwill at least once a year. This requires estimating the present value of future cash flows of asset group or combination of asset group to which goodwill has been allocated. In estimating the present value of future cash flows, the Group needs estimate future cash flows generated from the asset group or the combination of asset groups and choose appropriate discount rates.
（4）Depreciation and amortization
Taking the residual value into consideration, an investment property, fixed asset and intangible asset are depreciated or amortized on a straight-line basis over its useful life. The Group reviews the useful life periodically to determine the amount of depreciation or amortization which shall be recognized in each accounting period. The useful life is determined according to historical experience of similar assets and technological renovation estimated. The amount of depreciation or amortization shall be adjusted in future accounting periods if there are material changes in estimates made before.
（5）Deferred income tax asset
A deferred tax asset shall be recognized for the unused deductible losses to the extent that it is probable that future taxable profit will be available against which the deductible losses can be utilized. Taking the taxation planning into consideration, the management of the Group is required to make significant amount of judgments to estimate the time and the amount of future taxable profit in order to determine the amount of deferred income tax assets to be recognized.
（6）Corporate income tax
For some transactions in theGroup’s ordinary course of business, uncertainties exist in their tax treatment and calculation. An approval from the tax authority is needed to determine whether an item is deductible before tax. If the final confirmation from the tax authority differs with the original estimation, the difference will have effects on the current income tax and deferred income tax of the period in which the final confirmation is made by the tax authority.
（7）After-sale quality warranty
The Group has the obligation to provide warrant to the quality of goods sold, and is responsible for damages arising from the repair and replacement due to defective goods. The Group estimates and draws related provision on its after-sale quality warranty commitment to customers with respect to the goods sold. In the case that the contingent event becomes a current obligation and performance of the current obligation may be
very likely to cause economic benefit flow out of the Group, the Group recognizes provision based on the best
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
estimates to be spent for fulfilling the related current obligation. Otherwise, if the event does not become a current obligation, no predictions needed. In the course of judgment, the Group needs to consider the recent maintenance data which may not be likely to reflect the future maintenance situations. Any increase or reduction of the provision may possibly affect the profit or loss in the future year.
30. Changes in significant accounting policies and accounting estimates
（1）Change of important accounting policies
During January 2014 and July 2014 Ministry of Finance announced Accounting Standard for Business Enterprises No.39– Fair Value Measurement (hereinafter referred to as―ASBENo.39‖), Accounting Standard for Business Enterprises No.40– Joint Arrangement (hereinafter referred to as―ASBENo.40‖), Accounting Standard for Business Enterprises No.41– Disclosure of Interest in Other Entities(hereinafter referred to as―ASBENo.41‖), Accounting Standard for Business EnterprisesNo.2– Long-term Equity Investments (hereinafter referred to as―ASBENo.2‖), Accounting Standard for Business Enterprises No.9– Employee Benefits (hereinafter referred to as―ASBENo.9‖), Accounting Standard for Business Enterprises No.30– Presentation of Financial Statements (hereinafter referred to as―ASBENo.30‖), Accounting Standard for Business Enterprises No.33– Consolidated Financial Statements (hereinafter referred to as―ASBENo.33‖) and Accounting Standard for Business Enterprises No.37– Presentation of Financial Instrument (hereinafter referred to as―ASBENo.37‖). Except that ASBE No.37 is used in the year 2014 and subsequent financial years, the above standards become effective as from July 1, 2014.
Except the following events, other events have insignificant effects due to changes in accounting policies. Line Amount Content and reason of change of accounting Approval
item
Amount
influenced in 2014 policies procedure influenced in 2013
affected
In accordance with the requirements of ASBE Available-f
No.2 : or-sale
A、When the Groupisn’ t capable of exercising financial 85,000.00 85,000.00 control, joint control or significant influence and Approved by assets
has equity investment of no quoted price in active the board of
markets and its fair valueisn’t measured reliably , it directors
shall be accounted for in accordance with ASBE Long-term -85,000.00 -85,000.00 No.22- Financial Instruments: Recognisation and equity
Measurement. investment
IV. Taxation
1. Types of taxes and tax rates
Type of taxes Tax base Statutory taxrate% VAT Taxable income 17 Consumption tax Import or produce high-class watches 20 Business tax Taxable income 5 Urban maintenance and construction
Turnover tax payable 7 tax
Educational surcharges Turnover tax payable 3（1）Corporate income tax
Name of taxpayer Income taxrate% TheCompany（Note①②）
25 HARMONYCompany（Note①）
25
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company
15（Note②③）
FIYTA HongKong（Note⑤）
16.5 Station68（Note⑤）
16.5 Nature ArtLimited（Note⑤）
16.5 ProtopLimited（Note⑤）
16.5 World WatchesInternational（Note⑤）
16.5 Shenzhen FIYTA Technology Development Co., Ltd (TechnologyCompany)（Note②
15④）
Shenzhen Xiangji Commercial& Trade Co., Ltd (TradingCompany)（Note⑥）
25 Beijing Henglianda Watch Center Co., Ltd (HengliandaCompany)（Note⑥）
25 Kunming Lishan Department Store Co., Ltd. (Lishan DepartmentStore)（Note⑥）
25 Harbin World Watches Distribution Co., Ltd. (HarbinCompany)（Note⑥）
25 Shenzhen Harmony Culture Communication Co., Ltd (Culture Company)（Note⑥）
25 Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit ShenzhenCompany)（Note
25⑥）
FIYTA Sales Co., Ltd (SalesCompany)（Note①⑥）
25 Liaoning Hengdarui Commercial& Trade Co., Ltd (HengdaruiCompany)（Note⑥）
25 SwissCompany（Note⑦）
30 Note①: According to the regulations stated in GuoShuiFa (2008) No. 28,―Interim Administration Method for Levy of Corporate Income Tax to Enterprise that OperatesCross-regionally‖, the head office of the Company and its branch offices, the head office of HARMONY Company and its branch offices adopt tax submission method of―unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and adjustment by financeauthorities‖ starting from 1 January 2008.50% is shared and prepaid by branches and50% is prepaid by the headquarters.
Note②: According to Notice of―Pre-tax Deduction of Enterprise Research and Development Expenses(Interim)‖, GuoShui FA (2008) No. 116 issued by State Administration of Taxation on 10 Dec. 2008, research and development expenses, which are charged to profit or loss instead of being capitalized as intangible assets, that incurred by the Company and the Manufacture Company for developing new technology, new product and new technique can be deducted by50% extra on top of actual expensed charged in profit or loss.
Note③: According to―Notice of TaxAffair‖, Shen Di Shui Nan BeiZi (2013) No. 203 issued by Shenzhen Nanshan Local Taxation Bureau, the company applied for―Reduction and Exemption in Corporate Income Tax Rate for High and New Technology Enterprises that Require Key Support from theState‖. The reduction and exemption period is from January 1, 2012 to December 31, 2014.
Note④: According to ShenGuoShuiBao Xi GaoXinNian Du Bei (2014) No. 0027―Notice to Acceptance of Annual Information Filing of High-tech Enterprises―issued by Xixiang Tax Sub Bureau of National Taxation Bureau of Baoan District of Shenzhen, the Company enjoys the―income tax rate exclusion of high-tech enterprises key supported by thestate‖. Note⑤: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is16.50% this year Note⑥: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is25% for residential enterprises since 1 January 2008.
Note⑦: The tax rate of30% is applicable for Swiss Company as it registered in Switzerland.
（2）Property tax
In accordance with Article 5 of―Notice to Publish―Reply to Issues Related to Property Tax and Vehicle and Vessel UsageTax‖‖,
Shen Di ShuiFa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased out by manufacturing or business
entity are taxed at1.2% on the bases of70% of the original cost of the property.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Properties of the Group that situated in Shenzhen are taxed according to this notice. Properties situated in other cities are taxed according to local regulations.
V. Notes to main items of consolidated financial statements
1. Cash and bank balances
Item 31/12/2014 31/12/2013
Foreign currency Exchange RMB Foreign currency Exchange RMB amount rate equivalent amount rate equivalent Cash onhand： -- -- 338,694.81 -- -- 487,926.67 -- -- 323,007.58 -- -- 422,048.31 RMB
698.00 6.1190 4,271.06 598.00 6.0969 3,645.95 USD
11,252.83 0.7889 8,877.36 4,697.33 0.7862 3,693.04 HKD
24.45 7.4556 182.29 5,587.20 8.4189 47,038.08 EUR
375.75 6.2715 2,356.52 1,683.05 6.8336 11,501.29 CHF
-- -- 114,319,146.38 -- -- 107,168,563.21 Bank deposit::
-- -- 96,108,985.12 -- -- 95,824,234.81 RMB
196,091.57 6.1190 1,199,885.01 213,460.48 6.0969 1,301,410.16 USD
13,272,713.21 0.7889 10,470,753.04 9,135,662.45 0.7862 7,182,542.68 HKD
1,042,736.70 6.2715 6,539,523.21 418,575.21 6.8336 2,860,375.56 CHF
Other monetary
-- -- 1,797,229.35 -- -- 6,620.86 fund:
-- -- 1,797,229.35 -- -- 6,620.86 RMB
Total 116,455,070.54 107,663,110.74 Amount of RMB1,575,000.00 in other monetary funds is the security deposit with Shenzhen Center Branch of Agricultural Bank of China for issuing of irrevocable letter of guarantee.
2. Notes receivable
Types 31/12/2014 31/12/2013 5,162,768.29 100,000.00 Bank acceptance bills
1,000,000.00 7,000,000.00 Trade acceptance bills
Total 6,162,768.29 7,100,000.00（1）There is no pledge of notes receivable at the end of the period.
（2）There is no endorsed or discounted notes receivable that is not yet due at the end of the period.
（3）There is no notes transferred to receivables due toissuer’s default at the end of the period.
3. Accounts receivable
（1）Accounts receivables disclosed by types:
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
31/12/2014
Types
Provision for bad Provision
Amount % Net amount and doubtful debts Percentage%
Receivables that are
individually significant in
amount and provided for bad
- - - - - debt separately
Receivables provided for bad
debt by portfolio:
Including: Portfolio based on
165,747,769.87 46.05 8,663,644.67 5.23 157,084,125.20 aging of receivables
Specific receivables 194,192,780.33 53.95 194,192,780.33 - -
Subtotal 359,940,550.20 100.00 8,663,644.67 2.41 351,276,905.53 Receivables that are
individually insignificant in
amount but provided for bad - - - - - debt separately
Total 359,940,550.20 100.00 8,663,644.67 2.41 351,276,905.53（Continued）
31/12/2013
Types
Provision for bad Provision
Amount % Net amount and doubtful debts Percentage%
Receivables that are
individually significant in
amount and provided for bad - - - - - debt separately
Receivables provided for bad
debt by portfolio:
Including: Portfolio based on
143,086,026.61 43.09 7,193,141.49 5.03 135,892,885.12 aging of receivables
Specific receivables 188,564,454.07 56.79 - - 188,564,454.07 Subtotal 331,650,480.68 99.88 7,193,141.49 2.17 324,457,339.19 Receivables that are
individually insignificant in
401,267.10 0.12 401,267.10 100.00 - amount but provided for bad
debt separately
Total 332,051,747.78 100.00 7,594,408.59 2.29 324,457,339.19 Note:
① Accounts receivable that are provided for bad debt based on aging analysis in aging portfolio:
31/12/2014
Aging
Provision for bad and
Amount % Provisionrate% Net amount doubtful debts
162,924,972.23 98.30 8,146,248.60 5.00 154,778,723.63 Within 1 year
1,647,216.14 0.99 164,721.62 10.00 1,482,494.52 1 to 2 years
1,175,581.50 0.71 352,674.45 30.00 822,907.05
2 to 3 years
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
- - - - - Over 3 years
Total 165,747,769.87 100.00 8,663,644.67 5.23 157,084,125.20 Continued:
31/12/2013
Aging Provision for bad
Amount % and doubtful Net amount Provision rate%
debts
140,672,904.40 98.31 6,951,829.27 5.00 133,721,075.13 Within 1 year
2,413,122.21 1.69 241,312.22 10.00 2,171,809.99 1 to 2 years
- - - - - 2 to 3 years
- - - - - Over 3 years
Total 143,086,026.61 100.00 7,193,141.49 5.03 135,892,885.12② Among the portfolio, accounts receivable that are provided for bad debt using other method
Name of portfolio Carrying amount Bad debt provision Provision Percentage% Portfolio of specific
194,192,780.33 - - accounts
（2）Bad debt provision accrual, received or reversed in current period
Bad debt provision accrued is RMB1,375,436.79 in current period. There was no received or reversed bad debt provision in current period.
（3）Accounts receivable actually written off in current period
Item Written-off amounts Accounts receivable actually written off 306,839.09（4）Accounts receivable due from the top five debtors of the Group are as follows:
Total accounts receivable due from the top five debtors of the Group as at 31/12/2014 is RMB32,471,220.99, accounting for9.02% of the total accounts receivable as at 31/12/2014 and the total provision for bad and doubtful debts made as at 31/12/2014 is RMB1,623,561.05.
