FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
Stock Code: 000026 200026 Short Form of Stock: FIYTA A, FIYTA B Announcement No: 2019-011 FIYTA HOLDINGS LTD.
2018 Annual Report, Summary
1. Important Notice
This summary of the Annual Report is quoted out of the full text of the Annual Report. Investors desirous to understand entirely the Company's operation results, financial position and future development planning are advised to carefully read the full text of the Annual Report which is published in the medium designated by CSRC.
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are neither material omissions nor errors which would render any statement misleading.
Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report enclosed in this Annual Report.
All the directors attended the board meeting for reviewing the Annual Report.
Indication of qualified audit opinion
Inapplicable
The profit distribution preplan or the preplan for conversion of reserve into capital for the reporting period reviewed by the Board of Directors
The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: With
438,744,881 shares as the base, the Company would distribute cash dividend at the rate of CNY 2.00 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to the whole shareholders and shall capitalize no reserve.
Profit Distribution Preplan for Preferred Shares during the Reporting Period Approved by the Resolution of the Board of Directors
Inapplicable
III. Company Profile
I. Company Information
||||||||
|-|-|-|-|-|-|-|
|Short form of the stock:|FIYTA A, FIYTA B||Stock Codes:|||000026 and 200026|
|Stock Exchange Listed with||Shenzhen Stock Exchange|||||
|Liaison Persons and Communication Information||Secretary of the Board|||Securities Affairs Representative||
|Name|Lu Wanjun|||Zhang Yong|||
||20th Floor, FIYTA Technology Building, Gaoxin S. RoadOne, Nanshan District, Shenzhen|||20th Floor, FIYTA Technology Building, Gaoxin S. RoadOne, Nanshan District, Shenzhen|||
|Office Address|||||||
|Fax|0755-83348369|||0755-83348369|||
|Tel.|0755-86013669|||0755-86013669|||
|Email|investor@fiyta.com.cn|||investor@fiyta.com.cn|||

FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
2. Summary of the Principal Business or Leading Products during the Reporting Period
(1) Principal Business and Operation Model
FIYTA concentrates itself in watch industry, takes the brand strategy as the guidance, integrates watch R& D, design, manufacture, sales and services, and has formed two core businesses - watch brand management and watch retail and services. The Company possesses its proprietary watch brands, including FIYTA, Emile Chouriet,JONAS&VERUS and licenced cooperative brands - JEEP and BEIJING, which have different styles and can satisfy segmentized market demands; has watch retail and service brands - HARMONY and BRAND GALLERY, which cover the nationwide market and satisfy high and medium and fashion consumption demands.
(2) Development Status of Watch Industry and the Company's Position in the Industry
Modern watch industry is an advanced manufacture with high precision machinery integrated with information technology and is a special highly sophisticated and accurate time-keeping product. Watch is also a consumer product with aesthetic and fashion character and cultural connotation, as well as high quality consumer goods with outstanding brand value. Under a favorable trend of thepeople’s pursuance for better life and consumption upgrading, watch industry, which integrates high-end sophisticated manufacture and brand aesthetics, enjoys a good development prospect.
In 2018, under the background that the macro economy held pressure and the consumption market was weak in growth, the Company conducted in-depth study on the consumption demand and fashion trend in its brand management business, worked hard on breakthrough and innovation in technology, process and product design and constantly improved the product quality and continuously satisfied thecustomers’ demand. Meanwhile, in light of the segmented market, the Company continued to increase the input in multi-brand strategical planning, channel construction, marketing and promotion, etc, continuously enrich the brand connotation and build brands with differentiation. During the reporting period, the Company constantly maintained powerful competition superiority with it brand businesses in the domestic watch market of which FIYTA Brand further took the leading position in the industry in terms of its influence. In respect of retail services, the Company seized the opportunity of sales recovery of medium- and high-end brands, positively adjusted the shop brand structure and channel layout, continuously developed the medium- and high-end quality channels, kept doing a good job in service quality improvement and arrangement of the technical service network. During the reporting period, the Company's superiority in retail service business competition was further consolidated; where Harmony World Watch kept the leading position in the industry in terms of sales size and channel arrangement. The Company created again a new historical record in annual revenue and total profit and kept advancing towards the vision of “becoming a leading internationalized watch brand enterprise”.
3. Summary of Accounting/Financial Data
(1) Summary of Accounting/Financial Data in the Past Three Years
Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years No
In CNY
||||||
|-|-|-|-|-|
||||Increase/Decrease of the||
||2018|2017|reporting year over the|2016|
||||previous year||
|Operating revenue|3,400,450,599.90|3,345,809,703.98|1.63%|2,993,864,561.43|
|Net profit attributable to the Company’s|183,835,095.29|140,216,258.28|||
||||31.11%|110,662,681.59|
|shareholders|||||
|Net profit less the non-recurring profit/loss|||||
||162,758,061.00|123,918,527.75|31.34%|97,200,540.64|
|attributable to the Company’s shareholders|||||
|Net cash flows arising from operating|331,627,789.62|564,954,561.97|||
||||-41.30%|455,759,094.15|
|activities|||||
|Basic earning per share (CNY/share)|0.4190|0.3196|31.10%|0.2522|
|Diluted earning per share (CNY/share)|0.4190|0.3196|31.10%|0.2522|

FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
||||||||
|-|-|-|-|-|-|-|
|Return on equity, weighted average||7.30%||5.79%|1.51%|4.74%|
||||||Increase/Decrease of the||
|||End of 2018||End of 2017|end of the reporting year|End of 2016|
||||||over the end of the previous||
||||||year||
|Total assets|3,599,691,650.26||3,579,789,692.90||0.56%|4,004,897,562.72|
|Net assets attributable to the Company’s|2,570,134,782.90||2,467,967,361.20||||
||||||4.14%|2,371,370,535.17|
|shareholders|||||||

(2) Summary of Accounting Data Based on Quarters
In CNY
|||||||||
|-|-|-|-|-|-|-|-|
|||The first quarter||The second quarter|The third quarter||The fourth quarter|
|Operating revenue|851,815,980.69||844,075,452.03||868,796,654.10|835,762,513.08||
|Net profit attributable to the Company’s|59,518,000.75||52,849,920.69||50,293,172.83|21,174,001.02||
|shareholders||||||||
|Net profit less the non-recurring profit/loss|54,825,312.90||44,934,058.26||48,421,717.55|14,576,972.29||
|attributable to the Company’s shareholders||||||||
|Net cash flows arising from operating|67,632,201.86||157,040,072.23||65,916,200.63|41,039,314.90||
|activities||||||||

Does there exist any significant difference between the above financial indicators or their sum total and the corresponding financial indicators as disclosed by the Company in its quarterly reports or semi-annual report
No
4. Capital Stock and Shareholders
(1) Quantity of shares held by the common shareholders and preferred shareholders whose voting rights are restored and shareholding by the top 10 shareholders
In shares
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||Total preference||||
||||Total common||||||Total preference||||||
||Total commonshareholders atthe end of thereporting period||shareholders at the||||||shareholders with||shareholders with the||||
||||||||||||voting power recovered||||
|||31,855|end of the month||31,352||||the voting power|0|at the end of the month|||0|
||||before the date of||||||recovered at the||||||
||||disclosing the||||||end of the reporting||before the day of||||
||||||||||||disclosing the Annual||||
||||Annual Report||||||period||Report||||
||Shareholding by top 10 shareholders||||||||||||||
|||||||||||||Pledging or freezing|||
||Name of theShareholder|Nature of theshareholder||Shareholding|||Shareholding||||||||
||||||||||Number of the restricted shares held|||Status of the|||
|||||proportion|||quantity||||||Quantity||
|||||||||||||shares|||
|AVIC InternationalHolding Limited||Statecorporate|37.15%|||162,977,327||0|||||||
|ChongqingInternational TrustCo., Ltd. - YUXINNo. 2 Trust||Domesticnaturalpersons|4.19%|||18,389,227||0|||||||
|Mo Jiadong||Domesticnaturalpersons|2.90%|||12,703,968||0|||||||
|#Yang Zugui||Domesticnaturalpersons|2.52%|||11,069,727||0|||||||
|National SocialSecurity Fund 114Portfolio||Statecorporate|2.20%|||9,657,744||0|||||||
|Xizang InvestmentCo., Ltd.||Statecorporate|1.13%|||4,976,551||0|||||||
|MANULIFE TEDAFund－ MinshengBank－MANULIFE TEDAValue GrowthOriented Additional||Domesticnon-state-owned corporate|1.12%|||4,893,559||0|||||||

FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
||||||||
|-|-|-|-|-|-|-|
|Issue No. 351AssetsManagementProgram|||||||
|Shenzhen HeliFengyuanCommerce &Trade Co., Ltd.||Domesticnon-state-owned corporate|0.62%||2,704,000|0|
|ShenzhenRongliyuanCommercialInformation Co.,Ltd.||Domesticnon-state-owned corporate|0.37%||1,630,500|0|
|ChinaConstruction BankCo., Ltd. -INVESCO GREATWALL QuantizedSelected StockType SecuritiesInvestment Fund||Domesticnon-state-owned corporate|0.31%||1,376,533|0|
||Explanation on associated||||||
||relationship or consistent action of|||Inapplicable|||
||the above shareholders||||||
||Note to the shareholder(s) involved||||||
||in the securities margin trading (if|||Inapplicable|||
||any)||||||

(2) Total preference shareholders and the shareholding by the top 10 preference shareholders
Inapplicable
FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
(3) Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller 5. Company Bond
Did there exist any company bonds which were issued to the public and listed with the stock exchange for trading and was due by the date when the Annual Report was approved for issuing or failed to be fully cashed by the end of the reporting period.
No
III. Discussion and Analysis on the Operation
1. Operation Summary in the Reporting Period
In China, the domestic economy slowed down in growth, the Sino-US trade conflict was full of complications, the consumption market demand was bearish, and the watch industry was confronted with serious market pressure. During the reporting period, the Company focused on value creation, spared in effort in carrying forward refined management and specialized operation, exerted itself on upgrading the brand identity and customer services, improved the operation efficiency; under the situation of relatively weak market, the Company still realized continuous increase of profit. In 2018, the Company realized revenue amounting to CNY 3,400.45million with year-on-year growth of1.63% and realized total profit amounting to CNY 231.20million with a year-on-year growth of21.87%; realized net profit amounting to CNY 183.84million with a year-on-year growth of31.11%. The Company has once again achieved a historical record in operation performance.
FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
During the reporting period, the Company carried out the following key work.
I. Putting forth effort in promoting upgrading of FIYTA Brand and continously supporting quick development of various brands
FIYTA Brand closely followed the trend of upgrading consumption and thecustomers’ consumption demand of “quality-orientation and personalization” and carried forward in depth upgrading of the brands based on products, marketing and channels, etc. In 2018, FIYTA Brand adhered to the spirit of being specialized in watch making, insisted on independent aesthetic design, launched “FENGZHI”, “SOLO” Series, etc. and enriched the serial products of“QUORRA’S CORD”, “CLOVER”,etc. Meanwhile, for the purpose of satisfying thecustomers’ demand on high quality and customization, the Company announced a high-end customized designer brand - MOONYANG at Basellworld; for the purpose of complying with the life style of rejuvenation and intelligence of consumers, the Company enhanced the digitalized new media marketing; for the purpose of pressing close to the change ofcustomers’ consumption scene, vigorously developing the channels of brand flagship store and shopping center and the proportion of sales in shopping center was continuously increasing. In 2018, in light of FIYTA Brand's outstanding performance in specialized watch making and innovative design, FIYTA Brand Space Watch series and the application project were rewarded with a number of “the Fifth China Industrial Award” and many models of FIYTA Brand were rewarded with principal industrial awards, including “2018 China Design Red Star Award”, “Honorable Mention of China Design” and “Governor Cup Industrial Design Award”, “Shenzhen Gift”, etc. During the reporting period, the Company complied withconsumers’ consumption demand of personalization and diversification, continued to reinforce the influence of the brands of “Emile Chouriet”, “JONAS&VERUS”, “JEEP” and “BEIJING”, improved the competition superiority on the segmented market; the proportion of sales of multiple brands exceeded25% of the total of the watch brand management business and still kept quick development.
II. Continuing to optimize the watch retail service network and constantly upgrading customer service quality Harmony World Watch Center firmly grasped the opportunity of revived growth of medium- and high-end watches, deepened strategic cooperation with Swatch, Rolex, Richemont, Kering, etc. and individual watch makers, acquired more high quality international brand resources; and at the same time, kept carrying forward the work of channel upgrading and development of key medium- and high-end channels. In 2018, the unit price of Harmony world watch customers was significantly improved and the channels were further concentrated on medium- and high-end. So far, Harmony World Watch Center has 190 channels of famous brand watches of medium- and high-end. At the same time, for the purpose of satisfyingcustomers’ new demand of consuming online international brands, Harmony accelerated layout of online channels by uniting international brands; based on the existing brands, including Oris, Titoni, which have been authorized for online sale, Harmony has opened Carl F.Bucherer Brand JD official flagship store and TISSOT Brand T-Mall Franchise Store. For the purpose of continuously improving customer service quality and sharing the huge space of famous brand watch inventory market, Harmony continued to develop technical service business. In 2018, Harmony and Swatch Group jointly opened the first brand comprehensive after-sale service center. Now the said technical service center has 150 channels. In the reporting period, the Company continued to carry forward upgrading of BRAND GALLERY operation and channel development work, has possessed 150 BRAND GALLERY famous brANd channels based on medium end and fashion and the channel influence has been further improved.
