FIYTA Holdings Ltd.
Semi-Annual Financial Report 2018
Legal Representative:Xu Dongsheng
Chief Accountant Officer: Chen Zhuo
Person in charge of the accounting department: Tian Hui
Financial Report
I.Auditors’ Report
The Semi-Annual Report has not been audited.
II. Financial Statements
The currency applied in the financial notes and statements is Renminbi (CNY)
1. Consolidated Balance Sheet
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Ending balance|Ending balance|
|Current assets:|||
|Monetary fund|281,009,271.58|187,152,891.32|
|Settlement reserve|||
|Inter-bank lending|||
|Financial assets which is measured based on|||
|the fair value and whose movement is counted to the|||
|current gain/loss|||
|Derivative financial assets|||
|Notes receivable|4,632,089.34|9,693,883.68|
|Accounts receivable|378,420,568.27|326,254,624.94|
|Advance payment|24,690,349.29|24,663,314.53|
|Receivable premium|||
|Reinsurance accounts receivable|||
|Reserve for reinsurance contract receivable|||
|Interest receivable|||
|Dividends receivable|||
|Other receivables|47,707,666.00|34,990,539.09|
|Redemptory monetary capital for sale|||
|Inventories|1,735,371,328.09|1,820,526,676.26|

||||
|-|-|-|
|Held-for-sale assets|||
|Non-current assets due within a year|||
|Other current assets|23,779,637.36|24,616,815.21|
|Total current assets|2,495,610,909.93|2,427,898,745.03|
|Non-current assets:|||
|Provision of loans and advance in cash|||
|Available-for-sale financial assets|85,000.00|85,000.00|
|Held-to-due investments|||
|Long term accounts receivable|||
|Long-term equity investment|43,972,531.47|43,879,518.09|
|Investment real estate|348,258,775.18|305,493,987.77|
|Fixed assets|463,913,136.18|523,699,592.65|
|Construction-in-process|12,515,382.25|10,947,300.53|
|Engineering supplies|||
|Clearing of fixed assets|||
|Productive biological asset|||
|Oil and gas assets|||
|Intangible assets|44,446,605.63|44,223,280.21|
|Development expenses|||
|Goodwill|||
|Long-term expenses to be apportioned|109,190,273.11|109,409,785.49|
|Deferred income tax asset|106,468,887.10|105,905,944.80|
|Other non-current assets|4,863,862.29|8,246,538.33|
|Total non-current assets|1,133,714,453.21|1,151,890,947.87|
|Total assets|3,629,325,363.14|3,579,789,692.90|
|Current liabilities:|||
|Short term borrowings|479,917,100.00|525,990,510.00|
|Borrowings from central bank|||
|Deposits taking and interbank placement|||
|Loans from other banks|||
|Financial liabilities measured based on the fair|||
|value and whose change was charged to the current|||
|gain and loss.|||
|Derivative financial liabilities|||
|Notes payable|||

||||
|-|-|-|
|Accounts payable|266,982,797.21|263,256,495.65|
|Advance receipts|18,605,653.79|15,141,587.79|
|Funds from selling out and repurchasing|||
|financial assets|||
|Service charge and commission payable|||
|Salaries payable to the employees|40,464,315.83|71,564,367.14|
|Taxes payable|56,008,726.34|55,857,236.59|
|Interest payable|686,654.15|1,464,729.11|
|Dividends payable|||
|Other payables|84,655,036.89|57,767,536.64|
|Payable reinsurance|||
|Reserve for insurance contract|||
|Acting trading securities|||
|Income from securities underwriting on|||
|commission|||
|Held-for-sale liabilities|||
|Non-current liabilities due within a year|35,000,000.00|35,000,000.00|
|Other current liabilities|||
|Total current liabilities|982,320,284.21|1,026,042,462.92|
|Non-current liabilities:|||
|Long term borrowings|62,153,235.50|79,870,353.00|
|Bonds payable|||
|Including: preferred shares|||
|Perpetual bond|||
|Long-term accounts payable|||
|Long term accrued payroll|||
|Special accounts payable|||
|Predicted liabilities|||
|Deferred income|5,904,000.00|5,904,000.00|
|Deferred income tax liability|||
|Other non-current liabilities|||
|Total non-current liabilities|68,057,235.50|85,774,353.00|
|Total liabilities|1,050,377,519.71|1,111,816,815.92|
|Owner’s equity:|||
|Capital Stock|438,744,881.00|438,744,881.00|

||||
|-|-|-|
|Other equity instruments|||
|Including: preferred shares|||
|Perpetual bond|||
|Capital Reserve|1,062,455,644.22|1,062,455,644.22|
|Less: shares in stock|||
|Other comprehensive income|-12,916,362.14|-11,523,442.39|
|Special reserve|||
|Surplus Reserve|206,805,713.35|206,805,713.35|
|Reserve against general risks|||
|Retained earnings|883,852,486.46|771,484,565.02|
|Total owners’ equity attributable to the parent|||
||2,578,942,362.89|2,467,967,361.20|
|company|||
|Minority shareholders’ equity|5,480.54|5,515.78|
|Total owner’s equity|2,578,947,843.43|2,467,972,876.98|
|Total liabilities and owners’ equity|3,629,325,363.14|3,579,789,692.90|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
2. Balance Sheet, Parent Company
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Ending balance|Ending balance|
|Current assets:|||
|Monetary fund|253,398,514.18|131,163,944.43|
|Financial assets which is measured based on|||
|the fair value and whose movement is counted to the|||
|current gain/loss|||
|Derivative financial assets|||
|Notes receivable|||
|Accounts receivable|7,386,159.04|6,832,006.11|
|Advance payment|||
|Interest receivable|||
|Dividends receivable|||
|Other receivables|698,286,652.54|831,952,437.86|

||||
|-|-|-|
|Inventories|||
|Held-for-sale assets|||
|Non-current assets due within a year|||
|Other current assets|10,533,391.51|9,089,170.12|
|Total current assets|969,604,717.27|979,037,558.52|
|Non-current assets:|||
|Available-for-sale financial assets|85,000.00|85,000.00|
|Held-to-due investments|||
|Long term accounts receivable|||
|Long-term equity investment|1,375,221,122.40|1,375,128,109.02|
|Investment real estate|265,238,770.42|270,241,724.52|
|Fixed assets|334,026,583.81|340,765,873.45|
|Construction-in-process|12,515,382.25|10,947,300.53|
|Engineering supplies|||
|Clearing of fixed assets|||
|Productive biological asset|||
|Oil and gas assets|||
|Intangible assets|36,303,042.25|36,932,963.95|
|Development expenses|||
|Goodwill|||
|Long-term expenses to be apportioned|4,789,075.14|4,418,287.94|
|Deferred income tax asset|1,499,126.32|1,499,126.32|
|Other non-current assets|1,322,816.84|2,687,910.84|
|Total non-current assets|2,031,000,919.43|2,042,706,296.57|
|Total assets|3,000,605,636.70|3,021,743,855.09|
|Current liabilities:|||
|Short term borrowings|455,000,000.00|470,000,000.00|
|Financial liabilities measured based on the fair|||
|value and whose change was charged to the current|||
|gain and loss.|||
|Derivative financial liabilities|||
|Notes payable|||
|Accounts payable|57,686,340.48|60,520,874.66|
|Advance receipts|3,401,495.93|4,212,930.07|
|Salaries payable to the employees|4,580,915.75|9,291,422.00|

||||
|-|-|-|
|Taxes payable|2,626,857.04|1,038,481.26|
|Interest payable|663,902.90|929,155.39|
|Dividends payable|||
|Other payables|38,509,235.57|20,666,945.05|
|Held-for-sale liabilities|||
|Non-current liabilities due within a year|35,000,000.00|35,000,000.00|
|Other current liabilities|||
|Total current liabilities|597,468,747.67|601,659,808.43|
|Non-current liabilities:|||
|Long term borrowings|57,361,928.00|74,861,928.00|
|Bonds payable|||
|Including: preferred shares|||
|Perpetual bond|||
|Long-term accounts payable|||
|Long term accrued payroll|||
|Special accounts payable|||
|Predicted liabilities|||
|Deferred income|5,904,000.00|5,904,000.00|
|Deferred income tax liability|||
|Other non-current liabilities|||
|Total non-current liabilities|63,265,928.00|80,765,928.00|
|Total liabilities|660,734,675.67|682,425,736.43|
|Owner’s equity:|||
|Capital Stock|438,744,881.00|438,744,881.00|
|Other equity instruments|||
|Including: preferred shares|||
|Perpetual bond|||
|Capital Reserve|1,068,111,185.32|1,068,111,185.32|
|Less: shares in stock|||
|Other comprehensive income|||
|Special reserve|||
|Surplus Reserve|206,805,713.35|206,805,713.35|
|Retained earnings|626,209,181.36|625,656,338.99|
|Total owner’s equity|2,339,870,961.03|2,339,318,118.66|

||||
|-|-|-|
|Total liabilities and owners’ equity|3,000,605,636.70|3,021,743,855.09|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
3.Consolidated Profit Statement
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|I. Turnover|1,695,891,432.72|1,599,541,144.35|
|Including: operating income|1,695,891,432.72|1,599,541,144.35|
|Interest income|||
|Earned insurance premium|||
|Service charge and commission income|||
|II. Total operating costs|1,556,492,673.56|1,488,102,213.22|
|Including: Operating costs|976,325,736.35|941,479,684.84|
|Interest payment|||
|Service charge and commission payment|||
|Surrender Value|||
|Compensation expenses, net|||
|Provision of reserve for insurance|||
|contract, net|||
|Payment of policy dividend|||
|Reinsurance expenses|||
|Taxes and surcharges|17,790,786.43|15,181,497.28|
|Sales costs|422,113,041.69|394,286,321.79|
|. Administrative expenses|125,528,317.71|98,170,386.95|
|Financial expenses|18,147,791.49|26,200,633.06|
|Loss from impairment of assets|-3,413,000.11|12,783,689.30|
|Add: Income from change of fair value (loss is|||
|stated with “-“)|||
|Investment income (loss is stated with “-“)|93,013.38|188,871.89|
|Including: return on investment in associate|||
||93,013.38|188,871.89|
|and joint venture|||
|Exchange income (loss stated with “-“)|||

||||
|-|-|-|
|Income from disposal of assets (loss is|||
||-54,407.16|-13,352.95|
|stated with “-“)|||
|Other income|6,497,018.80|1,478,043.00|
|III. Operating Profit (loss is stated with “-“)|145,934,384.18|113,092,493.07|
|Plus: Non-operating income|363,859.51|145,866.91|
|Less: Non-operating expenses|466,522.53|661,190.44|
|IV. Total profit (total loss is stated with “-”)|145,831,721.16|112,577,169.54|
|Less: Income tax expense|33,463,799.72|25,965,385.00|
|V. Net Profit (net loss is stated with “-“)|112,367,921.44|86,611,784.54|
|(I) Net Profit from sustainable operation (net loss|||
||112,367,921.44|86,611,784.54|
|is stated with “-“)|||
|(II) Net profit from termination of business|||
|operation (net loss is stated with “-“)|||
|Net profit attributable to the parent company’s|||
||112,367,921.44|86,708,824.76|
|owner|||
|Minority shareholders’ gain/loss||-97,040.22|
|VI. Net of other comprehensive income after tax|-1,392,954.99|7,086,490.52|
|Net of other comprehensive income after tax|||
||-1,392,919.75|7,168,544.58|
|attributable to the parent company’s owner|||
|(I) Other comprehensive income which cannot be|||
|re-classified into the gain and loss|||
|1. Movement of the net liabilities and net|||
|assets re-measured for setting the beneficial plan|||
|2. Share enjoyable in the other|||
|comprehensive income in which the investee cannot be|||
|re-classified into the gain and loss under the equity|||
|method|||
|(II) Other comprehensive income which cannot be|||
||-1,392,919.75|7,168,544.58|
|re-classified into the gain and loss in future|||
|1. Share enjoyable in the other|||
|comprehensive income in which the investee cannot be|||
|re-classified into the gain and loss under the equity|||
|method in future|||
|2. Gain/loss from change in the fair value|||
|of the financial assets available for sale|||
|3. Gain/loss from which the|||
|held-to-maturity investment is re-classified as|||
|available-for-sale financial assets|||

||||
|-|-|-|
|4. Valid part of the gain/loss from cash|||
|flow hedge|||
|5. Conversion difference in foreign|-1,392,919.75||
|||7,168,544.58|
|currency statements|||
|6. Others|||
|Net amount of other comprehensive income after tax|-35.24||
|||-82,054.06|
|attributable to minority shareholders|||
|VII. Total comprehensive income|110,974,966.45|93,698,275.06|
|Total comprehensive income attributable to the|110,975,001.69||
|||93,877,369.34|
|parent company’s owner|||
|Total comprehensive income attributable to|-35.24||
|||-179,094.28|
|minority shareholders|||
|VIII. Earnings per share:|||
|(I) Basic earnings per share|0.2561|0.1976|
|(II) Diluted earnings per share|0.2561|0.1976|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
4.Statement of Profit, Parent Company
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|I. Revenue|56,119,634.18|51,354,423.93|
|Less: Operating cost|9,578,544.70|8,618,881.55|
|Taxes and surcharges|2,206,362.07|1,857,724.22|
|Sales costs||5,024,222.36|
|. Administrative expenses|41,637,155.81|33,744,643.77|
|Financial expenses|3,554,000.36|5,846,311.05|
|Loss from impairment of assets|||
|Add: Income from change of fair value (loss isstated with “-“)|||
|Investment income (loss is stated with “-“)|93,013.38|188,871.89|
|Including: return on investment inassociate and joint venture|||
||93,013.38|188,871.89|
|Income from disposal of assets (loss is|-13,917.68||

||||
|-|-|-|
|stated with “-“)|||
|Other income|1,598,000.00|754,000.00|
|II. Operating Profit (loss is stated with “-“)|820,666.94|-2,794,487.13|
|Plus: Non-operating income|9,480.00|35,879.89|
|Less: Non-operating expenses|446,782.07|20,000.00|
|III. Total profit (total loss is stated with “-“)|383,364.87|-2,778,607.24|
|Less: Income tax expense|-169,477.50|-1,787,850.83|
|IV. Net Profit (net loss is stated with “-“)|552,842.37|-990,756.41|
|(I) Net Profit from sustainable operation (net|||
||552,842.37|-990,756.41|
|loss is stated with “-“)|||
|(II) Net profit from termination of business|||
|operation (net loss is stated with “-“)|||
|V. Net of other comprehensive income after tax|||
|(I) Other comprehensive income which cannot|||
|be re-classified into the gain and loss|||
|1. Movement of the net liabilities and|||
|net assets re-measured for setting the beneficial plan|||
|2. Share enjoyable in the other|||
|comprehensive income in which the investee cannot|||
|be re-classified into the gain and loss under the|||
|equity method|||
|(II) Other comprehensive income which cannot|||
|be re-classified into the gain and loss in future|||
|1. Share enjoyable in the other|||
|comprehensive income in which the investee cannot|||
|be re-classified into the gain and loss under the|||
|equity method in future|||
|2. Gain/loss from change in the fair|||
|value of the financial assets available for sale|||
|3. Gain/loss from which the|||
|held-to-maturity investment is re-classified as|||
|available-for-sale financial assets|||
|4. Valid part of the gain/loss from cash|||
|flow hedge|||
|5. Conversion difference in foreign|||
|currency statements|||
|6. Others|||
|VI. Total comprehensive income|552,842.37|-990,756.41|

||||
|-|-|-|
|VII. Earnings per share:|||
|(I) Basic earnings per share|0.0013|-0.0023|
|(II) Diluted earnings per share|0.0013|-0.0023|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
5. Consolidated Cash Flow Statement
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|I. Net cash flows arising from operating activities:|||
|Cash received from sales of goods and supply|||
||1,905,278,291.59|1,812,867,961.66|
|of labor service|||
|Net increase of customers’ deposit and due|||
|from banks|||
|Net increase of borrowings from the central|||
|bank|||
|Net increase of borrowings from other financial|||
|institutions|||
|Cash received from the premium of the original|||
|insurance contract|||
|Net cash received from the reinsurance|||
|business|||
|Net increase of the reserve from policy holders|||
|and investment|||
|Net increase from disposal of financial assets|||
|which is measured based on the fair value and|||
|whose movement is counted to the current gain/loss|||
|Cash received from interest, service charge|||
|and commission|||
|Net increase of loan from other banks|||
|Net increase of fund from repurchase business|||
|Rebated taxes received|185,691.63|84,719.44|
|Other operation activity related cash receipts|25,022,648.38|19,800,294.79|
|Subtotal of cash flow in from operating activity|1,930,486,631.60|1,832,752,975.89|

||||
|-|-|-|
|Cash paid for purchase of goods and reception|||
||1,010,882,821.40|980,063,342.31|
|of labor services|||
|Net increase of loans and advances to|||
|customers|||
|Net increase of due from central bank and due|||
|from banks|||
|Cash from payment for settlement of the|||
|original insurance contract|||
|Cash paid for interest, service charge and|||
|commission|||
|Cash for payment of policy dividend|||
|Cash paid to and for staff|308,576,830.37|263,216,670.99|
|Taxes paid|169,009,260.06|130,097,049.65|
|Other business activity related cash payments|217,345,445.68|182,660,252.41|
|Subtotal of cash flow out from operating activity|1,705,814,357.51|1,556,037,315.36|
|Net cash flows arising from operating activities|224,672,274.09|276,715,660.53|
|II. Cash flows arising from investment activities:|||
|Cash received from recovery of investment|||
|Cash received from investment income|||
|Net cash from disposal of fixed assets and|||
|intangible asset and recovery of other long term|6,872.90|24,249.89|
|assets|||
|Net cash received from disposal of subsidiaries|||
|and other operating units|||
|Other investment related cash receipts|||
|Subtotal of cash flow in from investment activity|6,872.90|24,249.89|
|Cash paid for purchase/construction of fixed|||
||52,519,739.81|56,447,301.65|
|assets, Intangible assets and other long term assets|||
|Cash paid for investment|||
|Net increase of the pledged loan|||
|Net cash paid for acquisition of subsidiaries and|||
|other operation units|||
|Other investment related cash payments|||
|Subtotal of cash flow out from investment activity|52,519,739.81|56,447,301.65|
|Net cash flow arising from investment activities|-52,512,866.91|-56,423,051.76|
|III. Cash flows arising from fund raising activities:|||

||||
|-|-|-|
|Cash received from absorbing investment|||
|Incl.: Cash received from the subsidiaries’|||
|absorption of minority shareholders’ investment|||
|Cash received from loans|384,997,200.00|173,846,200.00|
|Cash received from bond issuing|||
|Other fund-raising related cash receipts|||
|Subtotal of cash flow in from fund raising activity|384,997,200.00|173,846,200.00|
|Cash paid for debt repayment|448,409,609.38|371,965,603.86|
|Cash paid for dividend/profit distribution or|||
||15,009,057.38|66,091,946.92|
|repayment of interest|||
|Including: Dividend and profit paid by the|||
|subsidiaries to minority shareholders|||
|Cash paid for other financing activities|||
|Sub-total cash flow paid for financing activities|463,418,666.76|438,057,550.78|
|Net cash flow arising from financing activities|-78,421,466.76|-264,211,350.78|
|IV. Change of exchange rate influencing the cash|||
||118,439.84|339,990.07|
|and cash equivalent|||
|V. Net increase of cash and cash equivalents|93,856,380.26|-43,578,751.94|
|Plus: Opening balance of cash and cash|||
||184,947,891.32|427,227,755.81|
|equivalents|||
|VI. Ending balance of cash and cash equivalents|278,804,271.58|383,649,003.87|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
6.Cash Flow Statement, Parent Company
Prepared by FIYTA Holdings Ltd.
June 30, 2018
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|I. Net cash flows arising from operating activities|||
|Cash received from sales of goods and supply|||
||56,758,456.16|50,374,752.27|
|of labor service|||
|Rebated taxes received|||
|Other operation activity related cash receipts|1,204,947,705.78|264,986,637.47|
|Subtotal of cash flow in from operating activity|1,261,706,161.94|315,361,389.74|

||||
|-|-|-|
|Cash paid for purchase of goods and reception|||
|of labor services|||
|Cash paid to and for staff|33,422,054.30|31,949,428.47|
|Taxes paid|4,702,936.63|4,894,598.25|
|Other business activity related cash payments|1,045,289,650.60|13,685,482.18|
|Subtotal of cash flow out from operating activity|1,083,414,641.53|50,529,508.90|
|Net cash flows arising from operating activities|178,291,520.41|264,831,880.84|
|II. Cash flows arising from investment activities:|||
|Cash received from recovery of investment|||
|Cash received from investment income|||
|Net cash from disposal of fixed assets and|||
|intangible asset and recovery of other long term|||
|assets|||
|Net cash received from disposal of subsidiaries|||
|and other operating units|||
|Other investment related cash receipts|||
|Subtotal of cash flow in from investment activity|||
|Cash paid for purchase/construction of fixed|||
||9,442,405.28|26,633,834.50|
|assets, Intangible assets and other long term assets|||
|Cash paid for investment|||
|Net cash paid for acquisition of subsidiaries and|||
|other operation units|||
|Other investment related cash payments|||
|Subtotal of cash flow out from investment activity|9,442,405.28|26,633,834.50|
|Net cash flow arising from investment activities|-9,442,405.28|-26,633,834.50|
|III. Cash flows arising from fund raising activities:|||
|Cash received from absorbing investment|||
|Cash received from loans|360,000,000.00|165,000,000.00|
|Cash received from bond issuing|||
|Other fund-raising related cash receipts|||
|Subtotal of cash flow in from fund raising activity|360,000,000.00|165,000,000.00|
|Cash paid for debt repayment|392,500,000.00|354,000,000.00|
|Cash paid for dividend/profit distribution or|||
||14,108,861.83|62,917,164.79|
|repayment of interest|||
|Cash paid for other financing activities|||
|Sub-total cash flow paid for financing activities|406,608,861.83|416,917,164.79|

||||
|-|-|-|
|Net cash flow arising from financing activities|-46,608,861.83|-251,917,164.79|
|IV. Change of exchange rate influencing the cashand cash equivalent|||
||-5,683.55|-26,249.80|
|V. Net increase of cash and cash equivalents|122,234,569.75|-13,745,368.25|
|Plus: Opening balance of cash and cashequivalents|||
||128,958,944.43|269,372,926.47|
|VI. Ending balance of cash and cash equivalents|251,193,514.18|255,627,558.22|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
7.Consolidated Statement of Changes inOwner’s Equity
Prepared by FIYTA Holdings Ltd.
June 30, 2018
Amount in the reporting period
In CNY
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Reporting period|||||||||||||
||Owners’ equity attributable to the parent company|||||||||||||
|||Other equity instruments|||||Other|||Reserve||Minority|Total|
|Items||||||||||||||
|||||||Less:||||||||
||Capital|Preferre|Perpetu||Capital|shares in|comprehe|Special|Surplus|against|Retained|shareholde|owner’s|
||Stock|||Others|Reserve||nsive|reserve|Reserve|general|earnings|rs’ equity|equity|
|||d shares|al bond|||stock||||||||
||||||||income|||risks||||
|I. Ending balance of the|438,744,||||1,062,455,||-11,523,44||206,805,7||771,484,5||2,467,972,|
|||||||||||||5,515.78||
|previous year|881.00||||644.22||2.39||13.35||65.02||876.98|
|Plus: Change in||||||||||||||
||||||||||||||0.00|
|accounting policy||||||||||||||
|Correction of||||||||||||||
||||||||||||||0.00|
|previous errors||||||||||||||
|Consolidation||||||||||||||
|of enterprises under the|||||||||||||0.00|
|same control||||||||||||||
|Others|||||||||||||0.00|
|II. Opening balance of|438,744,||||1,062,455,||-11,523,44||206,805,7||771,484,5||2,467,972,|
|||||||||||||5,515.78||
|the reporting year|881.00||||644.22||2.39||13.35||65.02||876.98|
|III. Decrease/increase of||||||||||||||
||||||||-1,392,919||||112,367,92||110,974,9|
|the report year (decrease||||||||||||-35.24||
||||||||.75||||1.44||66.45|
|is stated with “-“)||||||||||||||
|(I) Total comprehensive|||||||-1,392,919||||112,367,92|-35.24|110,974,9|

|||||
|-|-|-|-|
|income|.75|1.44|66.45|
|(II) Owners’ input and||||
||||0.00|
|decrease of capital||||
|1.Common shares||||
|contributed by the|||0.00|
|shareholder||||
|2. Capital contributed by||||
|other equity instruments|||0.00|
|holders||||
|3. Amount of payment for||||
|shares credited to|||0.00|
|owners’ equity||||
|4. Others|||0.00|
|(III) Profit Distribution|||0.00|
|1. Provision of surplus||||
||||0.00|
|reserve||||
|2. Provision of generic||||
||||0.00|
|risk reserve||||
|3. Distribution to the||||
||||0.00|
|owners (or shareholders)||||
|4. Others|||0.00|
|(IV) Internal carry-over of||||
||||0.00|
|owners’ equity||||
|1. Conversion of capital||||
|reserve into capital (or|||0.00|
|capital stock)||||
|2. Conversion of surplus||||
|reserve into capital (or|||0.00|
|capital stock)||||
|3. Loss made up with||||
||||0.00|
|surplus reserve||||
|4. Others|||0.00|
|(V) Special reserve|||0.00|
|1. Provision in the||||
||||0.00|
|reporting period||||
|2.. Applied in the||||
||||0.00|
|reporting period||||
|(VI) Others|||0.00|

|||||||||
|-|-|-|-|-|-|-|-|
|IV. Ending balance of the|438,744,|1,062,455,|-12,916,36|206,805,7|883,852,4||2,578,947,843.43|
|||||||5,480.54||
|reporting period|881.00|644.22|2.14|13.35|86.46|||

 Amount of the previous year
In CNY
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Previous period|||||||||||||
||Owners’ equity attributable to the parent company|||||||||||||
|||Other equity instruments|||||Other|||Reserve||Minority|Total|
|Items||||||||||||||
|||||||Less:||||||||
||Capital|Preferre|Perpetu||Capital|shares in|comprehe|Special|Surplus|against|Retained|sharehold|owner’s|
||Stock|||Others|Reserve||nsive|reserve|Reserve|general|earnings|ers’ equity|equity|
|||d shares|al bond|||stock||||||||
||||||||income|||risks||||
|I. Ending balance of the|438,744,||||1,062,455,||-11,778,49||193,961,7||687,986,80|3,577,654.|2,374,948,|
|previous year|881.00||||644.22||8.24||00.45||7.74|56|189.73|
|Plus: Change in||||||||||||||
|accounting policy||||||||||||||
|Correction of||||||||||||||
|previous errors||||||||||||||
|Consolidation||||||||||||||
|of enterprises under the||||||||||||||
|same control||||||||||||||
|Others||||||||||||||
|II. Opening balance of|438,744,||||1,062,455,||-11,778,49||193,961,7||687,986,80|3,577,654.|2,374,948,|
|the reporting year|881.00||||644.22||8.24||00.45||7.74|56|189.73|
|III. Decrease/increase of||||||||||||||
|the report year|||||||255,055.8||12,844,01||83,497,757|-3,572,138|93,024,68|
|(decrease is stated with|||||||5||2.90||.28|.78|7.25|
|“-“)||||||||||||||
|(I) Total comprehensive|||||||255,055.8||||140,216,25|2,116,368.|142,587,6|
|income|||||||5||||8.28|91|83.04|
|(II) Owners’ input and||||||||||||-5,688,507|-5,688,507|
|decrease of capital||||||||||||.69|.69|
|1.Common shares||||||||||||||
|contributed by the||||||||||||||
|shareholder||||||||||||||
|2. Capital contributed by||||||||||||||
|other equity instruments||||||||||||||
|holders||||||||||||||
|3. Amount of payment for||||||||||||||
|shares credited to||||||||||||||
|owners’ equity||||||||||||||

|||||||||
|-|-|-|-|-|-|-|-|
|||||||-5,688,507|-5,688,507|
|4. Others||||||||
|||||||.69|.69|
|||||12,844,01|-56,718,50||-43,874,48|
|(III) Profit Distribution||||||||
|||||2.90|1.00||8.10|
|1. Provision of surplus||||12,844,01|-12,844,01|||
|reserve||||2.90|2.90|||
|2. Provision of generic||||||||
|risk reserve||||||||
|3. Distribution to the|||||-43,874,48||-43,874,48|
|owners (or shareholders)|||||8.10||8.10|
|4. Others||||||||
|(IV) Internal carry-over of||||||||
|owners’ equity||||||||
|1. Conversion of capital||||||||
|reserve into capital (or||||||||
|capital stock)||||||||
|2. Conversion of surplus||||||||
|reserve into capital (or||||||||
|capital stock)||||||||
|3. Loss made up with||||||||
|surplus reserve||||||||
|4. Others||||||||
|(V) Special reserve||||||||
|1. Provision in the||||||||
|reporting period||||||||
|2. Applied in the||||||||
|reporting period||||||||
|(VI) Others||||||||
|IV. Ending balance of the|438,744,|1,062,455,|-11,523,44|206,805,7|771,484,56||2,467,972,|
|||||||5,515.78||
|reporting period|881.00|644.22|2.39|13.35|5.02||876.98|

