Auditors’ Report
FIYTA Holdings Ltd.
For the Year Ended 31 December 2015
Grant Thornton
CONTENTS
Auditors’ report
Consolidated and company balance sheets 1-2
Consolidated and company income statements 3
Consolidated and company cash flow statements 4-5
Consolidated and company statements of changes in shareholders’
6-11
equity
Notes to the financial statements 12-89
致同会计师事务所(特殊普通合伙)
中国北京朝阳区建国门外大街 22 号
赛特广场 5 层邮编 100004
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www.grantthornton.cn
(English Translation for Reference Only)
Auditors’ Report
GTCSZ(2016) No. 441ZA2106
To the shareholders of FIYTA Holdings Ltd.,
We have audited the accompanying financial statements of FIYTA Holdings Ltd. (“FIYTA Holdings”),
which comprise the consolidated and company balance sheets as at 31 December 2015, and the
consolidated and company income statements, the consolidated and company cash flow statements and
consolidated and company statements of change in shareholders’ equity for the year then ended, and
notes to the financial statements.
I. Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial
statements in accordance with the requirements of Accounting Standards for Business Enterprises, and
for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with China Standards on Auditing. Those standards require that we
comply with Chinese Certified Public Accountants’ ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
III. Opinion
In our opinion, the accompanying financial statements of FIYTA Holdings present fairly, in all material
respects, the consolidated and the company’s financial position of FIYTA Holdings as at 31 December
2015, and of their consolidated and the company’s financial performance and cash flows for the year then
ended in accordance with the requirements of Accounting Standards for Business Enterprises.
Grant Thornton Chinese Certified Public Accountant Su Yang
Chinese Certified Public Accountant Chen Zhifang
Beijing, China 10 March 2016
Consolidated and company balance sheets
As at 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
As at 31/12/2015 As at 31/12/2014
Item Notes
Consolidated Company Consolidated Company
Current assets:
Cash and bank balances V. 1 638,962,875.93 513,869,824.81 116,455,070.54 37,060,566.79
Financial assets measured at fair
value through profit or loss for - - - -
the current period
Notes receivable V. 2 7,197,788.08 - 6,162,768.29 -
Accounts receivable V. 3 304,725,676.29 351,276,905.53 11,735,787.90
Prepayments V. 4 48,869,563.60 43,054,642.06 -
Interest receivable - - - -
Dividends receivable - - - -
Other receivables V. 5 39,847,732.76 1,527,756,817.18 41,525,719.27 1,524,513,111.66
Inventories V. 6 2,092,691,019.29 - 2,133,791,024.32 -
Non-current assets due within
- - - -
one year
Other current assets V. 7 15,796,773.56 2,089,651.83 14,421,516.43 503,071.74
Total current assets 3,148,091,429.51 2,043,716,293.82 2,706,687,646.44 1,573,812,538.09
Non-current assets:
Available-for-sale financial assets V. 8 85,000.00 85,000.00 85,000.00 85,000.00
Held-to-maturity investments - - - -
Long-term receivables - - - -
Long-term equity investment V. 9 43,221,572.05 814,121,292.05 42,389,759.91 773,189,479.91
Investment property V. 10 216,948,193.02 216,948,193.02 226,091,938.89 226,091,938.89
Fixed assets V. 11 361,979,828.01 113,553,719.50 323,732,870.58 117,256,223.80
Construction in progress V. 12 173,189,274.57 173,189,274.57 51,389,263.53 51,389,263.53
Construction materials - - - -
Disposal of fixed assets - - - -
Productive biological assets - - - -
Oil and gas assets - - - -
Intangible assets V. 13 36,429,626.66 30,104,404.98 35,502,525.72 29,165,984.08
Development expenditures - - - -
Goodwill V. 14 - - - -
Long-term deferred expenses V. 15 155,704,564.39 4,693,186.19 149,733,566.03 4,813,767.34
Deferred tax assets V. 16 105,901,723.16 1,081,888.10 90,669,076.10 1,198,606.77
Other non-current assets V. 17 5,118,833.65 5,118,833.65 31,500,000.00 -
Total non-current assets 1,098,578,615.51 1,358,895,792.06 951,094,000.76 1,203,190,264.32
Total assets 4,246,670,045.02 3,402,612,085.88 3,657,781,647.20 2,777,002,802.41
1
Consolidated and company balance sheets (continued)
As at 31 December 2015
As at 31/12/2015 As at 31/12/2014
Item Notes
Consolidated Company Consolidated Company
Current liabilities
Short-term loans V. 18 988,186,200.00 700,000,000.00 989,445,000.00 683,000,000.00
Financial liabilities measured at
fair value through profit or loss - - - -
for the current period
Notes payable - - - -
Accounts payable V. 19 155,939,686.54 23,711,339.76 147,119,118.81 211,339.76
Advances from customer V. 20 18,031,129.87 3,207,516.61 12,087,368.17 3,484,435.98
Employee benefits payable V. 21 39,396,747.95 8,188,793.56 38,648,432.41 10,307,200.18
Taxes payable V. 22 68,921,732.81 2,857,031.42 77,602,770.06 3,505,501.05
Interest payable V. 23 19,211,630.02 18,170,745.35 19,420,893.75 18,139,997.63
Dividends payable - - - -
Other payables V. 24 48,131,616.20 17,550,238.03 188,574,900.45 165,507,426.74
Non-current liabilities due
108,914,000.00 - - -
within one year
Other current liabilities V. 25 1,988,252.38 - 5,482,521.27 -
Total current liabilities 1,448,720,995.77 773,685,664.73 1,478,381,004.92 884,155,901.34
Non-current liabilities:
Long-term loan V. 26 90,994,964.33 68,361,928.00 139,952,425.65 15,361,928.00
Bonds payable V. 27 399,823,760.28 399,823,760.28 398,767,929.40 398,767,929.40
Long-term payables - - - -
Long-term employee benefits
- - - -
payable
Specific payables - - - -
Contingent liabilities - - - -
Deferred income V. 28 4,300,000.00 4,300,000.00 4,200,000.00 4,200,000.00
Deferred tax liabilities - - - -
Other non-current liabilities - - - -
Total non-current liabilities 495,118,724.61 472,485,688.28 542,920,355.05 418,329,857.40
Total liabilities 1,943,839,720.38 1,246,171,353.01 2,021,301,359.97 1,302,485,758.74
Share capital V. 29 438,744,881.00 438,744,881.00 392,767,870.00 392,767,870.00
Capital reserve V. 30 1,062,455,644.22 1,068,111,185.32 525,508,281.60 531,163,822.70
Less: treasury stock - - - -
Other comprehensive income V. 31 -17,145,189.71 - -17,609,265.22 -
Special reserves - - - -
Surplus reserve V. 32 179,743,077.15 179,743,077.15 165,915,466.89 165,915,466.89
Undistributed profit V. 33 635,417,237.55 469,841,589.40 566,819,577.37 384,669,884.08
Total shareholders' equity
2,299,215,650.21 2,156,440,732.87 1,633,401,930.64 1,474,517,043.67
attributable to the parent
company 3,614,674.43 - 3,078,356.59 -
Total shareholders’ equity 2,302,830,324.64 2,156,440,732.87 1,636,480,287.23 1,474,517,043.67
Total liabilities and
4,246,670,045.02 3,402,612,085.88 3,657,781,647.20 2,777,002,802.41
shareholders’ equity
Legal representative:Xu Principal in charge of accounting:Hu Head of accounting
Dongsheng Xinglong department:Hu Xinglong
2
Consolidated and company income statements
For the year ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
Not Year ended 31/12/2015 Year ended 31/12/2014
Item
es Consolidated Company Consolidated Company
108,183,860.4
I. Operating revenue V. 34 3,162,196,212.90 95,435,182.26 3,278,142,785.87
5
Less: Operating cost V. 34 1,929,513,666.04 14,952,820.19 2,054,714,957.45 30,576,403.18
Business tax and surcharges V. 35 30,674,510.18 5,351,881.76 23,901,881.30 5,072,072.03
Selling and distribution
V. 36 779,536,520.59 - 722,839,956.11 -
expenses
G&A expenses V. 37 198,077,866.76 53,984,337.81 208,452,027.58 53,365,686.49
Financial expenses V. 38 94,347,464.79 18,388,066.34 105,819,460.82 22,482,320.07
Impairment loss V. 39 6,253,998.83 -566,874.66 2,621,303.29 441,201.26
Add: Gains from changes in fair value
- - - -
("-" for losses)
Investment gain (“-“ for losses) V. 40 831,812.14 132,219,952.72 -848,180.21 87,893,120.21
Including: Income from
investment in associates and jointly 831,812.14 831,812.14 -848,180.21 -848,180.21
controlled enterprise
II. Operating profit (“-“ for losses) 124,623,997.85 135,544,903.54 158,945,019.11 84,139,297.63
Add: non-operating income V. 41 12,037,251.82 3,566,753.92 12,541,095.86 8,530,541.14
Including: gains from disposal of
94,316.07 4,000.00 70,124.76 57,532.85
non-current assets
Less: non-operating expenses V. 42 1,131,027.33 316,767.32 1,091,494.98 212,482.77
Including: losses from disposal of
59,880.75 16,717.32 115,045.74 32,482.77
non-current assets
III. Profit before income tax ("-" for
135,530,222.34 138,794,890.14 170,394,619.99 92,457,356.00
losses)
Less: income tax expenses V. 43 13,486,541.61 518,787.56 24,291,386.77 443,629.11
IV. Net profit for the year ("-" for
122,043,680.73 138,276,102.58 146,103,233.22 92,013,726.89
losses)
Attributable to:
121,702,057.44 - 145,591,136.39 -
Shareholders of the parent company
Minority interests 341,623.29 - 512,096.83 -
V. After tax other comprehensive
658,770.06 - -9,354,879.56 -
income
Attributable to:
464,075.51 - -9,348,432.13 -
Shareholders of the parent company
A. Not reclassified subsequently to profit
- - - -
or loss
B. Reclassified subsequently to profit or
464,075.51 - -9,348,432.13 -
loss
a. Translation differences arising on
translation of foreign currency financial 464,075.51 - -9,348,432.13 -
statements
Minority interests 194,694.55 - -6,447.43 -
VI. Total comprehensive income for
122,702,450.79 138,276,102.58 136,748,353.66 92,013,726.89
the year
Attributable to:
122,166,132.95 - 136,242,704.26 -
Shareholders of the parent company
Minority interests 536,317.84 - 505,649.40 -
VII. Earnings per share: - -
1. Basic earnings per share 0.310 - 0.371 -
2. Diluted earnings per share - - - -
Principal in charge of accounting:Hu Head of accounting
Legal representative:Xu Dongsheng
Xinglong department:Hu Xinglong
3
Consolidated and company cash flow statements
For the year ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary unit: RMB Yuan
Year ended 31/12/2015 Year ended 31/12/2014
Item Notes
Consolidated Company Consolidated Company
I. Cash flows from operating activities:
Cash received from sales of goods and rendering
3,655,072,713.33 106,837,676.30 3,753,155,046.51 342,112,116.63
of services
Refund of taxes and surcharges - - - -
Cash received relating to other operating activities V. 44 41,260,214.12 62,329,516.00 39,294,097.35 12,452,134.93
Subtotal of cash inflows from operating
3,696,332,927.45 169,167,192.30 3,792,449,143.86 354,564,251.56
activities
Cash paid for goods and services 2,182,822,674.35 - 2,491,056,383.84 21,692,373.05
Cash paid to and on behalf of employees 498,411,775.82 50,544,482.34 450,944,736.29 42,583,354.07
Payments of taxes and levies 267,337,552.24 10,408,943.54 199,704,011.66 8,053,948.98
Cash paid relating to other operating activities V. 44 351,523,932.63 13,607,560.44 361,554,381.10 137,085,829.65
Subtotal of cash outflows for operating
3,300,095,935.04 74,560,986.32 3,503,259,512.89 209,415,505.75
activities
Net cash flows from operating activities 396,236,992.41 94,606,205.98 289,189,630.97 145,148,745.81
II. Cash flows from investing activities
Cash received from disposal of investments - - 1,400,000.00
Cash received from returns on investments - 131,388,140.58 - 88,741,300.42
Net cash received from disposal of fixed assets,
340,367.11 111,800.00 51,919.04 41,000.00
intangible assets and other long-term assets
Cash received from disposal of subsidiaries and
- - - -
other business units
Net cash received relating to other investing
- - - -
activities
Subtotal of cash inflows from investing
340,367.11 131,499,940.58 51,919.04 90,182,300.42
activities
Cash paid to acquire fixed assets, intangible assets
230,352,063.28 105,530,925.54 185,725,953.70 47,533,744.89
and other long-term assets
Cash paid to acquire investments - 40,100,000.00 - -
Net cash paid to acquire subsidiaries and other
- - - -
business units
Cash paid relating to other investing activities V. 44 - - 1,575,000.00 1,575,000.00
Subtotal of cash outflows for investing
230,352,063.28 145,630,925.54 187,300,953.70 49,108,744.89
activities
Net cash flows from investing activities -230,011,696.17 -14,130,984.96 -187,249,034.66 41,073,555.53
III. Cash flows from financing activities：
Cash received from capital contributions 585,499,993.55 585,499,993.55 - -
Including: Cash received from capital contributions
- - - -
by minority shareholders of subsidiaries
Cash received from loans 2,338,413,855.11 1,813,000,000.00 1,383,754,987.79 838,000,000.00
Cash received from bonds - - - -
Cash received relating to other financing activities V. 44 13,500,000.00 - 189,684,398.22 150,001,328.82
Sub-total of cash inflows from financing
2,937,413,848.66 2,398,499,993.55 1,573,439,386.01 988,001,328.82
activities
Cash repayments of borrowings 2,289,386,353.35 1,743,000,000.00 1,489,909,721.41 1,050,000,000.00
Cash payments for interest expenses and
127,821,827.59 107,150,257.43 135,784,422.03 115,502,648.61
distribution of dividends or profits
Including: Cash payments for dividends or profit to
- - - -
minority shareholders of subsidiaries
Cash payments relating to other financing activities V. 44 165,515,699.12 152,015,699.12 42,248,452.40 1,165,383.00
Including: Cash payments to minority shareholders
- - - -
of subsidiaries for capital reduction
Sub-total of cash outflows for financing
2,582,723,880.06 2,002,165,956.55 1,667,942,595.84 1,166,668,031.61
activities
Net cash flows from financing activities 354,689,968.60 396,334,037.00 -94,503,209.83 -178,666,702.79
IV. Effect of foreign exchange rate changes on 1,592,540.55 - -220,426.68 -
4
cash and cash equivalents
V. Net increase in cash and cash equivalents V. 45 522,507,805.39 476,809,258.02 7,216,959.80 7,555,598.55
Add: Cash and cash equivalents as at 31/12/2014 114,880,070.54 35,485,566.79 107,663,110.74 27,929,968.24
VI. Cash and cash equivalent as at 31/12/2015 V. 45 637,387,875.93 512,294,824.81 114,880,070.54 35,485,566.79
Head of accounting
Legal representative:Xu Dongsheng Principal in charge of accounting: Hu Xinglong
department:Hu Xinglong
5
Consolidated statements of changes in shareholders’ equity
for the Year Ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Year ended 31/12/2015
Attributable to shareholders' equity of the parent company
Item Less: Other General Minority Total shareholders'
Special Surplus Undistributed interest equity
Share capital Capital reserve treasury comprehensive risk
reserve Reserve profit
stocks income reserve
I. Balance at 31/12/2014 392,767,870.00 525,508,281.60 - -17,609,265.22 - 165,915,466.89 - 566,819,577.37 3,078,356.59 1,636,480,287.23
Add: Changes in accounting
—— —— —— —— —— —— —— —— —— ——
policies
Correction of errors —— —— —— —— —— —— —— —— —— ——
Consolidation under common
- - - - - - - - - -
control
Others - - - - - - - - - -
II. Balance at 1/1/2015 392,767,870.00 525,508,281.60 - -17,609,265.22 - 165,915,466.89 - 566,819,577.37 3,078,356.59 1,636,480,287.23
III. Changes in equity for the
45,977,011.00 536,947,362.62 - 464,075.51 - 13,827,610.26 - 68,597,660.18 536,317.84 666,350,037.41
year ( "- "for decrease)
(I) Total comprehensive income
- - - 464,075.51 - - - 121,702,057.44 536,317.84 122,702,450.79
for the year
(II) Shareholders' contributions
45,977,011.00 536,947,362.62 - - - - - - - 582,924,373.62
and decrease of capital
1. Common shares by the
45,977,011.00 536,947,362.62 - - - - - - - 582,924,373.62
shareholders
2. Increase in shareholders'
equity resulted from share-based - - - - - - - - - -
payments
3. Others - - - - - - - - -
(III) Appropriation of profits - - - - - 13,827,610.26 - -53,104,397.26 - -39,276,787.00
1. Transfer to surplus reserves - - - - - 13,827,610.26 - -13,827,610.26 - -
2. Distributions to shareholders - - - - - - - -39,276,787.00 - -39,276,787.00
3. Others - - - - - - - - - -
(IV) Transfer within equity - - - - - - - - - -
1.Capital reserves converting
- - - - - - - - - -
into share capital
2.Surplus reserves converting
- - - - - - - - - -
into share capital
3.Surplus reserves cover the
- - - - - - - - - -
deficit
4. Others - - - - - - - - - -
6
(V) Special Reserve - - - - - - - - - -
1. Provision for the year - - - - - - - - - -
2. Use for the year - - - - - - - - - -
(VI) Others - - - - - - - - - -
IV. Balance at 31/12/2015 438,744,881.00 1,062,455,644.22 - -17,145,189.71 - 179,743,077.15 - 635,417,237.55 3,614,674.43 2,302,830,324.64
Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong Head of accounting department:Hu Xinglong
7
Consolidated statements of changes in shareholders’ equity (continued)
for the Year Ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Year ended 31/12/2014
Attributable to shareholders' equity of the parent company
Item Less: Other General Minority Total shareholders'
Special Surplus Undistributed interest equity
Share capital Capital reserve treasury comprehensive risk
reserve Reserve profit
stocks income reserve
I. Balance at 31/12/2013 392,767,870.00 525,506,952.78 - -8,260,833.09 - 156,714,094.20 - 469,706,600.67 2,384,907.19 1,538,819,591.75
Add: Changes in accounting
—— —— —— —— —— —— —— —— —— ——
policies
Correction of errors —— —— —— —— —— —— —— —— —— ——
Consolidation under common
- - - - - - - - - -
control
Others - - - - - - - - - -
II. Balance at 1/1/2014 392,767,870.00 525,506,952.78 - -8,260,833.09 - 156,714,094.20 - 469,706,600.67 2,384,907.19 1,538,819,591.75
III. Changes in equity for the
- 1,328.82 - -9,348,432.13 - 9,201,372.69 - 97,112,976.70 693,449.40 97,660,695.48
year ( "- "for decrease)
(I) Total comprehensive income
- - - -9,348,432.13 - - - 145,591,136.39 505,649.40 136,748,353.66
for the year
(II) Shareholders' contributions
- 1,328.82 - - - - - - 187,800.00 189,128.82
and decrease of capital
1. Common shares by the
- - - - - - - - 187,800.00 187,800.00
shareholders
2. Increase in shareholders'
equity resulted from share-based - - - - - - - - - -
payments
3. Others - 1,328.82 - - - - - - - 1,328.82
(III) Appropriation of profits - - - - - 9,201,372.69 - -48,478,159.69 - -39,276,787.00
1. Transfer to surplus reserves - - - - - 9,201,372.69 - -9,201,372.69 - -
2. Distributions to shareholders - - - - - - - -39,276,787.00 - -39,276,787.00
3. Others - - - - - - - - - -
(IV) Transfer within equity - - - - - - - - - -
1.Capital reserves converting
- - - - - - - - - -
into share capital
2.Surplus reserves converting
- - - - - - - - - -
into share capital
3.Surplus reserves cover the
- - - - - - - - - -
deficit
4. Others - - - - - - - - - -
8
(V) Special Reserve - - - - - - - - - -
1. Provision for the year - - - - - - - - - -
2. Use for the year - - - - - - - - - -
(VI) Others - - - - - - - - - -
IV. Balance at 31/12/2014 392,767,870.00 525,508,281.60 - -17,609,265.22 - 165,915,466.89 - 566,819,577.37 3,078,356.59 1,636,480,287.23
Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong Head of accounting department:Hu Xinglong
9
Company statements of changes in shareholders’ equity
for the Year Ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Year ended 31/12/2015
Item Less: Total
Other comprehensive Special Undistributed
Share capital Capital reserve treasury Surplus Reserve shareholders'
income reserve profit
stocks equity
I. Balance at 31/12/2014 392,767,870.00 531,163,822.70 - - - 165,915,466.89 384,669,884.08 1,474,517,043.67
Add: Changes in accounting policies —— —— —— —— —— —— —— ——
Correction of errors —— —— —— —— —— —— —— ——
Others - - - - - - - -
II. Balance at 1/1/2015 392,767,870.00 531,163,822.70 - - - 165,915,466.89 384,669,884.08 1,474,517,043.67
III. Changes in equity for the year ( "- "for
45,977,011.00 536,947,362.62 - - - 13,827,610.26 85,171,705.32 681,923,689.20
decrease)
(I) Total comprehensive income for the year - - - - - - 138,276,102.58 138,276,102.58
(II) Shareholders' contributions and decrease of
45,977,011.00 536,947,362.62 - - - - - 582,924,373.62
capital
1. Common shares by the shareholders 45,977,011.00 536,947,362.62 - - - - - 582,924,373.62
2. Increase in shareholders' equity resulted from
- - - - - - - -
share-based payments
3. Others - - - - - - -
(III) Appropriation of profits - - - - - 13,827,610.26 -53,104,397.26 -39,276,787.00
1. Transfer to surplus reserves - - - - - 13,827,610.26 -13,827,610.26 -
2. Distributions to shareholders - - - - - - -39,276,787.00 -39,276,787.00
3. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - -
4. Others - - - - - - - -
(V) Special Reserve - - - - - - - -
1. Provision for the year - - - - - - - -
2. Use for the year - - - - - - - -
(VI) Others - - - - - - - -
IV. Balance at 31/12/2015 438,744,881.00 1,068,111,185.32 - - - 179,743,077.15 469,841,589.40 2,156,440,732.87
Head of accounting department:Hu
Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong
Xinglong
10
Company statements of changes in shareholders’ equity
for the Year Ended 31 December 2015
Prepared by: FIYTA Holdings Ltd. Monetary Unit: RMB Yuan
Year ended 31/12/2014
Item Less: Other Total
Special Undistributed
Share capital Capital reserve treasury comprehensive Surplus Reserve shareholders'
reserve profit
stocks income equity
I. Balance at 31/12/2013 392,767,870.00 531,162,493.88 - - - 156,714,094.20 341,134,316.88 1,421,778,774.96
Add: Changes in accounting policies —— —— —— —— —— —— —— ——
Correction of errors —— —— —— —— —— —— —— ——
Others - - - - - - - -
II. Balance at 1/1/2014 392,767,870.00 531,162,493.88 - - - 156,714,094.20 341,134,316.88 1,421,778,774.96
III. Changes in equity for the year ( "- "for
- 1,328.82 - - - 9,201,372.69 43,535,567.20 52,738,268.71
decrease)
(I) Total comprehensive income for the year - - - - - - 92,013,726.89 92,013,726.89
(II) Shareholders' contributions and decrease of
- 1,328.82 - - - - - 1,328.82
capital
1. Common shares by the shareholders - - - - - - - -
2. Increase in shareholders' equity resulted from
- - - - - - - -
share-based payments
3. Others - 1,328.82 - - - - - 1,328.82
(III) Appropriation of profits - - - - - 9,201,372.69 -48,478,159.69 -39,276,787.00
1. Transfer to surplus reserves - - - - - 9,201,372.69 -9,201,372.69 -
2. Distributions to shareholders - - - - - - -39,276,787.00 -39,276,787.00
3. Others - - - - - - - -
(IV) Transfer within equity - - - - - - - -
1.Capital reserves converting into share capital - - - - - - - -
2.Surplus reserves converting into share capital - - - - - - - -
3.Surplus reserves cover the deficit - - - - - - - -
4. Others - - - - - - - -
(V) Special Reserve - - - - - - - -
1. Provision for the year - - - - - - - -
2. Use for the year - - - - - - - -
(VI) Others - - - - - - - -
IV. Balance at 31/12/2014 392,767,870.00 531,163,822.70 - - - 165,915,466.89 384,669,884.08 1,474,517,043.67
Head of accounting department:Hu
Legal Representative:Xu Dongsheng Principal in charge of accounting:Hu Xinglong
Xinglong
11
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Notes to the Financial Statements
I. Company information
1. Company Profile
FIYTA Holdings Ltd. (the “Company”) was founded, under the approval of Shen Fu Ban Fu (1992) 1259
issued by the General Office of Shenzhen Municipal Government, through the restructuring of former
Shenzhen FIYTA Time Industrial Company by the promoter of China National Aero-Technology Import and
Export Shenzhen Industry & Trade Center (name changed to “China National Aero-Technology Shenzhen
Co., Ltd” lately) on 25 December 1992, and the name changed to “Shenzhen FIYTA Holdings Ltd”.
