飞亚达（集团）股份有限公司 FIYTA HOLDINGS LTD.

Transcription

飞亚达（集团）股份有限公司
FIYTA HOLDINGS LTD.
Semi-Annual Report 2011 （Full Text）
August 17, 2011
Table of Contents
Chapter 1 Important Notice, Definitions and Table of Contents
Chapter 2 Company Information
Chapter 3 Change in Share Capital and Shares Held by the Principal Shareholders
Chapter 4 Directors, Supervisors, Senior Executives
Chapter 5 Report of the Board of Directors
Chapter 6 Important Events
Chapter 7 Financial Report (Unaudited)
Chapter 8 Documents Available for Inspection
Chapter 1 Important Notice, Definitions and Table of Contents
I. Important Notice
The Board of Directors, the Supervisory Committee, directors, supervisors and senior
executives of the Company hereby confirm that there are no important omissions, fictitious
statements or serious misleading information carried in this report, and shall take all
responsibilities, individually and/or jointly, for the authenticity, accuracy and completeness
of the whole contents.
No director, supervisor or senior executive has ever made any statement expressing that
he/she cannot make sure of or has different opinion on the authenticity, correctness or
completeness of this annual report.
This semi-annual report has not been audited.
There exists no deviation between the domestic and international accounting standards in
this semi-annual report.
Mr. Wu Guangquan, the Chairman of the Board, Mr. Xu Dongsheng, the General Manager,
Mr. Li Dehua, Deputy General Manager and Chief Accountant, and Mr. Hu Xinglong, the
Financial Manager hereby make sure the accuracy and completeness of the financial
report enclosed in this semi-annual report.
II. Definitions
The following names in abbreviation shall refer to the following organizations unless the
context hereof otherwise clearly requires:
This Company, the Company or Fiyta: Fiyta Holdings Ltd.
Harmony: Shenzhen Harmony World Watches Center Co., Ltd.
Rainbow Supermarket: Shenzhen Rainbow Supermarket Co., Ltd.
CATIC Real Estate: CATIC Real Estate Co., Ltd.
CATIC Real Estate Development: Shenzhen CATIC Real Estate Development Co., Ltd.
CATIC Property: Shenzhen CATIC Property Management Co., Ltd.
Chapter 2
Company Information
I. Legal Name in Chinese and English, and Short Form:
Company name in Chinese: 飞亚达（集团）股份有限公司
Short Form in Chinese: 飞亚达公司
In English: FIYTA HOLDINGS LTD.
Short Form of the English Name: FIYTA
II. Legal Representative: Mr. Wu Guangquan
III. Secretary of the Board: Mr. Chen Libin
Securities Affairs Representative: Zhang Yong
Liaison Address: 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan
District, Shenzhen
Tel : 0755－86013992 86013669
Fax: 0755－83348369
E-mail: [email protected]
IV. Registered Office Address: FIYTA Technology Building, Gaoxin S. Road One,
Nanshan District, Shenzhen
Office Address: 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan
District, Shenzhen
Postal Code: 518057
Internet Website: http:// www.fiytagroup.com
V. Newspapers Designated for Disclosing the Information: Securities Times, Hong
Kong Commercial Daily
Internet Website for publishing this semi-annual report: http://www.cninfo.com.cn
Place Where the Semi-Annual Report is Prepared and Placed: Secretariat of the Board
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form & Code of the Stock:
FIYTA A
FIYTA B
000026
200026
VII. Other Relevant Information:
1.
Date of the initial registration: March 30, 1990
Date of the latest change of the registration: March 3, 2011
Registration with: Shenzhen Municipal Administration for Industry and Commerce
2. Business License No.: 440301103196089
3. Taxation Registration No.: 440301192189783
4. Organization Code: 19218978-3
5. Certified public accountant engaged
Types
Stock A
and
Stock B
Description
Office address
8th – 9th Floors, Block A,
RSM China CPAs
International Enterprise
Building35 Jinrong Dajie,
Xicheng District, Beijing
II. Financial highlights:
In CNY
Increase/decrease
of the report period
vs the same period
of the previous
year (%)
End of the report
period
End of the
previous year
Total assets, in CNY
2,430,200,977.0
9
2,436,539,054.3
9
-0.26%
Owner’s equity attributable to the
Company’s shareholders, in CNY
1,325,486,367.2
9
1,265,996,583.6
7
4.70%
Capital stock, in shares
392,767,870.00
280,548,479.00
40.00%
3.375
4.51
-25.17%
Report period
(Jan. to Jun.)
Same Period of
the Previous
Year
Year-on-year
increase/decrease
(%)
1,232,010,736.4
1
810,811,910.82
51.95%
102,601,007.36
44,751,195.21
129.27%
103,969,019.95
51,957,376.73
100.10%
Net profit attributable to the Company’s
shareholders in CNY
85,990,142.75
42,399,471.66
102.81%
Net profit attributable to the Company’s
shareholders less non- recurring
loss/gain, in CNY
87,145,297.28
36,774,788.99
136.97%
0.219
0.171
28.07%
0.219
0.171
28.07%
Net assets-income ratio (%), weighted
average
6.75%
5.62%
1.13%
Net assets-income ratio less nonrecurring loss/gain (%), weighted
average
6.84%
5.00%
1.84%
Net cash flows arising from operating
activities (CNY)
-103,426,718.82
875,685.15
-
Net cash flows per share arising from
-0.263
0.003
-
Net asset per share attributable to the
Company’s shareholders (CNY/share)
Turnover, in CNY
Operating Profit, in CNY
Total profit in CNY
Basic earnings
CNY/share
Diluted
earnings
(CNY/share)
per
share,
per
in
share
operating activities, in CNY/share
Chapter 3
Change in the Capital Stock and Shares Held by the Principal
Shareholders
I. Changes in Shares
1. Changes in the Company’s capital stock ended June 30, 2011 are as follows:
In shares
Before the change
I. Restricted Shares
1.State owned
shares
2. State corporate
shares
3. Other domestic
shares
Including:
Domestic non-state
owned corporate
shares
Domestic
natural person
shares
4. Foreign shares
Including: Foreign
corporate shares
Overseas
natural person
shares
5. Senior executive
shares
II. Unrestricted
shares
1. CNY ordinary
shares
2. Foreign invested
shares listed in
Mainland China
3. Foreign invested
shares listed out of
Mainland China
4. Others
III. Total Shares
Increase/ Decrease (+ / -)
After the change
Bon
Shares
Proportio
New
us
Oth
Proportio
Q’ty
converted
Sub-total
Q’ty
n
issuing shar
ers
n
from reserve
es
142,681,505 50.86%
57,072,601
57,072,601 199,754,106 50.86%
123,645,981
44.07%
49,458,392
19,000,000
6.77%
7,600,000
7,600,000
26,600,000
6.77%
19,000,000
6.77%
7,600,000
7,600,000
26,600,000
6.77%
35,524
0.01%
14,209
14,209
49,733
0.01%
137,866,974
49.14%
55,146,790
55,146,790 193,013,764
49.14%
79,546,974
28.35%
31,818,790
31,818,790
111,365,764
28.35%
58,320,000
20.79%
23,328,000
23,328,000
81,648,000
20.79%
280,548,479 100.00%
112,219,391
Change in the Restricted Shares:
49,458,392 173,104,373
44.07%
112,219,391 392,767,870 100.00%
Shareholders
Shenzhen
CATIC Group
Co., Ltd.
Changzhou
Investment
Group Co., Ltd.
First State Cinda
Fund
Management
Co. Ltd.,
Bohong Shujun
(Tianjin) Equity
Investment Fund
Partnership Co.,
Ltd.
ICBC Credit
Suisse Asset
Management
Co. Ltd.,
Taikang Assets
Management
Co., Ltd.
Caitong
Securities Co.,
Ltd.
Lu Bingqiang
Total
Number of the
Number of
Number of
shares with the
Number of
restricted shares
restricted shares
Causes of sales Date of relieving
restriction
restricted shares
at year
increased this
restriction
the restriction
relieved this
at year end
beginning
year
year
116,412,377
0
46,564,950
4,000,000
0
1,600,000
4,000,000
5,000,000
6,000,000
4,000,000
3,233,604
0
0
0
0
0
1,600,000
2,000,000
2,400,000
1,600,000
1,293,442
35,524
0
14,209
142,681,505
0
57,072,601
Equity
November
9,
separation
2012
reform;
New (111,415,501
162,977,327 shares
from shares),
non-public
December 30,
offering
2013 (4,996,876
shares)
New
shares
December 30,
from non-public
5,600,000
2011
offering
New
shares
December
from non-public
5,600,000
2011
offering
New
shares
December
from non-public
7,000,000
2011
offering
New
shares
December
from non-public
8,400,000
2011
offering
New
shares
December
from non-public
5,600,000
2011
offering
New
shares
December
from non-public
4,527,046
2011
offering
Senior
executives’
49,733
restricted shares
199,754,106
－
－
2. Issuing and Listing
(1) In the report period, there were neither newly issued shares nor derivative securities in
the Company. The Company started implementation of the plan of non-public offering of
A-shares of 2010. The plan was reviewed and approved at the 8th meeting of the Sixth
Board of Directors dated April 12, 2010 and was approved by China Securities Regulatory
Commission with the Official Reply on Non-public Offering of Fiyta Holdings Ltd. (ZHENG
JIAN XU KE [2010] No. 1703) on November 29, 2010. The Company issued 31,230,480
new shares by non-public offering and completed the procedures of registration for
custody and sales restriction of the newly issued A shares with China Securities
Depository and Clearing Company Limited Shenzhen Branch on December 14, 2010. The
listing date of the shares subscribed by the designated investors was December 30, 2010.
The sale restriction term of the shares subscribed by Shenzhen CATIC Group Co., Ltd.,
the Company’s controlling shareholder, is 36 months from December 30, 2010 to
December 29, 2013. The sale restriction term of the shares subscribed by Changzhou
Investment Group Co., Ltd., First State Cinda Fund Management Co. Ltd., Bohong Shujun
30,
30,
30,
30,
30,
(Tianjin) Equity Investment Fund Partnership Co., Ltd., ICBC Credit Suisse Asset
Management Co. Ltd., Taikang Assets Management Co., Ltd. and Caitong Securities Co.,
Ltd. is 12 months from December 30, 2010 to December 29, 2011. All the designated
investors subscribed the shares in cash without assets transfer or liabilities transfer
involved.
(2) In the report period, the Company implemented 2010 Annual Equity Distribution Plan
according to which the Company converted its capital reserve into capital stock on
4-for-10 basis. As a result, 112,219,391 shares more were converted. After the conversion,
the Company’s total capital stock became 392,767,870 shares.
(3) At present, there are no employees’ shares in the Company.
II. Shareholders
1. Ended June 30, 2011, there were totally 18,302 shareholders in the Company: including
11,614 shareholders of A shares (including one senior executive); 6,688 shareholders of B
shares.
2. Shares held by the Company’s top ten shareholders
Shares held by top 10 shareholders ended June 30, 2011:
Total Shareholders
18,302
Shareholding of the top 10 shareholders
Shareholders
Shenzhen CATIC Group
Co., Ltd.
China Construction Bank –
Huaxia Superiority Growth
Stock Based Securities
Investment Fund
Shareholder type
State-owned
corporate
Domestic
non-state
corporate
Industrial and Commercial
Domestic
Bank of China – E-Fund
non-state
Value Growth Mixed
corporate
Securities Investment Fund
Domestic
ICBC Credit Suisse Steady
non-state
Growth Stock Based
corporate
Bohong Shujun (Tianjin)
Equity Investment Fund
Partnership Co., Ltd.
Domestic
non-state
corporate
Changzhou Investment
Group Co., Ltd.
State-owned
corporate
Domestic
First State Cinda Leading
non-state
Growth Stock Type
corporate
Taikang Life Insurance
Co.,Ltd. – Toulian – Jinqu
-019L-TL002 SHEN
Domestic
non-state
corporate
Shareholding
proportion
Total shares
held
Quantity of restricted
shares held
Quantity of shares
pledged or frozen
41.49%
162,977,327
162,977,327
0
3.80%
14,920,073
0
0
2.55%
10,000,000
0
0
2.14%
8,400,000
8,400,000
0
1.78%
7,000,000
7,000,000
0
1.43%
5,600,000
5,600,000
0
1.39%
5,460,000
5,460,000
0
1.25%
4,900,000
4,900,000
0
Caitong Securities Co., Ltd. State-owned
1.15%
4,527,326
4,527,046
corporate
China Merchants Securities Overseas
(HK) Co., Ltd.
state-owned
1.11%
4,353,189
0
corporate
Shareholding of top 10 shareholders of unrestricted shares
Shareholders
Quantity of unrestricted shares held
Share type
China Construction Bank – Huaxia
Superiority Growth Stock Based Securities
14,920,073 A Shares
Investment Fund
Industrial and Commercial Bank of China –
E-Fund Value Growth Mixed Securities
10,000,000 A Shares
Investment Fund
China Merchants Securities (HK) Co., Ltd.
B shares
4,353,189
B shares
KGI ASIA LIMITED
4,337,622
BANK JULIUS BAER & CO.LTD
MARTIN CURRIE INVESTMENT
MANAGEMENT LIMITED
3,485,769 B shares
2,232,959
A Shares
NOMURA SECURITIES CO. LTD.
1,773,611 A Shares
GSI S/A GOLDEN CHINA PLUS MASTER
1,729,125 B shares
FUND
First Shanghai Securities Co., Ltd.
1,727,719 B shares
Industrial and Commercial Bank of China –
A Shares
Guotou Ruiyin Core Enterprise Stock Based
1,685,633
Note to the connectivity relations The Company has not found any connectivity relations among the aforesaid
or action in concert of the above shareholders or any persons acting in concert as specified in the Measures for
shareholders
Administration of Information on the Shareholder Equity Change of Listed Companies.
0
0
Shenzhen CATIC Group Co., Ltd. holds over 5% of the Company’s shares. In the report
period, as the Company implemented the conversion of its capital reserve into capital
stock, the number of shares held by it changed from 116,412,377 shares into 162,977,327
shares. In the report period, none of the shares held by Shenzhen CATIC Group Co., Ltd.
was ever pledged, frozen or mandated.
3. About the Controlling Shareholder
Shenzhen CATIC Group Co., Ltd. was founded in June, 1997, with registered capital of
CNY 673.3671 million, its legal representative is Wu Guangquan. Shenzhen CATIC Group
Co., Ltd. is a diversified holding company, engaged in the business of manufacture and
sales of LCD, PCB, medium and high grade watches, and agriculture related resources,
etc. through its subsidiaries. The Group was listed with Hong Kong Stock Exchange in
September 1997.
4. Actual Controller
China National Aero-Technology Import & Export Corporation Shenzhen, was
incorporated on December 1, 1982, with registered capital: CNY 1,000 million, legal
representative: You Lei;licenced business activities: operating import and export business
for other commodities and technologies except for those commodities whose export is
jointly operated under the unified organization or the State and those commodities whose
import is operated by companies checked and ratified by the State as importer and
exporter or agent, compensation trade; investment and initiation of entities; domestic
commerce and supply and sale of goods and materials (excluding the commodities
monopolized for operation, under control of and for exclusive sale by the central
government); sales of home-made automobiles (with cars exclusive); real estate
development.
Controller of the actual controller: CATIC International Holdings Limited was incorporated
in 1983 with registered capital of CNY 8,459 million and its legal representative is Wu
Guangquan. Aviation Industry Corporation of China, Zhongjin Innovation (Tianjin)
Investment Co., Ltd., National Council for Social Security Fund and AVIC CCB Aviation
Industry Equity Investment (Tianjin) Company Limited respectively hold the equity in
CATIC International Holdings Limited by 62.52%, 14.31%、14.31% and 8.86%. Its legal
representative is Wu Guangquan and the licenced businesses are: supply of labor
services to the engineering projects carried out abroad; sales of methylbenzene, acetone,
methyl ethyl ketone, piperidine, ether, potassium permanganate, chloroform, sulfuric acid,
hydrochloric acid, acetic anhydride, combustible liquid, combustible solid, articles
inflammable naturally and with moisture, oxidizer and organic peroxide, toxic and
corrosive goods; insurance for motor vehicles, assets of enterprises, household property
and cargo freight. General businesses: import and export; warehousing; industry, hotel,
property, real estate development investment and management; new energy equipment
development, sales and repairing; exhibition; technology transfer and technical services in
connection with the aforesaid business.
The eventual controller of the Company’s actual controller - AVIC International Shenzhen
Company Limited, is the State-owned Assets Supervision and Administration Commission
of the State Council.
5. Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller
Chapter 4
Directors, Supervisors, Senior Executives
1. Change of the Company’s Shares Held by them
Of the Company’s directors, supervisors and senior executives in office, only Mr. Lu
Bingqiang, the deputy general manager, holds the Company’s shares. In the report period,
as the Company implemented the conversion of its capital reserve into capital stock, the number
of shares held by him changed from 47,365 shares into 66,311 shares.
II. The Company has not yet implemented the equity incentive plan. In the report period,
none of the directors, supervisors and senior executives held any of the Company’s stock
option.
III. In the report period there was none of the directors, supervisors or senior executives
newly engaged or disengaged.
Chapter 5 Report of the Board of Directors
I. Operation Review
(I) Operation Summary
In the first half year of 2011, the Company still carried on the corporate philosophy,
insisted on the enterprise values, focused on the creation of the channels for HARMONY
World Watches and construction of the brand for FIYTA products, continuously optimized and
integrated the internal resources, improved the working standards on overall basis, endeavored to
develop the business fields, improved the Company’s competitiveness in the market and earning
power and achieved a big growth in revenue and profit.
1. Retail of Famous Brand Watches
In the report period, HARMONY World Watches focused on Key=BSC2 on overall basis in its
retailing business, overcame difficulties in the work according to the requirements of “high
aspiration, high standard and high performances”, unceasingly optimized and developed
network, enhanced the shop management, achieved great success in practicing the
“marketing at three levels”, orderly implementation of promotion activities, construction
and maintenance of the relationship with the customers, construction and maintenance of
the relationship of key brands and channel cooperation, developing the employees’
working ability and team construction, etc. and realized a high speed growth in the
revenue.
Channel Development and Maintenance: While steadily carrying out the operation, the Company
has continuously speeded up network development, unceasingly improved the management level,
enhanced fostering and construction of the management team, improved the earning power of
new shops and promoted the new shops to tide over the incubation period as quickly as possible.
Meanwhile, the Company has further enhanced the shop optimization and upgrading of the
existing retailers and expansion of the famous brand watches, upgraded the shop identity and
provided consumers with more pleasant shopping environment.
Strengthening the international cooperation and brand promotion: The Company has unceasingly
strengthened and deepened the communications and cooperation with international watch groups
and independent watch brands, kept good cooperative relationship, distributed the watch culture
by means of high-end VIP salon, opening ceremony, theme show, etc., fostered and developed
consumer groups and achieved favorable response in the watch industry as well as all walks of
life. The Company has enthusiastically promoted HARMONY Brand and built HARMONY Brand
from various dimensions, including advertisement in mass media, VIP journal
“HARMONY WORLD”, channel and brand integration, high-end interview, construction of flagship
shops, etc., improved the brand favorite of HARMONY so that the value of HARMONY Brand may
12
be continuously promoted.
Deepening the 3-Level Marketing and Enhancing Terminal Operation: The Company has
continuously enhanced the terminal sales capability, implemented and practiced the principle of
“3-Level Marketing”, paid attention to the sales of watches not on active demand while vigorously
carrying out sales. Through sales competition of watches not on active demand, shops have
carried out a series of sales technique training and VIP activities, promoted sales of the watches
of long accounting age, and improved the inventory carry rate. Meanwhile, the Company
enhanced the repairing service management work and provided the customers with after-sale
services with high quality by means of improvement of the occupational skill and service quality of
the skilled repairers
Reinforcing team construction and improving capabilities on overall basis. The Company has
introduced various professionals through various channels and exerted itself on construction of a
team “with high vision, high standard and high performance”. Meanwhile, the Company has
attached importance on the construction of backup talents and fostering of reserve cadres,
continued to implement the training program for improving the leadership of the shop operation
managers and routine in-service training of salespersons of the shops and employees of different
posts, and enhanced the training certification of the sales consultants.
2. FIYTA watches
In the report period, FIYTA Brand has been insisting on the cultural ideas of progressiveness and
innovation, continuously improving the brand-building model of “4P+C” with international famous
watch brand as the benchmark.
The Company has been unceasingly exploring the price management system applicable to the
brand development, attempting to improve the various kinds of sales channels, and persistently
enhancing the synergistic interaction among departments and business units and construction of
professional team of high competence. In the report period, the revenue experienced a quick
growth.
Channel Expansion: The Company has been implementing enthusiastically the strategy of
channel expansion with the orientation of improving channel distribution and improving channel
quality, further improved the construction of the principal channels including franchise shops,
channels of HARMONY and HENGDELI, channels of department stores (including the imported
brand zones) and dealers, etc., consolidated the cooperation with the customers, speeded up the
layout of retail network in cities of different sizes, uninterruptedly explored and upgraded the sales
management of e-commerce.
Brand Price System and New Products Coming into the Market: The Company has continued to
take the products with high added-value as the identity and leading products for promotion,
unceasingly added vitality to the brand so as to improve the brand image; continued to put in
order the price differences in the series and inter-series and adjust the product price system
based on the market feedback; continued to strengthen the work of new product research and
development, gradually developed core product series with brand characteristics and competitive
advantages and high identification.
Brand Promotion: Aiming at the objective customer base, the Company has classified customers
and brand contact work in all aspects, propagated the core value of “perfect workmanship” and
“progressive improvement” of FIYTA, and carried forward the public relation activities with brand
spokesman and customers’ club as the base; continuously invested brand promotion resources,
equalized the optimized allocation of resources and improved the brand communication efficiency
with interaction of TV advertisement, print media, outdoor advertising and theme based public
activities. In March 2011, FIYTA Brand formally entered Basel No. 1 Exhibition Hall of Basel-World,
Switzerland, becoming the first Chinese watch brand that has entered Basel-World.
Sales Competition: In the first half year, the Company has carried out promotion activities and
sales competition with a number of themes, which have powerfully promoted the sales, optimized
the inventories and FIYTA customers’ satisfaction has been continuously heightened.
13
Strengthening Team Construction: The Company has persistently reinforced the talent training
work aiming at building a professional brand team with high qualification, studiously valuing the
duty and high learning ability; meanwhile, established a rational talent team echelon and
continuously improved the talent reserve, training, professional development, performance
assessment, etc. In the report period, the Company conducted public relations training and
practical training in many regions, powerfully promoted construction of the sales team and brand
promotion work.
3. Fashion Brand
Fashion brand continued to take channel construction as the key work, unceasingly developed
retail network, set up franchise counters in a number of entity shops in first-tier cities in China,
developed number sales channels, including network, credit card, etc. In addition, by means of
the Group’s internal channel resources, a foundation has been laid for development of the market
in future.
4. Property Operation
In the report period, the Company has further enhanced the management of the relations with the
clients of FIYTA Building, FIYTA Technology Building and Xi’an Chengheng International hotel
Building and the revenue has been maintained relatively steadily.
In the report period, the Company has further deepened the application of the advanced
management tool, persistently carried out the management innovation work and improved the
ability of strategic investment management. The Company has enhanced human resource
reserve, implemented the plan of recruiting new staff from key universities and schools and
college students practical training program; at the same time, focus was put on the staff’s
on-service training and internal cultivation work. The Company pays attention to construction of
the relationship with investors, received many investors for the on-site survey and visits by call,
positively constructed the image of the listed company with favorable capital market.
(II) Principal Business and Operation
The Company is mainly engaged in design, development, manufacture, sales and repairing of
timepieces and components, including operation of FIYTA watch products and sales of world top
brand watches; in addition, the Company has income from operation of the properties, including
FIYTA Building, FIYTA Technology Building and Xi’an Chengheng International Hotel Building.
1. The Company’s income and profit from principal business based on sectors are classified as
follows:
14
Sectors
Commerce
Industry
Property Operation
Revenue
101,074.44
Year-on-year
increase/dec
Operating
gross profit
rease of
costs
rate (%)
revenue rate
(%)
75,903.38
24.90%
50.62%
In CNY 10,000
Year-on-year
Year- on-year
increase/dec
increase/decr
rease of
ease of gross
operating
profit rate (%)
costs (%)
44.77%
3.04%
20,382.60
7,561.07
62.90%
73.86%
67.51%
1.40%
3,440.49
1,051.64
69.43%
3.87%
3.56%
0.09%
2. Watch business and property take over 10% of the Company’s income as well as the profit from
the principal business
(1) Watches The sales income and sales cost of FIYTA watches and foreign famous watches
are listed as follows:
Table 1: Presented based on the categories of the products
Products
Revenue
Operating
costs
In CNY 10,000
Year-on-year
Year-on-year
Year- on-year
increase/dec
Gross profit increase/dec
increase/decr
rease of
rate (%)
rease of
ease of gross
operating
Revenue (%)
profit rate (%)
costs (%)
Sales of foreign
famous watches
101,074.44
75,903.38
24.90%
50.62%
44.77%
3.04%
Sales of FIYTA
watches
20,382.60
7,561.07
62.90%
73.86%
67.51%
1.40%
Table 2: Presented according to regions
In CNY 10,000
Northeast China
11,621.14
Year-on-year
increase/decrease of
Revenue (%)
41.83%
North China
22,855.51
54.23%
Northwest China
29,768.57
51.88%
Southwest China
8,232.47
69.93%
East China
14,890.88
67.60%
South China
37,750.36
46.33%
Regions
Revenue
(2) Property The Company’s revenue and profit from property operation mainly came from
lease of FIYTA Building, FIYTA Technology Building and Xi’an Chengheng International Hotel
Building.
3. In the report period, no material change took place in the Company’s principal business or its
structure, and earning power of the principal business in comparison with the previous report
period.
15
4. In the report period, the Company had no other business activities having major influence on
the Company.
5. Problems existing in the operation, future development prospects and measures
In the second half year of 2011, the Company continues to favour the Chinese luxury market,
especially the development of the watch industry, continues to increase the investment in the
principal business. The Company shall steadily speed up construction of HARMONY channels
and strives to realize overall balance of the retail network layout; continues to enhance
communication and interaction with brands and goods suppliers, endeavors to obtain more
supports in resources of strategy and key brands; positively and effectively deploy FIYTA Brand
advertisement and promotion resources, make full use of the proceeds raised through share
offering, expand the advertisement media of CCTV, the Internet, etc. and investment in outdoor
advertisement of the 2nd and 3rd-tier cities and enhance the brand visibility and brand influence;
enrich the channel development ways; and at the same time, carry forward “the brand image
maintenance project” on overall basis while taking colorful marketing and promotion activities;
further speed up construction of the domestic retail network of fashion brands, enrich the contents
of fashion brands and pay attention to introduction of other potential fashion brands.
II. Investments
(I) Proceeds previously raised through share offering extended to the report period
Application of the Proceeds Raised through Share Offering
First Half Year of 2011
Total proceeds raised through share
offering
Total proceeds involved in change of the
application in the report period
Total accumulative proceeds involved in
change of the application
Proportion of the accumulative proceeds
involved in change of the application in the
total proceeds
Committed
investment
projects and
investment
direction with
over-raised
proceeds
Committed
investment
projects
1. Expansion of
HARMONY
world
watches
chain
network
and
improvement
projects
2. Project of new
FIYTA watches
coming into the
market
3. Project of
FIYTA
Brand
marketing
promotion
48,276
Total proceeds invested in the report year
37,522
Total proceeds invested accumulatively
39,201
-
Project
change
d?
(includin
g the
change
d part)
Total
proceeds
invested
as
committe
d
Total
investment
after
adjustment
(1)
-
41,000
41,000
Date
whe
n
the
proj
ect
has
reac
hed
the
pred
icted
appli
cabl
e
statu
s
Benefit
realized
in the
report
year
(gross
profit)
Has
the
predi
cted
result
be
realiz
ed?
Has any
material
change
taken
place in
feasibilit
y?
83.92%
2408
Y
N
3,382
67.64%
1695
Y
N
1,412
35.3%
-
N
Amount
invested in
the report
year
Accumulated
amount
invested at the
end of the
report period
(2)
Investment
progress
ended the
report
period（%）
(3)＝(2)/(1)
33,696
34,407
2,719
1,107
5,000
-
5,000
4,000
-
4,000
16
Subtotal of the
committed
50,000
50,000
investment
projects
Description and causes of failure in complying with the
schedule and planned benefit
37,522
39,201
78.4%
4103
-
-
Note to significant change in feasibility of the project
-
Amount, application and application progress of the
unbooked proceeds
About the change of the implementation site of the
projects invested with the proceeds
About the change of the implementation method of the
projects invested with the proceeds
About the initial investment in the projects planned to be
invested with the proceeds and the replacement
-
The Proposal on Replacement of the Self-raised Fund Invested in the Project Which
should be Invested with the Proceeds Raised through Share Offering with the Proceeds
as reviewed and approved at the 19th meeting of the Sixth Board of directors held on
December 29, 2010 approved to replace CNY 164,703,186.65 of the self-raised fund in
the project which should be invested with the proceeds raised through share offering with
the proceeds amounting to CNY 164,703,186.65 raised through this share offering.
About provisional supplementation of the working capital
with the idle proceeds raised through share offering
Amount of balance of the proceeds incurred in process of
implementation of the project and the cause
Application and status of the unused proceeds raised
through share offering
Planned application
Application of the proceeds and problems existing in the
disclosure or other conditions
No existence
(II) In the report period, the Company had no material investment with funds raised from
other financing activities.
(1) Establishment of HARMONY World Watches International Limited
The 20th meeting of the Six Board of Directors held on January 13, 2011 reviewed and approved
the Proposal on Establishment of HARMONY Branch in Hong Kong. With a view to further
improving HARMONY’s international influence and speeding up the process of HARMONY to
becoming an internationalized enterprise, the Company decided to set up a HARMONY branch in
Hong Kong as a HARMONY solely funded subsidiary with registered capital of HK$ 10 million and
the company name of “HARMONY World Watches International Limited. The new company
shall enhance development of the overseas famous brand watch market in Hong Kong, etc., bring
about new performance growth for the Company so as to realize the Company’s development
strategic target.
(2) Establishment of FIYTA Sales Co., Ltd.
The 22nd meeting of the Six Board of Directors held on February 25, 2011 reviewed and approved
the Proposal on Establishment of FIYTA Sales Company. With a view to clarifying the business
management structure, seizing the market opportunity, enhancing the strategic layout of the retail
channels of watch industry, promoting quick development of own brand, swift expansion of the
watch business size, improving scale merit and strengthening the anti-risk capability, the
Company decided to invest CNY 50 million to set up FIYTA Sales Co., Ltd., a solely funded
subsidiary, and revoke the existing sales department.