 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
8. Statement of Changes inOwner’s Equity, Parent Company
Prepared by FIYTA Holdings Ltd.
June 30, 2018
Amount in the reporting period
In CNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Reporting period|||||||||||
|||Other equity instruments|||||Other|||||
|Items|Capital||||Capital|Less: shares||Special|Surplus|Retained|Total owner’s|
|||Preferred|Perpetual||||comprehensi|||||
||Stock|||Others|Reserve|in stock||reserve|Reserve|earnings|equity|
|||shares|bond||||ve income|||||
|I. Ending balance of the|438,744,88||||1,068,111,18||||206,805,713.|625,656,33|2,339,318,11|
|previous year|1.00||||5.32||||35|8.99|8.66|
|Plus: Change in||||||||||||
|accounting policy||||||||||||
|Correction of previous||||||||||||
|errors||||||||||||
|Others||||||||||||
|II. Opening balance of|438,744,88||||1,068,111,18||||206,805,713.|625,656,33|2,339,318,11|
|the reporting year|1.00||||5.32||||35|8.99|8.66|
|III. Decrease/increase of||||||||||||
|the report year (decrease||||||||||552,842.37|552,842.37|
|is stated with “-“)||||||||||||
|(I) Total comprehensive||||||||||||
|||||||||||552,842.37|552,842.37|
|income||||||||||||
|(II) Owners’ input and||||||||||||
|decrease of capital||||||||||||
|1.Common shares||||||||||||
|contributed by the||||||||||||
|shareholder||||||||||||
|2. Capital contributed by||||||||||||
|other equity instruments||||||||||||
|holders||||||||||||
|3. Amount of payment for||||||||||||
|shares credited to||||||||||||
|owners’ equity||||||||||||
|4. Others||||||||||||
|(III) Profit Distribution||||||||||||
|1. Provision of surplus||||||||||||
|reserve||||||||||||
|2. Distribution to the||||||||||||
|owners (or shareholders)||||||||||||
|3. Others||||||||||||
|(IV) Internal carry-over of||||||||||||

|||||||
|-|-|-|-|-|-|
|owners’ equity||||||
|1. Conversion of capital||||||
|reserve into capital (or||||||
|capital stock)||||||
|2. Conversion of surplus||||||
|reserve into capital (or||||||
|capital stock)||||||
|3. Loss made up with||||||
|surplus reserve||||||
|4. Others||||||
|(V) Special reserve||||||
|1. Provision in the||||||
|reporting period||||||
|2. Applied in the||||||
|reporting period||||||
|(VI) Others||||||
|IV. Ending balance of the|438,744,88|1,068,111,18|206,805,713.|626,209,18|2,339,870,961.03|
|reporting period|1.00|5.32|35|1.36||

 Amount of the previous year
In CNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Previous period|||||||||||
|||Other equity instruments|||||Other|||||
|Items|Capital||||Capital|Less: shares||Special|Surplus|Retained|Total owner’s|
|||Preferred|Perpetual||||comprehensi|||||
||Stock|||Others|Reserve|in stock||reserve|Reserve|earnings|equity|
|||shares|bond||||ve income|||||
|I. Ending balance of the|438,744,88||||1,068,111,18||||193,961,700.|553,934,71|2,254,752,47|
|previous year|1.00||||5.32||||45|0.97|7.74|
|Plus: Change in||||||||||||
|accounting policy||||||||||||
|Correction of||||||||||||
|previous errors||||||||||||
|Others||||||||||||
|II. Opening balance of|438,744,88||||1,068,111,18||||193,961,700.|553,934,71|2,254,752,47|
|the reporting year|1.00||||5.32||||45|0.97|7.74|
|III. Decrease/increase of||||||||||||
||||||||||12,844,012.9|71,721,628|84,565,640.9|
|the report year (decrease||||||||||||
||||||||||0|.02|2|
|is stated with “-“)||||||||||||
|(I) Total comprehensive||||||||||128,440,12|128,440,129.|

|||||||
|-|-|-|-|-|-|
|income||||9.02|02|
|(II) Owners’ input and||||||
|decrease of capital||||||
|1. Common shares||||||
|contributed by the||||||
|shareholder||||||
|2. Capital contributed by||||||
|other equity instruments||||||
|holders||||||
|3. Amount of payment for||||||
|shares credited to||||||
|owners’ equity||||||
|4. Others||||||
||||12,844,012.9|-56,718,50|-43,874,488.|
|(III) Profit Distribution||||||
||||0|1.00|10|
|1. Provision of surplus|||12,844,012.9|-12,844,01||
|reserve|||0|2.90||
|2. Distribution to the||||-43,874,48|-43,874,488.|
|owners (or shareholders)||||8.10|10|
|3. Others||||||
|(IV) Internal carry-over of||||||
|owners’ equity||||||
|1. Conversion of capital||||||
|reserve into capital (or||||||
|capital stock)||||||
|2. Conversion of surplus||||||
|reserve into capital (or||||||
|capital stock)||||||
|3. Loss made up with||||||
|surplus reserve||||||
|4. Others||||||
|(V) Special reserve||||||
|1. Provision in the||||||
|reporting period||||||
|2. Applied in the||||||
|reporting period||||||
|(VI) Others||||||
|IV. Ending balance of the|438,744,88|1,068,111,18|206,805,713.|625,656,33|2,339,318,11|
|reporting period|1.00|5.32|35|8.99|8.66|

Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui
III. Company Profile
Fiyta Holdings Ltd. (hereinafter referred to as the Company) was reorganized, incorporated and renamed from Shenzhen Fiyta Timer Industry Company on December 25 1992 with approval by the General Office of Shenzhen MunicipalPeople’s Government with Document SHEN FU BAN FU[1992] No. 1259 and with China National Aero-Technology Import& Export Corporation Shenzhen Industry& Trade Center (which was renamed as AVIC International Shenzhen Company Limited as the sponsor. The Company's head office is located at the 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen, Guangdong Province.
On March 10, 1993, the Company, with approval by thePeople’s Bank of China Shenzhen Special Economic Zone Branch[SHEN REN YIN FU ZI (1993) No.070], issued publically domestic CNY based common shares (A-shares) and CNY based special shares (B-shares). In accordance with the Approval Document of Shenzhen Municipal Securities Regulatory Office SHEN ZHENG BAN FU[1993] No. 20 and the Approval Document of Shenzhen Stock Exchange SHEN ZHENG SHI ZI (1993) No. 16, theCompany’s A-shares and B-shares were all listed with Shenzhen Stock Exchange for trading commencing from June 3, 1993.
On January 30, 1997, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company was renamed as Shenzhen Fiyta Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between China National Aero-Technology Corporation Shenzhen (CATIC Shenzhen Corporation) and CATIC Shenzhen Holdings Limited ( with original name of Shenzhen CATIC Group Co., Ltd. (hereinafter referred to as CATIC Shenzhen), CATIC Shenzhen Corporation assigned 72.36 million corporate shares (taking52.24% of theCompany’s total shares) to CATIC Shenzhen. From then on, theCompany’s controlling shareholder turned to be CATIC Shenzhen from CATIC Shenzhen Corporation.
On October 26, 2007, the Company implemented the equity separation reform, according to which the shareholder of theCompany’s non-negotiable shares would pay shares to the whole shareholders of negotiable shares registered on the equity record day as designated in the equity separation reform plan at the rate of 3.1 shares for every 10 shares held by them while theCompany’s total 249,317,999 shares remained unchanged. So far, after the equity separation reform, the proportion of theCompany’s shares held by CATIC Shenzhen reduced from52.24% to44.69%.
On February 29, 2008, due to expansion of theCompany’s business scope and with approval by Shenzhen Municipal Administration for Industry and Commerce, theCompany’s enterprise corporate business licence number was changed from 4403011001583 into 440301103196089.
In 2010, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on Approval of Non-public Issuing of Shenzhen Fiyta Holdings Ltd., ZHENG JIAN XU KE[2010] No. 1703 and the Official Reply on the Issue of Non-Public Issuing of Shenzhen Fiyta Holdings Ltd. by State-owned Assets Supervision and Administration Commission of the State Council[2010] No. 430, the Company was approved to non-publically issue no more than 50 million common shares (A-shares). After completion of non-public issuing on December 9, 2010, theCompany’s registered capital
increased to CNY 280,548,479.00 and AVIC Shenzhen holds41.49% of theCompany’s equity based capital.
On March 03, 2011, with approval by Shenzhen Municipal Administration for Industry and Commerce, the Company was renamed as Fiyta Holdings Ltd. On April 8, 2011, the Company took the total share capital of 280,548,479 shares as at December 31, 2010 as the base, converted its capital reserve into share capital at the rate of 4 shares for every 10 shares. After the conversion, theCompany’s total share capital became 392,767,870 shares.
On November 11, 2015, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on Approval of Non-public Issuing of Fiyta Holdings Ltd., ZHENG JIAN XU KE[2015] No. 2588 and the Official Reply on the Issue of Non-Public Issuing of Fiyta Holdings Ltd. by State-owned Assets Supervision and Administration Commission of the State Council[2015] No. 415, the Company was approved to non-publically issue no more than 46,911,649 common shares (A-shares). After completion of non-public issuing on December 22, 2015, theCompany’s registered capital increased to CNY 438,744,881.00 and CATIC Shenzhen holds37.15% of theCompany’s equity based capital.
Ended June 30, 2018, the Company accumulatively issued altogether 438,744,881 shares. For the detail, refer to Note VII. 53 “Share Capital”.
The principal business activities of the Company and its subsidiaries (collectively the Group) are: production and sales of various pointer type quartz watches and units, spares and parts, various timing apparatus, processing and wholesale of K gold watches and ornament watches (for production site, separate application should be submitted); domestic trade, materials supply and sales (excluding the commodities for exclusive operation, exclusive control and monopoly); property management and lease. Self-run import and export, design and construction; import and export business (implemented according to Document SHEN MAO GUAN DENG ZHENG ZI NO. 2007-072). The Company's legal representative is Huang Yongfeng.
The Company has established theShareholders’ General Meeting, the Board of Directors, the Supervisory Committee, the Audit Committee, the Strategy Committee and the Nomination, Remuneration and Assessment Committee as the governance organs, etc. The Company has also established a number of functional departments, including comprehensive management department, human resource department, financial department, property department, innovation& design department, strategy and information department, office of the Board of Directors, audit department, R& D department, etc.
The financial statements was approved and issued through the resolution of the Board of Directors dated August 21, 2018.
There were 9 subsidiaries consolidated during the reporting period. For the detail, refer to Note IX. "Equity in Other Entities". The consolidation scope of the reporting year is the same as that of the previous year. For the detail, refer to Note VIII "Change of the Consolidation Scope".
IV. Basis for preparation of the financial statements
1. Preparation Basis
The financial statements are prepared with the going-concern assumption as the base and the transactions and matters actually occurred in accordance with the Accounting Standards for Business Enterprises - Basic Standards promulgated by the Ministry of Finance (issued by Order 33 of the Ministry of Finance and revised according to Order 76 of the Ministry of Finance), 42 specific accounting standards promulgated and revised on February 15, 2006 and afterwards, and their application guidelines, interpretations and other relevant requirements (collectively, "Accounting Standards for Enterprises"). Besides, the Company 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)
In accordance with the Enterprise Accounting Standards, the Company follows the accrual basis of accounting. With the exception of some financial instruments, these financial statements are measured based on the historic cost basis. If impaired, the assets shall provide for impairment in accordance with the relevant regulations.
2. Operation on Going Concern Basis
The financial statements of the Company have been prepared on going concern basis.
V. Important accounting policies and accounting estimates
Presentation on specific accounting policies and accounting estimates:
The Company and its subsidiaries have made a few of specific accounting policies and accounting estimates about cognition of revenue, depreciation of fixed assets, amortization of intangible assets, R& D expenditures and other transactions and matters in accordance with the actual operation and management characteristics and based on relevant provisions of accounting standards for business enterprises. For the detail, refer to various descriptions stated in Note V.28 "Revenue", Note V.16 "Fixed assets", Note V.21(1) "Intangible Assets", Note V.21(2) “R& D expenditure" for details. 1. Statement on complying with the accounting standards for business enterprise
The financial statements prepared by the Company in accordance with the requirements of accounting standards for business enterprises truly and fully reflect the financial status of the Company on June 30, 2018 and the business result and cash flow and relevant information for January to June 2018. In addition, the Company's financial statements are in conformity with the disclosure requirements of Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions for Financing Reporting as amended in 2014 by China Securities Regulatory Commission on relevant financial statements and their notes in all important aspects.
2. Fiscal period
The fiscal period of the Company includes the fiscal year and interim period. The interim period refers to the reporting
period less than a whole fiscal year. The fiscal year of the Company is the Gregorian year, i.e. from January first to
December 31st.
3. Business Cycle
The normal business cycle refers to the period of the Company from purchasing the assets for processing to realization of cash or cash equivalent. The Company takes 12 months as a business cycle and uses it as the liquidity division standard for assets and liabilities.
4. Recording Currency
Renminbi is the currency for the major economic environment where the Company and its domestic subsidiaries are managed, and the Company and its domestic subsidiaries take Renminbi as the standard currency for accounting. Except Switzerland based Montres Chouriet SA Company (hereinafter referred to as the "Swiss Company"), an overseas subsidiary of FIYTA Hong Kong Co., Ltd. (hereinafter referred to as "FIYTA HK"), has determined Swiss franc as its recording currency for accounting in accordance with the currencies available in its major economic environment where it is operated. The other overseas subsidiaries, including FIYTA HK, have determined Hong Kong currency as their recording currency for accounting in accordance with the currencies available in their major economic environment where they are operated. Hong Kong currency will be converted into Renminbi while in preparing financial statements.
The Company uses Renminbi while preparing these financial statements.
5. The accounting treatment on merger of enterprises under the same control and not under the same control Merger of enterprises refers to the transaction or matter that two or more independent enterprises are merged into a reporting entity. The merger of enterprises includes merger under the same control and the merger not under the same control.
(1) Merger of enterprises under the same control
The enterprise participating in merger is under the final control of the same party or parties and such control is not temporary, this is the merger of enterprises under the same control. In the merger of enterprises under the same control, the party that obtains the control right to the other enterprises participating in merger on the date of merger is the merging party and the other enterprises participating in the merger are the merged party. The date of merger refers to the date when the merging party has actually obtained the control right to the merged party.
The assets and liabilities acquired by the merging party are measured at the book value on the merged party on the date of merger. If the book value of net assets acquired by the merging party is different with the book value paid for merger consideration (or sum of book value of issued shares), the capital reserve (premium on stock capital) shall be adjusted; if the capital reserve (premium on stock capital) is not sufficient to be written down, the retained earnings shall be adjusted. Various direct expenses incurred by the merging party for merger of enterprises are included in the current profits and
losses at the time of occurrence.
(2) Merger of enterprises not under the same control
The enterprises to be merged, if not under the final control by the same party or parties before or after merger, refer to the merger of enterprises not under the same control. For the merger of enterprises not under the same control, the party acquiring the control right to the other enterprises involved with the merger on the date of purchase is the purchasing party and the other enterprises involved with the merger are the purchased party. The date of purchase refers to the date when the purchasing party actually acquires the control right to the purchased party.
For the merger of enterprises not under the same control, the merger costs contain the assets paid by the purchasing party on the date of purchase for acquiring the control right to the purchased party, the liabilities incurred or undertaken and the fair value of the issued equity securities are the commission incurred for merger of enterprises and involved with audit, legal service, evaluation, consultation and etc., as well as other overhead expenses, are included in the current profits and losses at the time of occurrence. The transaction costs of equity securities or debt securities issued as merger consideration by the purchasing party are included in the initial confirmation amount of equity securities or debt securities. The contingent consideration involved is included into the merger costs at the fair value on its purchase date. If it is necessary to adjust the contingent consideration because any new or further evidence for the existing situation on the purchase date appears within 12 months after the purchase date, the merged goodwill shall be modified accordingly. The merger costs incurred and the net identifiable assets acquired in the merger by the purchasing party are measured at the fair value on the purchase date. The difference that the merger costs are larger than the fair value of the net identifiable assets of the purchased party on the purchase date as acquired in the merger is confirmed as the goodwill. If the merger costs are less than the fair value of the net identifiable assets of the purchased party as acquired in the merger, the fair value of various identifiable assets, liabilities and contingent liabilities of the purchased party and measurement of merger costs are first checked, and if the merger costs are less than the fair value of net identifiable assets of the purchased party acquired in the merger, the difference is included in the current profits and losses.
If the deductible temporary difference of the purchased party acquired by the purchasing party is not confirmed for it does not conform to the confirmation conditions of deferred tax assets on the date of purchase, but new or further information obtained within 12 months after the date of purchase shows the existence of relevant situation on the date of purchase and it is expected that the economic interest arising from deductible temporary difference of the purchased party on the date of purchase could be realized, the relevant deferred tax assets are confirmed and the goodwill is reduced synchronously. If the goodwill is not sufficient to be written down, the difference is confirmed as the current profits and losses; except the above situation, if the deferred tax assets involved with merger of enterprises are confirmed, it is included in the current profits and losses.
For the merger of enterprises not under the same control as realized in steps through several transactions, whether the several transactions are "package deals" is judged in accordance with the Notice of the Ministry of Finance on Issuing the Explanation No. 5 of Accounting Standards for Business Enterprises (Cai Kuai[2012]19) and the judgment standard on "package deals" in article 51 of Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements (see the Note V.6(2)). If they are package deals, they are treated with reference to the description of various paragraphs in front of this part and the Note V.14 "Long-term Equity Investment"; if they are not package deals, individual financial statements and consolidated financial statements are separately made relevant accounting treatment:
In individual financial statements, the sum of the book value of the equity investment of the purchased party as held before the date of purchase and the newly increased investment costs on the date of purchase is used as the initial investment
costs of the investment; if the equity of the purchased party as held before the date of purchase is involved with other comprehensive income, while this investment is being disposed, other comprehensive incomes related to it are made accounting treatment on the same basis as the purchased party directly disposing relevant assets or liabilities (namely, except the purchased party measures again the corresponding share in the change caused by the net liabilities or net assets of the set benefit plan according to the equity method, the others are included in the current profits and losses). In the consolidated financial statements, the equity of the purchased party as held before the date of purchase is measured again at the fair value on the date of purchase of such equity, and the difference between the fair value and its book value is included in the current profits and losses; if the equity of the purchased party as held before the date of purchase is involved with other comprehensive incomes, other comprehensive incomes related to it shall be made accounting treatment on the same basis as the purchased party directly disposing relevant assets or liabilities (namely, except the purchased party measures again the corresponding share in the change caused by the net liabilities or net assets of the set benefit plan according to the equity method, the others are included in the current profits and losses). 6. Method of preparing consolidated financial statements
(1) Principle of determining the scope of consolidated financial statements
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control refers to, the Company owns the power to the purchased party, enjoys variable return by participating in the relevant activities of the purchased party and is able to impact the amount of return by using the power to the purchased party. The scope of consolidation includes the Company and all of its subsidiaries. A subsidiary refers to the entity under control of the Company.
Once the change of relevant facts and situations causes the change of relevant factors involved with the above definition of control, the Company will make new evaluation.
(2) Method of preparing consolidated financial statements
As of the date when the actual control right to the net assets, production and management decision of subsidiary is acquired, the Company starts to put it into the scope of consolidation; ceases to contain it in the scope of consolidation from the date of losing the actual control right. For any subsidiary disposed, its operation result and cash flow before disposal date have been properly contained in the consolidated profit statement and consolidated cash flow; any subsidiary disposed in the current period is not modified the beginning number of the balance sheet. For any subsidiary increasing due to merger of enterprises not under the same control, its operation result and cash flow after the date of purchase have been properly contained in the consolidated profit statement and consolidated cash flow, and the beginning number and comparison number of the consolidated financial statements are not modified. For any subsidiary increasing due to merger of enterprises under the same control, its operation result and cash flow from the beginning of the current consolidation period to the date of consolidation have been properly contained in the consolidated profit statement and consolidated cash flow, and the comparison numbers of the consolidated financial statement are synchronously modified.
While preparing the consolidated financial statements, if the accounting policies or accounting period adopted by any subsidiary and the Company are not consistent, necessary modification shall be made to the subsidiary's financial statements based on the Company's accounting policies and accounting period. For any subsidiary acquired from merger
of enterprises not under the same control, its financial statements are modified on the basis of the fair value of net identifiable assets on the date of purchase.
All major current account balances, transactions and unrealized profit in the Company are set off in preparation of consolidated financial statements.
In the stockholder's equity and current net profit or loss of a subsidiary, the parts not owned by the Company are solely listed under the stockholder's equity and net profit in the consolidated financial statements separately as minority equity and minority interest. If the loss of subsidiary shared by minority shareholders exceeds the share enjoyed by minority shareholders in the shareholders' equity of the subsidiary in the beginning, it still writes down the minority equity. When the loss in a subsidiary shared by minority shareholders exceeded the share in theshareholders’ equity enjoyable by the minority shareholders at the beginning of the reporting period, the minorityshareholders’ equity should be written down. When the control right to the original subsidiary is lost due to disposal of partial equity investment or other reasons, the residual equity is measured again at its fair value on the date of losing the control right. The sum of the consideration acquired from disposal of equity and the fair value of residual equity is minus the share of net assets of the original subsidiary as continually calculated from the date of purchase at the original shareholding ratio, such difference is included in the investment income in the current period of losing the control right. Other comprehensive incomes related to equity investment of the original subsidiary shall be made accounting treatment on the same basis as the purchased party directly disposing relevant assets or liabilities when the control right is lost (namely, except the original subsidiary measures again the change caused by the net liabilities or net assets of the set benefit plan according to the equity method, the others are included in the current profits and losses). Thereafter, such part of the residual equity is made subsequent measurement in accordance with the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment or Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and other relevant provisions. See the Note V.14 "Long-term Equity Investment" or the Note V.10 "Financial Instruments".
If the Company disposes the investment on the subsidiary's equity in steps through several transactions and until loses the control right, whether the various transactions disposing the investment on the subsidiary's equity until losing the control right are package deals shall be distinguished. If the terms, conditions and economic impact of various transactions disposing the investment on the subsidiary's equity conform to one or more of the following circumstances, it is usually indicated that several transactions shall be made accounting treatment as packagedeal:① these transactions are concluded synchronously or in consideration of mutual impact;② these transactions can wholly reach a complete commercial result;③ Occurrence of a transaction lies on occurrence of at least another transaction;④ A transaction may be uneconomic separately, but it is economical if the transaction is considered with other ones. If they are not package deals, each transaction thereof is made accounting treatment in accordance with the principle applicable for "partially disposing long-term equity investment on subsidiary in the case of not losing control right" (see (2)④, Note V.14 for details) and "losing control right to the original subsidiary due to disposal of partial equity investment or other reasons" (see the above paragraph) as appropriate. If the various transactions disposing the investment on the subsidiary's equity until losing control right are package deals, various transactions are made accounting treatment as a transaction of disposing the subsidiary and losing control right; however, before losing control right, the difference between every disposal amount and the share of the subsidiary's net assets enjoyed corresponding to disposal of investment is recognized as other comprehensive income in the consolidated financial statements, and is included in the current profit and loss corresponding to loss of control right.
7. Classification of joint venture arrangements and accounting treatment method of joint management
Joint venture arrangement refers to an arrangement that two or more participants jointly control. In accordance with the rights enjoyed and obligations undertaken in the joint venture arrangement, the Company classifies joint venture arrangements into joint management and joint venture. Joint management refers to the joint venture arrangement that the Company enjoys the relevant assets of the arrangement and undertakes the relevant liabilities of the arrangement. Joint venture refers to the joint venture arrangement that the Company only enjoys rights to the net assets of the arrangement. The Company's investment on joint venture is measured with equity method and is treated in accordance with the accounting policies as stated in the Note V.14 (2)② "Long-term equity investment measured with equity method". As a joint venture in the joint management, the Company confirms the assets solely held, liabilities solely undertaken and the assets jointly held and liabilities jointly undertaken as confirmed according to the Company's share; confirms the income arising from sale of the joint management's output share enjoyed by the Company; confirms the income arising from sale of output if confirming joint management according to the Company's share; confirms the expenses solely incurred by the Company, and the expenses incurred if confirming joint management according to the Company's share. When the Company as a joint venture delivers or sells assets to the joint management (the assets do not constitute business, same as below), or the joint management purchases assets, before such assets are sold to a third party, the Company only confirms the parts in the profit and loss arising from such transaction and belonging to other participants of the joint management. If occurrence of such assets is in conformity with the impairment loss as stated in the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets, in the event that the Company delivers or sells assets to the joint management, the Company fully confirms the loss; in the event that the Company purchases assets from the joint management, the Company confirms the loss according to its share undertaken.
8. Standard for confirming cash and cash equivalent
The cash and cash equivalent of the Company include the cash on hand, the deposit that can be used for payment at any time, and the investment held by the Company, which has short term (generally becomes mature within three months from the date of purchase), good liquidity and is easy to be converted into known amount of cash and with low risk in change of value.
9. Foreign currency transactions and translation of foreign currency statements
(1) Translation methods for foreign currency transactions
The foreign currency transactions occurred in the Company, at the time of initial recognition, shall be translated into the amount of bookkeeping base currency at the spot exchange rate (generally refer to the medium price of the foreign exchange quotation as declared by the People's Bank of China) on the date of transaction, but any foreign currency exchanging business or any transaction related to exchange of foreign currency occurred by the Company shall be translated into the amount of bookkeeping base currency at the actual exchange rate.
(2) Translation methods for monetary items in foreign currency and nonmonetary items in foreign currency
The monetary items in foreign currency shall be translated according to the spot exchange rate on the date of balance sheet, and the balance of exchange incurred accordingly is included in the current profits and losses except the balance of exchange arising from the special borrowing in foreign currency related to purchase and building of the assets meeting capitalization conditions is treated on the principle of capitalization of borrowing cost, and for the monetary items in foreign currency available for sale, the balance of exchange arising from change of other book balances exclusive of amortized cost is included in other comprehensive incomes.
If preparation of consolidated financial statements is involved with overseas operation and any monetary item in foreign currency substantially constitutes net investment to overseas operation, the balance of exchange arising from change of exchange rate is included in other comprehensive incomes; when overseas operation is disposed, it is transferred into the current profits and losses from disposal.
The non-monetary items in foreign currency measured with historical cost are still measured with the amount in bookkeeping base currency which is translated at the spot exchange rate on the transaction occurring date. The non-monetary items in foreign currency measured at fair value are translated at the exchange rate on the date of recognizing fair value, and the difference between the amount in bookkeeping base currency and the previous amount in bookkeeping base currency after translated is treated as change of fair value (including change of exchange rate) and included in the current profits and losses or recognized as other comprehensive incomes.
(3) Translation methods for financial statements in foreign currency
If preparation of consolidated financial statements is involved with overseas operation and any monetary item in foreign currency substantially constitutes net investment to overseas operation, the balance of exchange arising from change of exchange rate is deemed as "translation balance of statements in foreign currency" and recognized as other comprehensive incomes; when overseas operation is disposed, it is included in the current profits and losses from disposal.
The financial statements in foreign currency for overseas operation are translated into the statements in Renminbi according to the following method: the items of assets and liabilities in the balance sheet are translated at the spot exchange rate on the date of balance sheet; in the items of stockholder's equity, except the item of "undistributed profit", other items are translated at the spot exchange rate at the time of occurrence. The items of incomes and expenses in the profit statement are translated at the current average exchange rate on the transaction occurring date. The undistributed profit at the beginning of the year is the undistributed profit at the ending of the previous year after translated; the undistributed profit at the ending of the year is listed according to the calculation of translated profit distributed on various items; after translated, the difference between the sum of assets items and liabilities items and the sum of stockholder's equity items is the translated difference of statements in foreign currency and is recognized as other comprehensive incomes. If overseas operation is disposed and the control right is lost, the translated difference of foreign currency statements as listed under the item of stockholder's equity in balance sheet and related to overseas operation is transferred fully or at the ratio of disposing the overseas operation into the current profits and losses from disposal. The cash flow in foreign currency and cash flow of overseas subsidiaries are translated at the current average exchange rate on the cash flow occurring date. The amount of cash impacted by change of exchange rate is used as the modification item and solely listed in the cash flow statement.
The number in the beginning of the year and the actual number in the previous year are listed according to the amount after the financial statements for the previous year are translated.
While disposing all owners' equity of the Company in overseas operation or losing the control right to overseas operation due to disposal of partial equity investment or other reasons, the foreign current statements attributive to the owners' equity of the parent company, as listed under the item of stockholder's equity in balance sheet and related to overseas operation, are translated into difference and fully transferred into the current profits and losses from disposal.
When the ratio of holding overseas operation equity caused by disposal of partial equity investment or other reasons reduces but the control right to overseas operation is not lost, the translated difference of foreign currency statements related to the overseas operation disposing part is attributive to minority equity and not transferred into the current profits and losses. When the disposal of overseas operation is involved with the partial equity of a joint venture or a cooperative enterprise, the translated difference of foreign currency statements related to the overseas operation is transferred at the ratio of disposing the overseas operation into the current profits and losses from disposal.
10. Financial instruments
A financial asset or financial liability is recognized when the Company becomes a party of financial instrument contract. Financial assets and financial liabilities are measured at fair value at the initial recognition time. For the financial assets and financial liabilities that are measured at fair value and which changes are included into the current profits and losses, the relevant transaction expenses are directly included in the profits and losses; for other financial assets and financial liabilities, the relevant transaction expenses are included in the amount of initial recognition.
(1) Methods for determining fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant can receive from selling an asset or is payable for transferring a liability in the orderly transactions occurring in the date of measurement. If there is an active market for financial instruments, the Company uses the quotation in the active market to determine its fair value. The quotation in the active market refers to the price that is readily available from exchanges, brokers, industry associations and pricing service institutes on regular basis, and represents the price of market transaction actually occurring in the fair transactions. If there is not an active market for financial instruments, the company takes valuation technologies to determine its fair value. Valuation technologies include with reference to the price used in the recent transactions that the parties who are familiar with situation and willingly transact make in the market, with reference to the current fair value of other financial instruments that are substantially same, discounted cash flow and option pricing model.
(2) Classification, confirmation and measurement of financial assets
The financial assets purchased or sold in any conventional manner are made accounting confirmation and termination of confirmation on the date of transaction. At the time of initial confirmation, financial assets are classified into the financial assets that are measured at fair value and which change is included in the current profits and losses, held-to-maturity investment, loan, receivable and the financial assets available for sale.
① The financial assets that are measured at fair value and which change is included in the current profits and losses, Including trading financial assets and the financial assets designated as measurement at fair value and which change is included in the current profits and losses
The financial assets held for trading refer to the financial assets that meet one of the following conditions: A. the purpose of acquiring the financial assets is mainly for recent sale; B. are a part of the portfolio of identifiable financial instruments under concentrated management, and objective evidences showing that the Company recently administrates the portfolio with short-term profit making mode; C. are a derivative instrument, except the derivative instruments designated and being effective hedging instruments, the derivative instruments belonging to financial guarantee contract, the derivative instruments connecting with an equity instrument investment that is without quotation in an active market and which fair value cannot be reliably measured, and must be settled by delivering the equity instrument.
Any financial asset meeting one of the following conditions can be designated at the time of initial recognition as the financial asset that is measured at fair value and which change is included in the current profits and losses: A. This designation can eliminate or significantly reduce inconsistence of relevant gains or losses in the aspect of confirmation or measurement as caused due to different measurement basis of the financial asset; B. The formal written document of the risk management or investment strategy of the Company has clearly stated that the portfolio of financial assets or the portfolio of financial assets and financial liabilities containing the financial asset is manage and evaluated on the basis of fair value, and reported to the key management.
The financial assets that are measured at fair value and which change is included into the current profits and losses are made subsequent measurement at fair value, and the gains or losses formed due to change of fair value and the dividends and interests related to such financial assets are included in the current profits and losses.
② Held-to-maturity investment
Refers to non-derivative financial assets with fixed date of maturity, fixed or identifiable recovery amount, and which the Company has the clear intention and ability to hold until its maturity.
Held-to-maturity investment is subject to effective interest method and is subsequently measured according to the amortized cost. The gains or losses generating in case of terminated confirmation, occurrence of devaluation or amortization are included in the current profits and losses.
Effective interest method refers to such method that their amortized costs and interest incomes or expenditures in various periods are calculated at the effective interest rate of financial assets or financial liabilities (including a set of financial assets or financial liabilities). Effective interest rate refers to such interest rate with which the future cash flow of any financial asset or financial liability in the expected period of existence or applicable shorter period is discounted to the current book value of such financial asset or financial liability.
While calculating the effective interest rate, the Company will forecast the future cash flow on the basis of considering all contract articles of financial assets or financial liabilities (no consideration of the credit loss in the future), and will also consider various charges, transaction expenses, discount or premium paid or collected among all parties of financial assets or financial liabilities contract and belonging to a part of effective interest rate.
③ Loans and receivables
Refer to non-derivative financial assets without quotation, fixed or identifiable recovery amount in an active market. The financial assets classified as loans and receivables by the Company include notes receivable, accounts receivable, interest receivable, dividends receivable and other receivables.
Loans and receivables are subject to effective interest method and are subsequently measured according to the amortized cost. The gains or losses generating in case of terminated confirmation, occurrence of devaluation or amortization are included in the current profits and losses.
④ Financial assets available for sale
Including the non-derivative financial assets that are designated available for sale at the time of initial recognition, and the financial assets except the financial assets measured at fair value and which changes are included in the current profits and losses, loans and receivables, held-to-maturity investments.
The ending costs of debt instruments investment available for sale are determined according to the amortized cost, namely, initially recognized amount deducted with the paid principal, plus or minus the accumulative amount of amortization arising from amortizing the difference between the initially recognized amount and the amount on the date of maturity with effective interest rate, and deducted with the loss of devaluation occurred. The ending costs of equity instruments available for sale are their initially acquired costs.
The financial assets available for sale are subsequently measured at fair value, and the gains or losses from change of fair value are recognized as other comprehensive incomes except that the balance of exchange related to the amortized costs in the loss of devaluation and monetary financial assets in foreign currency are included in the current profits and losses, and they are transferred and included into the current profits and losses when the financial assets are terminated recognition. However, any equity instrument investment with quotation in an active market and which fair value cannot be reliably measured, and the derivative financial assets connecting with such equity instrument and must be settled by delivering the equity instrument are subsequently measured at costs.
The interest of any financial asset accrued in the holding period and dividend in cash as distributed upon declaration of the invested organization are included in the income from investments.
(3) Devaluation of financial assets
Except the financial assets that are measured at fair value and which changes are included into the current profits and losses, the Company checks the book values of other financial assets on the date of each balance sheet. If any objective evidence shows that devaluation of financial assets occurs, provision for impairment is set aside.
The Company separately makes devaluation testing for any single financial asset in large amount; any single financial asset without large amount is separately made devaluation testing or made devaluation testing in the portfolio of financial assets with the similar credit risk characteristics. Any financial assets not found devaluation in a single testing (including the single financial assets with or without large amount) are made devaluation testing in the portfolio of financial assets with the similar credit risk characteristics. Any financial assets recognized impairment loss in a single item are made devaluation testing not in the portfolio of financial assets with the similar credit risk characteristics.
① Devaluation of held-to-maturity investments, loans and receivables
The book value of any financial asset measured at costs or amortized costs is written down to the present value of the future cash flow forecasted, and the write-down amount is recognized as impairment loss and included in the current profits and losses. After any financial asset is recognized its impairment loss, if any objective evidence shows that such financial asset has recovered its value, and it is objectively related to the matter occurring after the loss is recognized, the
previously recognized impairment loss is reversed, and the book value of financial asset after the impairment loss is reversed does not exceed the amortized cost of the financial asset on the date of reversal when it is assumed that provision for impairment is not set aside.
② Devaluation of financial assets available for sale
If it is judged according to comprehensive relevant factors that the fall of fair value of equity instrument investment available for sale is serious or non temporary, it shows that the equity instrument investment available for sale devalues. When any financial asset available for sale devalues, the accumulative losses arising from fall of fair value as previously recorded in other comprehensive income are transferred out and included in the current profits and losses.
After any financial asset is recognized its impairment loss, if any objective evidence shows that such financial asset has recovered its value, and it is objectively related to the matter occurring after the loss is recognized, the previously recognized impairment loss is reversed, the impairment loss of equity instrument investment available for sale is reversed and recognized as other comprehensive incomes, and the impairment loss of equity instrument investment available for sale is reversed and included in the current profits and losses.
The impairment loss of the equity instrument investment without quotation in an active market and which fair value cannot be reliably measured, or the derivative financial assets connecting with the equity instrument and must be settled by delivering the equity instrument is not reversed.
(4) Recognition basis and measurement method for transfer of financial assets
Any financial asset meeting one of the following conditions is terminated recognition:① The rights under the contract of collecting the cash flow of the financial asset are terminated;② the financial asset has been transferred and substantially all of risks and remunerations on the ownership of the financial asset are transferred to the transferee;③ the financial asset has been transferred, the enterprise has neither transferred nor kept substantially all of risks and remunerations on the ownership of the financial asset, but it gives up control to the financial asset.
If the enterprise has neither transferred nor kept substantially all of risks and remunerations on the ownership of the financial asset, and does not gives up control to the financial asset, relevant financial assets are recognized based on the extent continually involved with the transferred financial asset, and relevant liabilities are recognized accordingly. The extent continually involved with the transferred financial asset refers to the level of risk that the enterprise suffers from value change of the financial asset.
If the whole transfer of any financial asset meets the termination recognizing conditions, the book value of the transferred financial asset and the consideration received from the transfer is minus the accumulative amount of fair value change previously included in other comprehensive incomes, and the balance is included in the recent profits and losses. If the partial transfer of any financial asset meets the termination recognizing conditions, the book value of the transferred financial asset is shared between the termination recognizing part and non- termination recognizing part at their relative fair values. The consideration received from transfer and the accumulative amount of fair value change shared in the termination recognizing part and previously included in other comprehensive incomes, minus the shared aforesaid book value, are the balance, which is included in the current profits and losses.
If the Company sells the financial asset in mode of recourse or transfers the financial asset it holds by endorsement, it shall determine whether substantially all of risks and remunerations on the ownership of the financial asset have been transferred. If substantially all of risks and remunerations on the ownership of the financial asset have been transferred to the transferee, the financial asset's recognition is terminated; if substantially all of risks and remunerations on the ownership of the financial asset are kept, the financial asset's recognition is not terminated; if neither transfer is made nor substantially all of risks and remunerations on the ownership of the financial asset are kept, it shall continually judge whether control to the asset is maintained, and accounting treatment is made in accordance with the principles as stated in above paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are classified as the financial liabilities that are measured at fair value and which change is included in the current profits and losses, and other financial liabilities. The initially recognized financial liabilities are measured at fair value. For financial liabilities that are measured at fair value and which change is included in the current profits and losses, the relevant transaction expenses are directly included in the current profits and losses; for other financial liabilities, relevant transaction expenses are included in the initially recognized amount.
① Financial liabilities measured at fair value and which change is included in the current profits and losses
The financial liabilities held for trading and the financial liabilities designated at the time of initial recognition as measurement at fair value and which change is included in the current profits and losses have the conditions consistent with the financial assets held for trading and the financial assets designated at the time of initial recognition as measurement at fair value and which change is included in the current profits and losses.
The financial liabilities measured at fair value and which change is included in the current profits and losses are subsequently measured at fair value, and the gains or losses arising from change of fair value and the dividends and interests related to such financial liabilities are included in the current profits and losses.
② Other financial liabilities
The derivative financial liabilities connecting with the equity instrument without quotation in an active market and which fair value cannot be reliably measured, and must be settled by delivering the equity instrument are subsequently measured at costs. Other financial liabilities are subject to effective interest method and are subsequently measured according to the amortized cost. The gains or losses generating in case of terminated confirmation, occurrence of devaluation or amortization are included in the current profits and losses.
③ Financial guarantee contract
A financial guarantee contract that is not specified as financial liabilities at fair value through profit or loss is initially recognized at fair value minus direct transaction fees, and the subsequent measurement is based on the higher of the amount recognized in accordance with Accounting Standards for Business Enterprises No.13– Contingencies and the initially recognized amount deducting the cumulative amortization in accordance with Accounting Standards for Business Enterprises No.14– Income.
(6) Derecognition of financial liabilities
The current liabilities of financial liabilities have been wholly or partially cancelled, recognition on the financial liabilities or a part thereof can be terminated. The Company (the debtor) and the creditor enter an agreement to substitute the existing financial liabilities in the manner of undertaking new financial liabilities, and the contract's articles of new financial liabilities
and the existing financial liabilities are materially different, recognition on the existing liabilities is terminated and new liabilities are recognized synchronously.
If recognition on financial liabilities is wholly or partially terminated, the difference between the book value of the part terminated to recognize and the consideration paid (including non-cash assets transferred out or new financial liabilities undertaken) is included in the current profits and losses.
(7) Derivative instruments and embedded derivatives
A derivative instrument is initially measured at fair value on the date of signing relevant contract and is subsequently measured at fair value.. Except the derivative instruments designated as hedging instrument and with highly effective hedging, the gains or losses arising from which change of fair value are recognized to be included in the period of profits and losses based on the nature of hedging relationship and in accordance with the accounting requirements of hedging, the change of fair value of other derivative instruments is included in the current profits and losses
For the mixed instruments containing embedded derivative instruments, if they are not designated as financial assets or financial liabilities measured at fair value and which change is included in the current profits and losses, the embedded derivatives and the master contract have no close relationship in the economic characteristics and risk, and have the same conditions as the embedded derivatives, the separately existing instrument meets the definition of derivative instrument, then the embedded derivatives are separated from mixed instruments and are treated as sole derivative financial instruments. If it cannot carry out separate measurement to the embedded derivatives at the time of acquisition or subsequent date of balance sheet, the mixed instruments are wholly designated as financial assets or financial liabilities measured at fair value and which change is included in the current profits and losses.
(8) Setoff of financial assets and financial liabilities
When the Company has the legal rights of setting off the recognized financial assets and financial liabilities and can currently these legal rights now, and if the Company has the plan to settle with net amount or synchronously realize these financial assets and discharge these financial liabilities, the financial assets and financial liabilities are listed in the balance sheet with the amount after mutual set-off. Except that, financial assets and financial liabilities are listed respectively in the balance sheet and are not set off mutually.
(9) Equity instruments
Equity instrument refers to the contract that can certify possession of the residual equity of the Company in the assets after deducted all liabilities. If the Company issues (including refinancing), repurchase, sell or cancel any equity instrument, this is treated as change of equity. The Company does not recognize change of fair value of equity instruments. The transaction expenses related to equity transactions are deducted from equity.
The Company makes various distributions (exclusive of stock's dividends) to the equity instrument holders from stockholders' equity. The Company does not recognize fair value changing amount of equity instruments. The Company does not recognize change of fair value of equity instruments.
11. Receivables
(1) Individually significant receivable and provision for bad and doubtful debts individually
|||
|-|-|
||The carrying amount of accounts receivables of over CNY 800,000.00 (with CNY|
|Criteria of individually significant receivables|800,000.00 inclusive )and other receivables of over CNY500,000.00 (with CNY|
||500,000.00 inclusive) are recognized as individually significant receivable.|
||The Company separately made devaluation testing for any single accounts receivable|
||in large amount, individually tested financial assets which have not experienced|
||impairment, or made devaluation testing in the portfolio of financial assets with the|
|Measurement of individually recognized bad and doubtful debts provision of||
||similar credit risk characteristics. The accounts receivable whose impairment loss has|
|individually significant receivables:||
||been recognized through individual item testing shall no longer be included in the|
||portfolio of financial assets with the similar credit risk characteristics for devaluation|
||testing.|