4. Prepayments
（1）The ageing analysis of prepayments is as follows:
31/12/2014 31/12/2013
Aging
Amount % Amount % 42,177,990.15 97.97 39,385,528.82 90.57 within 1 year
225,856.85 0.52 3,501,516.25 8.05 1 to 2 years
103,427.06 0.24 143,958.00 0.33 2 to 3 years
547,368.00 1.27 456,610.00 1.05 over 3 years
Total 43,054,642.06 100.00 43,487,613.07 100.00
（2）The top five prepayments are as follows:
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Total prepayments due from the top five debtors of the Group as at 31/12/2014 is 24,044,169.94 RMBand accounts for55.85% of the total prepayments as at 31/12/2014.
5. Other receivables
（1）Other receivables disclosed by categories
31/12/2014
Category Provision for
Provision
Amount % bad and Net amount Percentage%
doubtful debts
Other receivables that individually
significant in amount and provided
- - - - - for bad debt separately
Other receivables provided for bad
debt by portfolio
Including: Portfolio of aging 33,466,574.93 75.29 2,803,647.28 8.38 30,662,927.65 Portfolio of specific
10,862,791.62 24.44 - - 10,862,791.62 accounts
Subtotal of portfolio 44,329,366.55 99.73 2,803,647.28 6.32 41,525,719.27 Other receivables that individually
insignificant in amount but
120,000.00 0.27 120,000.00 100.00 - provided for bad debt separately
Total 44,449,366.55 100.00 2,923,647.28 6.58 41,525,719.27（Continued）
As at 31/12/2013
Category Provision for
Provision
Amount % bad and Net amount Percentage%
doubtful debts
Other receivables that individually
significant in amount and provided
- - - - - for bad debt separately
Other receivables provided for bad
debt by portfolio
Including: Portfolio of aging 29,759,918.66 70.09 2,023,735.67 6.80 27,736,182.99 Portfolio of specific
12,700,457.11 29.91 - - 12,700,457.11 accounts
Subtotal of portfolio 42,460,375.77 100.00 2,023,735.67 4.77 40,436,640.10 Other receivables that individually
insignificant in amount but
- - - - - provided for bad debt separately
Total 42,460,375.77 100.00 2,023,735.67 4.77 40,436,640.10 Note:
① Among the portfolio, other receivables that are provided for bad debt based on aging analysis
Aging 31/12/2014
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Provision for bad and
Amount % Provision rate% Net amount doubtful debts
27,670,158.67 82.68 1,383,509.74 5 26,286,648.93 Within 1 year
3,271,785.31 9.78 327,178.52 10 2,944,606.79 1 to 2 years
846,782.30 2.53 254,034.69 30 592,747.61 2 to 3 years
1,677,848.65 5.01 838,924.33 50 838,924.32 Over 3 years
Total 33,466,574.93 100.00 2,803,647.28 8.38 30,662,927.65Continued：
31/12/2013
Aging
Provision for bad
Amount % Provision rate% Net amount and doubtful debts
26,494,988.82 89.03 1,335,820.98 5 25,159,167.84 Within 1 year
1,445,878.69 4.86 144,587.87 10 1,301,290.82 1 to 2 years
1,725,872.82 5.80 517,762.65 30 1,208,110.17 2 to 3 years
93,178.33 0.31 25,564.17 50 67,614.16 Over 3 years
Total 29,759,918.66 100.00 2,023,735.67 6.80 27,736,182.99② Among the portfolio, other receivables that are provided for bad debt using other method
Name of portfolio Carrying amount Bad debt provision Accrualpercentage% Portfolio of specific
10,862,791.62 - - accounts
（2）Bad debt provisions accrual, recovered or reversed
The amount of bad debt provisions accrual is RMB899,911.61 in current period. There is no bad debt provisions recovered or reversed in current period.
（3）Other receivables by nature
Item 31/12/2014 31/12/2013 Petty cash 8,613,005.35 7,667,948.82 Security deposit 5,710,249.11 4,115,131.62 Guarantee deposit 21,201,491.16 21,398,593.20 Goods promotion fee 5,021,765.71 4,604,283.18 Others 3,902,855.22 4,674,418.95 Total 44,449,366.55 42,460,375.77（4）Accounts receivable due from the top five debtors of the Group are as follows:
Company name 31/12/2014
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Provision for% of the balance
bad and Nature Balance Aging of other
doubtful receivables
debts Guarantee 1－2
China Resources (Shenzhen) Co., Ltd 3,135,144.00 7.05 313,514.40 deposit years
China Resources Sun Hung Kai Properties Guarantee 1－2
1,090,523.00 2.45 109,052.30（Hangzhou）Limited deposit years
Shenzhen Yitian Holiday World Property Guarantee 1－2
1,716,228.00 3.86 171,622.80 Development Co., Ltd deposit years
Goods
SMH International Trading (Shanghai) Co. within
promotion 914,167.91 2.06 91,416.79 Ltd. one year
fee
China Resources (Chongqing) Industrial Co., Guarantee 1－2
800,000.00 1.80 80,000.00 Ltd deposit years
Total 7,656,062.91 17.22 765,606.29 6. Inventory
（1）Inventories by categories
31/12/2014 31/12/2013
Category
Provision for dimi Provision for dimi
Book balance Carrying amount Book balance Carrying amount nution in value nution in value
129,886,207.63 7,759,807.87 122,126,399.76 122,362,922.04 4,886,794.86 117,476,127.18 Raw materials
29,054,964.10 - 29,054,964.10 19,607,611.43 - 19,607,611.43 Work-in-process
1,998,359,374.96 15,749,714.50 1,982,609,660.46 2,012,241,510.56 25,982,428.24 1,986,259,082.32 Goods in stock
Total 2,157,300,546.69 23,509,522.37 2,133,791,024.32 2,154,212,044.03 30,869,223.10 2,123,342,820.93 Note: at the year end, the balance of theGroup’s inventory of branded watches with aging over 3 years is RMB 240,521,136.99, accounts for16.67% of the closing balance of all branded watches. The opening balance of the branded watches of theGroup’s inventory with aging over 3 years is RMB148,409,033.32, about8.82% of the opening balance of the branded watches.
（2）Provision for diminution in value of inventories
Increase Decrease
Category 31/12/2013 31/12/2014 Accrual Other Reversed Written-off
4,886,794.86 2,873,013.01 - - - 7,759,807.87 Raw materials
25,982,428.24 - - 2,527,058.12 7,705,655.62 15,749,714.50 Goods in stock
-
Total 30,869,223.10 2,873,013.01 2,527,058.12 7,705,655.62 23,509,522.37（Continued）
Reasons for inventory falling price reserves Category Determination basis of net realizable value
reversed or written off in current period Net realizable value is determined according to the estimated sale price of finished
Raw
products produced deducted the costs that may incur till the completion of - materials
production, estimated sale costs and related taxes
将要发生的成本、估计的销售费用和相42
关税费后的金额确定
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Net realizable value is determined according to the estimated sale price of goods in
Goods in
stock less sales and distribution expenses and related taxes ① stock
Note:
①Reversal is due to the increase of net realizable value of FIYTA. Written-off is due to sales of inventory that were provided for impairment in prior period.
7. Other current assets
Item 31/12/2014 31/12/2013 Deductible input VAT tax 8,356,400.02 23,781,515.54 Housing rental 4,270,819.57 3,759,382.17 Others 1,794,296.84 3,271,093.36 Total 14,421,516.43 30,811,991.07 8. Available-for-sale financial assets
（1）Available-for-sale financial assets
31/12/2014 31/12/2013
Item
Provision for Carrying Provision for Carrying Book balance Book balance
impairment amount impairment amount Available-for-sale equity
385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00 instrument
Incl.: measured at cost 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00 Total 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00（2）Available-for-sale financial asset measured at cost
31/12/2014 31/12/2013
Investment
Invested entity
percentage Provision for Carrying Provision for Impairment Book balance Book balance
impairment amount impairment provision Shenzhen
Zhonghang 15% 300,000.00 300,000.00 - 300,000.00 300,000.00 - Culture Co. Ltd
Xi’an
Tangcheng
0.1% 85,000.00 - 85,000.00 85,000.00 - 85,000.00 Limited
Company
Total 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00（3）Movement of the impairment of available-for-sale financial assets in the reporting period
Category Available-for-sale equity instrument
Impairment as at 31/12/2013 300,000.00 Accrued in current year - Decrease in current year - Impairment as at 31/12/2014 300,000.00
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
9. Long-term equity investments
Movement
Balance of provision Balance Investment Balance as at 31/
Invested units Adjustment of Cash dividend for impairment as at 31/12/2013 income/loss 12/2014
other Changes of or profit Provison for as at Addition Reduction recognized Others
comprehensive other equity announced to impairment 31/12/2014 under the equity
income be issued
method
① Associated
company
Shanghai Watch
Industry Co.,
43,237,940.12 - - -848,180.21 - - - - - 42,389,759.91 -Ltd（Shanghai
WatchIndustry）
Total 43,237,940.12 - - -848,180.21 - - - - - 42,389,759.91 - 44
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
10. Investment property
Item Property and buildings Total I.Original cost
1.Balance as at 31/12/2013 340,029,020.44 340,029,020.44 2.Additions - -（1）Purchase - -（2）Inventory/fixed asset/construction in
- - progess transfer
（3）Business combination - - 3.Disposals - -（1）Disposals - -（2）Other - - 4.Balance as at 31/12/2014 340,029,020.44 340,029,020.44 II. Accumulated depreciation or amortization
1.Balance as at 31/12/2013 104,793,335.68 104,793,335.68 2. Additions 9,143,745.87 9,143,745.87（1）Accrued or amortized 9,143,745.87 9,143,745.87（2）Business combination - -（3）Other increases - - 3. Disposals - -（1）Disposal - -（2）Others - - 4.Balance as at 31/12/2014 113,937,081.55 113,937,081.55 III. Provision of impairment
1.Balance as at 31/12/2013 - - 2. Additions - -（1）Accrued - -（2）Other increases - - 3. Disposals - -（1）Disposal - -（2）Others - - 4.Balance as at 31/12/2014 - - IV. Carrying amount
1.As at 31/12/2014 226,091,938.89 226,091,938.89
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
2.As at 31/12/2013 235,235,684.76 235,235,684.76 Note: The depreciation and amortization recognized in 2014 is RMB 9,143,745.87.
11. Fixed assets
（1）Details of fixed assets
Property and Transportation Electronic Other
Item Machinery Total buildings vehicles devices equipments
I. Original cost
1.Balance as at
307,261,172.99 44,810,836.22 14,308,808.47 27,684,446.02 36,761,683.71 430,826,947.41 31/12/2013
2. Increased amount 13,819,850.26 18,966,129.16 2,355,556.06 3,500,735.89 1,719,526.63 40,361,798.00（1）Purchasing 13,819,850.26 18,966,129.16 2,355,556.06 3,500,735.89 1,719,526.63 40,361,798.00（2）Transfer from - - - - - - construction in progress
（3）Increase due to - - - - - - business combination
3. Decreased amount 2,238,421.08 266,662.30 642,646.00 1,354,832.49 130,888.67 4,633,450.54（1）Disposal or
- 266,662.30 642,646.00 1,354,832.49 130,888.67 2,395,029.46 retire
（2）Other decrease 2,238,421.08 - - - - 2,238,421.08 4.Balance as at
318,842,602.17 63,510,303.08 16,021,718.53 29,830,349.42 38,350,321.67 466,555,294.87 31/12/2014
II. Accumulated
depreciation
1.Balance as at
43,730,217.50 21,028,668.56 9,533,984.29 19,430,839.23 30,214,273.52 123,937,983.10 31/12/2013
2. Increased amount 9,820,449.80 4,766,694.24 1,745,516.10 2,945,970.82 1,822,450.22 21,101,081.18（1）Accrual 9,820,449.80 4,766,694.24 1,745,516.10 2,945,970.82 1,822,450.22 21,101,081.18（2）Other increase - - - - - - 3. Decreased amount - 223,589.57 610,513.70 1,278,659.98 103,876.74 2,216,639.99（1）Disposal or
- 223,589.57 610,513.70 1,278,659.98 103,876.74 2,216,639.99 retire
（2）Other decrease - - - - - - 4. Balance as at
53,550,667.30 25,571,773.23 10,668,986.69 21,098,150.07 31,932,847.00 142,822,424.29 31/12/2014
III. Impairment
- - - - - - provision
1.Balance as at
- - - - - - 31/12/2013
2. Increase - - - - - -（1）Accrual - - - - - -（2）Other increase - - - - - - 3. Decreased amount - - - - - -（1）Disposal or
- - - - - - retire
（2）Other decrease - - - - - - 4.Balance as at
- - - - - - 31/12/2014
IV. Net book value
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
1.As at 31/12/2014 265,291,934.87 37,938,529.85 5,352,731.84 8,732,199.35 6,417,474.67 323,732,870.58 2.As at 31/12/2013 263,530,955.49 23,782,167.66 4,774,824.18 8,253,606.79 6,547,410.19 306,888,964.31 Note:
① Fixed assets that are pledged or guaranteed
As at 31 December 2014, the property with original cost of RMB26,441,545.26, net book value of RMB20,638,152.20 was pledged for long-term loan of RMB6,255,497.65.
（2）Fixed assets that do not have certificate for property right
Reason for not having certificate for Item Book value
property rights
Office rooms for Harbin Branch 335,660.64 Defective in property right
（3）Cost of theGroup’s assets that are fully depreciated but still in use amounts to RMB53,243,264.12 at the end of year 2014.