Pursuant to the approval of ShenRen Yin Fu Zi (1993) 070 issued by the People’s Bank of China Shenzhen
Special Economic Zone Branch, the Company issued Renminbi ordinary shares (A shares) and Renminbi
special shares (B shares) publicly on 10 March 1993. On 3 June 1993, both the Company’s A shares and B
shares were listed and traded on Shenzhen Stock Exchange pursuant to the approval of ShenZheng Ban
Fu[1993]20 issued by Shenzhen Securities Regulatory Office and ShenZheng Shi Zi (1993)16 issued by
Shenzhen Stock Exchange.
On 30 January 1997, the company name changed to Shenzhen FIYTA Holdings Limited with the approval of
Shenzhen Municipal Administration for Industry and Commerce.
On 4 July 1997, China National Aero-Technology Shenzhen Co., Ltd. ("CATIC Shenzhen Company")
transferred 72,360,000 corporate shares (accounting for 52.24% of the Company's total share capital) to
Shenzhen China Aviation Group Company Limited (previously known as "Shenzhen China Aviation Industry
Company Limited", hereinafter referred to as "China National Aviation Group") according to share transfer
agreement signed by both parties. As a result, the Company’s controlling shareholder changed from CATIC
Shenzhen Company to China National Aviation Group.
On 26 October 2007, the Company implemented split-share reform. Under the premise of maintaining the
Company's total of 249,317,999 shares unchanged, the Company's shareholders of non-tradable shares paid
3.1 shares per 10 tradable shares to all the tradable share shareholders registered on option registration date
designated by the split-share reform program. At that point, after the reform, the shares held by China
National Aviation Group reduced to 44.69% from 52.24%.
On 29 February 2008, due to expanding the scope of business, the Company’s corporate business license was
altered from Shen Si Zi No. 4403011001583 to No. 440301103196089 with the approval of Shenzhen
Municipal Administration for Industry and Commerce.
With the approval of China Securities Regulatory Commission (CSRC) about non-public offering of stocks of
Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2010]1703) and the approval of State-owned Assets
Supervision and Administration Commission of the State Council (SASAC) about non-public offering of
stocks of Shenzhen FIYTA Holdings Limited” (SASAC(2010)430) in 2010, the Company was approved to
issue not more than 50,000,000 ordinary shares (A shares) through non-public offering. After the completion
of the non-public offering of stocks on 9 December 2010, the Company’s registered capital was increased to
RMB280,548,479.00 and the equity capital of the Company held by China National Aviation Group reduced to
41.49%.
On 8 April 2011, at the basis of 280,548,479 equity shares on 31 December 2010, the Company issued 4 shares
for each 10 shares by transfer of capital reserves to share capital. Total shares of the Company were increased
to 392,767,870 shares after then on.
On 11 November 2015, with the approval of China Securities Regulatory Commission (CSRC) “Reply of
non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (ZhengJianXuKe[2015]2588) and the
approval of State-owned Assets Supervision and Administration Commission of the State Council (SASAC)
“Reply of non-public offering of stocks of Shenzhen FIYTA Holdings Limited” (SASAC(2015)415), the
Company was approved to issue not more than 46,911,649 ordinary shares (A shares) through non-public
offering. After the completion of the non-public offering of stocks on 22 December 2015, the Company’s
registered capital was increased to RMB438,744,881.00 and the equity capital of the Company held by China
12
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
National Aviation Group reduced to 37.15%.
As of 31 December 2015, the Company has accumulatively issued 438,744,881 shares in total, refer to Note V.
29 for details.
The business scope of the Company and its subsidiaries (collectively referred to as the “Group”) mainly
includes: producing and selling of analogue quartz watches and its movements, components, various timing
devices, processing and wholesaling karat gold jewelry watches (production sites are to be declared separately);
domestic commercial and material supply and distributing business (excluding goods under exclusive
operational rights, special control and exclusive sales); property management and leasing; import and export
business of self-design, construction; import and export business (according to Shen Mao Guan Deng
ZhengZi No.2007-072).The legal representative of the Company is Wu Guangquan. The residence of the
Company is FIYTA Hi-Tech Building located at GaoXin Nan Yi Dao, Nanshan District, Shenzhen.
Corporate governance structure that are established by the Company includes general meeting of shareholders,
board of directors, board of supervisors, audit committee, strategy committee and nomination, remuneration
and evaluation committee. The Company has administration, human resources, finance, property, innovative
design, strategy and information department, general office of board of directors, audit, R&D, and other
functional departments.
The financial statements and notes to the financial statements have been approved by the 6th meeting of the 8th
Board of Directors of the Company on 8 March 2016.
2. Scope of consolidated financial statements
Within the reporting period, ProTop Limited, one of the subsidiaries of the Company, was deregistered. Refer
to Notes VI, Change of consolidation scope, and Notes VII, Equity in other entities for more details.
II. Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises
issued by the Ministry of Finance and their application guidelines, interpretations and other relevant
requirements (collectively, " Accounting Standards for Business Enterprises ").Besides, the Group discloses the
relevant financial information in accordance with Compilation Rules for Information Disclosure by Companies
Offering Securities to the Public No. 15 - General Provisions on Financial Reports (2014 Revision)announced
by China Securities Regulatory Commission.
The financial statements of the Company have been prepared on going concern basis.
The Group follows the accrual basis of accounting. The financial statements are prepared under the historical
cost convention except for certain financial instruments. If impaired, the assets shall provide for impairment in
accordance with the relevant regulations.
III. Significant accounting policies and accounting estimates
The Group determines the policies of depreciation of fixed asset, amortization of intangible assets, capitalized
conditions of R&D expenses and revenue recognition according to the characteristics of its production and
operation. Refer to Notes III. 16, 19, 20 and 25 for specific accounting policies.
1. Representation of compliance with the Accounting Standards for Business Enterprises
The financial statements are prepared in accordance with the requirements of the Accounting Standards for
Business Enterprises, which have truly and completely presented the financial position of the Group and
Company as of 31 December 2015 and their operating results and cash flows and other relevant information
for the year ended 31 December 2015.
2. Accounting period
Accounting year starts on 1 January and ends on 31 December.
13
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
3. Operating Cycle
The operating cycle of the Group is 12 months.
4. Functional currency
The Company and its domestic subsidiaries adopt Renminbi (RMB) as functional currency.
Except for the Swiss-based subsidiary Montres Chouriet SA (the “Swiss Company”), which is a subsidiary of
FIYTA (Hong Kong) Limited (the “FIYTA Hong Kong”), uses Swiss Franc as the functional currency on the
basis of the primary economic environment in which the Swiss Company operates, all other subsidiaries
outside of the mainland China, including HARMONY World Watches International Limited (the “World
Watches International)”, a subsidiary of Shenzhen HARMONY World Watches Centre Co., Ltd (the
“HARMONY Company”), FIYTA Hong Kong and its subsidiary Station 68 Limited ( the “Station 68”) as well
as Nature Art Limited, which is special purpose vehicles controlled by Station 68, use Hong Kong Dollar
(HKD) as the functional currency and their financial statements are translated into RMB on the preparation of
the financial statements.
The currency used in preparation of the Group’s financial statements is RMB.
5. Accounting treatment for business combinations involving entities under common control and not under
common control
(1) Business combinations involving entities under common control
For a business combination involving enterprises under common control, assets and liabilities that are obtained
in a business combination is measured at the carrying amount of the owners’ equity of the party being
absorbed in the consolidated financial statements of the ultimate controlling party at combination date, except
for the adjustments of different accounting policies. The difference between the carrying amount of the net
assets obtained and the carrying amount of the consideration paid for the combination (or total par value of
shares issued) is adjusted to capital reserve, if the capital reserve is not sufficient to absorb the difference, any
excess is adjusted against retained earnings.
Business combinations involving entities under common control achieved in stages that involves multiple
transactions
In the separate financial statements, the initial investment cost is the absorbing party’s share of the carrying
amount of the owners’ equity of the party being absorbed in the consolidated financial statements of the
ultimate controlling party at combination date. The difference between initial investment cost and original
investment carrying amount prior combination plus newly paid consideration at the combination date is
adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb the
difference, any excess is adjusted against retained earnings.
In the consolidated financial statements, assets and liabilities that are obtained in a business combination are
measured at their carrying amount of the owners’ equity of the party being absorbed in the consolidated
financial statements of the ultimate controlling party at combination date, except for the adjustments of
different accounting policies. The difference between the original investment carrying amount prior
combination plus newly paid consideration at the combination date and the carrying amount of the net assets
obtained is adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb
the difference, any excess is adjusted against retained earnings. The long-term equity investment of the
absorbing party prior to combination, profit or loss, other comprehensive income and changes of other
owners’ equity recognized between the later of combination date and the date that the absorbing party and the
absorbed party are under common ultimate control are offset the opening retained earnings or profit or loss
for the current period in the comparative statement.
(2) Business combination involving entities not under common control
For business combinations involving entities not under common control, the consideration for each
14
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
combination is measured at the aggregate of the fair values, at the acquisition date, of assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. At the
acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are measured at their
fair value.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is recognized as goodwill, and measured on the basis of its costs minus the accumulative
impairment provisions. Where the cost of combination is less than the acquirer’s interest in the fair value of
the acquiree’s identifiable net assets, the difference is recognized in profit or loss for the current period after
reassessment.
Business combinations involving entities not under common control achieved in stages that involves multiple
transactions.
In the separate financial statements, the initial investment cost is the sum of the carrying amount of equity
investment of the acquiree held prior to the acquisition date and the additional investment cost at the
acquisition date. When the previously-held equity investment is accounted for under the equity method, any
other comprehensive income previously recognized is not changed on the combination date and is accounted
for on the same basis as would have been required if the investee had directly disposed of the related assets or
liabilities. The owners’ equity recognized as the changes of the investee’s other owners’ equity except for net
profit or loss, other comprehensive income and profit distribution are transferred to profit or loss for the
current period when disposing the investment. For the previously-held equity investment which was accounted
for using fair value, the accumulated changes in fair value included in other comprehensive income is
transferred to profit or loss for the current period upon commencement of the cost method.
In the consolidated financial statements, the cost of business combination is the sum of the consideration paid
at the acquisition date plus the fair value of equity investment of the acquiree held prior to the acquisition date.
The cost of equity investment of the acquiree held prior to the acquisition date is re-measured at the fair value
at the acquisition date, the difference between the fair value and carrying value is recognized as profit or loss
for the current period. Other comprehensive income and changes of other owners’ equity from the equity
interest held in the acquire prior to the acquisition date are transferred to profit or loss for the current period
except for other comprehensive income due to the movement of net liabilities or assets in the investee’s
re-measurement defined benefit plan.
(3) Transaction costs for business combination
The intermediary and other relevant administrative expenses such as audit, legal and valuation advisory for
business combinations are recognized in profit or loss for the current year when incurred. Transaction costs of
equity or debt securities issued as the considerations of business combination are included in the initial
recognition amounts.
6. Preparation of consolidated financial statements
(1) The scope of consolidated financial statements
The scope of consolidated financial statements is determined on the basis of control. Control exists when the
investor has all the following: power over the investee; exposure, or rights to variable returns from its
involvement with the investee; and the ability to use its power over the investee to affect the amount of the
investor’s returns. A subsidiary is an entity that is controlled by the Company (such as enterprises, deemed
separate entities, and structured entities).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company, based on the financial statements of the
Company and its subsidiaries, according to other relevant information. The accounting policies and accounting
periods of the subsidiaries is in accordance with those established by the Company, all significant intercompany
accounts and transactions are eliminated on consolidation.
Where a subsidiary or business has been acquired through a business combination involving enterprises under
15
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
common control in the reporting period, the subsidiary and its business are included in the consolidated
financial statements from the date they are controlled by the ultimate controlling party. Their operating results
and cash flows are included in the consolidated income statement and consolidated cash flow statement from
the date they are controlled by the ultimate controlling party.
Where a subsidiary or business has been acquired through a business combination not involving enterprises
under common control, the subsidiary’s or business income, expenses and profits are included in the
consolidated income statement, and cash flows are included in the consolidated cash flow statement from the
acquisition date to the end of the reporting date.
The portion of a subsidiary’s equity that is not attributable to the parent is treated as minority interests and
presented in the consolidated balance sheet within shareholders’ equity. That portion of net profit or loss of
subsidiaries for the period attributable to minority interests is presented in the consolidated income statement
below the “net profit” line item as “minority interests”. When the amount of loss for the current period
attributable minority interests is more than minority interest in that subsidiary at beginning of the period, the
minority interest is reversed by the balance of the loss of the subsidiary attributable to minority interests.
(3) Acquiring minority shareholders’ equity
The difference between the cost of long-term equity investment and net asset enjoyed which was calculated
based on newly increased equity holding started from the purchase date or combination date, and the
difference between consideration received for the disposal which did not result in losing control over the
subsidiary, and net asset enjoyed which was calculated based on equity holding after disposal started from the
purchase date or combination date, is adjusted to capital reserve. If the capital reserve is insufficient to absorb
the difference, any excess is adjusted against retained earnings.
(4) Losing control over the subsidiary
When the Company loses control over subsidiary because of disposing part of equity investment or other
reasons, the remaining part of the equity investment is re-measured at fair value at the date when losing control
over the subsidiary. A gain or loss is recognized in profit or loss and is calculated by the aggregate of the fair
value of consideration received in disposal of the equity investment and the fair value of remaining part of the
equity investment, and deduct the share of net assets in proportion to previous shareholding percentage in
former subsidiary since acquisition date and the relating goodwill is derecognized.
Other comprehensive income related to the former subsidiary’s equity investment is transferred to profit or
loss for the current period of disposal, except for other comprehensive income due to the movement of net
liabilities or assets in the subsidiary’s re-measurement defined benefit plan.
(5) Disposing equity investment by stages until losing control
a. Determining whether those transactions in disposing equity investment until losing control step by step
belong to “a basket transaction;
b. If those transactions belong to a basket transaction, choose the accounting treatment method for
consolidated and individual financial statements;
c. If those transactions do not belong to a basket transaction, choose the accounting treatment method for
consolidated and individual financial statements.
Multiple transactions resulting in a loss of control are considered as a single transaction, when any of the
following conditions is satisfied:
① The transactions are entered into at the same time or in contemplation of each other;
② The transactions form a single transaction designed to achieve an overall commercial effect;
③ The occurrence of one transaction is dependent on the occurrence of at least one other transaction;
16
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
④ One transaction considered on its own is not economically justified, but it is economically justified when
considered together with other transactions
If multiple transactions by disposing equity investment by stages until losing control do not belong to a basket
transaction in individual financial statements, the carrying amount of long-term equity investments related to
each disposal of equity is derecognized in the separate financial statements, the difference between the
consideration received and the carrying amount of disposed long-term equity investments is recognized as
investment income.
In the consolidated financial statements, for disposing equity investment by stages until losing control step by
step, the measurement of remaining equity and accounting for profit or loss of disposing equity refer to the
above “(3)Losing control over the investee”. The difference between each consideration received and the share
of the subsidiary’s equity calculated consecutively since the purchase date related to disposing investment
before losing control is accounted for using following principal:
①Belong to “a basket transaction”, is recognized as other comprehensive income and is transferred to profit
or loss for the current period when losing control.
②Not belong to “a basket transaction”, is recognized in capital reserve as an equity transactions-and does not
allowed to be transferred to profit or loss for the current period when losing control.
7. Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. The Group classifies
joint arrangements into joint operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations
for the liabilities, relating to the arrangement.
The Group shall recognize the following items in the relation to its interest in a joint operation, and account
for them in accordance with relevant accounting standards:
A. its solely-held assets, and its share of any liabilities incurred jointly;
B. its sole-assumed liabilities, and its share of any liabilities incurred jointly;
C. its revenue from the sale of its share of the output arising from the joint operation;
D. its share of the revenue from the sale of the output by the joint operation; and
E. its sole-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of the
arrangement.
The Group adopts equity method under long-term equity investment in accounting for its investment in joint
venture.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily drawn on demand. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency statement
17
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company, using the exchange
rates prevailing at the dates of the transactions (spot exchange rate)
As at the balance sheet date, monetary items denominated in foreign currency are exchanged to Renminbi by
adopting the prevailing exchange rate on that date. Foreign exchange difference arising from the difference
between the prevailing exchange rate on that date and the prevailing exchange rate on initial recognition or on
the previous balance sheet date are recognized in profit or loss for the current period. Non-monetary items
denominated in foreign currency that are measured at historical cost are still measured at amount denominated
in reporting currency exchanged at the prevailing exchange rate at the transaction date. Non-monetary items
denominated in foreign currency that are measured at fair value are translated using the exchange rate at the
date when fair value was determined and the difference between the translated functional currency amount and
the prevailing exchange rate on initial recognition or on the previous balance sheet date are recognized in profit
or loss for the current period.
(2) Translation of foreign currency financial statements
At the balance sheet date, when translating the foreign currency financial statements of overseas subsidiaries,
the assets and liabilities of the balance sheet are translated to RMB using the spot exchange rate at the balance
sheet date; Items of the shareholders’ equity, except for "undistributed profits", are translated at the spot
exchange rate at the dates on which such items arose.
The revenue and expenses in the income statement are translated using the average exchange rate for the
period.
All items of the cash flow statement are translated using the average exchange rate for the period. As an
adjustment item, the impact of exchange rate changes on cash amount is reflected separately in the cash flow
as " Effect of foreign exchange rate changes on cash and cash equivalents ".
Differences arising from the translation of financial statements are separately presented as the “other
comprehensive income” in the shareholders’ equity of the balance sheet.
When the control on foreign operation is lost due to disposal, exchange differences of foreign currency
financial statements attributable to the foreign operation as presented [under shareholder’s equity item] in the
balance sheet are transferred to profit or loss for the current period entirely or partially on disposed portion.
10. Financial instruments
Financial instruments refer to the contracts of forming enterprise financial assets and other entities’ financial
liabilities or equity instruments.
(1) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognized when the Company becomes one party of financial
instrument contracts.
If one of the following conditions is met, the financial assets are terminated:
① The right of the contract to receive the cash flows of financial assets terminates;
② The financial asset has been transferred, and is in accordance with the following conditions for
de-recognition.
While prevailing obligations of financial liability is relieved entirely or partially, the financial liability is
derecognized accordingly. If the Company (borrower) makes an agreement with the lender to replace the
original financial liability by assuming a new financial liability which contract terms are different substantially,
the original financial liability is extinguished and the new financial liability is recognized.
18
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Conventionally traded financial assets are recognized and de-recognized on trade date
(2) Classification and measurement of financial assets
Financial assets are, upon initial recognition, classified into the following four categories: financial assets at fair
value through profit or loss (“FVTPL” financial assets), held-to-maturity investments, loans and receivables,
and available-for-sale financial assets (“AFS” financial assets). Financial assets are initially recognized at fair
value. In the case of financial assets at fair value through profit or loss (“FVTPL” financial assets), the related
transaction costs are recognized in profit or loss for the current period. For other financial assets, transaction
costs that are attributable to the acquisition of the financial assets are included in the initial recognition
amounts.
Financial assets at fair value through profit or loss include financial assets held for trading and those designated
upon initial recognition as at fair value through profit or loss. This kind of financial assets are subsequently
measured at fair value, all realized and unrealized gains and losses are recognized in profit or loss for the
current period.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity dates that the Company has the positive intention and ability to hold to maturity. Held-to-maturity
investments are subsequently measured at amortized cost using the effective interest method; gains and losses
arising from derecognition, impairment or amortization is recognized in profit or loss for the current period.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market including account receivables and other receivables (Note III. 12). Receivables are subsequently
measured at amortized cost using the effective interest method; gains and losses arising from derecognition,
impairment or amortization is recognized in profit or loss for the current period.
Available-for-sale financial assets (AFS financial assets)
AFS financial assets are those non-derivative financial assets that are designated as available for sale and those
financial assets in addition to those above mentioned. AFS financial assets are subsequently measured at fair
value, the discount or premium are amortized using the effective interest method and recognized as interest
income. The gains and losses arising from changes in fair value of AFS financial assets (other than impairment
losses and foreign exchange gains and losses resulted from foreign currency monetary assets which are
recognized in profit or loss for the current period) are recognized as other comprehensive income, until the
financial assets are derecognized, are transferred to profit or loss for the current period. Interest income and
dividends related to the AFS financial assets are recognized as profit or loss for the current period.
Equity instrument investment with no quoted price in active markets and with not reliably measured fair value,
and derivative financial assets for the equity instrument and settled by paying the equity instrument are
measured at cost.
(3) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair value through profit or loss
(FVTPL) or other financial liabilities. For financial liabilities not classified as at fair value through profit or loss
financial liabilities, the transaction costs are recognized in the initially recognition amounts.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trade and financial liabilities designated as at
fair value through profit or loss in the initial recognition. Such financial liabilities are subsequently measured at
fair value, all realized and unrealized gains and losses arising from change in fair value are recognized in profit
or loss for the current period.