(2) Receivables with provision for bad and doubtful debts based on the credit risk characteristics collectively
|||
|-|-|
|Portfolio Description|Method of provision for bad and doubtful debts|
|Group of ageing|Ageing analysis method|
|Specific fund portfolio|Other Method|

In grouping, reserve for bad debt is provided by ageing analysis method
||||
|-|-|-|
|Ageing|Percentage of provision for accounts receivable|Percentage of provision for other receivables|
|Within 1 year (including 1 year)|5.00%|5.00%|
|1-2 years|10.00%|10.00%|
|2-3 years|30.00%|30.00%|
|Over 3 years|50.00%|50.00%|

 In grouping, the account receivable for which reserve for bad debt is provided based on balance percentage:
Inapplicable
In grouping, the accounts receivable for which the bad debt reserve is provided based on the other method:
||||
|-|-|-|
|Portfolio Description|Percentage of provision for accounts receivable|Percentage of provision for other receivables|
|Specific fund portfolio|0.00%|0.00%|

(3) Accounts receivable with insignificant individual amount but individually recognized bad and doubtful debts provision
|||
|-|-|
||Including the accounts receivable involving dispute or lawsuit/arbitration with the|
||counterparty and the accounts receivable in which there exists evident indication|
|Reason of individual provision for bad and doubtful debts||
||showing that a debtor may possibly be unable to implement the obligation of|
||repayment.|
||Provision for bad and doubtful debts is based on the difference of the present value of|
|Method for provision for bad and doubtful debts||
||future cash flow lower than the book value.|

12. Inventories
Does the Company need to comply with the requirements on information disclosure for special industries?
No
(1) Classification of Inventories
Inventories include raw materials, products-in-process, commodity stocks, etc.
(2) Pricing of Inventories Acquired and Delivered
Inventories are priced based on the actual costs at the time of acquisition. Costs of inventories include purchase cost, processing cost and other costs. Raw materials, products-in-process and merchandise inventory are priced respectively according to the weighted average (with brand world watch stocks exclusive), specific identification (for famous brand watch stocks) at the time of delivery.
(3) Basis for determination of the net realizable value of inventories and the method for provision for price falling of inventories
The net realizable value of the inventories refers to the amount of the estimated sales prices of inventories less the estimated costs up to the completion, the estimated sales costs and relevant taxes. In determining the realizable net value of inventories, with the acquired concrete evidence as the base, the purpose of holding the inventories and the influence from the events after the balance sheet day are taken into consideration at the same time.
On the balance sheet day, inventories are measured based on the lower of the cost and the realizable net value. When the realizable net value is lower than the cost, reserve for price falling of inventories is provided. Including:
① For the inventories directly for sale, including the finished products and the materials for sale, in process of normal production and operation, the realizable net value is the amount of the estimated sales price of the inventories less the estimated sales costs and the relevant taxes;
② For the material inventories necessary to be processed, the realizable net value is the amount of the estimated sales price of the finished products produced in process of normal production and operation less the costs predicted to incur at the time of finishing the work, the estimated sales expenses and the relevant taxes.
The Company provides reserve for price falling of the inventories classified based on the models of self-made FIYTA
watch inventories.
For the famous brand watches in distribution, reserve for price falling of inventories is provided based on the individual items.
For the raw materials for FIYTA watches, based on the terminal sales status of FIYTA finished watches, reserve for price falling of inventories is provided with interchangeability of spares and parts and specialized classification of applications of materials taken into consideration.
After reserve for price falling of inventories is provided, if the factors influencing the price falling of the inventories have disappeared, which causes the realizable net value of the inventories to be higher than their book value, the reserve for price falling of the inventories provided previously is reversed, the amount reserved is recorded in the current gain and loss.
(4) The inventory system for the inventories is the perpetual inventory system
(5) Amortization of low value consumables and packing materials
Low value consumables and packing materials are amortized in lump sum at the time of reception.
13. Classified as assets held for sale
The Company shall classify a non-current asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction (including a non-monetary asset exchange of commercial substance, the same below) rather than through continuous use. Non-current assets or disposal group classified as held for sale shall meet the following criteria: disposable immediately under current conditions based on similar transactions for disposals of such assets or practices for the disposal group; a decision has been made on a plan for disposal and an undertaking to purchase has been obtained, and the disposal is expected to be completed within a year. Where, the disposal group refers to a group of assets which are disposed altogether by sale or other way as a whole in a transaction as well as a liability transferred in the transaction with direct connection with these assets. For an asset group or asset group portfolio attributable to the disposal group where the goodwill has been apportioned at the time of entity consolidation according to the Standards for Enterprise Accounting No. 8 - Impairment of Assets, the disposal group should be included in the goodwill apportioned to the disposal group.
When the Company makes initial measurement or makes re-measurement of the disposal group which has been classified as held for sale non-current assets and where book value is higher than the net value of fair value less disposal expenses, the difference between book value and the net value of fair value less disposal expenses is recognized as asset impairment loss in profit and loss in the current period, and at the same time, provision is made for impairment of held as available-for-sale asset. For the disposal group, the loss from impairment of the assets as recognized first offsets the carrying value of the goodwill in the disposal group and then offsets the carrying value of various non-current assets in the disposal group in compliance with the measurement provisions as specified in the Standard for Enterprise Accounting No. 42 - Held for Sale Assets, Disposal Group and Termination of Operation (hereinafter referred to as the “Standard for Holding for Sale). Where there is increase in net value of fair value less disposal expenses for non-current assets held as available-for-sale on subsequent balance sheet days, the previously charged difference should be recovered and reversed in asset impairment loss recognized applicable to the provision of the measurement standard for held-for-sale
after classification as held as available-for-sale investment; the reversal amount is recognized in profit and loss in the reporting period. The book value is increased based on the proportion of the book value of various non-current assets according to the provision of the measurement standard for held-for-sale in the disposal group with the goodwill exclusive: the book value of goodwill already offset as well as the impairment loss of the assets recognized before classification of the non-current assets applicable to the provision of the measurement standard as held-for-sale is not reversible. No depreciation or amortization is provided for a non-current asset in the non-current assets or disposal groups held for sale. Interest and other expenses attributable to the liabilities of a disposal group held for sale shall continue to be recognized.
When a non-current asset or disposal group no longer satisfies the conditions for classification of the held-for-sale, the Company no longer classifies it as held-for-sale category or removes the non-current asset from the held-for-sale disposal group, and measures it based on the lower of the two: (1) for the book value before classification as the held-for-sale, the amount after the adjustment for depreciation, amortization or impairment which should be recognized under the condition in which it is assumed not to be classified as held-for-sale; (2) recoverable amount.
14. Long-term equity investments
The long-term equity investment as stated in this part refers to the long term equity investment with control over, joint control over or significant influence upon the investees. The long term equity investment without control over, joint control over or significant influence upon the investees in the Company are taken as available-for-sale financial assets or the financial assets which are measured based on the fair value and their changes are counted to the current profit and loss. For the detail of the accounting policy, refer to Note V. 10 "Financial Instruments".
Joint control refers to the joint control over some arrangement made by the Company according to the relevant agreement and the relevant activities for the arrangement must be jointly decided by all the parties sharing the control power. Significant influence refers to the Company's power of participation in making an investee's financial and operation policies but the Company cannot control or jointly control with other parties to make these policies.
(1) Determination of Investment Costs
For the long term equity investment acquired through consolidation of enterprises under the common control, the share of the book value of the consolidatee's owner's equity as at the date of consolidation in the eventual controller's financial statements is taken as the initial investment cost of the long term equity investment. The balance among the initial investment cost of the long term equity investment and the cash as paid, non-cash asset as assigned and the book value of the liabilities as assumed is used for adjustment of the capital reserve; in case the capital reserve is not enough for writing-down, the retained earnings is adjusted. In case the equity securities as issued for consolidation consideration, the share of the book value of the consolidatee's owner's equity as at the date of consolidation in the eventual controller's consolidated financial statements is taken as the initial investment cost of the long term equity investment, the total book value of the issued shares is taken as the share capital, the balance between the initial investment cost of the long term equity investment and the total face value of the issued shares is used for adjustment of the capital reserve; in case the capital reserve is not enough for writing-down, the retained earnings is adjusted. The equity in the consolidatee under the common control which is acquired in steps through a number of transactions and the consolidation of the enterprise under control is eventually formed shall be treated depending on whether it belongs to "one package deal": if it belongs to "one
package deal", all the transactions shall be taken as a transaction for acquiring the control power for accounting treatment. If it does not belong to "one package deal", the share of the book value of the consolidatee's owner's equity in the eventual controller's consolidated financial statements is taken as the initial investment cost of the long term equity investment; the balance among the initial investment cost of the long term equity investment and the book value of the long term equity investment before arrival of the consolidation plus the book value of the newly paid consideration of the shares acquired further on the consolidation date shall be used to adjust the capital reserve; in case the capital reserve is not enough for writing-down, the retained earnings is adjusted. For the equity investment held before the date of consolidatoin or the other comprehensive income as recognized from the available-for-sale financial assets, no accounting treatment shall be taken for time being.
For the long term equity investment acquired through consolidation of enterprises not under the common control, the consolidation cost as at the acquisition date is taken as the initial investment cost of the long term equity investment. The consolidation cost is the sum of the assets paid to the buyer, the liabilities incurred or assumed, and the fair value of the equity securities as issued. The equity which is acquired in steps through a number of transactions and eventually forms consolidation of enterprises not under the common control shall be treated depending on whether it belongs to "one package deal": if it belongs to "one package deal", all the transactions shall be taken as a transaction for acquiring the control power for accounting treatment. If it does not belong to "one package deal", the sum of the book value of the equity investment in the purchasee originally held plus the newly increased investment cost shall be taken as the initial investment cost of the long term equity investment calculated according to the cost method. In case the equity originally held is calculated based on the equity method, the relevant other comprehensive income shall not undergo accounting treatment for time being. If the equity investment originally held is an available-for-sale financial asset, the balance between its fair value and the book value and the accumulative movement of the fair value originally counted to other comprehensive income are transferred to the current profit and loss.
Intermediary fees in connection with audit, law service, appraisal and consulting, etc. incurred to the consolidator or purchaser and other relevant administrative fees shall be counted to the current profit and income at the time of incurrence.
The equity investment other than the long term equity investment formed from the enterprise consolidation which is initially measured based on the cost, such costs are recognized in such ways as the fair value of the equity securities issued by the Company, the value as specified in the investment contract or agreement, the fair value or the original book value of the assets exchanged out in the non-monetary asset exchange transactions, or the own fair value of the long term equity investment, etc. depending on the ways of acquirement of the long term equity investment. The expenses, taxes and other necessary expenditures directly in connection with the acquirement of the long term equity investment are counted to the investment costs. For the long term equity investment resulted from the additional investment which may bring out significant influence upon or joint control over the investee but shall not constitute control, the cost of the long term equity investment is the sum of the fair value of the equity investment originally held as determined according to the Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments plus the cost of the newly increased investment.
(2)Subsequent measurement and recognition of gains and losses
The long term equity investment with the investee enjoying joint control (with the constitution of joint operators exclusive) or significant influence is calculated by means of equity method; and also for the long term equity investment in which the Company's financial statements can implement control over the investee by calculation based on the cost method.
① Long term equity investment calculated based on the cost method
In calculation by cost method, the long term equity investment is valuated according to the initial investment cost, and for additional or recovery of investment, the cost of the long term equity investment is adjusted. Except that the actual payment or consideration paid at the time of acquiring the investment contains the cash dividend or profit already announced but not yet distributed, the return on the investment in the reporting period is recognized based on the cash dividend or profit already announced for distribution by the investee.
② Long term equity investment calculated based on the equity method
When the calculation based on the equity method is used, if the initial investment cost of the long term equity investment is greater than the share of the fair value of net identifiable assets enjoyable in the investee, the initial investment cost of the long term equity investment shall not be adjusted; when the initial investment cost is less than the share of the fair value of net identifiable assets enjoyable in the investee, the balance is counted to the current profit and loss and at the same time the cost of the long term equity investment is adjusted.
When the equity method is used for calculation, the net gains and losses realized by the investee and the share of the other comprehensive income enjoyable or sharable shall be respectively used to recognize the return on investment and other comprehensive income and at the same time the book value of the long term equity investment is adjusted; according to the profit announced for distribution by the investee or the part of the cash dividend enjoyable upon calculation, the book value of the long term equity investment is reduced correspondingly. For other change in the net profit and loss, other comprehensive income and owner's equity other than the profit distribution, the book value of the long term equity investment is adjusted and counted to the capital reserve. In determining the net profit and loss in the investee enjoyable, with the fair value of various identifiable assets, etc. in the investee when the investment is acquired as the base, the net profit of the investee is recognized after adjustment. When the accounting policy and fiscal period adopted by the investee is different from that of the Company, the investee's financial statements are adjusted according to the accounting policy and fiscal period adopted by the Company and the return on the investment and other comprehensive income are recognized on this basis. For the transactions between the Company and its associates or joint ventures, in case the assets provided or sold do not constitute business, the part calculated based on the proportion of the unrealized internal transaction gains and losses attributable to the Company shall be offset and the gains and losses on the investment shall be recognized on this basis. However, the loss from no internal transaction between the Company and an investee shall not be offset if the loss belongs to impairment of the assets assigned. In case the assets invested in a joint venture or an associate constitutes business and the investor has acquired the long term equity investment therefrom but has not achieved the control power, the fair value of the business provided shall be taken as the initial investment cost of the newly added long term equity investment, the balance between the initial investment cost and the book value of the business provided shall all be counted to the current gains and losses. In case assets sold by the Company to its joint ventures or associates constitute business, the balance between the consideration acquired and the book value of the business shall all be counted to the current gains and losses. In case the asset provided to the Company by its joint venture or the associate constitutes business, accounting treatment shall be conducted according to the Enterprise Accounting Standards No. 20 - Enterprise Consolidation and all the amount shall be recognized as the transaction related gains and losses.
In determining the part of the net loss incurred to the investee to be shared by the Company, the book value of the long term equity investment and other long term equity which has substantially constituted net investment in the investee shall be reduced to the limit of zero. In addition, in case the Company is obliged for extra loss in an investee, the predicted
liabilities shall be recognized according to the obligation predicted to assume and counted to the current gains and losses in the investment. In case an investee realizes net profit in subsequent periods, the Company shall recover recognition of the part of income enjoyable after the recognized part of the loss shared by the Company has been made up for with the part of the benefit enjoyable.
③ Acquisition of minority equity
In preparation of the consolidated financial statements, the balance between the long term equity investment newly increased resulted from purchase of minority equity and the share of the net asset continuously calculated commencing from the date of purchase (or date of consolidation) enjoyable by the subsidiary shall be used to adjust the capital reserve. In case the capital reserve is not enough for writing-down, the retained earnings shall be adjusted.
④ Disposal of long term equity investment
In a consolidated financial statement, the parent company has partially disposed the long term equity investment in its subsidiary without losing its control power, the difference between the disposal income of the amount enjoyable in thesubsidiary’s net assets corresponding to the long term equity investment disposed is counted to theowner’s equity. In case that the parent company has partially disposed the long term equity investment in its subsidiary has caused the parent company to have lost the control power over the subsidiary, it should be treated according to the accounting policy as specified in the “method for preparation of consolidated financial statements” of Note V. 6.(2).
If a long term equity investment is disposed under other situation, for the equity disposed, the difference between its book value and the consideration actually obtained is counted to the current gains and losses.
For the long term equity investment calculated based on the equity method, the other comprehensive income part which was originally counted to theowner’s equity undergoes accounting treatment according to the corresponding proportion by using the same base for direct disposal of the relevant assets or liabilities used by the investee. The owner's equity recognized due to change of the other owners' equity of the investee with the net gains and loss, other comprehensive income and profit distribution exclusive is carried over into the current gains and losses based on the proportions. For the long term equity investment, in case the remaining equity after disposal sitll needs to be calculated according to the cost method, the other comprehensive income calculated by the equity method or calculated and recognized based on the standards for recognition and measurement of financial instruments undergoes the accounting treatment by using the same base as the investee has adopted for direct disposal of the relevant assets or liabilities and carried over to the current gains and losses according to the proportion; movement of all other owners' equity calculated and determined by using the equity method with the net gains and losses in the investee's net assets as determined, other comprehensive income and profit distribution exclusive is carried over to the current gains and losses according to the proportion. In case the Company has lost the control over an investee due to disposal of partial equity, in preparation of individual financial statements, the remaining equity after disposal can still implement joint control over or significant influence on the investee; the equity method is applied for calculation instead and the said remaining equity is adjusted as if the equity method was used for calculation commencing from the time of its acquisition; in case the remaining equity after the adjustment can no longer implement joint control over or significant influence on the investee, the accounting treatment shall be conducted according to the provisions concerning recognition and measurement of financial instruments; the balance between the fair value as at the day of loosing the control power and the book value is counted to the current gains and losses. The other comprehensive income calculated by means of the equity method or calculated and
recognized according to the standards for recognition and measurement of financial instruments undergoes accounting treatment on the same base as the investee has lost control and the investee directly disposes the relevant assets or liabilities. The movement of the other owner's equity in the investee's net assets calculated and recognized by means of the equity method is carried over into the current gains and losses at the time of loosing the control over the investee with the exception of the net gains and profit, other comprehensive income and profit distribution. Where, for the remaining equity after disposal calculated by means of equity method, the other comprehensive income and other owner's equity are carried over according to the proportion; in case the remaining equity after disposal is recognized and measured based on the financial instruments, the other comprehensive income and other owner's equity are all carried over.
In case the Company has lost the joint control over or significant influence on the investee due to disposal of partial equity, the remaining equity after disposal is calculated according to the standards for recognition and measurement of financial instruments while the balance between the fair value and the book value as at the day when the Company lost its joint control or significant influence is counted to the current gains and losses. The other comprehensive income from the original equity investment calculated and recognized by means of the equity method undergoes accounting treatment by using the same base as the investee directly disposes the relevant assets or liabilities when the calculation based on teh equity method is terminated; the owner's equity recognized due to the movement of other owner's equity with the investee's net gains and losses, other comprehensive income and profit distribution exclusive is all transferred into the current return on investment when the equity method is stopped.
The Company disposes the equity investment in a subsidiary in steps through a number of transactions until it has lost the control power. If the aforesaid transaction belongs to a one-package transaction, the transactions shall undergo accounting treatment as a transaction in which the equity investment in a subsidiary is disposed and the control power is lost. The balance between the first disposal consideration prior to loss of the control power the book value of the long term equity investment corresponding to the equity disposed is recognized as other comprehensive income first and then all transferred into the current gains and losses from loss of the control power.
15. Investment based real estate
Measurement model for investment real estate
Measured based on the cost method
Depreciation or amortization method
Investment based real estate refers to the real estate held by the Company which creates rental or added value of capital or both, Including the land use right which has already been let out, the land use right held and to be assigned after appreciation, building which has been leased out, etc.
Investment based real estate is initially measured according to the cost Investment based real estate is initially measured based on the cost. The follow-expenses in connection with the investment based real estate are recorded in the investment based real estate costs in case the relevant economic benefit may flow into the Company while the costs can be reliably measured. Other follow-up expenses are recorded in the current gain and loss at the time of incurrence. The Company adopts the cost model to make follow-up measurement of the investment based real estate and makes depreciation or amortization according to the policy of coincidence with housing and building or land use right.
About the impairment test method and method for provision of reserve for impairment of the investment based real estate. For the detail, refer to Note V.22 "Impairment of Long Term Assets".
When the self-use real estate is transferred into the investment based real estate or the investment based real estate is transferred into the self-use real estate, the book value prior to the transfer is taken as the entry value after the transfer. When the application of the investment based real estate is for self-use, the investment based real estate is transferred to fixed asset or intangible asset commencing from the date of change. When the application of the self-use real estate is changed into earning rental or increase of capital value, commencing from the date of change, the fixed asset or intangible asset are transferred into investment based real estate. When conversion takes place, for the investment based real estate measured by means of the cost module instead, the book value before conversion shall be taken as the entry value after the conversion; for the investment based real estate measured by means of fair value instead, the fair value as at the conversion date shall be taken as the entry value after conversion.
When the investment based real estate is disposed or permanently withdrawn from use and it is predicted that it is unable to earn economic benefit, the recognition of the investment based real estate is terminated. The income from disposal of investment based real estate, including sale, assignment, discarding or damage, is charged to the current gain and loss after deduction of the book value and the relevant taxes.
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
||||||
|-|-|-|-|-|
|Categories|Depreciation methods|Depreciation life|Residual rate|Yearly depreciation|
|Plant & buildings|Average service life method|20 -35|5|2.7 -4.8|
|Machinery & equipment|Average service life method|10|5 -10|9 -9.5|
|Electronic equipment|Average service life method|5|5|19|
|Motor vehicle|Average service life method|5|5|19|
|Other equipment|Average service life method|5|5|19|