12. Construction in progress
（1）Details of construction in progress
31/12/2014 31/12/2013
Item
Net carrying Net carrying Book balance Impairment Book balance Impairment
amount amount Clock& Watch base
in Guangming New 51,283,233.53 - 51,283,233.53 6,608,187.55 - 6,608,187.55 District
FIYTA Tech.
Building Canopy 17,279.00 - 17,279.00 - - - project
FIYTA Tech.
Building basement 88,751.00 - 88,751.00 - - - renovation project
Total 51,389,263.53 - 51,389,263.53 6,608,187.55 - 6,608,187.55（2）Change of important construction in progress projects
Interests
Accumulated Incl.: Amount
capitalization
Transferred Other amount of of interests
Project name 31/12/2013 Increase rate in 31/12/2014 fixed assets decrease interests capitalized in
current
capitalization current period
period
Watch& clock
base project of
6,608,187.55 44,675,045.98 - - 516,676.58 516,676.58 6.06 51,283,233.53 Guangming new
district
(Continued）：
Percentage of
accumulated
Project name Budget Project progress Capital resource investment to
budget%
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Watch& clock base project of Self-financing and loans 300,000,000.00 17.13 30%
Guangmin new district from financial institutions 13. Intangible asset
（1）Intangible asset
Right to use
Item Land-use right Software system Total trademarks
I. Original cost
1.Balance as at
34,854,239.40 4,397,962.64 10,364,821.52 49,617,023.56 31/12/2013
2.Increased in current
- 806,959.26 - 806,959.26 period
（1）Purchasing - 806,959.26 - 806,959.26（2）InternalR&D - - - -（3）Increase due to
business - - - - combination
（4）Other increases - - - - 3.Decreased amount of
- 573,760.82 817,507.66 1,391,268.48 the current period
（1）Disposal - - - -（2）Other decreases - 573,760.82 817,507.66 1,391,268.48 4.Balance as at 31/12/2014 34,854,239.40 4,631,161.08 9,547,313.86 49,032,714.34 II. Accumulated amortization
1.Balance as at
6,945,081.20 2,498,020.91 4,005,309.73 13,448,411.84 31/12/2013
2.Increased in current
747,061.42 703,013.69 22,970.15 1,473,045.26 period
（1）Accrual 747,061.42 703,013.69 22,970.15 1,473,045.26（2）Other increases - - - - 3.Decreased in current
- 573,760.82 817,507.66 1,391,268.48 period
（1）Disposal - - - -（2）Other decreases - 573,760.82 817,507.66 1,391,268.48 4.Balance as at
7,692,142.62 2,627,273.78 3,210,772.22 13,530,188.62 31/12/2014
III. Impairment provision
1.Balance as at
- - - - 31/12/2013
2.Increased in current
- - - - period
（1）Accrual - - - -（2）Other increases - - - - 3.Decreased in current
- - - - period
（1）Disposal - - - -（2）Other decreases - - - - 4.Balance as at
- - - - 31/12/2014
IV. Book value
1.Balance as at
27,162,096.78 2,003,887.30 6,336,541.64 35,502,525.72 31/12/2014
2.Balance as at 27,909,158.20 1,899,941.73 6,359,511.79 36,168,611.72
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
31/12/2013
Note: Amortization recognized in 2014 is RMB1,473,045.26.
14. Goodwill
（1）Original cost of goodwill
Name of investee or events
31/12/2013 Increase Decrease 31/12/2014 constituting goodwill
- -
Lishan Department Store 1,735,756.48 1,735,756.48－ －
（2）Goodwill impairment provision
Name of investee or events Balance as at Increase Decrease Balance as at constituting goodwill 31/12/2013 Provision Other Disposal Other 31/12/2014 - - - -
Lishan Department Store 1,735,756.48 1,735,756.48 Note:
HARMONY Company, a subsidiary of the Company, acquired100% shares of Lishan Department Store on 31 March 2008 with consideration of RMB1,200,000.00. On the date of acquisition, the fair value of identifiable net assets of Lishan Department Store was RMB(535,756.48). HARMONY Company recorded the difference of RMB1,735,756.48 as goodwill in the consolidated financial statements. At the end of 2008, it carried out the impairment test for the goodwill. As the recoverable amount was lower than its book value, HARMONY Company charged the goodwill impairment losses of RMB1,735,756.48 to the profit or loss in year 2008.
15. Long-term deferred expenses
Decrease
Item 31/12/2013 Increase 31/12/2014 Amortization Other decrease
Counter
fabrication 46,739,539.07 61,527,010.56 48,284,028.31 - 59,982,521.32 expenses
Renovation
82,497,957.56 45,003,038.61 47,602,378.40 - 79,898,617.77 expenses
Fee for
15,295,637.91 2,000,000.00 7,790,676.14 - 9,504,961.77 representation
Others 2,009,551.04 - 566,018.02 1,096,067.85 347,465.17 Total 146,542,685.58 108,530,049.17 104,243,100.87 1,096,067.85 149,733,566.03 16. Deferred income tax assets and deferred income tax liabilities
（1）Deferred income tax assets and deferred income tax liabilities before offsetting
31/12/2014 31/12/2013
Item Deductible/Taxable Deductible/Taxable
Deferred income Deferred income temporary temporary
tax assets tax assets difference difference
Deferred income tax assets:
Asset impairment provision 35,096,814.32 7,934,522.40 40,487,367.36 9,618,849.12 Offset internal unrealized
321,704,912.25 79,169,123.81 246,128,085.69 60,608,908.97 profit
Deferred income 4,200,000.00 1,050,000.00 2,950,000.00 737,500.00
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Deductible loss 10,815,273.17 2,515,429.89 14,143,969.77 3,193,876.20 Subtotal 371,816,999.74 90,669,076.10 303,709,422.82 74,159,134.29（2）Details of deductible temporary difference and deductible losses thathaven’t been recognized as deferred tax assets Item 31/12/2014 31/12/2013 Deductible temporary difference 2,035,756.48 2,035,756.48 17. Other non-current assets
Item 31/12/2014 31/12/2013 Prepaid property building fund
31,500,000.00 21,500,000.00 Prepaid project decoration fund 10,976,867.85 -
Total 31,500,000.00 32,476,867.85 18. Short-term loans
（1）Classification of short-term loans
Item 31/12/2014 31/12/2013 436,445,000.00 710,000,000.00 Guaranteed loan
553,000,000.00 313,000,000.00 Credit Loan
Total 989,445,000.00 1,023,000,000.00 Note:
① There is no unpaid short-term loans that fall due.
② Refer to Note X. 5(3) for details of guarantee between related-parties.
19. Accounts payables
Item 31/12/2014 31/12/2013 Trade payables 136,579,035.50 210,748,187.96 Payables for material purchased 10,328,743.55 11,388,092.75 Payables for project warranty 211,339.76 211,339.76 Total 147,119,118.81 222,347,620.47 Including: payables in significant amount with aging over 1 year
Item 31/12/2014 Reasons for unpaid or unsettled FoshanShundeDaliangWeiye Watch Co.,
519,571.54 Invoice not received Ltd.
20. Advances from customer
Item 31/12/2014 31/12/2013 Trade advances received 12,087,368.17 9,667,278.30
21. Employee remuneration payable
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Item 31/12/2013 Increase Decrease 31/12/2014 Short-term remuneration 31,173,812.15 423,599,155.73 416,690,010.28 38,082,957.60 Post-employment welfare-defined
- 33,889,802.97 33,324,328.16 565,474.81 contribution plans
Dismissal welfare - 930,397.85 930,397.85 - Total 31,173,812.15 458,419,356.55 450,944,736.29 38,648,432.41（1）Short-term remuneration
||||||
|-|-|-|-|-|
|Item|31/12/2013|Increase|Decrease|31/12/2014|
|Wages, bonuses and allowances|30,902,945.51|376,765,796.35|370,012,641.19|37,656,100.67|
|Employee Welfare|-|7,999,484.15|7,999,484.15|-|
|Social insurance|-|13,632,856.94|13,632,856.94|-|
|Incl.：1. medical insurance|-|11,756,010.63|11,756,010.63|-|
|2. work-related injury insurance|-|787,687.01|787,687.01|-|
|3. maternity insurance|-|1,089,159.30|1,089,159.30|-|
|Housing funds|-|13,905,722.60|13,905,722.60|-|
|Expenditure for labor union and employeetraining|270,866.64|10,181,312.43|10,025,322.14|426,856.93|
|Others|-|1,113,983.26|1,113,983.26|-|
|Total|31,173,812.15|423,599,155.73|416,690,010.28|38,082,957.60|

（2）Defined contribution plans
||||||
|-|-|-|-|-|
|Item|31/12/2013|Increase|Decrease|31/12/2014|

 Post-employment welfare
||||||
|-|-|-|-|-|
|Incl.：1．endowment insurance|-|30,511,750.50|30,511,750.50|-|
|2．unemployment insurance|-|2,133,667.36|2,133,667.36|-|
|3．Enterprise annuity payment|-|1,244,385.11|678,910.30|565,474.81|
|4．Others|-|-|-|-|
|Total|-|33,889,802.97|33,324,328.16|565,474.81|

 22. Taxes payable
Item 31/12/2014 31/12/2013 Value added tax 39,838,385.65 23,538,538.96
Consumption tax - 161,657.78
Business tax 795,720.42 701,932.65
Corporate income tax 34,315,435.06 30,923,761.70
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Individual income tax 745,837.07 698,803.51 City maintenance& construction tax 465,372.23 389,481.45 Property tax 618,271.30 257,112.75 Educational surcharges 276,780.09 207,011.67 Stamp duty 252,083.51 293,628.46 Embankment protection fee 8,859.19 34,037.50 Others 286,025.54 422,208.83 Total 77,602,770.06 57,628,175.26 23. Interest payable
Item 31/12/2014 31/12/2013 2,620,893.75 2,622,859.82 Interest for bank loan
16,800,000.00 16,800,000.00 Interest for bond
Total 19,420,893.75 19,422,859.82 24. Other payables
Item 31/12/2014 31/12/2013 Security deposit 16,573,961.57 15,979,227.33 Shareholder loans 150,000,000.00 - Decoration expenses 4,712,095.11 7,219,523.10 Down payment 3,331,638.94 3,518,826.15 Store activity funds 6,075,167.30 4,792,456.06 Personal accounts payable 358,160.60 2,279,334.80 Others 7,523,876.93 4,665,566.86 Total 188,574,900.45 38,454,934.30 Including: other payables in significant amount and with aging over 1 year
Reasons for unpaid or Item Amount
unsettled
Shenzhen Tencent Computer System Co., Ltd. 5,142,001.36 within lease term within lease term OracleR&D Center (Shenzhen) Limited 811,590.00
within lease term Shenzhen Yitianxun Technology Co., Ltd 505,657.80
within lease term Shenzhen Avic Real Estate Co., Ltd 424,800.00
within lease term Shenzhen Good Family Sports-Ware Chain Limited 414,630.00
within lease term Shenzhen Honestar Electronic Limited 375,144.00
Sun Dawei 358,160.60 Not yet been returned within lease term China Merchants Bank Shenzhen Sci-tech Park Branch 349,692.00
Shenzhen Uni-phone Self-service Kara-Ok Entertainment within lease term
334,880.00
Supermarket Limited
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
within lease term Shenzhen Oriental Boiler Control Co., Ltd 318,491.60
within lease term Shenzhen Yongantang Chain Pharmacy Limited 301,644.00
within lease term Shenzhen AvicChangtai Investment Development. Co., Ltd 221,712.00
within lease term Shenzhen Hangjian Engineering Cost Consultation Co., Ltd 208,304.00
Total 9,766,707.36
25. Other current liabilities
Item 31/12/2014 31/12/2013 Accrued expenses 5,482,521.27 4,924,394.22 26. Long-term loan
Item 31/12/2014 Interests rates 31/12/2013 Interests rates Credit loan - - 87,000,000.00 6.4000% Mortgage loan 6,255,497.65 3.00-4.25% 7,293,022.01 3.00-4.25% Guaranteed loan 133,696,928.00 3.00-5.69% 118,291,928.00 3.00% Subtotal 139,952,425.65 212,584,950.01
Less: Long-term loan that is due within one
- 39,310,000.00
year
Total 139,952,425.65 173,274,950.01
Note:
① There is no unpaid long-term loans that fall due.
② As described in Note V.11, the loan is pledged by property and houses with original cost of RMB26,441,545.26 and book value of RMB20,638,152.20.
③Refer to Note X. 5(3) for guarantee between related parties.