(3) Increasing Capital in Shenzhen Harmony World Watches Center Co., Ltd.
The 22nd meeting of the Six Board of Directors held on February 25, 2011 reviewed and approved
the Proposal on Increasing Capital in Harmony World Watches Center. Shenzhen Harmony
World Watches Center Co., Ltd. is one of the Company’s solely funded subsidiaries and is a
famous world watch retailers having more than 200 chain shops all over China. With quick
expansion of the business size of HARMONY, the existing fund of its own is obviously in shortage.
At present, the registered capital cannot satisfy the requirements of the Company’s normal
operation. Based on the Company’s development strategy and practical requirements, the
Board of Directors approved the Company to increase the registered capital in HARMONY from
the existing CNY 300 million to CNY 600 million.
(4) Montres Chouriet SA to Purchase the Plant
The 25th meeting of the Six Board of Directors held on June 13, 2011 reviewed and approved the
17
Proposal on Montres Chouriet SA to Purchase Plant, and approved Montres Chouriet SA enter
into Plant Purchase Agreement with the Transferor. The total investment in this transaction
amounted to CNY 37.20 million.
III. Accounting Policies, Change in Accounting Estimation and Correction of Material
Accounting Errors
In the report period, there was neither change in the accounting policy or accounting estimation
nor correction of any previous accounting errors.
Chapter 6 Important Events
I. Progress of Implementation of the Company’s Internal Control
With a view to implementing the Basic Regulations of Internal Control of the Enterprises and the
relevant supplementary guiding work and in accordance with the requirements of China Securities
Regulatory Commission and Shenzhen Securities Regulatory Bureau, the Company formally
started the basic rule-compliance project of internal control of the enterprise (hereinafter referred
to as the “Internal Control Project”) in April, 2011.
The Company implemented the internal control project in an orderly way in accordance with the
Guides to the Experimental Work for Key Experimental Companies under the Jurisdiction of
Shenzhen to Implement the Regulations for Internal Control of Enterprises and the Table of the
Implementation Progress of the 54 Experimental Companies in Practicing the Internal Control
under the Jurisdiction of Shenzhen. Ended June 30, 2011, the progress of implementation of the
internal control projects is stated as the following table:
Project implementation
Date of
description
completion
Performance
Performance description
1.0 Engagement of
independent consulting
agency
Union Strength Business Consulting
Engagement of
independent consulting
May 11, 2011
Finished
agency
Co Ltd. (Union Strength) was engaged
as the consulting agency of the
internal control project.
2.0. Organization assurance
stage
The person in charge of
2.1
the internal control
implementation was
The General Manager was appointed
April 6, 2011
Finished
as the person in charge of the internal
control implementation.
appointed
Leading group for the internal control
implementation project was
The internal control leading
2.2
group or the similar
organization was
established, the group leader was the
April 6, 2011
Finished
established
GM, the deputy leaders were a deputy
GM and the chief accountant; the
group members consisted of
supervisor, the secretary of the Board,
leaders of various subsidiaries, etc.
18
The leading group has further
established the working team of
internal control implementation project
and teams of various business
modules;
The leaders of the working teams
2.3
The internal control project
consist of a deputy GM and the chief
group was established and
accountant (concurrently); and the
the members were
engaged in the internal
April 6, 2011
Finished
team members mainly consist of the
leaders of various functional
control work on full-time
departments; the office is located in
basis.
the audit department.
The persons in charge of various
business modules have been
appointed as the leaders of various
business modules and the members
consist of the backbone persons of
different business plates.
3.0 Internal control starting stage
Preparation of the internal
3.1
control implementation
plan and proposal
Implementation Proposal
3.2
The Company announced the
April 28, 2011
Finished
“Proposal on the Implementation Work
of Standardizing the Internal Control of
Enterprises”
reviewed and announced
by the Board of Directors
The leading group called together the
3.3
Holding the Project
Starting Conference
working team, module team and
May 24, 2011
Finished
independent consulting agency to hold
the internal control project starting
conference.
The Company engaged
3.4
agent and professionals to
At the starting meeting, Union
May 24, 2011
Finished
offer internal training
Strength offered training of internal
control knowledge
4.0 Internal control construction
stage – determining the internal
control implementation scope
Defining the internal
4.1
control scope in
connection with the
Defining the internal control scope in
June 30, 2011
Finished
financial statements
connection with the financial
statements according to the result of
the financial statements in 2010,
Determining the risk points of the key
4.2
Determining the risk points
of the key and prior control
points of the internal control and prior
June 30, 2011
Finished
control in connection with the financial
statements:
1) Defining the key business units;
19
2} Identifying the important accounting
items;
3} Identifying the risks corresponding
to the key accounting items;
4} Defining the important business
process and sub-process;
5} Defining the scope of the internal
control file record and test
implementation at the process level.
The implementation scope
was reviewed and
4.3
approved by the internal
control leading group, the
The implementation scope was
June 30, 2011
Finished
reviewed and approved by the internal
control leading group.
audit committee or the
Board of Directors
II. Profit Distribution Proposal and Implementation
In the report period, 2010 Annual Shareholders’ General Meeting held by the Company approved
its 2010 Annual Profit Distribution Proposal. Based on 280,548,479 shares of the total capital
stock ended December 31, 2010, the Company was to distribute cash dividend at the rate of CNY
1.00 for every 10 shares (with tax inclusive) and the total amount of cash dividend as distributed
was CNY28,054,847.90.
Meanwhile, the Company converted its capital reserve into capital stock on 4-for-10 basis. The
total number of the shares converted was 112,219,391 shares. After the conversion, the
Company’s total capital stock turned to be 392,767,870 shares. The cash dividend, bonus
(converted) shares for both A and B shares were distributed respectively on April 27, 2011 and
April 29, 2011.
Company has neither semiannual profit distribution proposal nor proposal for converting public
reserve into share capital for the middle of 2011.
III. In the report period, the Company has never been involved in any material lawsuit or
arbitration and no previous material lawsuit or arbitration has been extended to the report
period either.
IV. There was no equity in other listed companies held by the Company in the report
period.
V. Assets acquisition, sales, absorption or consolidation in the report period
Purchase of Plant by Montres Chouriet SA
The Company reviewed and approved the Proposal on Purchase of Plant by Montres Chouriet SA
at the 25th Meeting of the Sixth Board of Directors held on June 13, 2011. The Company
approved the Plant Purchase Agreement entered into by Montres Chouriet SA, one of the
20
Company’s solely funded subsidiaries and the transferor. The total investment amount involved
in the transaction was CNY 37.2 million. Ended June 30, 2011, Montres Chouriet SA, the
transferor and the local notary public jointly concluded the letter of performance guarantee for
purchase of plant.
The formal plant purchase agreement needs to be subscribed jointly by the three parties, namely
Montres Chouriet SA, the transferor and the local notary public before October 1, 2011. By that
time, Montres Chouriet SA shall pay the balance to the bank account designated by the notary
public, including the balance for purchase of the plant and the notarization charge and the taxes,
and complete the work of transfer and handover of the property.
VI. Related transactions
1. Implementation of Routine Related Transactions
(1) Shenzhen CATIC Property Management Co., Ltd., one of the Company’s related corporate
offers property management service for the Company’s FIYTA Building and FIYTA Technology
Building. The price of this related transaction is based on the market price. In the report period,
the Company has paid property management fee and water and electricity charge amounting to
CNY 0.7249 million, which complies with the estimation at the year beginning.
(2) The Company’s FIYTA Building and FIYTA Technology Building offers property lease service to
CATIC Real Estate Co., Ltd., Shenzhen CATIC Real Estate Development Co., Ltd., Shenzhen
Makway Cable TV Devices Co., Ltd., Shenzhen CATIC Property Management Co., Ltd., CATIC
Securities Co., Ltd. and Shenzhen Grand Skylight Hotel Management, the Company’s related
corporate companies. Both parties determine the service charge based on the market price. In the
report period, the Company received property rental income amounting to CNY 5.7444 million,
which complied with the amount predicted at year beginning.
(3) The Company sells watches through the franchised counters of Rainbow Supermarket Co.,
Ltd. In the report period, the sales expenses for such franchised counters was CNY 8.3115 million,
which complied with the amount predicted at year beginning.
(4) The Company sells watches in small quantity and offers product processing to AVIC
International Holding Corporation, Aviation Industry Corporation of China and Shenzhen Shennan
Circuits Co., Ltd., the Company’s related corporate. In the report period, the Company received
CNY16.4132 million of different income, which complied with the amount predicted at year
beginning.
The Routine Related Transactions in 2010 and the Proposal on the Predicted Conditions of the
Routine Related Transactions in 2011 were published on Securities Times, Hong Kong
Commercial Daily on March 1, 2011.and http://www.cninfo.com.cn.
2. Liabilities or Guarantees with Related Parties
Ended June 30, 2011, Shenzhen CATIC Group Co., Ltd., the Company’s controlling shareholder
offered guarantee to the Company for the bank credit line amounting to CNY 772 million.
21
3. There exists no such situation that the Company’s holding shareholder or any of its subsidiaries
has ever occupied the Company’s funds.
VII. Important Contracts and Implementation
1. In the report period, the Company was not involved in such events as keeping as custodian,
contracted or leased any other company’s assets and vice versa in the report period or extended
from the previous years.
2. In the report period, the Company offered guarantees to Shenzhen Harmony World Watches
Center Co., Ltd. and FIYTA (Hong Kong) Limited for their loans amounting to CNY 68 million and
HK $ 80 million (around CNY66.29 million), taking 5.37% and 5.24% of the Company’s audited
net assets in 2010 respectively. Ended June 30, 2011, the total accumulated amount of external
guarantees offered by the Company and its subsidiaries was CNY 116.37 million, taking 9.19% of
the Company’s audited net assets in 2010. All the external guarantees offered by the Company
are due to the subsidiaries’ production and operation requirements and are the guarantees
offered to the Company’s subsidiaries for their loans.
The Company has neither provided any guarantee to the controlling shareholder or any related
parties nor been involved in any other external guarantee activity. There has been no loss the
Company has to bear due to overdue guarantee, any guarantee in connection of any lawsuit or
being judged as having lost in lawsuit due to guarantee. All the fund dealings with the related
parties belong to normal operation fund dealings, and there existed no such case that a related
party has occupied the Company’s funds against the law.
3. In the report period, there was no entrusted asset management incurred previously and
extended to the report period in the Company.
VIII. Commitment by the Shareholder Holding over 5% (with 5% Inclusive) of the
Company’s Shares
(1) The Company started to implement the equity separation reform plan on November 7, 2007. In
the Company’s equity separation reform plan, the commitments made by Shenzhen CATIC Group
Co., Ltd., the shareholder holding over 5% of the Company’s shares, and the implementation are
summarized as follows:
Shenzhen CATIC Group Co., Ltd. committed that upon completion of the equity separation reform
of FIYTA, the non-negotiable shares held by Shenzhen CATIC Group Co., Ltd. would not be listed
with Shenzhen Stock Exchange for trading within 36 months after the day when such shares got
approved for listing. Within 24 months after the 3-year sales restriction term expires, in case
CATIC Shenzhen Corporation would sell the non-negotiable FIYTA shares it was holding through
listing with Shenzhen Stock Exchange, the sales price must not be lower than CNY 25.00 per
share.
Implementation of the commitment: The commitment is in process of implementation.
Commencing from the date when the equity separation reform was fulfilled to the end of the report
period, Shenzhen CATIC Group Co., Ltd. has not reduced or assigned any restricted shares held
22
by Shenzhen CATIC Group Co., Ltd..
(2) In 2010, the Company started the plan of non-public offering of A shares. The plan was
approved by China Securities Regulatory Commission with the Official Reply on Approval of Fiyta
Holdings Ltd. for Non-public Offering (ZHENG JIAN XU KE [2010] No. 1703) on November 29,
2010. The Company completed the procedures of registration for custody and sales restriction of
the newly issued A shares with China Securities Depository and Clearing Company Limited
Shenzhen Branch on December 14, 2010. The commitments made by Shenzhen CATIC Group
Co., Ltd., the shareholder holding over 5% of the Company’s shares, as one of the target
investors of the share-offering, and the implementation are as follows:
CATIC Group shall not assign the new shares subscribed by it within 36 months commencing
from the date of ending of the non-public offering by Fiyta Holdings Ltd. (from December 30, 2010
to December 29, 2013) according to the law, regulations and regulatory documents, including the
Measures of Administrative Measures for the Issuance of Securities by Listed Companies, Rules
for Implementation of the Non-public Issuing of Shares by Listed Companies, Rules of Shenzhen
Stock Exchange for the Listing of Stocks as well as the Contract for Subscription of the Shares
Non-publically Issued by Fiyta Holdings Ltd.
Status of implementation of the commitment: The commitment is in process of implementation.
(3) Shenzhen CATIC Investment Management Co., Ltd. accepted 25% equity in Shanghai Watch
Industry Co., Ltd. (Shanghai Watch Industry) held by Shanghai Aijian Trust & Investment Co., Ltd. through
assignment in April 2010, becoming the second biggest shareholder of Shanghai Watch Industry. As Shenzhen
CATIC Investment Management Co., Ltd. is the controlled subsidiary of AVIC International Shenzhen
Company Limited. Meanwhile, AVIC International Shenzhen Company Limited is the actual
controller of FIYTA and thus horizontal competition is composed. The background and purpose of
participation in Shanghai Watch Industry by AVIC International Shenzhen Company Limited are to
support the Company in business development and improve the Company’s competitiveness in
stead of being desirous to carry on and participate in the same business as the Company; while
AVIC International Shenzhen Company Limited has issued commitment of avoiding horizontal
competition. Shenzhen CATIC Investment Management Co., Ltd. has also committed that within
or before 2011, it may assign all the equity in Shanghai Watch Industry held by the Company or to
an independent third party in proper opportunity.
Status of implementation of the commitment: The commitment is in process of implementation.
IX. Special Notice and Independent Opinion of Independent Directors on the Funds
Occupied by the Related Parties and External Guarantees
In accordance with the Establishment of Independent Director Systems by Listed Companies
Guiding Opinion and Code of Corporate Governance for Listed Companies promulgated by China
Securities Regulatory Commission, and Stock Listing Rules of Shenzhen Stock Exchange, as
independent directors of Fiyta Holdings Ltd., we hereby present our special notice and
independent opinions on the accumulative and current external guarantees offered by the
Company and the fund occupancy of the related parties as follows:
23
In accordance with the Circular on Several Issues Concerning the Regulation of Cash Flows
Between Listed Companies and Their Affiliates and Security Provided to Outside Parties by Listed
Companies (ZHENG JIAN FA (2003) No. 56) and Circular on Regulating the External Guaranties
Provided by. Listed Companies (ZHANG JIAN FA (2005) No. 120, we have made careful and
responsible confirmation and finalization of the external guarantees offered by FIYTA Holdings Ltd.
and the funds occupied by its controlling shareholder and other related parties based on the
position of being responsible to the Company, the whole shareholders and investors and
according to the principle of seeking truth from facts.
Through careful inspection, the Company strictly abided by the relevant provisions of the Articles
of Association, carefully implemented the Document ZHENG JIAN FA (2003) No. 56 and (2005)
No. 120, strictly controlled the risks arising from the outward guarantee. In the report period, the
Company offered guarantees to Shenzhen Harmony World Watches Center Co., Ltd. and Fiyta
(Hong Kong) Limited for CNY680 million and HK$80 million (around CNY66.29 million)
respectively, taking 5.37% and 5.24% of the Company’s audited net assets respectively in 2010.
Ended June 30, 2011, the total accumulated amount of external guarantees offered by the
Company and its subsidiaries was CNY 116.37 million, taking 9.19% of the Company’s audited
net assets in 2010. All the external guarantees offered by the Company are due to the
subsidiaries’ production and operation requirements and are the guarantees offered to the
Company’s subsidiaries for their loans. The Company has neither provided any guarantee to
the controlling shareholder or any related parties nor been involved in any other external
guarantee activity. There has been no loss the Company has to bear due to overdue guarantee,
any guarantee in connection of any lawsuit or being judged as having lost in lawsuit due to
guarantee. All the fund dealings with the related parties belong to normal operation fund dealings,
and there existed no such case that a related party has occupied the Company’s funds against the
law.
X. The financial report has not been audited and no change has been made in the certified
public accountants.
XI. Investigation Reception and Interviews
In the report period, the Company implemented the Guidelines of Listed Companies for Fair
Information Disclosure. During reception of the surveys and interviews, the Company and the
obligor for relevant information disclosure have strictly observed the principle of fair information
disclosure without any discrimination policy and had never been engaged in any activity of
revealing, disclosing or letting out in advance any private information to any designated
addressees in a secret way. Reception of visitors is summarized as follows:
Reception Time
Reception Way of
place
reception
Visitors received
24
Discussion topics and materials
furnished
January 11, 2011
January 14, 2011
Company
Company
On-Site
Survey
On-Site
Survey
Fortis Haitong Investment
Management Co., Ltd.,
CITIC-Prudential Fund
Management Company
Ltd., China Nature Asset
Minsheng Royal Fund
Dongxing Securities Co.,
Ltd., Dacheng Fund
Management Co., Ltd., and
Rongtong Fund
Management Co., Ltd.
Development trend of the
domestic luxury goods sector,
some measures concerning the
Company’s strategic
development, brand construction,
channel management in the past
three years. Provision of the
Company’s public brochures in
2011.
Zheshang Securities Co.,
Ltd.
2011.
China Merchants Securities
January 18, 2011
March 14, 2011
April 1, 2011
Company
Company
Company
On-Site
Survey
Co., Ltd., Shenzhen
Haiheng Investment Co.,
Ltd.
2011.
On-Site
Survey
Shanghai Shenyin &
Wanguo Securities
Research Institute Co., Ltd. channel management in the past
2011.
On-Site
Survey
China Securities Co., Ltd.
25
2011.
April 20, 2011
April 28, 2011
May 12, 2011
May 17, 2011
May 18, 2011
Company
Company
Company
Company
Company
On-Site
Survey
Shanghai Zexi Investment
Guosen Securities Co., Ltd.,
Sealand Securities Co.,
Ltd., Huaxia Fund
Management Co., Ltd.
2011.
On-Site
Survey
Xiangcai Securities Co.,
Ltd.
2011.
China Galaxy Securities
Co., Ltd.
2011.
Liuhe Investment Co., Ltd.
2011.
Lion Fund Management
Co., Ltd.
On-Site
Survey
On-Site
Survey
On-Site
Survey
26
2011.
June 9, 2011
Company
On-Site
Survey
Shenzhen Team-Top
Investment Management
Co., Ltd., Pingan Dawa
Funds Management Co.,
Ltd., Yinhua Fund
Jiangsu Winlast Investment
& Development Co., Ltd.,
Beijing Xinyuan Lanzhong
Investment Management
Co., Ltd., Guotai Asset
Orient Securities Assets
Invesco Great Wall Fund
Management Co., Ltd. and
CITIC Securities Co., Ltd.
2011.
XII. In the report period, neither the Company nor any of its directors or senior executives
has ever been checked or punished by the supervisory authority.
XIII. Index of Provisional Announcement Information Disclosed in the Report Period
Public
Notice No
2011-001
2011-002
Announcement
Date
Description
Press of
Disclosure
Internet Websites of
Disclosure
January 14, 2011
Announcement on the
Resolutions of the 20th
Meeting of the Sixth Board
of Directors of FIYTA
Securities
Times
Hong Kong
Commercial
Daily
http://www.cninfo.com.cn
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
January 18, 2011
2011-003
February 22, 2011
2011-004
February 22, 2011
Announcement on the
Resolutions of 2010 2nd
Extraordinary
Shareholders’ Meeting
Announcement
Offering Guarantee
HARMONY
Announcement
on
27
on
to
the
2011-005
2011-006
2011-007
2011-008
2011-009
2011-010
2011-011
2011-012
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 5, 2011
March 9, 2011
Resolutions of the 21st
Hong Kong
Commercial
Daily
Announcement on the
Resolutions of the 22nd
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Commercial
Daily
Securities
Times
Hong Kong
Announcement on the
Meeting of the Sixth
Supervisory Committee
2010
Annual
Summary
Report,
Announcement on the
Implementation of the
Regular
Related
Transactions in 2010 and
Predictions of the Regular
Related Transactions in
2011
Announcement
on
Establishment of FIYTA
Sales Co., Ltd.
Special Report of the
Company on Deposit and
Application
of
the
Proceeds Raised through
Share Offering in 2010
Announcement
on
Change of the Business
Licence
Indicative Announcement
28
Commercial
Daily
2011-013
2011-014
2011-015
2011-016
2011-017
2011-018
2011-019
2011-020
2011-021
March 17, 2011
March 17, 2011
April 6, 2011
April 8, 2011
April 20, 2011
Securities
Times
Hong Kong
Commercial
Daily
Resolutions
of
the
Extraordinary Meeting of
the
Sixth
Board
of
Directors of FIYTA
Securities
Times
Hong Kong
Commercial
Daily
Announcement
on
Predicted Growth of the
Operation Results
Securities
Times, Hong
Kong
Commercial
Daily
Announcement on the
Resolutions
of
2010
Annual General Meeting
Securities
Times, Hong
Kong
Commercial
Daily
Announcement
Dividend Distribution
Securities
Times, Hong
Kong
Commercial
Daily
Notice on 2010 Annual
General Meeting
on
April 28, 2011
2011 1st Quarterly Report,
Text
Securities
Times, Hong
Kong
Commercial
Daily
April 28, 2011
Announcement on the
Resolutions of the 23rd
Securities
Times, Hong
Kong
Commercial
Daily
April 28, 2011
Announcement on the
Meeting of the Sixth
Supervisory Committee
Securities
Times, Hong
Kong
Commercial
Daily
April 28, 2011
Announcement
on
Offering Guarantee to
FIYTA
(Hong
Kong)
Securities
Times, Hong
Kong
29
Limited
2011-022
2011-023
2011-024
2011-025
2011-026
Commercial
Daily
April 29, 2011
Announcement on the
Related Transactions of
FIYTA
Securities
Times, Hong
Kong
Commercial
Daily
April 29, 2011
Announcement on the
Securities
Times, Hong
Kong
Commercial
Daily
June 14, 2011
Announcement on the
Securities
Times, Hong
Kong
Commercial
Daily
June 14, 2011
Announcement
on
Offering Guarantee to
FIYTA
(Hong
Kong)
Limited
Securities
Times, Hong
Kong
Commercial
Daily
Announcement
on
Montres Chouriet SA to
Purchase Plant
Securities
Times, Hong
Kong
Commercial
Daily
June 14, 2011
Section 7 Financial Report
I. Accounting Statements (attached hereinafter)
II. Notes to the Accounting Statements (attached hereinafter)
30
Chapter 8 Documents Available for Inspection
I. Semi-annual Report carried with personal signature of the Chairman of the Board;
II. Financial Report signed by and under the seal of the legal representative, chief
accountant and accounting supervisor;
III. All the originals of the Company’s documents and announcements disclosed in the
newspapers designated by China Securities Regulatory Commission.
IV. Articles of Association of the Company.
Board of Directors of
FIYTA Holdings Ltd.
August 17, 2011
31
FIYTA Holdings Ltd.
Semi-Annual Financial Report 2011
Legal Representative:
Wu Guangquan
Chief Accountant:
Li Dehua
Person in charge of the accounting department: Hu Xinglong
32
Attachment: Financial Report (Unaudited)
I. Accounting Statements
Balance Sheet
Prepared by FIYTA Holdings Ltd.
Items
June 30, 2011
Ending balance
Consolidated
In CNY
Opening Balance
Parent company
Consolidated
Parent company
Current assets:
Monetary fund
298,373,212.07
148,907,030.69
613,455,817.52
529,568,738.47
238,457,840.66
71,455,328.46
175,896,199.78
41,753,368.93
Settlement reserve
Lendings
Held for trading financial
assets
Notes receivable
Accounts receivable
Prepayment
24,779,790.36
36,644,253.43
Receivable premium
Reinsurance accounts
receivable
Reserve for reinsurance
contract receivable
Interest receivable
84,383,298.62
50,196,167.69
Dividends receivable
Other receivables
30,183,758.83
475,676,778.79
27,390,628.12
545,533,120.97
1,284,088,612.66
174,026,511.09
1,048,392,625.70
103,224,490.80
Redemptory monetary capital
for sale
Inventories
Non-current assets due within
a year
Other current assets
Total current assets
6,643,386.40
3,946,533.14
1,882,526,600.98
954,448,947.65
1,905,726,057.69
1,270,275,886.86
Long-term equity investment
1,932,928.17
707,248,128.17
1,981,913.65
354,489,913.65
Investment based real estate
162,284,137.68
162,284,137.68
165,381,973.79
165,381,973.79
Non-current assets:
Provision of loans and
advance in cash
Available-for-sale financial
assets
Held-to-due investments
Long term accounts
receivable
33
Fixed assets
247,181,868.71
224,783,029.02
251,742,068.63
203,000.00
203,000.00
0.00
19,168,485.61
12,186,271.87
19,237,532.22
12,241,014.82
83,450,930.94
23,391,567.25
72,152,718.07
21,221,733.80
33,453,025.00
3,926,911.99
20,316,790.34
3,926,911.99
547,674,376.11
1,134,023,045.98
530,812,996.70
785,961,644.66
2,430,200,977.09
2,088,471,993.63
2,436,539,054.39
2,056,237,531.52
622,311,000.00
544,000,000.00
728,253,730.00
600,000,000.00
205,300,470.39
136,714,189.27
156,353,328.00
57,467,235.33
3,464,531.40
2,939,051.02
8,464,969.63
1,589,073.41
Accrued payroll
14,047,620.84
1,675,303.84
19,980,930.64
8,500,000.00
Payable taxes
37,468,779.86
9,298,098.25
18,492,700.45
11,056,809.52
1,712,361.62
1,160,498.61
1,202,198.61
1,160,498.61
Construction-in-process
228,700,096.61
Engineering supplies
Disposal of fixed assets
Productive biological asset
Oil and gas assets
Intangible assets
Development expenses
Goodwill
Long-term expenses to be
apportioned
Deferred income tax asset
Other non-current assets
Total non-current assets
Total Assets
Current liabilities:
Short-term Loan
Due to the Central Bank
Deposits taking and
interbank placement
Borrowing capital
Transactional monetary
liabilities
Notes payable
Accounts payable
Advance from customers
Financial assets sold for
repurchase
Service charge and
commission payable
Interest payable
Dividends payable
Other payables
0.00
32,138,796.96
190,263.50
29,946,083.42
29,418,337.74
Payable reinsurance
Reserve for insurance
contract
Acting trading securities
Income from securities
underwriting on commission
Non-current liabilities due
within a year
Other current liabilities
2,645,322.20
34
22,516,478.86
Total current liabilities
916,443,561.07
725,733,224.41
965,001,780.77
702,290,095.73
181,332,819.80
180,000,000.00
181,440,065.11
180,000,000.00
332,776.04
124,482.04
131,259.28
131,259.28
3,450,000.00
2,950,000.00
2,400,000.00
1,900,000.00
185,115,595.84
183,074,482.04
183,971,324.39
182,031,259.28
1,101,559,156.91
908,807,706.45
1,148,973,105.16
884,321,355.01
392,767,870.00
392,767,870.00
280,548,479.00
280,548,479.00
530,606,952.78
531,162,493.88
643,381,884.88
643,381,884.88
121,066,992.16
121,066,992.16
121,066,992.16
121,066,992.16
280,449,864.44
134,666,931.14
222,514,569.59
126,918,820.47
Non-current liabilities:
Long-term Loan
Bonds payable
Long-term accounts payable
Special accounts payable
Predicted liabilities
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities
Total Liabilities
Owners’ equity/(or
shareholders’ equity):
Paid-up capital/(or capital
stock)
Capital Reserve
Less: shares in stock
Special reserve
Surplus Reserve
Reserve against general risks
Retained earnings
Translation reserve
Total owners’ equity attributable
594,687.91
1,325,486,367.29
-1,515,341.96
1,179,664,287.18
1,265,996,583.67
1,171,916,176.51
to the parent company
Minority shareholders’ equity
3,155,452.89
21,569,365.56
Total owner’s equity
1,328,641,820.18
1,179,664,287.18
1,287,565,949.23
1,171,916,176.51
Total liabilities and owners’
2,430,200,977.09
2,088,471,993.63
2,436,539,054.39
2,056,237,531.52
Chief Financial Officer: Li Dehua
Manager of the
equity
Legal representative: Wu Guangquan
Accounting Department: Hu Xinglong
35
Statement of Profit
January - June, 2011
Amount in the report period
Items
Consolidated
In CNY
Amount in the previous period
Parent company
Consolidated
Parent company
I. Turnover
1,232,010,736.41
229,421,696.61
810,811,910.82
151,312,416.02
Including: Revenue
1,232,010,736.41
229,421,696.61
810,811,910.82
151,312,416.02
1,129,360,743.57
227,590,437.45
766,060,715.61
154,668,313.10
820,486,746.77
108,169,866.25
565,307,056.65
69,292,155.00
5,519,125.06
2,491,222.67
3,079,780.59
2,134,996.13
185,744,896.33
75,701,460.95
113,555,280.39
51,090,854.22
Administrative expenses
86,933,806.49
32,034,218.96
62,246,359.77
24,653,838.38
Financial expenses
28,419,718.07
9,193,668.62
21,459,989.06
7,496,469.37
2,256,450.85
0.00
-48,985.48
34,138,145.45
-48,985.48
0.00
102,601,007.36
35,969,404.61
Interest income
Earned insurance
premium
Service charge and
commission income
II. Total operating costs
Including: Operating costs
Interest expenditure
Service charge and
commission payment
Surrender Value
Compensation
expenses, net
Provision of reserve for
insurance contract, net
Payment of policy
dividend
Reinsurance expenses
Business Taxes and
Surcharges
Sales costs
Loss from impairment of
assets
412,249.15
Plus: Income from change in
fair value (loss stated with
“-“)
Return on investment
13,758,953.80
(loss stated with “-“)
Including: return on
investment in associate and
joint venture
Exchange income (loss
stated with “-“)
III. Operating profit
(loss
36
44,751,195.21
10,403,056.72
stated with “-“)
Plus: Non-operating income
Less: Non-operating
1,374,365.97
350,853.72
6,353.38
487.00
0.00
0.00
103,969,019.95
36,319,771.33
17,802,177.43
516,812.76
86,166,842.52
35,802,958.57
85,990,142.75
35,802,958.57
176,699.77
0
expenses
Including: Loss from
disposal of non-current assets
IV. Total Profit (total loss stated
with “-“)
Less: Income tax expense
V. Net Profit
(net loss stated
with “-“)
Net profit attributable to
the parent company’s owner
Minority shareholders’
gain and loss
7,835,555.48
7,743,869.98
629,373.96
569,408.84
47,206.42
17,527.99
51,957,376.73
17,577,517.86
9,530,853.27
846,332.48
42,426,523.46
16,731,185.38
42,399,471.66
16,731,185.38
27,051.80
0.00
VI. Earnings per share:
(I) Basic earnings per
0.171
share
(II) Diluted earnings per
0.171
share
VII. Other comprehensive
-18,896.52
income
VIII. Total comprehensive
income
42,407,626.94
16,731,185.38
42,384,518.65
16,731,185.38
Total comprehensive
income attributable to the
parent company’s owner
Total comprehensive income
attributable to the minority
23,108.29
shareholders
37
Manager of the
Cash Flow Statement
Items
Consolidated
Parent company
In CNY
Amount in the previous period
Consolidated
Parent company
I. Cash flows arising from
operating activities
Cash received from sales
of goods and supply of labor
1,359,710,881.45
232,850,800.27
909,639,385.70
168,545,107.96
623,119.27
623,119.27
service
Net increase of the
customers’ deposits and
interbank placement
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 the held for trading
financial assets
Charge of cash interest,
service charge and
commission
Net increase of loan from
other banks
Net increase of fund from
repurchase business
Rebated taxes received
Cash received from other
217,481.16
4,483,957.14
86,972,592.72
7,265,097.91
2,305,225.60
1,364,412,319.75
319,823,392.99
917,527,602.88
171,473,452.83
1,147,963,105.94
118,780,238.76
696,249,537.70
61,942,930.99
Sub-total of cash flow
received from operation
activities
Cash paid for purchase of
38
goods and reception of labor
services
Net increase of loans and
advances to the customers
Net increase of amounts
due from the central bank and
other banks
Cash from payment for
settlement of the original
insurance contract
Cash for payment of
interest, service charge and
commission
Cash for payment of policy
dividend
Cash paid to and for
employees
Taxes paid
Cash paid for other
Subtotal of cash flow
paid for operating activities
Net cash flow arising
from operating activities
127,811,435.42
48,764,907.85
88,324,162.19
36,783,697.63
75,126,038.21
9,941,251.63
44,399,281.37
11,607,073.29
116,938,459.00
55,029,872.30
87,678,936.47
68,508,807.83
1,467,839,038.57
232,516,270.54
916,651,917.73
178,842,509.74
-103,426,718.82
87,307,122.45
875,685.15
-7,369,056.91
II. Cash flows arising from
investing activities:
Cash received from
investment recovery
Cash received from return
11,400,000.00
on investment
Net cash received from
disposal of fixed assets,
intangible assets and other
86,686.60
86,686.60
15,051,800.00
15,051,700.00
86,686.60
86,686.60
15,051,800.00
26,451,700.00
36,216,149.40
11,525,931.38
29,375,134.72
1,713,022.00
long-term assets
Net cash received from
disposal of subsidiaries and
other operating units
investment related activities
Sub-total of cash flow-in
received from investing
activities
Cash paid for purchase
and construction of fixed
assets, intangible assets and
39
other long term assets
Cash paid for investment
19,107,200.00
352,807,200.00
7,924,500.00
Net increase of the
pledged loan
Net cash paid for
acquisition of subsidiaries and
other operation units
Cash paid for other
investment related activities
Sub-total of cash flow
paid for investment activities
from investment activities
55,323,349.40
364,333,131.38
37,299,634.72
1,713,022.00
-55,236,662.80
-364,246,444.78
-22,247,834.72
24,738,678.00
510,311,000.00
392,000,000.00
386,548,610.00
345,000,000.00
510,311,000.00
392,000,000.00
386,548,610.00
345,000,000.00
616,135,405.74
448,000,000.00
335,000,000.00
335,000,000.00
50,313,122.18
47,490,785.45
16,473,470.97
14,770,376.67
1,000,000.00
1,000,000.00
III. Cash flows arising from
financing activities:
Cash received from
absorbing investment
Incl.: Cash received from
the subsidiaries’ absorption of
minority shareholders’
investment
Cash received from loans
Cash received from bond
issuing
financing activities
Sub-total cash flow
received from financing
activities
Cash paid for debt
repayment
Cash paid for
dividend/profit distribution or
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
from financing activities
IV. Change of exchange rate
231,600.00
231,600.00
666,680,127.92
495,722,385.45
352,473,470.97
350,770,376.67
-156,369,127.92
-103,722,385.45
34,075,139.03
-5,770,376.67
-50,095.91
-42,908.38
40
influencing the cash and cash
equivalent
V. Net increase of cash and
cash equivalents
Plus: Opening balance of
cash and cash equivalents
VI. Ending balance of cash and
cash equivalents
-315,082,605.45
-380,661,707.78
12,660,081.08
11,599,244.42
613,455,817.52
529,568,738.47
95,701,580.19
46,560,890.55
298,373,212.07
148,907,030.69
108,361,661.27
58,160,134.97
Manager of the
41
Statement of Change in Owner’s Equity
(I) Consolidated Statement of Change in Owner’s Equity
Semi-Annual 2011
In CNY
Amount of Previous Year
Owners’ equity attributable to the parent company
Paid-u
Items
p
capital/
(or
capital
Minorit
Reser
Capital
Reser
ve
Less: Specia Surplu
shares
in
stock
l
s
reserv Reser
e
ve
stock)
Owners’ equity attributable to the parent company
ve
Retain
y
agains
ed
shareh
t
earnin
genera
gs
Others
olders’
equity
Paid-u
Total
owner’
s
equity
l risks
p
capital/
(or
capital
Minorit
Reser
Capital
Reser
ve
Less: Specia Surplu
shares
in
stock
l
s
reserv Reser
e
ve
stock)
ve
Retain
y
agains
ed
shareh
t
earnin
genera
gs
Others
olders’
equity
Total
owner’
s
equity
l risks
-1,515, 21,569
-879,9 20,411
I. Ending balance of the
280,54 643,38
121,06
222,51 341.96 ,365.5 1,287, 249,31 191,84
115,94
158,57 43.60 ,058.3 735,21
previous year
8,479. 1,884.