 (3) Basis for recognizing the fixed assets under financing lease, Pricing and Depreciation Methods
The "finance lease" shall refer to a lease that has transferred in substance all the risks and rewards related to the
ownership of an asset. The ownership of it may or may not eventually be transferred. For the fixed assets rented by
means of financing lease, depreciation of the rented assets is provided according to the policy identical to the proprietary assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life.
17. Construction-in-process
The cost of construction-in-process 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. Construction-in-process is transferred to fixed assets when the asset is ready for its intended use.
For provision for impairment of construction-in-process and the method for provision for impairment, refer to Note V.22 "Impairment of Long Term Assets".
18. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of depreciation or premium, auxiliary expenses and balance of exchange resulted from foreign currency loan, etc. he borrowing costs from acquisition or production of the assets or borrowing expenses result therefrom directly attributable to compliance with the condition of capitalization starts to be capitalized when the expense of the asset has incurred, borrowing costs have incurred and the acquisition and construction or production activities necessary to let the asset reach the predicted applicable or sellable status; when the assets acquired, constructed or produced in compliance with capitalization have reached the predicted applicable status or sellable status, the capitalization stops. The other borrowing costs are recognized as expenses in the period of incurrence.
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.
The assets in compliance with the capitalization conditions refer to such assets as fixed assets, investment based real estate, inventories, etc. which need to undergo long time of acquisition or construction or production activities before they can reach the predicted applicable or sellable status.
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 until the acquisition or construction or production activities of the assets restart.
19. Biological Assets
Inapplicable
20. Oil and Gas Assets
Inapplicable
21. Intangible assets
(1) Pricing Method, Service Life and Impairment Test
An intangible asset refers to a recognizable non-monetary asset without physical form possessed by or under the control of the Company.
Intangible assets are initially measured based on the cost.. All expenses in connection with the intangible assets are charged to the costs of intangible assets if the relevant economic benefit can flow into the Company and the costs can be reliably measured. All the expenses of other items except that are charged to the current gain and loss at the time of incurrence.
The land use right acquired is usually calculated as intangible asset. For the buildings, such as factory building, constructed independently, the expenses in connection with the land use right and the construction cost of such building are calculated as intangible asset and fixed assets. For purchased housing and buildings, the relevant costs are distributed between the land use right and buildings; in case it is difficult to distribution rationally, they shall all be handled as fixed assets.
An intangible asset with limited service life is amortized in average by using the straight-line method over the predicted service life with its original value less the predicted residual value and the accumulated amount of the reserve for impairment already provided commencing from the time of availability for use. The intangible asset with unidentified service life would not be amortized.
The method for amortization of intangible assets with limited service life is as follows:
||||
|-|-|-|
|Categories|Useful Life (Year)|Amortization Method|
|Land use right|50|Straight-line method|
|Software system|5|Straight-line method|
|Trademark rights|5 -10|Straight-line method|

At the end of a year, the Company rechecks the service life of the intangible asset and the amortization method. The change incurred is treated as change of accounting estimation. In addition, the service life of intangible asset with indefinite service life is rechecked. If there is evidence showing that the duration of the economic benefit brought about by the intangible asset for the enterprise is foreseeable, the estimated service life is amortized according to the amortization
policy of intangible assets with limited service life.
(2) Accounting policy for internal 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 Company can satisfy all of the following conditions:① the technical feasibility of completing the intangible asset so that it will be available for use or sale;
② its intention to complete the intangible asset is to use or sell it; how the intangible asset will generate economic benefits;
③ Way of intangible assets producing economic interest, including those that can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
④ The availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset;
⑤ Its ability to measure reliably the expenditure attributable to the intangible asset during its development phase. If it is impossible to distinguish research stage expenses and development stage expenses, the R& D expenses as incurred shall be all charged to the current gains and losses.
The research and development projects of the Company 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 “development costs” in the balance sheet and shall be transferred to intangible assets when the project is completed to its intended use state.
(3) Impairment testing method and method for provision for impairment of intangible assets
About the impairment testing method and method for provision of reserve for impairment of the investment based intangible assets. For the detail, refer to Note V.22 "Impairment of Long Term Assets".
22. Impairment of long term assets
For non-current and non-financial assets such as fixed assets, construction-in-process, intangible assets with limited service life, investment based real estate measured based on the cost model, the long term equity investment in subsidiaries, joint ventures and associates, etc., the Company make judgment on whether there exists any sign of impairment on balance sheet day. In case there exists sign of impairment, the Company estimates the recoverable amount and makes impairment test. For goodwill and the intangible assets with the service life undetermined and the intangible assets which have not reached applicable status, regardless whether there exists sign of impairment, the Company makes impairment test every year.
In case impairment test result shows that the recoverable amount of asset is lower than the book value, provision for impairment is made based on the difference and is regarded in the loss for impairment. The recoverable amount is
determined based on the higher of the net amount of the fair value of the asset less the expense of disposal and the
present value of the predicted future cash flow of the asset. The fair value of assets is determined based on the sales agreement price in fair transaction; in case there is no sales agreement but does exist active market of asset, the fair value is determined according to thebuyer’s offer of the asset; in case there exists neither sales agreement nor active market of asset, the fair value of assets is estimated based on the best information obtainable. The disposal expenses include legal expenses, relevant taxes, handling fee and direct expenses incurred before the asset reaches the sellable status in connection with disposal of the assets. The present value the predicted future cash flow of assets: according to the predicted future cash flow created in process of continuous application and final disposal, choose the proper discount rate to determine the amount after discount. Provision for impairment of asset is calculated and recognized based on the individual asset. In case it is difficult to make estimation of the recoverable amount of individual asset, the recoverable amount of asset group is determined based on the asset group which the asset belongs to. The asset group is the minimum grouping of assets which can independently produce cash flow in.
For the goodwill separately stated in the financial statements, at the time of impairment testing, the book value of the goodwill is apportioned to the asset group or combination of asset groups of assets benefited from the synergistic effect of enterprise consolidation. In case the testing result shows that the recoverable amount of an asset group or combination of asset groups which contain apportioned goodwill is lower than their book value, the corresponding impairment loss is recognized. The amount of the impairment loss first offsets and is apportioned to the book value of the goodwill of the asset group or combination of asset groups, and then offset the book value of other assets according to the proportions of other various assets in the book value with the exception of goodwill in the asset group or combination of asset groups. The impairment loss of the aforesaid assets, once recognized, shall not be reversed as the recovered part in subsequent periods.
23. Long term expenses to be apportioned
Long term expenses to be apportioned refer to various expenses which have already incurred but should be borne in the reporting period and subsequent periods with the apportioning term exceeding one year. The Company's long term expenses to be apportioned include the special counter fabrication cost, repairing fee, etc. Long term expenses to be apportioned are amortized according to the straight-line method in the predicted beneficial period.
24. Payroll to Employees
(1) Accounting treatment of short term salaries
Short term salaries mainly include wages, bonus, allowances and subsidy, welfare expenses to employees, medical insurance premium, birth insurance premium, work related injury insurance premium, housing fund, labor union dues and employees' personnel education fund, non-monetary welfare, etc. The Company recognizes the short term salaries to incur during the fiscal periods when employees offer services to the Company as liabilities and count the same to the current gains and losses or the relevant cost of assets. Of them, non-monetary welfare is measured based on the fair value.
(2) Post-employment benefits
The post-employment benefits mainly include the basic endowment insurance, unemployment insurance, annuity, etc. Post-employment benefit program includes defined contribution plan. In case the defined contribution plan is used, the corresponding contributable amount is counted to the corresponding asset cost or the current gains and losses at the time of incurrence.
(3) Dismission welfare
In case the employment relation between the Company and an employee is terminated before the employment contract term is due or for the purpose of encouraging an employee to volunteerly accept the lay-off, the Company proposes to offer compensation, and the employees' payroll liabilities resulted from the termination benefits are recognized as at the earlier of the time when the Company cannot unilaterally withdraw the dismission welfare as specified in the plan for termination of labor relationship or the lay-off proposal and the time when the Company recognizes the costs related with the reorganization of payment of the termination benefits and such liabilities are counted to the current gains and losses. However, if the termination benefits are predicted to be unable to be fully paid within 12 months after termination of the annual reporting period, it shall be handled according to the other long term payroll to employees.
The internal retirement program for employees is handled based on the same principle as that for the aforesaid dismission welfare. The Company plans to count the salaries paid to the internally retired employees and their social insurance premium paid by the Company from the date when the concerned employees stops offering services to the Company to the time of their official retirement to the current gains and losses (dismission welfare) when they comply with the conditions for recognizing the predicted liabilities.
(4) Other long term employees' welfare
Other long term employees' welfare provided by the Company to its employees shall undergo the accounting treatment according to the defined contribution plan as long as it complies with the defined contribution plan. With the exception of this, it shall undergo accounting treatment according to the defined beneficial plan.
25. Predicted liabilities
Predicted liabilities are recognized when an obligation in connection with contingencies complies with the following conditions: (1) The obligation is a present obligation of the Company; (2) It is probable that an outflow of economic benefits will be required to settle the obligation; (3) The amount of the obligation can be measured reliably.
On the balance sheet day, with consideration of such factors as contingency related risk, uncertainty and the time value of money, etc., the predicted liabilities are measured according to the best estimated amount necessary to be paid in implementation of the relevant current obligation.
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.
26. Payment for shares
Inapplicable
27. Other financial instruments, such as preferred shares, perpetual liabilities, etc.
Inapplicable
28. Revenue
Does the Company need to comply with the requirements on information disclosure for special industries?
No
(1) General Principle
① Sale of goods
Revenue from the sale of goods is recognized only when all of the following conditions are satisfied: the Company has transferred to the buyer the significant risks and rewards of ownership of the goods, the Company 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.
②Provision of services
Where the outcome of a transaction involving the provision 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:①. The amount of revenue can be measured reliably;②. The associated economic benefits are likely to flow into the enterprise;③. The stage of completion of the transaction can be measured reliably;④. 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.
When a contract or agreement signed between the Company and other enterprise covers sales of goods and supply of labor service, in case the part of sales of goods and the part of providing labor service are distinguishable and can be measured separately, the part of sales of goods and the part of providing labor service should be treated separately; in case the part of sales of goods and the part of providing labor service cannot be distinguished or cannot be separately
measured despite that they are distinguishable, all the contract shall be treated as sales of goods.
③ Royalty revenue
Revenue is recognized on accrual basis according to the relevant contract or agreement.
④ Interest income
The interest income shall be calculated based on the tenure of theCompany’s monetary funds used by others and the actual interest rates used.
(2) Detailed method of revenue recognition
The watches sold by the Company includes two types, one is the self-manufactured FIYTA watch, the sales of which is managed by branch offices and provincial-level sale sections by regions set up by Harmony, a subsidiary of the Company's. 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:
① Direct sales to the customers
Under direct sales to the customers mode, the Company delivers products to customers and recognizes sales income after customers check and accept.
② Exclusive shop
Under exclusive shop mode, the Company delivers products to customers and recognizes sales income after customers check, accept and pay.
③ Shop-in-shop
Under shop-in-shop mode, the Company delivers products to customers, sales staff issues notes to retail customers and recognizes sales income after customers check and accept and department store collects the payment from the customers.
④ Consignment sales
Under consignment sales mode, the Company receives the detail of the sales list from consignee and recognizes revenue while issuing invoice to distributors.
29. Government subsidies
(1) Basis for judging asset related government grants and the accounting treatment method
Government subsidy refers to the monetary asset and non-monetary asset obtained free by the Company from the government, excluding the capital from the government as owner's contribution. Government subsidy consists of asset-related government subsidy and income-related government subsidy.
The government subsidy in form of monetary asset is measured based on the amount received or receivable. The
government subsidy in form of non-monetary asset is measured based on fair value; or measured based on nominal amount if the fair value cannot be reliably obtained. The government subsidy measured based on nominal amount is directly counted to the current gains and losses.
Asset-related government subsidy is recognized as deferred income and is distributed and counted on averaged to the current gains and losses over the service life of the relevant assets.
In case there exists any balance of the related deferred income when the government subsidy as already recognized needs to be returned, the balance is used to write down the book balance of the relevant deferred income and the exceeded part is counted to the current gains and losses; in case there exists no related deferred income, it is counted directly to the current gains and losses.
(2) Basis for judging income related government subsidy and the accounting treatment method
The income-related government subsidy used for compensate the relevant expenses and losses in the subsequent period is recognized as deferred income and counted to the current gains and losses in the period of recognizing the relevant expenses.
In case there exists any balance of the related deferred income when the government subsidy as already recognized needs to be returned, the balance is used to write down the book balance of the relevant deferred income and the exceeded part is counted to the current gains and losses; in case there exists no related deferred income, it is counted directly to the current gains and losses.
30. Deferred tax assets and deferred tax liabilities
(1) Income tax in the reporting period
At the balance sheet day, the current income tax liabilities (or asset) formed in the reporting period and previous periods are measured based on the income tax amount predicted payable (or returnable) as calculated according to the tax law. The taxable income amount based on which the current income tax expense is calculated is worked out after the corresponding adjustment of the pretax accounting profit during the reporting period according to the relevant provisions of the tax law.
(2) Deferred income tax asset and deferred income tax liability
The balance between the book value of some assets and liability items and their tax base and the provisional difference arising from the balance between the book value of the items which have not been taken as asset and liability but may be determined as tax base according to the tax law are recognized as deferred income tax asset and deferred income tax liability by means of the debt method based on balance sheet.
The taxable provisional difference which is connected with the initial recognition of goodwill and the initial recognition of the asset or liability arising from the transaction which is neither enterprise consolidation nor influences the accounting profit and taxable income amount (or may be used to offset loss) at the time of incurrence are not recognized as relevant deferred income tax liability. In addition, as to the taxable provisional difference in connection with investment in the
subsidiaries, associates and joint ventures, if the Company can control the time of reversal of the provisional difference
while such provisional difference may be possibly unable to be reversed in the foreseeable future and the relevant deferred income tax liability shall not be recognized either. With the exception of the aforesaid situation, the Company recognizes the deferred income tax liability arising from other taxable provisional difference.
The offsetable provisional difference which is connected with the initial recognition of the asset or liability (or may be used to offset loss) arising from the transaction which is neither enterprise consolidation nor influences the accounting profit and taxable income amount is not recognized as the relevant deferred income tax asset. In addition the offsetable provisional difference in connection with investment in the subsidiaries, associates and joint ventures, in case such provisional difference may be possibly unable to be reversed in the foreseeable future, or it is not highly possible to obtain taxable income amount which can be used to offset the offsetable provincial difference in future, shall not be recognized as the relevant deferred income tax asset. With the exception of the aforesaid situation, the Company recognizes the deferred income tax asset arising from the other offsetable provisional difference only with the taxable income amount which may possibly be obtainable for offsetting the offsetable provisional difference.
For the offsetable loss and tax payment write-down which may be carried over to the future years, only the future taxable income amount which may be obtainable and used to offset the offsetable loss and write down the tax payment may be recognized as the corresponding deferred income tax asset.
At the balance sheet day, 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 according to the tax law.
At the balance sheet day, the Company reviews the carrying amount of a deferred tax asset. If it is probable that sufficient taxable profits will not be available in future 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.
(3) Income tax expense
Income tax expense includes the current income tax and deferred income tax.
Except that the current income tax and deferred income tax in connection with other comprehensive income or the transactions and matters which are directly stated in the shareholders' equity are counted to the other comprehensive income or shareholder's equity and the deferred income tax arising from enterprise consolidation is used to adjusted the book value of goodwill, all the other current income tax and deferred income tax expenses or income are counted to the current gains and losses.
(4) Income Tax Offsetting
In case the Company has legal right to make netting and is desirous to make netting or obtain assets and settle liabilities at the same time, the Company may present the net amount after offsetting the current income tax liabilities with the current income tax assets.
In case the Company has legal right to settle the current income tax asset and current income tax liability in net while the deferred income tax asset and the deferred income tax liability are related to the income tax which is collected by the same tax collection and administration authority from the same tax payer or related to the different tax payer, but during the period in future when each significant deferred income tax asset and liability are reversed, the Company present the
deferred income tax asset and deferred income tax liability in net after offsetting when it involves the tax payer's desire to settle the current income tax asset and liability or obtaining asset and satisfying liability in net.
31. Lease
(1) Accounting process for operating lease
The "finance lease" shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. The ownership of it may or may not eventually be transferred. Other lease except the financing lease is operational lease
① The Company records the operational lease business as the tenant
Rental payment of operational lease is recorded in the relevant asset cost or current gain and loss based on the straight line method over various fiscal periods within the lease term. The initial direct expense is recorded in the current gain and loss. Contingent rental is recorded in the current gain and loss when it actually incurs.
② The Company records the operational lease business as the lessor
The rental income of the operational lease is recorded in the current gain and loss according to the straight line method in different periods within the lease term. The initial direct expense with bigger amount is capitalized at the time of incurrence and is recorded in the current gain and loss periodically according to the same base in recognizing the rental income during the lease term; other initial direct expense with smaller amount is recorded in the current gain and loss at the time of incurrence. Contingent rental is recorded in the current gain and loss when it actually incurs.
(2) Accounting treatment method for finance lease
① As lessor
At the beginning date of lease period, the Company will recognize the lower of the fair value of the lease asset at the beginning of the lease and the present value of the minimum amount of rent payment as the entry value of rent asset; takes the minimum rent payment as the entry value of long term account payable and its balance as the unrecognized financial charges. In addition, when the lease negotiation takes place in the same process of conclusion of lease contract, the initial direct expenses attributable to lease item are also counted to the value of rent asset. The balance of the minimum rent payment amount less the unrecognized financial charges is respectively stated on the long term liabilities and the long term liabilities due within a year.
Unrecognized financial charges are recognized in the current financing expenses by using the actual interest rate method within the lease term. Contingent rental is recorded in the current gain and loss when it actually incurs.
② As lessee
As at the beginning date of lease period, the Company takes the sum of the minimum amount of the rent collected at the beginning of the lease and the initial direct expense as the entry value of the finance lease receivable and at the same time records the unsecured residual value; the recognizes the balance of the sum of the minimum rent collection amount, initial direct expenses and unsecured residual value and the sum of its present value as the unrealized financing income.
The balance between the receivable rent from finance lease less the unrealized revenue of financing is respectively
presented in the long term claim and the long term claim due within a year.
The unrecognized financial charges are calculated by means of the actual interest rate method within the lease term and recognized as the current financial expenses. Contingent rental is recorded in the current gain and loss when it actually incurs.
32. Other important accounting policy and accounting estimate
Operation termination
Operation termination refers to the components which can satisfy one of the following conditions, can be separately distinguished and have been disposed or classified as the category of held-for-sale by the Company:① this component represents an independent major business or an independent major operation region;② this component is a part of a related plan for an independent principal business or an independent principal operation region;③ this component is a subsidiary acquired exclusively for resale.
About the accounting treatment method for operation termination, refer to the relevant description of Note V.13 “Held-for-sale assets and disposal group”
33. Changes in significant accounting policies and accounting estimates
(1) Change in significant accounting policies
Inapplicable
(2) Change in significant accounting estimates
Inapplicable
34. Miscelleneous
Inapplicable
VI. Taxation
1. Types of major taxes and tax rates
||||
|-|-|-|
|Type of taxes|Tax basis|Tax rates|
||VAT is calculated and paid based on the balance of the||
||output VAT as worked out based on 16% of the taxable||
|VAT||16%|
||revenues less the input VAT allowed to be offset in the||
||very period.||

||||
|-|-|-|
||For the high-grade watch at the price higher than CNY||
|Consumption tax|10,000 (with CNY 10,000 inclusive) imported or|20%|
||produced, the consumption tax is calculated and payable.||
||The urban maintenance and construction tax is based on||
|Urban maintenance and construction tax||7%|
||7% of the turnover tax actually paid||
|Corporate income tax|Taxable income amount|15%-30%|
||1.2% of 70% of the cost of the property or 12% of the||
|Real estate tax||1.2% and 12%|
||rental income||

In case there exist taxpayers subject to different corporate income tax rates, disclose the information.
|||
|-|-|
|Taxpayers|Income tax rates|
|The Company (Notes①②)|25.00%|
|Shenzhen Harmony World Watches Center Co., Ltd. (HARMONY) (Notes①)|25.00%|
|Shenzhen FIYTA Sophisticated Timepieces Manufacture Co., Ltd. (the Manufacture||
||15.00%|
|Co.) (Notes②③)||
|FIYTA Hong Kong (Note ④)|16.50%|
|Shenzhen FIYTA Technology Development Co., Ltd. (the Technology Co.) (Notes②||
||15.00%|
|③)||
|Shiyuehui Boutique (Shenzhen) Co., Ltd. (Shiyuehui ) (Notes⑤)|25.00%|
|Harbin Harmony World Watch Distribution Co., Ltd. (Harbin Company) (Notes⑤)|25.00%|
|Emile Chouriet (Shenzhen) Limited (Emile Choureit Shenzhen Company) (Notes⑤)|25.00%|
|FIYTA Sales Co., Ltd. (the Sales Co.) (Notes①⑤)|25.00%|
|Liaoning Hengdarui Commerce & Trade Co., Ltd. (Hengdarui) (Notes⑤)|25.00%|
|Montres Chouriet SA (the Swiss Co.) (Notes⑥)|30.00%|