27. Bonds payable
Item 31/12/2014 31/12/2013 12 FIYTA Debt 398,767,929.40 397,728,975.00（1）Change in bonds payable
Name of bond Par value Date of issue Maturity Issue amount 12 FIYTA Debt 400,000,000.00 2013-2-27 3+2年 400,000,000.00 Subtotal 400,000,000.00 400,000,000.00（Continued）
Issued amount Interest Amortization of
Name of
31/12/2013 in current accrued on premium or Repayment 31/12/2014 bond
period par value discount
12 FIYTA
397,728,975.00 - 20,160,000.00 1,038,954.40 20,160,000.00 398,767,929.40 Debt
Subtotal 397,728,975.00 - 20,160,000.00 1,038,954.40 20,160,000.00 398,767,929.40
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Less:
Long-term
loan that is - - - - - - due within
one year
Total 397,728,975.00 - 20,160,000.00 1,038,954.40 20,160,000.00 398,767,929.40 28. Deferred income
Item 31/12/2013 Increase Decrease 31/12/2014 Forming reasons Government grant 2,950,000.00 1,250,000.00 - 4,200,000.00
Note:
Incl. :Deferredincome—governmental grant
Amount
recognized in
Addition in Other Asset or income Subsidy project 31/12/2013 Non-operating 31/12/2014
current period Changes related in nature Income in
current period
Special fund for
Shenzhen strategic and
320,000.00 - 320,000.00 - - Income related new industry
development
The 14th Bonus for
350,000.00 - 350,000.00 - - Income related Patent Award
Special fund for cultural
and creative industries 780,000.00 - 780,000.00 - - Income related development
2012 integration project
of production, teaching 300,000.00 - 300,000.00 - - Income related and research
Technical study for civil
aviation airborne 1,200,000.00 - - - 1,200,000.00 Income related cockpit clock (note①)
Special fund for
Shenzhen industrial
design industry - 3, 000,000.00 - - 3,000,000.00 Income related development
（Note②）
Total 2,950,000.00 3, 000,000.00 1,750,000.00 - 4,200,000.00
Note:
For the foresaid subsidy projects, relevant documents did not explicitly stipulate subsidy objects. Those projectswon’t form long-term assets in future periods, so the Group recognizes it as income related government grant.
Note①:Special fund was obtained from the First Special Fund for Technology Innovation Scheming Technological Development Project (Advanced Equipment Manufacturing) of 2013 Municipal Technology Research and Development Fund by Technological Innovation Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality according to Administrative Measures for Shenzhen Technology Research and Development and Administrative Measures for Shenzhen Technology Scheming Project.
Note②：Special fund for Shenzhen industrial design industry development was obtained according to the Operating Specification for Affirmation and Fund Plan of Shenzhen Industrial Design Center(2013) No.227 which is jointly issued by Development and Reform Commission of Shenzhen Municipality, Economy, Trade and Information Commission of Shenzhen Municipality, Technological Innovation Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality,
29. Share capital
Item 31/12/2013 Increase or decrease in currentperiod（+,-） 31/12/2014
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Shares
New
increased by
shares Bonus shares Others Subtotal
reserves
issued
capitalization
Total shares 39,276.7870 - - - - - 39,276.7870 Note:
The above share capital has been verified with the capital verification report– ZhongruiYuehua Yan Zi (2011) No. 093, which is issued by RSM China CPAs.
30. Capital reserve
Item 31/12/2013 Increase Decrease 31/12/2014 Share premium
511,014,504.13 1,328.82 - 511,015,832.95 Other capital reserves
14,492,448.65 - - 14,492,448.65 Total 525,506,952.78 1,328.82 - 525,508,281.60 31. Other comprehensive income
2014
Less: recorded
in other
Amount comprehensive
As at As at incurred income in Less: Attribute to Attribute to
31/12/2014 Item 31/12/2013 before prior period Income parent minority
（3）=（1）+（1） income tax and tax company shareholders
（2） in current transferred to expenses aftertax（2） after tax
period profit or loss
in current
period
I.Other
comprehensive
profit that cannot - - - - - - - be reclassified into
profit and loss later
II. Other
comprehensive
profit that can be -8,260,833.09 -9,354,879.56 - - -9,348,432.13 -6,447.43 -17,609,265.22 reclassified into
profit and loss later
1. Translation
difference of
-8,260,833.09 -9,354,879.56 - - -9,348,432.13 -6,447.43 -17,609,265.22 foreign currency
financial statements
Total other
comprehensive -8,260,833.09 -9,354,879.56 - - -9,348,432.13 -6,447.43 -17,609,265.22 income
Note: Net after-tax other comprehensive income incurred in current period is RMB-9,354,879.56. Amongst, the amount attribute to parent company shareholders is RMB-9,348,432.13, and amount attribute to minority shareholders is RMB-6,447.43.
32. Surplus reserve
Item 31/12/2013 Increase Decrease 31/12/2014 94,729,200.20 9,201,372.69 - 103,930,572.89 Statutory surplus
rDesisecrrveet io nary surplus
61,984,894.00 - - 61,984,894.00 reserve
Total 156,714,094.20 9,201,372.69 - 165,915,466.89 Note: according to the Company Law and Articles of Association, the Company draws statutory surplus reserve at10% of
net profit. If the statutory surplus reserve is over50% of theCompany’s registered capital, drawing of statutory surplus reserve
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
can be stopped.
33. Undistributed profit
Percentage of drawing Item 2014 2013
or distributio n Undistributed profit at the end of prior year before adjustments 469,706,600.67 386,984,676.78 -- Adjustments to undistributed profit at the beginning of year - - -- Undistributed profit at the beginning of a year after adjustment 469,706,600.67 386,984,676.78 -- Plus: Net profit attributable to the owner of the parent company
145,591,136.39 130,125,124.48 -- for the year
Less: statutory surplus reserve drawn 9,201,372.69 8,126,413.59 10% Dividends payable to ordinary shares 39,276,787.00 39,276,787.00 -- 566,819,577.37 469,706,600.67 -- Undistributed profit at the end of the year
Incl.：Surplus reserve drawn by subsidiaries that attributable to
3,063,794.53 3,589,754.33
parent company
Note:
（1）Description on distribution of dividend
Pursuant to the―Resolution of Equity Distribution for Year2013‖ approved at the 2013 Annual General Meeting held on 10 June 2014, the Company distributed to all shareholders cash dividend of RMB1.00 (tax inclusive) for every 10 shares held based on total shares of 392,767,870 as at 31 December 2013. Total cash dividend distributed was RMB39,276,787.00
（2）Information onsubsidiary’s surplus reserve in the reporting period
In 2014, HARMONY Company, a subsidiary of the Company, drew surplus reserve of RMB1,313,979.52, of which RMB1,313,979.52 is attributable to the parent company. In 2014, Technology Company, a subsidiary of the Company, drew surplus reserve of RMB1,749,815.01, of which RMB 1,749,815.01 is attributable to the parent company.
34. Operating revenue and operating cost
Item 2014 2013
Operating revenue Operating cost Operating revenue Operating cost Revenue from main
3,245,370,291.15 2,043,109,870.34 3,065,746,163.46 1,971,723,379.05 business
Revenue from other
32,772,494.72 11,605,087.11 37,750,798.76 18,401,766.69 business
Total 3,278,142,785.87 2,054,714,957.45 3,103,496,962.22 1,990,125,145.74 Note:
（1）Main businesses presented by industry sectors
2014 2013
Industry sector
Operating revenue Operating cost Operating revenue Operating cost Watches 3,154,917,328.23 2,030,149,894.46 2,984,547,987.19 1,957,755,888.80 Leasing 90,452,962.92 12,959,975.88 81,198,176.27 13,967,490.25
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Total 3,245,370,291.15 2,043,109,870.34 3,065,746,163.46 1,971,723,379.05（2）Main businesses presented by product
2014 2013
Product
Operating revenue Operating cost Operating revenue Operating cost Branded watches 2,298,438,269.08 1,753,276,107.39 2,301,861,216.97 1,733,324,366.47 FIYTA watch 856,479,059.15 276,873,787.07 682,686,770.22 224,431,522.33 Property leasing 90,452,962.92 12,959,975.88 81,198,176.27 13,967,490.25 Total 3,245,370,291.15 2,043,109,870.34 3,065,746,163.46 1,971,723,379.05（3）Main businesses presented by region
2014 2013
Region
Operating revenue Operating cost Operating revenue Operating cost Southern China 1,033,845,169.19 612,581,751.95 976,738,481.63 607,835,407.97 Northwest China 565,700,125.97 367,811,265.82 558,311,345.16 363,009,177.34 Northern China 539,995,688.23 352,347,650.86 493,280,745.22 322,405,824.15 Eastern China 447,079,002.18 281,649,017.63 432,760,214.07 281,143,805.58 Northeast China 310,178,526.39 200,041,144.79 282,672,877.95 184,819,369.04 Southwest China 348,571,779.19 228,679,039.29 321,982,499.43 212,509,794.97 Total 3,245,370,291.15 2,043,109,870.34 3,065,746,163.46 1,971,723,379.05 35. Business tax and surcharges
Item 2014 2013 Consumption tax 460,361.20 2,074,363.64 Business tax 5,284,703.06 5,226,316.17 Urban maintenance and construction tax 9,904,010.65 8,328,827.60 Educational surcharge 4,958,321.12 3,279,324.36 Local educational surcharge 1,965,510.68 1,698,249.94 Others 1,328,974.59 2,137,965.82 Total 23,901,881.30 22,745,047.53 Note: please refer to Note IV. Taxes for different tax rates.
36. Selling and distribution expenses
Item 2014 2013 Wages 226,664,366.60 198,561,735.42 Amortization of long-term deferred
90,323,235.31 83,050,098.35 expense
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Market promotion expense 79,567,696.06 74,637,103.44 Rental 76,994,362.92 73,519,504.95 Advertising expense 56,732,801.49 48,099,428.53 Department store expense 51,485,467.55 44,324,424.71 Endowment insurance 31,423,816.21 30,506,204.96 Exhibition expenses
14,873,436.45 10,981,402.90 Utilities 12,972,823.88 12,240,139.39 Packing expense 11,661,907.15 12,230,148.26 Others
70,140,042.49 61,147,652.01 Total 722,839,956.11 649,297,842.92 37. Administrative expenses
Item 2014 2013 Wages
101,919,779.73 93,537,918.74 R& D expenses
33,842,818.77 28,586,506.35Worker’s insurance expenses
10,679,457.31 9,171,484.22 Depreciation
7,786,791.73 7,611,997.08 Travel expense
8,299,343.91 7,087,469.93 Office expenses
3,536,247.04 4,039,583.59 Labor union expenditure
4,243,665.80 3,978,802.49 Entertainment
3,076,771.19 3,511,587.34 Employee benefits
2,535,414.13 3,040,177.19 Conference expense
3,337,571.75 2,844,205.05 Training expense
3,655,926.54 1,067,751.88 Housing fund
3,234,901.43 2,632,149.98 Others
22,303,338.25 19,186,525.59 Total 208,452,027.58 186,296,159.43 38. Financial expenses
Item 2014 2013 Interest expense 97,571,157.24 88,455,766.03 Less: Interest capitalization 516,676.58 - Less: Interest income 1,750,775.15 1,292,200.79 Exchange gain or losses -2,544,542.58 -997,317.84 Bank charges and others 13,060,297.89 14,101,994.15
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Total 105,819,460.82 100,268,241.55 Note:
Amount of interest capitalization is included in construction in progress. The capitalization rate used for determining the amount of interest capitalization is6.06%.
39. Asset impairment loss
Item 2014 2013 (1)Bad debt loss 2,275,348.40 2,257,019.16 (2)Inventory impairment loss 345,954.89 6,465,651.92 Total 2,621,303.29 8,722,671.08 40. Investment gain
Item 2014 2013 Investment gain from the long-term equity investment measured by
-848,180.21 1,589,198.33 equity method
41. Non-operating income
Amount included in current Item 2014 2013 year’s non-recurring profit or loss Total gain on disposal of the non-current
70,124.76 465,627.90 70,124.76 assets
Including: gain on disposal of fixed assets 70,124.76 465,627.90 70,124.76 Clearing of payables that cannot be paid 1,209,959.00 169,783.51 1,209,959.00 Breach penalty 481,196.07 286,572.72 481,196.07 Government grant 10,344,542.00 3,610,593.36 10,344,542.00 Others 435,274.03 321,549.91 435,274.03 Total 12,541,095.86 4,854,127.40 12,541,095.86 Details of government grant:
Asset or income
Note Projects 2014 2013 related
2013 Specific subsidy fund for
self-innovation industry development of
2,421,000.00 －
Related to Income
（1） Nanshan District
2013 subsidy fund of Shenzhen enterprise
technology center development 2,000,000.00 －
Related to Income
（2） Specific subsidy of Shenzhen brand foster
1,000,000.00 －
Related to Income
（3） Specific subsidy for Shenzhen strategic
emerging industry development 800,000.00 －
Related to Income
（4） E-commerce FIYTA Mobile Internet Sales
Mode Innovation Project 800,000.00 －
Related to Income
（5）
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Specific fund for cultural creative industry
development 780,000.00 －
Related to Income
（6） 2013 subsidy fund for Shenzhen industrial
design and innovation results transferred
500,000.00 －
Related to Income
（7） into application
Award of the 14th Patent Award
350,000.00 －
Related to Income
（8） Award of the 15th Patent Award
350,000.00 －
Related to Income
（9） Award of the 11th Chinese Patent Award
350,000.00 －
Related to Income
Standardization fund
307,000.00 －
Related to Income
（10） 2012 integration project involving
production, study and research 300,000.00 －
Related to Income
（11） 2014 subsidy fund for implementing
standardization strategy 138,042.00 －
Related to Income
（12） 2014 subsidy for high-tech enterprises
100,000.00 －
Related to Income
（13） 2014 subsidy for the first batch of overseas
trademark registration application 70,000.00 －
Related to Income
2014 award for Shenzhen renowned
industrial design award 50,000.00 －
Related to Income
Government subsidy fund for Basel Watch
Show 20,000.00 －
Related to Income
Award of the 15th Chinese Patent Award
5,000.00 －
Related to Income
Specific subsidy fund for innovation of
Taitan Watch Test Co., Ltd. 3,500.00 －
Related to Income
2011-2013 Government Subsidy for FIYTA
Brand Development Project
－
990,000.00 Related to Income
Fund to finance establishment of technical 600,000.00
center
－
Related to Income
Government subsidy from Shenzhen watch
and clock Association for 2011 Basel
－
435,204.83 Related to Income
Exhibition
Shenzhen municipal award fund for
backbone enterprise
－
370,000.00 Related to Income
350,000.00
Award of the 13th Patent Award
－
Related to Income
2012 Shenzhen Municipal Prize for Progress
in Science and Technology (Standard Prize)
by Market Supervision and Administration
－
300,000.00 Related to Income
Bureau of Shenzhen Municipality
Special funds of provincial cooperation by
production, study and research －
236,000.00 Related to Income
2012 Prize for Progress in Science and
Technology by Technology Innovation
Commission of Shenzhen Municipality －
200,000.00 Related to Income
Government subsidy for standardization 112,500.00
project －
Related to Income
Subsidy for Exhibition Expenditures 16,888.53
－
Related to Income
Total 10,344,542.00 3,610,593.36
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Note:
（1）Amount up to RMB2,000,000.00 is the award obtained according to Specific Fund for Self-Innovation Industry Development of NanshanDistrict—Application Guidance for Yiyuan Business Building Award Project of Speeding Up Industry Transformation and Upgrade Award, and RMB 421,000.00 is the second-batch subsidy fund of 2013 economic development fund of Nanshan Bureau of Finance according to Administrative Method (Trail) for Specific Fund of Self-Innovation Industry Development of Nanshan District.