6,992.
4,569.
6,088.
7,089.
0 9,525.
16
59
88
84
07
00
88
6 565,94 7,999. 7,232.
9.23
00
65
Plus: Change of the
accounting policy
-
Correction of the errors
of the previous period
-
Others
-1,515, 21,569
-879,9 20,411
II. Opening balance of the 280,54 643,38
121,06
222,51 341.96 ,365.5 1,287, 249,31 191,84
115,94
158,57 43.60 ,058.3 735,21
report year
6,992.
4,569.
6,088.
7,089.
0 9,525.
16
59
88
84
07
8,479. 1,884.
00
88
6 565,94 7,999. 7,232.
9.23
III. Amount involved in the
42
00
65
change of
112,21 -112,7
increase/decrease
9,391. 74,932
(decrease is marked with
00
-
-
-
- 57,935 2,110, -18,41 41,075 31,230 451,53
-
- 5,120,
- 63,937 -635,3 1,158, 552,34
903.28
,479.7 98.36 307.26 6,424.
,294.8 029.87 3,912. ,870.9 ,480.0 4,652.
.10
5
67
5
0
23
5
16
“-“)
-71,88
(I) Net profit
85,990
1.16 85,918
93,990
.58 94,018
,142.7
,261.5
,182.9
,545.5
5
9
3
1
2,110, -38,95
(II) Other
029.87
comprehensive income
Sub-total of the above (I)
3.64 2,071,
-
-
-
-
-
- 85,990 2,110, -110,8 87,989
of capital
98.36
1.82 -714,2
30.18
-
-
,142.7 029.87 34.80 ,337.8
5
investment and decrease
-635,3 -78,83
076.23
and (II)
(III) Owner’s
28,362
-
-
-
- 93,990 -635,3 -50,46 93,304
,182.9 98.36
2
9.24 ,315.3
3
3
1,399,
-555,5
-18,30 -18,85 31,230 451,53
040.00 484,16
41.10
3,077. 8,618. ,480.0 4,652.
4,172.
87
97
0
23
23
1,399,
1. Capital provided by
- 31,230 451,53
040.00 484,16
,480.0 4,652.
4,172.
the owner
0
2. Amount of share
payment recorded in the
-
owner’s equity
3. Others
-555,5
-18,30 -18,85
43
23
23
41.10
3,077. 8,618.
87
(IV) Profit Distribution
-
-
-
-
-
97
- -28,05
-28,05
4,847.
4,847.
90
90
1. Provision of surplus
-
reserve
-
-
-
- 5,120,
- -30,05
- -190,2 -25,12
903.28
2,703.
63.50 2,063.
18
40
5,120,
-5,120,
903.28
903.28
2. Provision for
general risks
-190,2
3. Distribution to the
-28,05
-28,05
-24,93
63.50 -25,12
owner (or shareholders)
4,847.
4,847.
1,799.
2,063.
90
90
90
40
4. Others
-
(V) Internal carry-over of 112,21 -112,2
owner’s equity
9,391. 19,391
00
1. Increased capital
converted from capital
reserve (or capital stock)
-
.00
112,21 -112,2
-
9,391. 19,391
00
.00
converted from surplus
-
44
3. Making up Deficit
with Surplus Public
-
Reserve
4. Others
-
(VI) Special reserve
-
1. Provision in the
report period
-
2. Application in the
report period
-
IV. Ending balance of the
392,76 530,60
report period
7,870. 6,952.
00
-
- 121,06
78
- 280,44 594,68 3,155, 1,328, 280,54 643,38
6,992.
9,864.
16
44
-
7.91 452.89 641,82 8,479. 1,884.
0.18
00
88
- 121,06
- 222,51 -1,515, 21,569 1,287,
6,992.
4,569. 341.96 ,365.5 565,94
16
59
6
9.23
(2) Statement of Change in Owner’s Equity, Parent Company
Semi-Annual 2011
In CNY
Paid-up
Items
capital/(
Capital
or capital Reserve
stock)
I. Ending balance of the
previous year
280,548, 643,381,
479.00
884.88
Less:
shares
in stock
Amount of Previous Year
Reserve
Special
Surplus
against Retained
reserve Reserve general earnings
risks
121,066,
992.16
Total
owner’s
equity
Paid-up
capital/(
Capital
or capital Reserve
stock)
126,918, 1,171,91 249,317, 191,847,
820.47 6,176.51
Plus: Change of the
45
999.00
232.65
Less:
shares
in stock
Reserve
Special
Surplus
against Retained
reserve Reserve general earnings
risks
115,946,
088.88
Total
owner’s
equity
105,762, 662,873,
490.87
811.40
accounting policy
-
-
-
-
-
-
Correction of the errors
of the previous period
Others
II. Opening balance of the
report year
280,548, 643,381,
479.00
-
- 121,066,
884.88
- 126,918, 1,171,91 249,317, 191,847,
992.16
820.47 6,176.51
999.00
115,946,
232.65
105,762, 662,873,
088.88
490.87
811.40
III. Amount involved in the
change of
increase/decrease
112,219, -112,219
-
-
-
- 7,748,11 7,748,11 31,230,4 451,534,
391.00 ,391.00
0.67
0.67
80.00
-
- 5,120,90
652.23
- 21,156,3 509,042,
3.28
29.60
365.11
(decrease is marked with
“-“)
(I) Net profit
35,802,9 35,802,9
58.57
51,209,0 51,209,0
58.57
32.78
32.78
(II) Other
comprehensive income
Sub-total of the above (I)
and (II)
-
-
-
-
-
-
- 35,802,9 35,802,9
58.57
-
-
-
-
-
-
- 51,209,0 51,209,0
58.57
32.78
32.78
(III) Owner’s
investment and decrease
-
-
-
-
-
-
-
of capital
- 31,230,4 451,534,
80.00
1. Capital provided by
the owner
46
-
-
-
- 482,765,
652.23
132.23
- 31,230,4 451,534,
482,765,
80.00
2. Amount of share
-
652.23
132.23
payment recorded in the
-
-
-
-
owner’s equity
3. Others
(IV) Profit Distribution
-
-
-
-
-
- -28,054, -28,054,
847.90
1. Provision of surplus
reserve
-
-
-
- 5,120,90
- -30,052, -24,931,
847.90
3.28
703.18
799.90
-
5,120,90
-5,120,9
-
3.28
03.28
2. Provision for
general risks
3. Distribution to the
owner (or shareholders)
-
-
-28,054, -28,054,
-24,931, -24,931,
847.90
4. Others
(V) Internal carry-over of
owner’s equity
112,219, -112,219
-
-
-
-
-
847.90
799.90
799.90
-
-
-
-
-
-
-
-
-
-
391.00 ,391.00
converted from capital
112,219, -112,219
391.00 ,391.00
converted from surplus
3. Making up Deficit
with Surplus Public
47
Reserve
4. Others
(VI) Special reserve
-
-
-
-
-
-
-
-
1. Provision in the
report period
2. Application in the
report period
IV. Ending balance of the
report period
392,767, 531,162,
870.00
493.88
-
- 121,066,
- 134,666, 1,179,66 280,548, 643,381,
992.16
931.14 4,287.18
479.00
884.88
-
- 121,066,
- 126,918, 1,171,91
992.16
820.47 6,176.51
Manager of the Accounting Department: Hu Xinglong
48
II. Notes to the Accounting Statements
FIYTA Holdings Ltd.
Notes to Semi-annual Financial Statements 2011
(In CNY except otherwise specially expressed)
I. 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 Municipal People’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 China National Aero-Technology Corporation Shenzhen) as the sponsor.
On March 10, 1993, the Company, with approval by the People’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, the Company’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 March 3, 2011, with approval by Shenzhen Municipal Administration for Industry and
Commerce, the Company was renamed as Fiyta Holdings Ltd.
On July 4, 1997, according to the equity assignment agreement between AVIC International
Shenzhen Company Limited ("AVIC Shenzhen") and CATIC SHENZHEN HOLDINGS LIMITED
which was later on renamed as Shenzhen CATIC Group Co., Ltd. (hereinafter referred to as
CATIC Group), AVIC Shenzhen assigned 72.36 million corporate shares (taking 52.24% of the
Company’s total shares) to CATIC Group. From then on, the Company’s controlling shareholder
turned to be CATIC Group instead of AVIC Shenzhen.
On October 26, 2007, the Company implemented the equity separation reform, according to
which the shareholder of the Company’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 the
Company’s total 249,317,999 shares remained unchanged. So far, after the equity separation
reform, the proportion of the Company’s shares held by CATIC Group has been reduced from
52.24% to 44.69%.
On February 29, 2008, due to expansion of the Company’s business scope and with approval by
Shenzhen Municipal Administration for Industry and Commerce, the Company’s enterprise
corporate business licence number was changed from 4403011001583 into 440301103196089
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, ended December 31, 2010, the Company’s
registered capital increased to CNY 280,548,479.00 and Shenzhen CATIC Group Co., Ltd. holds
41.49% of the Company’s equity based capital.
49
Ended June 30, 2011, the Company’s total capital stock was 392,767,870.00 shares. For the
detail, refer to Note VII.29.
The principal business activities of the Company and its subsidiaries (hereinafter referred to as
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. import and export, design and construction; import
and export business (implemented according to Document SHEN MAO GUAN DENG ZHENG ZI
NO. 2007-072). Legal Representative: Wu Guangquan; the Company’s registered office address:
FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen.
The Company has established the Shareholders’ 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 such function departments as the Comprehensive Administration Department,
Human Resource Department, Finance Department, Audit Department, Securities Department,
Property Department, Sales Department, Research & Development Department, Innovation and
Design Department.
The financial statements were approved by the Board of Directors of the Company for issuing on
August 15, 2011.
II. Basis for Preparation of the Financial Statements
The Group’s financial statements are prepared with the assumption of continuous operation and
according to the actually incurred transactions and matters. According to the Enterprise
Accounting Standards – Basic Standards and 38 Specific Accounting Standards promulgated by
the Ministry of Finance in February 2006 as well as the successively published application guides,
interpretation and other relevant regulations of the enterprise accounting standards (hereinafter all
referred to as the Enterprise Accounting Standards) and the provisions on information disclosure
as specified in the Rules for the Compilation and Submission of Information Disclosure by
Companies That Offer Securities to the Public No.15 – General Provisions of Financial Report
(Revision in 2010) promulgated by China Securities Regulatory Commission.
According to the relevant provisions of the enterprise accounting standards, the Company takes
the accrual basis as the base of accounting. Except some financial instruments, the financial
statements take historical cost as the base of measurement. In case any asset experiences
impairment, provision for the impairment is made according to the relevant provisions.
III. Declaration of Compliance with the Accounting Standards for Enterprises
The financial statements prepared by the Group comply with the enterprise accounting standards,
have truly and fully reflected the financial position of the Company and the Group as at June 30,
2011 and such information as its operation results and cash flow from January to June, 2011.
IV. Principal Accounting Policies and Accounting Estimates
1. Fiscal Year
The Group classifies accounting period into annual and semi-annual periods. A mid-term
accounting period refers to a report period shorter than an entire fiscal year. The Group’s fiscal
year adopts the Gregorian calendar year, namely from January 1 to December 31 of a year.
2. Function currency for bookkeeping
CNY is the currency in the major economic environment where the Company’s and its domestic
subsidiaries’ premises are located. The Company and its domestic subsidiaries take CNY as the
recording currency.
Except Switzerland based Montres Chouriet SA (hereinafter referred to as the Swiss Company), a
subsidiary of FIYTA (Hong Kong) Limited (hereinafter referred to as FIYTA Hong Kong) which
50
takes Swiss Franc as the recording currency according to the major economic environment of the
place where its premises is located, the other overseas subsidiaries, including FIYTA Hong Kong,
68-Station Limited (68-Station), one of FIYTA (Hong Kong) Limited’s subsidiaries, NATURE ART
LTD., an entity controlled by 68-Station for special purpose (Nature Art), PROTOP LTD (PROTOP)
and HARMONY World Watches International Limited, one of HARMONY’s subsidiaries (World
Watches International) take Hong Kong Dollars as its recording currency according to the major
economic environment of the place where their premises are located. The currency adopted by
the Group in preparation of the financial statements is China yuan (CNY).
3. Accounting treatment for enterprise consolidation
Enterprise consolidation refers to a transaction or matter of the principal in a report which consists
of two or more independent enterprises through consolidation. Enterprise consolidation consists
of the consolidation of enterprises under the same control and that not under the same control.
(1) Consolidation of Enterprises under the Same Control
Enterprises involved in the consolidation is eventually controlled by the same party or same
parties before and after the consolidation while such control is not temporary but is consolidation
of enterprises under the same control. Consolidation of enterprises under the same control: the
party that acquires the control over the enterprises involved in the consolidation on the date of
consolidation is the consolidator and the other enterprises involved in the consolidation are the
consolidatees. The date of consolidation refers to the date when the consolidator actually
acquires the control over the consolidates.
The assets and liabilities acquired by the consolidator from the consolidation are measured based
on the book value of the consolidatee on the date of consolidation. The difference between the
book value of net assets acquired by the consolidator, the book value of the consolidate valuable
consideration paid or the total book value of the issued shares was used to adjust the capital
reserve (capital stock premium). In case the capital reserve (capital stock premium) is not
enough to be written-down, the retained earnings are adjusted.
The direct expenses incurred in enterprise consolidation to the consolidating party is recorded in
the current gain and loss.
(2) Enterprise consolidation not under the same control
Consolidation of a party not under the same control refers to an enterprise involved in
consolidation is not under the same eventual control by one party or more before and after
consolidation. In consolidation of the enterprises not under the same control, the party that has
acquired the control power over the other enterprises involved in the consolidation refers to the
purchaser and the other enterprise(s) involved in the consolidation is/are the purchasee. Date of
purchase refers to the date when the purchaser actually acquires the control over the purchasee.
For the consolidation of enterprises not under the same control, the consolidation costs consist of
the fair value of the assets paid, liabilities incurred or assumed and the issued equity based
securities for the purpose of acquisition of the control power over the purchasee and expenses
incurred in connection with the consolidation, including the charges for audit, law service,
appraisal and consulting and other administrative costs are recorded in the current gains and
losses. The transaction costs of the equity securities or debt securities issued by the purchaser as
the consolidation consideration are recorded in the initially recognized amount of the equity
securities or debt securities. The consolidation costs which may possibly subject to adjustment
and can be reliably measured are recognized as the contingent consideration and follow-up
measurement may influence the goodwill. The contingent consideration involved is recorded in
the consolidation costs based on the fair value as at the purchase date; for the contingent
consideration necessary to be adjusted against the conditions which already exist as at the
purchase date or further evidence within 12 months after the purchase date, the consolidated
goodwill should be adjusted correspondingly. In case of enterprise consolidation realized by steps
through several exchange transactions, in the Group’s consolidated financial statements, the
equity of the purchasee held before the purchase date shall be re-measured based on the fair
value of the equity as at the purchase date; the difference between the fair value and its book
value is recorded in the current return on investment as at the purchase date; meanwhile, the
51
other comprehensive income in connection with the equity of the purchasee held before the
purchase date shall be converted into the current return on investment; the consolidation cost is
the sum of the fair value of the purchasee’s equity as at the purchase date held before the
purchase date and the fair value of the purchasee’s equity as at the purchase date increased as
at the purchase date. The consolidation cost incurred to the purchaser and the recognizable net
asset acquired from consolidation are measured based on the fair value of the purchase day. The
difference of the consolidation cost greater than the fair value share of the recognizable net asset
on the date of purchase is recognized as goodwill. In case the consolidation cost is less than the
share of the faire value of the purchasee’s distinguishable net assets, the Company first of all
rechecks the fair value of the purchasee’s various distinguishable assets, liabilities or contingent
liabilities and measurement of the consolidation costs. In case the consolidation cost is still
smaller than the share of the fair value of the purchasee’s distinguishable net assets acquired in
the consolidation after the recheck, its difference is recorded in the current gain and loss.
In case the purchasee’s offsetable provisional difference acquired by the purchaser is not
recognized due to that it does not comply with the conditions for recognition of the deferred
income tax asset, within 12 months after the purchase date, if the new or further information as
obtained shows that the relevant conditions as at the purchase date already exist, it is predicted
that the economic benefit of the purchasee’s offsetable provisional difference as at the purchase
date can be realized, the relevant deferred income tax asset is recognized; meanwhile, the
goodwill is reduced. In case the goodwill is not enough to be written-down, the difference shall be
recognized as the current gain/loss. Except the aforesaid conditions, the deferred income tax
asset recognized in connection with the enterprise consolidation is recorded in the current
gain/loss.
4. Preparation of Consolidated Financial Statements
(1) Determination of the Consolidation Range of Financial Statements
The consolidation range of consolidated financial statements is determined with control as the
base. Control refers to that the Company is able to decide the financial and operating policy of the
investee, the power against which the Company is able to obtain interest from the operation
activities of the investee. Consolidation range includes the Company and all the subsidiaries. A
subsidiary refers to an enterprise or a body under the Company’s control.
(2) Preparation of Consolidated Financial Statements
The Group consolidates the subsidiaries commencing from the date when the subsidiaries’ net
assets and production and operating decision making power are actually under the Company’s
control. The consolidation shall stop commencing from the date when the actual control authority
is lost. For a subsidiary to be disposed, the operation result and cash flow prior to the day of
disposal have been properly included in the consolidated profit statement and consolidated cash
flow statement; for a subsidiary to be disposed in the current period, the consolidated balance
sheet at the beginning of the period is not adjusted. For the subsidiaries increased through
consolidation of the enterprises not under the same control, the operating results and cash flow
after the purchase date have been properly included in the consolidated profit statement and
consolidated statement of cash flow while the amount at the beginning of the period and
comparative amount in the consolidated financial statements shall not be adjusted. For the
subsidiaries increased through consolidation of the enterprises under the same control, the
operating results and cash flow from the very period of consolidation to the consolidation date
have been properly included in the consolidated profit statement and consolidated statement of
cash flow; moreover, comparative amount in the consolidated financial statements shall be
adjusted at the same time.
In process of preparation of consolidated statements, in case the accounting policy or fiscal term
adopted by the subsidiaries and the Company are not identical, in preparation of the consolidated
financial statements, consolidation is made after necessary adjustment of the subsidiaries’
financial statements in terms of the Company’s accounting policy or fiscal term. For the
subsidiaries acquired through consolidation of enterprises not under the same control, the
financial statements are adjusted with the fair value of recognizable net assets on the date of
purchase as the base.
52
All the material current account balance, transactions and unrealized profit within the Group are
offset at the time of preparation of the consolidated financial statements.
The part in the subsidiaries’ shareholders’ equity and the net current gain and loss which do not
belong to the part held by the Company are taken as minority equity and minority gain and loss
and are respectively listed under the shareholders’ equity and net profit separately in the
consolidated financial statement. The part of the current net gain and loss of a subsidiary
belonging to minority shareholders’ equity is presented as “minority shareholders’ gain and loss”
under the item of net profit in the consolidated profit statement. In case the loss of a subsidiary
shared by the minority shareholders has exceeded the share of the owners’ equity of the
subsidiary enjoyable by the minority shareholders at the beginning of the period, the minority
shareholders’ equity shall be written-down.
5. Recognition of Cash and Cash Equivalent
The Group’s cash and cash equivalents include cash on hand, deposits which may be used for
payment at any time and investment held by the Group with short term (usually due within three
months commencing from the date of purchase), high liquidity, easy to be turned into cash with
given amount and very small risk of change in value.
6. Transactions in Foreign Currency and Foreign Currency Translation
(1) Translation of Foreign Currency
In initial recognition of a transaction in foreign currency when incurs, the translation into amount in
recording currency based on the spot rate (which usually refers to the average of the foreign
exchange rate published by the People’s Bank of China on the very day of incurrence); however,
the foreign currency exchange business or transaction involved foreign currency exchange
incurred in the Company is converted into amount in recording currency according to the
exchange rate actually adopted.
(2) Translation of monetary items in foreign currency and non-monetary items in foreign currency
On the balance sheet day, for the monetary items in foreign currency, the spot rate on the balance
sheet day is used for translation; the exchange difference arising therefrom shall all recorded in
the current gain/loss.
The foreign currency based non-monetary items measured based on the historical cost is
measured still based on the function currency translated based on the spot exchange rate as of
the date of incurrence of the transaction. For the foreign exchange based non-monetary items
measured based on the fair value, translation is made based on the spot exchange rate as of the
date of determination based on the fair value; the discrepancy between the function currency
amount for bookkeeping after translation and the original function currency for bookkeeping is
recorded in the current gain and loss and is treated as the change of fair value (including
exchange rate change), or recognized as other comprehensive income and recorded in the
capital reserve.
(3) Method of Translation for the Statements in Foreign Currency
In case the preparation of the consolidated financial statements involves overseas operation, if
there is the monetary item in foreign currency which substantially composes net investment for
overseas operation, the exchange difference arising from the change of exchange rate shall be
stated in the item of “the translation difference in foreign currency statement” of the owner’s
equity; in handling the overseas operation, the exchange difference is recorded in the current gain
and loss.
The financial statements in foreign currency for operation outside Mainland China are translated
into statements in China Yuan (CNY) after conversion according to the following methods: all the
asset and liability items in the balance sheet are translated based on the spot rate on the balance
sheet day. For the owner’s equity type items, except the item of “retained earnings”, the other
items are translated based on the spot exchange rate at the time of incurrence. The income and
expense items in the statement of profit are translated based on the current average exchange
rate on the date of transaction. The retained earnings at year beginning is the retained profit of the
53
previous year end after translation. The retained profit at year end is calculated and stated based
on the items of the profit distribution after translation. The difference between the asset items and
liability items and the total of the owners’ equity items after translation is recognized as other
comprehensive income and separately stated under the item of shareholders’ equity as the
translation discrepancy of statements in foreign currency. In disposal of operation outside
Mainland China with the control power lost, the difference from translation of statements in foreign
currency stated under the item of owner’s equity in the balance sheet and in connection with
foreign operation is, all or based on the proportion of operation outside mainland China as
disposed, recorded in the disposal of current gain and loss.
Foreign currency cash flow and cash flow of overseas subsidiaries are translated based on the
current average exchange rate as at the date when the cash flow incurs. The amount affected by
the change of exchange rate upon cash is used as the adjustment item and is separately
presented in the cash flow statement.
The amount at year beginning and actual amount of the previous year are stated based on the
amount of the financial statements of the previous year after translation.
7. Financial instruments
(1) Method for Recognition of the Fair Value of Financial Assets and Financial Liabilities
Fair value refers to the amount involved in the assets exchange or settlement of obligation
conducted between the two parties of transaction familiar with the situation on volunteer basis in a
fair transaction. When there exists active market for financial instruments, the Group determines
the fair value with the quotation in the active market. Quotation in the active market refers to the
price easily and regularly accessible to the exchange, broker, guild, price service agent, etc. and
represents the transaction price actually incurred in the market in fair transaction. In case the
financial instruments do not exist in the active market, the Group uses the value estimation
technique to determine its fair value. The value estimation technique includes the price used in
the latest market transaction conducted by the parties familiar with the situation on volunteer basis
with reference to the current fair value of substantially the same other financial instruments, the
cash flow discount method and option pricing model, etc.
(2) Classification, Recognition and Measurement of Financial Assets
For trading of financial assets in general way, accounting recognition and termination recognition
are conducted on the date of transaction. Financial assets are classified into the following
categories at the time of initial recognition: financial asset measured based on the fair value and
whose change is recorded in the current gain and loss, held-to-maturity investment, loan,
accounts receivable and available for sale asset. Financial asset is measured based on the fair
value at initial recognition. For the financial asset which is measured based on the fair value and
the change is recorded in the current gain and loss, the relevant transaction expenses are directly
recorded in the current gain and loss; for other types of financial asset, the relevant transaction
expenses are recorded in the initially recognized amount. The Group’s financial assets are mainly
the accounts receivable.
Accounts receivable refer to the non-derivative financial assets without quotation in the active
market and the recoverable amount fixed or determinable. The financial assets classified as the
account receivable by the Group include the account receivable and other receivables, etc.
Actual interest rate is used for accounts receivable; the follow-up measurement is made based on
the amortized costs; the dividend or loss arising from the termination recognition, impairment
occurrence or amortization are recorded in the current gain and loss.
(3) Impairment of financial assets
The Group inspects the book value of financial assets on the balance sheet date and makes
provision for impairment when there is objective evidence showing that impairment incurs in the
financial asset.
For provision of the reserve for bad debt of accounts receivable, refer to Note IV. 8.