2. Tax Preferences
(1) Enterprise Income Tax
Note①: According to the regulations stated in GuoShuiFa (2008) No. 28, “Interim Administration Method for Levy of Corporate Income Tax to Enterprise that Operates Cross-regionally”, the head office of the Company and its branch offices, the head office of HARMONY Company and its branch offices adopt tax submission method of “unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and adjustment by finance authorities” starting from 1 January 2008.50% is shared and prepaid by branches and50% is prepaid by the headquarters.
Note②: According to the Notice of Improving R& D Expense Pre-tax Weighted Deduction Policy (CAI SHUI (2015) No. 119 promulgated by the Science and Technology Department of State Administration of Taxation, the R& D expenses arising from development of new technology, new products and new process in the Company, the Manufacture Company and the Technology Company may enjoy50% weighted deduction as the R& D expenses based on the specified
deduction according to fact as long as they have not formed intangible assets and counted to the current gains and loss;
Note③: The company enjoys the “income tax rate exclusion of high-tech enterprises key supported by the state”.
Note④: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is16.50% this year.
Note⑤: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is25% for residential enterprises since 1 January 2008.
Note⑥: The tax rate of30% is applicable for Swiss Company as it registered in Switzerland.
(2) Property tax
According to Article 2 of the Circular on Transmission of the Provisions on the Policy in Connection with the Property Tax and Urban Land Use Tax Promulgated by the State Administration of Taxation (SHEN DI SHUI FA[2003] No. 676: for the new properties newly constructed or purchased by taxpayers, the property tax may be exempted for three years commencing from the next month after completion of the construction or purchase. Our FIYTA Watch Building located at Guangming New Zone of Shenzhen enjoys exemption from the property tax for three years commencing from the next month of completion of the construction in September 2016.
3. Miscelleneous
Inapplicable
VII. Notes to items of consolidated financial statements
1. Monetary capital
In CNY
||||
|-|-|-|
|Items|Ending balance|Ending balance|
|Cash in stock|233,265.12|414,210.14|
|Bank deposit|278,565,485.60|184,528,160.32|
|Other Monetary Funds|2,210,520.86|2,210,520.86|
|Total|281,009,271.58|187,152,891.32|

 2. Financial assets measured based on fair value and its movements counted to the current gain or loss Inapplicable
3. Derivative financial assets
Inapplicable
4. Notes receivable
(1) Presentation of classification of notes receivable
In CNY
||||
|-|-|-|
|Items|Ending balance|Ending balance|
|Bank acceptance|3,164,514.86|2,398,579.72|
|Trade acceptance|1,467,574.48|7,295,303.96|
|Total|4,632,089.34|9,693,883.68|

 (2) Notes receivable already pledged by the Company at the end of the reporting period
Inapplicable
(3) Endorsed or discounted notes receivable at the end of the reporting period, but not yet due on the balance sheet day
Inapplicable
(4) Notes transferred to receivables due toissuer’s default at the end of the reporting period
Inapplicable
5. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Ending balance|||||
||Book balance||Bad debt reserve|||Book balance||Bad debt reserve|||
|Categories|||||||||||
|||||Provision|Book value||||Provision|Book value|
||Amount|Proportion|Amount|||Amount|Proportion|Amount|||
|||||proportion|||||proportion||
|Accounts receivable with|||||||||||
|significant single amount|1,702,371.9||1,702,371.9|||6,985,493.|||||
|||0.44%||13.57%|0.00||2.04%|6,985,493.80|44.40%|0.00|
|and provision of bad debt|4||4|||80|||||
|reserve on individual basis|||||||||||
|Receivables for which|||||||||||
|provision for bad debts have|389,169,407||10,748,839.||378,420,568.|334,903,9|||||
|||99.54%||85.66%|||97.93%|8,649,343.91|54.98%|326,254,624.94|
|been recognized based on|.57||30||27|68.85|||||
|the portfolio|||||||||||
|Accounts receivable with|||||||||||
||97,147.84|0.02%|97,147.84|0.77%|0.00|97,147.84|0.03%|97,147.84|0.62%|0.00|
|insignificant single amount|||||||||||

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|and provision of bad debt|||||||||||
|reserve on individual basis|||||||||||
||390,968,927||12,548,35908|.100.00%|378,420,568.27|341,986,6||15,731,985.5||326,254,624.94|
|Total||100.00%|||||100.00%||100.00%||
||.35|||||10.49||5|||

Accounts receivable with significant single amount and provision of bad debt reserve on individual basis at the end of the reporting period :
In CNY
||||||
|-|-|-|-|-|
|Accounts receivable (based on|Ending balance||||
|units)|Accounts receivable|Bad debt reserve|Provision proportion|Provision reason|
|Xi'an Centuryginwa Qujiang|||||
||1,702,371.94|1,702,371.94|100.00%|Chances of recovering is remote|
|Shopping Center Co., Ltd.|||||
|Total|1,702,371.94|1,702,371.94|--|--|

In the combination, the accounts receivable for which the bad debt reserve is provided based on the age analysis: In CNY
|||||
|-|-|-|-|
||Ending balance|||
|Ageing||||
||Accounts receivable|Bad debt reserve|Provision proportion|
|Itemized within 1 year||||
|Sub-total within 1 year|200,590,710.06|10,022,012.71|5.00%|
|1 to 2 years|1,386,065.23|138,606.52|10.00%|
|2 to 3 years|726,441.81|217,932.54|30.00%|
|Over 3 years|740,575.05|370,287.53|50.00%|
|Total|203,443,792.15|10,748,839.30|5.28%|

 Note to the basis for determining the combination:
In the combination, the account receivable for which reserve for bad debt is provided based on balance percentage: Inapplicable
In the combination, the accounts receivable for which the bad debt reserve is provided based on the other method:
|||||
|-|-|-|-|
||Ending balance|||
|Portfolio Description||||
||Accounts receivable|Bad debt reserve|Provision proportion (%)|
|Specific fund portfolio|185,725,615.42|-|-|

(2) Bad debt reserve provided, recovered or reversed in the reporting period
During the reporting period, the Company provided reserve for bad debt amounting to CNY 2,101,421.27; the reserve for bad debt recovered or reversed during the reporting period amounted to CNY 5,283,121.86.
Where the significant amount of the reserve for bad debt recovered or reversed:
In CNY
||||
|-|-|-|
|Company name|Amount recovered or reversed|Way of recovery|
|Xi'an Centuryginwa Shopping Co., Ltd.|5,283,121.86|Bank transfer|
|Total|5,283,121.86|--|

(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable due from the top five debtors are as follows:
Total accounts receivable due from the top five debtors of the Company in the current period is CNY32,639,305.03, accounting for8.35% of the total accounts receivable as at the end of the current period and the total provision for bad and doubtful debts made as at the end of the current period is CNY1,631,965.25.
(5) Accounts receivable terminated for recognition due to transfer of financial assets
Inapplicable
(6) Amount of assets, liabilities formed by transfer of accounts receivable and continuing to be involved Inapplicable
6. Advance payments
(1) Advance payments are presented based on ages
In CNY
||||||
|-|-|-|-|-|
||Ending balance||Ending balance||
|Ageing|||||
||Amount|Proportion|Amount|Proportion|
|Within 1 year|17,227,525.25|69.77%|20,284,829.30|82.25%|
|1 to 2 years|6,528,167.69|26.44%|2,034,407.41|8.25%|
|2 to 3 years|932,656.35|3.78%|2,344,077.82|9.50%|
|Over 3 years|2,000.00|0.01%|0.00|0.00%|

||||||
|-|-|-|-|-|
|Total|24,690,349.29|--|24,663,314.53|--|

(2) Advance payment to the top five payees of the ending balance collected based on the payees of the advance payment
The total amount of advance payment to the top five payees of the ending balance collected based on the payees of the advance payment was CNY 15,260,482.94, taking61.81% of the toal ending balance of the advance payment.
Other notes:
Inapplicable
7. Interest receivable
(1) Classification
Inapplicable
(2) Significant overdue interest
Inapplicable
8. Dividends receivable
(1) Dividends receivable
Inapplicable
(2)Significant dividends receivable with age exceeding 1 year
Inapplicable
9. Other receivables
(1) Disclosure of classification of other receivables
In CNY
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Ending balance|||||
||Book balance||Bad debt reserve|||Book balance||Bad debt reserve|||
|Categories|||||||||||
|||||Provision|Book value||||Provision|Book value|
||Amount|Proportion|Amount|||Amount|Proportion|Amount|||
|||||proportion|||||proportion||
|Other receivables with|||||||||||
||6,784,706.5||6,784,706.5|||6,847,372.|||||
|significant single amount||11.73%||66.80%|0.00||15.23%|6,847,372.68|68.70%|0.00|
||5||5|||68|||||
|and provision of bad debt|||||||||||

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|reserve on individual basis|||||||||||
|Other receivables for which||||33.00%|||||||
|bad debt reserve has been|51,060,207.||3,352,541.6||47,707,666.0|38,090,25|||||
|||88.24%|||||84.73%|3,099,718.79|31.10%|34,990,539.09|
|provided based on the|68||8||0|7.88|||||
|portfolio|||||||||||
|Other receivables with|||||||||||
|insignificant single amount|||||||||||
||20,000.00|0.03%|20,000.00|0.20%|0.00|20,000.00|0.04%|20,000.00|0.20%|0.00|
|and provision of bad debt|||||||||||
|reserve on individual basis|||||||||||
||57,864,914.||10,157,248|.100.00%|47,707,666.00|44,957,63||||34,990,539.09|
|Total||100.00%|||||100.00%|9,967,091.47|100.00%||
||23||23|||0.56|||||

Other receivables with significant single amount and provision of bad debt reserve on individual basis at the end of the reporting period:
In CNY
||||||
|-|-|-|-|-|
||Ending balance||||
|Other receivables (based on unit)|||||
||Other receivables|Bad debt reserve|Provision proportion|Provision reason|
|Deposit of China Resources|||||
||800,000.00|800,000.00|100.00%|Unrecoverable|
|(Chongqing) Industrial Co., Ltd.|||||
|Beat Blattman Marketing|3,843,487.75|3,843,487.75|100.00%|Unrecoverable|
|Liberty Time Center GmbH|2,141,218.80|2,141,218.80|100.00%|Unrecoverable|
|Total|6,784,706.55|6,784,706.55|--|--|

In the combination, other receivables for which the bad debt reserve is provided based on the age analysis:
In CNY
|||||
|-|-|-|-|
||Ending balance|||
|Ageing||||
||Other receivables|Bad debt reserve|Provision proportion|
|Itemized within 1 year||||
|Sub-total within 1 year|32,815,493.64|1,442,731.93|4.40%|
|1 to 2 years|7,530,672.67|753,067.27|10.00%|
|2 to 3 years|3,446,284.94|1,033,885.48|30.00%|
|Over 3 years|245,714.00|122,857.00|50.00%|
|Total|44,038,165.25|3,352,541.68|7.61%|

 Note to the basis for determining the combination:
In the combination, other account receivable for which reserve for bad debt is provided based on balance percentage: Inapplicable
In the combination, other receivable for which the bad debt reserve is provided based on other method:
|||||
|-|-|-|-|
||Ending balance|||
|Portfolio Description||||
||Other receivables|Bad debt reserve|Provision proportion (%)|

|||||
|-|-|-|-|
|Specific fund portfolio|7,022,042.43|-|-|

 (2) Bad debt provision accrual, received or reversed in the reporting period
During the reporting period, the Company provided reserve for bad debt amounting to CNY 190,156.76; the reserve for bad debt recovered or reversed during the reporting period amounted to CNY 0.00.
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Classification of other receivables based on nature of payment
In CNY
||||
|-|-|-|
|Nature of Payment|Ending book balance|Opening book balance|
|Cash deposit and deposit in security|32,937,359.59|30,200,936.65|
|Commodity promotion fee|3,701,674.02|3,387,360.70|
|Reserve|7,022,042.43|4,399,822.68|
|Payment for goods|5,984,706.55|6,047,372.68|
|Others|8,219,131.64|922,137.85|
|Total|57,864,914.23|44,957,630.56|

 (5) Other receivables owed by the top five debtors based on the ending balance
In CNY
|||||||
|-|-|-|-|-|-|
|||||Proportion in total ending|Ending balance of the|
|Company name|Nature of Payment|Ending balance|Ageing|||
|||||balance of other receivables|provision for bad debts|
|Beat Blattman Marketing|Payment for goods|3,843,487.75|Over 3 years|6.64%|3,843,487.75|
|China Resources||||||
||Deposit in security|2,960,734.00|Within 1 year|5.12%|148,036.70|
|(Shenzhen) Co., Ltd||||||
|Liberty Time Center GmbH|Payment for goods|2,141,218.80|Over 3 years|3.70%|2,141,218.80|
|CHINA RESOURCES SUN||||||
|HUNG KAI PROPERTIES(cid:10)|Deposit in security|1,497,003.00|Within 1 year|2.59%|74,850.15|
|(HANGZHOU) LIMITED||||||
|Shenzhen Yitian Holiday||||||
||Deposit in security|1,171,173.00|Within 1 year|2.02%|58,558.65|
|Plaza Co,. Ltd.||||||
|Total|--|11,613,616.55|--|20.07%|6,266,152.05|

(6) Accounts receivable involving government subsidy
Inapplicable
(7) Other receivables with recognition terminated due to transfer of financial assets
Inapplicable
(8) Amount of assets and liabilities formed through transfer of other receivables and continuing to be involved Inapplicable
10. Inventories
(1) Classification of inventories
In CNY
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Ending balance|||
|Items||Provision for price|||Provision for price||
||Book balance||Book value|Book balance||Book value|
|||falling|||falling||
|Raw materials|181,142,722.04|26,475,316.23|154,667,405.81|192,872,336.46|26,899,506.29|165,972,830.17|
|Products in process|9,992,097.03|0.00|9,992,097.03|16,744,428.79|0.00|16,744,428.79|
|Commodities in stock|1,632,393,233.64|61,681,408.39|1,570,711,825.25|1,708,413,402.70|70,603,985.40|1,637,809,417.30|
|Total|1,823,528,052.71|88,156,724.62|1,735,371,328.09|1,918,030,167.95|97,503,491.69|1,820,526,676.26|

 Does the Company need to comply with the requirements on disclosure according to the Guidance of Shenzhen Stock Exchange on Disclosure of Information of the Industry Engaged in No. 4 - Listed Companies Engaged in Seed Industry, Cultivation
No
(2) Reserve for Price Falling of Inventories
In CNY
||||||||
|-|-|-|-|-|-|-|
|||Increase in the reporting period||Decrease in the reporting period|||
|Items|Ending balance|||Reversal or||Ending balance|
|||Provision|Others||Others||
|||||Offset|||
|Raw materials|26,899,506.29|2,050,627.60|0.00|2,474,817.66|0.00|26,475,316.23|
|Products in process|0.00|0.00|0.00|0.00|0.00|0.00|
|Commodities in stock|70,603,985.40|0.00|0.00|8,922,577.01|0.00|61,681,408.39|
|Total|97,503,491.69|2,050,627.60|0.00|11,397,394.67|0.00|88,156,724.62|

(3) Note to the amount of capitalized borrowing costs involved in the ending balance of inventories
Inapplicable
(4) Assets already completed but not yet settled formed in the construction contract at the end of the reporting period
Inapplicable
11. Classified as held-for-sale assets
Inapplicable
12. Non-current assets due within a year
Inapplicable
13. Other current assets
In CNY
||||
|-|-|-|
|Items|Ending balance|Ending balance|
|Rent|4,036,993.89|5,229,782.50|
|Input VAT to be offset|14,235,658.91|18,745,349.24|
|Income tax paid in advance|803,709.68|314,917.39|
|Others|4,703,274.88|326,766.08|
|Total|23,779,637.36|24,616,815.21|

 14. Available-for-sale financial assets
(1) About available-for-sale financial assets
In CNY
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Ending balance|||
|Items|||||||
||Book balance|Impairment reserve|Book value|Book balance|Impairment reserve|Book value|
|Available-for-sale equity instrument|385,000.00|300,000.00|85,000.00|385,000.00|300,000.00|85,000.00|
|Measured based on 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 assets measured based on fair value at the end of the reporting period
Inapplicable
(3) Available-for-sale financial assets measured based on costs at the end of the reporting period
In CNY
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Book balance||||Impairment reserve||||Holding|Cash dividend|
||Beginning of|Increase in the|Decrease in|End of the|Beginning of|Increase in the|Decrease in|End of the|proportion of|in the|
|Investees|||||||||||
||the reporting|reporting|the reporting|reporting|the reporting|reporting|the reporting|reporting|the shares in|reporting|
||period|period|period|period|period|period|period|period|the investees|period|
|Shenzhen|||||||||||
|AVIC Culture|||||||||||
||300,000.00|0.00|0.00|300,000.00|300,000.00|0.00|0.00|300,000.00|15.00%|0.00|
|Communicatio|||||||||||
|n Co., Ltd.|||||||||||
|Xi'an|||||||||||
|Tangcheng|85,000.00|0.00|0.00|85,000.00|0.00|0.00|0.00|0.00|0.10%|0.00|
|Co., Ltd.|||||||||||
|Total|385,000.00|0.00|0.00|385,000.00|300,000.00|0.00|0.00|300,000.00|--|0.00|

 (4) Change in impairment of available-for-sale financial assets
In CNY
|||||
|-|-|-|-|
|Classification of available-for-sale|Available-for-sale equity|Available-for-sale liability||
||||Total|
|financial assets|instrument|instrument||
|Balance with provision for||||
|impairment recognized at the|300,000.00|0.00|300,000.00|
|beginning of the reporting period||||
|Balance with provision for||||
|impairment recognized at the end|300,000.00|0.00|300,000.00|
|of the reporting period||||

(5) Note to serious falling or non-provisional falling of the fair value of available-for-sale equity instruments without provision for impairment provided
Inapplicable
15. Held-to-maturity investments
(1) About held-to-maturity investments
Inapplicable
(2) Significant held-to-maturity investments at the end of the reporting period
Inapplicable
(3) Reclassification of the held-to-maturity investments in the reporting period
Inapplicable
16. Long term accounts receivable
(1) About long term accounts receivable
Inapplicable
(2) Long term accounts receivable recognized due to termination of the transfer of financial assets
Inapplicable
(3) Transfer of long term accounts receivable while continuing to be involved in the amount of the formed assets and liabilities
Inapplicable
17. Long-term equity investments
In CNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase/ Decrease (+ / -) in the reporting period||||||||||
|||||Income from|||Announced||||Ending|
|||||equity|Other||for||||balance of|
||Ending|||||||||Ending||
|Investees||Additional|Decrease of|investment|comprehensi|Other equity|distributing|Provision for|||the provision|
||balance||||||||Others|balance||
|||investment|investment|recognized|ve income|movement|cash|impairment|||for|
|||||under equity|adjustment||dividend or||||impairment|
|||||method|||profit|||||
|I. Joint Venture||||||||||||
|II. Associates||||||||||||
|Shanghai||||||||||||
|Watch||||||||||||
|Industry Co.,|43,879,518.0|||||||||43,972,531.4||
|||0.00|0.00|93,013.38|0.00|0.00|0.00|0.00|0.00||0.00|
|Ltd.|9|||||||||7||
|(Shanghai||||||||||||
|Watch)||||||||||||
||43,879,518.0|||||||||43,972,531.4||
|Sub-total||0.00|0.00|0.00|0.00|0.00|0.00|0.00|0.00||0.00|
||9|||||||||7||

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||43,879,518.0|||||||||43,972,531.4||
|Total||0.00|0.00|93,013.38|0.00|0.00|0.00|0.00|0.00||0.00|
||9|||||||||7||

Other notes
18. Investment based real estate
(1) Investment property measured based on the cost method
In CNY
||||||
|-|-|-|-|-|
||Plant and buildings|Land use right|Construction-in-process|Total|
|I. Original book value|||||
|1. Opening balance|449,153,501.16|0.00|0.00|449,153,501.16|
|2. Increase in the reporting|||||
||58,656,614.70|0.00|0.00|58,656,614.70|
|period|||||
|(1) Purchased|||||
|(2) Inventories\fixed|||||
|assets/construction- in – process|58,656,614.70|0.00|0.00|58,656,614.70|
|transferred in|||||
|(3) Increase of enterprise|||||
|consolidation|||||
|3. Amount decreased in the|||||
|reporting period|||||
|(1) Disposal|||||
|(2) Other transfer out|||||
|4. Ending balance|507,810,115.86|0.00|0.00|507,810,115.86|
|II. Accumulative depreciation and|||||
|accumulative amortization|||||
|1. Opening balance|143,659,513.39|0.00|0.00|143,659,513.39|
|2. Increase in the reporting|||||
||15,891,827.29|0.00|0.00|15,891,827.29|
|period|||||
|(1) Provision or amortization|6,375,026.65|0.00|0.00|6,375,026.65|
|(2)Transferred in to the fixed|||||
||9,516,800.64|0.00|0.00|9,516,800.64|
|asset|||||
|3. Amount decreased in the|||||
|reporting period|||||
|(1) Disposal|||||

||||||
|-|-|-|-|-|
|(2) Other transfer out|||||
|4. Ending balance|159,551,340.68|0.00|0.00|159,551,340.68|
|III. Provision for impairment|||||
|1. Opening balance|||||
|2. Increase in the reporting|||||
|period|||||
|(1) Provision|||||
|3. Amount decreased in the|||||
|reporting period|||||
|(1) Disposal|||||
|(2) Other transfer out|||||
|4. Ending balance|||||
|IV. Book value|||||
|1.Book value at the end of||||348,258,775.18|
||348,258,775.18|0.00|0.00||
|the reporting period|||||
|2.Book value at the||||305,493,987.77|
||305,493,987.77|0.00|0.00||
|beginning of the reporting period|||||

(2) Investment property measured based on fair value
Inapplicable
(3) Investment property without certificate of property right
Inapplicable
19. Fixed asset
(1) About fixed assets
In CNY
||||||||
|-|-|-|-|-|-|-|
|||Machinery &|||||
|Items|Plant & buildings||Motor vehicle|Electronic equipment|Others|Total|
|||equipment|||||
|I. Original book|||||||
|value|||||||
|1. Opening|548,203,064.99|76,359,195.91|15,572,717.72|43,168,802.82|56,767,439.55|740,071,220.99|

||||||||
|-|-|-|-|-|-|-|
|balance|||||||
|2. Increase in the|||||||
||0.00|1,821,880.34|0.00|1,463,669.77|1,471,405.39|4,756,955.50|
|reporting period|||||||
|(1) Purchase|0.00|1,821,880.34|0.00|1,463,669.77|1,471,405.39|4,756,955.50|
|(2)|||||||
|Construction-in-proc|||||||
|ess transferred in|||||||
|(3) Increase of|||||||
|enterprise|||||||
|consolidation|||||||
|3. Amount|||||||
|decreased in the|59,093,947.97|157,887.39|0.00|671,612.42|304,807.47|60,228,225.25|
|reporting period|||||||
|(1) Disposal or|||||||
||437,333.27|157,887.39|0.00|671,612.42|304,807.47|1,571,640.55|
|scrapping|||||||
|(2) Transferred|||||||
|into investment|58,656,614.70|0.00|0.00|0.00|0.00|58,656,614.70|
|purpose real estate|||||||
|4. Ending balance|489,109,117.02|78,023,188.86|15,572,717.72|43,960,860.17|57,934,037.47|684,599,921.24|
|II. Accumulative|||||||
|depreciation|||||||
|1. Opening|||||||
||94,955,404.27|36,106,695.76|12,805,115.03|25,960,630.90|46,543,782.38|216,371,628.34|
|balance|||||||
|2. Increase in the|||||||
||7,080,045.25|3,131,927.12|508,303.00|2,471,305.70|1,514,155.42|14,705,736.49|
|reporting period|||||||
|(1) Provision|7,080,045.25|3,131,927.12|508,303.00|2,471,305.70|1,514,155.42|14,705,736.49|
|3. Amount|||||||
|decreased in the|9,516,800.64|32,522.96|0.00|593,038.40|248,217.77|10,390,579.77|
|reporting period|||||||
|(1) Disposal or|||||||
||0.00|32,522.96|0.00|593,038.40|248,217.77|873,779.13|
|scrapping|||||||
|(2) Transferred|||||||
|into investment|9,516,800.64|0.00|0.00|0.00|0.00|9,516,800.64|
|purpose real estate|||||||
|4. Ending balance|92,518,648.88|39,206,099.92|13,313,418.03|27,838,898.20|47,809,720.03|220,686,785.06|
|III. Provision for|||||||
|impairment|||||||

||||||||
|-|-|-|-|-|-|-|
|1. Opening|||||||
|balance|||||||
|2. Increase in the|||||||
|reporting period|||||||
|(1) Provision|||||||
|3. Amount|||||||
|decreased in the|||||||
|reporting period|||||||
|(1) Disposal or|||||||
|scrapping|||||||
|4. Ending balance|||||||
|IV. Book value|||||||
|1.Book value at|||||||
|the end of the|396,590,468.14|38,817,088.94|2,259,299.69|16,121,961.97|10,124,317.44|463,913,136.18|
|reporting period|||||||
|2.Book value at|||||||
|the beginning of the|453,247,660.72|40,252,500.15|2,767,602.69|17,208,171.92|10,223,657.17|523,699,592.65|
|reporting period|||||||

(2) About temporarily idle fixed assets
Inapplicable
(3) Fixed assets rented through finance lease
Inapplicable
(4) Fixed assets leased through operating lease
Inapplicable
(5) Fixed assets that do not have certificate for property right
Inapplicable
20. Construction-in-process
(1)About construction in progress
In CNY
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Opening balance|||
|Items|||||||
||Book balance|Impairment reserve|Book value|Book balance|Impairment reserve|Book value|
|FIYTA Watch Buildingdesign, constructionand supportingconstruction project|||||||
||12,515,382.25|0.00|12,515,382.25|10,947,300.53|0.0|0 10,947,300.53|
|Total|12,515,382.25|0.00|12,515,382.25|10,947,300.53|0.0|0 10,947,300.53|

 (2) Movements of important construction-in-progress projects in the reporting period
In CNY
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||Including:amount ofthecapitalizedinterest inthereportingperiod|||
||||||||Proportion||||||
|||||Transferred|||||Accumulativ||||
||||||Other||of the||||Interest||
||||Increase in|into the|||||e amount||||
||||||decreases||accumulativ||||capitalizatio||
|||Openingbalance|the|fixed assets||Ending||Project|involved in|||Capital|
|Description|Budget||||in the||e||||n rate in the||
||||reporting|in the||balance||progress|interest|||source|
||||||reporting||engineering||||reporting||
||||period|current|||||capitalizatio||||
||||||year||input in the||||period||
|||||period|||||n||||
||||||||budget||||||
|FIYTA|||||||||||||
|Watch|||||||||||||
|Building|||||||||||||
|design,|||||||||||||
||34,050,900|. 10,947,300.|1,568,081.7|||12,515,382.||||||Self-raised|
|construction||||0.00|0.00||36.75%|36.75%|0.00|0.00|0.00%||
||00|53|2|||25||||||capital|
|and|||||||||||||
|supporting|||||||||||||
|construction|||||||||||||
|project|||||||||||||
||34,050,900|. 10,947,300.|1,568,081.7|||12,515,382.|||||||
|Total||||0.00|0.00||--|--|0.00|0.00|0.00%|--|
||00|53|2|||25|||||||