（2）the development subsidy obtained according toShenJingmaoXinxiJiCaiZi（2013）No. 204 Notice of Shenzhen Committee of Trade and Economic Information on 2013 Development Subsidy Plan of Shenzhen Industry Technology Progress Fund Enterprise Technology Center;
（3）the specific subsidy obtained by HARMONY Company the subsidiary of the Company according to ShenJingmaoXinxi Yu SuanZi No. 201412 About Issuing 2013 Shenzhen Brand Training Specific Fund issued by Shenzhen Committee of Economy, Trade and Information;
（4）Special fund for Shenzhen strategic and new industry development was obtained according to the Notice to Circulate the Plan of the 4th Batch of Shenzhen Specific Fund for Strategic and New Industry DevelopmentShenFaGai (2012) No.1241 which is jointly issued by Development and Reform Commission of Shenzhen Municipality, Economy, Trade and Information Commission of Shenzhen Municipality, Technological Innovation Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality,
（5）Specific fund obtained by FIYTA Sale Company the subsidiary of the Company according to the Notice to Circulate the Plan of the 4th Batch of Shenzhen Specific Fund for Strategic and New Industry Development ShenFaGai (2014) No. 939 which is jointly issued by Development and Reform Commission of Shenzhen Municipality, Economy, Trade and Information Commission of Shenzhen Municipality, Technological Innovation Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality,
（6）Special Fund for FIYTA Cameraman Series Wristwatch project of the company was obtained from Shenzhen Municipal Bureau of Culture Sport and Tourism according to Administrative Measures for Shenzhen Municipal Cultural Innovation Industry Development Special fund.
（7）Special project fund according to the Notice of Economy, Trade and Information Commission of Shenzhen Municipality on 2013 Planned Funding Projects of Shenzhen Industrial Design Innovation Results Transferred to ApplicationsShenJingmaoXinxiShengchanZi（2014）No. 147
（8）Special fund was obtained according to Notice about Payment of Bonus for the 13th Chinese Patent AwardYueZhiGui (2013) No.165 issued by Intellectual Property Right Bureau of Guangdong Province.
（9）Patent award obtained according to Notification of Guangdong Provincial Government on Awarding Units and Individuals Winning the Award of the 15th Chinese Patent Award in Guangdong ProvinceYue Fu Han (2014) No. 155
（10）RMB207,000.00 is 2014 specific scientific fund obtained by undertaking the work of watch materials of National Committee of Watch Standardization Technology and the Secretariat of the Committee of Appearance Parts Technology; RMB100,000.00 is 2014 specific science fund obtained by undertaking the work of team of SAC/TC160/SC3/WG1 Shell and Parts Wear Resistance, Scratch Resistance and Impact Test.
（11）Special Fund for Nickel less Stainless Steel Technology and Its Application of Production in Contact with Human Skin of 2012 Guidance Integration Project Fund by Production, Study and Research was obtained according to YueCai Jiao (2012) No.393 Special funds of provincial cooperation by production, study and research.
（12）RMB84,500.00 is subsidy fund for standard strategy obtained according to Notice to Circulate 2014 Funding Plan to Implement Standard Strategy Fund of Shenzhen MunicipalitySSJL（2014）No. 12 jointly issued by the Market Administration of Shenzhen Municipality, the Commission of Finance of Shenzhen Municipality; RMB 53,542.00 is the specific fund for 2014 implementation of standard strategy obtained by the Manufacturing Company, a subsidiary of the Company.
（13）Subsidy for national high-tech enterprises identification obtained by the Technology Company, a subsidiary of the Company.
42. Non-operating expenses
Amount included in Item 2014 2013 non-recurring profit or loss in current year
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Loss on non-current assets disposal 115,045.74 76,660.91 115,045.74 Incl. loss on fixed assets disposal 115,045.74 76,660.91 115,045.74 External donation 500,000.00 680,000.00 500,000.00 Others 476,449.24 251,821.31 476,449.24 Total 1,091,494.98 1,008,482.22 1,091,494.98 43. Income tax expenses
（1）Details of income taxes expenses
Item 2014 2013 Current income tax 40,801,328.57 34,171,124.35 Deferred income tax -16,509,941.80 -12,819,446.68 Total 24,291,386.77 21,351,677.67（2）Reconciliation between income tax expenses and accounting profits is as follows:
Item 2014 2013 Profit before tax 170,394,619.99 151,476,697.48 Income tax expenses calculated at legal (or applicable) tax rate
42,598,655.01 37,869,174.38 (profit before tax*25%)
Influence of different tax rate applicable to subsidiaries -19,295,365.00 -12,131,479.62 Adjustment of income tax to prior periods 236,881.91 -282,218.55 Profit and loss of joint venture and associated entities
212,045.05 -397,299.58 accounted using equity method
Income exempt fromtaxation（―-‖） - - Nondeductible cost, expense and loss 2,690,102.26 3,854,990.19 Influence of tax rate change to opening balance of deferred
22,285.47 - income tax
Taxation influence by using unrecognized deductible loss and
- - deductible temporary difference of priorperiods（―-‖）
Taxation influence of unrecognized deductible loss and
- - deductible temporary difference
Taxation influence from additional deduction ofR&D
-2,173,217.93 -2,789,001.25expenses（―-‖）
Others - -4,772,487.90 Income tax expenses 24,291,386.77 21,351,677.67 44. Notes to cash flow statement
（1）Cash received from other operating activities
Item 2014 2013
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Product promotion fee 21,243,620.58 20,237,279.49 Government grant 10,914,542.00 5,304,593.36 Security deposit 1,923,147.28 3,116,164.07 Interest income 1,750,775.15 1,292,200.79 Petty cash 22,950.38 19,612.78 Others 3,439,061.96 2,359,830.90 Total 39,294,097.35 32,329,681.39（2）Cash paid to other operating activities
Item 2014 2013 Marketing promotion fee 77,443,856.52 72,337,103.48 Rental 73,952,825.98 68,825,385.00 Advertising fee 51,847,512.57 63,543,116.36 Departmental store expenses 33,927,340.50 28,831,716.21 Travel expenses 15,544,104.75 13,105,233.11 Exhibition expenses 14,733,436.45 10,981,402.89 R& D expenses 13,908,494.97 11,828,678.97 Office expenses 10,454,837.21 10,597,505.13 Utilities 9,604,220.48 5,791,708.37 Business entertainment 8,044,877.78 7,757,673.11 Transportation expenses 8,020,282.83 7,385,888.70 5,185,100.10 3,816,213.36 Posting and telecommunication expenses
3,607,560.46 2,507,014.01 Fees for agent services
2,943,855.87 3,185,695.46 Insurance expense
2,636,497.78 2,341,293.91 Vehicle expenses
2,076,535.47 1,541,915.02 Maintenance expenses
1,652,626.49 2,290,982.21 Packing expenses
1,651,356.02 1,630,544.86 Training expenses
489,788.03 268,443.80 Consultation expenses
23,829,270.84 26,672,983.97 Others
Total 361,554,381.10 345,240,497.93（3）Cash paid to other investment activities
Item 2014 2013 Security deposit for issuing of letter of guarantee 1,575,000.00 -
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
（4）Cash received from other financing activities
Item 2014 2013 Loans from AVIC IHL 150,000,000.00 - Loans from CATIC International Finance Limited 39,683,069.40
Others 1,328.82 - Total 189,684,398.22 -（5）Cash paid to other financing activities
Item 2014 2013 Repayment of loans to CATIC International Finance Limited 39,683,069.40
Capital injection as minority shareholders 1,400,000.00 - Bank financing charges 1,134,375.00 - Guarantee fee - 1,200,000.00 Fee for bond issuing - 502,986.00 Others 31,008.00 - Total 42,248,452.40 1,702,986.00- 45. Supplement to Cash Flow Statement
（1）Supplement to Cash Flow Statement:
Supplement 2014 2013 1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 146,103,233.22 130,125,019.81 Add: Impairment for assets 2,621,303.29 7,950,136.01 Depreciation of fixed asset investment property 30,244,827.05 29,893,607.39 Amortization of intangible assets 1,473,045.26 1,416,772.60 Amortization of long-term deferred expenses 104,243,100.87 98,355,902.48 Losses on disposal of fixed assets, intangible assets,and other
44,920.98 -388,966.99 long-term assets(―－‖ for gain)
Loss on retirement of fixed assets(―－‖ for gain) - - Loss on changes of fair value(―－‖ for gain) - - Financial charges(―－‖ for income) 97,054,480.66 90,158,752.03 Investment losses(―－‖ for gain) 848,180.21 -1,589,198.33 Decrease in deferred tax assets(―－‖ for increase) -16,509,941.81 -12,819,446.68 Increase in deferred taxliabilities（―－‖ fordecrease） - - Decrease in inventories(―－‖ for increase) -3,088,502.66 -246,543,224.09
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Decrease in operating receivables(―－‖ for increase) -24,932,633.93 -26,941,577.23 Increase in operatingpayables（―－‖ fordecrease） -48,912,382.17 9,429,713.92 Others - - Net cash flows from operating activities 289,189,630.97 79,047,490.92 2. Significant investment and financing activities not
involving cash:
Debts converted to capital - - Convertible debts mature within one year - - Fixed assets acquired under finance leases - - 3. Net changes in cash and cash equivalents:
Cash as at 31/12/2014 114,880,070.54 107,663,110.74 Less: cash as at 31/12/2013 107,663,110.74 140,420,994.71 Plus: cash equivalents as at 31/12/2014 - - Less: cash equivalents as at 31/12/2013 - - Net increase in cash and cash equivalents 7,216,959.80 -32,757,883.97（2）Cash and cash equivalents
Item 31/12/2014 31/12/2013 I. Cash 114,880,070.54 107,663,110.74 338,694.81 487,926.67 Incl. Cash on hand
Bank deposit available for immediate payment 114,319,146.38 107,168,563.21 Other monetary funds available for immediate
222,229.35 6,620.86 payment
Due from the Central Bank available for payment - - II. Cash equivalents - - Incl. Bond investment due in three months - - III. Cash and cash equivalents as at 31/12/2014 114,880,070.54 107,663,110.74 46. Assets of restricted ownership or use rights
Item Amount Restriction reason Currency funds 1,575,000.00 Guarantee deposit Fixed assets 20,638,152.20 Charged for loan Total 22,213,152.20
47. Item in Foreign currency
（1）Item in Foreign currency
Balance in foreign currency as at Translation Balance translated in RMB Items
31/12/2014 rate as at 31/12/2014
Currency fund
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Incl.：USD 196,789.57 6.1190 1,204,156.07 HKD 13,283,966.04 0.7889 10,479,630.40 EURO 24.45 7.4556 182.29 SF 1,043,112.45 6.2715 6,541,879.73 Accounts receivable
Incl.：HKD 12,077,059.12 0.7889 9,527,591.94 SF 240,451.00 6.2715 1,507,988.45 Prepayment
Incl.：HKD 10,775,587.06 0.7889 8,500,860.63 SF 1,963,166.89 6.2715 12,312,001.15 Other receivables
Incl.：USD 201,186.60 6.1190 1,231,060.81 HKD 303,373.14 0.7889 239,331.07 EURO 22,366.80 7.4556 166,757.91 SF 502,707.54 6.2715 3,152,730.34 Accounts payable
Incl.：HKD 2,307,389.31 0.7889 1,820,299.43 SF 82,628.95 6.2715 518,207.46 Other payables
Incl.：USD 22,108.68 6.1190 135,283.01 HKD 1,858,296.28 0.7889 1,466,009.94 Short-term loans
Incl.：HKD 50,000,000.00 0.7889 39,445,000.00 Long-term loans
Incl.：HKD 150,774,683.29 0.7889 118,946,147.65 SF 900,000.00 6.2715 5,644,350.00（2）Overseas operational entity
For main business location and recording currency of important overseas operational entity, refer to Note III. 4.