54
(4) Basis for Recognition of Transfer of Financial Assets and Measurement Method
When a financial asset satisfies one of the following conditions, it is eventually recognized: ①The
contract right for receiving the cash flow of the financial assets is terminated; ② the financial
asset has been transferred while almost all the risks and remuneration in connection with the
ownership of the financial asset has been transferred to the party of transfer in; ③ the financial
assets have been transferred although the enterprise has neither transferred nor retained almost
all the risks and remuneration to the ownership of financial assets but the control over the financial
asset has been given up.
In case the enterprise has neither transferred nor retained all the risks and rewards involved in the
ownership of the financial assets but has not given up the control over the financial assets, the
concerned financial assets can continue to be recognized based on the level of the involved
financial assets transferred and the relevant liabilities shall be recognized correspondingly. The
level of the involved financial assets transferred refers to the level of risks the enterprise is
confronted with in change of the financial asset.
In case the overall transfer of the financial assets can satisfy the conditions of termination of
recognition, the balance between the book value of the financial assets as transferred, the
consideration received due to the transfer and the sum of the accumulative amount of change of
the fair value recorded in other comprehensive income is recorded in the current gain and loss.
If partial transfer of financial assets can satisfy the conditions for termination of recognition, the
book value of the financial assets transferred is apportioned based on its relevant fair value
between the part with recognition terminated and the part with recognition not terminated; and the
difference between the sum of the consideration received due to the transfer and the
accumulative amount involved in change of the fair value of the part with recognition terminated
which should be recorded in the other comprehensive income and the aforesaid book amount as
apportioned is recorded in the current gain and loss.
(5) Classification and Measurement of Financial Liabilities
Financial liabilities are classified into financial liabilities and other financial liabilities which are
measured based on the fair value at the time of initial recognition and whose change is recorded
in the current gain and loss. Financial liabilities are measured based on the fair value at initial
recognition. For the financial liabilities which are measured based on the fair value and the
change is recorded in the current gain and loss, the relevant transaction expenses are directly
recorded in the current gain and loss; for other types of financial liabilities, the relevant transaction
expenses are recorded in the initially recognized amount. The financial liabilities of the Group are
mainly the other financial liabilities.
Other financial liabilities undergo follow-up measurement based on the amortized cost by means
of actual interest rate method; the gain or loss arising from the termination of recognition or
amortization, is recorded in the current gain and loss.
(6) Termination of Recognition of Financial Liabilities
The present obligations of financial liabilities have been entirely or partially been eliminated before
termination of recognition of such financial liabilities or part of them. An agreement is concludd
between the Group (the debtor) and the creditor, the existing financial liabilities are replaced by
means of undertaking the new financial liabilities while the contract articles concerning the new
financial liabilities and the existing financial liabilities are substantially different, the recognition of
the existing financial liabilities are terminated and at the same time the new financial liabilities are
recognized.
In case recognition of financial liabilities is entirely or partially terminated, the difference between
the book value of the part with recognition terminated and the consideration paid (including the
non-cash assets transferred out or the new financial liabilities as undertaken) is recorded in the
current gain and loss.
(7) Offsetting of the financial assets and financial liabilities
55
When the Group has the legal right of setting off the financial assets and financial liabilities
already recognized and may implement such legal rights at present. Meanwhile, when the Group
plans to make settlement with net amount or at the same time realizes the financial assets and
pays off the financial liabilities, the amount after offsetting of the financial assets with the financial
liabilities is presented in the balance sheet. In addition, the financial assets and financial liabilities
are respectively presented in the balance sheet and must not be mutually offset.
(8) Equity Instrument
Equity instrument refers to a contract which can prove to have the Group’s surplus equity in the
assets after deduction of all the liabilities Equity instrument adds the owners’ equity after
receiving the consideration less the transaction costs at the time of issuing.
In providing various distributions (excluding the dividend) to the equity instrument holders, the
owners’ equity is reduced. The Group does not recognize the change of the fair value of the
equity instrument.
8. Accounts Receivable
(1) The determination criteria of bad debts
The Group checks the book value of accounts receivable on the balance sheet day and provides
reserve for impairment in case there exist following objective evidences showing that accounts
receivable have experienced impairment: ① A debtor is involved in serious financial difficulty; ②
The debtor breaches the contract, such as breaching contract in payment of interest or the
principal or delaying the payment, etc.; ③ Debtor may get bankrupt or conduct other financial
reorganization; ④ Other objective basis shows impairment incurred in the account receivable.
(2) Provision for bad debts
Criteria for recognizing the reserve for bad debt of the accounts receivable with significant single
amount and with the reserve for bad debt provided on individual basis and the way of provision
The Group classifies an account receivable with single amount exceeding CNY 800,000.00 and
other receivable with single amount exceeding CNY 500,000.00 as account receivable with
significant single amount.
①The Group tests impairment of individual accounts receivable with significant single amount,
separately tests the financial assets without impairment incurred, including the impairment test of
the portfolio of the financial asset with similar credit risk characteristics. The accounts receivable
in which loss from impairment has been recognized in the individual test shall no longer undergo
impairment test in the portfolio of the accounts receivable with similar credit risk characteristics.
② Basis for determining the accounts receivable with the reserve for bad debt provided based on
grouping of the credit risks and provision of the reserve for bad debt
A. Basis for determining the grouping based on the characteristics of the credit risk
The Group groups the financial assets based on the similarity of the characteristics and relevance
of the credit risks for the accounts receivable with insignificant single amount or with significant
amount but not experiencing impairment through single-item based testing. These credit risks
usually reflect a debtor’s ability to repay all the due amount according to the contract of such
assets and are related with the estimation of the future cash flow of the inspected assets.
Basis on determining different grouping:
Items
Basis for determining the grouping
Grouping based on the
accounting age
Length of the accounting age
B. Way of provision for bad debt as determined by grouping based the credit risk characteristics
In making impairment test by grouping, the amount of the reserve for bad debt is determined
56
according to the grouping structure of the accounts receivable and the similar credit risk
characteristics (the debtor’s ability to repay the debt according to the contract) and based on the
historical loss experience, the present economic conditions and the assessment of the loss
already existed in the grouping of the predicted accounts receivable.
Method of provision for bad debt based on different groupings:
Items
Grouping based
account age
Way of Provision
on
the
Provision for bad debt based on aging analysis
Method of grouped provision for bad debts by means of aging analysis
Provision proportion of the
Provision proportion of other
Age
accounts receivable (%)
receivables (%)
Within 1 year (including 1 year,
5
5
the following is the same)
1 to 2 years
10
10
2 to 3 years
30
30
Over 3 years
50
50
Note: The Company does not provide reserve for bad debts for the reserve due from the
employees, payment due from the subsidiaries in the consolidation range and the sales
revenue from the last settlement day of the supermarket to the balance sheet day in the
accounts receivable.
③ Accounts receivable with insignificant single amount and provision of bad debt reserve on
individual basis
For the accounts receivable with insignificant single amount but having the following
characteristics, the Group makes separate impairment test. In case there is objective
evidence showing that impairment has taken place, according to the balance of the present
value of future cash flow lower than the book value, loss from impairment is recog nized and
the reserve for bad debt is provided, including the account receivable involved with dispute
with the other party or lawsuit or arbitration; the accounts receivable in which there exists
evident indication showing that a debtor may possibly be unable to implement the obligation of
repayment.
(3) Reversal of reserve for bad debt
In case there is objective evidence showing that the value of the account receivable has been
recovered while it is objectively related with matters occurred after recog nition of the loss, the
loss from impairment originally recognized can be reversed and is recorded in the current gain
and loss. However, the book value of such reversal shall not exceed the amortized cost as at the
date of reversal of such account receivable for which it is assumed not provision for impairment
was made.
9. Inventories
(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. Inventories are priced respectively
according to the weighted average (for FIYTA watch stocks), specific identification (for famous
brand watch stocks) and first in first out (for raw materials for FIYTA watches) at the time of
procurement and delivery.
(3) Recognition of the realizable net value of inventories and provision of reserve for price falling
57
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 daily activities. 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, 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.
The inventories are measured at the lower of cost and net realizable value on the balance sheet
day. Reserve for price falling of inventories is provided when the net realizable value is lower than
the cost.
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 cost and short lived articles and packing materials are amortized in lump sum at the time of
requisition.
10. Long-term equity investment
(1) Determination of investment cost
For long term equity investment formed from enterprise consolidation, such as the long term
equity investment obtained from consolidation of the enterprises under the same control, the
share of the book value of the owners’ equity in the parties consolidated as obtained on the date
of consolidation is taken as the initial investment cost. Through long term equity investment by
means of consolidation of enterprises not under the same control, the enterprise consolidation
costs include the sum of the assets paid by the purchaser, the liabilities incurred or undertaken,
and the fair value of the equity securities issued. The agency fees for audit, legal services,
appraisal and consulting services, etc. incurred in consolidation of enterprises and other relevant
administrative expenses incurred to the purchaser should be recorded in the current gain and loss
at the time of incurrence.
The other equity investment except the long term equity investment formed from enterprise
consolidation is initially measured based on the costs; the cost is determined based on the cash
payment actually paid by the Group, the price as specified in the investment contract or
agreement, etc. depending on the different ways of acquiring the long term equity investment.
Investment costs include the expenses, taxes and other necessary expenditures directly
58
connected with the acquisition of the long term equity investment.
(2) The Follow-up Measurement and Gain and Loss Recognition Method
For a long term equity investment which does not have common control over or significant
influence upon the investee and there is no quotation in the active market and the fair value
cannot be reliably measured, the Company adopts the cost method for calculation. The long term
investment which has common control over or significant influence upon the investee, the equity
method is used for calculation. The long term equity investment which does not control or
common control over or significant influence upon the investee while the fair value can be reliably
measured can be used as the financial asset available for sale in calculation.
In addition, for a long term equity investment in which the Company can exercise control over the
investee but does not have common control over or significant influence upon the it and there is
no quotation in the active market and the fair value cannot be reliably measured, the Company
adopts the cost method for calculation.
① Long term equity investment calculated based on the cost method
In calculation based on the cost method, the long term equity investment is priced based on the
initial investment costs, except the amount actually paid at the time when the investment is
acquired, or the cash dividend or profit already announced but not yet distributed involved in the
consideration, the current return on investment is recognized based on the amount of the cash
dividend or profit announced for distribution by the investee enjoyable by the Company as
investor.
② Long term equity investment calculated based on the equity method
In calculation based on the equity method, when the initial investment cost of the long term equity
investment is greater than the share of the fair value of the distinguishable net assets in the
investee enjoyable at the time of investment, the initial investment cost of the long term equity
investment shall not be adjusted. In case the initial cost of long term equity investment is smaller
than the fair value based share in the investee’s recognizable net assets enjoyable by the
Company, the difference shall be recorded in the current gain and loss and at the same time long
term equity investment cost shall be adjusted
If the equity method is used for calculation, the current investment gain/loss is the share of the net
gain/loss realized in the very year by the investee enjoyable or shareable. In confirming the share
of the net gain and loss enjoyable in the investee, the Group takes the fair value of various
recognizable assets of the investee at the time of obtaining the investment, and recognizes it after
adjustment of the net profit of investee according to the accounting policy of the Group and during
the fiscal period. The part of the inside transaction gain and loss unrealized between the Group,
the associates and joint ventures attributable to the Group is calculated based on the
shareholding proportion and is offset and the investment gain and loss are recognized on this
basis. However, the inside transaction loss unrealized incurred to the Group and the investee
shall not be offset if it belongs to the loss from impairment of the assets as assigned according to
the Enterprise Accounting Standards No. 8 – Impairment of Assets. For other comprehensive
income of the investeess, the book value of the long term equity investment is adjusted
correspondingly and is recognized as other comprehensive income and recorded in the capital
reserve.
In recognizing the net loss shareable incurred to the investee, the book value of the long term
equity investment and the other long term equity which substantially composes the net investment
in the investee is reduced to zero as the maximum. In addition, if the Group has the obligation for
assuming extra loss incurred to the investee, the predicted liability is recognized based on the
predicted obligation to be assumed and is recorded in the current investment loss. In case of the
net profit realized by the investee in the afterwards period, the Group shall restore the recognition
of the share of profit enjoyable after the amount enjoyable has made up for the unrecognized loss.
③ Acquisition of the minority equity
In preparation of the consolidated financial statements, the difference between the long term
59
equity investment newly increased by purchase of minority equity and the enjoyable share of a
subsidiary’s net assets continuously calculated commencing from the date of purchase (or date of
consolidation) based on the newly increased shareholding proportion is used to adjust the capital
reserve; in case the capital reserve is not enough for writing-down, the retained earnings is
adjusted.
(3) Basis for determining the joint control over and significant influence upon an investee
Control refers to that the Group is able to decide the financial and operating policy of another
enterprise, the power against which the Group is able to obtain interest from the operation
activities of that enterprise. Joint control over an investee refers to a joint control over some
economic activity according to the contract. It only exists when the important financial and
production operation decision in connection with the economic activity needs to be unanimously
approved by the investors with the control power. Significant influence upon an enterprise refers
to the power of participating in the decision making of the enterprise’s financial and operation
policies but that it cannot control or jointly control with other party the making of such policies. In
determining if to implement control over or exert significant influence upon an investee, the
potential voting elements, such as the current convertible debentures in the investee held by the
investor and other parties, the warranty available for implementation in the current period, can be
taken into consideration.
(4) Method for impairment testing and provision of reserve for impairment
On every balance sheet day, the Group checks the long term equity investment and makes sure if
there possibly exist any sign of impairment. In case there exists impairment in such assets, their
recoverable amount is estimated. In case the recoverable amount of the asset is lower than its
book value, provision for impairment of the asset is made based on its difference and is recorded
in the current gain and loss.
Loss from impairment of long term equity investment which once is confirmed shall not be
reversed in the afterwards fiscal periods.
11. Investment based real estate
Investment based real estate refers to the real estate held for the purpose of earning rental or
added value of the capital or both. It includes the housing, building, etc. already leased.
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 Group adopts the cost model to make follow-up measurement of the investment based real
estate and makes depreciation according to the policy of coincidence with housing and building.
For the detail about the impairment testing method and provision for the impairment of the
investment based real estate, refer to Note IV.16 “Impairment of Non-current Non-financial
Assets”.
12. Fixed assets
(1) Conditions for Recognition of Fixed Assets
Fixed assets refer to intangible assets held for the purpose of producing commodities, supplying
labor, lease or operation and management with service life exceeding over one fiscal year.
(2) Depreciation of different fixed assets
Fixed assets are initially measured based on the costs with the influence from the predicted
discarding expenses taken into consideration. Commencing from the next month after a fixed
asset has reached the predicted usable status, the average service life method is used to provide
depreciation within the service life. The service life, the predicted net residual value and annual
depreciation rate of various fixed assets are as follows:
60
20-35 years
5
Annual
depreciation
rate (%)
2.7-4.8
10 years
5-10
9-9.5
Motor vehicle
5 years
5
19
Electronic equipment
Other equipment
5 years
5
19
5 years
5
19
Types
Housing and buildings
Machines & equipment
Depreciation Life
(years)
Residual ratio
(%)
Predicted residual value refers to the amount the Group obtains from the disposal of the
asset less the disposal cost when it is assumed that the predicted service life of a fixed asset
expires and the fixed asset is the predicted status of termination of the service life.
(3) Method for testing the impairment of fixed assets and provision for impairment
For the detail about the impairment testing method and provision for the impairment of fixed
assets, refer to Note IV.16 “Impairment of Non-current Non-financial Assets”.
(4) Other Notes
The follow-up expenses in connection with fixed assets are recorded in the costs of fixed assets if
the economic benefit in connection with the fixed assets can highly probably flow into while the
costs can be reliably measured and the book value of the part replaced is terminated for
recognition. Other follow-up expenses are recorded in the current gain and loss at the time of
incurrence.
The income from disposal of fixed assets, including sale, assignment, discarding or damage, is
recorded in the current gain and loss after deduction of the book value and the relevant taxes.
The Group rechecks the service life, predicted net residual value and depreciation method of fixed
assets at least at the end of a year; in case any change takes place, it is taken as change in
accounting estimation.
13. Loan expenses
Loan expenses include the interest, amortization at discount or at premium and additional
expenses incurred by loans, the exchange difference incurred by foreign exchange loan as well
as the interest, amortization at discount or at premium and exchange difference incurred by
foreign exchange loans. For the loan expenses for purchase and construction or production of an
asset directly attributable to that in compliance with the capitalization conditions, capitalization
starts when the asset expenses have incurred, borrowing expenses have incurred, the purchase
or production activity necessary for the asset to reach the predicted usable or sellable status; The
remaining borrowing expenses are recognized in the very period of incurrence.
The interest cost of the special loan actually incurred in the current period is capitalized after
deduction of the interest income from the unapplied loan deposited with bank or return on the
investment achieved from temporary investment. For general borrowing, the capitalized amount is
determined based on the accumulated asset expenses exceeding the weighted average of the
asset expense of the special borrowing part times the capitalization rate of general borrowings as
occupied. The capitalization rate is determined according to the weighted average interest rate of
general borrowings.
During the capitalization period, the exchange difference of special borrowing in foreign currency
is all capitalized;
Assets in compliance with the capitalization conditions refer to fixed assets, investment based real
estate, inventories, etc. which can reach the predicted application status or status for sale through
a long term of purchase/construction or production activities.
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When the assets in compliance with capitalization conditions have experienced extraordinary
interruption in process of purchase/construction or production while the interruption time
successively exceeds three months, the capitalization of loan expenses suspend until the
purchase of asset or production activity restarts.
14. Intangible assets
(1) Intangible assets
Intangible asset refers to a non-monetary asset held or controlled by the Group with no physical
form recognizable.
Intangible assets are initially measured based on the cost. Expenses in connection with intangible
assets is recorded in the intangible asset cost if the relevant economic benefit may possibly flow
into the Group and its costs may be reliably measured. Other expenditures are recorded in the
current gain and loss at the time of incurrence.
The intangible assets with limited service life are amortized in average by stages by means of the
straight line method within the predicted service life commencing from the time of availability for
application with the original value less the predicted net residual value and the accumulated
amount of the reserve for impairment already provided. An intangible asset with indefinite service
life is not amortized.
At the end of a period, the service life of an intangible asset with limited service life and the
amortization method are rechecked. In case change takes place, it shall be handled as the
change of accounting estimate. In addition, the service life of and 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) Research and development expenses
Expenses for the Group’s internal research and development projects are divided into the
expenditure of the research stage and that for the development stage.
Expenses for the research stage is recorded in the current gain and loss at the time of incurrence.
The expenses at the development stage which can satisfy the following conditions at the same
time are recognized as intangible asset and that which cannot satisfy the following conditions are
recorded in the current gain and loss at the development stage.
① It is technically feasible to finish such intangible assets so as to make it useable or sellable;
② There is intention for fulfilling that intangible assets and application or sales;
③ The ways of intangible assets to produce economic benefit, including being able to prove that
there exists market for the products produced by using such intangible assets or there exists
market for intangible asset itself; in case intangible asset shall be used internally, it can be proved
useful.
④ There is sufficient support in terms of technology, financial resource and other resources so as
to fulfill the development of intangible asset and have the ability to use or sell such intangible
assets;
⑤ Expenses attributable to the development stage of such intangible assets can be reliably
measured.
In case it is impossible to distinguish the expenses at the research stage from that at the
development stage, the R & D expenses incurred shall all be recorded in the current gain and
loss.
62
(3) Method for testing the impairment of intangible assets and provision for impairment
For the detail about the impairment testing method and provision for the impairment of intangible
assets, refer to Note IV.16 “Impairment of Non-current Non-financial Assets”.
15. Long-term expenses to be apportioned
Long-term expenses to be apportioned refer to various expenses that have already incurred and
shall be borne in the current and future periods with the amortization term of over 1 year (with 1
year exclusive). Long term expenses to be apportioned are amortized based on the straight line
method during the predicted beneficial period and the amortization term is usually 2 – 5 years.
16. Impairment of Non-current Non-financial Assets
For the non-current non-financial assets, including fixed assets, intangible assets with limited
service life, investment based real estate measured based on the cost model, long term equity
investment in subsidiaries, joint ventures and associates, etc., the Group makes judgment on
whether there exists sign of impairment on the balance sheet day. If there does exist sign of
impairment, the recoverable amount is estimated and the impairment test is conducted. For the
goodwill, intangible assets with indefinite service life, the intangible assets which have not yet
reached the serviceable status, regardless whether there exists any sign of impairment,
impairment test is conducted 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 the higher of the net amount of the fair value of the assets
less the disposal expenses and the present value of the predicted future cash flow. 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
the buyer’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.
The loss from impairment shall not reverse the part whose value may be recovered in future once
the impairment of the aforesaid assets is recognized.
17. Predicted Liabilities
Predicted liabilities shall be recognized when the obligation in connection with the contingent
events complies with the following conditions: (1) such an obligation is a current one the Company
should assume; (2) Implementation of such obligation may possibly cause flow-out of economic
benefit ; (3) The amount involved in such obligation can be reliably measured.
On the balance sheet day, with consideration of the risks in connection with the contingent matters,
uncertainty, time value of currency, etc., the predicted liabilities are measured according to the
best estimated amount payable in implementation of the present obligations.
In case the determined liabilities payable should completely or partially be compensated by a third
party, while the amount of compensation can be basically confirmed receivable, it should be
individually recognized as assets. However, the amount of compensation as recognized should
63
not exceed the par value of the liabilities as predicted.
18. Revenue
(1) Sales of goods
Sales income is recognized when the major risk and remuneration involved in the ownership of
goods have been transferred to the buyer, with neither the successive management power
general in connection with the ownership retained nor effective control over the goods already
solve; the income amount may be reliably measured, the relevant economic benefit may flow into
the enterprise; the relevant costs incurred or to incur can be reliably measured.
(2) Income from labor services
The results of labor service transactions offered on the balance sheet date can be reliably
estimated, the labor service income is recognized based on the percentage of the work completed.
The completion progress of labor service transaction is determined based on the proportion of the
labor service already provided in the total labor service volume.
Reliable measurement of the result of the labor service transaction provided refers to that it can
satisfy at the same time: ① The amount of the income can be reliably measured; ②The
concerned economic benefit may highly possibly flow into the Company; ③ The completion of
the transaction can be reliably determined; ④ The costs incurred or to incur can be reliably
measured.
In case the result of a labor service transaction cannot be reliably measured, the labor service
income is recognized based on the labor cost which has incurred and is predicted to be
compensable and the labor service cost already incurred is taken as the current expenses. The
labor cost already incurred shall not be recognized as income if it is predicted to be impossible to
be compensated.
(3) Royalty Income
The income is recognized based on accrual basis according to the relevant contract or
agreement.
(4) Interest income
Interest income is determined according to the time the borrowers using the Group’s monetary
fund and the actual interest rate.
(5) Income from properties
The amount of income from lease of properties is determined on the lease date as specified in the
lease contract or agreement (rental-free period should be taken into consideration if there is
rental-free period) and the amount of rental and the income from the properties leased is
recognized when the concerned rental or the evidence of receipt has been received.
19. Government subsidies
Government subsidy refers to monetary asset or non-monetary asst obtained from the
government free of charge but does not include the capital invested by the government as the
Company’s owner. The government subsidy can be divided into the government subsidy in
connection with asset and government subsidy in connection with income.
The governmental subsidy is measured based on the amount received or receivable if it is
monetary asset. The government subsidy is measured based on the fair value if it is a
non-monetary asset; when the fair value cannot be obtained, it is measured based on the
nominated amount. The government subsidy measured based on the nominal amount is directly
recorded in the current gain and loss.
Asset related governmental subsidy is recognized as deferred income, is distributed in average
over the service life of the related assets and recorded in the current gain and loss. The
government subsidy in connection with income is recognized as deferred income if it is used for
compensating the Company’s relevant expenses or losses in the afterward term and is charged to
64
the current gain and loss during the recognition of the relevant expenses; or directly charged to
the current gain and loss if it is used for compensating the relevant expenses or losses already
incurred in the Company.
When the recognized government subsidy needs to be returned, if there exists the relevant
deferred income balance, the book balance of the deferred income should be written-down and
the excessive part is recorded in the current gain and loss; if there exists no relevant deferred gain
and loss, it is directly recorded in the current gain and loss.
20. Deferred income tax asset/deferred income tax liability
(1) Current income tax
The Company measures the current income tax liability or asset formed in the current period or
the previous period according to the predicted payable or reimbursed income tax amount
calculated according to the tax law. The current income tax cost is calculated based on the
amount of taxable income after adjustment of the pre-tax accounting profit in the report year
according to the tax law.
(2) Deferred income tax asset/deferred income tax liability
The difference between the book value of some asset and liability items and the tax base as well
as the provisional discrepancy arising from the difference between the book value of the tax base
items which has not been recognized as asset and liability but can be determined according to the
tax law and the tax base are recognized as deferred income tax asset and deferred income tax
liability by means of the balance sheet liability method.
For the provisional difference of payable taxes in connection with the initial recognition of goodwill
and in connection with the initial recognition of assets or liabilities arising from the transactions
which are neither enterprise consolidation and nor influence the accounting profit and taxable
income amount (or can be used to offset loss) at the time of incurrence, the pertinent deferred
income tax liability shall not be recognized. In addition, for the taxable provisional difference in
connection with investment in subsidiaries, associates and joint ventures, if the Group can control
the time of provisional difference reversal while such provisional difference may not be possibly
reversed in the foreseeable future, the pertinent deferred income tax liability shall not be
recognized either. Except the aforesaid exceptional case, the Group recognizes the deferred
income tax liability arising from the provisional difference of all other payable taxes.
For the offsetable provisional difference in connection with the initial recognition of the asset or
liability arising from the transaction which is neither enterprise consolidation nor may influence the
accounting profit and taxable income amount (or can be used to offset loss), the pertinent
deferred income tax asset shall not be recognized. In addition, for the offsetable provisional
difference in connection with investment in subsidiary, associate and joint venture, if the
provisional difference may not possibly be reservable in the foreseeable future or cannot be
possibly obtained and used for offsetting the taxable income amount of the provisional difference
in future, the pertinent deferred income tax asset shall not be recognized. Except the aforesaid
exceptional case, the Group recognizes the deferred income tax asset arising from the other
offsetable provisional difference within the limit of the taxable income amount which can be used
to offset the offsetable provisional difference.
For the offsetable loss and tax credit in the years after carry-forward, the pertinent deferred
income tax asset is recognized within the limit of the future taxable income amount whch may
possibly be used for offsetting the offsetable loss and tax credit.
On the balance sheet day, the deferred income tax asset and deferred income tax liability are
measured based on the applicable tax rate during the period of predicted recovery of such asset
or discharge of the liabilities according to the tax law.
On the balance sheet day, the book value of the deferred income tax asset is rechecked. In case it
is highly impossible to get enough taxable income amount to offset the interest of the deferred
income tax asset in the future period, the book value of the deferred income tax assets is deduced.
When it is highly possible to get enough taxable income amount, the deducted amount is
65
reversed.
(3) Income tax expenses
Income tax expense includes current income tax and deferred income tax.
Except the transactions which are recognized as the comprehensive income or directly recorded
in the owners’ equity and the mater related current income tax and deferred income tax which is
recorded in other comprehensive income or owners’ equity, as well as the book value of the
goodwill for adjustment of the deferred income tax arising from the enterprise consolidation, the
remaining current income tax and deferred income tax expenses or income are recorded in the
current gain and loss.
21. Lease
Financing lease is actually the lease in which all the risks and remuneration in connection with the
ownership of the asset has been transferred and whose ownership may be either eventually
transferred or possibly not transferred. Operating lease refers to the leases other than financing
lease. The Group’s leases refer to the operational lease.
(1) The Group 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 Group 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.
22. Emolument to Employees
The Group recognizes the accrued payroll as liability during the fiscal periods in which employees
are working for the Group.
The Group joins the social security program for employees established by the local government,
including the basic endowment insurance, medical insurance, housing provident fund and other
social security system; the corresponding expenses are recorded in the relevant asset cost or
current gain and loss at the time of incurrence.
In case the labor relation with an employee is terminated before the labor contract expires, or the
suggestion of compensation is proposed for the purpose of encouraging employees to accept the
lay-off with volunteer, if the Group has already prepared formal plan for terminating the labor
relation or proposed the suggestion of volunteer lay-off and is going to put it into practice while the
Group cannot unilaterally withdraw the plan of terminating the labor relation or suggestion of
lay-off, the predicted liability arising from the compensation for termination of the labor relation
with the employees is recognized and recorded in the current gain and loss.
The early retirement program is handled by using the same principle of the aforesaid lay-off
benefit. The Group records the emolument and paid to the employees of early retirement and their
social security premium from the date of stopping service to the Group to the date of regular
retirement in the current gain and loss (lay-off welfare) when they comply with the conditions for
recognizing the predicted liabilities.
23. Change in the Accounting Estimate
No change has taken place in accounting estimate in the report period.
24. Major Accounting Judgment and Estimation
66
In process of applying the accounting policy, due to the inherent uncertainty of the operating
activities, the Group needs to make judgment, estimation and assumption of the book value of the
items in the statements which cannot be accurately measured. These judgment, estimation and
assumption are made based on the past experience of the Group’s management with
consideration of other correlative factors. These judgment, estimation and assumption may
influence the reported amount of income, expenses, assets and liabilities and disclosure of the
contingent liabilities on the balance sheet day. However, the result which causes uncertainty of
these estimates may possibly result in significant adjustment which may influence the book
amount of the assets or liabilities in future.
The Group makes regular recheck of the aforesaid judgment, estimation and assumption on the
basis of continuous operation. In case the change of the accounting estate only influences the
very period of change, the amount influenced is recognized in the very period of change; in case
the change of the accounting estimate not only influences the very period of change but also the
future period, the amount influenced is recognized in the very period of change and the future
period.
On the balance sheet day, the important fields in which the Group needs to make judgment,
estimation and assumption on the amounts of the items in financial statements are as follows:
(1) Provision for bad debts
The Group calculates the loss from bad debt by allowance method according to the accounting
policy on accounts receivable. Impairment of accounts receivable is based on the recoverability of
the accounts receivable through appraisal. Determination of impairment of accounts receivable
demands the management’s judgment and estimation. The discrepancy between the actual
result and the previous estimation shall influence the provision or reversal of the book value of the
accounts receivable and reserve for bad debt receivable during the period of the estimated
change.