19
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Other financial liabilities
Derivative financial liabilities which are linked to equity instrument that is not quoted in an active market and
its fair value cannot be reliably measured and settled by delivering the equity instrument are subsequently
measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective
interest method.Gains and losses arising from derecognition or amortization is recognized in profit or loss for
the current period.
(4) Derivative financial instruments and embedded derivative instruments
Derivative financial instruments of the Group are initially measured at the fair value of the date a derivative
contract entered into and subsequently measured at their fair value. Derivative financial instruments of positive
fair value are recognized as assets; those of negative fair value are recognized as liabilities. Any gains or losses
arising from changes in fair value which do not meet the requirements of hedge accounting are directly
recognized to profit or loss for the current period.
For hybrid instrument with embedded derivative, where financial assets or liabilities not designated as fair value
through profit or loss, the economic features and risks of the embedded derivative are not closely related to
that of the host contract, and a similar instrument with the same terms as the embedded derivative would meet
the definition of a derivative, then embedded derivative is separated from hybrid instrument and accounted for
as a derivative. If embedded derivative is unable to measure separately either at acquisition or subsequently at
balance sheet date, hybrid instrument as a whole is designated as financial assets or liabilities at fair value
through profit or loss.
(5) Fair value of financial instruments
Determination of fair value of financial assets and financial liabilities refers to Note III.11.
(6) Impairment of financial assets
The Company assesses the carrying amount of financial assets at each balance sheet date other than those at
fair value through profit or loss, if there is objective evidence that financial assets are impaired, the Company
determines the amount of impairment loss. Objective evidence of impairment of financial assets are the
matters that occurred after the initial recognition of financial assets which has impact on the expected future
cash flows of financial assets, and can be reliably measured by the Company.
TObjective evidence that the financial assets are impaired including the following observable situations:
① The issuer or debtor has severe financial difficulties;
② The debtor has violated terms of the contract, such as the payment of the interest or principal is default or
overdue;
③ The Company made concessions to debtors in financial difficulties based on economic or legal factors;
④ The debtor has probably bankruptcy or other financial reorganization;
⑤ The issuer has so severe financial difficulties that financial assets can’t continue to be traded in an active
market;
⑥ The cash flow of individual asset in a group of financial assets cannot be evaluated for reduction, while
after evaluating the whole group of financial assets based on disclosed information, the expected future
cash flow of the group of financial assets is measureable and has been reduced since its initial recognition,
including that:
- repayment capability of the debtor of group of financial assets gradually deteriorates;
- economic difficulties of the country or region where the debtor is staying appear a situation where this
20
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
group of financial assets cannot be paid;
⑦ Significant adverse changes in the technological, market, economic or legal environment in which the
issuer operates, indicating that the cost of the investment in the equity instrument may not be recovered by
the investor;
⑧ Significant or prolonged decline in the fair value of investment in equity instruments, such as the fair value
of investment in equity instruments is less than 50% (50% inclusive) of the initial investment cost or in the
case that the fair value has been less than the initial investment cost for more than 12 months (12 months
inclusive).
Fair value less than the initial investment cost for more than 12 months (12 months inclusive) is being the
monthly average fair value of the investment in equity instruments less than the initial investment cost for
consecutive 12 months.
⑨ Other objective evidences indicate that financial assets have been impaired.
Financial asset measured at amortized cost.
If there’s objective evidence that the financial assets are impaired, then the carrying amount of financial assets
are reduced to the present value of estimated future cash flows (excluding future credit losses that have not
been incurred), with the reduced amount recognized to profit or loss for the current period. The present value
of estimated future cash flows is carried according to the financial asset's original effective interest rate, and
considers the value of collateral.
For a financial asset that is individually significant, the Company assesses the asset individually for impairment,
if there is objective evidence that it has been impaired, impairment loss is recognized in profit or loss for the
current period. For a financial asset that is not individually significant, the Company assesses the asset by
including the asset in a group of financial assets with similar credit risk characteristics and collectively assess
them for impairment. For an individually assessed financial asset (whether the financial asset is individually
significant or not individually significant), the Company includes the asset in a group of financial assets with
similar credit risk characteristics and collectively assessment for impairment. Asset for which an impairment
loss is individually recognized is not included in a collective assessment of impairment.
If, after an impairment loss has been recognized on financial assets measured at amortized cost, there is
objective evidence of a recovery in value of the financial asset which can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss is reversed through
profit or loss. A reversal of an impairment loss will not result in the asset’s carrying amount exceeding that
which would have been determined had no impairment loss been recognized in prior years.
Available-for-sale financial assets
If there is objective evidence that AFS financial assets are impaired, accumulated losses due to decreases in fair
value previously recognized directly in other comprehensive income are reversed and charged to profit or loss
for the current period. The reversed accumulated losses are the asset's initial acquisition costs after deducting
amounts recovered and amortized, current fair value and impairment losses previously recognized in profit or
loss.
If, in a subsequent period, the fair value of financial assets increases and the increase can be related objectively
to an event occurring after the impairment was recognized, the previously recognized impairment losses are
reversed and charged to profit or loss for the current period. The impairment losses of AFS equity instruments
are not reversed through profit or loss.
Financial assets measured at cost
If there is objective evidence that the financial assets are impaired, the difference between the carrying amount
and the present value discounted at the market rate of return on future cash flows of the similar financial
assets be recognized as impairment loss in profit or loss in the current period . The impairment loss
recognized shall no longer be reversed.
21
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(7) Transfer of financial assets
Transfer of financial assets refers to the transference or deliverance of financial assets to the other party (the
transferee) other than the issuer of financial assets.
The Group derecognizes a financial asset if it transfers substantially all the risks and rewards of ownership of
the financial asset to the transferee. If substantially all the risks and rewards of ownership of the financial asset
is retained, the financial asset is not derecognized.
The Group neither transfers nor retains substantially all the risks and rewards of ownership of financial assets,
then accounting for the following circumstances: if control over the financial assets is surrendered, derecognize
the financial assets and recognize any assets and liabilities arose; if the Company retains the control of the
financial assets, recognize the financial assets to the extent of the continuing involvement in the transferred
financial assets by the Company and recognize any relating liability
(8) Offset between financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize
the asset and settle the liability simultaneously. Otherwise, financial assets and financial liabilities are separately
shown in the balance sheet and not allowed to offset.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The Group measures the related assets or liabilities at fair value assuming the assets or liabilities are exchanged
in an orderly transaction in the principal market or, in the absence of a principal market, in the most
advantageous market.
For financial assets or financial liabilities in active markets, the Group uses the quoted prices in active markets
as their fair value. Otherwise, the Group uses valuation technique to determine their fair value.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and if the observable
inputs are not available or impractical, then unobservable inputs are used.
For assets and liabilities measured or disclosed at fair value in the financial statements, the level in which fair
value measurement is categorized is determined by the level of the fair value hierarchy of the lowest level input
that is significant to the entire fair value measurement: Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability.
At each balance sheet date the Group evaluates for assets and liabilities that are measured at fair value on a
recurring basis so as to determine any transfer between fair value hierarchy is necessary.
12. Receivables
Receivables include accounts receivable and other receivables.
(1) Individually significant receivable and provision for bad and doubtful debts individually
Criteria of individually significant receivables: the carrying amount of accounts receivables of over RMB
22
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
800,000.00 (inclusive) and other receivables of over RMB500,000.00 (inclusive) are recognized as individually
significant receivable.
Method for individually significant receivables for which separate bad and doubtful provision is made:
Receivables that are individually significant are subject to separate impairment assessment, if there is objective
evidence of impairment, provision for bad and doubtful debts is recognized on the shortfall between the
present value of future cash flows and the carrying amount.
Individually insignificant accounts, for which there is no objective evidence under individual impairment tests
warranting individual provision, are divided into different asset group for re-assessment of bad and doubtful
debts.
(2) Individually insignificant receivables but provision for bad and doubtful debts individually.
Litigation receivables, deterioration of customer credit receivables;
Reasons for provision individually receivables that there is obvious indication that the amount is likely
un-collectible.
Recognize the provision for bad and doubtful debts on the shortfall
Method of provision between the present value of future cash flows and the carrying
amount.
(3) Receivables with provision for bad and doubtful debts collectively.
For individually insignificant receivables, and individually insignificant receivables which are not impaired in
individual test, provision for bad and doubtful debts is recognized according to the following credit risk
combination
Method of provision for
Type of group Basis of group bad and doubtful debts
collectively
Group of ageing Ageing state Ageing analysis method
Receivables such as employee petty cash receivables,
accounts receivable due from subsidiaries included in
No need for bad debt
Specific fund portfolio consolidation scope, accounts receivable for the sales
provision
between the last date of settlement with department
store and the date of balance sheet
A. For group of aging, the rate of provision for bad and doubtful debts in ageing analysis method is as
follows:
Percentage of provision for Percentage of provision for
Aging
accounts receivable % other receivables %
Within 1 year (including 1 year) 5 5
1 to 2 years 10 10
2 to 3 years 30 30
Over 3 years 50 50
B. For other groups, the description of provision for bad and doubtful debts in other methods are as follows:
Name of group Description of provision method
No bad debt provision is recognized as the risk of
Portfolio of specific accounts impairment does not exist according to its credit risk
characteristics
Based on historical experience, the Group’s receivables due from petty cash paid to employees, receivables due
from subsidiaries of the Company and accounts receivable for the sales between the last settlement date of
23
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
the same department store and the balance sheet date are with high recoverability and low possibility of
incurring bad debt, as a result, no bad debt provisions are provided for such receivables.
13. Inventories
(1) Classification
Inventory mainly includes raw material, work-in-process and finished goods.
(2) Determination of cost
Inventories are measured at the actual cost when acquired. Costs of raw materials, work in progress, finished g
oods are calculated in first-in-first-out method (for raw material and work in progress of FIYTA watches) ,
weighted average cost method (for finished goods of FIYTA watches) and specific identification method (for
finished goods of branded watches) when issued.
(3) Recognition of the net realizable value and provision for decline in value of inventories
Net realizable value (“NRV”) is the estimated selling price deducting estimated costs to be incurred upon
completion, estimated selling expenses and related taxes. When determining the net realizable value of
inventory, basis is relied on the actual evidences obtained while the objectives of inventories holding and the
impact of post balance sheet date event are also considered:
①the NRV of inventories that are available for sale such as finished goods and materials held for trading are
determined using the estimated selling price less estimated selling expenses and related taxes if the business is
in the ordinary course of operation;
②the NRV of materials that need to be processed are determined using estimated selling price of finished
goods which is manufactured from the material less estimated cost of completion, estimated selling expenses
and related taxes if the business is in the ordinary course of operation.
The Company recognizes inventory impairment provision for FIYTA brand watches based on models
category.
Impairment provisions for branded watches are recognized on an item-by-item basis.
Impairment provisions for raw materials of FIYTA watches are recognized by categories based on
ultimate-customer selling status of FIYTA finished watches taking into considerations of the exchangeability
of the spare parts and the special usage of materials.
If the cost of closing inventory of the Company exceeds its net realizable value at balance sheet date, provision
for decline in value of inventories is recognized. The Company usually recognizes provision for decline in value
of inventories by a single inventory item. If the factors causing the inventory previously written-down have
disappeared, the provision for decline in value of inventories previously made is reversed .
(4) Inventory system
The Group adopts perpetual inventory system
(5) Amortization method of low-value consumables and packaging material
The Group adopts one-off amortization method when low-value consumables and packaging material are
taken for use.
14. Long-term equity investments
Long-term equity investments include equity investments where the Group has control of, or significant
influence over, an investee, and equity investments in joint ventures. Where the Group can exercise significant
influence over the investee, the investee is an associate.
24
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(1) Recognition of investment cost
For a business combination involving enterprises under common control, the initial investment cost of the
long-term equity investment is the absorbing party’s share of the carrying amount of the owners’ equity of the
party being absorbed in the consolidated financial statements of the ultimate controlling party at combination
date. For a business combination not involving enterprises under common control, the initial investment cost
of a long-term equity investment acquired is the cost of acquisition.
For a long-term equity investment acquired by paying cash, the initial investment cost is the amount of cash
has been paid. For a long-term equity investment acquired by issuing equity securities, the initial investment
cost is the fair value of the equity securities issued.
(2) Subsequent measurement and recognition of profit or loss
Where the Group is able to exercise control over an investee, the long-term equity investment is accounted for
using the cost method; where the Group has investment in associates and operation ventures, the long-term
equity investment is accounted for using the equity method.
For long-term equity investment which is accounted for using the cost method, investment income is
recognized in profit or loss for the current period as the cash dividend or profit announced and distributed,
except for those cash dividend or profit which have already included in the actual payment or consideration of
offer when the investment was made.
For long-term equity investment which is accounted for using the equity method, where the initial investment
cost of a long-term equity investment exceeds the Group’s interest in the fair values of the investee’s
identifiable net assets, no adjustment is made to the initial investment cost. Where the initial investment cost is
less than the Group’s interest in the fair values of the investee’s identifiable net assets, the difference is charged
to profit or loss for the current period, and the carrying amount of the long-term equity investment is adjusted
accordingly.
Under the equity method, the Group recognizes its share of the investee’s net profit or losses, as well as its
share of the investee’s other comprehensive income, as investment income or losses and other comprehensive
income, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment
is reduced by the portion of any profit distributions or cash dividends declared by the investee that is
attributable to the Group. The Group’s share of the investee’s owners’ equity changes, other than those arising
from the investee’s net profit or loss, other comprehensive income or profit distribution, is recognized in the
Groups’ equity, and the carrying amount of the long-term equity investment is adjusted accordingly. The share
of the investee’s net profit or loss for the current period is recognized after adjusting the investee’s net profit in
accordance with the Group’s accounting policies and accounting period based on the fair value of the
identifiable assets when the investment is made.
When the Group becomes capable of exercising significant influence or joint control (but not sole control)
over an investee due to additional investment or other reasons, the accounting is changed to the equity method
and the initial investment cost is the sum of the fair value of the previously-held equity investment and
additional investment cost. Where the previously-held equity investment is classified as available –for – sale
financial assets, the defenses between the fair value and carrying amount and the accumulated changes in fair
value included in other comprehensive income are transferred to profit or loss for the current period upon
commencement of the equity method.
When the Group can no longer exercise joint control of or significant influence over an investee due to partial
disposal of equity investment or other reasons, the remaining equity investment is accounted for in accordance
with Accounting Standard for Business Enterprises No.22 - Recognition and Measurement of Financial
Instruments and the difference between the fair value and the carrying amount at the date of the loss of joint
control or significant influenceis charged to profit or loss for the current periods. When the previously-held
equity investment is accounted for under the equity method, any other comprehensive income previously
recognized are accounted for on the same basis as would have been required if the Group had directly
disposed of the related assets or liabilities for the current period upon discontinuation of the equity method;
Other movement of owner’s equity related to previously-held equity investment is transferred in profit or loss
25
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
for the current period.
When the Group can no longer exercise control over an investee due to partial disposal of equity investment or
other reasons and the remaining equity investment after disposal can exercise joint control of or significant
influence over an investee, the remaining equity investment is accounted for under equity method and
re-measured by equity method as if it has been acquired since date of acquisition. Where the remaining equity
investment can no longer exercise joint control of or significant influence over an investee, the remaining
equity investment is accounted for in accordance with Accounting Standard for Business Enterprises
No.22-Recognization and Measurement of Financial Instruments and the difference between the fair value and
the carrying amount at the date of the loss of control is charged to profit or loss for the current period.
The unrealized profit or loss from internal transactions entered into between the Group and its associate or
joint venture is offset according to the shareholding percentage held by the Group and the remaining portion is
recognized as investment income or loss. However, the unrealized loss from internal transactions entered into
between the Group and its investee is not offset if it belongs to impairment loss from assets transferred.
For the long-term equity investments of associates and joint ventures held before January 1, 2007, if there
exists equity investment debit balance related to the investment, recognize investment income or loss after
deducting the equity investment debit balance in the original straight-line basis over the remaining period.
(3) Basis for recognition of joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control. In
assessing whether an enterprise has joint control of an arrangement exists, the Group firstly assesses whether
all the parties or a group of the parties control the arrangement collectively. When all the parties or a group of
the parties must act together unanimously in directing the relevant activities, then all the parties or a group of
the parties are regarded as having joint control of an arrangement. Then assess whether decisions about the
relevant activities require the unanimous consent of those parties that control the arrangement collectively.
When more than one combination of the parties can control an arrangement collectively, joint control does not
exist. Protective rights of any party is not considered when determining joint control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control of those policies. When determining whether an investor can exercise
significant influence over an investee, the effect of potential voting rights (for example, warrants, share options
and convertible bonds) held by the investors or other parties that are currently exercisable or convertible be
considered.
When the Group, directly or indirectly through subsidiaries, owns more than 20% ( 20% inclusive) but less than
50% of the voting shares of the investee, the Group has significant influence on the investee unless there is
clear evidence to show that the Group cannot participate in the business and operation decisions of the
investee, and accordingly cannot exercise any significant influence. When the Group owns less than 20% of the
voting shares of the investee, the Group has no significant influence on the investee unless there is clear
evidence to show that the Group can participate in the business and operation decisions of the investee, and
accordingly can exercise a significant influence.
(4) Method of impairment testing and impairment provision
For investment of subsidiaries, associates and joint ventures, refer to Note III. 21 for the Group’s method of
asset impairment.
15. Investment property
Investment property is a property held to earn rentals or for capital appreciation. The Group’s investment
property includes land use rights and buildings leased to other party, and land use rights held for appreciation.
The Group’s investment property is initially measured at acquisition cost, and is depreciated or amortized
according to the same policy for fixed assets or intangible assets.
26
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Refer to Note III. 21 for asset impairment method of investment property subsequently measured using the
cost model.
Disposal consideration of sale, transfer, retirement or damage of investment property after deducting its
carrying amount and related taxes is recognized in profit or loss for the current period.
Useful years Annual
Category Residual rate %
(year) depreciation rate %
Plant & buildings 20-35 5 2.7-4.8
16. Fixed asset
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of services, for rental to others,
or for administrative purposes and have useful lives more than one accounting year.
A fixed asset is recognized only when it is probable that economic benefits associated with the asset will flow
into the enterprise and the cost of the asset can be measured reliably.
A fixed asset is initially measured at actual cost.
(2) Depreciation methods
The Group uses the straight line method for depreciation. Fixed assets begin to be depreciated from the state
of intended use, and ceased being depreciated when derecognized or classified as held for sale non-current
assets. Without considering impairment provision, the Group’s annual depreciation rates are shown as follows
according to the category, expected useful lives and estimated net residual values rates:
Useful years Annual
Category Residual rate %
(year) depreciation rates%
Plant & buildings 20-35 5 2.7-4.8
Machinery & equipment 10 5-10 9-9.5
Motor vehicles 5 5 19
Electronic equipment 5 5 19
Others 5 5 19
Among the above, depreciation rate of impaired fixed assets are determined after deduction of the cumulative
amount of impairment provision.
(3) For impairment test and the impairment provision of fixed asset, refer to Note III. 21.
(4) The Group conduct reviews to the useful life, estimated net residual rate and depreciation method of fixed
assets at least at each end of the accounting year.
Useful lives of fixed assets are adjusted if they are different with the initial estimates. Estimated net residual
values are adjusted if they are different with the initial estimates.
(5) Overhaul costs
The overhaul costs incurred in regular inspection of fixed assets are capitalized as cost of fixed assets if there
is clear evidence that it meets the recognition criteria of fixed assets. It is recognized in profit or loss for the
current period if it does not meet the recognition criteria of fixed assets. Depreciation continues during the
period of regular overhaul.
17. Construction in progress
27
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Construction in progress is recognized based on the actual construction cost, including all expenditures
incurred for construction projects, capitalized borrowing costs for the construction in progress before it has
reached the working condition for its intended use and other related expenses during the construction period.
Construction in progress is transferred to fixed assets when the asset is ready for its intended use.
For provision for impairment of construction in progress, refer to Note III.21.
18. Borrowing cost
(1) Recognition of borrowing cost capitalization
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or
production of a qualifying asset and included in the cost of related assets. Other borrowing costs are
recognized as expenses and recorded in profit or loss for the current period when incurred. Capitalization of
such borrowing costs commenced only when all of the following conditions are satisfied:
①Expenditures for the asset are being incurred, capital expenditure includes the expenditure in the form of
cash payment, transfer of non-cash assets or the interest bearing liabilities for the purpose of acquiring or
constructing assets eligible for capitalization;
②Borrowing costs are being incurred;
③Activities relating to the acquisition, construction or production of the asset that are necessary to prepare
the asset for its intended use or sale have commenced.
(2) Capitalization period of borrowing costs
Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or
produced become ready for their intended use or sale. The borrowing cost incurred after that is recognized as
an expense in the period in which they are incurred and included in profit or loss for the current period.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or
production of a qualifying asset is interrupted abnormally and when the interruption is for a continuous period
of more than 3 months. Borrowing costs continues to be capitalized during the normal suspension period.
(3) Capitalization rate of borrowing costs and calculation of capitalization amount
For funds borrowed for a specific purpose, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing less any bank interest earned from depositing the borrowed funds before
being used into banks or any investment income on the temporary investment of those funds. For funds
borrowed for general purpose, the amount of interest to be capitalized on such borrowings is calculated by
applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the
asset over and above the amounts of specific-purpose borrowings. Capitalization rate is determined as
calculating weighted average interest rate of general borrowings.
In the capitalization period, exchange differences of specific borrowings in foreign currency are fully
capitalized. Exchange differences of general borrowings in foreign currency are recognized in profit or loss for
the current period.
19. Intangible assets
Intangible assets of the Group include land use rights, software system, trademark rights etc.
Intangible asset is initially measured cost and its useful life is determined on acquisition. An intangible asset
with a finite useful life is amortized by a method which can reflect the expected realization of economic
benefits related to the asset since the intangible asset is available for use. When the expected realization of
economic benefits cannot be reliably determined, intangible asset is amortized under straight-line method. An
intangible asset with an indefinite useful life is not amortized.
28
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Amortization methods of an intangible asset with a finite useful life are shown as follows:
amortization
Category Useful life Note
method
Land use right 45-50 years straight-line method -
Software system 5 years straight-line method -
trademark rights 5-10 years straight-line method -
The Group reviews the finite useful life of an intangible asset and the amortization method at the end of each
financial year. Any change is accounted for as a change in accounting estimate.
If an intangible asset is expected no longer in generating future economic benefits to the Group at the balance
sheet date, the carrying amount of the asset is charged to profit or loss for the current period.
Refer to Note III. 21 for impairment provision method for intangible assets.
20. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure on the research
phase and expenditure on the development phase.
Expenditure on the research phase is recognized in profit or loss when incurred.