VI. Change of scope of consolidation
Harmony World Watch Center was closed down due to the demolition of business location in 2008. It is deregistered by the Company in the reporting period and excluded out of the scope of consolidation at the end of the period.
VII. Equity in other entities
1. Equity in subsidiaries
（1）Structure of enterprise group
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Main Shareholdingratio%
Place of reg Nature of
Name of subsidiary business Ways acquired istration business
Direct Indirect
location
HARMONY Establishment or Shenzhen Shenzhen Commerce 100.00 -
Company investment Manufacturing Establishment or Shenzhen Shenzhen Manufacture 90.00 10.00
Company investment Establishment or FIYTA Hong Kong Hong Kong Hong Kong Commerce 100.00 -
investment Establishment or Station 68 Hong Kong Hong Kong Commerce - 60.00
investment Establishment or Harbin Company Harbin Harbin Commerce 25.00 75.00
investment Establishment or Henglianda Company Beijing Beijing Commerce - 100.00
investment Establishment or Technology Company Shenzhen Shenzhen Manufacture 100.00 -
investment Establishment or Trading Company Shenzhen Shenzhen Commerce 100.00 -
investment Establishment or Culture Company Shenzhen Shenzhen Commerce - 100.00
investment Emile Choureit Establishment or Shenzhen Shenzhen Commerce - 100.00
Shenzhen Company investment World Watches Establishment or Hong Kong Hong Kong Commerce - 100.00
International investment Establishment or Sales Company Shenzhen Shenzhen Commerce 100.00 -
investment Business combination Hengdarui Company Shenyang Shenyang Commerce - 100.00
under common control Business Lishan Department combination not Kunming Kunming Commerce - 100.00
Store under common control Business combination not Swiss Company Switzerland Switzerland Commerce - 100.00
under common control Nature Art Limited Hong Kong Hong Kong Commerce - - ① Protop Limited Hong Kong Hong Kong Commerce - - ① Note:
①According to the equity trust agreement signed by and between Station 68 a subsidiary of FIYTA Hong Kong and the trustee of Protop Limited on 10 December 2009, Station 68, as the trustor, owns shares, stock rights and related rights of Nature Art Limited and Protop Limited, and both parties agree that trustee may transfer its right anytime according to the instructions of trustor. Therefore, Station 68 owns the control right of Nature Art Limited and Protop Limited, and include them into its scope of consolidation. 2. Equity under joint operating arrangement or associated enterprise
（1）Important associated enterprises
Shareholding Accounting Main ratio(%) treatment of Name of joint venture Place of Nature of
business investment in joint or association registration business
location Direct Indirect venture or association① Association
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method（2）Major financial information of important association:
Item Shanghai Watch
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
31/12/2014 31/12/2013 Current assets 88,551,483.42 73,134,933.57 Non-current assets 22,504,083.78 23,041,765.77 Total assets 111,055,567.20 96,176,699.34 Current liabilities 18,718,641.86 14,710,516.78 Non-current liabilities - - Total liabilities 18,718,641.86 14,710,516.78 Net assets 92,336,925.34 81,466,182.56Incl.：Minorityshareholders’ interests - -Owners’ equity attributable to parent
- - company
Shares of net asset measured by shareholding
22,622,546.71 19,959,214.73 ratio
Adjustment matters - - Incl.: goodwill - - Unrealizable profit or losses from internal
- - transaction
Impairment provision - - Others - - Book value of investment to associations 42,389,759.91 43,237,940.12 Fair value of equity investment with existing
- - public quotation
Continued：
Shanghai Watch
Item
2014 2013 Operating income 105,335,016.70 72,493,931.14 Net profit 10,080,270.97 6,356,793.32 Other comprehensive income - - Total comprehensive income 10,080,270.97 6,356,793.32 VIII. Financial instruments and risk management
The Group has disclosed details of financial instruments in related notes. Risks related to those financial instruments and risk management policies adopted to reduce those risks are described as below. The Group management layer manages and supervises the risk exposure to ensure risks are controlled within limited range.
1. Risk management goals and policies
The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence of financial risk to financial performance of the Group. Based on the goal, the Group has formulated risk management policies to identify and analyze risks the Group faces, set proper acceptable risk level and design relevant internal control procedures, to supervise risk level. The Group will regularly review those risk management policies and relevant internal control system, to adapt to market situation and change of operating activities. The internal audit department of the Group will also regularly or randomly check whether the execution of internal
control system complies with risk management policies.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Main risks financial instruments of the Group may lead to include credit risks, liquidity risk, market risk, etc...
（1）Credit risk
Credit risk refers to the risk of financial loss of the Group caused due to default of contract obligation of transaction counterparty.
The Group manages credit risk by portfolio. Credit risk mainly arises from bank deposit and accounts receivable.
Bank deposit of the Group is mainly in state-owned banks and other large and medium listed banks. There are no significant credit risks of estimated bank deposits.
As for accounts receivable, the Group sets relevant policies to control credit risk exposure. Based on the financial status of debtor, external rating, guarantee possibility, credit record gained from the third party and other factors such as current market status, the Group evaluates credit qualification of debtor and set corresponding debt limit and credit period. The Group will regularly supervise credit record of debtor. For debtor with bad credit record, the Group will ensure the whole credit risk of the Group within controllable range in the forms of written reminder letter, reducing credit period and cancelling credit period.
The biggest credit risk exposure undertaken by the Group is carrying amount of each financial asset in balance sheet. The Group sets guarantees to any other credit risks that the Group may bear.
Amount accounts receivable, the total accounts receivable of top 5 accounts with amount in arrear account for9.02% of total accounts receivable of the Group（2013：9.43%）; in other accounts receivable, the total accounts receivable of top 5 accounts with amount in arrear account for17.22% of total accounts receivable of the Group（2013：20.25%）.
（2）Liquidity risk
Liquidity risk refers to risk of capital shortage caused when the Group executes obligations of settlement in the manner of cash payment or other financial assets.
In managing liquidity risk, the Group keeps the cash and cash equivalents that the Group deems sufficient and controls them to meet operating needs, reduce influence of cash liquidity fluctuation. The Group management monitors the use of bank loans and ensures to comply with borrowing agreement. At the same time, the Group gains the commitment for providing sufficient reserve funds from main financial institutions, to meet short-term and long-term capital needs.
The Group finance operation funds through capital and bank and other borrowings incurred in operating business. As at 31 December 2014, bank borrowing facility that the Group has not yet used is RMB539,100,000（31 December 2013:RMB464,415,000） Maturity analysis of financial liabilities and off-balance-sheet guarantee items by undiscounted remaining contract cash flow at the end of the period (Unit: RMB ten thousands):
31/12/2014
Item Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total Financialliabilities：
Short-term loans 98,944.50 － － － 98,944.50 Accounts payable 14,711.91 － － － 14,711.91 Payable interest 1,942.09 － － － 1,942.09 Other payables 18,857.49 － － － 18,857.49 Other currentliabilities（excluding
548.25 － － － 548.25 deferredincome）
Long-term loan － 7,925.19 4,444.50 1,625.55 13,995.24 Bonds payable － 40,000.00 － － 40,000.00 Financial guarantee 43,644.50 7,889.00 3,944.50 － 55,478.00 Sum of financial liability and
178,648.74 55,814.19 8,389.00 1,625.55 244,477.48 contingent liability
Maturity analysis of financial liabilities and off-balance-sheet guarantee projects held by the Group in the prior period according to
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
cash flow of undiscounted remaining contracts(Unit: ten thousands RMB):
31/12/2013
Item Within 1 year 1 to 2 years 2 to 3 years Over 5 years Total Financialliabilities：
Short-term loans 102,300.00 － － － 102,300.00 Accounts payable 22,234.76 － － － 22,234.76 Payable interest 1,942.29 － － － 1,942.29 Other payables 3,845.49 － － － 3,845.49 Non-current liabilities due within 1
3,931.00 － － － 3,931.00 year
Other currentliabilities（excluding
492.44 － － － 492.44 deferredincome）
Long-term loan － － 7,862.00 9,465.50 17,327.50 Bonds payable － － 40,000.00 － 40,000.00 Financial guarantee 45,931.00 － 7,862.00 － 53,793.00 Sum of financial liability and
180,676.98 － 55,724.00 9,465.50 245,866.48 contingent liability
The amount of financial liability disclosed in the above table is undiscounted contract cash flow and thus may be different with the carrying amount of balance sheet.
（3）Market risk
Market risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused due to market price change, including interest risk, exchange rate risk and other price risk.
Interest risk
Interest risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused due to interest change. Interest risk may arise from confirmed interest accrual financial instrument and unconfirmed financial instrument (such as some loan commitments)
The interest risk of the Group mainly arises from long-term bank loans and bonds payable and long-term interest-bearing debt. Financial liabilities with floating rate lead the Group to cash flow interest risk. Fixed interest rate financial liabilities lead the Group to fair value interest risk. According to current market environment the Group determines the proportion of fixed interest and floating interest rate contract, maintaining proper fixed and floating interest instrument combination through regular review and supervision. As at 31 December 2014, if borrowing rate measured at floating rate rises or drops 50 base points, and other factors keep unchanged, net profit andshareholders’ equity of the Group will decrease or increase about RMB700,000(at 31 December 2013: RMB870,000).
Exchange rate risk
Exchange rate risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused due to exchange rate change. Exchange rate risk may arise from the financial instrument measured at foreign currencies other than recording currency.
Main operation of the Group is within China, and main businesses are settled in RMB. Therefore, the market risk of exchange fluctuations undertaken by the Company is not significant.
Refer to Details of other foreign currencies of Notes to the Financial Statement for financial assets of foreign currencies and financial liabilities of foreign currencies at the end of the period.
2. Capital management
The capital management policies of the Group are formulated to guarantee the Group can keep operation, and thus provide
returns to shareholders and benefit other stakeholders, and at the same time to keep the optimal capital structure to reduce capital cost.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
To keep or adjust capital structure, the Group may adjust amounts of dividends paid for shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.
The Group supervises capital structure based on asset liability ratio (total liabilities divided by total assets). As at 31 December 2014, the asset-liability ratio of the Group is55.26% (31 December 2013:56.76%).
IX. Fair value
Fair value level can be classified according to the input value of the lowest level that is significant to whole measurement of fair value:
First level: quote of same assets or liabilities in an active market (unadjusted).
Second level: directly (price) or indirectly (derive from price) use observable input value other than market quote of assets or liabilities in the first level.
Third level: use any input value not based on observable market data in assets or liabilities (unobservable input value).
（1）Items and amounts measured at fair value
As at 31 December 2014, there are no assets and liabilities measured at fair value.
（2）Items and amounts not measured at fair value but with fair value disclosed
Financial assets and financial liabilities measured at amortized cost mainly include: cash and bank balances, notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable, other payables, long-term payables, etc. The difference between the book value of financial assets and financial liabilities that are not measured at fair value and fair value is small.