(2) Provision for Price Falling of the Inventories of Brand Watches
For distribution of famous brand watches with stock age exceeding three years, in the opinion of
the Group’s management their prices tend to rise, while the famous brand watches enjoy good
sales prospect in future. The Group’s management makes overall recheck of the realizable
value of such famous brand watches at the end of a fiscal period; in the opinion of the Group’s
management, even though the stock age of such famous brand watches has increase somewhat,
the value of the famous brand watches is still entirely recoverable. In case there is sign showing
that the realizable net value of such famous brand watches is lower than the book value, the
Group shall make adjustment during the occurrence of the relevant signs. As the impairment of
such famous brand watches demands the management to make judgment and estimation after
concrete evidence has been acquired and with consideration of such factors as the purpose of
holding the famous brand watches, the influence on the matters after the balance sheet day. The
discrepancy between the actual result and the originally estimated shall influence the provision or
reversal of the value of inventories and reserve for price falling of inventories during the changed
period.
In the opinion of the Group’s management, the provision for price falling of the aforesaid famous
brand watches and the recheck method are proper.
(3) Reserve for impairment of the non-financial non-current assets
On the balance sheet day, the Group judges whether there may possibly exist any sign of possible
impairment of the non-current assets other than financial assets. For the intangible assets with
uncertain service life, except the impairment test conducted each year, when there exists any sign
of impairment, impairment test is also conducted. For the non-current assets other than financial
assets, when there exists sign showing that its book amount is unrecoverable, impairment test is
conducted.
When the book value of assets or asset group is higher than the recoverable amount, i.e. the
higher of the net amount of the fair value less the disposal expenses and the present value of the
predicted future cash flow, it shows that impairment has incurred.
67
The net amount of the fair value less the disposal expenses is determined with reference to the
sales agreement price of the similar assets in fair transaction or the observable market price less
the incremental cost directly attributable to disposal of the assets.
In prediction of the present value of future cash flow, it is necessary to make significant judgment
on the output, sales price, the relevant operation costs of the asset (or asset group) and the used
discount rate in calculating the present value, etc. The Group may use the accessible relevant
information in estimating the recoverable amount, including the prediction of the relevant output,
sales price and relevant operation costs according to the reasonable and supportable
assumption.
The Group tests the goodwill to determine whether impairment takes place at least every year.
This demands prediction of the present value of the future cash flow of the assets or grouping of
asset groups with the goodwill distributed. When prediction is made on the present value of the
future cash flow, the Group needs to predict the cash flow produced by the future asset groups or
grouping of the asset groups; meanwhile proper discount rate is chosen to determine the present
value of future cash flow.
(4) Depreciation and Amortization
The Group provides depreciation and makes amortization of the investment based real estate,
fixed assets and intangible assets based on the straight line method within the service life with
their residual value taken into consideration. The Group rechecks the service life regularly to
determine the amount to be recorded in the depreciation and amortization expenses of each
report period. The service life is determined by the Group according to the past experience on the
similar assets with combination of the updating of the predicted technology. If great change has
taken place in the previous estimation, the depreciation and amortization expenses are adjusted
during the future period.
(5) Development expenses
In determining the capitalized amount, the Group’s management needs to make prediction of the
future cash flow of the relevant assets, applicable discount rate and assumption of the predicted
beneficial period.
(6) Asset of deferred income tax
Within the limit where there is possibly enough taxable profit available for offsetting the loss, the
Group recognizes the deferred income tax asset for all the tax loss not utilized. This demands the
Group’s management to use a lot of judgment to estimate the time when the future taxable profit
may take place and the amount and decide the amount of the deferred income tax asset
necessary to be determined with combination of taxation planning strategy.
(7) Income tax
In normal operating activities, there exists a certain uncertainty in final tax treatment and
calculation in partial transactions in the Group; whether partial items are necessary to be
approved by the tax collection authority for payment before tax, If there exists discrepancy
between the final certification result of these tax affairs and the initially estimated amount, such
discrepancy shall produce influence upon the income tax and deferred income tax of the very
period during the final certification.
(8) After-sale Warranty
The Group is liable for the quality warranty for the commodities sold out and responsible for
compensation for the quality damage arising from the quality defect of the goods, including
repairing, replacement, etc. The Group makes estimation of and provides corresponding reserve
for the after-sale quality repairing commitments offered to the customers for the sold and repairing
of the sold commodities. Such contingent matters have formed a present obligation while
implementation of such present obligation may possibly cause the economic benefit to flow out of
the Group; the Group recognizes the best estimate necessary to be paid in implementing the
present obligations for the contingent matters. On the contrary, when such matter has not yet
formed a present obligation, the Group does not need to make prediction. In process of making
68
judgment, the Group needs to consider the data of the Group’s recent repairing experience.
However, the recent repairing experience may not possibly reflect the futre repairing conditions.
Any increase or decrease of the reserve may all possibly influence the gain and loss of future
years.
(V) Taxes
1. Value-added tax
The Group is a general VAT payer and the taxable VAT is the balance of the current output VAT
less the offsetable input VAT and the output VAT rate is 17%.
2. Business Tax
The Company and its subsidiaries pay business tax at the rate of 5% of the housing rental income,
income from offering labor service and the income from use of the assigned assets.
3. Consumption tax
For the imported or self-made high-grade watches, the Company and its subsidiaries pay
consumption tax based on 20% of the taxation base.
4. City maintenance construction tax and education surcharge
The Company and its subsidiaries pay the city maintenance construction tax based on 1% or 7%
of the amount of turnover tax and pay the education surcharge based on 3%.
5. Corporate Income Tax
Income tax rate
Income tax rate of
The Company and its Subsidiaries
of the previous
the report year
year
The Company (Note ①) and (Note⑤)
24%
22%
24%
22%
15%
15%
24%
22%
FIYTA Hong Kong Limited (Note③)
16.5%
16.5%
68-Station Limited (Note ③)
16.5%
16.5%
LIANGYA (Note ③)
16.5%
16.5%
BAODING (Note ③)
16.5%
16.5%
Shenzhen FIYTA Science & Technology Co., Ltd. (FIYTA Science &
Technology) (Note ④)
25%
25%
Shenzhen Xiangji Trade Co., Ltd. (Xiangji Trade) (Note ④)
25%
25%
Xi’an Chengheng Industrial Co., Ltd. (Xi’an Chengheng) (Note ④)
25%
25%
Beijing Henglianda Timepieces Co., Ltd. (Henglianda) (Note ④)
25%
25%
Kunming Lishan Department Store Co., Ltd. (Lishan Department
Store) (Note ④)
25%
25%
Harbin World Watches Distribution Co., Ltd. (Harbin Co.) (Note ④)
25%
25%
Shenzhen Harmony Culture Communication Co., Ltd. (Culture Co.)
(Note ④)
25%
25%
Shenzhen Harmony World Watches Center Co., Ltd. (Harmony)
(Note ①)
Shenzhen FIYTA Sophisticated Timepieces Manufacture Co., Ltd.
(the Manufacture Co.) (Note②) (Note ⑤)
Shenzhen World Watches Center Co., Ltd. (World Watches Center)
(Note ①)
69
Emile Chouriet (Shenzhen) Co., Ltd. (Emile Chouriet
(Shenzhen) (Note ④)
25%
25%
Montres Chouriet (Swiss Company) Note ⑥)
30%
30%
16.5%
-
25%
-
Harmony World Watches International Limited (World Watches
International) (Not ③)
FIYTA Sales Co., Ltd. (Sales Co.) (Note ④)
Note ① : In accordance with the Circular of the State Council on Implementation of the
Transitional Preferential Policy of Enterprise Income Tax GUO FA (2007) No. 39 promulgated by
the State Council on December 26, 2007, the enterprises previously enjoying the enterprise
income tax at rate of 15% would implement the rate of 24% in 2011. The place of registration of
such companies’ is Shenzhen and the applicable rate for the current year is 24%.
Note ②: In accordance with the Notice of Nanshan District Local Taxation Bureau, Shenzhen on
Registration for Tax Exemption SHEN DI SHUI JIAN NAN BEI GAO ZI [2009] No. 091026,
commencing from January 1, 2009, the Company would enjoy low rate taxation policy for hi-tech
enterprises necessary of key support from the central government and the enterprise income tax
rate is 15% for a term from January 2009 to December 2011.
Note ③: The company’s place of registration is Hong Kong and it applies the local profit tax of
Hong Kong. In the report year, the applicable tax rate is 16.50%.
Note ④ In accordance with the Enterprise Income Tax Law of the People’s Republic of China,
the tax rate of the income tax on resident enterprises is 25%.
Note ⑤: In accordance with the Circular of the State Administration of Taxation on Issuing the
Measures on Administration of Pre-tax Deduction of the Enterprise Research and Development
Budget (Trial) GUO SHUI FA [2008] No. 116 on December 10, 2008, the Company’s and the
Manufacture Company’s research and development budget for developing new technology, new
products and new process may enjoy 50% additional deduction as research and development
budget in addition to deduction based on actual incurrence according to the provisions concerned
if such budget has not formed intangible asset which should be charged to the current gain and
loss.
Note ⑥: The registration place of the Swiss Company is Switzerland. Based on the applicable tax
rate of the registration place, the tax rate is 30.00%.
6. Real estate tax
According to Article 5 of the Circular of Shenzhen Local Tax Bureau on Printing and Issuing the
Questions and Answers on a Number of Policies on Use of Real Estate Tax and Vehicle and
Vessel Use Tax, a production operator should pay real estate tax based on 70% of the cost of the
real estate at the tax rate of 1.2%. For the properties located in Shenzhen, the Group pays the
real estate tax according to the tax rate as specified in the aforesaid circular. For the properties
located in other cities, the real estate tax is paid based on the rates specified by the respective
local authorities.
VI. Enterprise Consolidation and Consolidated Financial Statements
1. Subsidiaries
(1) Subsidiaries Acquired through Establishment or Investment
70
in CNY 10,000
Subsidiaries
Harmony
Business
Nature
Subsidiary type
Place of
Registration
Equity-controlled
Shenzhen
Commerce
60,000
(CNY)
Shenzhen
Manufacture
1,000
(CNY)
Equity-controlled
Manufacture Co.
Registered
Capital
World Watches Center
Equity-controlled
Shenzhen
Commerce
280
(CNY)
FIYTA Hong Kong Limited
Equity-controlled
Hong Kong
Commerce
2,000
(HKD)
68-Station Limited
Equity-controlled
Hong Kong
Commerce
380
(HKD)
Xi’an Chengheng
Equity-controlled
Xi’an
commerce,
catering,
recreation
Harbin Co.
Equity-controlled
Harbin
Commerce
50
(CNY)
Henglianda
Equity-controlled
Beijing
Commerce
3,000
(CNY)
1,000
(CNY)
FIYTA Science & Technology
Equity-controlled
Shenzhen
Manufacture
1,000
(CNY)
Trade Co.
Equity-controlled
Shenzhen
Commerce
500
(CNY)
Cultural Co. (Note ②)
Equity-controlled
Shenzhen
Commerce
50
(CNY)
Business Scope
Purchase and sales of watches
and spares and parts, repairing
service
Producing various clocks and
watches, movements, spares
and parts, sophisticated
timepieces, and repairing
High grade clocks and watches,
glasses, ornaments, gifts,
general merchandise and
handicrafts (excluding gold and
silver jewelry
Trade and investment
sales of watches, domestic trade
Domestic trade (except the
business
under monopoly),
timepieces sales, repairing and
after-sale
service,
hotel
management,
property
management,
real
estate
development,
real
estate
agency,
property
lease,
accommodation,
catering
service,
teahouse
service,
pastries processing and sales
Purchase and sales of
timepieces and parts; timepiece
repairing
Sales of timepieces, accessories
and repairing service
R&D, production and sales of
timepieces, production,
machining, sales and technical
development of sophisticated
parts.
Sales of clocks and watches,
gifts, relevant information
consulting and other domestic
trade
Cultural activity planning,
advertising services
71
Balance of other
items which
substantially
composes net
investment in the
subsidiary
Enterprise
type
Legal
representative
Company
with limited
liability
Xu Dongsheng
279313935
60,000(CNY)
-
Company
with limited
liability
Xu Dongsheng
715210802
1,000(CNY)
-
Company
with limited
liability
Fang Juan
192236228
140(CNY)
-
Lu Bingqiang:
37954781
2,000
(HKD)
-
Xu Liang
50994724
300(HKD)
-
Xu Dongsheng
668658862X
1,000(CNY)
-
Lu Bingqiang:
127592103
50(CNY)
-
Zhang Yuping
775466877
1,500(CNY)
-
Company
with limited
liability
Xu Dongsheng
69396758X
1,000(CNY)
-
Company
with limited
liability
Xu Dongsheng
697108950
500(CNY)
-
Company
with limited
liability
Fang Juan
562782024
50(CNY)
-
company with
limited
liability
company with
limited
liability
Company
with limited
liability
Company
with limited
liability
Company
with limited
liability
Organization
code
Capital
actually
contributed
at year end
Emile Chouriet (Shenzhen)
(Note ③)
Equity-controlled
Shenzhen
Commerce
500
(HKD)
Wholesale, import and export of
watches, watch spares and
parts, jewelry, ornaments and
the supplementary business;
after-sale repairing service of
watches.
World Watches International
(Note ②)
Equity-controlled
Shenzhen
Commerce
1000
(HKD)
Retail and repairing services
Company
with limited
liability
Fang Juan
5000
(CNY)
Design, R & D, sales of various
watches, timekeeping
instruments and spares and
parts, sales of jewelry,
ornaments, (except the items
forbidden by the law,
administrative regulations, the
decisions of the State Council;
the restrictive items are subject
to the permit)
Company
with limited
liability
Xu Dongsheng
Sales Co. (Note ③)
Equity-controlled
Shenzhen
Commerce
72
Company
with limited
liability
Lu Bingqiang:
550312818
500(HKD)
532891780001
1104
1000(HKD)
574768692
5000(CNY)
-
(continued)
In CNY 10,000
Amount in minority
Balance of the owner’s equity of
shareholders’
the parent company offsetting
Are the
equity used to
Minority
the loss shared by minority
statements
write-down
shareholder
shareholders in the report
Notes
consolidated
minority
s’ equity
period exceeding the share
(Y/N)
shareholders’ gain
enjoyed in the owner’s equity at
and loss
year beginning
Shareholding
Proportion (%)
Voting power
proportion (%)
HARMONY
100.00
100.00
Yes
-
-
-
Manufacture Co.
100.00
100.00
Yes
-
-
-
-
50.00
50.00
Yes
140.00
-
-
-
FIYTA Hong Kong Limited
100.00
100.00
Yes
-
-
-
-
68-Station Limited
60.00
60.00
Yes
175.55
-
-
-
Xi’an Chengheng Co.
100.00
100.00
Yes
-
-
-
-
Harbin Co.
100.00
100.00
Yes
-
-
-
-
Henglianda
100.00
100.00
Yes
-
-
-
FIYTA Science & Technology
100.00
100.00
Yes
-
-
-
-
Trade Co.
100.00
100.00
Yes
-
-
-
-
Cultural Co.
100.00
100.00
Yes
-
-
-
-
100.00
100.00
Yes
-
-
-
-
①)
100.00
100.00
Yes
Sales Co. (Note ②)
100.00
100.00
Yes
Subsidiaries
World Watches Center (Note ①)
World Watches International (Note
Note ③
Note④
Note ①: HARMONY World Watches International Limited, a subsidiary of Harmony, one of the Company’s subsidiaries, was incorporated in May 2011 with
capital contribution of HKD 10 million.
Note ②: FIYTA Sales Co., Ltd., one of the Company’s subsidiaries, was incorporated in May 2011 with capital contribution of CNY 50 million and operation
term from May 3, 2011 to May 3, 2061.
73
Note ③: In the report period, the Company acquired 0.5% equity in AVIC International Shenzhen Company Limited, a minority shareholder of Harmony, one
of the Company’s subsdiaries and paid equity acquisition consideration amounting to CNY 2.8072 million. Ended the report period, the Company held 100%
equity in Harmony, one of the Company’s subsidiaries;
Note ④: In the report period, Harmony, one of the Company’s subsidiaries, acquired 50% equity in Beijing Hengdeli Watch Co., Ltd., a shareholder of
Henglianda, one of the Company’s subsidiaries and paid equity acquisition consideration amounting to CNY 16.3 million. Ended the report period, Harmony
held 100% equity in Henglianda.
74
(2) Subsidiaries acquired through consolidation of an enterprise not under the same
control
In CNY 10,000
Balance of other
Place of
Subsidiary
Subsidiaries
items which
业务性质 Registere
Legal
Capital actually
Busines Enterpri
Registratio
Business
n
nature
d capital
type
Organization
representativ
substantially
contributed at
s Scope se type
code
e
composes net
year end
investment in the
subsidiary
Domes
tic
trade,
compa
Lishan
Equity-contr
Department
Commer
500(CNY
materi
ny with
ce
)
als
limited
supply
liability
Kunming
olled
Lu Wanjun
77552086-1
120(CNY)
-
-
-
Store
and
sales
Produc
tion,
manuf
acture
Swiss
Equity-contr
Switzerlan
Commer
and
compa
sales
ny with
of
limited
Emile
liability
25(CHF)
Company
olled
d
ce
Deper Jean
-
Chouri
et
watche
s
(continued)
in CNY 10,000
Balance of the owner’s
equity of the parent
Amount in minority
shareholders’ equity
Are the
Minority
Shareholding Voting power statements
Subsidiaries
shareholders’
Proportion (%)proportion (%) consolidated
company offsetting the
loss shared by minority
used to write-down
shareholders
in the
Notes
minority
equity
(Y/N)
shareholders’ gain
report period exceeding
the share enjoyed in the
and loss
owner’s equity at year
beginning
Lishan Department
100.00
100.00
Yes
-
Store
75
-
-
-
Swiss Company
100.00
100.00
Yes
-
-
-
-
2. Operator with the control power formed by special purpose entity
According to the equity trust agreement concluded between 68-Station Limited, one of
FIYTA Hong Kong’s subsidiaries and the trustee of LIANGYA and BAODING, on
December 10, 2009, 68-Station, as the trustor, holds the right to earnings of the shares,
equity, and the relevant rights of LIANGYA and BAODING, and the contractual trustee
agreed to assign their rights at any time according to the trustor’s instructions. 68-Station
thus held the control power over LIANGYA and BAODING which were therefore put in the
consolidation scope of 68-Station.
LIANGYA and BAODING are the suppliers of the Group’s fashion brand watches. The
major business dealings between LIANGYA and BAODING, the special purpose entities
included in the consolidation scope and the Company and the principal assets, liabilities of
LIANGYA and BAODING in the consolidated statements and their year end balance are
as follows:
In CNY
Items
Major business dealings with
the Company
Year end balance of the major
assets and liabilities recognized in
the consolidated statements
June, 2011:
Liangya
Purchase of fashion brand
watches
Current assets
1,715.00
Current liabilities
30,600.00
Net assets
-28,885.00
End of 2010:
LIANGYA
watches
Current assets
7,585.77
Current liabilities
26,037.54
Net assets
-18,451.77
(continued)
In
CNY
Items
Major business dealings with
the Company
Year end balance of the major
assets and liabilities recognized in
the consolidated statements
June, 2011:
BAODING
watches
477,608.42
Current assets
103,740.00
Non-current assets
334,081.84
Current liabilities
247,266.58
Net assets
477,608.42
End of 2010:
76
BAODING
watches
Current assets
1,341,473.46
Non-current assets
88,272.37
Current liabilities
1,282,385.69
Net assets
147,360.14
3. Note to the change of the consolidation scope
As stated in Note VI.1, in the report year, the Group increased the consolidation scope in
the report period correspondingly due to new establishment of FIYTA Sales Co., Ltd. and
HARMONY World Watches International Limited.
4. Subsidiaries newly listed in the consolidation scope in the report period
Description
HARMONY
World
Net profit in the report
Net asset at year end
Watches
International Limited
FIYTA Sales Co., Ltd.
year
8,316,000
-
50,000,000
-
5. Exchange rates of the major items of the statements of overseas operation entities
Assets and Liabilities
Items
FIYTA Hong Kong
Limited
Montres Chouriet SA,
Switzerland
June 30, 2011
December 31, 2010
HKD 1 = CNY0.8316
HKD 1 = CNY0.8509
S.Fr. 1 = CNY 7.7743
S.FR. 1 = CNY 7.0562
Revenue, Costs and Cash Flow
Items
FIYTA Hong Kong
Limited
Montres Chouriet SA,
Switzerland
2010
HKD 1 = CNY0.8487
HKD 1 = CNY0.8657
S.Fr. 1 = CNY 7.2929
S.Fr. 1 = CNY 6.8115
Note: 68-Station is one of the subsidiaries of FIYTA Hong Kong. BAODING and LIANGYA
are the operation entities under control of FIYTA Hong Kong. Their exchange rates and
method are identical to that of FIYTA Hong Kong.
VII. Notes to items in the consolidated financial statements
In the following notes (including the notes to the major items of the parent company’s
financial statements), year beginning refers to December 31, 2010 and the end of the
report period refers to June 30, 2011 unless there is otherwise notice. The report period
refers to January - June, 2011 and the same period of the previous year refers to January
– June, 2010.
1. Monetary funds
Items
End of the report period
Year beginning
77
Amount in
foreign
currency
Convers
ion rate
Amount in
Conver
foreign
sion
currency
rate
Amount in CNY
Amount in
CNY
Cash in stock:
- CNY
1.0000
2,401,589.03
- USD
6.4716
313.14
- HKD
- Euro
- GBP
108.09
- S.Fr.
3,722.52
9.3612
2,016.86
261,223.99
306.00
6.6227
2,026.54
1,476.66
0.8509
1,256.49
3.90
8.8065
34.34
18,880.25
10.3986
2,681.82
-
2,026.54
0.8316
4,476.33
-
2,401,589.03
110.00
1,124.00
10.218
2
7.7743
20,849.31
2,454.05
7.0562
1,124.00
17,316.03
Bank deposit:
- CNY
281,434,220.9
3
1.0000
281,434,220.9
3
-
-
- USD
146,482.34
6.4716
947,975.12
125,038.69
6.6227
828,093.73
- HKD
9,956,910.11
0.8316
8,280,166.45
0.8509
6,148,857.42
- S.Fr.
653,904.66
7.7743
5,083,651.00
40,091.70
7.0562
282,895.00
179,006.92
-
-
65,245.92
7,226,436.4
4
605,847,744.0
6
Other
Monetary
Funds:
- CNY
179,006.92
298,373,212.0
7
Total
613,455,817.5
2
2. Accounts receivable
(1) Presented based on types of accounts receivable
Categories
Book Balance
Reserve for bad debt
Proportion
Amount
Accounts receivable with significant
single amount and provision of bad
debt reserve on individual basis
(%)
10,988,318.4
9
Accounts receivable for which bad
debt reserve has been provided
78
Proportion
Amount
3.87
10,988,318.49
(%)
100.00
based on the grouping
Combined
based
on
the
72,880,543.0
6
accounting age
Grouping
of
the
designated
42
48
receivable
1.68
10.62
30,114,190.99
100.00
100.00
45,186,156.30
15.93
85.51
with
and
30,114,190.9
provision of bad debt reserve on
9
single
4,083,646.82
59.81
242,541,487.
Sub-total of Groupings
insignificant
5.60
169,660,944.
accounts
Accounts
4,083,646.82
25.69
amount
individual basis
283,643,996.
Total
96
(continued)
Year beginning
Book Balance
Categories
Proportion
Amount
(%)
10,988,318.4
9
Proportion
Amount
(%)
4.97
10,988,318.49
100.00
23.23
4,083,646.82
7.95
81.41
4,083,646.82
2.27
13.62
30,114,190.99
100.00
100.00
45,186,156.30
20.44
based on the grouping
Grouping
based
on
the
Grouping
51,348,742.2
3
accounting age
of
the
designated
128,631,104.
37
accounts
179,979,846.
Sub-total of groupings
Accounts
60
receivable
with
and
30,114,190.9
9
insignificant
single
58.18
amount
individual basis
238,457,840.
Total
66
(2) Presented based on age of accounts receivable
Items
Amount
Proportion (%)
79
Year beginning
Amount
Proportion (%)
Within 1 year
240,362,003.86
1 to 2 years
426,479.18
2 to 3 years
240,195.77
Over 3 years
84.74
0.15
80.41
429,855.42
0.19
10,723.48
0.01
42,866,425.38
19.39
221,082,356.08
100.00
0.08
42,615,318.15
Total
177,775,351.80
15.02
283,643,996.96
100.00
(3) Provision for bad debt
① Provision for bad debt of the accounts receivable with significant single amount and
provision of bad debt reserve on individual basis
Description of accounts receivable
Book amount
Beijing Urban/Rural Trade Center
Co., Ltd.
Qingdao Handry Timepieces,
Glasses and Jewelry Co.
Timepieces and Sewing Machine
Reserve for bad
Provision
debt
proportion
2,033,710.15
2,033,710.15
100.00
1,298,215.01
1,298,215.01
100.00
982,604.03
982,604.03
100.00
890,387.77
890,387.77
100.00
Siping No. 1 Department Store
823,302.04
823,302.04
100.00
Anshan Timepieces and
807,815.02
807,815.02
100.00
Wholesale Station of Yingkou
Jilin
Timepieces
and Photographic
General
Merchandise
Co.
Paraphernalia Wholesale Co.
Photographic Equipment Co.
Customers to be identified
Total
4,152,284.47
4,152,284.47
10,988,318.49
10,988,318.49
100.00
Reasons
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
② Accounts receivable for which bad debt reserve has been provided based on the
grouping
The accounts receivable for which the bad debt reserve is provided based on the age
analysis:
Age
Book Balance
Amount
Within 1
year
70,449,952.21
Proportion
(%)
96.66
Year beginning
Reserve for
bad debt
2,447,630.6
2
80
Book Balance
Amount
49,155,629.05
Proportion
(%)
95.73
Reserve for
bad debt
2,447,630.62
1 to 2
426,479.18
0.59
43,130.16
418,473.80
0.81
43,130.16
240,195.77
0.33
5,361.74
10,723.48
0.02
5,361.74
1,763,915.90
2.42
1,763,915.90
3.44
1,587,524.30
72,880,543.06
100.00
51,348,742.23
100.00
4,083,646.82
years
2 to 3
years
Over 3
years
Total
1,587,524.3
0
4,083,646.8
2
Note: No reserve for bad debt has been provided for CNY 169,660,944.42 of the accounts
receivable at year end (amount in the same period of the previous year: CNY
128,631,104.37) as described in Note IV. 8.
③ Accounts receivable with insignificant single amount and provision of bad debt reserve
on individual basis
Description of
accounts
receivable
Doubtful
accounts/bad debt
Book Balance
Proportion (%)
30,114,190.99
100.00
Reserve for
bad debt
30,114,190.99
Provision reason
Unrecoverable
For the accounts receivable for which there is obvious sign showing that the customer
obliged for repayment is unable to implement the obligation with the single amount not
exceeding CNY 800,000.00, the Group takes that there exists big risk in recovering
the account receivable from such a customer and provides reserve for bad debt by
100%.
(4) In the report period, there is no account receivable due from the shareholder
holding over 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(5) Top Five Debtors of the Accounts Receivable
Proportion in the
Company names
Relationship
with the Group
Amount
Years
total of the
accounts
receivable(%)
Shenzhen China
Resource Co., Ltd.
(Payment with credit
Non-Related
Party
6,827,950.99
Within 1
year
2.86
card at Mixc Shop)
Xi’am Golden Eagle
International Shopping
Center Co., Ltd.
Shanxi International
Non-Related
Party
Non-Related
Trade Center Co., Ltd.
Party
Fuzhou Grand Ocean
Non-Related
4,328,436.83
3,886,026.85
3,596,387.14
81
Within 1
year
Within 1
year
Within 1
1.82
1.63
1.51
Retail Co., Ltd.
year
Party
Hunan Hepingtang
Non-Related
Industrial Co., Ltd.
Party
Within 1
3,420,835.65
1.43
year
22,059,637.46
Total
9.25
(6) Accounts due from related parties
For the detail, refer to Note VIII.6 Accounts due to and from related parties
(7) Accounts receivable in foreign currency are presented in the original currency and the
exchange rate
Items
Year beginning
Exchan
Foreign
Exchan
currency
ge rate
Foreign currency
ge rate
CNY
USD
44,913.38
6.4716
290,661.43
28,229.20
6.6227
HKD
274,930.42
0.8316
228,632.14
1,694,573.47
0.8509
S.Fr.
13,145.00
7.7655
102,077.50
39,132.00
7.0562
CNY
186,953.52
1,441,912.5
7
276,123.22
3. Advances to Suppliers
（1） (1) Advances to suppliers presented based on age
Age
Proportion
Amount
Within 1 year
Year beginning
Proportion
Amount
(%)
(%)
24,747,630.36
99.87
35,747,261.28
97.55
1 to 2 years
32,160.00
0.13
716,932.15
1.96
2 to 3 years
0.00
-
-
-
Over 3 years
0.00
-
180,060.00
0.49
24,779,790.36
100.00
36,644,253.43
100.00
Total
(2) Top Five Receivers of Advance Payment
Company names
Relationship
with the Group
Amount
82
Time of
Reason of
prepayment
unsettlement
Shenzhen
Borui
Trade Co., Ltd.
Dongguan
Junyi
Precision Hardware
Products Co., Ltd.
SAN
SUN
INDUSTRIAL CO.,
LTD.
Shenzhen Youpin
Decoration
Engineering
Co.,
Ltd.
Shanghai Dongyi
Exhibition Service
Co., Ltd.
Non-Related
Party
5,879,998.76
Within 1 year
Goods not
received
Non-Related
Party
5,047,034.76
Within 1 year
Goods not
received
Non-Related
Party
3,326,400.00
Within 1 year
Prepayment for
accessories
Non-Related
Party
1,922,100.00
Within 1 year
Prepayment for
refurbishment
Non-Related
Party
1,238,495.79
Within 1 year
Prepayment for
refurbishment
Total
17,414,029.31
(3) In the report period, there was no advance payment paid to the shareholder
(4) Advance payments in foreign currency are presented in the original currency
and at exchange rate.
Items
HKD
Year beginning
Exchan
Foreign
Exchan
Foreign currency
ge rate
CNY
currency
ge rate
CNY
5,136,020.00
0.8316
4,271,114.23
9,583,285.48
0.8509
8,154,417.6
3,665.00
7.0562
1
25,860.97
S.Fr.