Expenditure on the development phase is capitalized only when the Group can satisfy all of the following
conditions: it is technical feasible that the intangible asset can be used or sold upon completion; there is
intention to complete the intangible asset for use or sale; the intangible asset can generate economic benefits,
including there is evidence that the products produced using the intangible asset has a market or the intangible
asset itself has a market; if the intangible asset is for internal use, there is evidence that there is usage for the
intangible asset; there is sufficient support in terms of technology, financial resources and other resources in
order to complete the development of the intangible asset, and there is capability to use or sell the intangible
asset; the expenses attributable to the development stage of the intangible asset can be measured reliably.
Expenditure on the development phase is recorded in profit or loss for the current period if the above
conditions are not met.
Research and development projects of the Group will enter into the development phase when they meet the
above conditions and pass the technical feasibility and economic feasibility studies and necessary approval of
the project.
Capitalized expenditure on the development phase is presented as “development costs” in the balance sheet
and is transferred to intangible assets when the project is completed to its intended use.
21. Impairment of assets
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments, investment
property subsequently measured at cost model, fixed assets, construction in progress, intangible assets,
goodwill and related facilities, etc. (excluding inventories, investment property measured at fair value model,
deferred income tax assets and financial assets) are determined as follows:
At each balance sheet date, the Group determines whether there may be indication of impairment of the
assets, if there is any, the Group will estimate the recoverable amount of the asset, and perform test for
impairment.
For goodwill arising from a business combination, intangible assets with indefinite useful life and the intangible
assets that have not yet ready for use are tested for impairment annually regardless of whether such indication
exists.
The recoverable amount of an asset is determined by the higher of the net amount after deducting the disposal
costs from the asset’s fair value and the present value of the asset’s estimated future cash flow.
29
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the
recoverable amount of the asset group to which the asset belongs. The identification of the asset group is
based on whether the cash flow generated from the asset group is independent of the major cash inflows from
other assets or asset groups.
When the asset or asset group's recoverable amount is lower than its carrying amount, the Group reduces its
carrying amount to its recoverable amount, the reduced amount is included in profit or loss, while the
provision for impairment of assets is recognized.
For tests of goodwill impairment, the carrying amount of goodwill arising from a business combination is
allocated reasonably to the relevant asset group since the acquisition date. If the carrying value of goodwill is
unable to be allocated to asset group, the carrying value of goodwill will be allocated to asset portfolio. Asset
group or portfolio of asset group is asset group or portfolio of asset group which can be benefit from
synergies of a business combination and is not greater than the reportable segment of the Group.
In impairment testing, if indication of impairment exists in asset group or portfolio of asset group containing
allocated goodwill, impairment test is first conducted on asset group or portfolio of asset group that does not
contain goodwill, and corresponding recoverable amount is estimated and any impairment loss is recognized.
Then asset group or portfolio of asset group containing goodwill is conducted impairment test by comparing
its carrying amount and its recoverable amount. If the recoverable amount is less than the carrying amount,
impairment loss of goodwill is recognized.
Once impairment loss is recognized, it can’t be reversed in subsequent accounting periods.
22. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized evenly over the expected benefit
period. For the long-term deferred expense that cannot benefit in future accounting period, their amortized
value is recognized in profit or loss for the current period.
23. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for
service rendered by employees or for the termination of employment relationship. Employee benefits include
short-term employee benefits, post-employment benefits, termination benefits and other long-term employee
benefits. Benefits provided to the Group’s spouse, children, dependents, family members of deceased
employees, or other beneficiaries are also employee benefits.
According to liquidity employee benefits is presented as “employee benefits payable” and “long-term employee
benefits payable” on the balance sheet.
(2) Short-term employee benefit
The Group shall recognize employee wages or salaries incurred, bonus, social security contributions such as
premiums or contributions on medical insurance, work injury insurance and maternity insurance and housing
funds as liabilities through profit or loss or related cost of assets for the financial year in which the employees
render the related services. If the liability is not expected to be settled wholly before twelve months after the
end of the annual reporting period in which the employees render the related services and have significant
financial effects, it is measured at the discounted amount.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Defined
contribution plans are post-employment benefit plans under which an entity pays fixed contributions into an
escrow fund and will have no obligation to pay further contributions. Defined benefit plans are
post-employment benefit plans other than defined contribution plans.
30
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Defined contribution plans
Defined contribution plans include primary endowment insurance and unemployment insurance.
The Group recognizes, in the accounting period in which an employee provides service, the contribution
payable to a defined contribution plan as a liability, with a corresponding charge to the profit or loss for the
current period or the cost of a relevant asset.
For defined benefit plans, independent actuaries estimate the actuarial value at the balance sheet date to
determine the cost of rendering welfare by using the Project Unit Credit method. The Group recognizes the
following components of employee benefits cost arising form defined benefit plan:
① service cost, comprising current service cost, past service cost and any gain or loss on settlement. Current
service cost is the increase in the present value of the defined benefit plan obligation resulting from employee
service in the current period. Past service cost is the increase or decrease in the present value of the defined
benefit plan obligation for employee service in prior periods, resulting from a plan amendment.
② net interest on the net defined benefit plan net liabilities or assets, including interest income on plan assets,
interest cost on the defined benefit plan obligation and interest on the effect of the asset ceiling.
③ changes as a result of re-measurement of the net defined benefit plan liabilities or assets.
Item①and item② above are recognized in profit or loss for the current period unless another Accounting
Standard requires or permits the inclusion of the employee benefit costs in the cost of assets. Item③ is
recognized in other comprehensive income and is not reclassified to profit or loss in a subsequent period;
however, the Group may transfer those amounts recognized in other comprehensive income to other equity.
(4) Termination benefits
Termination benefits provided by the Group to employees are recognized as an employee benefits liability and
charge to the profit or loss for the current period, at the earlier of the following dates: When the Group cannot
unilaterally withdraw the offer of termination benefits because of an employment termination plan or a
curtailment proposal and when the Group recognizes costs or expenses related to a restructuring that involves
the payment of termination benefits.
For early retirement arrangement, early retirement benefits are accounted for termination benefits, in which the
salaries and social security contributions to be paid to and for the early retired employees from the off-duty
date to the normal retirement date are charged to the profit or loss for the current period. Compensations after
the normal retirement date (such as formal endowment insurance) are accounted for as post-employment
benefits.
(5) Other long-term employee benefits
Other long-term employee benefits provided by the Group to the employees satisfied the conditions for
classifying as a defined contribution plan, When the benefits satisfied a defined benefits plan, they are
accounted for in accordance with the above requirements relating to defined contribution plan, but the
movement of net liabilities or assets in the investee’s re-measurement defined benefit plan in the cost of
relevant employee benefits is recognized in profit or loss for the current period or the relevant cost of assets.
24. Provisions
An obligation for additional losses of investees related to a contingency is recognized as a provision when all
of the following conditions are satisfied:
(1) The obligation is a present obligation of the Group;
31
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be measured reliably.
Provisions are initially measured at the best estimate of the payment to settle the associated obligations and
consider the relevant risk, uncertainty and time value of money. If the impact of time value of money is
significant, the best estimate is determined as its present value of future cash outflow. The Group reviews the
carrying amount of provisions at the balance sheet date and adjusts the carrying amount to reflect the best
estimate.
If all or part of the expenses necessary for settling the provision is expected to be compensated by a third
party, the amount of compensation is separately recognized as an asset when it is basically certain to be
received. The recognized compensation amount not exceed the carrying value of the provision.
25. Revenue
(1) General principal
①Sale of goods
Revenue from the sale of goods is recognized only when all of the following conditions are satisfied: the
Group has transferred to the buyer the significant risks and rewards of ownership of the goods, the Group
retains neither continuing managerial involvement nor effective control over the goods sold, and related
income can be measured reliably and the economic benefits are likely to flow to the Company, and the
associated costs can be measured reliably.
②Providing of services
Where the outcome of a transaction involving the providing of services can be estimated reliably, at the end of
the period, revenue associated with the transaction is recognized using the percentage of completion method.
The percentage of completion of a transaction involving the providing of services is determined according to
the proportion of the services performed to the total services to be performed.
The outcome of a transaction involving the providing of services can be estimated reliably only when all of the
following conditions can be satisfied at the same time:
A. The amount of revenue can be measured reliably;
B. The associated economic benefits are likely to flow into the enterprise;
C. The stage of completion of the transaction can be measured reliably;
D. The costs incurred and to be incurred in the transaction can be measured reliably.
If the outcome of a transaction involving the providing of services can not be estimated reliably, the revenue
of providing of services is recognized only to the extent of service cost incurred that is recoverable probably,
and service cost incurred is charged to profit or loss for the current period. If the service cost incurred is not
expected to be recoverable, no revenue is recognized.
③Transfer of the right to use assets
Revenue is recognized when the economic benefits associated with the transfer of the right to use assets can
flow to the Company and the amount can be measured reliably.
④Interest income
The interest income is calculated based on the tenure of the Group’s monetary funds used by others and the
actual interest rates used.
32
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
⑤Revenue from property leasing
The amount of revenue from property leasing are recognized when the rentals are collected or evidence of
receipt of payments are obtained in accordance with the tenure (consider rental-free period, if any) and rental
stated in the leasing contract or agreement.
(2) Detailed method of revenue recognition
The watches sold by the Group includes two types, one is the self-manufactured FIYTA watch, the sales of
which is managed by branch offices and provincial-level sale sections by regions set up by Sales Company, a
subsidiary of the Company. The other is brand watches, the sales of which are controlled by HARMONY
Company, a subsidiary of the Company, and the Company act as agent Regarding to sales modes, a portion of
the sales of self-manufactured FIYTA watches is sold through direct sales to customer and consignment sales
while most of the self-manufactured FIYTA watches and brand watches are sold under two sales modes,
namely exclusive shop and shop-in-shop. Detailed method of revenue recognition as follows:
A. Direct sales to the customers
Under direct sales to the customers mode, the Group delivers products to customers and recognizes sales
income after customers inspection and acceptance.
B. Exclusive shop
Under exclusive shop mode, the Group delivers products to customers and recognizes sales income after
customers inspection, acceptance and pay.
C. Shop-in-shop
Under shop-in-shop mode, the Group delivers products to customers, sales staff issues notes to retail
customers and recognizes sales revenue after customers inspection and acceptance and the department store
collects the payment from the customers.
D. Consignment sales
Under consignment sales mode, the Group receives the detail of the sales list from distributors and recognizes
revenue while issuing invoice to distributors.
26. Government grants
A government grant is recognized only when the Group can comply with the conditions attaching to the grant
and the Group can receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. Where there is undoubted evidence that the Group can comply with the conditions attaching to the
grants and the Group will receive the grants, they are measured in accordance with the receivable amount;
otherwise, they are measured according to the amount actually received.
A government grant related to an asset is a grant obtained by the Group used for purchase or construction, or
formation the long-term assets by other ways. Otherwise, the government grant is treated as a government
grant related to income.
For government grant with unspecified purpose, the amount of grant used to form a long-term asset or related
to an assets is regarded as government grant related to an asset, the remaining amount of grant is regarded as
government grant related to income. If it is not possible to distinguish, the amount of grant is treated as
government grant related to income.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss
over the useful life of the related asset. For a government grant related to income, if the grant is a
33
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or
loss for the current period; if the grant is a compensation for related expenses or losses to be incurred in
subsequent periods, the grant is recognized as deferred income, and then recognized in profit or loss over the
periods in which the costs are recognized. Government grants measured at nominal amounts are directly
recognized in profit or loss for the period.
Reversal of recognized government grant will be set off to the carrying value of relevant deferred income. Any
excess of the reversal to the carrying amount of deferred income will be recognized in profit or loss for the
current period. In case there is no relevant deferred income, reversal will be directly recognized in profit or loss
for the current period.
27. Deferred tax assets and deferred tax liabilities
Income tax comprises of current income tax and deferred income tax. Current tax and deferred tax are
included in profit or loss for the current period as income tax, other than deferred tax related to transactions or
events that are directly recognized in shareholders’ equity and deferred income tax arising from business
combination should adjust the carrying amount of goodwill.
Temporary differences arising from the difference between the carrying amount of an asset or liability and its
tax base are recognized as deferred tax using the balance sheet liability method.
All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in the
following transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in a transaction which
is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) when the
transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
and the Group is able to control the timing of the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.
The Group recognizes a deferred tax asset for the carry forward of deductible temporary differences,
deductible losses and tax credits to subsequent periods, to the extent that it is probable that future taxable
profits will be available against which the deductible temporary differences, deductible losses and tax credits
can be utilized, except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit (or
deductible loss) when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries, associates and joint
ventures, the corresponding deferred tax asset is recognized when both of the following conditions are
satisfied: it is probable that the temporary difference will reverse in the foreseeable future, it is probable that
taxable profits will be available in the future, against which the temporary difference can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, and their tax effect is
reflected.
At the balance sheet date, the Group reviews the carrying amount of a deferred tax asset. If it is probable that
sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to
be utilized, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed
when it becomes probable that sufficient taxable profits will be available.
28. Operating leases and finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incidental to ownership of an
asset. An operating lease is a lease other than a finance lease.
34
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(1) As lessor
In finance leases, at the beginning date of lease period, the Group will recognize the sum of minimum lease
collection and initial direct costs as the recorded value of finance leases receivable and meanwhile is recorded
as unguaranteed residual value; the difference between the sum of minimum lease collection, initial direct costs
and unguaranteed residual value and their present value is recorded as unrecognized financing charges.
Unrecognized financing charges are measured at amortized cost using the effective interest method in the
periods of leasing and recognized in financing charges for the current period.
Rental receipt from operating leases is recognized in profit or loss on a straight-line basis over the lease term.
The initial direct costs incurred are recognized in profit or loss for the current period.
(2) As lessee
In finance leases, at the beginning date of lease period, the Group will recognize the lower of the fair value of
leased asset of the beginning date of lease period and the present value of minimum lease payment as the
recorded value of the leased asset, their difference is recorded as unrecognized financing charges. Initial direct
costs are recognized in leased assets’ value. Unrecognized financing charges are measured at amortized cost
using the effective interest method in the periods of leasing and recognized in financing charges for the current
period. The Group depreciates the leased assets by adopting the depreciation policy consistent with self-owned
fixed assets.
Rental paid for operating leases is recognized in the cost of relevant assets or profit or loss on a straight-line
basis over the lease term. The initial direct costs incurred are recognized in profit or loss for the current period
29. Critical accounting judgments and estimates
The Group gives continuous assessment of the reasonable expectations of future events and the critical
accounting estimates and key assumptions based on its historical experience and other factors.
The critical accounting estimates and key assumptions that are likely to lead to significant adjusted risks of the
carrying amount of assets and liabilities for the next financial year are listed as follows:
(1) Bad debt provision
The allowance method is adopted by the Group to account for losses on bad debts for receivables. Impairment
of receivable is made based on estimation of its recoverability, which requires the management to make
judgments and estimates. The difference between the actual outcome and the estimates will have effects on the
carrying amounts of accounts receivable and on provision or reversal of the provision for bad debts of the
accounting period in which the estimates will be changed.
(2) Impairment provision for non-current non-financial assets
At the balance sheet date, the Group judges whether there are indicators of impairment for non-current assets
other than financial assets. For an intangible asset with an indefinite useful life except for annually impairment
test, an impairment test will be conducted if there are any indicators of impairment occur. For non-current
assets other than financial assets, an impairment test is made if there are evidences indicating the carrying
amounts cannot be recovered in full amount.
An asset or asset group is impaired when its carrying amount is higher than its recoverable amount (i.e. the
higher of its fair value less the disposal expenses and the present value of the estimated future cash flows).
The net amount of fair value less the disposal expenses are determined with reference to the quoted price of
similar assets in a sales agreement in an arm’s length transaction or an observable market price less incremental
costs directly attributable to disposal of the asset.
When estimating the present value of future cash flows, significant judgments are involved to the production
output, selling price, relevant business costs of the asset (or asset group) and the discount rate adopted in
calculating the present value. In estimating the recoverable amount, the Group will adopt all information
35
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
available, such as forecasts for the production output, the selling price and relevant business costs, which are
made according to reasonable and supportive assumptions.
The Group conducts impairment test to goodwill at least once a year. This requires estimating the present
value of future cash flows of asset group or combination of asset group to which goodwill has been allocated.
In estimating the present value of future cash flows, the Group needs estimate future cash flows generated
from the asset group or the combination of asset groups and choose appropriate discount rates.
(3) Depreciation and amortization
Taking the residual value into consideration, an investment property, fixed asset and intangible asset are
depreciated or amortized on a straight-line basis over its useful life. The Group reviews the useful life
periodically to determine the amount of depreciation or amortization which is recognized in each accounting
period. The useful life is determined according to historical experience of similar assets and technological
renovation estimated. The amount of depreciation or amortization is adjusted in future accounting periods if
there are material changes in estimates made before.
(4) Deferred income tax asset
A deferred tax asset is recognized for the unused deductible losses to the extent that it is probable that future
taxable profit will be available against which the deductible losses can be utilized. Taking the taxation planning
into consideration, the management of the Group is required to make significant amount of judgments to
estimate the time and the amount of future taxable profit in order to determine the amount of deferred
income tax assets to be recognized.
(5) Corporate income tax
For some transactions in the Group’s ordinary course of business, uncertainties exist in their tax treatment and
calculation. An approval from the tax authority is needed to determine whether an item is deductible before
tax. If the final confirmation from the tax authority differs with the original estimation, the difference will have
effects on the current income tax and deferred income tax of the period in which the final confirmation is
made by the tax authority.
(6) After-sale quality warranty
The Group has the obligation to provide warrant to the quality of goods sold, and is responsible for damages
arising from the repair and replacement due to defective goods. The Group estimates and draws related
provision on its after-sale quality warranty commitment to customers with respect to the goods sold. In the
case that the contingent event becomes a current obligation and performance of the current obligation may be
very likely to cause economic benefit flow out of the Group, the Group recognizes provision based on the best
estimates to be spent for fulfilling the related current obligation. Otherwise, if the event does not become a
current obligation, no predictions needed. In the course of judgment, the Group needs to consider the recent
maintenance data which may not be likely to reflect the future maintenance situations. Any increase or
reduction of the provision may possibly affect the profit or loss in the future year.
30. Changes in significant accounting policies and accounting estimates
(1) Change of significant accounting policies
There was no change to significant accounting policies during the reporting period.
(2) Change of significant accounting estimates
There was no change to significant accounting estimates during the reporting period.
IV. Taxation
1. Types of taxes and tax rates
36
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Type of taxes Tax base Statutory tax rate%
VAT Taxable income 17
Consumption tax Import or produce high-class watches 20
Business tax Taxable income 5
Urban maintenance and
Turnover tax payable 7
construction tax
Educational surcharges Turnover tax payable 3
Local educational surcharges Turnover tax payable 2
Corporate income tax (note 1) Taxable income 15-30
70% of original value of property, rental
Property tax (note 2) 1.2, 12
income
(1) Corporate income tax
Name of taxpayer Income tax rate%
The Company(Note①②) 25
HARMONY Company(Note①) 25
Shenzhen FIYTA Precision Timer Manufacturing Co., Ltd. (Manufacturing Company(Note②③) 15
FIYTA Hong Kong(Note⑤) 16.5
Station 68(Note⑤) 16.5
Nature Art Limited(Note⑤) 16.5
World Watches International(Note⑤) 16.5
Shenzhen FIYTA Technology Development Co., Ltd (Technology Company)(Note②④) 15
Shenzhen Xiangji Commercial & Trade Co., Ltd (Trading Company)(Note ⑥) 25
Beijing Henglianda Watch Center Co., Ltd (Henglianda Company)(Note ⑥) 25
Kunming Lishan Department Store Co., Ltd. (Lishan Department Store)(Note⑥) 25
Harbin World Watches Distribution Co., Ltd. (Harbin Company)(Note ⑥) 25
Shenzhen Harmony Culture Communication Co., Ltd (Culture Company) (Note⑥) 25
Emile Choureit Timing (Shenzhen) Ltd. (Emile Choureit Shenzhen Company)(Note ⑥) 25
FIYTA Sales Co., Ltd (Sales Company)(Note ①⑥) 25
Liaoning Hengdarui Commercial & Trade Co., Ltd (Hengdarui Company)(Note⑥) 25
Swiss Company(Note⑦) 30
Note ①: According to the regulations stated in GuoShuiFa (2008) No. 28, “Interim Administration Method
for Levy of Corporate Income Tax to Enterprise that Operates Cross-regionally”, the head office of the
Company and its branch offices, the head office of HARMONY Company and its branch offices adopt tax
submission method of “unified calculation, managing by classes, pre-paid in its registered place, settlement in
total, and adjustment by finance authorities” starting from 1 January 2008. 50% is shared and prepaid by
branches and 50% is prepaid by the headquarters.
Note ②: According to Notice of “Pre-tax Deduction of Enterprise Research and Development Expenses
37
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(Interim)”, GuoShui FA (2008) No. 116 issued by State Administration of Taxation on 10 Dec. 2008, research
and development expenses, which are charged to profit or loss instead of being capitalized as intangible assets,
that incurred by the Company and the Manufacture Company for developing new technology, new product and
new technique can be deducted by 50% extra on top of actual expensed charged in profit or loss.
Note ③:The company enjoyed for “Reduction and Exemption in Corporate Income Tax Rate for High and
New Technology Enterprises that Require Key Support from the State”.
Note ④: According to ShenGuoShuiBao Xi GaoXinNian Du Bei (2014) No. 0027 “Notice to Acceptance of
Annual Information Filing of High-tech Enterprises” issued by Xixiang Tax Sub Bureau of National Taxation
Bureau of Baoan District of Shenzhen, the Company enjoys the “Reduction and Exemption in Corporate
Income Tax Rate for High and New Technology Enterprises that Require Key Support from the State”.
Note ⑤: These companies are registered in Hong Kong and the income tax rate of Hong Kong applicable is
16.50% this year
Note ⑥: According to the People's Republic of China Enterprise Income Tax Law, the income tax rate is 25%
for residential enterprises since 1 January 2008.
Note ⑦: The tax rate of 30% is applicable for Swiss Company as it registered in Switzerland.
(2) Property tax
In accordance with Article 5 of “Notice to Publish “Reply to Issues Related to Property Tax and Vehicle and
Vessel Usage Tax””, Shen Di ShuiFa (1999) No.374 issued by Shenzhen Local Taxation Bureau, property leased
out by manufacturing or business entity are taxed at 1.2% on the bases of 70% of the original cost of the
property.
Properties of the Group that situated in Shenzhen are taxed according to this notice. Properties situated in
other cities are taxed according to local regulations.