(3) Provision for impairment of construction in progress in the current period
Inapplicable
21. Engineering materials
Inapplicable
22. Disposal of fixed assets
Inapplicable
23. Productive biological asset
(1) Productive biological asset by using the cost measurement model
Inapplicable
(2) Productive biological asset by using the fair value measurement model
Inapplicable
24. Oil and Gas Assets
Inapplicable
25. Intangible assets
(1) About the intangible assets
In CNY
||||||||
|-|-|-|-|-|-|-|
|Items|Land use right|Patent Right|Non-patent technology|Software system|Trademark rights|Total|
|I. Original book value|||||||
|1. Opening|||||||
||34,854,239.40|0.00|0.00|19,904,736.57|9,547,313.86|64,306,289.83|
|balance|||||||
|2. Increase in the|||||||
||79,583.00|0.00|0.00|2,077,738.43|496,358.86|2,653,680.29|
|reporting period|||||||
|(1) Purchase|79,583.00|0.00|0.00|2,077,738.43|496,358.86|2,653,680.29|
|(2) Internal R &|||||||
|D|||||||
|(3) Increase of|||||||
|enterprise consolidation|||||||
|3. Amount|||||||
|decreased in the|||||||
|reporting period|||||||
|(1) Disposal|||||||
|4. Ending balance|34,933,822.40|0.00|0.00|21,982,475.00|10,043,672.72|66,959,970.12|

||||||||
|-|-|-|-|-|-|-|
|II. Accumulative|||||||
|amortization|||||||
|1. Opening|||||||
||9,887,164.24|0.00|0.00|6,951,113.14|3,244,732.24|20,083,009.62|
|balance|||||||
|2. Increase in the|||||||
||366,015.82|0.00|0.00|1,893,226.08|171,112.97|2,430,354.87|
|reporting period|||||||
|(1) Provision|366,015.82|0.00|0.00|1,893,226.08|171,112.97|2,430,354.87|
|3. Amount|||||||
|decreased in the|||||||
|reporting period|||||||
|(1) Disposal|||||||
|4. Ending balance|10,253,180.06|0.00|0.00|8,844,339.22|3,415,845.21|22,513,364.49|
|III. Provision for|||||||
|impairment|||||||
|1. Opening|||||||
|balance|||||||
|2. Increase in the|||||||
|reporting period|||||||
|(1) Provision|||||||
|3. Amount|||||||
|decreased in the|||||||
|reporting period|||||||
|(1) Disposal|||||||
|4. Ending balance|||||||
|IV. Book value|||||||
|1.Book value at|||||||
|the end of the reporting|24,680,642.34|0.00|0.00|13,138,135.78|6,627,827.51|44,446,605.63|
|period|||||||
|2.Book value at|||||||
|the beginning of the|24,967,075.16|0.00|0.00|12,953,623.43|6,302,581.62|44,223,280.21|
|reporting period|||||||

(2) About the land use right without certificate of title
Inapplicable
26. Development expenditure
Inapplicable
27. Goodwill
Inapplicable
28. Long term expenses to be apportioned
In CNY
|||||||
|-|-|-|-|-|-|
|||Increase in the reporting|Amount amortized in the|||
|Items|Opening balance|||Other decrease|Ending balance|
|||period|reporting period|||
|Charge of fabrication of||||||
||49,334,415.56|14,981,157.22|24,086,669.23|0.00|40,228,903.55|
|special counters||||||
|Refurbishment expenses|58,392,053.11|18,954,360.44|14,628,775.92|0.00|62,717,637.63|
|Market promotion|0.00|6,792,452.86|1,698,113.22|0.00|5,094,339.64|
|Others|1,683,316.82|0.00|533,924.53|0.00|1,149,392.29|
|Total|109,409,785.49|40,727,970.52|40,947,482.90|0.00|109,190,273.11|

 29. Deferred tax assets and deferred tax liabilities
(1) Deferred income tax asset without offsetting
In CNY
||||||
|-|-|-|-|-|
||Ending balance||Opening balance||
|Items|||||
||Offsetable provisional difference|Deferred income tax asset|Offsetable provisional difference|Deferred income tax asset|
|Asset impairment reserve|81,697,110.54|19,865,559.30|93,805,178.33|22,891,430.26|
|Unrealized profit from the|||||
||298,377,314.29|73,967,818.56|309,982,920.90|76,608,130.54|
|intracompany transactions|||||
|Offsetable loss|50,682,837.77|11,159,509.24|27,342,976.03|4,930,384.00|
|Deferred income|5,904,000.00|1,476,000.00|5,904,000.00|1,476,000.00|
|Total|436,661,262.60|106,468,887.10|437,035,075.26|105,905,944.80|

(2) Deferred income tax liabilities without offsetting
Inapplicable
(3) Deferred income tax asset or liabilities stated with net amount after offsetting
In CNY
||||||
|-|-|-|-|-|
||Amount mutually offset between||Amount mutually offset between||
|||Ending balance of the deferred||Opening balance of the deferred|
||the deferred income tax assets||the deferred income tax assets||
|Items||income tax asset or liabilities after||income tax asset or liabilities after|
||and liabilities at the end of the||and liabilities at the beginning of||
|||offsetting||offsetting|
||reporting period||the reporting period||
|Deferred income tax asset|0.00|106,468,887.10|0.00|105,905,944.80|

 (4) Statement of deferred income tax asset not recognized
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Offsetable provisional difference|29,465,221.39|29,691,944.68|
|Offsetable loss|52,654,047.72|41,326,518.50|
|Total|82,119,269.11|71,018,463.18|

 (5) Unrecognized deferred income tax asset available for offsetting loss is going to expire in the following years Inapplicable
30. Other non-current assets
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Advance payment for equipment|4,863,862.29|8,246,538.33|
|Total|4,863,862.29|8,246,538.33|

 31. Short term loans
(1) Classification of short-term loans
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Secured loan|129,917,100.00|120,990,510.00|
|Credit loan|350,000,000.00|405,000,000.00|

||||
|-|-|-|
|Total|479,917,100.00|525,990,510.00|

 (2)Short-term loans overdue but still remaining outstanding
Inapplicable
32. Financial liabilities measured based on fair value and the movements counted to the current gain or loss Inapplicable
33. Derivative financial liabilities
Inapplicable
34. Notes payable
Inapplicable
35. Accounts payable
(1) Statement of accounts payable
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Payment for goods|201,502,338.96|197,139,603.70|
|Payment for materials|7,881,729.77|5,596,017.29|
|Engineering payment|57,598,728.48|60,520,874.66|
|Total|266,982,797.21|263,256,495.65|

 (2) Significant accounts payable with age exceeding 1 year
Inapplicable
36. Advances from customers
(1) Statement of advances from customers
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Advances on sales|15,204,157.86|10,928,657.72|
|Rent received in advance|3,401,495.93|4,212,930.07|
|Total|18,605,653.79|15,141,587.79|

(2) Significant advances from customers with age exceeding 1 year
Inapplicable
(3) Unfinished projects formed in the construction contracts but already settled at the end of the reporting period Inapplicable
37. Employee remuneration payable
(1) Statement of employee remuneration payable
In CNY
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase in the reporting period|Decrease in the reporting period|Ending balance|
|I. Short term remuneration|67,145,581.32|258,370,201.89|288,791,753.83|36,724,029.38|
|II. Post-employment benefit|||||
|program - defined contribution|4,418,785.82|20,093,945.06|20,772,444.43|3,740,286.45|
|plan.|||||
|III. Dismission welfare|0.00|0.00|0.00|0.00|
|IV. Other welfare due within a|||||
||0.00|0.00|0.00|0.00|
|year|||||
|Total|71,564,367.14|278,464,146.95|309,564,198.26|40,464,315.83|

 (2) Presentation of short term remuneration
In CNY
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase in the reporting period|Decrease in the reporting period|Ending balance|
|1. Salaries, bonus, allowances|||||
||66,712,129.20|230,556,433.10|261,048,814.75|36,219,747.55|
|and subsidies|||||
|2. Staff’s welfare|0.00|5,507,544.99|5,507,544.99|0.00|
|3. Social security premium|0.00|9,054,362.60|9,054,362.60|0.00|
|Including: medical|||||
||0.00|8,049,893.76|8,049,893.76|0.00|
|insurance premium|||||
|Work injury|||||
||0.00|410,886.39|410,886.39|0.00|
|insurance|||||
|Maternity Insurance|0.00|593,582.45|593,582.45|0.00|
|4. Public reserve for housing|0.00|8,249,237.92|8,249,237.92|0.00|
|5. Trade union fund and staff|||||
||433,452.12|4,356,888.05|4,286,058.34|504,281.83|
|education fund|||||
|Compensation provided for|0.00|645,735.23|645,735.23|0.00|

||||||
|-|-|-|-|-|
|severing of employment relation|||||
|Total|67,145,581.32|258,370,201.89|288,791,753.83|36,724,029.38|

 (3) Presentation of the defined contribution plan
In CNY
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase in the reporting period|Decrease in the reporting period|Ending balance|
|1. Basic endowment insurance|||||
||1,044.89|18,891,415.99|18,850,590.58|41,870.30|
|premium|||||
|2. Unemployment insurance|||||
||0.00|529,422.59|529,422.59|0.00|
|premium|||||
|3. Contribution to the enterprise|||||
||4,417,740.93|673,106.48|1,392,431.26|3,698,416.15|
|annuity scheme|||||
|Total|4,418,785.82|20,093,945.06|20,772,444.43|3,740,286.45|

 Other notes:
38. Taxes payable
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|VAT|27,512,259.94|28,234,436.08|
|Consumption tax|13,792.59|0.00|
|Corporate income tax|23,107,706.42|24,051,749.74|
|Individual income tax|2,254,316.88|779,154.31|
|Urban maintenance and construction tax|906,564.08|948,001.89|
|Real estate tax|1,370,319.41|640,117.90|
|Education Surcharge|647,696.32|677,393.80|
|Stamp duty|118,885.78|401,599.97|
|Dyke protection surcharge|1,195.61|2,178.98|
|Others|75,989.31|122,603.92|
|Total|56,008,726.34|55,857,236.59|

 Other notes:
39. Interest payable
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Long term loan interest with interest payment in|116,286.23|152,151.14|

||||
|-|-|-|
|installment and principal repayment upon maturity|||
|Interest payable for short term loan|570,367.92|1,312,577.97|
|Total|686,654.15|1,464,729.11|

 40. Dividend payable
Inapplicable
41. Other payables
(1) Other payments stated based on nature of fund
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Collateral and Deposit|20,236,777.86|23,026,920.95|
|Fund for shop-front activities|45,720,112.79|15,096,271.16|
|Personal account payable|1,683,098.43|4,911,856.36|
|Refurbishment|2,873,345.15|3,175,612.64|
|Down payment|591,807.71|1,132,084.26|
|Others|13,549,894.95|10,424,791.27|
|Total|84,655,036.89|57,767,536.64|

 (2) Other payables in significant amount and with aging over 1 year
In CNY
||||
|-|-|-|
|Items|Ending balance|Cause of failure in repayment or carry-over|
|Shenzhen Tencent Computer System Co., Ltd .|4,693,429.16|Property rental deposit; still in the lease term|
|Oracle Research & Development Center(Shenzhen) Co., Ltd|804,000.00|Property rental deposit; still in the lease term|
|Rainforest Restaurant Nanshan District, Shenzhen|791,320.00|Property rental deposit; still in the lease term|
|SHENZHEN COMEN MEDICAL INSTRUMENTS CO., LTD.|734,775.68|Property rental deposit; still in the lease term|
|China Merchants Bank Co., Ltd. Shenzhen Branch|637,932.40|Property rental deposit; still in the lease term|
|Total|7,661,457.24|--|

Other notes
42. Liabilities classified as held-for-sale liabilities
Inapplicable
43. Non-current liabilities due within a year
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Long-term liabilities due within a year|35,000,000.00|35,000,000.00|
|Total|35,000,000.00|35,000,000.00|

 Other notes:
44. Other current liabilities
Inapplicable
45. Long-term Loan
(1) Classification of Long-term Borrowings
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Mortgage loan|4,791,307.50|5,008,425.00|
|Secured loan|92,361,928.00|109,861,928.00|
|Less: Long-term borrowings due within 1 year|-35,000,000.00|-35,000,000.00|
|Total|62,153,235.50|79,870,353.00|

 Notes to classification of long term borrowings:
Note：① The Company has no overdue and outstanding long term borrowing.
② For classification of the categories of collaterals of secured borrowings and the amount, refer to Note VII.78.③ For guaranteed borrowings and the guarantees offered by the related parties, refer to Note XII.5(4).
④ The interest rate of long term borrowings is4.5325%.
46. Bonds Payable
(1) Bonds payable
Inapplicable
(2) Increase/Decrease of bonds payable (excluding other financial instruments classified as financial liabilities,
such as preferred shares, perpetual bonds, etc.)
Inapplicable
(3) Note to the conditions and time of share conversion of convertible company bonds
Inapplicable
(4) Note to other financial instruments classified as financial liabilities
Inapplicable
47. Long term accounts payable
(1) Long term accounts payable stated based on the nature
Inapplicable
48. Long term payroll payable
(1) Statement of long term payroll payable
Inapplicable
(2) Change of defined benefit plans
Inapplicable
49. Special accounts payable
Inapplicable
50. Predicted liabilities
Inapplicable
51. Deferred income
In CNY
|||||||
|-|-|-|-|-|-|
|||Increase in the|Decrease in the|||
|Items|Opening balance|||Ending balance|Cause of formation|
|||reporting period|reporting period|||
|Government subsidies|5,904,000.00|0.00|0.00|5,904,000.00||
|Total|5,904,000.00|0.00|0.00|5,904,000.00|--|

Items involving government subsidies:
In CNY
||||||||||
|-|-|-|-|-|-|-|-|-|
|Liabilities|Opening balance|Amount of newly|Amount counted|Amount counted|Amount offsetting|Other changes|Ending balance|Related with|

||||||||||
|-|-|-|-|-|-|-|-|-|
|||added subsidy in|to the|to the other|costs and|||assets/related|
|||the reporting|non-operating|income in the|expenses in the|||with income|
|||period|income in the|reporting period|reporting period||||
||||reporting period||||||
|Special purpose|||||||||
|fund of Shenzhen|||||||||
|||||||||Related with|
|industrial design|2,000,000.00|0.00|0.00|0.00|0.00|0.00|2,000,000.00||
|||||||||assets|
|development|||||||||
|(Note (1))|||||||||
|Funding project|||||||||
|for construction of|||||||||
|enterprise||||||||Related with|
||2,000,000.00|0.00|0.00|0.00|0.00|0.00|2,000,000.00||
|technology center||||||||assets|
|designated by the|||||||||
|state (Note (2))|||||||||
|Key technology R|||||||||
|& D project of|||||||||
|DF101 Airplane||||||||Related with|
||480,000.00|0.00|0.00|0.00|0.00|0.00|480,000.00||
|Benchmark||||||||income|
|Timing System|||||||||
|(Note (3))|||||||||
|Special purpose|||||||||
|fund for the|||||||||
|Self-dependent|||||||||
|||||||||Related with|
|2017 Innovation|124,000.00|0.00|0.00|0.00|0.00|0.00|124,000.00||
|||||||||income|
|Industry|||||||||
|Development in|||||||||
|Nanshan District|||||||||
|Special purpose|||||||||
|fund for 2017|||||||||
|Industry and||||||||Related with|
||1,300,000.00|0.00|0.00|0.00|0.00|0.00|1,300,000.00||
|Informationization||||||||income|
|at Provincial Level|||||||||
|(Note (4))|||||||||
|Total|5,904,000.00|0.00|0.00|0.00|0.00|0.00|5,904,000.00|--|

 Other notes:
Note①: It is the special fund for development of industrial design in Shenzhen obtained according to the Operation Instructions on Certification and Financial Support Program for Industrial Design Centers in Shenzhen (Trial Implementation) SHEN JING MAO IT Zi[2013] No. 227 jointly promulgated by Economy, Trade and Information
Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality;
Note②: It is the fund from the financial support for construction of enterprise technology centers in Shenzhen obtained
according to the Circular of Development and Reform Commission of Shenzhen Municipality on Issuing the First Batch of
Supporting Program of Financial Support Fund for Construction of Enterprise Technology Centers in Shenzhen in 2015 (SHEN JING MAO XINXI YU[2015] No. 129 on October 28, 2015.
Note③: It is the special fund for cooperation among organizations under the province and ministries, manufacturers and research institutions obtained according to the Public Notice on the Projects Enjoying Support with the Special Fund for Overall Strategic Cooperation of Provincial Institutions from the Special Fund for Cooperation among Organizations under the Province and Ministries, Manufacturers and Research Institutions in Year 2013 (YUE KE GONG SHI[2014] No. 13) promulgated by Department of Science and Technology of Guangdong Province on December 9, 2015.
Note④: The special purpose fund obtained according to the Circular of the Economic and Information Commission of Guangdong Province on Doing a Good Job in Submission to the Special Project Library of Production and Services at Provincial Level in 2017 (YUE JING XIN SHENG CHAN HAN (2016) No. 53) jointly promulgated by the Economic& Information Commission of Guangdong Province and the Finance Department of Guangdong Province.
52. Other non-current liabilities
Inapplicable
53. Capital stock
In CNY
|||||||||
|-|-|-|-|-|-|-|-|
|||Increase / Decrease (+/ -)||||||
||Opening balance|||Shares converted|||Ending balance|
|||New issuing|Bonus shares||Others|Sub-total||
|||||from reserve||||
|Total Shares|438,744,881.00|0.00|0.00|0.00|0.00|0.00|438,744,881.00|

 54. Other equity instruments
(1) Basic information on the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. at the end of the reporting period
Inapplicable
(2)Movement of the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. at the end of the reporting period
Inapplicable
55. Capital reserve
In CNY
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase in the reporting period|Decrease in the reporting period|Ending balance|
|Capital premium (capital stock|1,047,963,195.57|0.00|0.00|1,047,963,195.57|

||||||
|-|-|-|-|-|
|premium)|||||
|Other capital reserve|14,492,448.65|0.00|0.00|14,492,448.65|
|Total|1,062,455,644.22|0.00|0.00|1,062,455,644.22|

 56. Treasury shares
Inapplicable
57. Other comprehensive income
In CNY
|||||||||
|-|-|-|-|-|-|-|-|
|||Amount incurred in the reporting period||||||
||||Less: Gain or loss|||||
|||Amount|counted to the other|||||
||||||Attributable to|Attributable to||
||||||||Ending|
|||incurred before|comprehensive|||||
|Items|Opening balance|||Less: Income|the parent|minority||
|||income tax in|income and||||balance|
|||||tax expense|company after|shareholders||
|||the reporting|transferred into gain|||||
||||||tax|after tax||
|||period|or loss in the|||||
||||current period|||||
|Other comprehensive income which cannot be|||||-1,392,919.75||-12,916,362.|
||-11,523,442.39|-1,392,954.99|0.00|0.00||-35.24||
|re-classified into the gain and loss in future|||||||14|
|Conversion difference in foreign currency|||||-1,392,919.75||-12,916,362.|
||-11,523,442.39|-1,392,954.99|0.00|0.00||-35.24||
|statements|||||||14|
||-11,523,442.39||||-1,392,919.75|-35.24|-12,916,362.14|
|Total other comprehensive income||-1,392,954.99|0.00|0.00||||

 Other notes include the valid part of gain and loss of a cash-flow hedge converted into initial amount of arbitraged items for adjustment:
Inapplicable
58. Special reserve
Inapplicable
59. Surplus Reserve
In CNY
||||||
|-|-|-|-|-|
|Items|Opening balance|Increase in the reporting period|Decrease in the reporting period|Ending balance|
|Surplus reserve|144,820,819.35|0.00|0.00|144,820,819.35|
|Discretionary surplus reserve|61,984,894.00|0.00|0.00|61,984,894.00|
|Total|206,805,713.35|0.00|0.00|206,805,713.35|

Note to surplus reserve, including the note to its increase/decrease and the cause(s) of its movement in the reporting
period:
Inapplicable
60. Retained earnings
In CNY
||||
|-|-|-|
|Items|Reporting period|Previous period|
|Before adjustment: Retained earnings at the end of the previousperiod|||
||771,484,565.02|687,986,807.74|
|After adjustment: Retained earnings at the beginning of thereporting period|771,484,565.02||
|||687,986,807.74|
|Plus: Net profit attributable to the parent company’s owner in thereport period|||
||112,367,921.44|140,216,258.28|
|Less: Provision of statutory surplus public reserve|0.00|12,844,012.90|
|Dividends of common shares payable|0.00|43,874,488.10|
|Retained earnings at the end of the reporting period|883,852,486.46|771,484,565.02|

 Statement of adjustment of retained earnings at the beginning of the reporting period:
1). The amount involved in the retroactive adjustment according to the Enterprise Accounting Standards and the relevant new provisions influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
2). The amount involved in change of the accounting policy influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
3). The amount involved in correction of the significant accounting errors influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
4). The amount involved in change of the consolidation scope caused by the common control influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
5). The total amount involved in other adjustments influencing the retained earnings at the beginning of the reporting period was CNY 0.00.
61. Operation Income and Costs
In CNY
||||||
|-|-|-|-|-|
||Amount incurred in the reporting period||Amount incurred in the previous period||
|Items|||||
||Income|Costs|Income|Costs|
|Principal business|1,683,836,915.1|4 973,240,076.81|1,588,553,573.96|940,053,728.29|
|Other businesses|12,054,517.5|8 3,085,659.54|10,987,570.39|1,425,956.55|
|Total|1,695,891,432.7|2 976,325,736.35|1,599,541,144.35|941,479,684.84|

62. Business Taxes and Surcharges
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Consumption tax|35,185.87|3,685.47|
|Urban maintenance and construction tax|8,003,388.87|6,767,130.24|
|Education Surcharge|5,707,461.48|4,841,191.32|
|Resource tax|0.00|0.00|
|Real estate tax|1,987,807.87|1,792,451.23|
|Land use tax|189,899.66|133,605.02|
|Tax on using vehicle and boat|375.00|1,860.00|
|Stamp duty|990,689.30|890,202.85|
|Others|875,978.38|751,371.15|
|Total|17,790,786.43|15,181,497.28|

 63. Sales expenses
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Salaries & bonus|139,546,287.86|137,774,121.37|
|Market promotion|74,916,847.31|52,659,388.21|
|Rent|37,604,819.68|33,600,054.64|
|Amortization of the long-term expenses to be apportioned|34,992,451.67|46,807,569.89|
|Shopping mall fees|26,432,225.66|30,701,374.17|
|Social security premium|20,980,632.82|19,188,573.59|
|Advertisement fee|14,113,335.56|13,600,866.95|
|Packing expenses|8,692,707.95|6,046,492.43|
|Exhibition fee|8,567,276.57|14,393,962.02|
|Freight|5,646,078.77|5,646,078.77|
|Other expenses|50,620,377.84|33,867,839.75|
|Total|422,113,041.69|394,286,321.79|

 64. Administrative expenses
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Salaries & bonus|63,138,017.67|44,368,426.25|
|R & D expenses|21,285,926.02|21,944,615.09|
|Depreciation expense|7,397,612.68|6,605,338.51|

||||
|-|-|-|
|Social security premium|5,047,581.22|4,088,475.24|
|Business travel expenses|3,182,680.24|2,678,668.34|
|Rent|3,014,559.67|647,956.03|
|Labor union dues|2,603,067.32|1,249,443.18|
|Amortization of the long-term expenses to be apportioned|2,539,439.18|1,767,821.69|
|Amortization of intangible assets|2,223,019.77|1,277,694.42|
|Public reserve for housing|2,048,849.77|2,252,733.41|
|Other expenses|13,047,564.17|11,289,214.79|
|Total|125,528,317.71|98,170,386.95|

 65. Financial expenses
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Interest payment|14,273,043.13|23,246,930.51|
|Less: capitalized interest|0.00|0.00|
|Less: Interest income|0.00|1,489,867.45|
|Exchange gain & loss|33,652.69|265,259.52|
|Financial service charge|4,920,682.75|4,178,310.48|
|Total|18,147,791.49|26,200,633.06|

 66. Loss from impairment of assets
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|I. Loss from impairment of assets|-5,178,800.41|6,473,689.30|
|II. Loss from price falling of inventories|1,765,800.30|6,310,000.00|
|Total|-3,413,000.11|12,783,689.30|

 67. Income from change of the fair value
Inapplicable
68. Return on investment
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Income from long term equity investment based on equity|93,013.38|188,871.89|

||||
|-|-|-|
|method|||
|Total|93,013.38|188,871.89|

 Other notes:
69. Income from disposal of assets
In CNY
||||
|-|-|-|
|Source of income from disposal of assets|Amount incurred in the reporting period|Amount incurred in the previous period|
|Profit from disposal of assets|3,490.00|3,570.55|
|Loss from disposal of assets|-57,897.16|-16,923.50|

 70. Other income
In CNY
||||
|-|-|-|
|Source of arising of other income|Amount incurred in the reporting period|Amount incurred in the previous period|
|2017 Shenzhen Patent Award (Note 1)|2,000.00|0.00|
|Special Fund of Shenzhen Standard in 2017(Note 2)|496,000.00|0.00|
|Financial support for integrating IT application with|||
|industrialization from the Economic Promotion Bureau of|100,000.00|0.00|
|Nanshan District (Note 3)|||
|19th China Patent Award(Note 4)|500,000.00|0.00|
|Special fund for industry transformation and upgrading in|||
||500,000.00|0.00|
|2018(Note 5)|||
|Job stabilization subsidy delivered on behalf by|||
||10,000.00|0.00|
|Administration of Social Security Funds|||
|2016 R & D financial support from the Technology|||
||866,000.00|0.00|
|Innovation Commission (Note 6)|||
|R & D financial support from Guangming New Zone|360,000.00|0.00|
|Financial support as exhibition subsidy in Guangming|||
||50,000.00|0.00|
|New Zone|||
|Special financial support for economic development in|||
||208,000.00|0.00|
|Guangdong New Zone|||
|Allowance for BaselWorld 2017|496,013.80|0.00|
|Financial support for excellence creation rating in|||
||200,000.00|0.00|
|Nanshan District (Note 7)|||
|The national E-commerce demonstration enterprise|||
|award from the State Commission of Economy and|1,000,000.00|0.00|
|Information Technology (Note 8)|||

||||
|-|-|-|
|Subsidy of export credit insurance|33,005.00|0.00|
|Domestic patent fee award for improving the enterprise's|||
||2,000.00|0.00|
|competitiveness (Note 9)|||
|Enterprise R & D financial support of year 2016(Note 10)|1,024,000.00|0.00|
|Subsidy for the domestic economic and trade exhibition|||
|of the special fund for the new zone economic|50,000.00|0.00|
|development in 2017|||
|Special fund for supporting intellectual property for the|||
|economic development of the first half year of 2018 (Note|600,000.00|0.00|
|11)|||
|Prize of the 18th China Patent Award|0.00|100,000.00|
|Special Fund for Shenzhen Standards 2016|0.00|651,000.00|
|Fund for financing patent application|0.00|3,000.00|
|Support with Special Fund of Shenzhen Standard in|||
||0.00|499,350.00|
|2016|||
|Science & Technology Innovation Commission of|||
||0.00|7,800.00|
|Shenzhen Municipality - Innovation|||
|Allowance for BaselWorld|0.00|100,000.00|
|Subsidy for Improving Internationalized Operation Ability|||
||0.00|57,073.00|
|2016|||
|Special Financial Support for Self-Innovation Industry|||
||0.00|60,000.00|
|Development of Nanshan District 2016|||

Other Notes:
Note 1: It refers to the patent award received according to the Circular of Market and Quality Supervision Commission of Shenzhen Municipality on Publishing the Name List of the Winners of Patent Awards of Shenzhen 2017 (SHEN SHI[2016]No.8);
Note 2: It refers to the patent award received according to Notice of Market and Quality Supervision Commission of Shenzhen Municipality on the Plan for Financial Support to Standard Related Projects for Building Shenzhen Standards in 2017 and the Circular on Issuing the Supporting Plan with Special Fund for Development of Self-dependent Innovation Industries in Nanshan District 2017– Fund for the Sub-item of Economic Development (the Fourth Batch) (SHEN NAN JING[2017] No. 6);
Note 3: It refers to the special fund received according to the Circular on Issuing the Supporting Plan with Special Fund for Development of Self-dependent Innovation Industries in Nanshan District 2017– Fund for the Sub-item of Economic Development (the Fourth Batch) (SHEN NAN JING[2017] No. 6).
Note 4: It refers to the patent award received according to the Circular of Market and Quality Supervision Commission of
Shenzhen Municipality on Handling the Reward of the
5th
Guangdong Patent Award and the Supporting Award of
Guangdong Provincial Intellectual Property of the
19th
China Patent Award;
Note 5: It refers to the special fund received according to the Circular of Economic, Trade and Information Commission of Shenzhen Municipality on Carrying out Declaration Work of the Special Fund for Industrial Transformation and Upgrading for Community Joint Stock Partnership Companies Reform and Improvement of the City 2018([2017] No. 243);
Note 6: It refers to the government financial support fund according to the Circular of Shenzhen Science& Technology Innovation Commission on the Second Batch of Enterprises to be Financially Supported in the Enterprise R& D Financial Support Plan 2017 (SHEN FA[2016] No. 7);
Note 7: It refers to the special fund received according to the Circular on Issuing the Supporting Plan with Special Fund for Development of Self-dependent Innovation Industries in Nanshan District 2017– Fund for the Sub-item of Economic Development (the Fourth Batch) (SHEN NAN JING[2017] No. 6);
Note 8: It refers to the special fund of the government received according to the Circular of the Economic, Trade and Information Commission of Shenzhen Municipality on Disclosing the Special Fund Projects for E-commerce Development in Shenzhen 2018 (SHEN JING MAO XIN XI SHENG CHAN ZI[2018] No. 100);
Note 9: It refers to the patent award received according to the Circular of Market and Quality Supervision Commission of Shenzhen Municipality on Publishing the Name List of the Winners of Patent Awards of Shenzhen 2017 (SHEN SHI[2016]No.8);
Note 10: It refers to the government financial support fund according to the Circular of Shenzhen Science& Technology Innovation Commission on the Second Batch of Enterprises to be Financially Supported in the Enterprise R& D Financial Support Plan 2017 (SHEN FA[2016] No. 7);
Note 11: It refers to the special fund received according to the Circular on the Projects to be Financially Supported for the Strategic Projects of Intellectual Property, Quality Certification, Brand and Standardization with the Special Fund for Economic Development of Guangming New Zone in the First Half Year of 2018.
71. Non-operating expenses
In CNY
|||||
|-|-|-|-|
||||Amount counted to the current|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period||
||||non-operating gain and loss|
|Disposal of account payable impossible to||||
||52,506.24|3,741.50|52,506.24|
|be paid||||
|Others|311,353.27|142,125.41|311,353.27|
|Total|363,859.51|145,866.91|363,859.51|