X. Related party relationship and transactions
1. Details of the parent company of the Company
Shareholding ratio
Ratio of vote right Name of parent Place of Nature of Registered of parent
of parent company company registration business capital company to the
to theCompany% Company%
investment in
industries,
China National
Shenzhen domestic trade, 1,110,631,996.00 41.49 41.49 Aviation Group
material supply
and distribution
Ultimate controlling party of the Company:
CATIC Shenzhen Company holds35.63% shareholding of China National Aviation Group. CATIC Shenzhen Company is a wholly owned subsidiary of China Aero Space International Holdings Limited (CASI), and China Aviation Industry Corporation (AVIC) directly holds62.52% of the equity of CASI. Therefore, the ultimate controlling party of the Company is AVIC. 2. Subsidiaries of the Company
Refer to Note VII. 1 for details of subsidiaries of the Company
3. Joint venture and association of the Group
Refer to Note VII.2 for details of important joint venture and association
4. Other related parties of the Group
Name of related parties Relationship with the Group Controlled by the same party Shenzhen CATIC Property Management Limited ( CATIC Property Management)
Controlled by the same party
Shenzhen CATIC Building Equipment Co., Ltd. ( CATIC Building Company)
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Controlled by the same party Rainbow Department Store Co., Ltd. (Rainbow Department Store )
Controlled by the same party Shennan Circuits Co., Ltd. ( Shennan Circuits )
Controlled by the same party CATIC Real Estate Company
Controlled by the same party Shenzhen Maiwei Cable TV Equipment Limited ( Maiwei Company )
Controlled by the same party AVIC Securities Co., Ltd. ( AVIC Securities Company)
Controlled by the same partyXi’an Skytel Hotel Co., Ltd. (Skytel Hotel)
Controlled by the same party Shenzhen AVIC Nanguang Elevator Co., Ltd. ( AVIC Nanguang Company)
Shenzhen CATIC City Real Estate Development Co., Ltd. ( CATIC City Real Estate Controlled by the same party Company)
Controlled by the same party Shenzhen CATIC City Development Co., Ltd. ( CATIC City Development Company)
Controlled by the same party CATIC Guanlan Property Development Co., Ltd.（CATIC Mission HillsProperty）
Controlled by the same party CATIC Changtai Investment Development Co., Ltd. (CATIC Changtai Company )
Shenzhen CATIC Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Controlled by the same party Company)
Ganzhou CATIC Real Estate Development Co.,Ltd.（Ganzhou CATIC Real Estate Controlled by the same partyCompany）
Controlled by the same party Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment)
Controlled by the same party Chengdu CATIC Property Development Co., Ltd (Chengdu CATIC Property Company)
Controlled by the same party Zhonghang Electronic Measuring Instruments Co., Ltd (Zhonghang Electronic Company)
Controlled by the same party Shenzhen CATIC Theme Real-estate Co., Ltd (CATIC Theme Company)
Controlled by the same party Shenzhen AVIC Training Center (AVIC Training Center)
Controlled by the same party CATIC International FinanceLimited（CATIC FinanceCompany）
XuDongsheng Key management member Key management member Tang Boxue
Key management member Chen Zhuo
Key management member Chen Libin
Key management member Lu Bingqiang
Key management member Du Xi
Key management member Lu Wanjun
Key management member Hu Xinglong
5. Related party transactions
（1）Details of related party purchase and sale
①Purchasing goods and receiving services
Related party Type of transaction 2014 2013 Zhonghang Electronic
Processing Charges 15,068.38 38,931.11 Company
CATIC Property
Property management 1,356,088.67 1,781,754.76 Management
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
AVIC Training center Training 146,420.76 281,013.20 Rainbow Department
Department store expenses 3,549,567.71 2,393,915.69 Store
Shanghai Watch Material purchase 2,554,285.26 695,854.70② Selling products and providing services
Related party Type of transaction 2014 2013 Rainbow Department
product sales and services 81,841,738.79 80,900,993.83 Store
AVIC product sales 1,075,012.82 1,906,205.98 Shennan Circuits Material sales 24,363,526.18 24,274,127.74 Zhonghang Electronic
Material sales - 168,714.53 Company
（2）Related party leasing
①Company as a lessor
Recognized rental income in Recognized rental income in Type of leased assets
Lessee current period prior period CATIC Real Estate Company property 1,508,832.00 1,508,832.00 Maiwei Company property - 233,285.00 CATIC Property
property 7,282,960.71 2,660,544.00 Management
AVIC Securities Company property 1,088,430.00 1,037,310.00 CATIC City Real Estate
property 22,320.00 22,320.00 Company
CATIC City Development
property 22,320.00 22,320.00 Company
CATIC Guanlan Property property 89,280.00 89,280.00 CATIC Changtai Company property 1,285,632.00 1,285,632.00 Skytel Hotel property 4,499,900.00 3,500,000.00 Rainbow Department Store property 452,800.04 667,105.82 CATIC Jiufang Asset Mgmt
property 363,636.00 378,066.00 Company
CATIC City Investment property 90,024.00 90,024.00 CATIC Theme Company Property 945,624.00 945,624.00 CATIC Technology Property
210,270.00 - Shenzhen Company
③ Company as a lessee
Rental expenses charged in Rental expenses charged in Name of lessor Type of leased assets
current period prior period Ganzhou CATIC Real Estate
Property 995,408.16 949,918.91 Company
Chengdu CATIC Property
Property 816,017.05 546,919.23 Company
（3）Related party guarantees
①The Group as guarantor
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
If the guarantee Guarantee
Amount guaranteed Effective date Expiring date finished? (Yes/No) HARMONY Company 60,000,000.00 2014-2-25 2015-2-24 No No HARMONY Company 50,000,000.00 2014-12-8 2015-12-7
No HARMONY Company 30,000,000.00 2014-5-9 2015-5-8
No HARMONY Company 27,000,000.00 2014-5-27 2015-5-26
No HARMONY Company 100,000,000.00 2014-10-29 2015-10-28
No FIYTA Hong Kong 39,445,000.00 2014-10-6 2015-10-6
No FIYTA Hong Kong 39,445,000.00 2013-7-11 2016-7-10
No FIYTA Hong Kong 39,445,000.00 2013-8-5 2016-8-4
No FIYTA Hong Kong 15,778,000.00 2014-1-6 2017-1-6
No FIYTA Hong Kong 7,889,000.00 2014-1-27 2017-1-27
No FIYTA Hong Kong 15,778,000.00 2014-3-3 2017-3-3
② The Group as guarantee
If the guarantee Guarantor
Amount guaranteed Effective date Expiring date finished? (Yes/No) China National
10,000,000.00 2014-9-5 2018-6-24 No Aviation Group
China National No
5,000,000.00 2014-1-15 2017-6-24
Aviation Group
China National No
361,928.00 2013-12-24 2016-12-24
Aviation Group
No
HARMONY Company 40,000,000.00 2014-2-12 2015-2-11
No
HARMONY Company 90,000,000.00 2014-2-19 2015-2-18
（4）Related party borrowing
Related party Amount borrowed Start date Expire date Note Borrow from
China National
150,000,000.00 2014-5-26 2015-5-25 ① Aviation Group
CATIC Finance
39,773,500.00 2014-9-22 2014-10-21 ② Company
① Interest of loans from China National Aviation Group in the reporting period is RMB5,500,000.00.
②Interest of loans from CATIC Finance Company in the reporting period is RMB139,207.25.
（5）Remuneration for key management members
There are 14 key management members in the reporting period and 11 key management members in prior reporting period. See the following table for detailed remuneration:
Item 2014 2013
Remuneration for key
13,818,900.00 11,050,000.00
management members
6. Receivables from and payables to related party
（1）Receivables from related party
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
31/12/2014 31/12/2013 Item Related party
Carrying Bad debt Carrying Bad debt amount provision amount provision Accounts
2,134,424.46 106,721.22 2,154,095.08 107,704.75 receivable Rainbow Department
524,313.00 68,144.58 644,059.00 32,202.95 SAtVorIeC
1,477,311.21 73,865.56 10,884,289.63 544,214.48 Shennan Circuits
Zhonghang Electronic
- - 197,396.00 197,396.00 Company
Chengdu CATIC Property
7,875.00 393.75 - - Company
Notes receivable 6,162,768.29 - 7,000,000.00 - Shennan Circuits
Zhonghang Electronic
- - 100,000.00 - Company
CATIC Property
Other receivables - - 6,700.00 335.00 Management
Xi’an Skytel Hotel - - 1,750,000.00 87,500.00 Ganzhou CATIC Real
172,665.60 14,766.56 122,665.60 6,133.28 Estate Company
Rainbow Department
308,001.60 15,400.08 167,856.60 8,392.83 Store
CATIC Changtai Company 50,000.00 2,500.00 - - AVIC Training Center - - 11,424.70 571.24 Chengdu CATIC Property
115,616.40 11,561.64 115,616.40 5,780.82 Company
（2）Payables to related party
Item Related party 31/12/2014 31/12/2013 Zhonghang Electronic
Accounts payable - 45,549.40 Company
Shanghai Watch 647,691.97 131,230.72 Prepayments AVIC - 15,469.00 Other payables CATIC Building Company - 8,227.10 AVIC Nanguang Company - 3,354.90 CATIC City Investment
37,700.00 37,700.00 Company
AVIC Securities Company 187,440.00 178,920.00 AVIC IHL 150,000,000.00 - CATIC Real Estate
424,800.00 424,800.00 Company
CATIC Changtai Company 221,712.00 221,712.00 CATIC Jiufang Asset Mgmt
60,606.00 60,606.00 Company
Rainbow Department Store 60,000.00 60,000.00 Chengdu CATIC Sunshine
114,648.52 4,364.60 Real Estate Company
XI. Commitments and contingencies
1. Significant commitments
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
（1）Capital commitment
Contract already signed but not yet recognized in the financial
31/12/2014 31/12/2013 statements
Long-term assets construction commitment 187,127,768.52 7,117,817.60（2）Operating lease commitment
As of the balance sheet date, the irrevocable operating lease contracts signed by the Company are as follows:
The minimum lease payment for irrevocable operating
31/12/2014 31/12/2013 lease:
The 1st year after the balance sheet day 28,940,871.89 39,333,248.01 The 2nd year after the balance sheet day 18,388,748.63 25,091,639.54 The 3rd year after the balance sheet day 8,702,855.74 10,776,187.77 Years afterwards 3,008,648.97 6,241,600.00 Total 59,041,125.23 81,442,675.32（3）Other commitments
As at 31 December, 2014, there is no commitment that shall be disclosed.
2. Contingencies
（1）Contingent liabilities and financial influence formed by providing liability guarantee to other units
Refer to Note X. 5(3) for details of external guarantees entered by companies in the scope of consolidation, and guarantee between parent company and subsidiaries.
（2）As at 31 December 2014, there is no pending actions, external guarantees and other contingencies that shall be disclosed.（3）As at 31 December 2014, there is no other contingencies that shall be disclosed.
XII. Post balance sheet events
1. Profit distribution after balance sheet date
The resolution of 2014 profit distribution proposal has been passed on the 17th Board Meeting of the 7th Board of Directors on 10 March 2015. It proposed to distribute cash dividend of RMB1.00 (tax inclusive) for every 10 shares held by shareholders based on the total 392,767,870 shares as at 31 December 2014. Cash dividend that proposed to be distributed amounts to RMB39,276,787.00. The proposal is subject to approval from Annual GeneralShareholders’ Meeting.
2. Other events after balance sheet date
Pursuant to the resolution passed in the 17th Board Meeting of the 7th Board of Directors on 10 March 2015, the Company plans to apply credit facility of no more than RMB 2,200,000,000.00 from banks in form of guaranteed loan, mortgage loanetc… in 2015. The proposal of credit facility application is subject to approval from Annual GeneralShareholders’ Meeting.
Pursuant to the resolution passed in the 17th Board Meeting of the 7th Board of Directors on 10 March 2015, the Company plans to provide guarantee to HAMONY Company, Sales Company, Manufacturing Company, Technology Company, FIYTA Hong Kong and Trading Company for their application of credit facility of no more than RMB1,000,000,000.00 in 2015. This credit facility is included in the total credit facility of RMB2,200,000,000.00 to be applied in 2015 mentioned above. The proposal of credit facility application is subject to approval from Annual GeneralShareholders’ Meeting.
XIII. Other significant events
On 5 May 2014, Shenzhen HARMONY World Watch Center Co., Ltd filed for deregistration to Market Supervision
Administration of Shenzhen Municipality.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
XIV. Notes to the parentcompany’s financial statements
1. Accounts receivable
（1）Accounts receivable by categories:
31/12/2014
Category
Provision for bad Provision
AmountPercentage% Net amount and doubtful debts rate%
Receivables that are individually
significant in amount and
- - - - - provided for bad debt
separately
Receivables provided for bad
debt by portfolio
Incl.: Portfolio of aging 11,338,842.00 92.17 566,942.10 5.00 10,771,899.90 Portfolio of specific accounts 963,888.00 7.83 - - 963,888.00 Subtotal of portfolios 12,302,730.00 100.00 566,942.10 4.61 11,735,787.90 Receivables that are individually
insignificant in amount but
- - - - - provided for bad debt
separately
Total 12,302,730.00 100.00 566,942.10 4.61 11,735,787.90（Continued）
31/12/2013
Category
Provision for bad Provision
AmountPercentage% Net amount and doubtful debts rate%
Receivables that are
individually significant in
- - - - - amount and provided for
bad debt separately
Receivables provided for bad
debt by portfolio
Incl.: Portfolio of aging - - - - - Portfolio of specific accounts 239,193,039.81 100.00 - - 239,193,039.81 Subtotal of portfolios 239,193,039.81 100.00 - - 239,193,039.81 Receivables that are
individually insignificant in
- - - - - amount but provided for bad
debt separately
Total 239,193,039.81 100.00 - - 239,193,039.81Note：
① Accounts receivable that are provided for bad debt based on aging analysis in aging portfolio:
31/12/2014
Aging
Provision for bad
Amount Percentage% Provision rate% Net amount and doubtful debts
11,338,842.00 100.00 566,942.10 5.00 10,771,899.90 Within 1 year
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
- - - - - 1 to 2 years
- - - - - 2 to 3 years
- - - - - Over 3 years
Total 11,338,842.00 100.00 566,942.10 5.00 10,771,899.90Continued：
31/12/2013
Aging
Provision for bad
Amount Percentage% Provision rate% Net amount and doubtful debts
- - - - - Within 1 year
- - - - - 1 to 2 years
- - - - - 2 to 3 years
- - - - - Over 3 years
Total - - - - -② among the portfolio, accounts receivable that are provided for bad debt using other methods
Name of portfolio Carrying amount Bad debt provision Accrualrate% Portfolio of specific
963,888.00 - - accounts
（2）Bad debt provisions accrued, received or reversed in the current period
The amount of bad debt provisions accrued in current period is RMB566,942.10 and there is no bad debt provisions received or reversed in the current period.
（3）Accounts receivable due from the top five debtors of the Company are as follows:
The sum of top 5 accounts receivable is RMB8,836,242.00, accounting for71.82% of total accounts receivable, and the total amount of associated bad debt provisions is RMB441,812.10.