V. Notes to main items of consolidated financial statements
1. Cash at bank and on hand
31/12/2015 31/12/2014
Item
Foreign Exchange RMB Foreign Exchange RMB
currency rate equivalent currency rate equivalent
Cash on hand: -- -- 387,241.40 -- -- 338,694.81
RMB -- -- 369,313.36 -- -- 323,007.58
USD 698.00 6.4936 4,532.53 698.00 6.1190 4,271.06
HKD 12,910.73 0.8378 10,816.55 11,252.83 0.7889 8,877.36
EUR 24.45 7.0952 173.48 24.45 7.4556 182.29
CHF 375.75 6.4018 2,405.48 375.75 6.2715 2,356.52
Bank deposit: -- -- 636,995,113.67 -- -- 114,319,146.38
RMB -- -- 628,885,440.39 -- -- 96,108,985.12
USD 165,167.86 6.4936 1,072,534.45 196,091.57 6.1190 1,199,885.01
HKD 7,451,264.03 0.8378 6,242,664.82 13,272,713.21 0.7889 10,470,753.04
CHF 124,101.66 6.4018 794,474.01 1,042,736.70 6.2715 6,539,523.21
38
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Other monetary fund: -- -- 1,580,520.86 -- -- 1,797,229.35
RMB -- -- 1,580,520.86 -- -- 1,797,229.35
Total 638,962,875.93 116,455,070.54
Amount of RMB1,575,000.00 in other monetary funds is the security deposit with Shenzhen Center Branch of
Agricultural Bank of China for issuing of irrevocable letter of guarantee.
2. Notes receivable
Classification 31/12/2015 31/12/2014
Bank acceptance bills 5,697,788.08 5,162,768.29
Trade acceptance bills 1,500,000.00 1,000,000.00
Total 7,197,788.08 6,162,768.29
(1)There is no pledge of notes receivable at the end of the period.
(2)There is no endorsed or discounted notes receivable that is not yet due at the end of the period.
(3)There is no notes receivable transferred to receivables due to issuer’s default at the end of the period.
3. Accounts receivable
(1)Accounts receivables disclosed by categories:
31/12/2015
Category
Percentage Provision for Provision
Amount Net amount
% bad debts rate %
Receivables that are individually
significant in amount and - - - - -
provided for bad debt separately
Receivables provided for bad debt
by portfolio:
Including: Portfolio based on
138,760,245.46 44.39 7,856,219.86 5.66 130,904,025.60
aging of receivables
Specific receivables 173,821,650.69 55.61 - - 173,821,650.69
Subtotal 312,581,896.15 100.00 7,856,219.86 2.51 304,725,676.29
Receivables that are individually
insignificant in amount but - - - - -
provided for bad debt separately
Total 312,581,896.15 100.00 7,856,219.86 2.51 304,725,676.29
Accounts receivables disclosed by categories (continued)
31/12/2014
Category
Percentage Provision for Provision
Amount Net amount
% bad debts rate %
Receivables that are individually
significant in amount and provided - - - - -
for bad debt separately
Receivables provided for bad debt
by portfolio:
39
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Including: Portfolio based on
165,747,769.87 46.05 8,663,644.67 5.23 157,084,125.20
aging of receivables
Specific receivables 194,192,780.33 53.95 - - 194,192,780.33
Subtotal 359,940,550.20 100.00 8,663,644.67 2.41 351,276,905.53
Receivables that are individually
insignificant in amount but - - - - -
provided for bad debt separately
Total 359,940,550.20 100.00 8,663,644.67 2.41 351,276,905.53
Note:
①Accounts receivable that are provided for bad debt based on aging analysis in aging portfolio:
31/12/2015
Aging Provision for bad
Amount Percentage % Provision rate % Net amount
debts
Within 1 year 131,175,022.16 94.53 6,586,786.79 5.00 124,588,235.37
1 to 2 years 5,689,069.52 4.10 568,906.94 10.00 5,120,162.58
2 to 3 years 1,237,753.78 0.89 371,326.13 30.00 866,427.65
Over 3 years 658,400.00 0.48 329,200.00 50.00 329,200.00
Total 138,760,245.46 100.00 7,856,219.86 5.66 130,904,025.60
(Continued)
31/12/2014
Aging
Provision for bad
Amount Percentage % Provision rate % Net amount
debts
Within 1 year 162,924,972.23 98.30 8,146,248.60 5.00 154,778,723.63
1 to 2 years 1,647,216.14 0.99 164,721.62 10.00 1,482,494.52
2 to 3 years 1,175,581.50 0.71 352,674.45 30.00 822,907.05
Over 3 years - - - - -
Total 165,747,769.87 100.00 8,663,644.67 5.23 157,084,125.20
② Among the portfolio, accounts receivable that are provided for bad debt using other method
Name of portfolio Carrying amount Bad debt provision Provision rate %
Portfolio of specific
173,821,650.69 - -
accounts
(2) Provision and recovery of provision within this year
The amount of Bad debt provision accrued is RMB54,831.98 in current period. There was no received bad
debt provision in current period.
(3) Actual written-off of accounts receivable within this year
Item Written-off amounts
Accounts receivable actually written off 862,256.79
(4)Accounts receivable due from the top five debtors of the Group are as follows:
40
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
The closing balance of total accounts receivable due from the top five debtors of the Group is
RMB24,938,417.27, accounting for 7.98% of the total accounts receivable as at 31 December 2015 and the
corresponding provision for bad and doubtful debts accrued as at 31 December 2015 is RMB1,246,920.86.
4. Prepayments
(1)The ageing analysis of prepayments is as follows:
31/12/2015 31/12/2014
Aging
Amount Percentage % Amount Percentage %
Within 1 year 40,458,069.74 82.79 42,177,990.15 97.97
1 to 2 years 7,684,834.45 15.73 225,856.85 0.52
2 to 3 years 103,176.35 0.21 103,427.06 0.24
Over 3 years 623,483.06 1.27 547,368.00 1.27
Total 48,869,563.60 100.00 43,054,642.06 100.00
(2)The top five prepayments are as follows:
Total prepayments due from the top five debtors of the Group as at 31 December 2015 is RMB25,528,143.71
and accounts for 52.24% of the total prepayments as at 31 December 2015.
5. Other receivables
(1)Other receivables disclosed by categories
31/12/2015
Category
Percentage Provision for Provision
Amount Net amount
% bad debts rate %
Other receivables that are individually
significant in amount and provided 800,000.00 1.88 800,000.00 100.00 -
for bad debt separately
Other receivables provided for bad
debt by portfolio:
Including: Portfolio based on aging of
36,781,989.54 86.30 1,852,085.48 5.04 34,929,904.06
receivables
Specific other receivables 4,917,828.70 11.54 - - 4,917,828.7
Subtotal 41,699,818.24 97.84 1,852,085.48 4.44 39,847,732.76
Other receivables that are individually
insignificant in amount but provided 120,000.00 0.28 120,000.00 100.00 -
for bad debt separately
Total 42,619,818.24 100.00 2,772,085.48 6.50 39,847,732.76
Other receivables disclosed by categories(continued)
31/12/2014
Category
Percentage Provision for Provision
Amount Net amount
% bad debts rate %
Other receivables that are
individually significant in amount - - - - -
and provided for bad debt separately
Other receivables provided for bad
debt by portfolio:
41
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Including: Portfolio based on aging
33,466,574.93 75.29 2,803,647.28 8.38 30,662,927.65
of receivables
Specific other receivables 10,862,791.62 24.44 - - 10,862,791.62
Subtotal 44,329,366.55 99.73 2,803,647.28 6.32 41,525,719.27
Other receivables that are
individually insignificant in amount 120,000.00 0.27 120,000.00 100.00 -
but provided for bad debt separately
Total 44,449,366.55 100.00 2,923,647.28 6.58 41,525,719.27
Note:
①Among the portfolio, other receivables that are provided for bad debt based on aging analysis：
31/12/2015
Aging
Provision for bad
Amount Percentage % Provision rate % Net amount
debts
Within 1 year 36,738,589.54 99.88 1,836,929.48 5.00 34,901,660.06
1 to 2 years 16,360.00 0.05 1,636.00 10.00 14,724.00
2 to 3 years - - - - -
Over 3 years 27,040.00 0.07 13,520.00 50.00 13,520.00
Total 36,781,989.54 100.00 1,852,085.48 5.04 34,929,904.06
(Continued)
31/12/2014
Aging Provision for bad
Amount Percentage % Provision rate % Net amount
debts
Within 1 year 27,670,158.67 82.68 1,383,509.74 5.00 26,286,648.93
1 to 2 years 3,271,785.31 9.78 327,178.52 10.00 2,944,606.79
2 to 3 years 846,782.30 2.53 254,034.69 30.00 592,747.61
Over 3 years 1,677,848.65 5.01 838,924.33 50.00 838,924.32
Total 33,466,574.93 100.00 2,803,647.28 8.38 30,662,927.65
②Among the portfolio, other receivables that are provided for bad debt using other method:
Name of portfolio Carrying amount Bad debt provision Provision rate %
Portfolio of specific
4,917,828.70 - -
accounts
(2) Provision and recovery of provision within this year
The amount of bad debt provisions reversed is RMB151,561.80 in current period. There is no bad debt
provisions received in current period.
(3)Other receivables by nature
Item 31/12/2015 31/12/2014
Petty cash 4,917,828.70 8,613,005.35
42
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Security deposit 9,126,499.58 5,710,249.11
Guarantee deposit 19,654,321.18 21,201,491.16
Goods promotion fee 6,617,843.27 5,021,765.71
Others 2,303,325.51 3,902,855.22
Total 42,619,818.24 44,449,366.55
(4)Accounts receivable due from the top five debtors of the Group are as follows:
Provision for
% of the balance
bad and
Company name Nature Balance Aging of other
doubtful
receivables
debts
Guarantee within
China Resources (Shenzhen) Co., Ltd 2,758,194.00 6.47 137,909.70
deposit one year
China Resources Sun Hung Kai Guarantee within
1,497,003.00 3.51 74,850.15
Properties(Hangzhou)Limited deposit one year
Goods
within
The Swatch Group (China) Ltd. promotion 1,177,889.45 2.76 58,894.47
one year
fee
Shenzhen Yitian Holiday World Property Guarantee within
1,090,523.00 2.56 54,526.15
Development Co., Ltd deposit one year
Oris International Trade (Shanghai) Co., Goods within
1,059,500.00 2.49 52,975.00
Ltd. promotion fee one year
Total 7,583,109.45 17.79 379,155.47
6. Inventory
(1)Inventories by categories
31/12/2015 31/12/2014
Category Provision for Provision for di
Book balance diminution in Carrying amount Book balance minution in val Carrying amount
value ue
Raw materials 160,662,691.18 6,305,697.86 154,356,993.32 129,886,207.63 7,759,807.87 122,126,399.76
Work-in-proce
17,310,018.61 - 17,310,018.61 29,054,964.10 - 29,054,964.10
ss
Finished goods 1,943,230,127.88 22,206,120.52 1,921,024,007.36 1,998,359,374.96 15,749,714.50 1,982,609,660.46
Total 2,121,202,837.67 28,511,818.38 2,092,691,019.29 2,157,300,546.69 23,509,522.37 2,133,791,024.32
Note: At the year end, the balance of the Group’s inventory of branded watches with aging over 3 years is
RMB 204,730,851.60, accounts for 13.56% of the closing balance of all branded watches. The opening balance
of the branded watches of the Group’s inventory with aging over 3 years is RMB240,521,136.99, about 16.67%
of the opening balance of the branded watches.
(2)Provision for diminution in value of inventories
Increase Decrease
Category 31/12/2014 31/12/2015
Accrual Other Reversed Written-off
Raw materials 7,759,807.87 - - 94,272.69 1,359,837.32 6,305,697.86
43
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Finished goods 15,749,714.50 6,456,406.02 - - - 22,206,120.52
Total 23,509,522.37 6,456,406.02 - 94,272.69 1,359,837.32 28,511,818.38
Provision for diminution in value of inventories (continued)
Reasons for inventory
falling price reserves
Category Determination basis of net realizable value
reversed or written off in
current period
Raw Net realizable value is determined according to the estimated sale price of finished
products produced deducted the costs that may incur till the completion of ①
materials
production, estimated sale costs and related taxes
Finished Net realizable value is determined according to the estimated sale price of finished
goods goods less sales and distribution expenses and related taxes -
将要发生的成本、估计的销售费用和相关税费后的金额确定
Note:
① Reversal is due to the increase of net realizable value of raw material. Written-off is due to sales of raw
material that were provided for impairment in prior period.
7. Other current assets
Item 31/12/2015 31/12/2015
Deductible input VAT tax 10,185,449.99 8,356,400.02
Housing rental 4,065,558.45 4,270,819.57
Others 1,545,765.12 1,794,296.84
Total 15,796,773.56 14,421,516.43
8. Available-for-sale financial assets
(1)Available-for-sale financial assets
31/12/2015 31/12/2014
Item
Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Available-for-sale equity
385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
instrument
Incl.: measured at cost 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
Total 385,000.00 300,000.00 85,000.00 385,000.00 300,000.00 85,000.00
(2)Available-for-sale financial asset measured at cost
Book balance Provision for impairment
D Investm
In In Cash
Invested ec De ent
cr cre divide
entity 31/12/2014 re 31/12/2015 31/12/2014 cre 31/12/2015 percenta
ea as nd
as ase ge
se e
e
44
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Shenzhen
Zhonghang
300,000.00 - - 300,000.00 300,000.00 - - 300,000.00 15.00 -
Culture Co.
Ltd
Xi’an
Tangcheng
85,000.00 - - 85,000.00 - - - - 0.10 -
Limited
Company
Total 385,000.00 - - 385,000.00 300,000.00 - - 300,000.00 -- -
(3)Movement of the impairment of available-for-sale financial assets in the reporting period
Category Available-for-sale equity instrument
Impairment as at 31/12/2014 300,000.00
Accrued in current year -
Including: transferred from other
-
comprehensive income
Decrease in current year -
Including: reversal due to fair value increases -
Impairment as at 31/12/2015 300,000.00
45
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
9. Long-term equity investments
Movement
Balance of
Cash provision
Balance Investment Balance as at 31
Investee Adjustment of dividend for
as at 31/12/2014 income/loss /12/2015
other Changes of or profit Provison for impairment as
Addition Reduction recognized Others
comprehensiv other equity announce impairment at 31/12/2015
under the
e income d to be
equity method
issued
① Associated
company
Shanghai
Watch
Industry Co.,
42,389,759.91 - - 831,812.14 - - - - - 43,221,572.05 -
Ltd(Shanghai
Watch
Industry)
Total 42,389,759.91 - - 831,812.14 - - - - - 43,221,572.05 -
46
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
10. Investment property
Item Buildings Total
I. Total book value
1.Balance as at 31/12/2014 340,029,020.44 340,029,020.44
2.Additions - -
(1)Purchase - -
(2)Inventory/fixed asset/construction in
- -
progress transfer
(3)Business combination - -
3.Disposals - -
(1)Disposals - -
(2)Other - -
4.Balance as at 31/12/2015 340,029,020.44 340,029,020.44
II. Accumulated depreciation or amortization
1.Balance as at 31/12/2014 113,937,081.55 113,937,081.55
2. Additions 9,143,745.87 9,143,745.87
(1)Accrued or amortized 9,143,745.87 9,143,745.87
(2)Business combination - -
(3)Other increases - -
3. Disposals - -
(1)Disposal - -
(2)Others - -
4.Balance as at 31/12/2015 123,080,827.42 123,080,827.42
III. Provision of impairment
1.Balance as at 31/12/2014 - -
2. Additions - -
(1)Accrued - -
(2)Other increases - -
3. Disposals - -
(1)Disposal - -
(2)Others - -
4.Balance as at 31/12/2015 - -
IV. Carrying amount
1.As at 31/12/2015 216,948,193.02 216,948,193.02
2.As at 31/12/2014 226,091,938.89 226,091,938.89
47
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Note: The depreciation and amortization recognized in 2015 is RMB 9,143,745.87.
11. Fixed assets
(1) Fixed assets by categories
Item Property and Machinery Transportatio Electronic Other Total
buildings n vehicles devices equipment
I. Total book value
1.Balance as at 318,842,602.17 63,510,303.08 16,021,718.53 29,830,349.42 38,350,321.67 466,555,294.87
31/12/2014
2. Additions 40,214,221.05 16,361,135.14 883,703.40 4,192,363.41 1,889,137.34 63,540,560.34
(1)Purchasing 40,214,221.05 16,361,135.14 883,703.40 4,192,363.41 1,889,137.34 63,540,560.34
(2)Transfer from -
- - - - -
construction in progress
(3)Increase due to -
- - - - -
business combination
3. Disposals - 406,320.94 385,777.94 162,294.30 80,612.61 1,035,005.79
(1)Disposal or retire - 406,320.94 385,777.94 162,294.30 80,612.61 1,035,005.79
(2)Other decrease - - - - -
4.Balance as at
359,056,823.22 79,465,117.28 16,519,643.99 33,860,418.53 40,158,846.40 529,060,849.42
31/12/2015
II. Accumulated
depreciation
1.Balance as at
53,550,667.30 25,571,773.23 10,668,986.69 21,098,150.07 31,932,847.00 142,822,424.29
31/12/2014
2. Additions 11,213,864.75 7,375,642.57 2,086,029.47 3,160,459.68 1,167,168.65 25,003,165.12
(1)Accrual 11,213,864.75 7,375,642.57 2,086,029.47 3,160,459.68 1,167,168.65 25,003,165.12
(2)Other increase - - - - - -
3. Reductions - 201,507.94 366,489.04 132,919.29 43,651.73 744,568.00
(1)Disposal or retire - 201,507.94 366,489.04 132,919.29 43,651.73 744,568.00
(2)Other decrease - - - - - -
4. Balance as at 64,764,532.05 32,745,907.86 12,388,527.12 24,125,690.46 33,056,363.92 167,081,021.41
31/12/2015
III. Provision for - - - - - -
impairment
1.Balance as at - - - - - -
31/12/2014
2. Additions - - - - - -
(1)Accrual - - - - - -
(2)Other increase - - - - - -
3. Reductions - - - - - -
(1)Disposal or retire - - - - - -
(2)Other decrease - - - - - -
4.Balance as at - - - - - -
31/12/2015
IV. Carrying amount
1.As at 31/12/2015 294,292,291.17 46,719,209.42 4,131,116.87 9,734,728.07 7,102,482.48 361,979,828.01
48
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
2.As at 31/12/2014 265,291,934.87 37,938,529.85 5,352,731.84 8,732,199.35 6,417,474.67 323,732,870.58
Note:
Fixed assets that are pledged or guaranteed
As at 31 December 2015, the property with original cost of RMB25,183,927.61, net book value of
RMB20,007,240.87 was pledged for long-term loan of RMB5,877,036.33.
(2)Fixed assets that do not have certificate for property right
Reason for not having certificate for
Item Book value
property rights
Office rooms for Harbin Branch 319,555.68 Defective in property right
(3)Cost of the Group’s assets that are fully depreciated but still in use amounts to RMB76,709,868.88 at the
end of year 2015.
12. Construction in progress
(1)Details of construction in progress
31/12/2015 31/12/2014
Item
Net carrying Net carrying
Book balance Impairment Book balance Impairment
amount amount
Clock & Watch
base in 173,189,274.57 - 173,189,274.57 51,283,233.53 - 51,283,233.53
Guangming New
District
FIYTA Tech.
Building Canopy - - - 17,279.00 - 17,279.00
project
FIYTA Tech.
Building
basement - - - 88,751.00 - 88,751.00
renovation
project
Total 173,189,274.57 - 173,189,274.57 51,389,263.53 - 51,389,263.53
(2) The Group’s major construction projects in progress are set out as follows
Transfer Other Including
Accumulated
Project red to current Capitalize
31/12/2014 Additions capitalized 31/12/2015
name fixed deducti capitalized d rate%
on interest
assets interest
Clock &
Watch base
in 51,283,233.53 121,906,041.04 - - 3,386,352.38 2,869,675.80 5.77 173,189,274.57
Guangming
New District
The Group’s major construction projects in progress are set out as follows (continued):
Percentage of
accumulated
Project Budget Progress Sources of funds
investment to
budget %
Clock & Watch base in Self-raised and loan from the
270,000,000.00 64.14 64.39%
Guangming New District bank
49
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
13. Intangible asset
(1)Intangible asset
Right to use
Item Land right Software system Total
trademarks
I. Book value
1.Balance as at
34,854,239.40 4,631,161.08 9,547,313.86 49,032,714.34
31/12/2014
2 Additions - 2,327,148.25 - 2,327,148.25
(1)Purchasing - 2,327,148.25 - 2,327,148.25
(2)Internal R&D - - - -
(3)Increase due to
business - - - -
combination
(4)Other increases - - - -
3. Reductions - - - -
(1)Disposal - - - -
(2)Other decreases - - - -
4.Balance as at 31/12/2015 34,854,239.40 6,958,309.33 9,547,313.86 51,359,862.59
II. Accumulated amortization
1.Balance as at
7,692,142.62 2,627,273.78 3,210,772.22 13,530,188.62
31/12/2014
2. Additions: 731,567.04 657,160.31 11,319.96 1,400,047.31
(1)Accrual 731,567.04 657,160.31 11,319.96 1,400,047.31
(2)Other increases - - - -
3. Reduction - - - -
(1)Disposal - - - -
(2)Other decreases - - - -
4.Balance as at
8,423,709.66 3,284,434.09 3,222,092.18 14,930,235.93
31/12/2015
III. Provision for impairment
1.Balance as at
- - - -
31/12/2014
2. Additions: - - - -
(1)Accrual - - - -
(2)Other increases - - - -
3. Reduction - - - -
(1)Disposal - - - -
(2)Other decreases - - - -
4.Balance as at
- - - -
31/12/2015
IV. Carrying amount
1.Balance as at
26,430,529.74 3,673,875.24 6,325,221.68 36,429,626.66
31/12/2015
2.Balance as at
27,162,096.78 2,003,887.30 6,336,541.64 35,502,525.72
31/12/2014
Note: Amortization recognized in 2015 is RMB1,400,047.31元。
14. Goodwill
50
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(1) Book value of goodwill
Name of investee or events
31/12/2014 Additon Reduction 31/12/2015
constituting goodwill
Lishan Department Store 1,735,756.48 - - 1,735,756.48
(2) Provision for impairment of goodwill
Name of investee or events Balance as at Additon Reduction Balance as at
constituting goodwill 31/12/2014 Provision Other Disposal Other 31/12/2015
Lishan Department Store 1,735,756.48 - - - - 1,735,756.48
Note:
HARMONY Company, a subsidiary of the Company, acquired 100% shares of Lishan Department Store on
31 March 2008 with consideration of RMB1,200,000.00. On the date of acquisition, the fair value of
identifiable net assets of Lishan Department Store was RMB(535,756.48). HARMONY Company recorded the
difference of RMB1,735,756.48 as goodwill in the consolidated financial statements. At the end of 2008, it
carried out the impairment test for the goodwill. As the recoverable amount was lower than its book value,
HARMONY Company charged the goodwill impairment losses of RMB1,735,756.48 to the profit or loss in
year 2008.