72. Non-operating expenditure
In CNY
|||||
|-|-|-|-|
||||Amount counted to the current|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period||
||||non-operating gain and loss|
|Outward donation|380,000.00|3,000.00|380,000.00|
|Others|86,522.53|658,190.44|86,522.53|
|Total|466,522.53|661,190.44|466,522.53|

 73. Income tax expense
(1) Statement of income tax expense
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Income tax expense in the reporting period|34,026,742.02|24,613,171.31|
|Deferred income tax expense|-562,942.30|1,352,213.69|
|Total|33,463,799.72|25,965,385.00|

 (2) Process of adjustment of accounting profit and income tax expense
In CNY
|||
|-|-|
|Items|Amount incurred in the reporting period|
|Total profit|145,831,721.16|
|Income tax expense calculated based on the statutory/ applicable tax rate|36,457,930.29|
|Influence of different tax rates applicable to subsidiaries|-5,958,497.90|
|Influence of adjustment of the income tax in the previous period|117,154.89|
|Influence of the non-taxable income|-23,253.35|
|Influence of the non-offsetable costs, expenses and loss|479,273.82|
|Influence from the offsetable provisional difference or offsetable loss of the||
||3,398,258.77|
|unrecognized deferred income tax asset at the end of the reporting period||
|Influence from the addition of the R & D expenses upon deduction of tax payment (to||
||-1,007,066.81|
|be stated with “-“)||
|Income tax expense|33,463,799.72|

 74. Other comprehensive income
For the detail, refer to Note X.57.
75. Cash Flow Statement Items
(1) Other operation activities related cash receipts
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Commodity promotion fee|6,072,093.46|8,162,746.84|
|Government subsidies|6,497,018.80|2,778,043.00|
|Deposit in security|4,350,761.76|1,420,812.66|
|Interest income|1,079,587.08|1,489,867.45|
|Reserve|1,406,129.93|1,707,688.82|
|Others|5,617,057.35|4,241,136.02|
|Total|25,022,648.38|19,800,294.79|

 (2) Other cash paid in connection with operation activities
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Market promotion|66,401,628.85|45,369,388.21|
|Rent|39,732,881.18|34,532,393.41|
|Shopping mall fees|26,461,676.31|30,701,374.17|
|Advertisement fee|11,176,335.56|12,310,866.95|
|Packing expenses|8,883,462.57|6,046,492.43|
|Business travel expenses|8,333,226.89|7,772,400.58|
|Water and electricity fees|7,029,160.13|4,636,608.93|
|R & D expenses|6,759,781.73|7,253,934.93|
|Office expenses|6,534,273.39|5,004,516.54|
|Freight|6,018,407.34|5,112,140.83|
|Exhibition fee|5,974,002.19|10,307,276.23|
|Property management fee|4,228,170.40|2,405,767.74|
|Business entertainment|2,830,040.57|3,093,901.20|
|Service fee to intermediary agencies|2,156,715.09|1,929,387.83|
|Others|14,825,683.48|6,183,802.43|
|Total|217,345,445.68|182,660,252.41|

Note to other cash paid in connection with operation activities:
(3) Other investment activities related cash receipts
Inapplicable
(4) Other investment activities related cash payments
Inapplicable
(5) Other fund-raising activities related cash receipts
Inapplicable
(6) Other fund-raising activities related cash payments
Inapplicable
76. Supplementary information of the cash flow statement
(1) Supplementary information of the cash flow statement
In CNY
||||
|-|-|-|
|Supplementary information|Amount in the reporting period|Amount in the previous period|
|1. Net cash flows arising from adjustment of net profit into|||
||--|--|
|operating activities:|||
|Net profit|112,367,921.44|86,611,784.54|
|Plus: Asset impairment reserve|-14,525,567.48|12,783,689.30|
|Depreciation of fixed assets, depletion of oil and gas asset,|||
||21,080,763.14|21,936,993.35|
|depreciation of productive biological asset|||
|Amortization of intangible assets|2,430,354.87|1,594,234.34|
|Amortization of the long-term expenses to be apportioned|40,947,482.90|54,065,432.58|
|Loss (income is stated in “-”) from disposal of fixed assets,|||
||54,407.16|13,352.95|
|intangible assets and other long term assets|||
|Financial expenses (income is stated with “-”)|14,273,043.13|23,246,930.51|
|Investment loss (income is stated with “-”)|-93,013.38|-188,871.89|
|Decrease of the deferred income tax asset (increase is|||
||-562,942.30|1,352,213.69|
|stated with “_”)|||
|Decrease of inventories (Increase is stated with “-”)|94,502,115.24|93,091,588.65|
|Decrease of operative items receivable (Increase is stated|||
||-56,854,840.95|-12,212,990.56|
|with “-”)|||
|Increase of operative items payable (Decrease is stated|11,052,550.32|-5,578,696.93|

||||
|-|-|-|
|with “-”)|||
|Net cash flows arising from operating activities|224,672,274.09|276,715,660.53|
|2. Significant investment and fund-raising activities with no|||
||--|--|
|cash income and expenses involved:|||
|3. Net change in cash and cash equivalents:|--|--|
|Plus: Ending balance of cash equivalent|278,804,271.58|383,649,003.87|
|Less: Opening balance of cash equivalent|184,947,891.32|427,227,755.81|
|Net increase of cash and cash equivalents|93,856,380.26|-43,578,751.94|

 (2) Net cash paid for acquisition of subsidiary in the reporting period
Inapplicable
(3) Net cash received from disposal of subsidiary in the reporting period
Inapplicable
(4) Composition of cash and cash equivalents
In CNY
||||
|-|-|-|
|Items|Ending balance|Opening balance|
|Including: Cash in stock|233,265.12|414,210.14|
|Bank deposit available for payment at any time|278,565,485.60|184,528,160.32|
|Other monetary fund used for payment at any time|5,520.86|5,520.86|
|II. Cash equivalents|278,804,271.58|184,947,891.32|
|III. Ending balance of cash and cash equivalents|278,804,271.58|184,947,891.32|
|Including: cash and cash equivalents restricted for use from|||
||2,205,000.00|2,205,000.00|
|the parent company or other subsidiaries of the Group|||

77. Notes to items of statement of change inowner’s equity
Inapplicable
78. Assets restricted in ownership or use right
In CNY
||||
|-|-|-|
|Items|Book value at the end of the reporting period|Cause of being restricted|
|Monetary capital|2,205,000.00|Deposit for L/G|
|Total|2,205,000.00|--|

79. Foreign currency monetary items
(1) Foreign currency monetary items
In CNY
|||||
|-|-|-|-|
|Items|Ending balance of foreign currency|Conversion rate|Ending balance of Renminbi converted|
|Monetary capital||||
|Including: USD|358,309.02|6.61660|2,370,787.46|
|Euro|145,749.33|7.65150|1,115,201.00|
|HKD|5,537,161.79|0.84310|4,668,381.11|
|CHF|229,106.11|6.63500|1,520,119.04|
|Accounts receivable||||
|Including: USD|657,648.25|6.61660|4,351,395.41|
|Euro|32,872.11|7.65150|251,520.95|
|HKD|13,326,820.48|0.84310|11,235,842.35|
|CHF|164,418.90|6.63500|1,090,919.40|
|Advance payments||||
|Including: HKD|7,216,704.66|0.84310|6,084,403.70|
|CHF|888,530.91|6.63500|5,895,402.59|
|Other receivables||||
|Including: HKD|288,356.00|0.84310|243,112.94|
|CHF|905,580.00|6.63500|6,008,523.30|
|Accounts payable||||
|Including: HKD|11,482,520.80|0.84310|9,680,913.29|
|CHF|30,046.97|6.63500|199,361.65|
|Advances from customers||||
|HKD|218,093.00|0.84310|183,874.21|
|Other payables||||
|Including: HKD|25,926.92|0.84310|21,858.99|
|CHF|68,759.90|6.63500|456,221.94|
|Short term loans||||
|HKD|30,000,000.00|0.84310|25,293,000.00|
|Long-term Loan||||
|CHF|725,000.00|6.63500|4,810,375.00|

(2) Note to overseas operating entities, including important overseas operating entities, which should be disclosed about its principal business place, function currency for bookkeeping and basis for the choice. In case of any change in function currency, the cause should be disclosed.
For the principal business place, function currency for bookkeeping for key overseas business entities, refer to Note V.4. 80. Hedging
Inapplicable
81. Miscelleneous
Inapplicable
VIII. Change in consolidation scope
1. Consolidation of enterprises not under the same control
(1) Consolidation of enterprises not under common control during the reporting period
Inapplicable
(2) Consolidation cost and goodwill
Inapplicable
(3) Purchasee's distinguishable assets and liabilities as at the date of purchase
Inapplicable
(4) Profit or loss of the equity held before the date of purchase arising from re-measurement based on the fair value
Does there exist any transaction in which the enterprise consolidation is realized step by step through several transactions and the control power is obtained within the reporting period.
No
(5) Note to the consolidation consideration or the fair value of the distinguishable assets and liabilities of the purchasee which cannot be reasonably identified as at the date of purchase or at the end of the very period of consolidation
Inapplicable
(6) Other notes
2. Consolidation of enterprises under the same control
(1) Consolidation of enterprises not under common control during the reporting period
Inapplicable
(2) Consolidation cost
Inapplicable
(3) Book value of the consolidatee's assets and liabilities as at the date of consolidation
Inapplicable
3. Counter purchase
Inapplicable
4. Disposal of subsidiaries
Does there exist any such situation that a single disposal may cause the control power over the investment in a subsidiary lost?
No
Does there exist any such situation that disposal in steps through a number of transactions may cause the control power over the investment in a subsidiary lost during the reporting period?
No
5. Change of consolidation scope due to other reason
Inapplicable
6. Miscelleneous
Inapplicable
IX. Equity in other entities
1. Equity in a subsidiary
(1) Composition of an enterprise group
||||||||
|-|-|-|-|-|-|-|
|||||Shareholding proportion|||
|Subsidiaries|Main business location|Place of registration|Nature of business|||Way of acquisition|
|||||Direct|Indirect||
|||||||Establishment or|
|Harmony|Shenzhen|Shenzhen|Commerce|100.00%|||
|||||||investment|
|||||||Establishment or|
|the Manufacture Co.|Shenzhen|Shenzhen|Manufacture|90.00%|10.00%||
|||||||investment|
|||||||Establishment or|
|FIYTA Hong Kong|Hong Kong|Hong Kong|Commerce|100.00%|||
|||||||investment|
|||||||Establishment or|
|Harbin Co.|Harbin|Harbin|Commerce|100.00%|||
|||||||investment|
|||||||Establishment or|
|Technology Co.|Shenzhen|Shenzhen|Manufacture|100.00%|||
|||||||investment|
|||||||Establishment or|
|SHIYUEHUI|Shenzhen|Shenzhen|Commerce|100.00%|||
|||||||investment|
|Emile Choureit||||||Establishment or|
||Shenzhen|Shenzhen|Commerce|100.00%|||
|(Shenzhen)||||||investment|
|||||||Establishment or|
|FIYTA Sales Co., Ltd.|Shenzhen|Shenzhen|Commerce|100.00%|||
|||||||investment|
|||||||Consolidation of|
|Hengdarui|Shenyang|Shenyang|Commerce|100.00%||enterprises under the|
|||||||same control|
|||||||Consolidation of|
|Swiss Company|Switzerland|Switzerland|Commerce||100.00%|enterprises not under|
|||||||the same control|

 Note to the proportion of shareholding in a subsidiary different from the proportion of voting power:
Basis of holding less than a half of the voting power but still controlling the investee and holding more than a half of the voting power but not controlling the investee:
Inapplicable
Basis of an important structurized entity being brought to the consolidation scope and being controlled:
Inapplicable
Basis of distinguishing an agent from consignor:
Inapplicable
Other notes:
Inapplicable
(2) Important non-wholly-owned subsidiaries
Inapplicable
(3) Key financial information of important non-wholly-owned subsidiaries
Inapplicable
(4) Significant restriction on use of enterprisegroup’s assets and paying off the enterprisegroup’s liabilities Inapplicable
(5) Financial support or other support provided to the structured entities incorporated in the scope of consolidated financial statements
Inapplicable
2. Transaction with a subsidiary with the share of theowner’s equity changed but still under control
(1)Note to change in the share of the owner's equity in subsidiaries
Inapplicable
(2) Affect of the transaction on the minority equity and owner's equity attributable to the parent company Inapplicable
3. Equity in joint venture arrangement or associates
(1) Important joint ventures or associates
||||||||
|-|-|-|-|-|-|-|
|||||Shareholding proportion||Accounting treatment|
|Name of joint venture or||||||method for investment|
||Main business location|Place of registration|Nature of business||||
|associate||||Direct|Indirect|in joint ventures or|
|||||||associates|
|Shanghai Watch|Shanghai|Shanghai|Manufacture|25.00%||Equity method|

 Note to the proportion of the shareholding in a joint venture or an associate different from voting power therein:
Inapplicable
Basis of holding below20% voting power but having significant influence or holding more than20% voting power but not having significant influence
Inapplicable
(2) Key financial information of important joint ventures
Inapplicable
(3) Key financial information of important associates
In CNY
||||
|-|-|-|
||Ending balance/amount incurred in the reporting period|Opening balance/amount incurred in the reporting period|
|Current assets|92,802,011.32|88,035,307.16|
|Non-current assets|16,422,790.67|17,515,363.90|
|Total assets|109,224,801.99|105,550,671.06|
|Current liabilities|8,332,353.00|5,527,973.92|
|Non-current liabilities|0.00|0.00|
|Total liabilities|8,332,353.00|5,527,973.92|
|Minority shareholders’ equity|0.00|0.00|
|Equity attributable to the parent company’s shareholders|100,892,448.99|100,022,697.16|
|Share of net assets calculated according to the|||
||25,223,112.25|25,005,674.29|
|shareholding proportion|||
|Book value of the equity investment in associates|43,972,531.47|43,879,518.09|
|Revenue|46,323,386.37|43,499,754.20|
|Net profit|372,053.52|755,487.55|
|Other comprehensive income|0.00|0.00|
|Total comprehensive income|372,053.52|755,487.55|
|Dividends from associates received in the current year|0.00|0.00|

 (4) Financial information summary of unimportant joint ventures and associates
Inapplicable
(5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to the Company
Inapplicable
(6) Excessive loss incurred to a joint venture or an associate
Inapplicable
(7) Unrecognized commitment in connection with investment in a joint venture
Inapplicable
(8) Contingent liabilities in connection with investment in joint ventures or associates
Inapplicable
4. Important joint operation
Inapplicable
5. Equity in the structurized entities not incorporated in the consolidated financial statements
Inapplicable
6. Miscelleneous
Inapplicable
X. Financial instruments and risk management
TheCompany’s major financial instruments consist of monetary funds, accounts receivable, notes receivable, other receivables, other current assets, available-for-sale financial assets, accounts payable, interest payable, dividend payable, other payables, short term loan, non-current liabilities due within a year, long term loan, bonds payable. The detailed information about various financial instruments has been disclosed in the corresponding items in Note VII. The risks involved in these financial instruments and theCompany’s risk control policies aiming at reducing these risks are stated as follows. TheCompany’s management conducts management and monitoring of these risk exposures so as to ensure risks to be controlled within a specific limitation.
Sensitivity analysis is adopted by the Company to analyze possible impact on the current profit and loss orshareholders’ equity by the reasonable and possible changes of risk variables. Since any risk variables seldom happen individually, relativity between variables will cause significant influences on the ultimate impacted amount of the change in a risk variable, so the following statement is based on supposition that each variable happens independently.
(I) 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 Company, lower the negative influence of the risks upon the Company's business performance to the minimum and maximize the interest of the shareholders and its other equity investors. Based on this goal, the basic strategy of risk management for the Company is to ascertain and analyze all the risks that the Group confronts, establish appropriate bottom line for risk-taking, and manage the risks accordingly, in the meantime supervise all the risks in a timely and reliable manner, controlling the risks within the limited scope.
1. Market Risks
(1) Foreign exchange risk
Foreign exchange risk refers to the risk arising from the loss on exchange rate changes. The Company is mainly exposed to foreign exchange risk that relates to Hong Kong dollars, Swiss Franc. Except a number of the Company's subsidiaries that conduct procurement and sales in Hong Kong Dollars and Swiss Franc, the principal business activities of theCompany’s principal business activities are settled in Renminbi. As at 30 June 2018, except the balance of the aforesaid assets or liabilities which are stated in Hong Kong dollar, Swiss Franc, US dollar, etc., the balance of the financial assets and financial liabilities of the Company are all in Renminbi. Foreign exchange risks arising from the balance of assets and liabilities of such foreign currencies may have an impact on the operating results of the Company.
In CNY
|||||
|-|-|-|-|
|Items||6/30/2018|Amount at the beginning of the year|
|Monetary capital|9,674,488.61||9,103,319.22|
|Accounts receivable|16,929,678.11||11,193,694.31|
|Advance payment for goods|11,979,806.29||12,872,520.90|
|Other receivables|6,251,636.24||6,290,491.67|
|Accounts payable|9,880,274.94||1,330,403.14|
|Advance from customers|183,874.21||185,101.44|
|Other payables|478,080.93||794,190.64|
|Short term loans|25,293,000.00||50,990,510.00|
|Long-term Loan|4,810,375.00||5,008,425.00|

 Sensitivity analysis on foreign exchange risks:
Assumption for sensitivity analysis on foreign exchange risks: both the net investment hedge of the overseas business and cash flow hedge are highly effective. On the basis of the aforesaid assumption, while the other variables remain unchanged, the pre-tax influence of the reasonable change of the exchange rate possibly incurred upon the current income and loss andshareholders’ equity is as follows:
In CNY
||||||||||
|-|-|-|-|-|-|-|-|-|
||||Current year|||Previous year|||
||Change of the exchange||||||||
|Items|||Influence upon the||Influence upon theshareholders’ equity|Influence upon theprofit||Influence upon the|
||rate||||||||
||||profit|||||shareholders’ equity|
||Appreciation of Renminbi|483,724.43||483,724.43||1,408,960.66|1,408,960.66||
||by 5%||||||||
|Monetary capital|||||||||
||Depreciation of Renminbi|-483,724.43||-483,724.43||-1,408,960.66|-1,408,960.66||
||by 5%||||||||
||Appreciation of Renminbi|846,483.91||846,483.91||526,006.88|526,006.88||
|Accounts|by 5%||||||||
|receivable|Depreciation of Renminbi|-846,483.91||-846,483.91||-526,006.88|-526,006.88||
||by 5%||||||||
||Appreciation of Renminbi|598,990.31||598,990.31||0.00|0.00||
|Advance payment|by 5%||||||||
|for goods|Depreciation of Renminbi|-598,990.31||-598,990.31||0.00|0.00||
||by 5%||||||||

|||||||
|-|-|-|-|-|-|
||Appreciation of Renminbi|||||
||by 5%|||||
|Other receivables||||||
||Depreciation of Renminbi|-312,581.81|-312,581.81|-267,418.42|-267,418.42|
||by 5%|||||
||Appreciation of Renminbi|494,013.75|494,013.75|169,110.89|169,110.89|
||by 5%|||||
|Accounts payable||||||
||Depreciation of Renminbi|-494,013.75|-494,013.75|-169,110.89|-169,110.89|
||by 5%|||||
||Appreciation of Renminbi|9,193.71|9,193.71|0.00|0.00|
|Advance from|by 5%|||||
|customers|Depreciation of Renminbi|-9,193.71|-9,193.71|0.00|0.00|
||by 5%|||||
||Appreciation of Renminbi|23,904.05|23,904.05|331,358.00|331,358.00|
||by 5%|||||
|Other payables||||||
||Depreciation of Renminbi|-23,904.05|-23,904.05|-331,358.00|-331,358.00|
||by 5%|||||
||Appreciation of Renminbi|1,264,650.00|1,264,650.00|7,247,132.00|7,247,132.00|
||by 5%|||||
|Short term loans||||||
||Depreciation of Renminbi|-1,264,650.00|-1,264,650.00|-7,247,132.00|-7,247,132.00|
||by 5%|||||
||Appreciation of Renminbi|240,518.75|240,518.75|280,757.79|280,757.79|
||by 5%|||||
|Long-term Loan||||||
||Depreciation of Renminbi|-240,518.75|-240,518.75|-280,757.79|-280,757.79|
||by 5%|||||

(2) Interest rate risk - risk from change of the cash flow
TheCompany’s risk of movement in the cash flow of financial instrument arising from change of the interest rate arising from change of the interest rate is mainly related with the bank loan of the fluctuating interest rate (for the detail, refer to Note VI.31 and VI. 45). The Company's policy is to maintain the fluctuating interest rate of these loans.
Sensitivity analysis on interest rate risks:
Sensitivity analysis on interest rate risks is based on the following assumption:
·Influence of the change of market interest rate upon the interest income or expenses of the financial instruments with variable interest rates;
· For the financial instrument with fixed interest rate measured based on the fair value, the change of the interest rate only impact its interest income or expenses;
· For the derivative financial instrument designated as arbitrage tool, the change of the market interest rate impacts its
fair value and all the interest rate intercropping date is predicted to be highly valid;
· The market interest rate as at the balance sheet day uses the discounted cash flow technique to calculate the change of the fair value of the financial instrument and other financial assets and liabilities.
On the basis of the aforesaid assumption, while the other variables remain unchanged, the pre-tax influence of the reasonable change of the interest rate possibly incurred upon the current income and loss andshareholders’ equity is as follows:
In case the loan interest rate calculated based on the floating interest rate rises or falls by 50 base points as at 31st December 2017 while the other factors keep unchanged, the Company's net profit andshareholders’ equity shall decrease or increase by CNY 883,800 (as at 31st December 2017: CNY 326,300).
(3) Other price risks
The investment classified as the available-for-sale financial asset held by the Company is measured at the cost value as at the balance sheet day. Therefore, there exists no price risk necessary to be disclosed in the Company.
2. Credit risk
As at 30th June 2018 , the maximum credit risk exposure possibly arising from the financial loss to the Company was mainly from the loss arising from failure of the other party to the contract in implementing the obligations which caused loss from generation of the Company's financial assets, which specifically included the carrying amount of the financial asses recognized in the consolidated balance sheet. The Company provided no other guarantee which may render the Company bear the credit risk.
For the purpose of lowering the credit risk, the Company may possibly access to the guarantee, credit record and other elements from the third party based on the debtor's financial status, independent rating and other elements, such as assessment of thedebtor’s credit qualification, such as the current market situation and specifying the corresponding debt limit and credit term. The Company conducts regular supervision over thedebtors’ credit records and may take the measures of written reminders, shortening the credit period or canceling the credit period, etc. against the debtors with poor credit record so as to ensure theCompany’s overall credit risk to be within the controllable scope. In addition, the Company examines the recovery of the accounts receivable on each balance sheet day so as to ensure to provide sufficient bad debt reserve for the accounts impossible to be recovered. Therefore, in the opinion of the Company's management, the credit risk borne by the Company has been greatly reduced.
In the Company's accounts receivable, the accounts receivable owed by the top five customers took8.35% of the Company's total accounts receivable (end of 2017:6.30%); in the Company's other receivables, the total other receivables owed by the top five customers took20.07% of the Company's total other receivables (end of 2017:24.14%).
3. Liquidity risk
In management of the liquidity risk, the Company kept the cash and cash equivalent as sufficient as the management considered necessary and conducted supervision over the same so as to satisfy the Company's business requirements and reduced the impact from the fluctuation of cash flow. The Company's management conducted monitoring over the application of the bank loans and ensured its compliance with the loan agreements.
The Company took the capital arising from its business, bank loans and other borrowings as the major capital source. As at 30th June 2018, the amount of the bank loan not yet used by the Company was CNY 2,764.48 million (31st December 2017: CNY 2,723.97 million).
The expiry of the remaining contract obligations for the financial liabilities held by the Company not discounted is analyzed as follows:
In CNY10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Items||Within 1 year||1 to 2 years||2-3 years||Over 3 years||Total|
|Financial assets:|||||||||||
|Monetary capital|28,100.93||-||-||-||28,100.93||
|Notes receivable|463.21||-||-||-||463.21||
|Accounts receivable|38,916.94||-||-||-||38,916.94||
|Other receivables|5,106.02||-||-||-||5,106.02||
|Total financial assets|72,587.10||-||-||-||72,587.10||
|Financial liabilities:|||||||||||
|Short term loans|47,991.71||-||-||-||47,991.71||
|Accounts payable|26,698.28||-||-||-||26,698.28||
|Interest payable|68.67||-||-||-||68.67||
|Other payables|8,465.50||-||-||-||8,465.50||
|Non-current liabilities due within a year|3,500.00||-||-||-||3,500.00||
|Long-term Loan|-||3,500.00||1,750.00||965.32||6,215.32||
|Financial guarantee|20,491.71||-||-||-||20,491.71||
|Total financial liabilities and contingent|107,215.87||3,500.00||1,750.00||965.32||113,431.19||
|liabilities|||||||||||

XI. Disclosure of Fair Value
1. Fair value at the end of the reporting period of the assets and liabilities measured based on the fair value Inapplicable
2. Basis for determining the market price of the items measured based on the continuous and non-continuous first level fair value
Inapplicable
3. Items measured based on the continuous or uncontinuous 2nd level fair value, valuatoin technique as used, nature of important parameters and quantitative information
Inapplicable
4. Items measured based on the continuous or uncontinuous 3rd level fair value, valuatoin technique as used, nature of important parameters and quantitative information
Inapplicable
5. Items measured based on the continuous 3rd level fair value, sensitivity analysis on adjusted information and unobservable parameters between the book value at beginning and end of the period
Inapplicable
6. In case items measured based on fair value are converted between different levels incurred in the current period, state the cause of conversion and determine conversion time point
Inapplicable
7. Change of valuation technique incurred in the current period and cause of such change
Inapplicable
8. Fair value of financial assets and financial liabilities not measured at fair value
Inapplicable
9. Others
Inapplicable
XII. Related parties and transactions
1. Details of the parent company of the Company
|||||||
|-|-|-|-|-|-|
|||||Shareholding ratio of the|Ratio of vote right of the|
|Name of the parent||||||
||Place of registration|Nature of business|Registered capital|parent company in the|parent company in the|
|company||||||
|||||Company|Company|
|||Investment in industries,||||
|AVIC International Holding||||||
||Shenzhen|domestic trade, material|1,166,161,996|37.15%|37.15%|
|Limited||||||
|||supply and distribution||||