4. Other receivables
(1) Other receivables presented based on categories
Categories
Book Balance
Proportion
Amount
Proportion
(%)
Amount
(%)
Other receivables with significant
-
-
-
-
-
-
-
-
21,508,097.34
61.79
4,465,791.17
20.76
Other receivables for which bad debt
reserve has been provided based on
grouping
Grouping based on the accounting
age
83
Grouping of the designated accounts
13,141,452.66
37.75
34,649,550.00
99.55
4,465,791.17
12.89
156,020.47
0.45
156,020.47
100.00
34,805,570.47
100.00
4,621,811.64
13.28
Other receivables with insignificant
Total
(continued)
Year beginning
Book Balance
Categories
Proportion
Amount
Proportion
(%)
Amount
(%)
-
-
-
-
-
-
-
61.94
4,465,791.17
22.52
99.51
4,465,791.17
14.02
0.49
156,020.47
100.00
100.00
4,621,811.64
14.44
grouping
19,829,774.4
7
age
12,026,644.8
37.57
2
31,856,419.2
9
156,020.47
32,012,439.7
Total
6
(2) Other receivables presented based on ages
Items
Within
Amount
1
year
1
to
2
years
2
to
3
years
Over
years
Total
3
Year beginning
Proportion (%)
Amount
Proportion (%)
21,058,359.0
24,442,171.40
70.22
1,216,271.96
3.49
5,171,256.90
16.15
4,124,803.86
11.86
1,586,857.16
4.96
5,022,323.25
14.43
4,195,966.70
13.11
34,805,570.47
100.00
84
0
32,012,439.7
6
65.78
100.00
① Other receivables for which bad debt reserve has been provided based on grouping
Other receivables for which the bad debt reserve is provided based on the age analysis:
Book Balance
Age
Proportion
Amount
Within 1
Year beginning
Book Balance
Reserve for
bad debt
(%)
Amount
14,133,290.32
65.71
1 to 2 years
2,425,362.77
11.28
65,648.36
2 to 3 years
1,024,573.19
4.76
3,924,871.06
18.25
21,508,097.34
100.00
year
Over 3
years
Total
Proportion
(%)
707,635.48 13,608,039.14
Reserve for
bad debt
68.62
707635.48
1,951,845.20
9.84
65648.36
118,779.60
658,162.40
3.32
118779.60
3,573,727.73
3,611,727.73
18.22
3,573,727.73
4,465,791.17 19,829,774.47
100.00
4,465,791.17
Note: No reserve for bad debt has been provided for CNY 13,141,452.66 of other
receivable at year end (amount in the same period of the previous year: CNY
12,026,644.82) as described in Note IV. 8.
② Other receivables with insignificant single amount and provision of bad debt reserve on
individual basis at year end
Other receivables
Book Balance
Proportion (%)
Reserve for bad
debt
Provision reason
Reserve for
individual
156,020.47
employees of
100.00
156,020.47
Unrecoverable
service termination
For the other receivables in connection with the reserve for individual employees of
service termination, none of single amounts exceeds CNY 500,000.00. However, such
accounts are unrecoverable due to those employees leaving service, the reserve for
bad debt is provided based on 100%.
(4) In the report period, there was no other receivables due from the shareholder
(5) Top Five Debtors of the Other Receivables
Proportion
Relationship
Company names
with the
Amount
Years
Group
Shenzhen
Yuda
in
the total of the
other
receivables (%)
Non-Related
Within 1
85
11.33
Sophisticated
Party
3,942,000.00
year
Machinery Co., Ltd.
Shenzhen New Longtai
Non-Related
Industrial Co. Ltd.
Shenzhen
Over 3
Party
1,573,876.89
4.52
years
China
Resource
Co.,
(Payment
with
Ltd.
Non-Related
credit
Within 1
Party
1,569,020.00
4.51
year
card at Mixc Shop)
Shenzhen
Watch
&
Non-Related
Clock Association
Shangyu
Within 1
Party
BuEr
Precision Machine Co.,
1,565,112.69
Non-Related
Within 1
Party
Ltd.
4.50
year
1,408,500.00
Total
4.05
year
28.90
10,058,509.58
(7) Other receivables in foreign currency are presented in the original currency and
exchange rate
Items
S.Fr.
Year beginning
Amount in
Exchan
Conversion in
foreign
currency
583,682.96
ge rate
7.7655
CNY
4,532,590.0
0
356,090.01
HKD
428,198.67
0.8316
Amount in
Exchan
Conversion
foreign
233,056.00
currency
ge
rate
7.0562
in CNY
1,644,489.7
846,168.10
0.8509
5
720,004.44
5. Inventories
(1) Classification of Inventories
Items
Provision for price
Book Balance
falling
Book value
Raw materials
82,135,113.25
22,429,279.11
59,705,834.14
Products in process
13,594,755.14
-
13,594,755.14
1,225,366,771.62
14,578,748.24
1,210,788,023.38
1,321,096,640.01
37,008,027.35
1,284,088,612.66
Commodities in stock
(Note)
Total
(continued)
86
Year beginning
Items
Provision for price
Book Balance
Book value
falling
Raw materials
75,456,394.56
20,429,279.11
55,027,115.45
Products in process
13,299,075.48
-
13,299,075.48
994,388,732.16
14,322,297.39
980,066,434.77
1,083,144,202.20
34,751,576.50
1,048,392,625.70
Commodities in
stock
Total
Note: The balance of the Group’s famous brand watches in stock with age exceeding
three years at year end was CNY 106,293,453.75, taking 8.67% of the balance of the
famous brand watches at year end; the balance of the Group’s famous brand watches in
stock with age exceeding three years at year beginning was CNY 76,417,873.20, taking
8.59% of the balance of the famous brand watches at year end.
(2) Change of reserve for price falling of inventories
Provision in
Items
Year beginning
Decrease in the report year
the report
Amount of
Amount
year
reversal
written off
End of the report
period
Raw materials
20,429,279.11
2,000,000.00
-
-
22,429,279.11
Commodities in stock
14,322,297.39
256,450.85
-
-
14,578,748.24
Total
34,751,576.50
2,256,450.85
-
-
37,008,027.35
(3) There were no inventories used as collateral for debt at year end.
6. Other current assets
Items
Rentals
Description
Rental for shops
Others
Total
End of the
report period
Year beginning
3,525,920.98
3,315,176.10
3,117,465.42
631,357.04
6,643,386.40
3,946,533.14
(1) Long-term equity investment classification
Items
Year
beginning
87
Increase in
the report
year
Decreas
e in the
End of the
report
report period
year
Investment in associates
Other equity investment
Less: Reserve for impairment of
long-term equity investments
Total
48,985.4
1,847,928.1
8
7
-
-
385,000.00
300,000.00
-
-
300,000.00
1,981,913.65
0.00
48,985.4
1,932,928.1
8
7
1,896,913.65
-
385,000.00
(2) Statement of Long Term Equity Investment
Accountin
Investees
g method
Shenzhen Research Institute of
Northwest China Polytechnic
University
Xi’an Tangcheng Joint Stock
method
Cost
method
Co., Ltd.
Cost
Shenzhen CATIC Culture
Transmit
Equity
method
Co., Ltd.
Investm
Year
Increase/D
End of the
ent cost
beginning
ecrease
report period
1,350,000.00
1,896,913.65
-48,985.48
1,847,928.17
85,000.00
85,000.00
-
85,000.00
300,000.00
300,000.00
-
300,000.00
2,281,913.65
-48,985.48
2,232,928.17
Total
(continued)
Holding
proporton
of the
Investees
shares in
the
investees
(%)
Holding
proporton of
inconsistence of
the
holding proportion
vote-bearing
Cash
impairment
dividend in
of the shares in the nt reserve in the report
the report
investees with
investees
voting power
Research
Institute of
45.00
Provision for
shares in the
Shenzhen
Northwest
Note to
50.00
China
Impairme
year
Equity
distribution
based
on
50%
proportion
according
year
to
the
-
-
-
-
-
-
-
-
-
-
agreement of the
Polytechnic
shareholders
University
Xi’an
Tangcheng
Joint Stock
0.10
0.10
-
15.00
15.00
-
Co., Ltd.
Shenzhen
CATIC Culture
Transmit Co.,
300,000.0
0
Ltd.
300,000.0
Total
0
88
(3) The investee’s ability to transfer the fund to the investor has not been restricted.
(4) Investment in joint ventures and associates
Associates
Proporti
Place of
Enterprise
Investees
Legal
Registratio represent
type
n
Business
Registered
type
Capital
ative
on held
by the
Compa
Voting
proportion in
the investee
taken by the
Company
ny (%)
Shenzhen
(%)
Education,
Research
Institute of
Northwest China
Institution
Shenzhe
Zheng
n
Yongan
Polytechnic
training
and
3,000,000.00
45
50
scientific
research
University
(continued)
Investees
Total assets
Total liabilities
at year end
at year end
Total
Total net
operation
assets at
income in the
year end
report year
Net profit in
Rela
the report
tions
year
hip
Organizat
ion code
Shenzhen
Research
4,752,223.6
Institute of
9
Northwest China
727,944.15
Ass
4,024,279.5
0
4
-97,970.95 ociat
-
e
Polytechnic
University
(5) Statement of reserve for impairment of long term equity investment
Increase in
Items
Year beginning
the report
year
Shenzhen
CATIC
Communication Co., Ltd.
Culture
300,000.00
-
Decrease in
End of the report
report year
period
-
300,000.00
8. Investment Based Real Estate
(1) Statement of investment based real estate
Items
Year
Increase in the
Decrease in
End of the
beginning
report year
report year
report period
89
Investment based real estate
measured afterwards by means
231,774,832.2
4
of cost method
Less: Provision for impairment
of investment based real estate
231,774,832.2
Total
4
-
- 231,774,832.24
-
-
-
- 231,774,832.24
(2) Investment based real estate measured based on costs
Items
I. Total original value
II.
Total
accumulative
depreciation
Year
Increase in the
Decrease in
End of the
beginning
report year
report year
report period
231,774,832.2
-
-
231,774,832.24
-
-
231,774,832.24
66,392,858.45
3,097,836.11
-
69,490,694.56
66,392,858.45
3,097,836.11
4
231,774,832.2
4
69,490,694.56
III. Total reserve for impairment
IV. Total Book Value
165,381,973.7
9
165,381,973.7
9
0.00
162,284,137.68
0.00
162,284,137.68
9. Fixed assets
(1) Fixed assets
Items
Cost price
Increase in
the report
year
Year
beginning
241,886,087.
44
20,586,041.3
9
Motor vehicles
11,911,437.8
9
20,008,458.6
3
Others
35,327,380.7
1
Total
329,719,406.
90
Decrease
in report
year
End of the
report period
242,049,875.1
226,857.00
63,069.34
779,289.99
-
21,365,331.38
1,078,568.00
899,902.13
12,090,103.76
1,658,363.76
35,461.38
21,631,361.01
947,447.74
86,163.10
36,188,665.35
4,690,526.49
1,084,595.9
333,325,336.6
0
06
Accumulative
depreciation
5
0
3,684,055.93
-
32,271,863.29
9,098,765.09
844,791.56
-
9,943,556.65
7,238,439.42
603,831.85
854,932.07
6,987,339.20
1,310,029.80
30,895.64
13,098,237.77
2,615,446.95
6,197.92
23,842,470.98
9,058,156.09
892,025.63
86,143,467.89
-
-
-
-
-
-
-
-
-
-
-
-
28,587,807.3
6
Motor vehicles
11,819,103.6
1
Others
21,233,221.9
5
Total
77,977,337.4
3
Provisions
for
impairment of fixed
assets
Total
Fixed assets, net
251,742,068.
247,181,868.7
63
1
(2) Fixed assets with ownership restricted
Ended the report period, the housing and buildings with book value of CNY 3,346,473.41
(original value: CNY 3,471,249.10) were used as the collateral for long term loan
amounting to CNY 1,332,819.80.
(3) Fixed assets leased through operational lease
Types of leased assets for operational lease
Book value at the end of
Book value at year
the period
beginning
162,284,137.68
165,774,200.29
Total
162,284,137.68
165,774,200.29
(4) Fixed asset whose property title certificate has not been issued
Cause of failure to get
Items
the property title
property title certificate
certificate
Premises of Harbin
Defect existing in the
Office
property title
Estimated time of getting the
unknown
Total
Book value
392,028.00
392,028.00
(5) The original value of the Group’s fixed assets in application without provision of depreciation at
91
year end was CNY 21,439,129.42.
10. Construction in process
Year
Project
Project
of
adjustment
beginning
Transfer-in in
the report
the report
year
year
Others
Quantity of
Decre
fixed assets
ase
End of the
report period
stall
of
the
ground parking lot of
FIYTA
Increase in
-
169,000.0
0
Technology
-
-
169,000.00
-
-
34,000.00
Building
Project
of
gate
relocation of the parking
lot of FIYTA Technology
-
34,000.00
Building
0.00
Total
-
203,000.0
-
0
-
203,000.00
11. Intangible assets
Items
Year beginning
Increase in the
Decrease in
End of the
report year
report year
report period
I. Total original book value
29,155,773.85
388,981.20
14,303.66 29,530,451.39
Land use right
15,487,349.60
-
- 15,487,349.60
2,529,964.45
388,981.20
-
2,918,945.65
11,138,459.80
-
14,303.66
11,124,156.14
9,918,241.63
443,724.15
- 10,361,965.78
5,161,114.16
172,037.16
-
5,333,151.32
766,635.14
271,686.99
-
1,038,322.13
3,990,492.33
-
-
3,990,492.33
-
-
-
-
Land use right
-
-
-
-
Software system
-
-
-
-
Trademark use right
-
-
-
-
IV. Total Book Value
19,237,532.22
-
-
19,168,485.61
Land use right
10,326,235.44
-
-
10,154,198.28
Software system
Trademark use right
II.
Total
accumulative
amortized amount
Land use right
Software system
Trademark use right
III. Total accumulative amount
of provision for impairment
92
Items
Year beginning
Increase in the
Decrease in
End of the
report year
report year
report period
Software system
1,763,329.31
-
-
1,880,623.52
Trademark use right
7,147,967.47
-
-
7,133,663.81
12. Goodwill
(1) Statement of goodwill
Investee’s name or
matter resulting in
goodwill
Lishan Department
Store
Year
beginning
Increase in
the report
End of the
Provision for
report
impairment at
period
year end
report year
year
1,735,756.48
Decrease in
-
-
1,735,756.4
8
1,735,756.48
(2) Impairment test and provision for impairment of goodwill
For the method for testing impairment of goodwill, refer to Note IV.16.
HARMONY, one of the Company’s subsidiaries acquired 100% equity in Lishan
Department Store on March 31, 2008 with valuable consideration of CNY 1,200,000.00
and the fair value of the recognizable net assets of Lishan Department Store on the
acquisition day was CNY 535,756.48. HARMONY presented the margin amounting to
CNY 1,735,756.48 in the consolidated financial statements as “goodwill”. At the end of
2008, HARMONY made impairment test of the goodwill and charged the loss from
impairment of the goodwill lower than the recoverable amount totaling CNY 1,735,756.48
to the gain and loss of the year 2008.
13. Long-term expenses to be apportioned
Items
Cost for making
special counters
Refurbishment
Speaker fee
Others
Total
Year beginning
Increase in the
report year
Amount
amortized in the
Amount at year end
report year
15,119,640.32
11,270,357.95
6,891,985.56
19,498,012.71
52,914,667.85
19,022,667.70
13,450,525.13
58,486,810.42
3,978,571.35
3,338,547.48
1,989,285.66
5,327,833.17
139,838.55
27,001.71
28,565.62
138,274.64
72,152,718.07
33,658,574.84
22,360,361.97
83,450,930.94
14. Deferred Income Tax Asset/Deferred Income Tax Liability
(1) Deferred Income Tax Asset/Deferred Income Tax Liability Already Recognized
93
Asset of deferred income tax recognized
Year end
Year beginning
Offsetable
Items
Deferred
income tax asset
Reserve
Provisional
provisional
discrepancy and
Deferred income
difference
tax asset
offsetable and loss
loss offsetable
offsetable
for
impairment
of
the
assets
Unrealized
6,046,757.80
28,336,888.62
26,552,542.59
105,509,885.33
99,000.00
600,000.00
754,724.60
3,882,873.37
33,453,025.00
138,329,647.33
profit
offset internally
Deferred income
Loss deductable
Total
5,651,946.35
26,080,437.76
13,811,119.39
59,466,701.13
99,000.00
600,000.00
754,724.60
3,882,873.37
20,316,790.34
90,030,012.26
(2) Statement of unrecognized deferred income tax asset
Items
Offsetable
Year end
provisional
discrepancy
Total
Year beginning
58,479,106.68
62,314,863.16
58,479,106.68
62,314,863.16
Note: The reason why the Group has not recognized aforesaid offsetable provisional
discrepancy is that it is uncertain whether enough taxable income amount may be
achieved.
15. Statement of Reserve for Impairment of Assets
Items
I. Provision for bad debts
beginning
End of the
the report
Amount of
Amount
report
year
reversal
written off
period
49,807,967.9
49,807,967.
-
-
4
II. Provisions for price falling of 34,751,576.5
inventories
Decrease in report year
Provision in
Year
94
37,008,027.
2,256,450.85
-
-
0
35
III. Reserve for impairment of
the long term equity investment
IV. Reserve for impairment of
fixed assets (Note)
V. Reserve for impairment of
goodwill
300,000.00
-
-
-
300,000.00
-
-
-
-
-
1,735,756.48
-
-
-
1,735,756.4
8
94
Decrease in report year
Provision in
Year
Items
beginning
End of the
the report
Amount of
Amount
report
year
reversal
written off
period
86,595,300.9
Total
88,851,751.
2,256,450.85
-
2
77
16. Ownership or the assets with use right restricted
End of the report
Items
Cause of being restricted
period
Sub-total of the assets used
for security
3,346,473.41
3,346,473.41
Used for mortgage loan
Sub-total of the assets with
the ownership or use right
restricted
due
to
392,028.00
other
reason:
Premises of Harbin Office
392,028.00
Total
Defect existing in the property title
3,738,501.41
17. Short-term Loan
Items
Secured loan (note)
Credit borrowing
Total
Year beginning
582,311,000.00
668,253,730.00
40,000,000.00
60,000,000.00
622,311,000.00
728,253,730.00
Note: The short term borrowing at year end were guaranteed by CATIC Group for the
Company. For the detail about the related guarantee, refer to Note VIII.5 (4).
18. Accounts payable
(1) Statement of accounts payable
Items
Trade accounts payable
136,269,519.53
140,330,134.06
68,819,611.10
15,811,854.18
211,339.76
211,339.76
205,300,470.39
156,353,328.00
Payables for materials
Engineering
warranty
fee
payable
Total
Year beginning
(2) In the report period, there was no account payable due from the shareholder holding
over 5% (with 5% inclusive) of the Company’s vote-bearing shares or any of the related
parties.
95
(3) Note to the accounts payable with big amount with age exceeding 1 year
Creditors
Reason of remaining
Amount
Shenzhen Yikang Watch Co. Ltd.
outstanding
259,952.74
Guangzhou Non-ferrous Metal
50,140.07
Failure in
communication with
the person in charge
Invoice not yet
issued
310,092.81
Total
(4) Balances in foreign currency in the accounts receivable are as follows:
Items
Year beginning
Amount in
Exchan
Conversion in
foreign
ge rate
CNY
Amount in
Exchan
Conversion in
foreign
ge rate
CNY
currency
HKD
S.Fr.
currency
15,002,159.6
3
21,394.89
0.8316
12,475,795.95
7.7655
166,142.00
Total
17,162,709.2
6
21,536.00
14,603,749.3
0.8509
1
7.0562
151,962.32
14,755,711.6
12,641,937.95
3
19. Advance receipt
(1) Statement of advance receipt
Item
Advances on sales
Total
Year beginning
3,464,531.40
8,464,969.63
3,464,531.40
8,464,969.63
(2) In the report period, there was no advance receipt received from the shareholder
(3) Advance receipts received from the related parties
(4) Balances in foreign currency in the advance receipts are as follows:
Item
Amount in
foreign
currency
HKD
354,437.69
Year beginning
Exchan
Conversion in
ge rate
CNY
0.8316
294,750.38
96
Amount in
foreign
currency
705,530.57
Exchan
Conversion in
ge rate
CNY
0.8509
600,335.96
20. Accrued Payroll
Items
Year beginning
Increase in
Decrease in
End of the report
report year
report year
period
I. Salaries, bonus,
allowances,
19,810,762.31
107,736,938.57
114,236,045.88
13,311,655.00
-
3,497,224.40
3,497,224.40
-
1,155.32
13,674,934.67
13,093,109.92
582,980.07
163.90
3,024,459.49
3,024,623.39
-
972.72
7,644,816.91
7,645,789.63
-
-
1,277,641.63
1,222,337.79
55,303.84
7.45
497,746.64
497,754.09
-
-
161,646.17
161,646.17
-
11.25
222,263.04
222,274.29
-
-
857,474.48
331,384.56
526,089.92
-
3,022,844.11
3,022,844.11
-
162,631.26
2,582,268.93
2,591,914.42
152,985.77
-
2,203.33
2,203.33
-
6,381.75
429,793.36
436,175.11
-
19,980,930.64
130,946,207.37
136,879,517.17
14,047,620.84
subsidies
II. Staff’s welfare
III. Social security
Including:
1.
medical insurance
premium
2.
Basic
endowment
insurance premium
3. Contribution to
the annuity scheme
4.
Unemployment
insurance premium
5.
Service
injury
insurance premium
6.
Maturity
insurance premium
7. Others
IV. Public reserve
for housing
V.
Trade
fund
union
and
staff
education fund
VI. Compensation
given
due
to
termination of the
labor service
VII. Others
Total
21. Taxes payable
Items
Year beginning
Value-added tax
11,094,602.06
3,388,267.58
Consumption tax
0.00
-
506,966.36
551,432.79
24,434,924.30
13,502,946.07
777,534.31
582,038.39
Business tax
Enterprise income tax
Individual income tax
97
Items
Urban maintenance and
Year beginning
361,922.63
206,564.52
37,939.92
105,000.00
105,851.36
30,206.92
Stamp duty
20,292.35
17,282.43
Dyke protection surcharge
38,139.64
28,004.81
Others
90,606.93
80,956.94
37,468,779.86
18,492,700.45
construction tax
Real estate tax
Education Surcharge
Total
22. Interest payable
Items
Bank loan interest payable
Total
Year beginning
1,712,361.62
1,202,198.61
1,712,361.62
1,202,198.61
23．Dividend Payable
Company names
End of the report
Year beginning
period
AVIC International
Shenzhen Company
Limited
-
190,263.50
Total
-
190,263.50
Reason of being overdue
for 1 year
-
24. Other payables
(1) Statement of Other Payables
Items
Within 1 year
Year beginning
21,790,673.93
18,685,715.31
1,642,319.66
2,997,601.79
2 to 3 years
1,651,054.83
680,766.66
Over 3 years
7,054,748.54
7,054,253.98
32,138,796.96
29,418,337.74
1 to 2 years
Total
(2) In the report period, there was no account payable due to the shareholder holding more
than 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(3) Accounts due to related parties
(4) Note to other payables with big amount with age exceeding 1 year
98
Reason of
Creditors
Amount
remaining
outstanding
Shenzhen Tencent Computer System
Co., Ltd.
Zhu Jin
2,600,000.00
500,000.00
Kejin Biology Recognition (Shenzhen)
Co., Ltd.
Shenzhen YouLiFeng Self-help Kara
OK Co., Ltd.
454,518.40
432,429.00
Shenzhen CATIC Real Estate Co.,
Ltd.
424,800.00
Weisheng
Electronics
(Shenzhen)
Co., Ltd.
Shenzhen
Pasta
Wang
Catering
Chain Shop Co., Ltd.
Shenzhen
Yongantang
Chain-
Pharmacy Co., Ltd.
Shenzhen GoodFamily Sports Goods
Chain Shop Co., Ltd.
Oracle
Research
&
Development
Center (Shenzhen) Co., Ltd.
China Merchants Bank Co., Ltd.
Shenzhen Hi-tech Park Sub-branch
Shenzhen Honestar Electronics Co.,
Ltd.
Total
337,105.20
329,000.00
Are they to
be paid after
the balance
sheet day?
Still in the lease
term
Deposit for food
coupon
Still in the lease
term
Still in the lease
term
Still in the lease
term
Still in the lease
term
Still in the lease
term
No
No
No
No
No
No
No
Still in the lease
301,644.00
279,578.00
238,140.00
211,440.00
218,280.00
term
No
Still in the lease
term
Still in the lease
term
Still in the lease
term
Still in the lease
term
No
No
No
No
6,326,934.60
(5) Note to the other payables with big amount
Creditors
Shenzhen Tencent Computer
System Co., Ltd.
Citylion International Limited
Kejin
Biology
Recognition
Description
2,600,000.00
Rent deposit
2,189,507.68
Current accounts
541,122.40
Rent deposit
Zhu Jin
500,000.00
Deposit for food coupon
Shenzhen YouLiFeng Self-help
432,429.00
Rent deposit
(Shenzhen) Co., Ltd.
99
Kara OK Recreation Supermarket
Co., Ltd.
6,263,059.08
Total
(6) Balances in foreign currency in other payables are as follows:
Items
Amount in
foreign
currency
Year beginning
Exchan
Conversion in
ge rate
CNY
Amount in
foreign
currency
Exchan
Conversion in
ge rate
CNY
HKD
2,632,885.62
0.8316
2,189,507.68
5,543,264.00
0.8509
4,716,763.34
USD
3,697.48
6.4716
23,928.61
3,613.12
6.6227
23,928.61
S.Fr.
88,883.11
7.7743
691,004.00
34,000.00
7.0562
239,910.80
Total
2,904,440.29
4,980,602.75
25. Other current liabilities
Items
End of the report
Description
Accrued supermarket
Accrued expenses
Year beginning
period
expenses
Total
-
2,645,322.20
-
2,645,322.20
26. Long-term Loan
(1) Classification of the long term borrowings:
Items
Year beginning
Secured loan (note ①)
180,000,000.00
180,000,000.00
Mortgage loan (Not ②)
1,332,819.80
1,440,065.11
181,332,819.80
181,440,065.11
Total
Note ①: The long term borrowings at year end were guaranteed by CATIC Group for the
Company. For the detail about the related guarantee, refer to Note VIII.5 (4).
Note ②: The housing and buildings as stated in Note VII.9 were used as the collateral.
(2) Top five lenders of the long term borrowings
Inter
Lenders
Date of
Date of
est
Currenc
starting
ending
rate
y
Year beginning
Amount in
Amount in
Amount in
Amount in
foreign
function
foreign
function
currency
currency
currency
currency
%
China
Construction
2010-1-21
2012-1-20
4.86
CNY
-
Bank Co., Ltd.
100
90,000,000.00
-
90,000,000.00
Shenzhen
Branch
Guangdong
Development
Bank
2009-12-1
2012-12-1
4.86
CNY
-
50,000,000.00
-
50,000,000.00
2009-7-15
2012-6-28
4.86
CNY
-
20,000,000.00
-
20,000,000.00
2009-9-3
2012-6-28
4.86
CNY
-
20,000,000.00
-
20,000,000.00
2010-11-30 2017-11-30
4.25
HKD
1,602,717.63
1,332,819.80
Shenzhen
Donghai
Sub-branch
Sales
Department of
Ningbo Bank
Shenzhen
Branch
Sales
Department of
Ningbo Bank
Shenzhen
Branch
China
Construction
Bank (Asia)
1,692,402.2
9
1,440,065.11
Co., Ltd.
181,332,819.80
Total
181,440,065.1
1
27. Long term accounts payable
Items
Year beginning
Credit borrowing due to Beijing
Hengdeli
-
3,500,000.00
Total
-
3,500,000.00
28. Other Non-current Liabilities
Items
Deferred
income
Deferred
income
End of the report
Description
period
Fund financed for construction of enterprise
technology center (Note ①)
Fund for supporting implementation of
standardization strategy (Note②)
Deferred
Budget for the provincial and ministerial IUR
income
cooperation commissioner project(Note③ )
101
Year beginning
1,800,000.00
1,800,000.00
150,000.00
-
200,000.00
100,000.00
Deferred
income
Deferred
income
Specialized financial support to enterprises from
Nanshan District against the financial crisis (Note
500,000.00
500,000.00
800,000.00
-
3,450,000.00
2,400,000.00
④)
Special fund for cultural industry development of
Nanshan District – Shenzhou-7 Space Watch
Series (Note ⑤)
Total
Note ①: According to Document SHEN JING MAO FA [2002] No. 93, the Company’s
technology center has been expertised as an Enterprise Technology Center of Shenzhen
and therefore it has obtained a supporting fund amounting to CNY 3,000,000 for
construction of the enterprise technology center. The fund is used for purchasing
equipment.
Note ②: It is the subsidy for implementation of the standardization strategy in accordance
with the Measures for Management of the Fund for Implementation of Standardization
Strategy in Shenzhen (SHEN ZHI JIAN [2008] No. 106) which has been carried over to the
subsidy income in the report year.
Note ③: It is for construction of the Company’s technology commissioner working statin
according to the project of constructing the enterprise technology commissioner working
station, to explore the model of innovation of cooperation of production, academy and
research, achieve the results of cooperation of production, academy and research in the
key technology fields of the working station, including timekeeping, material, digitalized
research, development and manufacture, etc. and make progressive popularization in the
industry, and drive technology progress and industrial development in the sector.
Therefore, the Company shall obtain this financial support and transfer it to the subsidy
income upon acceptance inspection at the end of 2012.
Note ④: Where CNY 300,000 is the financial support fund obtained from the Company
used for development and application of the project of digitalized R & D sytem in the watch
industry according to the project contract of Specialized Financial Support to Enterprises
from Nanshan District against the Financial Crisis with Contract No. NAN KE ZHUAN
2009144 concluded with Nanshan District Bureau of Science and Technology, Shenzhen.
Where CNY 200,000 is the subsidy of intellectual property obtained by the Company
according to the Contract of 2009 Medium-sized and Small Enterprise Supporting
Program of Nanshan District with the Specialized Fund for Supporting Enterprises against
Financial Crisis – Invention Patent Technology Implementation Projects with Contract No.
NAN ZHI FA 2009-2-5 concluded with Nanshan District Bureau of Science and
102
Technology, Shenzhen.
Note ⑤: It is the financial support amounting to CNY800,000.00 obtained according to the
Circular on the Second Financial Support Projects with the Special Fund for Cultural
Industry Development in Nanshan District in 2010, the Document of the Cultural Industry
Development Office of Nanshan District People’s Government, Shenzhen (SHEN NAN
WEN CHAN [2011] No. 86 and the fund was transferred to the subsidy income.
29．Capital Stock
Year beginning
B
Items
Amount
Prop
New
ortio
issui
n%
ng
on
us
sh
ar
Shares
converted
from public
reserve
O
th
er
Propo
Sub-total
Amount
rtion
%
s
es
I.
Restricted
Shares
1.
State
shares
2.
-
-
-
-
-
-
State
corporate
173,104,373.0
123,645,981.00
44.07%
49,458,392.00
-
49,458,392.00
shares
3.