15. Long-term deferred expenses
Reduction
Item 31/12/2014 Additions 31/12/2015
Others
Amortization
deduction
Counter
fabrication 59,982,521.32 68,436,819.26 61,531,837.33 - 66,887,503.25
expenses
Renovation
79,898,617.77 24,842,100.99 32,968,056.59 - 71,772,662.17
expenses
Fee for
9,504,961.77 16,230,757.44 9,362,104.68 - 16,373,614.53
representation
Others 347,465.17 575,502.72 252,183.45 - 670,784.44
Total 149,733,566.03 110,085,180.41 104,114,182.05 - 155,704,564.39
16. Deferred income tax assets and deferred income tax liabilities
(1)Deferred income tax assets and deferred income tax liabilities before offsetting
31/12/2015 31/12/2014
Item Deductible/Taxab Deductible/Taxab
Deferred income Deferred income
le temporary le temporary
tax assets tax assets
difference difference
Deferred income tax assets:
Asset impairment provision 53,423,315.43 12,781,048.95 35,096,814.32 7,934,522.40
Offset internal unrealized profit 371,236,241.47 87,969,273.73 321,704,912.25 79,169,123.81
Deferred income 4,300,000.00 1,075,000.00 4,200,000.00 1,050,000.00
Deductible loss 16,561,138.12 4,076,400.48 10,815,273.17 2,515,429.89
Subtotal 445,520,695.02 105,901,723.16 371,816,999.74 90,669,076.10
(2)Details of deductible temporary difference and deductible losses that haven’t been recognized as deferred
tax assets
51
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 31/12/2015 31/12/2014
Deductible temporary difference 2,035,756.48 2,035,756.48
17. Other non-current assets
Item 31/12/2015 31/12/2014
Prepaid property building fund
- 31,500,000.00
Prepaid equipment fund
5,118,833.65 -
Total 5,118,833.65 31,500,000.00
18. Short-term loans
(1)Classification of short-term loans
Item 31/12/2015 31/12/2014
Guaranteed loan 338,186,200.00 436,445,000.00
Credit Loan 650,000,000.00 553,000,000.00
Total 988,186,200.00 989,445,000.00
Note:
① There are no unpaid short-term loans that fall due.
② Refer to Note X. 5(3) for details of guarantee between related-parties.
19. Accounts payables
Item 31/12/2015 31/12/2014
Trade payables 111,750,463.34 136,579,035.50
Payables for material purchased 20,477,883.44 10,328,743.55
Payables for project warranty 23,711,339.76 211,339.76
Total 155,939,686.54 147,119,118.81
Among, significant accounts payable aging over 1 year
Item 31/12/2015 Reasons for not settle
Shenzhen Ruishi Watch Co., Ltd. 825,789.29 Invoice not received
20. Advances from customer
Item 31/12/2015 31/12/2014
Trade advances received 14,823,613.26 8,602,932.19
Rental advances received 3,207,516.61 3,484,435.98
Total 18,031,129.87 12,087,368.17
21. Employee remuneration payable
52
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 31/12/2014 Increase Decrease 31/12/2015
Short-term remuneration 38,082,957.60 457,737,029.58 456,909,320.37 38,910,666.81
Post-employment welfare-defined
contribution plans 565,474.81 39,118,755.83 39,198,149.50 486,081.14
Dismissal welfare - 2,304,305.95 2,304,305.95 -
Total 38,648,432.41 499,160,091.36 498,411,775.82 39,396,747.95
(1) Short-term employee benefits
Item 31/12/2014 Increase Decrease 31/12/2015
Wages, bonuses and allowances 37,656,100.67 408,359,831.00 407,320,090.39 38,695,841.28
Employee Welfare - 7,971,090.54 7,971,090.54 -
Social insurance - 15,862,607.42 15,862,607.42 -
Incl.：1. medical insurance - 13,573,559.22 13,573,559.22 -
2. work-related injury insurance - 881,679.02 881,679.02 -
3. maternity insurance - 1,407,369.18 1,407,369.18 -
Housing fund - 15,260,562.48 15,260,562.48 -
Expenditure for labor union and employee 426,856.93 8,336,445.02 8,548,476.42 214,825.53
training
Other short-term benefits - 1,946,493.12 1,946,493.12 -
Total 38,082,957.60 457,737,029.58 456,909,320.37 38,910,666.81
(2)Defined contribution plans
Item 31/12/2014 Increase Decrease 31/12/2015
Post-employment welfare
Incl.：1．endowment insurance - 35,009,138.91 35,008,301.11 837.80
2．unemployment insurance - 1,926,514.75 1,926,514.75 -
3．Enterprise annuity payment 565,474.81 2,183,102.17 2,263,333.64 485,243.34
4．Others - - - -
Total 565,474.81 39,118,755.83 39,198,149.50 486,081.14
22. Taxes payable
Item 31/12/2015 31/12/2014
Value added tax 38,446,286.82 39,838,385.65
Business tax 585,194.96 795,720.42
Corporate income tax 27,163,568.79 34,315,435.06
Individual income tax 1,102,201.03 745,837.07
City maintenance & construction tax 612,201.25 465,372.23
Property tax 45,596.12 618,271.30
53
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 31/12/2015 31/12/2014
Educational surcharges 395,801.04 276,780.09
Stamp duty 242,297.50 252,083.51
Embankment protection fee 22,414.09 8,859.19
Others 306,171.21 286,025.54
Total 68,921,732.81 77,602,770.06
23. Interest payable
Item 31/12/2015 31/12/2014
Interest payable for long-term loan 605,563.29 597,095.78
Interest on corporate bonds 16,800,000.00 16,800,000.00
Interest payable for short-term loan 1,806,066.73 2,023,797.97
Total 19,211,630.02 19,420,893.75
24. Other payables
Item 31/12/2015 31/12/2014
Security deposit 17,427,761.30 16,573,961.57
Shareholder loans - 150,000,000.00
Decoration expenses 4,268,223.01 4,712,095.11
Down payment 3,052,393.03 3,331,638.94
Store activity funds 8,504,697.12 6,075,167.30
Personal accounts payable 1,802,485.42 358,160.60
Housing allowance 1,760,000.00 -
Expenses for capital raising 1,146,772.99 -
Others 10,169,283.33 7,523,876.93
Total 48,131,616.20 188,574,900.45
Among, significant other payables aging over 1 year:
Reasons for unpaid or
Item Amount
unsettled
Shenzhen Tencent Computer System Co., Ltd. 4,693,429.16 within lease term
Oracle R&D Center (Shenzhen) Limited 811,590.00 within lease term
China Tenth Metallurgy Group Limited Corporation 690,000.00 Security deposit for project
Shenzhen Yitianxun Technology Co., Ltd 505,657.80 within lease term
Shenzhen Xiangya Food Co., Ltd. 471,760.00 within lease term
Shenzhen Avic Real Estate Co., Ltd 424,800.00 within lease term
Shenzhen Honestar Electronic Limited 375,144.00 within lease term
Shenzhen Good Family Sports-Ware Chain Limited 351,030.00 within lease term
54
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Reasons for unpaid or
Item Amount
unsettled
Sun Dawei 358,160.60 Not yet been returned
China Merchants Bank Shenzhen Sci-tech Park Branch 349,692.00 within lease term
Shenzhen Uni-phone Self-service Kara-Ok Entertainment
334,880.00 within lease term
Supermarket Limited
Shenzhen Oriental Boiler Control Co., Ltd 318,491.60 within lease term
Shenzhen Hangjian Engineering Cost Consultation Co., Ltd 208,304.00 within lease term
Total 9,892,939.16
25. Other current liabilities
Item 31/12/2015 31/12/2014
Accrued expenses 1,988,252.38 5,482,521.27
26. Long-term loan
Item 31/12/2015 Range of 31/12/2014 Range of
interest rate interest rate
Pledge loans 5,877,036.33 3.00-4.25% 6,255,497.65 3.00-4.25%
Guaranteed loan 194,031,928.00 2.94-6.06% 133,696,928.00 3.00-5.69%
Subtotal 199,908,964.33 139,952,425.65
Less: Long-term loan due within one
108,914,000.00 -
year
Total 90,994,964.33 139,952,425.65
Note:
① There is no unpaid long-term loans that fall due.
② As described in Note V.11, the loan is pledged by property and houses with original cost of
RMB25,183,927.61 and book value of RMB20,007,240.87.
③Refer to Note X. 5(3) for guarantee between related parties.
27. Bonds payable
Item 31/12/2015 31/12/2014
12 FIYTA Debt 399,823,760.28 398,767,929.40
(1) Movement of bonds payable
Bond Name Par value Issue date Bond period Issue amount
12 FIYTA Debt 400,000,000.00 27/2/2013 3+2 years 400,000,000.00
Subtotal 400,000,000.00 400,000,000.00
Bonds payable (continued)
Interest Amortization
Bond Name 31/12/2014 Issued accrued on of premium Repayment 31/12/2015
par value or discount
12 FIYTA
398,767,929.40 - 20,160,000.00 1,055,830.88 20,160,000.00 399,823,760.28
Debt
55
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Subtotal 398,767,929.40 - 20,160,000.00 1,055,830.88 20,160,000.00 399,823,760.28
Less:
Long-term loan
- - - - - -
due within one
year
Total 398,767,929.40 - 20,160,000.00 1,055,830.88 20,160,000.00 399,823,760.28
28. Deferred income
Item 31/12/2014 Increase Decrease 31/12/2015 Forming reasons
Government grant 4,200,000.00 2,800,000.00 2,700,000.00 4,300,000.00
Note:
Incl. :Deferred income—governmental grant
Amount
recognized in Other Related to
Subsidy project 31/12/2014 Increase 31/12/2015
Non-operating Changes assets/income
Income
Technical study for civil
aviation airborne cockpit 1,200,000.00 - 1,200,000.00 - - Income related
clock (note ①)
Special fund for
Shenzhen industrial
design industry 3,000,000.00 - 1,500,000.00 - 1,500,000.00 Asset related
development
(Note ②)
Funding project for
construction of
National Enterprise - 2,000,000.00 - - 2,000,000.00 Asset related
Technology Center(Note
③)
Researching project for
gordian technique of
standard timing system - 800,000.00 - - 800,000.00 Income related
of DF101(Note ④)
Total 4,200,000.00 2,800,000.00 2,700,000.00 - 4,300,000.00
Note:
Note ①:Special fund was obtained from the First Special Fund for Technology Innovation Scheming
Technological Development Project (Advanced Equipment Manufacturing) of 2013 Municipal Technology
Research and Development Fund by Technological Innovation Commission of Shenzhen Municipality and
Finance Commission of Shenzhen Municipality according to Administrative Measures for Shenzhen
Technology Research and Development and Administrative Measures for Shenzhen Technology Scheming
Project on 28 June 2013.
Note ②：Special fund for Shenzhen industrial design industry development was obtained according to the
Shen Jingmao Xinxi Jishu Zi (2013) No. 227 - Operating Specification for Affirmation and Fund Plan of
Shenzhen Industrial Design Center (Trial) which is jointly issued by Economy, Trade and Information
Commission of Shenzhen Municipality and Finance Commission of Shenzhen Municipality on 10 Oct 2014.
Note ③：Funding project for construction of Shenzhen Enterprise Technology Center was obtained
according to the Notice for the 1st Supportive Project in 2015 of Funding Project for Construction of
Shenzhen Enterprise Technology Center which was issued by Shenzhen Development and Reform
Commission (Shen Jing Mao Xin Xi Yu[2015] No. 129) on 28 Oct 2015.
Note ④：Special fund for university-industry cooperation in 2013 was obtained according to Yue Ke Gong Shi
[2014] No. 13 – Publicity about Projects which would be Supported by Special Fund of Comprehensive
56
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Strategic Cooperation between Province and College and Special Fund of Province-Ministry
University-Industry Cooperation in 2013, issued by Guangdong Science and Technology Department on 9 Dec
2015.
29. Share capital (Unit: 0,000 shares)
Additions or reduction (+, -)
Item 31/12/2014 Capitalization 31/12/2015
Issuance of Bonus
of capital Others Subtotal
new share shares
reserves
Total shares 39,276.7870 4,597.7011 - - - 4,597.7011 43,874.4881
Note:
The above share capital has been verified with the capital verification report – Zhitong Yan Zi (2015) No.
441ZC0652, which is issued by Grant Thornton.
30. Capital reserve
Item 31/12/2014 Increase Decrease 31/12/2015
Share premium 511,015,832.95 536,947,362.62 - 1,047,963,195.57
Other capital reserves 14,492,448.65 - - 14,492,448.65
Total 525,508,281.60 536,947,362.62 - 1,062,455,644.22
As described in note 1, the increase is the premium of non-public offering of ordinary share (A share).
31. Other comprehensive income
Movement
Less:
recorded in
other
Amount comprehens Less:
incurred ive income Inco Attribute to Attribute
As at As at 31/12/2015
Item before in prior me parent to minority
31/12/2014(1) (3)=(1)+(2)
income tax period and tax company shareholde
in current transferred expe after tax(2) rs after tax
period to profit or nses
loss in
current
period
I. Other
comprehensive
income items which
will not be - - - - - - -
reclassified
subsequently to
profit or loss
II. Other
comprehensive
income items which
-17,609,265.22 658,770.06 - - 464,075.51 194,694.55 -17,145,189.71
will be reclassified
subsequently to
profit or loss
1. Translation
difference of
-17,609,265.22 658,770.06 - - 464,075.51 194,694.55 -17,145,189.71
foreign currency
financial statements
57
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Total other
comprehensive -17,609,265.22 658,770.06 - - 464,075.51 194,694.55 -17,145,189.71
income
Note: Net after-tax other comprehensive income incurred in current period is RMB658,770.06. Amongst, the
amount attribute to parent company shareholders is RMB464,075.51 and the amount attribute to minority
shareholders is RMB194,694.55.
32. Surplus reserve
Item 31/12/2014 Increase Decrease 31/12/2015
Statutory surplus
103,930,572.89 13,827,610.26 - 117,758,183.15
reserve
Discretionary surplus 61,984,894.00
- - 61,984,894.00
reserve
Total 165,915,466.89 13,827,610.26 - 179,743,077.15
Note: according to the Company Law and Articles of Association, the Company draws statutory surplus
reserve at 10% of net profit. If the statutory surplus reserve is over 50% of the Company’s registered capital,
drawing of statutory surplus reserve can be stopped.
33. Undistributed profit
Appropriation
Item 31/12/2015 31/12/2014
proportion
Undistributed profit at the end of prior year before adjustments 566,819,577.37 469,706,600.67 --
Adjustments to undistributed profit at the beginning of year - - --
Undistributed profit at the beginning of a year after adjustment 566,819,577.37 469,706,600.67 --
Plus: Net profit attributable to the owner of the parent company
121,702,057.44 145,591,136.39 --
for the year
Less: statutory surplus reserve drawn 13,827,610.26 9,201,372.69 10%
Dividends payable to ordinary shares 39,276,787.00 39,276,787.00 --
635,417,237.55 566,819,577.37 --
Undistributed profit at the end of the year
Incl.：Surplus reserve drawn by subsidiaries that attributable to
2,279,410.31 3,063,794.53 --
parent company
Note:
(1)Description on distribution of dividend
Pursuant to the “Resolution of Equity Distribution for Year 2014” approved at the 2014 Annual General
Meeting held on 17 June 2015, the Company distributed to all shareholders cash dividend of RMB1.00 (tax
inclusive) for every 10 shares held based on total shares of 392,767,870 as at 31 December 2014. Total cash
dividend distributed was RMB39,276,787.00.
(2)Information on subsidiary’s surplus reserve in the reporting period
In 2015, HARMONY Company, a subsidiary of the Company, drew surplus reserve of RMB1,613,488.44, of
which RMB1,613,488.44 is attributable to the parent company. In 2015, Technology Company, a subsidiary of
the Company, drew surplus reserve of RMB665,921.87, of which RMB 665,921.87 is attributable to the parent
company.
34. Operating revenue and operating cost
Item 2015 2014
58
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Operating revenue Operating cost Operating revenue Operating cost
Revenue from main
3,127,774,670.18 1,920,619,137.50 3,245,370,291.15 2,043,109,870.34
business
Revenue from other 34,421,542.72 8,894,528.54 32,772,494.72 11,605,087.11
business
Total 3,162,196,212.90 1,929,513,666.04 3,278,142,785.87 2,054,714,957.45
Note:
(1) Primary operating income and operating cost by industry
2015 2014
Industry sector
Operating revenue Operating cost Operating revenue Operating cost
Watches 3,032,902,719.41 1,906,085,186.72 3,154,917,328.23 2,030,149,894.46
Property leasing 94,871,950.77 14,533,950.78 90,452,962.92 12,959,975.88
Total 3,127,774,670.18 1,920,619,137.50 3,245,370,291.15 2,043,109,870.34
(2) Primary operating income and operating cost by products
2015 2014
Product
Operating revenue Operating cost Operating revenue Operating cost
Branded watches 2,147,608,465.85 1,623,918,119.34 2,298,438,269.08 1,753,276,107.39
FIYTA watch 885,294,253.56 282,167,067.38 856,479,059.15 276,873,787.07
Property leasing 94,871,950.77 14,533,950.78 90,452,962.92 12,959,975.88
Total 3,127,774,670.18 1,920,619,137.50 3,245,370,291.15 2,043,109,870.34
(3) Primary operating income and operating cost by regions
2015 2014
Region
Operating revenue Operating cost Operating revenue Operating cost
Southern China 999,754,959.45 553,758,526.17 1,033,845,169.19 612,581,751.95
Northwest China 524,570,697.36 340,488,440.23 565,700,125.97 367,811,265.82
Northern China 504,961,668.45 329,038,618.83 539,995,688.23 352,347,650.86
Eastern China 449,126,026.79 277,859,635.82 447,079,002.18 281,649,017.63
Northeast China 303,634,173.44 192,956,014.26 310,178,526.39 200,041,144.79
Southwest China 345,727,144.69 226,517,902.19 348,571,779.19 228,679,039.29
Total 3,127,774,670.18 1,920,619,137.50 3,245,370,291.15 2,043,109,870.34
35. Business tax and surcharges
Item 2015 2014
Consumption tax - 460,361.20
Business tax 5,596,456.29 5,284,703.06
Urban maintenance and construction 13,940,149.40 9,904,010.65
tax
Educational surcharge 5,962,188.92 4,958,321.12
59
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Local educational surcharge 3,938,882.37 1,965,510.68
Others 1,236,833.20 1,328,974.59
Total 30,674,510.18 23,901,881.30
Note:The criteria of business taxes and surcharges accrued and paid refer to Note IV.Taxation.
36. Selling and distribution expenses
Item 2015 2014
Wages 263,308,344.47 226,664,366.60
Amortization of long-term deferred 93,564,343.23 90,323,235.31
expense
Market promotion expense 84,050,882.70 79,567,696.06
Rental 65,286,842.09 76,994,362.92
Department store expense 56,462,314.77 51,485,467.55
Advertising expense 49,861,317.33 56,732,801.49
Worker’s insurance expenses 37,804,708.38 31,423,816.21
Exhibition expenses 15,789,224.96 14,873,436.45
Packing expense 15,478,171.90 11,661,907.15
Utilities 13,570,654.19 12,972,823.88
Others 84,359,716.57 70,140,042.49
Total 779,536,520.59 722,839,956.11
37. Administrative expenses
Item 2015 2014
Wages 93,399,507.02 101,919,779.73
R & D expenses 37,481,362.43 33,842,818.77
Worker’s insurance expenses 11,091,233.56 10,679,457.31
Depreciation 8,122,537.00 7,786,791.73
Travel expense 6,647,853.61 8,299,343.91
Labor union expenditure 4,250,501.29 4,243,665.80
Housing fund 3,613,504.12 3,234,901.43
Office expenses 3,512,382.34 3,536,247.04
Amortization of long-term deferred 2,957,005.19 2,823,531.65
expense
Rental 2,457,640.32 2,358,336.15
Others 24,544,339.88 29,727,154.06
Total 198,077,866.76 208,452,027.58
38. Financial expenses
Item 2015 2014
Interest expense 89,096,566.16 97,571,157.24
60
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 2015 2014
Less: Interest capitalization 2,869,675.80 516,676.58
Less: Interest income 1,997,798.65 1,750,775.15
Exchange gain or losses -1,457,015.95 -2,544,542.58
Bank charges and others 11,575,389.03 13,060,297.89
Total 94,347,464.79 105,819,460.82
Note:
Amount of interest capitalization is included in construction in progress. The capitalization rate used for
determining the amount of interest capitalization is 5.77%.
39. Impairment losses
Item 2015 2014
(1)Bad debt loss -108,134.50 2,275,348.40
(2)Inventory impairment loss 6,362,133.33 345,954.89
Total 6,253,998.83 2,621,303.29
40. Investment income
Item 2015 2014
Investment gain from the long-term equity investment measured by
831,812.14 -848,180.21
equity method
41. Non-operating income
Amount included in
current year’s
Item 2015 2014
non-recurring profit or
loss
Total gain on disposal of the non-current
94,316.07 70,124.76 94,316.07
assets
Including: gain on disposal of fixed assets 94,316.07 70,124.76 94,316.07
Clearing of payables that cannot be paid 23,568.41 1,209,959.00 23,568.41
Breach penalty 313,888.80 481,196.07 313,888.80
Government grant 10,889,579.23 10,344,542.00 10,889,579.23
Others 715,899.31 435,274.03 715,899.31
Total 12,037,251.82 12,541,095.86 12,037,251.82
The details of government grants are as follows:
Related to
Projects 2015 2014 Note
assets/income
Special Fund for Industrial Transferring and
Upgrading in 2015 of Shenzhen Economy &
3,115,000.00 Related to Income (1)
Trade and Information System Steering
Committee
61
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Related to
Projects 2015 2014 Note
assets/income
Special Fund for Industrial Transferring and
Upgrading in 2014 of Shenzhen Economy &
2,643,000.00 Related to Income (2)
Trade and Information System Steering
Committee
Special Fund for Development of Shenzhen
1,500,000.00 Related to asset (3)
Industrial Designing
Electronic Clock Technical Research Project for
1,200,000.00 Related to Income (4)
Civil Aviation Flight Deck
Government Subsidiaries for Basel Watch Fair 900,271.23 20,000.00 Related to Income (5)
Special Fund for Development of Creative
469,000.00 Related to Income (6)
Industry of Nanshan District in 2015
Subsidiaries for Merit Rating of Shenzhen
300,000.00 Related to Income (7)
Nanshan Economy Promoting Bureau
Subsidiaries for 8 Standardized Research
264,250.00 Related to Income (8)
Projects of Shenzhen Baoan Bureau of Finance
Fund for Performing Standardized Strategy of
230,000.00 Related to Income (9)
Shenzhen in 2015
Award for 15th National Patent Appearance
100,000.00 350,000.00 Related to Income (10)
Designing
Technical Bonus of Guangdong in 2013 50,000.00 Related to Income (11)
Subsidiaries for Standardized Projects of
35,000.00 Related to Income
Nanshan Bureau of Science and Technology
2nd Batch of Supportive Fund for Register
33,000.00 Related to Income (12)
abroad in 2015 of Shenzhen
2nd Government Subsidiaries for Supporting
Improving the Ability of International Trading 27,258.00 Related to Income (13)
in 2014
20,000.00 Related to Income (14)
Bonus for Famous Industrial Designing in 2015
2nd Subsidiaries for Copyright in 2015 of
1,800.00 Related to Income
Shenzhen Market Supervisory Authority
Subsidiaries for Commerce Circulation of
1,000.00 Related to Income (15)
Shenzhen Economy and Trade Commission
2013 Specific subsidy fund for self-innovation
- 2,421,000.00 Related to Income
industry development of Nanshan District
2013 subsidy fund of Shenzhen enterprise
- 2,000,000.00 Related to Income
technology center development
Specific subsidy of Shenzhen brand foster - 1,000,000.00 Related to Income
62
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Related to
Projects 2015 2014 Note
assets/income
Specific subsidy for Shenzhen strategic
- 800,000.00 Related to Income
emerging industry development
E-commerce FIYTA Mobile Internet Sales
- 800,000.00 Related to Income
Mode Innovation Project
Specific fund for cultural creative industry
- 780,000.00 Related to Income
development
2013 subsidy fund for Shenzhen industrial
design and innovation results transferred into - 500,000.00 Related to Income
application
Award of the 14th Patent Award - 350,000.00 Related to Income
Award of the 11th Chinese Patent Award - 350,000.00 Related to Income
Standardization fund - 307,000.00 Related to Income
2012 integration project involving production,
- 300,000.00 Related to Income
study and research
2014 subsidy fund for implementing
- 138,042.00 Related to Income
standardization strategy
2014 subsidy for high-tech enterprises - 100,000.00 Related to Income
2014 subsidy for the first batch of overseas
- 70,000.00 Related to Income
trademark registration application
2014 award for Shenzhen renowned industrial
- 50,000.00 Related to Income
design award
The 15th China Patent Award - 5,000.00 Related to Income
Specific subsidy fund for innovation of Taitan
- 3,500.00 Related to Income
Watch Test Co., Ltd.