2. Other receivables
(1)Other receivables disclosed by categories:
31/12/2014
Category
Provision for bad Provision
AmountPercentage% Net amount and doubtful debts rate%
Receivables that are
individually significant in
- - - - - amount and provided for
bad debt separately
Receivables provided for bad
debt by portfolio
Incl.: Portfolio of aging 283,905.40 0.02 27,484.97 9.68 256,420.43 Portfolio of specific accounts 1,524,256,691.23 99.98 - - 1,524,256,691.23 Subtotal of portfolios 1,524,540,596.63 100.00 27,484.97 0.01 1,524,513,111.66
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Receivables that are
individually insignificant in
- - - - - amount but provided for bad
debt separately
Total 1,524,540,596.63 100.00 27,484.97 0.01 1,524,513,111.66（Continued）
31/12/2013
Category
Provision for bad Provisio
AmountPercentage% Net amount and doubtful n rate%
debts
Receivables that are individually
significant in amount and - - - - - provided for bad debt separately
Receivables provided for bad debt
by portfolio
Incl.: Portfolio of aging 2,511,372.60 0.19 153,225.81 6.10 2,358,146.79 Portfolio of specific accounts 1,335,273,187.22 99.81 - - 1,335,273,187.22 Subtotal of portfolios 1,337,784,559.82 100.00 153,225.81 0.01 1,337,631,334.01 Receivables that are individually
insignificant in amount but - - - - - provided for bad debt separately
Total 1,337,784,559.82 100.00 153,225.81 0.01 1,337,631,334.01Note：
① Other receivables that are provided for bad debt based on aging analysis in aging portfolio:
31/12/2014
Aging
Bad debt
Amount Percentage% Provision rate% Net amount provision
254,050.00 89.48 12,702.50 5.00 241,347.50 Within 1 year
363.07 0.13 36.30 10.00 326.77 1 to 2 years
- - - - - 2 to 3 years
29,492.33 10.39 14,746.17 50.00 14,746.16 Over 3 years
Total 283,905.40 100.00 27,484.97 9.68 256,420.43Continued：
31/12/2013
Aging
Bad debt
Amount Percentage% Provision rate% Net amount provision
2,296,287.70 91.44 116,816.88 5.09 2,179,470.82 Within 1 year
110,000.07 4.38 11,000.01 10.00 99,000.06 1 to 2 years
35,542.50 1.41 10,662.75 30.00 24,879.75 2 to 3 years
69,542.33 2.77 14,746.17 21.20 54,796.16 Over 3 years
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
Total 2,511,372.60 100.00 153,225.81 6.10 2,358,146.79② Other receivables that are provided for bad debt using other method
Name of portfolio Carrying amount Bad debt provision Accrualrate% Portfolio of special
1,524,256,691.23 - - accounts
（2）Bad debt provision accrued, received or reversed in the current period
The amount of bad debt provision reversed in the current period is RMB125,740.84.
（4）Other receivables presented by nature of account
Item 31/12/2014 31/12/2013 Related party balances within
1,523,785,927.87 1,334,829,991.32 consolidated scope
Petty cash 620,763.36 827,108.10 Security deposit 64,050.00 1,814,050.00 Others 69,855.40 233,410.40 Total 1,524,540,596.63 1,337,704,559.82（5）Accounts receivable due from the top five debtors of the Company are as follows:
Percentage in total
Provision for bad closing balance of
Company name Nature Balance Aging and doubtful other receivables
debts(%)
HARMONY Company Transaction 949,235,308.79 Within 1 year 62.26 - Within 1 year
Sales Company Transaction 457,373,068.49 30.00 - Emile Choureit Within 1 year
Transaction 88,416,677.51 5.80 - Shenzhen Company
Within 1 year
Trading Company Transaction 27,483,121.61 1.80 - Within 1 year
FIYTA Hong Kong Transaction 1,147,471.00 0.08 - Total -- 1,523,655,647.40 -- 99.94 - 3. Long-term equity investments
31/12/2014 31/12/2013
Item
Impairment Impairment
Carrying amount Book value Carrying amount Book value provision provision
Investment in
730,799,720.00 - 730,799,720.00 732,199,720.00 - 732,199,720.00 subsidiaries
Investment to
42,389,759.91 - 42,389,759.91 43,237,940.12 - 43,237,940.12 associated companies
Total 773,189,479.91 - 773,189,479.91 775,437,660.12 - 775,437,660.12（1）Investment to subsidiaries
Closing Impairment balance for Invested units 31/12/2013 Increase Decrease 31/12/2014
provision impairment
provision
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
HARMONY
601,307,200.00 - - 601,307,200.00 - - Company
World Watch
1,400,000.00 - 1,400,000.00 - - - Center
Harbin Company 125,000.00 - - 125,000.00 - - Manufacturing
9,000,000.00 - - 9,000,000.00 - - Company
Technology
10,000,000.00 - - 10,000,000.00 - - Company
FIYTA Hong Kong 55,367,520.00 - - 55,367,520.00 - - Trade Company 5,000,000.00 - - 5,000,000.00 - - FIYTA Sales
50,000,000.00 - - 50,000,000.00 - - Company
Total 732,199,720.00 - 1,400,000.00 730,799,720.00 - -
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (all amounts in RMB Yuan unless otherwise stated)
（2）Investment to joint venture and association
Increase and decrease during the period
Closing enIn tev re ps rt ie sd
e s
31/12/2013
Additional withdrawn
I pn rv oe fs it tm anen dt
Adju ost tm hee rn t of
Other
diC via ds eh
n d
Impairment
31/12/2014
ib ma pla an irc me eo nf t investment investment
loss under
comprehensive
equity declared or
provision
Other
provision equity change profit
income
method distribution
①
Association
Shanghai
43,237,940.12 - - -848,180.21 - - - - - 42,389,759.91 - Watch
Total 43,237,940.12 - - -848,180.21 - - - - - 42,389,759.91 - 82
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated) 4. Operating revenue and operating cost
Item 2014 2013
Revenue Cost Revenue Cost 108,183,860.45 30,576,403.18 95,787,415.95 21,182,291.58 Main businesses
- - - - Other businesses
Total 108,183,860.45 30,576,403.18 95,787,415.95 21,182,291.58 5. Investment income
Item 2014 2013
Investment income from long-term equity investment measured by
88,741,300.42 74,971,478.14 cost method
Investment income from long-term equity investment measured by
-848,180.21 1,589,198.33 equity method
Total 87,893,120.21 76,560,676.47 XV. Supplementary information
1. Details of non-recurring gain or loss for the year
Item Year ended 31/12/2014 Note Disposal gain or loss of non-current assets -44,920.98
Overridden approval, or without official approval
-
document, or incidental tax return or exemption
Government grants included in current profit or loss
(except for the fixed or quantitative government grants,
enjoyed in a consecutive way, which closely related to the 10,344,542.00
enterprise businesses and according to certain state
policies and or on a nation-wide unified standard)
Tax for the possessions of funds collected from
-
non-monetary enterprises
Investment cost of subsidiaries, joint venture and
cooperative enterprises less than the profit incurred in
-
identifiable net asset fair value of invested unit when
investment
Profit and loss of non-monetary assets exchange -
Profit and loss from entrusting others to invest or manage
-
assets
Asset impairment provision accrued due to force majeure
-
such as natural disasters
Profit and loss of debt restructuring -
Enterprise restructuring expenses, such as expenses for
-
arranging employees,, integrating cost
Profit and loss over fair value part accrued in transactions
-
of unreasonable transaction price
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated) Current net profit and loss of subsidiaries from business
combination under common control from the opening -
period to combination date
Profit and loss incurred contingent matters unrelated to
-
normal operating business
Except for effective hedging business related to normal
operating business, profit and loss of fair value incurred in
-
financial assets and financial liabilities measured at fair
value through current profit and loss
Investment profit obtained by disposing financial assets,
financial liabilities and available-for-sale financial assets -
measured at fair value through current profit and loss
Impairment provision reversal of accounts receivable
-
under separate impairment test
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of investment
-
real asset subsequently measured in fair value mode
Influence on current profit and loss caused by one-off
adjustment according to requirements of laws and -
regulations about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than the
1,149,979.86
above items
Profit and loss items pursuant to the definition of
-
non-recurring profit and loss
Total non-recurring profit or loss 11,449,600.88
Less：effect of income tax of non-recurring profit or loss 2,657,581.21
Net non-recurring profit or losses 8,792,019.67
Less: effect of non-recurring profit or losses attributable
-
to minority shareholders (after tax)
Non-recurring profit or losses attributable to ordinary
8,792,019.67
shareholders of the Company
2. Return on Equity (ROE) and Earnings per share (EPS)
Weighted average EPS (Yuan per Share)
Profit of the reporting period
ROE% Basic EPS Diluted EPS Net profit attributable to ordinary shareholders of
8.62 0.371
the Company
Net profit attributable to ordinary shareholders of
8.10 0.348
the Company after deducting non-recurring profit
or loss
3. Supplementary information of changes of accounting policies
According to Accounting Standards for Business Enterprises No. 2----Long-Term Equity Investment, and other eight accounting
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated) standards issued in 2014, related accounting policies are changed and comparative figures are restated. Restated balance sheet as at 1 January 2013, 31 December 2013, and balance sheet as at 31 December 2014 are as follows:
|||
|-|-|
|1 January 2013|31 December 2013|

 Currentassets：
Currency funds 140,420,994.71 107,663,110.74 116,455,070.54 Financial assets measured at fair value
through profit or loss for the current - - - period
Notes receivable 2,000,000.00 7,100,000.00 6,162,768.29 Accounts receivable 309,117,274.31 324,457,339.19 351,276,905.53 Prepayments 75,418,566.40 43,487,613.07 43,054,642.06 Interest receivable - - - Dividend receivable - - - Other receivables 33,353,606.26 40,436,640.10 41,525,719.27 Inventories 1,883,265,248.76 2,123,342,820.93 2,133,791,024.32 Assets classified as held-for-sale assets - - - Non-current asset due within one year - - - Other current assets 51,043,401.97 30,811,991.07 14,421,516.43 Total current assets 2,494,619,092.41 2,677,299,515.10 2,706,687,646.44 Non- currentassets：
Available-for-sale financial assets 85,000.00 85,000.00 85,000.00 Held-to-maturity investment - - - Long-term receivables - - - Long-term equity investment 41,648,741.79 43,237,940.12 42,389,759.91 Investment property 244,379,430.63 235,235,684.76 226,091,938.89 Fixed assets 317,801,267.87 306,888,964.31 323,732,870.58 Construction in progress 3,866,365.79 6,608,187.55 51,389,263.53 Construction materials - - - Disposal of fixed assets - - - Productive biological asset - - - Oil and gas assets - - -
Intangible assets 36,749,627.18 36,168,611.72 35,502,525.72
Development expenditure - - -
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated)
|||
|-|-|
|1 January 2013|31 December 2013|
|-126,274,611.5861,339,687.61-832,144,732.453,326,763,824.86|-146,542,685.5874,159,134.2932,476,867.85881,403,076.183,558,702,591.28|

Continued：
|||
|-|-|
|1 January 2013|31 December 2013|

 Currentliabilities：
Short-term loans 1,409,800,000.00 1,023,000,000.00 989,445,000.00 Financial liabilities measured at fair value
through profit or loss for the current - - - period
Notes payable - - - Accounts payable 211,297,566.43 222,347,620.47 147,119,118.81 Advances from customers 12,131,032.89 9,667,278.30 12,087,368.17 Employee remuneration payable 28,090,979.22 31,173,812.15 38,648,432.41 Taxes payable 55,705,075.23 57,628,175.26 77,602,770.06 Interest payable 7,376,397.56 19,422,859.82 19,420,893.75 Dividend payable - - - Other payables 37,453,414.11 38,454,934.30 188,574,900.45 Liabilities classified as held-for-sale
- - - liabilities
Non-current liabilities due within one
55,846,683.00 39,310,000.00 - year
Other current liabilities 10,088,432.90 4,924,394.22 5,482,521.27 Total current liabilities 1,827,789,581.34 1,445,929,074.52 1,478,381,004.92 Non-currentliabilities：
Long-term loans 48,383,020.45 173,274,950.01 139,952,425.65 Bonds payable - 397,728,975.00 398,767,929.40 Long-term payable - - -
Long-term payroll payable - - -
Specific payable - - -
Contingent liabilities - - -
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated)
|||
|-|-|
|1 January 2013|31 December 2013|
|1,506,000.00--49,889,020.451,877,678,601.79392,767,870.00525,506,952.78--7,169,555.04-148,587,680.61386,984,676.781,446,677,625.132,407,597.941,449,085,223.073,326,763,824.86|2,950,000.00--573,953,925.012,019,882,999.53392,767,870.00525,506,952.78--8,260,833.09-156,714,094.20469,706,600.671,536,434,684.562,384,907.191,538,819,591.753,558,702,591.28|

Chapter 12 Documents Available for Inspection
I. Accounting Statements signed by and under the seal of the legal representative, chief accountant and accounting supervisor
II. Original of theAuditors’ Report under the seal of the accounting firm and signed by and under the seals of certified public accountants.
III. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities Times and Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2014 (expressed in RMB Yuan unless otherwise indicated) FIYTA Holdings Ltd. 12 March 2015