44.07%
0
Other
domestic
19,035,524.00
6.79%
-
-
7,614,209.00
-
7,614,209.00
shares
6.79%
26,649,733.00
Including:
Domestic
19,000,000.00
6.78%
-
-
7,600,000.00
-
7,600,000.00
corporate
6.78%
26,600,000.00
shares
Domestic
35,524.00
0.01%
-
-
14,209.00
-
14,209.00
natural person
0.01%
49,733.00
shares
Total restricted
199,754,106.0
142,681,505.00
50.86%
-
-
shares
57,072,601.00
-
57,072,601.00
50.86%
0
II. Unrestricted
shares
103
1.
CNY
111,365,764.0
ordinary
79,546,974.00
28.35%
-
31,818,790.00
-
-
31,818,790.00
28.35%
0
shares
2. B shares
58,320,000.00
20.79%
-
-
23,328,000.00
-
23,328,000.00
137,866,974.00
49.14%
-
-
55,146,789.00
-
55,146,789.00
81,648,000.00
20.79%
Total
193,013,763.0
unrestricted
49.14%
0
shares
III.
Total
112,219,391.0
280,548,479.00
100%
-
-
112,219,391.0
392,767,870.0
0
0
100%
-
Shares
0
Note: On April 8, 2011, approved by 2010 Annual Shareholders’ General Meeting, the
Company converted the capital reserve into capital stock on 4-for-10 basis and total
112,219,391 shares were converted into. After the conversion, the Company’s total capital
stock turned to be 392,767,870 shares.
30. Capital reserve
Year
Items
Increase in the Decrease in the
beginning
report period
628,889,436.2
Capital premium
- 112,219,391.00
3
Other capital reserve
14,492,448.65
-
643,381,884.8
Total
report period
8
Year end
516,670,045.23
555,541.10
13,936,907.55
- 112,774,932.10
530,606,952.78
Note: On April 8, 2011, approved by 2010 Annual Shareholders’ General Meeting, the
Company converted the capital reserve into capital stock on 4-for-10 basis and total
112,219,391 shares were converted into, and the capital reserve was reduced by CNY
112,219,391.
31 Surplus Reserve
Items
Statutory surplus
reserve
Discretionary surplus
reserve
Total
Year beginning
Increase in the
Decrease in the
End of the report
report period
report period
period
59,082,098.16
-
-
59,082,098.16
61,984,894.00
-
-
61,984,894.00
-
-
121,066,992.16
121,066,992.1
6
32. Retained earnings
(1) Change of the retained earnings
104
Provision or
End of the report
Items
Year beginning
period
distribution
proportion
Retained earnings at the end of
the
previous
year
before
222,514,569.59
158,577,089.84
-
-
222,514,569.59
158,577,089.84
85,990,142.75
93,990,182.93
-
5,120,903.28
-
-
28,054,847.90
24,931,799.90
280,449,864.44
222,514,569.59
adjustment
Adjustment
of
retained
earnings at year beginning
Retained
earnings
at
year
beginning after adjustment
Plus: Net profit attributable to
the parent company’s owners
in the report year
Less: Provision of statutory
surplus reserve
Provision of discretionary
surplus reserve
Dividend
of
ordinary
shares payable
Retained earnings at year end
(2) Note to the profit distribution
On April 8, 2011, approved by 2010 Shareholders’ General Meeting, the Company took
the total capital stock of 280,548,479 shares as at December 31, 2010 as the base,
distributed the cash dividend to the whole shareholders at the rate of CNY1.00 (with tax
inclusive) for every 10 shares; the Company totally distributed CNY 28,054,847.90 of cash
dividend.
33. Operation Income and Costs
(1) Revenue and costs
Amount in the same
Items
period of the previous
year
Income from principal business
Income from other business
Total operation income
Costs of principal business
Costs of other business
105
1,223,457,139.19
804,875,634.44
8,553,597.22
5,936,276.38
1,232,010,736.41
810,811,910.82
817,716,151.55
563,084,063.68
2,770,595.22
2,222,992.97
Amount in the same
Items
year
Total operation costs
820,486,746.77
565,307,056.65
(2) Principal Businesses Based on Sectors
Sectors
Amount in the same period of the
previous year
Revenue
Operating costs
Revenue
Operating costs
1,216,784,372.62
835,673,243.11
788,279,736.35
569,456,580.59
34,404,920.13
10,516,401.34
33,123,632.35
10,155,217.35
1,251,189,292.75
846,189,644.45
821,403,368.70
579,611,797.94
27,732,153.56
28,473,492.90
16,527,734.26
16,527,734.26
Sales of famous
brand watches,
FIYTA watches
and fashion
brand watches
Lease and
hospitality
industry
Sub-total
Less: Amount
offset internally
Total
(3) Principal Businesses Based on Products
Product names
Revenue
Operating costs
1,010,744,436.49
759,033,754.63
Famous brand
watches
previous year
Revenue
Operating costs
671,041,497.30
524,319,858.56
117,238,239.05
45,136,722.03
33,123,632.35
10,155,217.35
-
-
Manufacture and
sales of FIYTA
watches
Leasehold
203,826,024.40
75,610,683.70
34,404,920.13
10,516,401.34
2,213,911.73
1,028,804.78
1,251,189,292.75
846,189,644.45
821,403,368.70
579,611,797.94
27,732,153.56
28,473,492.90
16,527,734.26
16,527,734.26
1,223,457,139.19
817,716,151.55
804,875,634.44
563,084,063.68
Fashion brand
watches
Sub-total
Less: Amount offset
internally
Total
(4) Principal Business (based on regions)
106
previous year
Regions
Revenue
Operating costs
Revenue
Operating costs
Northeast China
116,211,424.07
84,771,953.67
81,938,483.51
61,640,612.11
North China
228,555,105.04
170,977,378.41
148,193,414.76
114,042,752.47
Northwest China
297,685,676.30
216,749,024.10
196,004,881.55
145,657,992.78
Southwest China
82,324,718.58
56,998,772.65
48,445,300.60
32,986,195.55
East China
148,908,755.02
104,190,737.58
88,846,654.19
64,290,037.42
South China
377,503,613.73
212,501,778.03
257,974,634.08
160,994,207.61
1,251,189,292.75
846,189,644.45
821,403,368.70
579,611,797.94
27,732,153.56
28,473,492.90
16,527,734.26
16,527,734.26
1,223,457,139.19
817,716,151.55
804,875,634.44
563,084,063.68
Sub-total
Less: Amount
offset internally
Total
(5) Revenue from the top five customers
Duration
Total Revenue from the
top five customers
Proportion in the operation
income of the same period
(%)
277,959,023.00
22.72
Jan to Jun, 2010
191,641,050.71
14.56
34. Business Taxes and Surcharges
Items
Amount in the same period
of the previous year
144,333.33
26,688.89
2,123,084.23
1,860,956.80
2,001,849.77
367,191.29
Education surcharge
889,385.27
589,466.09
Others
360,472.46
235,477.52
5,519,125.06
3,079,780.59
Consumption tax
Business tax
Urban maintenance and
construction tax
Total
Note: For the detail of the rates of various business taxes and surcharges, refer to Note V:
Taxes
35. Sales Costs
Items
107
Amount in the same period of
the previous year
Wages
63,231,465.33
40,720,438.65
Rental
28,253,930.89
16,796,928.55
Advertisement
24,572,455.95
13,200,279.45
Market promotion
12,116,193.68
7,956,002.78
10,567,753.46
6,111,840.28
10,349,802.79
7,406,081.70
Labor insurance
8,396,849.83
4,688,687.80
4,417,920.31
1,869,313.30
Water and electricity
4,103,320.59
2,969,388.51
Packing
3,128,053.81
2,327,280.07
Business travel
2,415,843.92
1,077,878.23
Transportation
2,255,029.79
1,426,541.96
Welfare
1,449,950.81
986,744.85
Others
10,486,325.17
6,017,874.26
185,744,896.33
113,555,280.39
Long-term expenses to be
apportioned
Supermarket cost
Total
36. Administrative Expenses
Items
Wages
the previous year
40,328,349.00
28,847,583.61
8,707,184.03
7,529,979.58
R & D costs
7,497,115.16
3,893,925.84
Labor insurance
4,096,950.42
2,730,573.95
Depreciation
2,306,542.73
2,482,749.38
Business travel
3,389,135.36
2,481,021.56
1,572,313.08
1,585,576.94
Training
1,091,550.55
1,338,010.09
Meeting
2,244,633.39
1,181,095.20
Trade union budget
1,525,665.25
1,175,621.34
Business entertainment
1,435,422.35
1,135,717.69
Welfare
1,221,365.69
1,107,794.08
Others
11,517,579.48
6,756,710.51
86,933,806.49
62,246,359.77
Long-term
expenses
to
be
apportioned
Total
37. Financial expenses
Items
108
the previous year
Interest payment
Less: interest income
Exchange losses
Financial service charge
Others
Total
22,448,012.25
16,902,537.11
1,865,047.98
325,877.63
77,779.02
353,333.91
7,519,041.15
5,245,738.42
239,933.63
9,074.93
28,419,718.07
21,459,989.06
38. Return on Investment
(1) Statement of Return on Investment
Amount in the report
Items
period
Return on long term equity investment based on
equity method
year
-48,985.48
-
-
-
-
-
-48,985.48
-
Return on investment from disposal of long-term
equity investment
Return on investment obtained from the
available-for-sale financial assets
Total
Amount in the same
(2) Return on long term equity investment calculated based on the equity method
Amount in the
Investees
report period
Amount in the
same period of the
-48,985.48
-
-48,985.48
-
Polytechnical University
Total
decrease
previous year
Shenzhen Research
Institution of Northwestern
Cause of increase and
Decrease of net profit of the
investee in the report year
39. Loss from impairment of assets
Items
period
Loss from price falling of inventories
Total
40. Non-operating income
109
Amount in the same
year
2,256,450.85
412,249.15
2,256,450.85
412,249.15
Amount
Amount in the
Items
Amount in the
same period of
report period
the previous
recorded in the
non-recurring
gain/loss in the
year
report year
50,844.86
6,938,441.32
50,844.86
50,844.86
6,938,441.32
50,844.86
1,026,556.00
720,000.00
1,026,556.00
30,000.00
84,428.66
-
266,965.11
92,685.50
296,965.11
1,374,365.97
7,835,555.48
1,374,365.97
Total gains from disposal of non-current asset
Including: Income from disposal of fixed
assets
Government subsidy (for the detail, refer to the
following table: statement of government
subsidies)
Indemnity income
Others
Total
Where: Statement of Government Subsidies
Amount in the same
Items
period
Award of doing bigger and
stronger for trade distribution
enterprises
Fund subsidy for financial support
of intellectual property sub-item
Standard financial support
year
300,000.00
-
100,000.00
-
100,000.00
-
500,000.00
-
26,556.00
-
Funds
for
the
project
in
technology development program
-
150,000.00
Special fund for development of
cultural industry
-
570,000.00
1,026,556.00
720,000.00
Quality award from Nanshan
District Government
Development fund for medium
and small enterprises
Total
41. Non-operating expenses
Items
Total loss from disposal of the
non-current assets
Including: Loss from disposal
period
Amount in the same
year
Amount recorded in
the non-recurring
gain/loss in the
report year
487.00
47,206.42
487.00
487.00
47,206.42
487.00
110
Items
period
Amount recorded in
Amount in the same
year
the non-recurring
gain/loss in the
report year
of fixed assets
Penalty payment
-
400.00
-
Donation payment
-
500,000.00
-
Extraordinary losses
-
-
-
5,866.38
81,767.54
5,866.38
6,353.38
629,373.96
6,353.38
Others
Total
42. Income tax expense
Items
period
The income tax in the report period calculated
according to the tax law and the relevant provisions.
Adjustment of deferred income tax
Total
Amount in the same
year
30,736,895.33
12,370,589.99
-12,934,717.90
-2,839,736.72
17,802,177.43
9,530,853.27
43. Basic earning per share and diluted earning per share
Basic earning per share is calculated based on the consolidated net profit attributable to
the Company’s shareholder of ordinary shares divided by the weighted average of the
Company’s ordinary shares issued outside as follows: The number of newly issued
ordinary shares is determined commencing from the date of consideration receivable
(usually the date of issuing) according to the specific articles of the issuing contract.
The numerator of the diluted earnings per share is determined after adjustment of the
following elements with the current net profit attributable to the Company’s shareholders of
ordinary shares: (1) Interest of diluting potential ordinary shares recognized as expenses
in the very period; (2) gain or expense arising at the time of conversion of diluted potential
ordinary shares; and
(3) influence from the aforesaid adjustment of the relevant income tax.
Denominator of the diluted earnings per share is equal to sum of the following two items:
(1) The weighted average of ordinary shares already issued by the parent company in the
basic earnings per share; and (2) weighted average of ordinary shares increased due to
the assumed diluted potential ordinary shares converted into ordinary shares.
111
In calculating the weighted average of the number of the ordinary shares increased due to
conversion of the diluted potential ordinary shares into the issued ordinary shares, the
conversion of the diluted potential ordinary shares incurred in the previous period is
assumed to be conducted at the beginning of the very period; the conversion of the diluted
potential ordinary shares issued in the very period is assumed to be conducted on the
date of issuing.
(1) Basic earnings per share and amount of diluted earnings per share in different periods
are presented:
Profit in the report
period
previous year
Basic earning
Diluted earning
Basic earning
Diluted earning
per share
per share
per share
per share
Net profit attributable
to the Company’s
shareholders of
0.219
0.219
0.170
0.170
0.222
0.222
0.148
0.148
ordinary shares
Net profit attributable
to the Company’s
shareholders of
ordinary shares less
non-recurring gain
and loss
(2) Process of calculation of basic earnings per share and diluted earnings per share
In the report period, there existed no potential ordinary shares with dilution in the
Company. Therefore, the diluted earning per share is equal to the basic earning per share.
① In calculating the basic earnings per share, the current net profit attributable to
shareholders of ordinary shares is:
in CNY
Items
Amount in the
report period
Net profit attributable to the shareholders of ordinary shares
85,990,142.75
85,990,142.75
Including: Net profit attributable to continuous operation
Net profit attributable to the Company’s shareholders
112
87,145,297.28
Amount in the same
period of the
previous year
42,399,471.66
42,399,471.66
36,774,788.99
of ordinary shares less non-recurring gain and loss
87,145,297.28
Including: Net profit attributable to continuous operation
36,774,788.99
② In calculating the earnings per share, denominator was the weighted average of
ordinary shares issued outside and the calculation process is as follows:
in CNY
Items
period
Number of ordinary shares issued outside at
Year beginning
280,548,479.00
249,317,999.00
112,219,391.00
-
-
-
392,767,870.00
249,317,999.00
year beginning
Plus:
Number
of
shares
increased
from
conversion of reserve into capital stock in the
report period
Less: Weighted number of ordinary shares
repurchased in the report period
Weighted number of ordinary shares issued
outside at year end
Basic earning per share =P0÷S
S= S0＋S1＋Si×Mi÷M0–- Sj×Mj÷M0-Sk
Where: P0 is the net profit attributable to the Company’s shareholders of common shares
or the net profit less the non-recurring gain and loss attributable to the shareholders of
common shares. S is the weighted average of ordinary shares issued externally; S0 is the
total number of shares at the beginning of the report period; S1 is the number of shares
increased due to conversion of public reserve into share capital or dividend distribution in
the report period; Si is the number of newly added shares from issuing new shares or
shares converted from bonds in the report period; Sj is the number of shares decreased
due to repurchase in the report period; Sk is the number of shares shrunk in the report
period; M0 is the number of months in a report period; Mi is the accumulative monthly
amount from the next month of increasing shares to the end of the report period; Mj is the
accumulative monthly amount from the next month of decreasing shares to the end of the
report period
44. Other comprehensive income
Amount in the
Items
Amount in the
same period of
report period
the previous
year
1. Gain/loss from available-for-sale financial assets
Less: Influence upon income tax from available-for-sale
113
-
-
-
-
financial assets
Net of the gain/loss credited previously to other
-
-
-
-
2,071,076.23
-18,896.52
-
-
Sub-total
2,071,076.23
-18,896.52
Total
2,071,076.23
-18,896.52
comprehensive gains transferred to the current gains
Sub-total
2. Translation difference in financial statements expressed in
foreign currency
Less: Net in disposal of the gain/loss from overseas
operation currently transferred
45. Notes to the items of the cash flow statement:
(1) Major items of other operation activity related cash receipts
Items
Amount in the same
period
Commodity promotion
Deposit
Government subsidies
Interest income
previous year
-
4,024,872.31
198,288.49
931,555.60
2,376,556.00
720,000.00
1,865,047.98
Total
period of the
4,439,892.47
325,877.63
6,002,305.54
(2) Major items of other operation activity related cash payments
Items
Amount
Rental
28,835,437.43
Advertisement
16,572,455.95
Market promotion
12,116,193.68
Supermarket expenses
R&D
Business travel
10,349,802.79
10,407,058.02
6,233,231.44
5,818,295.37
Water and electricity
4,173,211.88
Packing
3,128,053.81
Transportation
2,742,395.46
Entertainment
2,739,048.22
Meeting
2,252,091.39
Trade union budget
1,525,665.25
Insurance premium
1,343,135.88
Exhibition
1,342,203.51
Training
1,091,550.55
114
Post and telecommunications
881,711.85
Securities
752,482.90
Consulting
301,417.50
112,605,442.88
Total
(3) Other financing related cash payments
Items
period
Total
period of the
previous year
Commission to securities brokers
Others
Amount in the same
-
1,000,000.00
231,600.00
-
231,600.00
1,000,000.00
46. Supplementary information of the cash flow statement
(1) Information of net cash flows arising from adjustment of net profit into operating
activities:
Amount of the report
Items
Year
Amount in the same
year
1. Net cash flows arising from adjustment of net profit
into operating activities:
Net profit
Plus: Provisions for impairment of assets
Depreciation of fixed assets, oil and gas assets,
production based biological asset
Amortization of intangible assets
Long-term expenses to be apportioned
Loss (gain) from disposal of fixed assets, intangible
assets and other long term assets
Losses (gain) on retirement of fixed assets
Financial expenses
Investment loss (gain)
Decrease (increase) of deferred income tax asset
Increase (decrease) of deferred income tax liability
Decrease (Increase) of inventories
Decrease (Increase) of the operative items receivable
Increase of operative items payable
Net cash flow arising from operating activities
2. Significant investment and fund-raising activities not
involved in cash income and expenses:
115
86,166,842.52
42,426,523.46
2,256,450.85
412,249.15
12,155,992.20
11,291,840.71
443,724.15
408,896.88
19,274,937.49
13,641,819.86
-50,357.86
-6,891,234.90
-
-
22,448,012.25
16,902,537.11
48,985.48
-
-13,136,234.66
-2,849,463.09
201,516.76
9,726.36
-235,695,986.96
-69,377,130.81
-48,253,241.92
-31,424,609.33
50,712,640.88
26,470,146.56
-103,426,718.82
1,021,301.96
Amount of the report
Items
Year
Amount in the same
year
3. Net change of cash and cash equivalents:
Ending cash balance
298,373,212.07
108,507,278.08
Less: Opening cash balance
613,455,817.52
95,701,580.19
Plus: Ending cash equivalent balance
-
-
Less: Opening cash equivalent balance
-
-
-315,082,605.45
12,805,697.89
Net increase in cash and cash equivalents
(2) Composition of cash and cash equivalents
Items
Year end
Year beginning
613,455,817.52
I. Cash
Including: Cash in stock
2,448,191.65
282,981.39
295,746,013.50
613,107,590.21
179,006.92
65,245.92
-
-
Due from banks
-
-
Call loan to banks
-
-
-
-
298,373,212.07
613,455,817.52
Bank deposit available for payment at
any time
Other
monetary
fund
available
for
payment at any time
Due from central bank available for
payment
II. Cash equivalent
Including: bond investment due within three
months
III. Balance of cash and cash equivalent at the
end of the report period
VIII. Related parties and related transactions
1. The Company’s parent company
Parent
company
Relationship
Place of
Types
Registration
Legal
representati
ve
Business
nature
Investing and
initiating entities,
Shenzhen
CATIC Group
Co., Ltd.
Parent
Company
company
limited
Shenzhen
Wu
Guangquan
domestic
commerce,
goods and
materials supply
and sales
(Continued)
116
Proportion of
Parent
the parent
company’s
The
Parent
Registered
company’s
voting power
Company’
Organization
company
capital
shareholding
proportion
s eventual
Code
in the
over the
controller
Company (%)
Company (%)
41.49
41.49
Shenzhen
CATIC
Group Co.,
Ltd.
673,367,090.00
219351229
AVIC
Note: The equity proportion in Shenzhen CATIC Group Co., Ltd. held by AVIC
International Shenzhen Company Limited is 58.77%. AVIC International Shenzhen
Company Limited is a solely funded subsidiary of AVIC International Holding Corporation
(AVIC International). Aviation Industry Corporation of China directly holds 62.52% equity
in AVIC International. Therefore, the Company’s eventual controller is Aviation Industry
Corporation of China.
2. Subsidiaries
For the detail, refer to Note VI.1 Subsidiaries
3. Joint Ventures and Associates
For the detail, refer to Note VII.7(4)
4. The Company’s other related parties
Other related parties
Relationship with the
Organization
Company
Code
Shenzhen CATIC Property Management Co., Ltd. (CATIC
under the control of
Property)
the same party
Shenzhen CATIC Building Equipment Co., Ltd. (CATIC
Building)
the same party
19219400-5
743201073
Rainbow Supermarket Co., Ltd. (Rainbow Supermarket)
the same party
Associate
of
618842912
a
Shennan Circuit Co., Ltd. (Shennan Circuit)
Shenzhen CATIC Monitor Technology Co., Ltd. (CATIC
117
controlled subsidiary
192195761
689407061
the same party
Monitor)
CATIC Real Estate
the same party
279340845
Shenzhen Makway Cable TV Equipment Co., Ltd.
(Makway)
the same party
618810902
CATIC Securities Co., Ltd. (CATIC Securities)
the same party
741986153
Shenzhen Grand Skylight Hotel Management Co.,
Ltd. (Hotel Management)
the same party
Shenzhen CATIC Nanguang Elevator Co., Ltd. (CATIC
Nanguang)
the same party
Shenzhen CATIC CITY Property Development Co., Ltd.
(CATIC CITY Property)
the same party
Shenzhen CATIC CITY Development Co., Ltd. (CATIC
CITY Development)
the same party
76197033-5
192350741
676667833
192194005
CATIC Land Development Co., Ltd. (CATIC Land)
the same party
661015568
CATIC Guanlan Real Estate Development Co., Ltd.
(Guanlan Rea Estate)
the same party
CATIC Changtai Investment Development Co., Ltd.
(CATIC Changtai)
the same party
763495945
732047808
5. Related transactions
(1) Related transactions in connection with acceptance of labor service
Pricing
Description
of related
Related Parties transaction
s
principle
and
making
of the previous year
Proportion
Proportion in
decision
procedur
Amount in the same period
in the
the amount
Amount
of the similar
transactions
es of
(%)
related
118
Amount
amount of
the similar
transactions
(%)
transactio
ns
Property
CATIC Property manageme
Contract
nt
Rainbow
Supermarket
Franchise
counter
724,888.81
100.00
868,158.64
100.00
8,311,541.70
5.70
6,264,615.83
3.71
price
Contract
sales costs
price
(2) Related transaction in connection with sales of goods
Descripti
on of
Related Parties
Related
Transacti
ons
Pricing
Amount incurred in the report
Amount incurred in the
principle
year
previous year
and
decision
procedur
es of
Proportion
Proportion in
making
in the
the amount
Amount
of the similar
amount of
Amount
the similar
transactions
related
transaction
(%)
transactio
s (%)
ns
Aviation Industry
Sale of
Contract
Corporation
goods
price
SHENNAN
Sale of
Contract
Circuit
goods
price
Rainbow
Sale of
Contract
Supermarket
goods
price
15,180,771.29
1.28
1,232,428.48
12.07
30,948,455.36
2.61
891,336.75
0.12
173,411.35
7.11
19,965,503.4
3
2.59
(3) Related Leases
The Group as the lessor
Basis for
Lessor
Lessees
Leased
Starting
Terminatio
asset
date
n date
determini
Rental income
ng the
recognized in
rental
the report period
income
CATIC
Real
Company Estate
CATIC
Real
The
Estate
Company
Development
The
The
Company
The
Company
Housing
2009-10-1
2011-12-31
Housing
2011-7-01
2012-5-15
Makway
Housing
2010-1-1
2012-1-31
CATIC Property
Housing
2007-10-1
2012-9-30
119
Contract
price
1,278,783.00
Contract
price
38,115.00
Contract
price
193,806.00
Contract
price
1,180,080.00
CATIC
Company Securities
The
CATIC
CITY
Company Property
The
CATIC
City
Company Development
The
The
Company
The
Company
The
Company
Housing
2007-9-16
2012-9-15
Housing
2010-05-01
2012-05-15
Housing
2010-05-01
2012-05-15
CATIC Land
Housing
2009-10-1
2011-12-31
GUANLAN Real
Estate
Housing
2009-10-1
2011-12-31
CATIC Changtai
Housing
2009-10-1
2011-12-31
Housing
2009-08-01
2012-07-31
Equipment
2009-08-01
2012-07-31
Housing
2010-5-01
2013-4-30
Hotel
Company Management
The
Hotel
Company Management
The
Rainbow
Company Supermarket
The
Contract
price
426,852.00
Contract
price
Contract
price
Contract
price
10,800.00
10,800.00
7,560.00
Contract
price
45,360.00
Contract
price
622,080.00
Contract
price
Contract
1,750,000.00
price
Contract
price
180,000.00
(4) Related guarantee
Has the
Guarantor
Guarantee
Amount in
Guarantee
Expiry of
guarantee
starting date
guarantee
guarantee
been
implement
ed
Shenzhen
CATIC Group
The Company
100,000,000.00
2011-3-1
2012-4.25
No
The Company
50,000,000.00
2010-10-14
2011-10-14
No
The Company
22,000,000.00
2010-10-18
2011-10-18
No
The Company
272,000,000.00
2011-3-8
2012-3-8
No
The Company
50,000,000.00
2009-12-1
2012-12-1
No
The Company
90,000,000.00
2010-2-1
2012-1-20
No
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
120
Shenzhen
CATIC Group
The Company
100,000,000.00
2011-5-5
2011-11-5
No
The Company
40,000,000.00
2009-7-15
2012-9-3
No
HARMONY
40,000,000.00
2010-10-12
2011-12-6
No
8,316,000.00
2011-5-13
2012-5-13
No
Co., Ltd.
Shenzhen
CATIC Group
Co., Ltd.
The Company
FIYTA Hong
The Company
Kong Limited
772,316,000.00
Sub-total
6. Due to and from Related Parties
(1) Accounts receivable and other receivables from related parties
Projects
Book Balance
Year beginning
Reserve for
Book Balance
Reserve for
bad debt
bad debt
Accounts receivable:
Rainbow Supermarket
Shenzhen CATIC Group Co., Ltd.
Shennan Circuit
2,783,637.98
55,716.41
804,896.91
55,716.41
36,047.40
524,471.00
36,047.40
-
73,983.60
-
91,763.81
1,403,351.51
91,763.81
102,500.00
5,125.00
102,500.00
5,125.00
72,401.60
2,807.08
56,141.60
2,807.08
155,000.00
-
-
-
7,932.08
158,641.60
7,932.08
6,664,946.00
675,533.29
Total
10,124,117.27
Other receivables:
CATIC Monitor
Rainbow Supermarket
Shenzhen CATIC Enterprise Group
Training Center
Total
329,901.6
0
(2) Due to and advance receipts from related parties
Items
Year beginning
Advance receipts
-
AVIC
Total
2,943,763.91
2,943,763.91
Other payables:
CATIC Building
8,227.10
8,227.10
CATIC Nanguang
3,354.90
3,354.90
CATIC Real Estate
85,800.00
85,800.00
CATIC CITY Property
107,280.00
107,280.00
CATIC CITY Development
107,280.00
107,280.00
121
CATIC Securities
150,000.00
150,000.00
64,602.00
64,602.00
424,800.00
424,800.00
Rainbow Supermarket
60,000.00
60,000.00
Total
1,011,344.00
1,011,344.00
-
190,263.50
-
190,263.50
Makway
CATIC Real Estate
Dividends payable:
AVIC International Shenzhen Company
Limited
Total
IX. Contingencies
1. On May 8, 2011, FIYTA Hong Kong, one of the Company’s subsidiaries, and Bank of
China (Hong Kong) Limited entered into a short term loan contract with loan No.
CCMC/CCE（CP）/205/11/100061/00/F/34849, according to which FIYTA Hong Kong
obtained a loan amounting to CNY8,311,000.00 (equal to HKD10,000,000.00) and the
Company offered joint responsibility guarantee for the aforesaid loan.
2. On October 11, 2010, the Company and Jiangsu Bank Co., Ltd. Shenzhen Branch
(Jiangsu Bank Shenzhen Branch) concluded the Maximum Guarantee Contract No.
BZ161409000001, HARMONY, one of the Company’s subsidiaries, offered irrevocable
credit guarantee with amount of CNY 60,000,000.00.
The guarantee contract term is from October 8, 2010 to October 7, 2011. Ended June 30,
2011, HARMONY had borrowed CNY 40,000,000.00 from Jiangsu Bank Shenzhen
Branch.
3. On November 30, 2010, 68-Station, one of the Company’s grandson companies, and
China Construction Bank (Asia) Co., Ltd. concluded a collateral loan contract with loan No.
974928 with 68-Station’s housing and building (with net book value amounting to CNY
3,346,473.41) as collateral. From November 30, 2010 to November 30, 2017, it offered
guarantee for the long term loan amounting to HKD1,710,000.00. Ended June 30, 2011,
the book amount of the long term loan was HKD1602717.63.
X. Commitments
The irrevocable operating lease contracts executed between the Group and external
parties ended June 30, 2011 were as follows:
in CNY
Items
End of the Report
Period
Year beginning
Minimum rental payment for irrevocable
operating lease:
Within a year
26,503,547.00
122
39,436,800.00
1 to 2 years
46,214,674.00
36,284,300.00
2 to 3 years
34,790,273.00
30,639,000.00
Over 3 years
59,990,333.00
67,876,100.00
167,498,827.00
174,236,200.00
Total
Note: Commitment for irrevocable operation lease is mainly the rental payable by the
Company to the supermarket and franchised shops.