Total 10,889,579.23 10,344,542.00
Note:
(1) Special Fund for Industrial Transferring and Upgrading in 2015 was obtained according to Shen Jingmao
Xinxi Yusuan Zi [2015] No.295-Notice about Special Fund for Industrial Transferring and Upgrading by
Shenzhen Economy, Trade and Information Commission in 2015 and Shen Jingmao Xinxi Yusuan Zi [2015]
No.236 – Notice about 1st Batch of Special Fund for Industrial Transferring and Upgrading by Shenzhen
Economy, Trade and Information Commission in 2015.
(2) Special Fund for Industrial Transferring and Upgrading in 2014 was obtained according to Shen Jingmao
Xinxi Yusuan Zi [2015] No.33-Notice about Special Fund for Industrial Transferring and Upgrading by
Shenzhen Economy, Trade and Information Commission in 2014 and Shen Jingmao Xinxi Yusuan Zi [2015]
No.76 – Notice about planed Special Fund for Industrial Transferring and Upgrading by Shenzhen Economy,
Trade and Information Commission in 2014.
(3) Special Fund for Development of Shenzhen Industrial Designing was obtained according to Shen Jingmao
Xinxi Jishu Zi [2013] No.227-Rules for Affirming and Planning of Shenzhen Industrial Centre (Trial) which
was jointly issued by Shenzhen Economy, Trade and Information Commission and Shenzhen Finance
Commission.
(4) Special fund for technology development project (advance equipment manufacturing) of 1st batch of
technology innovation plan was obtained according to Management Method to Shenzhen Science and
Technology Research and Management Method of Shenzhen Science and Technology Project.
(5) Government subsidy fund for Basel Watch Fair for 2014 and 2015 obtained from Shenzhen Association of
Timepieces.
63
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(6) Special Fund obtained according to Management Method to Special Fund for Development of Creative
Industry of Nanshan District and Shen Nan Jing [2015] No.3-Notice about Disputing Special Fund for
Development of Creative Industry of Nanshan District (3rd Batch).
(7) Subsidy obtained according to Shen Nan Jing [2015] No.2-Notice about Disputing Subsidiaries for Merit
Rating of Shenzhen Nanshan Economy Promoting Bureau in 2015.
(8) Subsidy for Implimenting Standardizing Strategy was obtained according to Shen Bao Fu [2012]
No.21-Notice about Baoan District Promoting Industrial Transferring and Upgrading and Development of
Economy and Shen Bao Gui [2013] No.14- Notice about Management Method to Baoan Specific Financial
Funds.
(9) Fund for Implementing Standardized Strategy of Shenzhen in 2015 was obtained according to Management
Method to Performing Standardized Strategy of Shenzhen, audited by Shenzhen Market and Quality
Supervision and Administration Commission and reviewed by Shenzhen Finance Commission.
(10) Award for 15th National Appearance Designing was obtained according to Yue Fu Han[2014] No.155-
Notice about Encouraging Entities and Individuals Who had Win the Bonus of 15th National Patent Award
issued by People's Government of Guangdong Province.
(11) Second class prize of Technical Bonus of Guangdong in 2013 was obtained according to Yue Han[2014]
No.18-Notice about the 2013 annual report of the Guangdong science and Technology Award by Guangdong
Government
(12) The 1st Batch of supportive fund for register of trademark abroad in 2015 of Shenzhen was obtained
according to Shen Cai Gui [2014] No 18-Notice abou Management Method to Special Fund for Intellectual
Property in Shenzhen
(13) The 2nd Government Subsidiaries for Supporting Improving the Ability of International Competence in
2014 was obtained according to Shen Cai Gui[2014] No.13- Details of Supporting Improving the Ability of
International Trading of which the amount of import or export is below USD45,000,000.00 and Shen Jingmao
Xinxi Yusuan Zi[2014] No.146-Reporting Guidelines for Supporting Improving the Ability of International
Trading
(14) Third class prize of Concept Group of the Governor Cup was obtained according to Shen Jingmao
Yusuan Zi[2015] No.163-Notice about Issuing Shenzhen Famous Industrial Designing Prize in 2015 by
Shenzhen Economy & Trade and Information Commission.
(15) Subsidy for Commerce Circulation of Shenzhen Economy,Trade and Information Commission was
obtained according to Shen Jingmao Xinxi Shichang Zi[2015] No.177-Notice about Issuing Subsidy for
Economy and Trade Statistics and Information Reporting of Market Monitoring.
42. Non-operating expenses
Amount included in
Item 2015 2014 non-recurring profit or
loss in current year
Loss on non-current assets disposal 59,880.75 115,045.74 59,880.75
Incl. loss on fixed assets disposal 59,880.75 115,045.74 59,880.75
External donation 608,200.00 500,000.00 608,200.00
Others 462,946.58 476,449.24 462,946.58
Total 1,131,027.33 1,091,494.98 1,131,027.33
43. Income tax expenses
(1)Details of income taxes expenses
64
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 2015 2014
Current income tax 28,719,188.67 40,801,328.57
Deferred income tax -15,232,647.06 -16,509,941.80
Total 13,486,541.61 24,291,386.77
(2)Reconciliation between income tax expenses and accounting profits is as follows:
Item 2015 2014
Profit before tax 135,530,222.34 170,394,619.99
Income tax expenses calculated at legal (or applicable) tax rate
33,882,555.59 42,598,655.01
(profit before tax *25%)
Impact from tax preferential rate in certain subsidiaries -18,398,179.94 -19,295,365.00
Adjustment for income tax in prior year 500,784.84 236,881.91
Gains or losses in joint venture and associates entities in
-207,953.04 212,045.05
equity method
Income not subject to tax - -
Expenses not deductible for tax purposes 731,684.90 2,690,102.26
Effect of tax rate change on opening deferred tax - 22,285.47
Taxation influence by using unrecognized deductible loss and
-250,766.51 -
deductible temporary difference of prior periods(“-”)
Taxation influence of unrecognized deductible loss and
- -
deductible temporary difference
Taxation influence from additional deduction of R&D
-2,771,584.23 -2,173,217.93
expenses(“-”)
Others - -
Income tax expenses 13,486,541.61 24,291,386.77
44. Notes to cash flow statement
(1)Cash received from other operating activities
Item 2015 2014
Product promotion fee 22,758,667.54 21,243,620.58
Government grant 10,989,579.23 10,914,542.00
Security deposit 2,440,915.22 1,923,147.28
Interest income 1,997,798.65 1,750,775.15
Petty cash 56,039.62 22,950.38
Others 3,017,213.86 3,439,061.96
Total 41,260,214.12 39,294,097.35
(2)Cash paid to other operating activities
65
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item 2015 2014
Marketing promotion fee 78,338,971.48 77,443,856.52
Rental 63,610,470.17 73,952,825.98
Advertising fee 48,741,600.33 51,847,512.57
Departmental store expenses 39,025,574.70 33,927,340.50
Travel expenses 18,058,641.50 15,544,104.75
R & D expenses 15,655,827.82 13,908,494.97
Office expenses 12,486,686.57 10,454,837.21
Exhibition expenses 10,675,009.25 14,733,436.45
Utilities 9,200,243.52 9,604,220.48
Transportation expenses 8,976,276.33 8,020,282.83
Business entertainment 7,248,539.21 8,044,877.78
Posting and telecommunication expenses 6,574,954.85 5,185,100.10
Packing expenses 4,913,593.92 1,652,626.49
Vehicle expenses 3,052,469.63 2,636,497.78
Insurance expense 3,011,959.23 2,943,855.87
Clothing expense 2,434,924.13 1,659,064.16
Maintenance expense 2,325,196.69 2,076,535.47
Intermediary agents expense 2,186,252.23 3,607,560.46
Consultation expenses 2,023,389.06 489,788.03
Others 12,983,352.01 23,821,562.70
Total 351,523,932.63 361,554,381.10
(3)Cash paid to other investment activities
Item 2015 2014
Security deposit for issuing of letter of guarantee - 1,575,000.00
(4)Cash received from other financing activities
Item 2015 2014
Letter of credit 13,500,000.00 -
Loans from AVIC IHL - 150,000,000.00
Loans from CATIC International Finance Limited - 39,683,069.40
Others - 1,328.82
Total 13,500,000.00 189,684,398.22
(5)Cash paid to other financing activities
Item 2015 2014
66
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Borrowings to Avic Intl 150,000,000.00 -
Letter of credit 13,500,000.00
Financing by issuing share non-public expense 1,582,574.12 -
Bank charges for issuing letter of credit 433,125.00 1,134,375.00
Repayment of loans to CATIC International Finance Limited - 39,683,069.40
Capital injection from minority shareholders - 1,400,000.00
Others - 31,008.00
Total 165,515,699.12 42,248,452.40
45. Supplement to Cash Flow Statement
(1)Supplement to Cash Flow Statement
Supplement 2015 2014
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 122,043,680.73 146,103,233.22
Add: Impairment for assets 6,253,998.83 2,621,303.29
Depreciation of fixed asset investment property 34,146,910.99 30,244,827.05
Amortization of intangible assets 1,400,047.31 1,473,045.26
Amortization of long-term deferred expenses 104,114,182.05 104,243,100.87
Losses on disposal of fixed assets, intangible assets, and other
-34,435.32 44,920.98
long-term assets (Gain as in "-")
Loss on retirement of fixed assets (Gain as in "-") - -
Loss on changes of fair value (Gain as in "-") - -
Financial expenses (Gain as in "-") 86,226,890.36 97,054,480.66
Investment losses (Gain as in "-") -831,812.14 848,180.21
Decrease in deferred tax assets (Increase as in "-") -15,232,647.06 -16,509,941.81
Increase in deferred tax liabilities(Decrease as in "-") - -
Decrease in inventories (Increase as in "-") 37,457,546.34 -3,088,502.66
Decrease in operating receivables (Increase as in "-") 40,599,512.23 -24,932,633.93
Increase in operating payables(Decrease as in "-") -19,906,881.91 -48,912,382.17
Others - -
Net cash flows from operating activities 396,236,992.41 289,189,630.97
2. Significant investment or financing activities not involving
cash:
Debts converted to capital - -
Convertible debts mature within one year - -
Fixed assets acquired under finance leases - -
67
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Supplement 2015 2014
3. Net increase / (decrease) in cash and cash equivalents:
Cash as at 31/12/2015 637,387,875.93 114,880,070.54
Less: cash as at 31/12/2014 114,880,070.54 107,663,110.74
Plus: cash equivalents as at 31/12/2015 - -
Less: cash equivalents as at 31/12/2014 - -
Net increase in cash and cash equivalents 522,507,805.39 7,216,959.80
(2)Cash and cash equivalents
Item 2015 2014
I. Cash 637,387,875.93 114,880,070.54
Incl. Cash on hand 387,241.40 338,694.81
Bank deposit available for immediate payment 636,995,113.67 114,319,146.38
Other monetary funds available for immediate
5,520.86 222,229.35
payment
Due from the Central Bank available for payment - -
II. Cash equivalents - -
Incl. Bond investment due in three months - -
III. Cash and cash equivalents as at 31/12/2015 637,387,875.93 114,880,070.54
46. Assets of restricted ownership or use rights
Item Amount Restriction reason
Currency funds 1,575,000.00 Security deposit
Fixed assets 20,007,240.87 Guarantee
Total 21,582,240.87
47. Item in Foreign currency
(1) Item in Foreign currency
Balance denominated in
Translation Balance translated in RMB
Items foreign currency as at
rate as at 31/12/2015
31/12/2015
Currency fund
Incl.：USD 165,865.86 6.4936 1,077,066.98
HKD 7,464,174.76 0.8378 6,253,481.37
EUR 24.45 7.0952 173.48
CHF 124,477.41 6.4018 796,879.49
Accounts receivable
Incl.:HKD 7,702,398.08 0.8378 6,453,069.11
Prepayment
68
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Incl.:HKD 14,028,308.80 0.8378 11,752,917.11
CHF 2,906,588.08 6.4018 18,607,395.57
Other receivables
Incl.: USD
HKD 246,494.00 0.8378 206,512.67
EUR 193.52 7.0952 1,373.06
CHF 3,583.42 6.4018 22,940.34
Accounts payable
Incl.:HKD 19,424,929.18 0.8378 16,274,205.67
CHF 251,707.44 6.4018 1,611,380.69
Advances from customer
Incl.:HKD 7,693.92 0.8378 6,445.97
Other payables
Incl.:HKD 2,701,499.80 0.8378 2,263,316.53
CHF 51,308.75 6.4018 328,468.36
Short-term bank loan
Incl.:HKD 79,000,000.00 0.8378 66,186,200.00
Non-current liability due in one year
Incl.:HKD 130,000,000.00 0.8378 108,914,000.00
Long-term bank loan
Incl.:HKD 20,519,821.35 0.8378 17,191,506.33
CHF 850,000.00 6.4018 5,441,530.00
(2)Overseas operational entity
For main business location and recording currency of important overseas operational entity, refer to Note III.
4.
VI. Changes of consolidation scope
ProTop Limited was deregistered in 2015, therefore, it was excluded out of the scope of consolidation at the
year end.
VII. Equity in other entities
1. Equity in subsidiaries
(1)Structure of enterprise group
Main Shareholding ratio%
Place of re Nature of
Name of subsidiary business Ways acquired
gistration business Direct Indirect
location
Establishment
HARMONY Company Shenzhen Shenzhen Commerce 100.00 -
or investment
69
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Manufacturing Establishment
Shenzhen Shenzhen Manufacture 90.00 10.00
Company or investment
Hong Establishment
FIYTA Hong Kong Hong Kong Commerce 100.00 -
Kong or investment
Hong Establishment
Station 68 Hong Kong Commerce - 60.00
Kong or investment
Establishment
Harbin Company Harbin Harbin Commerce 25.00 75.00
or investment
Establishment
Henglianda Company Beijing Beijing Commerce - 100.00
or investment
Establishment
Technology Company Shenzhen Shenzhen Manufacture 100.00 -
or investment
Establishment
Trading Company Shenzhen Shenzhen Commerce 100.00 -
or investment
Establishment
Culture Company Shenzhen Shenzhen Commerce - 100.00
or investment
Emile Choureit Establishment
Shenzhen Shenzhen Commerce - 100.00
Shenzhen Company or investment
World Watches Hong Establishment
Hong Kong Commerce - 100.00
International Kong or investment
Establishment
Sales Company Shenzhen Shenzhen Commerce 100.00 -
or investment
Business
combination
Hengdarui Company Shenyang Shenyang Commerce - 100.00
under common
control
Business
combination
Lishan Department
Kunming Kunming Commerce - 100.00 not under
Store
common
control
Business
combination
Switzerlan
Swiss Company Switzerland Commerce - 100.00 not under
d
common
control
Hong
Nature Art Limited Hong Kong Commerce - - ①
Kong
Note:
①According to the equity trust agreement signed by and between Station 68, a subsidiary of FIYTA Hong
Kong, and the trustee of ProTop Limited on 10 December 2009, Station 68, as the trustor, owns shares, stock
rights and related rights of Nature Art Limited and ProTop Limited, and both parties agree that trustee may
transfer its right anytime according to the instructions of trustor. Therefore, Station 68 owns the control right
of Nature Art Limited and ProTop Limited, and include them into its scope of consolidation. ProTop Limited
was deregistered in 2015 and excluded out of the scope of consolidation at the end of the period.
2. Equity in joint arrangement or associated
(1) Significant joint venture or associate
Shareholding Accounting
Principal
Registratio Business ratio(%) treatment for joint
Name place of
n place naure ventures or
business Direct Indirect
associates
① Associate company
Shanghai Watch Shanghai Shanghai Manufacture 25.00 - Equity method
(2) Principal financial information of significant associate company:
Shanghai Watch
Item
31/12/2015 31/12/2014
70
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Current assets 85,404,253.13 88,551,483.42
Non-current assets 20,902,422.63 22,504,083.78
Total assets 106,306,675.76 111,055,567.20
Current liabilities 9,638,478.88 18,718,641.86
Non-current liabilities - -
Total liabilities 9,638,478.88 18,718,641.86
Net assets 96,668,196.88 92,336,925.34
Incl.：Minority shareholders’ interests - -
Owners’ equity attributable to parent
- -
company
Share of net assets calculated as shareholding
24,167,049.22 22,622,546.71
percentage%
Adjustment matters - -
Incl.: goodwill - -
Unrealized profit or losses from internal
- -
transaction
Impairment provision - -
Others - -
Book value of investment to associate 43,221,572.05 42,389,759.91
Fair value of equity investment with existing
- -
public quotation
Continued：
Shanghai Watch
Item
31/12/2015 31/12/2014
Operating income 91,465,902.16 105,335,016.70
Net profit 3,327,248.55 10,080,270.97
Other comprehensive income - -
Total comprehensive income 3,327,248.55 10,080,270.97
VIII. Financial instruments and risk management
Main financial instruments of the group include monetary fund, account receivable, notes receivable, other
receivables, other current assets, available-for-sale financial assets, account payable, interest payable, dividend
payables, other payables, short-term loan, non-current liabilities in one year, long-term loan, bond payable. The
Group has disclosed details of financial instruments in related notes. Risks related to those financial
instruments and risk management policies adopted to reduce those risks are described as below. The Group
management layer manages and supervises the risk exposure to ensure risks are controlled within limited range.
1. Risk management goals and policies
The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence
of financial risk to financial performance of the Group. Based on the goal, the Group has formulated risk
management policies to identify and analyze risks the Group faces, set proper acceptable risk level and design
relevant internal control procedures, to supervise risk level. The Group will regularly review those risk
management policies and relevant internal control system, to adapt to market situation and change of operating
71
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
activities. The internal audit department of the Group will also regularly or randomly check whether the
execution of internal control system complies with risk management policies.
Main risks financial instruments of the Group may lead to include credit risks, liquidity risk, market risk, etc...
(1)Credit risk
Credit risk refers to the risk of financial loss of the Group caused due to default of contract obligation of
transaction counterparty.
The Group manages credit risk by portfolio. Credit risk mainly arises from bank deposit and accounts
receivable.
Bank deposit of the Group is mainly in state-owned banks and other large and medium listed banks. There are
no significant credit risks of estimated bank deposits.
As for accounts receivable, the Group sets relevant policies to control credit risk exposure. Based on the
financial status of debtor, external rating, guarantee possibility, credit record gained from the third party and
other factors such as current market status, the Group evaluates credit qualification of debtor and set
corresponding debt limit and credit period. The Group will regularly supervise credit record of debtor. For
debtor with bad credit record, the Group will ensure the whole credit risk of the Group within controllable
range in the forms of written reminder letter, reducing credit period and cancelling credit period.
The biggest credit risk exposure undertaken by the Group is carrying amount of each financial asset in balance
sheet. The Group sets guarantees to any other credit risks that the Group may bear.
For a mount of accounts receivable, the total accounts receivable of top 5 accounts with amount in arrear
account for 7.98% of total accounts receivable of the Group (2014：9.02%); in other accounts receivable, the
total accounts receivable of top 5 accounts with amount in arrear account for 17.79% of total accounts
receivable of the Group (2014: 17.22%).
(2)Liquidity risk
Liquidity risk refers to risk of capital shortage caused when the Group executes obligations of settlement in
the manner of cash payment or other financial assets.
In managing liquidity risk, the Group keeps the cash and cash equivalents that the Group deems sufficient and
controls them to meet operating needs, reduce influence of cash liquidity fluctuation. The Group management
monitors the use of bank loans and ensures to comply with borrowing agreement. At the same time, the
Group gains the commitment for providing sufficient reserve funds from main financial institutions, to meet
short-term and long-term capital needs.
The Group finances working capital through capital and bank and other borrowings incurred in business
operation. As at 31 December 2015, bank borrowing facility that the Group has not yet used is
RMB886,288,400. (31 December 2014: RMB539,100,000)
Maturity analysis of financial assets, financial liabilities and off-balance-sheet guarantee items by undiscounted
remaining contract cash flow at the end of the period (Unit: RMB 0,000):
31/12/2015
Item
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total
Financial assets:
Cash and bank balance 63,896.29 - - - 63,896.29
Notes receivable 719.78 - - - 719.78
Accounts receivable 31,258.19 - - - 31,258.19
72
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Other receivables 4,261.98 - - - 4,261.98
Other current assets 1,579.68 - - - 1,579.68
Other non-current assets 511.88 - - - 511.88
Total financial assets 102,227.80 - - - 102,227.80
Financial liabilities：
Short-term loans 98,818.62 - - - 98,818.62
Accounts payable 15,593.97 - - - 15,593.97
Payable interest 1,921.16 - - - 1,921.16
Other payables 4,813.16 - - - 4,813.16
Other current liabilities(excluding
198.83 - - - 198.83
deferred income)
Non-current liabilities due in one year 10,891.40 - - - 10,891.40
Long-term loan - 2,255.35 2,000.00 4,844.15 9,099.50
Bonds payable 40,000.00 - - - 40,000.00
Financial guarantee - - 39,710.02 1,675.60 41,385.62
Total of financial liability and
172,237.14 2,255.35 41,710.02 6,519.75 222,722.26
contingent liability
Maturity analysis of financial assets, financial liabilities and off-balance-sheet guarantee items by undiscounted
remaining contract cash flow at the beginning of the period (Unit: RMB ten thousands):
31/12/2014
Item
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total
Financial assets:
Cash and bank balance 11,645.51 - - - 11,645.51
Notes receivable 616.28 - - - 616.28
Accounts receivable 35,994.06 - - - 35,994.06
Other receivables 4,444.94 - - - 4,444.94
Other current assets 1,442.15 - - - 1,442.15
Other non-current assets 3,150.00 - - - 3,150.00
Total financial assets 57,292.94 - - - 57,292.94
Financial liabilities：
Short-term loans 98,944.50 - - - 98,944.50
Accounts payable 14,711.91 - - - 14,711.91
Payable interest 1,942.09 - - - 1,942.09
Other payables 18,857.49 - - - 18,857.49
Other current liabilities(excluding
548.25 - - - 548.25
deferred income)
Long-term loan - 7,925.19 4,444.50 1,625.55 13,995.24
73
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Bonds payable - 40,000.00 - - 40,000.00
Financial guarantee 3,944.50 7,889.00 30,644.50 - 42,478.00
Total of financial liability and
138,948.74 55,814.19 35,089.00 1,625.55 231,477.48
contingent liability
The amount of financial asset and financial liability disclosed in the above table is undiscounted contract cash
flow and thus may be different with the carrying amount of balance sheet.