III. Enthusiastically Making Layout of New Businesses and Starting Intelligent Retail in a Cooperative Way Based on the quick growth of smart watch market, the Company speeded up layout of smart watch business and promoted business innovation. In 2018, FIYTA Brand launched the first pointer type aerobic capacity smart watch - JOYUP series and JEEP Brand launched smart all-realmwatch； where, the Company achieved innovative breakthrough in the field of heavy smart watch by JEEP Brand smart watch, in which the Company applied QUALCOMM radio technology and created 4G all-net independent communication with the functions of sports, navigation, payment, etc. It enjoys first mover advantage in terms of functions and technology in the industry, has received good response in market sales and more than 10,000 units were sold in three months after coming into the market.
In light of the new development trend of intelligent retail, for the purpose of bring the superiority of the Company's retail network and profound medium- and high-end member resource into better play, in 2018, the Company, centering the trend ofcustomers’ experience, improvement of operation efficiency and whole-channel integration development, etc, started the intelligent retail project with cooperation ofOC&C, an international consulting institution.
IV. Insisting on Independent Science& Technology Innovation and Consolidating the Core Technology Power In 2018, the Company brought the advantage of the watch manufacture bases in Shenzhen and Switzerland into good play, integrated domestic and foreign resources, constantly increased investment in the field of key technologies, including the driving units of mechanical watches, research on application of new materials, space watch and smart watches, kept enhancing its leading position of independent innovation in China watch brands, achieved quite a number of scientific research results and achieved great progress in partial key technology R& D of driving units, materials, etc. In 2018, the Company accumulatively applied for 57 patents, including 15 invention and utility model patents. Relying on the accumulation in aspects of innovation mechanism, innovation ability and innovation talents, the Company was elected a national consumer goods standardization demonstration base and a post-doctorial innovation practice base in Shenzhen.
FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
V. Focusing on Creation of Enterprise Values and Carrying forward Refined Operation Management
In 2018, the Company focused on value creation and spared no effort in carrying forward refined operation management. In the brand management business, the Company actively adjusted the business and organization structure, compressed the management levels, vigorously carried forward cost and expenditure control, further improved the organization efficiency, removed low efficiency and loss-making shops with firm determination, and effectively controlled the operation cost; in the retail service business, the Company brought the advantage of channel size into play, carried out sales discount and improved comparable unit shop output. As a result, the gross profit of Harmony world watch business increased by1.96% and comparable unit shop output grew by4%. In 2018, the Company, with the help of scientific management tools, systematically solved the key and tough problems existing in the operation management, continuously carried forward process optimization and construction of precise supply chain, further optimized the inventory structure, with the total amount dropped by CNY 38.2204 million over the year beginning and interest-bearing liabilities dropped by CNY 88.8778 million over the year beginning.
VI. Carrying forward Construction of the Incentive Mechanism and Culture and Further Improving Organization Vitality
For the purpose adapting itself to the change of the market environment and customers, the Company insisted on the enterprise spirit of inheritance and innovation and established and released the new cultural system. In addition, the Company practiced A-share restrictive stock incentive program with a valid term of 5 years (Phase I) and granted 4.224 million A-share restrictive stock to 128 backbone employees. By means of construction of the new culture system and long-term incentive mechanism, the Company further improved the vitality of the organization, supported the new turn of development strategy in landing and arrival of various operation objectives.
Movement of the Major Financial Items in 2018:
||||||
|-|-|-|-|-|
|Statement Items|2018|2017|Increase/ Decrease|Note to the movement|
||||(%)||