XII. Other Important Matters
1. Acquisition of the Equity of HENGLIANDA
On December 17, 2010, approved with the resolution of the 17th meeting of the Sixth Board
of Directors, the Company planned to acquire 50% equity of HENGLIANDA held by Beijing
Hengdeli Switzerland Clock and Watch Co., Ltd. through HARMONY, one of the Company’s
subsidiaries. Both Parties agreed that with October 31, 2010 as the base date of the equity
assignment, the equity assignment price was CNY16,300,000.00. Upon completion of the
acquisition, HARMONY would hold 100% equity of HENGLIANDA. Ended December 31,
2010, HARMONY had paid CNY4,890,000.00 of the equity assignment consideration.
Ended June 30, 2011, HARMONY had paid the remaining amount CNY 11,410,000.00 and
the procedures for assignment of the equity had been completed.
2. Acquisition of the equity of HARMONY. On August 14, 2010, approved with the resolution
of the 13th meeting of the Sixth Board of Directors, the Company planned to accept 0.50%
equity in HARMONY held by AVIC International Shenzhen Company Limited through
assignment. Both Parties took the appraisal price amounting to CNY 2,807,200.00 as
specified in the Appraisal Report ZHONG LIAN PING BAO ZI [2010] No. 511 issued by
China United Assets Appraisal Co., Ltd. as the equity assignment price. Ended June 30,
2011, the procedures for the equity assignment were completed.
3. Purchase of the Plants in Switzerland and Construction of the Assembling Line
The 25th meeting of the Six Board of Directors held on June 13, 2011 reviewed and
approved the Proposal on Purchase of the Plants of Montres Chouriet SA. The Board of
Directors approved Montres Chouriet SA, a solely funded subsidiary, and the assigner to
conclude the plant purchase agreement. The total investment in this transaction amounted
to CNY 37.20 million. Ended June 30, 2011, Montres Chouriet SA, the assigner and the
local notary public jointly concluded the performance guarantee for plant purchase.
The formal plant purchase agreement should be jointly signed by the three parties, namely,
Montres Chouriet SA, the assigner and the local notary public before October 1, 2011.
During this period, the notary public shall designate the bank account for payment of all the
123
balances, including the outstanding consideration for the plant, notarization charge and
taxes; and ownership transfer and handover work shall be completed.
4. Investment and establishment of a subsidiary (refer to Note VI. 1)
With a view to further improve HARMONY’s international influence, speeding up the
process of turning HARMONY into an internationalized enterprise, in accordance with the
resolution of the 20th meeting of the Sixth Board of Directors held on January 13, 2011, in
the report period, the Company incorporated HARMONY World Watches International
Limited, as a subsidiary of HARMONY in Hong Kong with registered capital of HKD10
million.
For the purpose of clearing the business management structure, seizing the market
opportunity, promoting quick development of own brand and enhancing the strategic
layout of the retail channels of watches and clocks, according to the resolution of the 22nd
meeting of the Sixth Board of Directors held on February 25, 2011, the Company invested
CNY 50 million and incorporated FIYTA Sales Co., Ltd., a solely funded subsidiary.
VIII. Notes to the principal items on the Company’s financial statements
1. Accounts receivable
(1) Presented based on Categories of accounts receivable
Book Balance
Categories
Proportion
Amount
(%)
Proportion
Amount
(%)
10,988,318.49
9.58
10,988,318.49
100.00
26,304,664.62
22.93
2,157,775.72
8.20
47,308,439.56
41.24
-
-
based on the combination
Combined based on the accounting
age
124
Accounts
insignificant
receivable
single
73,613,104.18
64.17
2,157,775.72
2.93
30,114,190.99
26.25
30,114,190.99
100.00
100.00
43,260,285.20
37.71
with
amount
and
individual basis
Total
114,715,613.66
(continued)
Year beginning
Book Balance
Categories
Proportion
Amount
(%)
10,988,318.4
9
Proportion
Amount
(%)
12.93
10,988,318.49
100.00
15.45
2,157,775.72
16.43
36.20
-
-
51.65
2,157,775.72
4.91
35.42
30,114,190.99
100.00
100.00
43,260,285.20
50.89
based on the combination
Combined based on the accounting
13,134,239.2
5
age
0
43,911,144.6
Accounts
30,776,905.4
5
receivable
with
and
30,114,190.9
9
insignificant
single
amount
individual basis
85,013,654.1
Total
3
(2) Presented based on age of accounts receivable
Items
Within 1 year
Amount
Year beginning
Proportion (%)
Amount
Proportion (%)
65,278,721.22
56.90
35,851,944.24
42.17
1 to 2 years
426,479.18
0.37
128,382.49
0.15
2 to 3 years
240,195.77
0.21
10,723.48
0.01
Over 3 years
48,770,217.49
42.51
49,022,603.92
57.67
Total
114,715,613.66
100.00
85,013,654.13
100.00
① Provision for bad debt of the accounts receivable with significant single amount and
125
provision of bad debt reserve on individual basis
Description of accounts receivable
Beijing Urban/Rural Trade Center
Co., Ltd.
Qingdao Handry Timepieces,
Glasses and Jewelry Co.
Reserve for
Provision
bad debt
proportion
2,033,710.15
2,033,710.15
100.00
1,298,215.01
1,298,215.01
100.00
982,604.03
982,604.03
100.00
890,387.77
890,387.77
100.00
823,302.04
823,302.04
100.00
807,815.02
807,815.02
100.00
4,152,284.47
4,152,284.47
100.00
10,988,318.4
10,988,318.4
9
9
Book Balance
Timepieces and Sewing Machine
General Merchandise Co.
Jilin Timepieces and Photographic
Paraphernalia Wholesale Co.
Siping No. 1 Department Store
Anshan Timepieces and
Photographic Equipment Co.
Total
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
Wholesale Station of Yingkou
Customers to be identified
Reasons
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
Unrecoverabl
e
② Accounts receivable for which bad debt reserve has been provided based on the
grouping
The accounts receivable for which the bad debt reserve is provided based on the age
analysis:
Age
Book Balance
Amount
Within 1
year
1 to 2
years
2 to 3
years
Over 3
years
Total
24,305,292.21
Proportion
(%)
Year beginning
Reserve for
bad debt
92.40 552,051.43
Book Balance
Amount
Proportion
(%)
Reserve for
bad debt
11244045.12
85.61
552,051.43
109,024.31
0.41
12,838.25
115554.75
0.88
12,838.25
123,440.09
0.47
5,361.74
10723.48
0.08
5,361.74
1,766,908.01
6.72
1763915.90
13.43
1,587,524.30
26,304,664.62
100.00
13,134,239.25
100.00
2,157,775.72
1,587,524.3
0
2,157,775.7
2
126
Note: No reserve for bad debt has been provided for CNY 47,308,439.56 of the accounts
receivable at the end of the report period (amount in the same period of the previous year:
CNY 30,776,905.40) as described in Note IV. 8.
③ At the end of the report period, accounts receivable with insignificant single amount
and provision of bad debt reserve on individual basis
Description of
accounts
receivable
Doubtful
accounts/bad debt
Book Balance
30,114,190.99
Proportion (%)
100.00
Reserve for
bad debt
30,114,190.99
Provision reason
Unrecoverable
For the accounts receivable for which there is obvious sign showing that the customer
obliged for repayment is unable to implement the obligation with the single amount not
exceeding CNY 800,000.00, the Company takes that there exists big risk in recovering
the account receivable from such a customer and provides reserve for bad debt by
100%.
(4) In the report period, there was no account receivable due from the shareholder
(5) Top Five Debtors of the Accounts Receivable
Proportion
Relationship
Company names
with the
Amount
Years
Company
Harmony
Subsidiary
Beijing Urban/Rural
Trade Center Co.,
Ltd.
Qingdao
Non-Related
Party
in
the total of the
accounts
receivable(%)
Within 1
7,003,118.97
2,033,710.15
year
Over 3
years
6.10
1.77
Handry
Timepieces,
Non-Related
Glasses
and
Party
1,298,215.01
Over 3
years
1.13
Jewelry Co.
Timepieces
Sewing
and
Machine
Wholesale
Station
of Yingkou General
Non-Related
Party
982,604.03
Over 3
years
0.86
Merchandise Co.
Jilin Timepieces and
Photographic
Non-Related
Paraphernalia
Party
890,387.77
Wholesale Co.
127
Over 3
years
0.78
Total
10.64
12,208,035.93
Proportion in the
Company names
Relationship with the
total of the
Amount
Company
accounts
receivable (%)
Harmony
FIYTA
Hong
Kong
Limited
Rainbow Supermarket
Shenzhen CATIC Group
Co., Ltd.
7,003,118.97
Subsidiary
835,590.53
6.10
0.73
Under the same
2,783,637.98
eventual controller
Eventual controller
6,664,946.00
2.43
5.81
675,533.29
0.59
Under the same
Shennan Circuit
Total
Subsidiary
eventual controller
17,962,826.77
15.66
2. Other receivables
(1) Other receivables presented based on categories
Categories
Book Balance
Proportion
Amount
Proportion
(%)
Amount
(%)
-
-
-
-
11,727,374.9
2.45
3,734,037.03
31.84
97.52
-
-
99.97
3,734,037.03
0.78
0.03
156,020.47
100.00
100.00
3,890,057.50
0.81
the grouping
age
2
467,683,440.
90
479,410,815.
82
156,020.47
Total
479,566,836.
29
(continued)
Categories
Year beginning
128
Book Balance
Proportion
Amount
Proportion
(%)
Amount
(%)
-
-
-
-
8,093,002.32
1.47
3,734,037.03
46.14
98.5
-
-
99.97
3,734,037.03
0.68
0.03
156,020.47
100.00
100.00
3,890,057.50
0.71
the grouping
age
541,174,155.
68
549,267,158.
00
156,020.47
549,423,178.
Total
47
(2) Other receivables presented based on ages
Items
Within 1
year
1 to 2
years
2 to 3
years
Over 3
years
Total
Amount
Year beginning
Proportion (%)
473,262,792.36
98.69
925,464.42
0.19
356,256.26
0.07
5,022,323.25
1.05
479,566,836.29
100.00
Amount
Proportion (%)
484,054,173.57
88.10
60,103,955.04
10.94
1,105,813.16
0.20
4,159,236.70
0.76
549,423,178.47
100.00
① Other receivables for which bad debt reserve has been provided based on grouping
Other receivables for which the bad debt reserve is provided based on the age analysis:
Age
Book Balance
Amount
Within 1
year
1 to 2
years
Proportion
(%)
Year beginning
Reserve for
Book Balance
bad debt
Amount
Proportion
(%)
Reserve for
bad debt
6,623,330.99
56.48
38,475.47
3,522,295.59
43.52
38,475.47
925,464.42
7.89
3,054.23
611,637.10
7.56
3,054.23
129
2 to 3
Over 3
3,822,323.25
32.59
11,727,374.92
100.00
years
Total
3.04 118,779.60
356,256.26
years
3,573,727.7
3
3,734,037.0
3
348,341.9
4.3
118,779.60
3,610,727.73
44.62
3,573,727.73
8,093,002.32
100.00
3,734,037.03
Note: No reserve for bad debt has been provided for CNY 467,683,440.90 of other
receivable at end of the report period (amount in the same period of the previous year:
CNY 541,174,155.68) as described in Note IV. 8.
② Other receivables with insignificant single amount and provision of bad debt reserve on
individual basis at the end of the report period
Other receivables
Book Balance
Proportion (%)
Reserve for bad
debt
Provision reason
Reserve for
individuals of service
156,020.47
100.00
156,020.47
Unrecoverable
termination
For the other receivables in connection with the reserve for individual employees of
service termination, none of single amounts exceeds CNY 500,000. However, such
accounts are unrecoverable due to those employees leaving service, the reserve for
bad debt is provided based on 100%.
(4) In the report period, there was no other receivable due from the shareholder holding
over 5% (with 5% inclusive) of the Company’s vote-bearing shares.
(5) Top Five Debtors of the Other Receivables
Proportion
Relationship
Company names
with the
Amount
Years
Company
Harmony
Emile
Subsidiary
Chouriet
(Shenzhen)
Subsidiary
Manufacture Co.
Subsidiary
Trade Co.
Subsidiary
FIYTA Science &
Technology
Total
Subsidiary
in
the total of the
other
receivables (%)
386,985,687.4
9
Within 1
year
Within 1
34,861,214.17
year
Within 1
27,987,620.04
year
Within 1
10,592,437.60
year
Within 1
5,148,200.79
465,575,160.09
130
year
80.69
7.27
5.84
2.21
1.07
97.08
Proportion in the
Relationship with
Company names
Amount
the Company
Harmony
total of the other
receivables (%)
386,985,687.49
Subsidiary
80.69
Grandson
Henglianda
company
60,252.10
0.01
FIYTA Hong Kong
Subsidiary
95,165.00
0.02
Grandson
34,861,214.17
7.27
Manufacture Co.
company
Subsidiary
27,987,620.04
Trade Co.
Subsidiary
10,592,437.60
5.84
2.21
FIYTA Science &
Subsidiary
5,148,200.79
1.07
Under the same
102,500.00
0.02
Rainbow Supermarket
eventual
controller
Under the
same
72,401.60
0.02
Shenzhen CATIC Enterprise
eventual
controller
Under the
same
155,000.00
0.03
Group Training
Center
Total
eventual controller
466,060,478.79
97.18
Technology
CATIC
Monitor
(7) Other receivables in foreign currency are presented in the original currency and
exchange rate
Items
Year beginning
Amount in
Exchan
Conversion in
HKD
foreign currency
5,116.04
ge
rate
0.8316
CNY
4,254.50
S.Fr.
1,815.26
7.7743
14,112.40
Amount in
Exchan
foreign
8,397.50
currency
Conversion
ge rate
0.8509
in7,145.43
CNY
(1) Long-term equity investment classification
Decreas
Increase in
Items
Year beginning
the report
period
Investment in subsidiaries
Investment to joint ventures
Other equity investment
Less: reserve for
352,807,200.
0
00
385,000.00
300,000.00
131
End of the
report
report period
period
352,508,000.0
1,896,913.65
e in the
-
-
705,315,200.
00
48,985.4
8
1,847,928.17
-
-
385,000.00
-
-
impairment of long-term
300,000.00
equity investments
Total
354,489,913.6
352,807,200.
48,985.4
707,248,128.
5
00
8
17
(2) Statement of Long Term Equity Investment
Accountin
Investees
Investment
g method
cost
Cost
298,500,000.0
Harmony
-
125,000.00
125,000.00
-
9,000,000.00
9,000,000.00
-
10,000,000.00
10,000,000.00
-
10,000,000.00
10,000,000.00
- 10,000,000.0000
18,483,000.00
18,483,000.00
-
5,000,000.00
5,000,000.00
-
method
Cost
method
Cost
Xi’an Chengheng
method
Science
&
FIYTA
Cost
method
Technology
Hong
Kong
Cost
method
Limited
Cost
Trade Co.
method
Cost
FIYTA Sales Co.
Shenzhen
Institute
method
report period
601,307,200.000
1,400,000.00
Cost
Manufacture Co.
ase
1,400,000.00
method
Harbin Co.
End of the
302,807,200.00
0
Cost
World Watches Center
Increase/Decre
298,500,000.00
method
FIYTA
Year beginning
50,000,000.00
50,000,000.00
0
1,400,000.0000
125,000.0000
9,000,000.0000
10,000,000.0000
18,483,000.0000
5,000,000.0000
50,000,000.0000
Research
of
China
Northwest
Polytechnic
Equity
method
1,350,000.00
1,896,913.65
-48,985.48
85,000.00
85,000.00
-
300,000.00
300,000.00
-
1,847,928.1700
University
Xi’an Tangcheng Joint
method
Stock Co., Ltd.
Shenzhen
Cost
CATIC
Culture Communication
Co., Ltd.
Cost
method
354,789,913.6
Total
5
352,758,214.52
85,000.0000
300,000.0000
707,548,128.1
7
(continued)
Holding
Holding
proportion proportion of
Investees
Note to
inconsistence of
of the
the
holding proportion
shares in
vote-bearing
the
shares in the
investees with
investees
investees
voting power
Provision for
Impairme
impairment
of the shares in the nt reserve in the report
132
period
Cash dividend
in the report
period
(%)
100.00
Harmony
100.00
-
-
-
-
-
-
-
Another
shareholder enjoys
the fixed income
World Watches
50.00
Center
100.00
but does not
participate in
operation
Harbin Co.
100.00
100.00
-
-
-
Manufacture Co.
100.00
100.00
-
-
- 30,786,321.10
100.00
100.00
-
-
-
-
100.00
100.00
-
-
-
3,400,809.83-
100.00
100.00
-
-
-
-
Trade Co.
100.00
100.00
-
-
-
-
FIYTA Sales Co.
100.00
100.00
-
-
-
-
-
-
-
-
Xi’an
Chengheng
FIYTA
Science
& Technology
FIYTA
Hong
Kong Limited
Shenzhen
According
Research
Institute
of
Northwest China
agreement,
45.00
50.00 Company
to
the
the
enjoys
dividends based on
Polytechnic
50% equity
University
Xi’an
Tangcheng Joint
0.10
0.10
-
15.00
15.00
-
Stock Co., Ltd.
Shenzhen
CATIC
Culture
Communication
300,000.0
0
Co., Ltd.
300,000.0
Total
- 34,187,130.93
0
(3) Statement of provision for impairment of long-term equity investments
Items
Other
long-term
Year beginning
equity
investment
133
Increase in
Decrease in
End of the
the report
the report
Report Period
period
period
Shenzhen
CATIC
Communication
Culture
Co., Ltd.
300,000.00
-
-
300,000.00
4. Operation Revenue and Costs
(1) Operation revenue and costs
Amount in the same
Items
year
Revenue from principal business
Revenue from other business
Total operation revenue
Costs of principal business
Costs of other business
Total operation costs
226,264,903.90
147,920,077.50
3,156,792.71
3,392,338.52
229,421,696.61
151,312,416.02
105,561,441.74
66,051,538.00
2,608,424.51
3,240,617.00
108,169,866.25
69,292,155.00
(2) Principal Businesses Based on Sectors
Sectors
Revenue
Operating costs
previous year
Revenue
Operating costs
FIYTA
consumption
191,859,983.77
95,045,040.40
114,796,445.15
55,896,320.65
34,404,920.13
10,516,401.34
33,123,632.35
10,155,217.35
226,264,903.90
105,561,441.74
147,920,077.50
66,051,538.00
goods
Leasehold
Total
(3) Principal Business (based on regions)
Regions
Revenue
Operating costs
previous year
Revenue
Operating costs
Northeast China
22,023,685.70
12,310,285.01
12,618,069.27
6,965,750.25
North China
27,379,914.83
13,649,678.30
16,338,778.08
8,028,569.90
Northwest China
22,932,699.13
11,663,574.71
13,307,710.69
6,700,620.83
Southwest China
19,198,777.60
9,667,823.34
12,586,310.47
6,286,065.67
East China
30,067,203.18
15,443,592.46
17,746,755.11
8,972,805.70
104,662,623.45
42,826,487.91
75,322,453.88
29,097,725.66
226,264,903.90
105,561,441.74
147,920,077.50
66,051,538.00
South China
Total
(4) Operation revenue from Top Five Customers:
134
Total operation revenue
Proportion in the operation
from the top five
revenue of the same period
customers
(%)
Duration
11.10
25,108,711.81
19,903,836.50
13.15
5. Return on Investment
(1) Statement of Return on Investment
Amount in the same
Investees
period
Return on long term equity investment based on cost
method
Return on long term equity investment based on
equity method
34,187,130.93
13,758,953.80
-48,985.48
-
-
-
-
-
34,138,145.45
13,758,953.80
Return on investment from disposal of long-term
equity investment
Return on investment obtained from the
available-for-sale financial assets
Total
year
(2) Return on long term equity investment based on cost method
Amount in the same
Investees
period
Shenzhen FIYTA Technology Development Co., Ltd.
Shenzhen FIYTA Sophisticated Timepieces Manufacture
Co., Ltd.
Total
year
3,400,809.83
30,786,321.10
13,758,953.80
34,187,130.93
13,758,953.80
(3) Return on long term equity investment calculated based on the equity method
Investees
Amount in the
report period
Amount in the
same period of the
previous year
and decrease
Decrease of net
Shenzhen Research Institution of
Northwestern Polytechnical
Cause of increase
-48,985.48
University
-
profit of the
investee in the
report year
135
6. Supplementary information of the cash flow statement
Items
period
Amount in the same
year
1. Net cash flows arising from adjustment of net profit
into operating activities:
35,802,958.57
16,731,185.38
9,551,664.64
9,649,031.96
443,724.15
408,896.88
6,341,035.05
7,076,735.78
-50,357.86
-6,920,913.33
10,183,933.21
7,489,968.00
-34,138,145.45
-13,758,953.80
-6,777.24
9,726.36
-70,802,020.29
-17,640,073.04
50,537,978.99
-28,187,680.79
79,443,128.68
17,773,019.69
87,307,122.45
-7,369,056.91
Ending cash balance
148,907,030.69
58,160,134.97
Less: Opening cash balance
529,568,738.47
46,560,890.55
Plus: Ending cash equivalent balance
-
-
Less: Opening cash equivalent balance
-
-
-380,661,707.78
11,599,244.42
Net profit
Plus: Provisions for impairment of assets
Depreciation of fixed assets, oil and gas assets,
production based biological asset
Amortization of intangible assets
Long-term expenses to be apportioned
Loss (gain) from disposal of fixed assets, intangible
assets and other long term assets
Financial expenses
Investment loss (gain)
Decrease (increase) of deferred income tax asset
Increase (decrease) of deferred income tax liability
Decrease (Increase) of inventories
Decrease (Increase) of operational receivables
Increase of operational payables
Net cash flow arising from operating activities
2. Significant investment and fund-raising activities not
involved in cash income and expenses:
3. Net change of cash and cash equivalents:
Net increase in cash and cash equivalents
XIV. Complementary Information
1. Statement of non-recurring gain and loss
In CNY
Amount in
the report
Items
period
50,357.86
Gain/Loss from disposal of non-current assets
136
Amount in the
same period
of the previous
year
6,891,234.90
Tax rebate or reduction with approval by overstepping authority, or without
-
formal approval document
Government subsidy recognized in current gain and loss (excluding those
closely related to the Company’s business and granted under the state’s
1,026,556.00
720,000.00
-
-
-
-
-
-
-1,965,352.1
2
-405,053.38
-888,438.26
7,206,181.52
266,716.27
1,581,498.85
policies according to certain quota of amount or volume)
Gains/losses from fair value changes of trading financial assets and trading
financial liabilities, and investment income from disposal of trading financial
assets, trading financial liabilities and available-for-sale financial assets,
except effective hedging activities related to the Company’s normal
operations
Reversal of provision for impairment of the accounts receivable separately
tested for impairment
Income and expenses from the business other than the above items
Other gain and loss items in compliance with definition of non-recurring gains
and losses
Sub-total
Amount influencing the income tax
Amount affected by minority equity (after tax)
-1,155,154.5
Total
3
5,624,682.67
The Group recognizes the non-recurring gain and loss items according to the
Interpretative Announcement on Information Disclosure by Companies that Offer
Securities to the Public No. 1 – Non-Recurring Gains and Losses (CSRC Announcement
[2008] No. 43).
2. Net assets-income ratio and earnings per share
Profit in the report period
Net assets-income ratio
(weighted average)
Earning per share, CNY/share
Basic earning per
Diluted earning per
share
share
0.219
0.219
the
Company’s
shareholders of ordinary
6.75%
shares
137
the
shareholders
ordinary
shares
of
less
6.84%
0.222
0.222
non-recurring gain and
loss
Note: (1) Weighted average net asset earning rate = P0/(E0＋NP÷2＋Ei×Mi÷M0–- Ej
×Mj÷M0±Ek×Mk÷M0)
Where P0 is the net profit attributable to the shareholders of common shares respectively
corresponding to the net profit attributable to the Company’s shareholders of common
shares after deduction of the non-recurring gain and loss. NP is the net profit attributable
to the shareholders of ordinary shares in the Company. E0 is the net profit at the
beginning of a period attributable to the shareholders of ordinary shares in the Company;
Ei is the newly added net asset attributable to the Company’s shareholders of ordinary
shares arising from issuing of new shares or conversion of debentures into shares; Ej is
the net asset decreased from repurchase or cash dividend, etc. and attributable to the
Company’s shareholders of ordinary shares; M0 is the number of months in a report
period; Mi is the accumulated months from the next month after the new addition of net
asset to the end of a report period; Mi is the number of accumulative months from the next
month after the deduction of net assets to the end of a report period; Ek is the
increase/decrease change arising from other transaction or matters; Mk is the
accumulated months from the next month after change in increase/decrease of other net
asset to the end of the report period.
In case consolidation of an enterprise under the same control took place in the report
period, in calculating the weighted average net asset-income ratio less the non-recurring
gain and loss, the net assets of the consolidatee would be weighted commencing from the
next month after the consolidation date. In calculating the weighted average net
asset-income ratio during the comparative period, the consolidatee’s net profit and net
assets would all be weighted commencing from the next month after the eventual
controller starts implementing control.
In calculating the weighted average net
asset-income ratio less the non-recurring gain and loss during the comparative period, the
consolidatee’s net assets would not be weighted for calculation (the weight is zero).
(2) For calculation of basic earnings per share and diluted earnings per share, refer to
Note VII. 42.
3. Notes to the Abnormalities of the Major Items in the Group’s Consolidated
Financial Statements and the Reasons
(1) Items in Balance Sheet
A. Decrease of the monetary funds over the year beginning by CNY 315.08 million and
decrease of cash and cash equivalents in the report period by CNY 315.08 million, where
the net cash flow arising from the operating activities was CNY –103.43 million were
mainly due to that with expansion of the marketing network size of famous brand watches
and FIYTA watches, the purchase cost increased correspondingly and cash outflow
reached CNY 105.50 million. Net cash flow arising from investment activities amounting to
CNY –55.24 million mainly consisted of payment for purchase of fixed assets and
refurbishment of new shops amounting to CNY 36.22 million and payment for purchase of
138
the equity in HENGLIANDA amounting to CNY19.11 million.
Net cash flow arising from financing activities amounting to CNY –164.68 million mainly
consisted of repayment of the bank loan amounting to CNY 114.14 million, payment for
bank loan interest amounting to CNY 22.49 million and payment of the dividends
amounting to CNY 28.05 million.
B. Decrease of the advance payment over the year beginning by CNY 11.86 million
consisted of: advance payment in FIYTA Technology increased by CNY 5.09 million over
the year beginning, that in FIYTA Hong Kong decreased by CNY 3.75 million, that in
HARMONY decreased by CNY 12.38 million and that in XIANGJI decreased by CNY 0.81
million.
C. Increase of accounts receivable by CNY 62.56 million over the year beginning was
mainly due to growth of sales, including that of HARMONY increased by CNY 34.26
million over the year beginning and that of FIYTA Watches increased by CNY 30.10 million
D. Inventories increased by CNY 235.70 million over the year beginning, mainly including:
inventories in HARMONY increased by CNY 149.20 million for its newly opened shops
and increase of brands; goods in stock and raw materials in FIYTA increased by CNY 59
million due to development of new styles and goods allocation.
E. Increase of the long term expenses to be apportioned by CNY 11.30 million over the
year beginning was mainly due to increase of the refurbishment expenses for retail shops,
where HARMONY increased by CNY 5.50 million, FIYTA Hong Kong increased by
CNY2.34 million and XIANGJI increased by CNY1.37 million for refurbishment.
F. Decrease of the short term loans by CNY 105.94 over the year beginning mainly
consists of repayment of the short term loans by the headquarters amounting to CNY
56.00 million, repayment of the short term loans by HARMONY amounting to CNY 50
million.
G. Increase of the payable taxes by CNY 18.98 million over the year beginning mainly
consists of increase of payable taxes in HARMONY by CNY 11.67 million over the year
beginning, decrease of payable taxes in FIYTA Business Division by CNY 2.70 million
139
over the year beginning due to increase of purchases; increase of the payable taxes in
FIYTA Hong Kong by CNY 2.70 million over the year beginning, and increase of the
payable taxes in FIYTA Technology and Manufacture Co. by CNY 7.60 million over the
year beginning.
H. Decrease of capital reserve by CNY 112.77 million over the year beginning was mainly
due to decrease of the capital reserve by CNY 112.22 million resulted from that the
Company conducted conversion of the capital reserve into capital stock on 4-for-10 basis.
I. Decrease of the minority shareholders’ equity by CNY 18.41 million over the year
beginning was mainly due to that the Company acquired the minority shareholders’ equity
in HARMONY and HARMONY acquired minority shareholders’ equity in HENGLIANDA,
one of its subsidiaries.
(2) Profit Statement Items
A. Operation revenue in the report period was CNY 1,232.01 milloin with a year-on-year
growth of 51.95%. The growth was mainly due to that HARMONY increased the revenue
due to increase of the newly opened shops and its existing shops increased revenue
through steady development and optimization of the network sales; in addition, FIYTA
watches experienced a big growth in revenue over the same period of the previous year;
B. The operation costs in the report period amounted to CNY 820.49 million, increased by
45.14% over the same period of the previous year. The growth was mainly due to increase
of the revenue; the difference between its growth proportion and the growth proportion of
the operation revenue was 6.81%. The difference was mainly due to that HARMONY
made good control over the terminal discount and the gross profit rate of FIYTA watches
increased somewhat over the same period of the previous year;
C. The sales costs incurred in the report period amounted to CNY 185.74 million, a
63.57% growth over the same period of the previous year. The growth was mainly due to
corresponding increase of the sales costs with increase of the sales income.
D. The amount of the administrative expenses incurred in the report period was CNY
86.93 million, a 39.66% growth over the same period of the previous year. The growth was
140
mainly due to corresponding growth of emoluments and the relevant expenses resulted
from expansion of the business scope, increase and upgrading of employees.
E. Loss from impairment of assets incurred in the report period amounted to CNY 2.2565
million, increased by CNY 1.8442 million over the same period of the previous year. The
growth was mainly due to the provision for impairment of the inventories of the raw
materials corresponding to the watches with poor realizability in the terminal sales by the
Manufacture Co., one of the Company’s subsidiaries, amounting to CNY2.00 million and
the provision for impairment of the inventories amounting to CNY 0.2565 million by
HARMONY for its famous brand watches according to the Group’s method for
measurement of the reserve for impairment of the inventories;
F. Non-operating revenue incurred in the report period amounted to CNY 1.3744 million,
decreased by 82.46% over the same period of the previous year. The decrease was
mainly due to the income from disposal of fixed assets resulted from the Company’s sale
of Huashun Building in Chengdu in the same period of the previous year.
141

飞亚达（集团）股份有限公司 FIYTA HOLDINGS LTD.

Transcription

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