Note to the parent company:
AVIC International Shenzhen Co., Ltd.33.93% of the shares in AVIC International Holdings Limited. AVIC International Shenzhen is a wholly owned subsidiary of AVIC International Holdings Limited (AVIC IHL), and China Aviation Industry Corporation (AVIC) directly holds62.52% of the equity of AVIC IHL. Therefore, the eventual controller of the Company is AVIC.
2. Subsidiaries of the Company
Refer to Note IX. 1 for details of subsidiaries of the Company.
3. Joint venture and association of the Company
Refer to NOTE IX.3 for details of the Company's major joint ventures or associates.
4. Other related parties of the Company
|||
|-|-|
|Names of other related parties|Relationship between other related parties and the Company|
|AVIC Property Management Co., Ltd. (AVIC Property)|Controlled by the same party|
|Shenzhen AVIC Building Technology Co., Ltd. (AVIC Building Co.)|Controlled by the same party|
|Rainbow Department Store Co., Ltd. (RAINBOW)|Controlled by the same party|
|Shennan Circuit Co., Ltd. (Shennan Circuit)|Controlled by the same party|
|AVIC SUNDA Co., Ltd. (AVIC SUNDA)|Controlled by the same party|
|AVIC Securities Co., Ltd. (AVIC Securities)|Controlled by the same party|
|Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel)|Controlled by the same party|
|Shenzhen AVIC Nanguang Elevator Co., Ltd. (AVIC Nanguang )|Controlled by the same party|
|Shenzhen AVIC City Property Development Co., Ltd.(AVIC City Property)|Controlled by the same party|
|Shenzhen AVIC Development Co., Ltd. (AVIC City Development)|Controlled by the same party|
|Shenzhen AVIC Guanlan Real Estate Development Co., Ltd. (AVIC Guanlan Real Estate)|Controlled by the same party|
|Shenzhen AVIC Changtai Investment Development Co., Ltd. (AVIC Changtai)|Controlled by the same party|
|Shenzhen AVIC 9 Square Assets Management Co., Ltd. (9 Square Asset)|Controlled by the same party|
|Ganzhou AVIC Real Estate Development Co., Ltd. (Ganzhou AVIC Real Estate)|Controlled by the same party|
|Shenzhen AVIC City Investment Co., Ltd.(AVIC City Investment)|Controlled by the same party|
|Shenzhen AVIC Group Enterprise Training Center|Controlled by the same party|
|Ganzhou AVIC 9 Square Commerce Co., Ltd. (Ganzhou 9 Square)|Controlled by the same party|
|Jiujiang AVIC City Real Estate Development Co., Ltd. (Jiujiang AVIC Real Estate)|Controlled by the same party|
|AVIC City Property (Kunshan) Co., Ltd. (AVIC City Property (Kunshan) )|Controlled by the same party|
|Shenzhen AVIC Curtain Wall Engineering Co., Ltd. (AVIC Curtain Wall Engineering )|Controlled by the same party|
|AVIC Finance Co., Ltd. (AVIC Finance )|Controlled by the same party|
|Shenzhen AVIC Security Service Co., Ltd. (AVIC Security Service)|Controlled by the same party|

|||
|-|-|
|Shenzhen AVIC Property Asset Management Co., Ltd. (AVIC Property Asset Management)|Controlled by the same party|
|Jiujiang 9 Square Commerce Management Co., Ltd. (9 Square Commerce Management)|Controlled by the same party|
|Shenzhen AVIC Huacheng Property Development Co., Ltd.(AVIC Huacheng Property)|Controlled by the same party|
|AVIC Property Management Co., Ltd. CBD Branch (AVIC Property CBD)|Controlled by the same party|
|AVIC Property Management Co., Ltd. Real Estate Project Branch (AVIC Property Real Estate||
||Controlled by the same party|
|Project)||
|Shenzhen AVIC Grand Skylight Hotel Management Co., Ltd. (Grand Skylight Hotel)|Controlled by the same party|
|Shenzhen AVIC Real Estate Development Co., Ltd. (AVIC Real Estate)|Controlled by the same party|
|Huang Yongfeng|A senior executive|
|Wang Mingchuan|A senior executive|
|Fu Debin|A senior executive|
|Xiao Zhanglin|A senior executive|
|Wang Bo|A senior executive|
|Chen Libin|A senior executive|
|Zhang Hongguang|A senior executive|
|Zhang Shunwen|A senior executive|
|Wang Yan|A senior executive|
|Wang Baoying|A senior executive|
|Sheng Qing|A senior executive|
|Wang Jingqi|A senior executive|
|Lu Bingqiang|A senior executive|
|Lu Wanjun|A senior executive|
|Liu Xiaoming|A senior executive|
|Pan Bo|A senior executive|
|Li Ming|A senior executive|
|Chen Zhuo|A senior executive|

5. Related transactions
(1) Related transactions of purchase and sale of commodities and supply and acceptance of labor services Statement of purchase of commodities and acceptance of labor services
In CNY
|||||||
|-|-|-|-|-|-|
||Description of Related|Amount incurred in the|Transaction quota as|Has it exceeded the|Amount incurred in the|
|Related parties||||||
||Transactions|reporting period|approved|transaction quota|previous period|
|AVIC Property|Reception of services|2,966,178.17|5,000,000.00|No|3,912,604.61|

|||||||
|-|-|-|-|-|-|
||Shopping mall|||||
|Rainbow Ltd.||2,554,556.27|3,000,000.00|No|2,529,676.00|
||fees/purchase of goods|||||
|AVIC Building Co.|Engineering fees|468,415.30|5,000,000.00|No|0.00|
|Shenzhen AVIC Group||||||
||Training fee|144,548.39|500,000.00|No|0.00|
|Enterprise Training Center||||||

Statement of sales of goods/supply of labor services
In CNY
|||||
|-|-|-|-|
|Related parties|Description of Related Transactions|Amount incurred in the reporting period|Amount incurred in the previous period|
|Rainbow Ltd.|Products and labor services|35,060,373.29|37,311,632.36|
|Shennan Circuit Co., Ltd.|Products and labor services|3,300,322.92|1,074,050.91|
|Shenzhen Grand Skylight Hotel||||
||Products and labor services|5,982.90|2,564.10|
|Management Co., Ltd.||||
|Ganzhou 9 Square|Products and labor services|701,423.33|0.00|

 Note to the related transactions of purchase and sale of commodities and supply and acceptance of labor services (2) Related entrusted management/contracted and mandatory management/contracting
Inapplicable
(3) Related lease
The Company as lessor:
In CNY
|||||
|-|-|-|-|
|||Rental income recognized in the current|Rental income recognized in the|
|Names of lessees|Categories of leasehold properties|||
|||period|previous period|
|AVIC SUNDA|Housing|898,931.71|679,371.90|
|AVIC Property|Housing|3,786,677.96|3,213,521.33|
|AVIC Securities|Housing|608,571.42|584,228.58|
|AVIC City Property Co., Ltd.|Housing|187,965.57|218,555.04|
|AVIC City Development|Housing|2,428.57|8,878.07|
|Guanlan Real Estate|Housing|53,919.42|40,199.53|
|Tianyue Hotel|Housing|1,746,031.74|2,095,238.09|
|Rainbow Ltd.|Housing|229,327.58|262,440.80|
|9 Square Assets|Housing|579,564.39|192,879.08|
|AVIC City Investment|Housing|232,636.75|547,184.70|
|AVIC Huacheng Property|Housing|143,684.84|165,498.96|

||||
|-|-|-|
|AVIC Real Estate Development|Housing|33,406.82|

The Company as lessee:
In CNY
|||||
|-|-|-|-|
|||Rental fee recognized in the current|Rental fee recognized in the previous|
|Names of lessees|Categories of leasehold properties|||
|||period|period|
|Ganzhou 9 Square|Housing|544,600.15|0.00|
|Jiujiang AVIC Real Estate|Housing|201,501.48|0.00|
|AVIC City Property (Kunshan)|Housing|110,753.27|101,827.56|
|AVIC Changtai|Housing|0.00|176,273.10|

 (4) Related guarantee
The Company as a guarantor
In CNY
||||||
|-|-|-|-|-|
|Guarantees|Amount guaranteed|Effective date|Expiring date|Is the guarantee finished|
|FIYTA (Hong Kong) Limited|24,917,100.00|April 26, 2018|April 26, 2019|No|
|Shenzhen Harmony World|||||
||75,000,000.00|December 30, 2017|December 29, 2018|No|
|Watches Center Co., Ltd.|||||

The Company as a guarantee
In CNY
||||||
|-|-|-|-|-|
|Guarantors|Amount guaranteed|Effective date|Expiring date|Is the guarantee finished|
|Shenzhen Harmony World|||||
||50,000,000.00|September 12, 2017|September 11, 2018|No|
|Watches Center Co., Ltd.|||||
|Shenzhen Harmony World|||||
||50,000,000.00|June 12, 2018|February 28, 2019|No|
|Watches Center Co., Ltd.|||||
|Shenzhen Harmony World|||||
||5,000,000.00|July 03, 2017|July 03, 2018|No|
|Watches Center Co., Ltd.|||||
|AVIC International Holding|||||
||17,861,928.00|January 26, 2015|June 24, 2019|No|
|Limited|||||
|AVIC International Holding|||||
||10,000,000.00|October 28, 2015|June 24, 2019|No|
|Limited|||||
|AVIC International Holding|||||
||6,000,000.00|May 27, 2015|June 24, 2019|No|
|Limited|||||
|AVIC International Holding|||||
||7,000,000.00|December 01, 2015|June 24, 2019|No|
|Limited|||||
|AVIC International Holding|||||
||10,000,000.00|January 18, 2016|December 24, 2019|No|
|Limited|||||
|AVIC International Holding|15,000,000.00|January 26, 2016|June 24, 2020|No|

||||||
|-|-|-|-|-|
|Limited|||||
|AVIC International Holding|||||
||2,000,000.00|April 20, 2016|June 24, 2020|No|
|Limited|||||
|AVIC International Holding|||||
||7,500,000.00|May 05, 2016|June 24, 2020|No|
|Limited|||||
|AVIC International Holding|||||
||17,000,000.00|May 19, 2016|June 24, 2020|No|
|Limited|||||

(5) Borrowings and lendings among related parties
Inapplicable
(6) Assets assignment and liabilities reorganization of related parties
Inapplicable
(7)Remuneration to senior executives
Inapplicable
(8) Other related transactions
Inapplicable
6. Accounts receivable from and payable to related parties
(1) Receivables
In CNY
|||||||
|-|-|-|-|-|-|
|||Ending balance||Opening balance||
|Description|Related parties|||||
|||Book balance|Bad debt reserve|Book balance|Bad debt reserve|
|Accounts receivable:|AVIC City Property Co., Ltd.|39,204.91|1,960.25|0.00|0.00|
||AVIC Huacheng Property|30,803.86|1,540.19|0.00|0.00|
||AVIC 9 Square Assets|260,240.52|13,012.03|0.00|0.00|
||AVIC Property|272,406.30|13,620.32|0.00|0.00|
||Rainbow Ltd.|7,196,437.23|359,821.86|1,782,356.36|89,117.82|
||Shennan Circuit Co., Ltd.|1,331,624.48|66,581.22|786,443.94|39,322.20|
||Ganzhou 9 Square|160.00|8.00|115,742.00|5,787.10|
|Notes receivable:|Shennan Circuit Co., Ltd.|2,514,502.57|0.00|2,398,579.72|0.00|

|||||||
|-|-|-|-|-|-|
|Other receivables:|Rainbow Ltd.|843,580.00|42,179.00|832,774.30|41,638.72|
||AVIC International Holding|||||
|||11,101.80|555.09|0.00|0.00|
||Limited|||||
||Ganzhou 9 Square|122,665.60|6,133.28|122,665.60|6,133.28|
||AVIC City Property|||||
|||35,000.00|1,750.00|35,000.00|1,750.00|
||(Kunshan)|||||
||Grand Skylight Hotel|32,000.00|1,600.00|32,000.00|1,600.00|
||AVIC Training Center|155,451.61|7,772.58|150,000.00|7,500.00|
||Jiujiang 9 Square|||||
||Commerce Management|50,400.00|2,520.00|0.00|0.00|
||Co., Ltd.|||||
||AVIC Property|0.00|0.00|100.00|5.00|
||Jiujiang AVIC Real Estate|0.00|0.00|50,000.00|2,500.00|
||AVIC Building Co.|0.00|0.00|126,598.73|6,329.94|

 (2) Payables
In CNY
|||||
|-|-|-|-|
|Description|Related parties|Ending book balance|Opening book balance|
|Advance Receipts:|Guanlan Real Estate|10,971.43|8,315.43|
||AVIC SUNDA|0.00|148,915.46|
||9 Square Assets|0.00|33,331.01|
||AVIC Securities|0.00|101,428.57|
|Interest payable|AVIC Finance|172,187.50|0.00|
|Other payables:|AVIC Property|472,032.00|472,032.00|
||AVIC SUNDA|442,407.92|442,407.92|
||AVIC City Investment|309,732.00|309,732.00|
||9 Square Assets|179,860.00|66,666.60|
||AVIC Building Co.|112,710.23|89,289.47|
||AVIC City Property Co., Ltd.|99,052.32|99,052.32|
||AVIC Huacheng Property|73,819.68|73,819.68|
||Rainbow Ltd.|60,000.00|60,000.00|
||AVIC Real Estate|51,014.88|0.00|
||AVIC Guanlan Real Estate|25,401.60|0.00|
||AVIC Public Security Service Co.|10,533.44|0.00|
||Ganzhou 9 Square|3,725.69|0.00|

||||
|-|-|-|
|9 Square Commerce Management Co.,|||
||2,532.20|0.00|
|Ltd.|||
|AVIC Changtai|4,064.81|4,064.81|
|AVIC Securities|0.00|213,000.00|
|AVIC City Development|0.00|5,100.00|

 7. Relatedparties’ commitments
8. Miscelleneous
XIII. Stock payment
1. General
Inapplicable
2. Stock payment for equity settlement
Inapplicable
3. Stock payment for cash settlement
Inapplicable
4. Correction and termination of stock payment
Inapplicable
5. Miscelleneous
Inapplicable
XIV. Commitments and contingencies
1. Important commitments
Important commitments existing as at the balance sheet day
(1) Operating lease commitment
Implementation of irrevocable operating lease contract signed by the Company ended the balance sheet day is as follows: In CNY
||||||
|-|-|-|-|-|
|Items||Ending balance||Opening balance|
|Minimum rent payment for irrevocable operational lease:|||||
|1st year after the balance sheet day|42,593,133.47||29,799,099.00||

||||
|-|-|-|
|2nd year after the balance sheet day|||
|3rd year after the balance sheet day|9,207,698.49|7,533,388.00|
|Subsequent years|5,253,776.23|1,121,206.00|

2. Contingencies
(1) Significant contingencies existing as at the balance sheet day
(2) Important contingencies unnecessary to be disclosed but necessary to be explained
There existed no such contingencies necessary to be disclosed in the Company.
3. Others
Inapplicable
XV. Events after balance sheet day
1. Significant non-adjustment events
Inapplicable
2. Profit distribution
Inapplicable
3. Sales return
Inapplicable
4. Note to other matters after the balance sheet date
Inapplicable
XVI. Other significant events
1. Correction of the accounting errors in the previous period
(1) Retroactive restatement
Inapplicable
(2) Prospective application
Inapplicable
2. Liabilities restructuring
Inapplicable
3. Replacement of assets
(1) Non-monetary assets exchange
Inapplicable
(2) Other assets exchange
Inapplicable
4. Pension plan
Inapplicable
5. Discontinuing operation
Inapplicable
6. Segment information
(1) Basis for determining the reporting segments and accounting policy
Inapplicable
(2) Financial information of the reporting segments
Inapplicable
(3) In case there is no reporting segment or the total assets and liabilities of the reporting segments cannot be disclosed, explain the reason
Inapplicable
(4) Other notes
Inapplicable
7. Other significant transactions and matters that may affect investors' decision making
Inapplicable
8. Others
Inapplicable
XVII. Notes to the parentcompany’s financial statements
1. Accounts receivable
(1) Accounts receivables disclosed by types
In CNY
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Opening balance|||||
||Book balance||Bad debt reserve|||Book balance||Bad debt reserve||Book value|
|Categories|||||||||||
|||||Provision|Book value||||Provision||
||Amount|Proportion|Amount|||Amount|Proportion|Amount|||
|||||proportion|||||proportion||
|Receivables for which|||||||||||
|provision for bad debts have||||||6,871,446.3|||||
||7,425,599.28|100%|39,440.24|100%|7,386,159.04||100%|39,440.24|100%|6,832,006.11|
|been recognized based on||||||5|||||
|the portfolio|||||||||||
||||||7,386,159.04|6,871,446.3||||6,832,006.11|
|Total|7,425,599.28|100%|39,440.24|100%|||100%|39,440.24|100%||
|||||||5|||||

Accounts receivable with significant single amount and provision of bad debt reserve on individual basis at the end of the reporting period :
Inapplicable
In the combination, the accounts receivable for which the bad debt reserve is provided based on the age analysis: In CNY
|||||
|-|-|-|-|
||Ending balance|||
|Ageing||||
||Accounts receivable|Bad debt reserve|Provision proportion|
|Itemized within 1 year||||
|Sub-total within 1 year|871,586.71|39,440.24|4.53%|
|Total|871,586.71|39,440.24|4.53%|

 Note to the basis for determining the combination:
No reserve for bad debt of the accounts receivable was provided during the reporting period while it is going to be
provided at the end of the year.
In the combination, the account receivable for which reserve for bad debt is provided based on balance percentage: Inapplicable
In the combination, the accounts receivable for which the bad debt reserve is provided based on the other method: In CNY
|||||||||
|-|-|-|-|-|-|-|-|
||Portfolio Description||Book balance||Bad debt reserve||Provision proportion|
|Specific fund portfolio||6,554,012.57||-||-||

 Based on historical experience, the Company did not provide any reserve for bad debt for theGroup’s receivables due from its subsidiaries which should be brought into the consolidation scope (the specific fund grouping amounting to CNY 6,554,012.57 is attributable to the rent receivable from the subsidiaries), as such receivables are highly recoverable and it is little possible to become bad debt .
(2) Bad debt provision accrual, received or reversed in the reporting period
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Accounts receivable due from the top five debtors are as follows:
In CNY
|||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||||Bad debt reserve at||Are they|
||Serial||||Nature of||||||Proportion|||||
||||Names of the debtors||||Amount||Ageing||||the end of the||related|
||No.||||Payment||||||taken|||||
||||||||||||||reporting period||parties|
|1||FIYTA Sales Co., Ltd.||Rent||6,116,757.60||Within 1 year||82.37%||-||Yes||
|2||Shenzhen FIYTA Sophisticated TimepiecesManufacture Co., Ltd.||Rent||326,627.97||Within 1 year||4.40%||-||Yes||
|3||AVIC Property Management Co., Ltd.||Rent||272,406.30||Within 1 year||3.67%||13,620.32||Yes||
|4||Shenzhen AVIC 9 Square AssetsManagement Co., Ltd.||Rent||260,240.52||Within 1 year||3.50%||13,012.03||Yes||
|5||Shenzhen Goodfamily Sports EquipmentChain Store Co., Ltd.||Rent||178,101.30||Within 1 year||2.40%||8,900.52||No||

(5) Accounts receivable terminated for recognition due to transfer of financial assets
Inapplicable
(6) Amount of assets, liabilities formed by transfer of accounts receivable and continuing to be involved Inapplicable
2. Other receivables
(1) Disclosure of classification of other receivables
In CNY
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Opening balance|||||
||Book balance||Bad debt reserve|||Book balance||Bad debt reserve|||
|Categories|||||||||||
|||||Provision|Book value||||Provision|Book value|
||Amount|Proportion|Amount|||Amount|Proportion|Amount|||
|||||proportion|||||proportion||
|Other receivables for which|||||||||||
|bad debt reserve has been|698,339,717.57||||698,286,652.|832,005,5|||||
|||100%|53,065.03|100%|||100%|53,065.03|100%|831,952,437.86|
|provided based on the|||||54|02.89|||||
|portfolio|||||||||||
||698,339,717.57||||698,286,652.54|832,005,5||||831,952,437.86|
|Total||100%|53,065.03|100%|||100%|53,065.03|100%||
|||||||02.89|||||

Other receivables with significant single amount and provision of bad debt reserve on individual basis at the end of the reporting period:
Inapplicable
In the combination, other receivables for which the bad debt reserve is provided based on the age analysis:
In CNY
|||||
|-|-|-|-|
||Ending balance|||
|Ageing||||
||Other receivables|Bad debt reserve|Provision proportion|
|Itemized within 1 year||||
|Sub-total within 1 year|369,198.43|17,840.03|4.83%|
|1 to 2 years|152,000.00|15,200.00|10%|
|Over 3 years|40,050.00|20,025.00|50%|
|Total|561,248.43|53,065.03|9.45%|

 Note to the basis for determining the combination:
No reserve for bad debt of other receivables was provided during the reporting period while it is going to be provided at the
end of the year.
In the combination, other account receivable for which reserve for bad debt is provided based on balance percentage:
Inapplicable
In the combination, other receivable for which the bad debt reserve is provided based on other method:
Based on historical experience, as the reserve receivable from the employees, accounts receivable due from the subsidiaries which should be brought into the consolidation scope, accounts receivable with the nature of advance payment and the accounts receivable as the part of the premiums of endowment insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance and housing fund payable by employees are of high recoverability and low possibility of incurring bad debt, the Group provided no reserve for bad debt for them. In CNY
|||||||||
|-|-|-|-|-|-|-|-|
||Portfolio Description||Book balance||Bad debt reserve||Provision proportion|
|Specific fund portfolio||697,778,469.14||-||-||

(2) Bad debt provision accrual, received or reversed in the reporting period
Inapplicable
(3) Accounts receivable actually written off in current period
Inapplicable
(4) Classification of other receivables based on nature of payment
In CNY
||||
|-|-|-|
|Nature of Payment|Ending book balance|Opening book balance|
|Dealings among related parties within the consolidation|||
||696,575,834.05|831,217,702.17|
|scope|||
|Reserve|1,202,635.09|0.00|
|Cash deposit and deposit in security|258,104.00|352,131.00|
|Others|303,144.43|435,669.72|
|Total|698,339,717.57|832,005,502.89|

 (5) Other receivables owed by the top five debtors based on the ending balance
In CNY
|||||||
|-|-|-|-|-|-|
|||||Proportion in total ending|Ending balance of the|
|Company name|Nature of Payment|Ending balance|Ageing|||
|||||balance of other receivables|provision for bad debts|
|Shenzhen Harmony World||||||
||Current accounts|442,318,003.30|Within 1 year|63.34%|0.00|
|Watches Center Co., Ltd.||||||
|Liaoning Hengdarui||||||
||Current accounts|104,260,500.00|Within 1 year|14.93%|0.00|
|Commerce & Trade Co., Ltd.||||||
|FIYTA Sales Co., Ltd.|Current accounts|100,129,598.82|Within 1 year|14.34%|0.00|

|||||||
|-|-|-|-|-|-|
|Emile Chouriet (Shenzhen)||||||
||Current accounts|25,500,839.73|Within 1 year|3.65%|0.00|
|Limited||||||
|Shiyuehui Boutique||||||
||Current accounts|24,366,892.20|Within 1 year|3.49%|0.00|
|(Shenzhen) Co., Ltd.||||||
|Total|--|696,575,834.05|--|99.75%|0.00|

 (6) Accounts receivable involving government subsidy
Inapplicable
(7) Other receivables with recognition terminated due to transfer of financial assets
Inapplicable
(8) Amount of assets and liabilities formed through transfer of other receivables and continuing to be involved Inapplicable
3. Long-term equity investments
In CNY
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Opening balance|||
|Items|||||||
||Book balance|Impairment reserve|Book value|Book balance|Impairment reserve|Book value|
|Investment insubsidiaries|||||||
||1,331,248,590.93|0.00|1,331,248,590.93|1,331,248,590.93|0.00|1,331,248,590.93|
|Investment in|||||||
|associates and joint|43,972,531.47|0.00|43,972,531.47|43,879,518.09|0.00|43,879,518.09|
|ventures|||||||
|Total|1,375,221,122.40|0.00|1,375,221,122.40|1,375,128,109.02|0.00|1,375,128,109.02|

 (1) Investment in subsidiaries
In CNY
||||||||
|-|-|-|-|-|-|-|
||||||Provision for||
|||Increase in the|Decrease in the|||Ending balance of the|
|Investees|Opening balance|||Ending balance|impairment in the||
|||reporting period|reporting period|||provision for impairment|
||||||reporting period||
|Shenzhen Harmony|||||||
|World Watches Center|601,307,200.00|0.00|0.00|601,307,200.00|0.00|0.00|
|Co., Ltd.|||||||
|FIYTA Sales Co., Ltd.|450,000,000.00|0.00|0.00|450,000,000.00|0.00|0.00|
|Shenzhen FIYTA|9,000,000.00|0.00|0.00|9,000,000.00|0.00|0.00|

||||||||
|-|-|-|-|-|-|-|
|Sophisticated|||||||
|Timepieces Manufacture|||||||
|Co., Ltd.|||||||
|Shenzhen FIYTA|||||||
|Technology Development|10,000,000.00|0.00|0.00|10,000,000.00|0.00|0.00|
|Co., Ltd.|||||||
|FIYTA (Hong Kong)|||||||
||137,737,520.00|0.00|0.00|137,737,520.00|0.00|0.00|
|Limited|||||||
|Shiyuehui Boutique|||||||
||5,000,000.00|0.00|0.00|5,000,000.00|0.00|0.00|
|(Shenzhen) Co., Ltd.|||||||
|Harbin Harmony World|||||||
||2,184,484.39|0.00|0.00|2,184,484.39|0.00|0.00|
|Watch Co., Ltd.|||||||
|Liaoning Hengdarui|||||||
|Commerce & Trade Co.,|36,867,843.96|0.00|0.00|36,867,843.96|0.00|0.00|
|Ltd.|||||||
|Emile Chouriet|||||||
||79,151,542.58|0.00|0.00|79,151,542.58|0.00|0.00|
|(Shenzhen) Limited|||||||
|Total|1,331,248,590.93|0.00|0.00|1,331,248,590.93|0.00|0.00|

 (2) Investment in associates and joint ventures
In CNY
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase/ Decrease (+ / -) in the reporting period||||||||||
|||||Income from|||Announced||||Ending|
|||||equity|Other||for||||balance of|
||Opening|||||||||Ending||
|Investees||Additional|Decrease of|investment|comprehensi|Other equity|distributing|Provision for|||the provision|
||balance||||||||Others|balance||
|||investment|investment|recognized|ve income|movement|cash|impairment|||for|
|||||under equity|adjustment||dividend or||||impairment|
|||||method|||profit|||||
|I. Joint Venture||||||||||||
|II. Associates||||||||||||
|Shanghai||||||||||||
|Watch|43,879,518.0|||||||||43,972,531.4||
|||0.00|0.00|93,013.38|0.00|0.00|0.00|0.00|0.00||0.00|
|Industry Co.,|9|||||||||7||
|Ltd.||||||||||||
||43,879,518.0|||||||||43,972,531.4||
|Sub-total||0.00|0.00|93,013.38|0.00|0.00|0.00|0.00|0.00||0.00|
||9|||||||||7||
||43,879,518.09|||||||||43,972,531.47|0.00|
|Total||0.00|0.00|93,013.38|0.00|0.00|0.00|0.00|0.00|||

(3) Other notes
4. Operation Income and Costs
In CNY
||||||
|-|-|-|-|-|
||Amount incurred in the reporting period||Amount incurred in the previous period||
|Items|||||
||Income|Costs|Income|Costs|
|Principal business|56,119,634.18|9,578,544.70|51,281,774.36|8,618,881.55|
|Other businesses|0.00|0.00|72,649.57|0.00|
|Total|56,119,634.18|9,578,544.70|51,354,423.93|8,618,881.55|

 Other notes:
5. Return on investment
In CNY
||||
|-|-|-|
|Items|Amount incurred in the reporting period|Amount incurred in the previous period|
|Income from long term equity investment based on equity|||
||93,013.38|188,871.89|
|method|||
|Total|93,013.38|188,871.89|

 6. Miscelleneous
XVIII. Supplementary information
1. Statement of non-recurring gains and losses in the reporting period
In CNY
||||
|-|-|-|
|Items|Amount|Notes|
|||Gain/loss from disposal of partial obsolete office fixed|
|Gain/Loss from disposal of non-current assets|-54,407.16||
|||assets during the reporting period|
|Government subsidy credited to the current gain and loss|||
|(except the government subsidies closely related with the||For detail, refer to the supplementary description of the|
|Company’s business and enjoyable according to the unified|6,497,018.80|government subsidy counted to the current profit and|
|standard quota or fixed amount specified by the central||loss, Note VII.70.|
|government).|||
|Operating income and expenses other than the aforesaid||Operating income and expenses other than the aforesaid|
||7,533,121.86||
|items||items|
|Other various non-operating revenue and expenditure with|||
||-102,663.02|Other non-operating income and expenses|
|the aforesaid items exclusive|||
|Less: Amount affected by the income tax|1,264,520.20||

||||
|-|-|-|
|Total|12,608,550.28|--|

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
2. ROE and EPS
|||||
|-|-|-|-|
|||Earnings per share||
|Profit in the reporting period|Return on equity, weighted average|Basic earning per share|Diluted earning per share|
|||(CNY/share)|(CNY/share)|
|Net profit attributable to the Company’s||0.2561|0.2561|
||4.45%|||
|shareholders of ordinary shares||||
|Net profit attributable to the Company’s||||
|shareholders of ordinary shares less|3.95%|0.2274|0.2274|
|non-recurring gains and loss||||

3. Discrepancy in accounting data between IAS and CAS
(1) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to IAS and CAS
Inapplicable
(2) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to the accounting standards outside Mainland China and CAS
Inapplicable
(3) Note to the discrepancy in accounting data under the accounting standards outside Mainland China. In case the discrepancy in data which have been audited by an overseas auditing agent has been adjusted, please specify the name of the overseas auditing agent.
4. Miscelleneous
Inapplicable