Balance sheet items
||||||
|-|-|-|-|-|
|Advance payments|13,666,816.33|24,663,314.53|-44.59%|It was mainly due to decrease of advance payment for goodsat the end of the reporting period|
|Other receivables|45,870,582.26|34,990,539.09|31.09%|It was mainly due to increase of the deposit in security andcash deposit at the end of the reporting period over the yearbeginning.|
|Other current assets|73,703,312.24|24,616,815.21|199.40%|It was mainly due to increase of the input VAT to be offset atthe end of the reporting period over the year beginning.|
|Interest payable|772,351.26|1,464,729.11|-47.27%|It was mainly due to bank loan at the end of the reportingperiod and the corresponding decrease of the interest payableat the end of the reporting period.|
|Non-current liabilities due|347,470.00|35,000,000.00|-99.01%|It was mainly due to that the long-term loan due within a yearwas repaid at the end of the reporting period.|
|within a year|||||
|Long-term borrowings|4,517,110.00|79,870,353.00|-94.34%|It was mainly due to that the special-purpose loan for thewatch industry base in Guangming New Zone was repaid inthe reporting year.|
|Deferred income|3,672,855.36|5,904,000.00|-37.79%|It was mainly due to that the partial government subsidy to berecognized at the year beginning was recognized as otherincome during the reporting year.|

Profit Statement Items
||||||
|-|-|-|-|-|
|Interest cost|27,552,558.81|41,825,035.34|-34.12%|It was mainly due to that as the bank loan decreased in thereporting year and the payment for interest cost decreasedcorrespondingly.|
|Loss from impairment of|3,264,956.18|62,427,499.61|-94.77%|It was mainly due to decrease of the provision for price fallingof inventories in the reporting year over the same period of theprevious year.|
|assets|||||
|Income from disposal of|-181,302.24|7,321,993.36|-102.48%|The income from disposal of assets in the same period of theprevious year was mainly the income from disposal of thenon-operating real estate of Station 68 Ltd., one of theCompany's solely-funded subsidiaries, and there existed nosuch case in the reporting year.|
|assets|||||

Cash Flow Statement Items
||||||
|-|-|-|-|-|
|Rebated taxes received|4,793,245.20|886,252.20|440.84%|It was mainly due to increase of the rebated input VAT in thereporting year over the same period of the previous year.|
|Net cash from disposal of|53,280.03|10,678,135.25|-99.50%|It was mainly the income from disposal of the non-operatingreal estate of Station 68 Ltd. in the same period of theprevious year.|
|fixed assets, intangible|||||
|assets and recovery of|||||

FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
||
|-|
|other long term assets|

2. Did there exist any significant change in the principal business during the reporting period
No
3. Products taking over10% of the prime operating revenue or prime operating profit of the Company
In CNY
||||||||
|-|-|-|-|-|-|-|
|||||Year-on-year|||
||||||Year-on-year|Year-on-year|
|||||increase/decrease of|||
||||||increase/decrease of|increase/decrease of|
|Product description|Operating revenue|Operating profit|Gross profit rate|operating revenue|operating profit over|gross profit rate over|
|||||over the same|||
|||||period of previous|the same period of|the same period of|
||||||previous year|previous year|
|||||year|||
|Watch retail and|||||||
||2,090,970,707.50|514,107,944.07|24.60%|2.51%|13.62%|2.40%|
|services|||||||
|Watch brand|||||||
||1,102,309,603.80|768,173,914.58|69.70%|-3.53%|-3.51%|0.01%|
|business|||||||
|Sophisticated|||||||
||70,742,449.85|11,309,508.86|16.00%|102.78%|227.63%|6.09%|
|manufacture|||||||
|Leases|118,323,969.04|95,849,521.12|81.00%|8.11%|4.56%|-2.74%|
|Others|18,103,869.71|17,199,937.07|95.00%|-5.19%|11.71%|14.37%|

 4. Does there exist operation seasonality or periodicity necessary to be paid special attention to
No
5. Note to the Significant Change in Operation Revenue, Operation Costs, Total Amount of Composition of the Net Profit Attributable to the Company's Common Shareholders during the Reporting Period over the Previous Reporting Period
Inapplicable
6. Listing Suspension or Delisting Possibly to be Confronted with
Inapplicable
7. Matters in Connection with the Financial Report
(1) Explanation on the Changes in the Accounting Policy, Accounting Estimate, and Accounting Method in Comparison with the Financial Report of the Previous Year
Inapplicable
(2) Explanation on Serious Accounting Errors Occurred during the Reporting Period Necessary to be Restated Retrospectively
Inapplicable
(3) Explanation on the Changes in the Scope of the Consolidated Statements in Comparison with the Financial Report of the Previous Year
Inapplicable
FIYTA HOLDINGS LTD.
FIYTA HOLDINGS LTD. 2018 Annual Report, Summary
Board of Directors
March 15, 2019