(3)Market risk
Market risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused
due to market price change, including interest risk, exchange rate risk and other price risk.
Interest risk
Interest risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused
due to interest change. Interest risk may arise from confirmed interest accrual financial instrument and
unconfirmed financial instrument (such as some loan commitments)
The interest risk of the Group mainly arises from long-term bank loans and bonds payable and long-term
interest-bearing debt. Financial liabilities with floating rate lead the Group to cash flow interest risk. Fixed
interest rate financial liabilities lead the Group to fair value interest risk. According to current market
environment the Group determines the proportion of fixed interest and floating interest rate contract,
maintaining proper fixed and floating interest instrument combination through regular review and supervision.
As at 31 December 2015, if borrowing rate measured at floating rate rises or drops 50 base points, and other
factors keep unchanged, net profit and shareholders’ equity of the Group will decrease or increase about
RMB1,311,100(at 31 December 2014: RMB700,000).
Exchange rate risk
Exchange rate risk refers to the risk of fluctuation of fair value or future cash flow of financial instruments
caused due to exchange rate change. Exchange rate risk may arise from the financial instrument measured at
foreign currencies other than recording currency.
Main operation of the Group is within China, and main businesses are settled in RMB. Therefore, the market
risk of exchange fluctuations undertaken by the Company is not significant.
Refer to Details of other foreign currencies of Notes to the Financial Statement for financial assets of foreign
currencies and financial liabilities of foreign currencies at the end of the period.
2. Capital management
The capital management policies of the Group are formulated to guarantee the Group can keep operation, and
thus provide returns to shareholders and benefit other stakeholders, and at the same time to keep the optimal
capital structure to reduce capital cost.
To keep or adjust capital structure, the Group may adjust amounts of dividends paid for shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debts.
The Group monitors capital structure based on asset liability ratio (total liabilities divided by total assets). As at
31 December 2015, the asset-liability ratio of the Group is 45.77% (31 December 2014: 55.26%).
IX. Fair value
Fair value level can be classified according to the input value of the lowest level that is significant to whole
measurement of fair value:
First level: quote of same assets or liabilities in an active market (unadjusted).
74
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Second level: directly (price) or indirectly (derive from price) use observable input value other than market
quote of assets or liabilities in the first level.
Third level: use any input value not based on observable market data in assets or liabilities (unobservable input
value).
(1)Items and amounts measured at fair value
As at 31 December 2015, there are no assets and liabilities measured at fair value.
(2)Items and amounts not measured at fair value but with fair value disclosed
Financial assets and financial liabilities measured at amortized cost mainly include: cash and bank balances,
notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable, other
payables, long-term payables, etc.
The difference between the book value of financial assets and financial liabilities that are not measured at fair
value and fair value is small.
X. Related party relationship and transactions
1. Details of the parent company of the Company
Shareholding ratio
Ratio of vote right
Registration Registered of parent
Name Type of business of parent company
place capital company to the
to the Company%
Company %
investment in
industries,
China National
Shenzhen domestic trade, 1,166,161,996.00 37.15 37.15
Aviation Group
material supply
and distribution
The ultimate control party of the Company is:
CATIC Shenzhen Company holds 33.93% shareholding of China National Aviation Group. CATIC Shenzhen
Company is a wholly owned subsidiary of China Aero Space International Holdings Limited (CASI), and
China Aviation Industry Corporation (AVIC) directly holds 62.52% of the equity of CASI. Therefore, the
ultimate controlling party of the Company is AVIC.
2. Subsidiaries
Details of subsidiaries refer to Note VII.1.
3. Joint venture and association
Details of joint ventures and associates refer to NoteVII.2.
4. Other related parties
Name Relationship with the Group
Shenzhen CATIC Property Management Limited ( CATIC Property Management) Controlled by the same party
Shenzhen CATIC Building Equipment Co., Ltd. ( CATIC Building Company) Controlled by the same party
Rainbow Department Store Co., Ltd. (Rainbow Department Store ) Controlled by the same party
Shennan Circuits Co., Ltd. ( Shennan Circuits ) Controlled by the same party
CATIC Real Estate Company Controlled by the same party
AVIC Securities Co., Ltd. ( AVIC Securities Company) Controlled by the same party
75
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Name Relationship with the Group
Xi’an Skytel Hotel Co., Ltd. (Skytel Hotel) Controlled by the same party
Shenzhen AVIC Nanguang Elevator Co., Ltd. ( AVIC Nanguang Company) Controlled by the same party
Shenzhen CATIC City Real Estate Development Co., Ltd. ( CATIC City Real Estate
Controlled by the same party
Company)
Shenzhen CATIC City Development Co., Ltd. ( CATIC City Development Company) Controlled by the same party
CATIC Guanlan Property Development Co., Ltd. (CATIC Mission Hills Property) Controlled by the same party
CATIC Changtai Investment Development Co., Ltd. (CATIC Changtai Company ) Controlled by the same party
Shenzhen CATIC Jiufang Asset Management Limited (CATIC Jiufang Asset Mgmt Controlled by the same party
Company)
Ganzhou CATIC Real Estate Development Co., Ltd.(Ganzhou CATIC Real Estate
Controlled by the same party
Company)
Shenzhen CATIC City Investment Co., Ltd (CATIC City Investment) Controlled by the same party
Chengdu CATIC Property Development Co., Ltd (Chengdu CATIC Property Company) Controlled by the same party
Zhonghang Electronic Measuring Instruments Co., Ltd (Zhonghang Electronic Company) Controlled by the same party
Shenzhen CATIC Theme Real-estate Co., Ltd (CATIC Theme Company) Controlled by the same party
Shenzhen AVIC Training Center (AVIC Training Center) Controlled by the same party
Ganzhou CATIC 9 Square Trading Co, Ltd(Ganzhou 9 Square Company) Controlled by the same party
Jiujiang CATIC City Estate Co, Ltd (Jiujiang CATIC Estate Company) Controlled by the same party
CATIC City Estate (Kunshan) Co, Ltd (Kunshan Company) Controlled by the same party
Shenzhen CATIC Huacheng Real Estate Development Co, Ltd (CATIC Huacheng Controlled by the same party
Company)
Shenzhen CATIC Curtain Co, Ltd (CATIC Curtain Company) Controlled by the same party
CATIC Technical International Development Co, Ltd (CATIC Tech. Development Controlled by the same party
Company)
AVIC Finance Co., Ltd. (AVIC Finance Company) Controlled by the same party
Diao Weicheng Key management member
Xu Dongsheng Key management member
Wang Mingchuan Key management member
Liu Aiyi Key management member
Zhong Sijun Key management member
Cao Zhen Key management member
Huang Yongfeng Key management member
Zhang Hongguang Key management member
Zhang Shunwen Key management member
Wang Yan Key management member
Sui Yong Key management member
Tang Boxue Key management member
Chen Zhuo Key management member
Chen Libin Key management member
Lu Bingqiang Key management member
76
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Name Relationship with the Group
Du Xi Key management member
Lu Wanjun Key management member
Hu Xinglong Key management member
5. Transactions with related parties
(1)Details of related party purchase and sale
①Purchasing goods and receiving services
Related party Type of transaction 2015 2014
Department store
Rainbow Department Store 4,457,644.68 3,549,567.71
expenses
CATIC Property Management Property management 3,236,163.68 1,356,088.67
AVIC Training center Training 107,296.20 146,420.76
CATIC curtain wall engineering co.,
Engineering 198,113.16 -
Ltd.
CATIC Building co., Ltd. Engineering 281,621.61 -
CATIC Technical Development co.,
Engineering 100,000.00 -
Ltd.
CATIC Nanguang co., Ltd. Engineering 163,913.80 -
Shanghai Watch Material purchase 132,051.28 2,554,285.26
AVIC Securities Company Securities underwriting fee 7,250,000.00 -
Zhonghang Electronic Company Processing Charges - 15,068.38
②Selling products and providing services
Related party Type of transaction 2015 2014
Rainbow Department
Product sales and services 81,677,865.75 81,841,738.79
Store
AVIC Product sales 485,755.56 1,075,012.82
Shennan Circuits Material sales 11,668,906.38 24,363,526.18
(2) Lease
①The Group as leaser
Recognized rental income Recognized rental income
Lessee Type of leased assets
in current period in prior period
CATIC Real Estate Company Property 1,569,802.84 1,508,832.00
CATIC Property Property 6,516,962.97 7,282,960.71
Management
AVIC Securities Company Property 1,139,550.00 1,088,430.00
CATIC City Development Property 23,221.94 22,320.00
Company
CATIC Huacheng Company Property 277,419.12 -
CATIC City Real Estate Property 376,300.82 22,320.00
Company
CATIC Guanlan Property Property 92,887.74 89,280.00
77
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
CATIC Changtai Company Property 480,384.00 1,285,632.00
Skytel Hotel Property 4,700,000.00 4,499,900.00
Rainbow Department Store Property 465,520.04 452,800.04
CATIC Jiufang Asset Mgmt Property 363,636.00 363,636.00
Company
CATIC City Investment Property 950,861.29 90,024.00
CATIC Theme Company Property 353,338.00 945,624.00
CATIC Technology
Property - 210,270.00
Shenzhen Company
② The Group as lessee
Lesser Type of leased assets Rental expenses charged in Rental expenses charged in
current period prior period
Ganzhou CATIC Real Estate
Property 1,029,856.96 995,408.16
Company
CATIC Changtai Company Property 208,433.59 -
Jiujiang CATIC Estate
Property 321,880.50 -
Company
Kunshan Company Property 33,272.96 -
Chengdu CATIC Property
Property 1,206.09 816,017.05
Company
(3) Guarantees provided
①The Group as guarantor
Guarantee
Guarantee Amount Effective date Expiring date obligation expired
(Yes/No)
HARMONY Company 2,000,000.00 2015-1-13 2018-1-12 No
HARMONY Company 50,000,000.00 2015-11-20 2018-11-19 No
HARMONY Company 60,000,000.00 2015-12-2 2018-12-1 No
HARMONY Company 100,000,000.00 2015-12-2 2018-8-12 No
Manufacturing
10,000,000.00 2015-8-7 2018-8-7 No
Company
FIYTA Hong Kong 4,189,000.00 2015-3-12 2018-3-14 No
FIYTA Hong Kong 5,026,800.00 2015-4-2 2018-4-1 No
FIYTA Hong Kong 5,864,600.00 2015-7-9 2018-7-8 No
FIYTA Hong Kong 8,378,000.00 2015-8-4 2018-8-3 No
FIYTA Hong Kong 13,404,800.00 2015-9-14 2018-9-13 No
FIYTA Hong Kong 10,053,600.00 2015-9-15 2018-9-14 No
FIYTA Hong Kong 19,269,400.00 2015-9-16 2018-9-15 No
FIYTA Hong Kong 41,890,000.00 2013-7-11 2018-7-11 No
FIYTA Hong Kong 41,890,000.00 2013-8-5 2018-8-5 No
FIYTA Hong Kong 16,756,000.00 2014-1-6 2018-7-11 No
78
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Guarantee
Guarantee Amount Effective date Expiring date obligation expired
(Yes/No)
FIYTA Hong Kong 8,378,000.00 2014-1-27 2018-7-11 No
FIYTA Hong Kong 16,756,000.00 2014-3-3 2019-1-11 No
②The Group as guarantee
Guarantee
Guarantee Amount Effective date Expiring date obligation expired
(Yes/No)
China National
361,928.00 2013-12-24 2018-12-24 No
Aviation Group
China National
5,000,000.00 2014-1-15 2019-6-24 No
Aviation Group
China National
10,000,000.00 2014-9-5 2020-6-24 No
Aviation Group
China National
10,000,000.00 2015-1-8 2020-6-24 No
Aviation Group
China National
20,000,000.00 2015-1-26 2021-6-24 No
Aviation Group
China National
6,000,000.00 2015-5-27 2021-6-24 No
Aviation Group
China National
10,000,000.00 2015-10-28 2021-6-24 No
Aviation Group
China National
7,000,000.00 2015-12-1 2021-12-24 No
Aviation Group
CATIC Technology
400,000,000.00 2013-2-27 2018-8-26 No
Shenzhen Company
HARMONY Company 50,000,000.00 2015-10-23 2018-10-23 No
(4)Related party borrowing
The Group repaid loan of RMB150,000,000 to China National Aviation Group in current year.
(5) Others
The year-end balance of the Group’s cash is RMB1,002,871.65, which is deposited with AVIC Finance
Company. The interests received from the deposit are RMB2,871.65.
(6)Remuneration for key management members
There are 18 key management members in the reporting period and 14 key management members in prior
reporting period. See the following table for detailed remuneration:
Item 2015 2014
Remuneration for key
11,462,400.00 13,818,900.00
management members
6. Receivables from and payables to related parties
(1)Receivables
31/12/2015 31/12/2014
Item Related party
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Accounts Rainbow Department
8,012,826.57 400,641.33 2,134,424.46 106,721.22
receivable Store
Shennan Circuits 1,474,023.97 73,701.20 1,477,311.21 73,865.56
Ganzhou 9 Square
289,621.00 14,481.05 - -
Company
79
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
AVIC 13,500.00 675.00 524,313.00 68,144.58
Chengdu CATIC Property
- - 7,875.00 393.75
Company
Notes receivable Shennan Circuits 5,697,788.08 - 6,162,768.29 -
Rainbow Department
Other receivable 563,140.00 28,157.00 308,001.60 15,400.08
Store
CATIC Property
225,853.69 11,292.68 - -
Management
Ganzhou 9 Square
122,665.60 6,133.28 - -
Company
Chengdu CATIC Property
115,616.40 5,780.82 115,616.40 5,780.82
Company
CATIC Changtai Company 50,000.00 2,500.00 50,000.00 2,500.00
Jiujiang CATIC Estate
50,000.00 2,500.00 - -
Company
Kunshan Company 37,120.00 1,856.00 - -
Ganzhou CATIC Real
- - 172,665.60 14,766.56
Estate Company
(2)Payables
Item Related party 31/12/2015 31/12/2014
Accounts payable Shanghai Watch - 647,691.97
CATIC Real Estate
Advances from customer 133,848.00 -
Company
CATIC Property
Other payables 472,032.00 -
Management
CATIC Real Estate
424,800.00 424,800.00
Company
CATIC City Investment
244,068.00 37,700.00
Company
AVIC Securities Company 187,440.00 187,440.00
CATIC City Real Estate
97,912.32 -
Company
CATIC Huacheng Company 73,819.68 -
CATIC Jiufang Asset Mgmt
60,606.00 60,606.00
Company
Rainbow Department Store 60,000.00 60,000.00
Chengdu CATIC Sunshine
16,492.75 114,648.52
Real Estate Company
CATIC Building Company 9,630.00 -
CATIC City Development
3,960.00 -
Company
AVIC IHL - 150,000,000.00
CATIC Changtai Company - 221,712.00
XI. Commitments and contingencies
1. Significant commitments
(1)Capital commitment
Contract already signed but not yet recognized in the financial
31/12/2015 31/12/2014
statements
80
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Long-term assets construction commitment 112,495,477.39 187,127,768.52
(2)Operating lease commitment
As of the balance sheet date, the irrevocable operating lease contracts signed by the Company are as follows:
The minimum lease payment for irrevocable
31/12/2015 31/12/2014
operating lease:
The 1st year after the balance sheet day 19,070,208.30 28,940,871.89
The 2nd year after the balance sheet day 12,683,143.50 18,388,748.63
The 3rd year after the balance sheet day 6,603,532.25 8,702,855.74
After 3 years 4,116,940.51 3,008,648.97
Total 42,473,824.56 59,041,125.23
(3)Other commitments
As at 31 December, 2015, the Group has no commitment that shall be disclosed.
2. Contingencies
(1)Contingent liabilities and financial influence formed by providing liability guarantee to other units
Refer to Note X. 5(3) for details of external guarantees entered by companies in the scope of consolidation,
and guarantee between parent company and subsidiaries.
(2)As at 31 December 2015, there are no pending actions, external guarantees and other contingencies that
shall be disclosed.
(3)As at 31 December 2015, there is no other contingency that shall be disclosed.
XII. Post balance sheet date events
1. Profit distribution after balance sheet date
Proposed profit distribution or dividend 43,874,488.10
Profit distribution or dividend that was approved and declared 43,874,488.10
The resolution of 2015 profit distribution proposal has been passed on the 6th Board Meeting of the 8th
Board of Directors on 8 March 2016. It proposed to distribute cash dividend of RMB1.00 (tax inclusive) for
every 10 shares held by shareholders based on the total 438,744,881 shares as at 31 December 2015. Cash
dividend that proposed to be distributed amounts to RMB43,874,488.10 The proposal is subject to approval
from Annual General Shareholders’ Meeting.
2. Other events after balance sheet date
(1) The redemption and de-listing of “12 FIYTA Debt” was finished by the Company on 29 February 2016.
According to related articles in “Prospectus of Public Offering of Debenture by FIYTA Holdings Ltd in
2012”, the Company can decide whether to exercise the option of increase coupon rate, callable option or
prepayment option. According to the authorization given by the first extraordinary general meeting in 2012, the
Board of Directors decided to abandon the option of increase coupon rate and callable option and choose to
exercise prepayment option to redeem all “12 FIYTA Debt” that was registered on book on the redemption
registration date. The counterparts are all the holders of “12 FIYTA Debt” that was on the register of China
Securities Depository and Clearing Co., Ltd Shenzhen Branch after close of business on 26 February 2016. The
redemption price was RMB105.04 per debenture (including interests for current period and tax on interests).
81
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(2) Pursuant to the resolution passed on the 6th Board Meeting of the 8th Board of Directors on 8 March
2016, the Company plans to apply credit facility of no more than RMB 1,800,000,000.00 from banks in form
of guaranteed loan, mortgage loan etc… in 2016. The proposal of credit facility application is subject to
approval from Annual General Shareholders’ Meeting.
(3) Pursuant to the resolution passed on the 6th Board Meeting of the 8th Board of Directors on 8 March
2016, the Company plans to provide guarantee to the Company’s wholly-owned subsidiaries for their
application of credit facility of no more than RMB1,000,000,000.00 in 2016. This credit facility is included in
the total credit facility of RMB1,800,000,000.00 to be applied in 2016 mentioned above. The proposal of credit
facility application is subject to approval from Annual General Shareholders’ Meeting.
(4) Pursuant to the resolution passed on the 6th Board Meeting of the 8th Board of Directors on 8 March
2016, the Company proposed to increase the registered capital of Sales Company by RMB400,000,000.00.
After the increase, the registered capital of Sales Company will reach RMB450,000,000.00.
XIII. Other significant events
ProTop Limited performed deregistration in Hong Kong on 4 December 2015.
XIV. Notes to the parent company’s financial statements
1. Accounts receivable
(1)Accounts receivable by categories:
31/12/2015
Category
Provision for Provision
Amount Percentage% Net amount
bad debts rate %
Receivables that are individually
significant in amount and
provided for bad debt
- - - - -
separately
Receivables provided for bad
debt by portfolio
- - - - -
Incl.: Portfolio of aging - - - - -
Portfolio of specific accounts - - - - -
Subtotal of portfolios - - - - -
Receivables that are individually
insignificant in amount but - - - - -
provided for bad debt separately
Total - - - - -
Accounts receivables disclosed by categories (continued)
31/12/2014
Category
Provision for Provision
Amount Percentage% Net amount
bad debts rate %
Receivables that are individually
significant in amount and
provided for bad debt
- - - - -
separately
Receivables provided for bad
debt by portfolio
82
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
31/12/2014
Category
Provision for Provision
Amount Percentage% Net amount
bad debts rate %
Incl.: Portfolio of aging 11,338,842.00 92.17 566,942.10 5.00 10,771,899.90
Portfolio of specific accounts 963,888.00 7.83 - - 963,888.00
Subtotal of portfolios 12,302,730.00 100.00 566,942.10 4.61 11,735,787.90
Receivables that are individually
insignificant in amount but - - - - -
provided for bad debt separately
Total 12,302,730.00 100.00 566,942.10 4.61 11,735,787.90
Note：
① Accounts receivable that are provided for bad debt based on aging analysis in aging portfolio:
31/12/2015
Aging
Provision for bad
Amount Percentage% Provision rate % Net amount
debts
Within 1 year - - - - -
1 to 2 years - - - - -
2 to 3 years - - - - -
Over 3 years - - - - -
Total - - - - -
(Continued)
31/12/2014
Aging
Provision for bad
Amount Percentage% Provision rate % Net amount
debts
Within 1 year 11,338,842.00 100.00 566,942.10 5.00 10,771,899.90
② among the portfolio, accounts receivable that are provided for bad debt using other methods
Name of portfolio Carrying amount Bad debt provision Accrual rate%
Portfolio of specific
- - -
accounts
(2)Bad debt provisions accrued, received or reversed in the current period
The amount of Bad debt provision reversed is RMB566,942.10 in current period. There was no received bad
debt provision in current period.
2. Other receivables
(1) Other receivables disclosed by categories:
31/12/2015
Category
Percentage Provision Provision
Amount Net amount
% for bad rate %
debts
83
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Other receivables that are
individually significant in amount
- - - - -
and provided for bad debt
separately
Other receivables provided for bad
debt by portfolio
Incl.: Portfolio of aging 551,048.26 0.04 27,552.41 5.00 523,495.85
Portfolio of specific accounts 1,527,233,321.33 99.96 - - 1,527,233,321.33
Subtotal of portfolios 1,527,784,369.59 100.00 27,552.41 0.00 1,527,756,817.18
Other receivables that are
individually insignificant in amount - - - - -
but provided for bad debt separately
Total 1,527,784,369.59 100.00 27,552.41 0.00 1,527,756,817.18
Other receivables disclosed by categories(continued)
31/12/2014
Category
Percentag Provision Provision
Amount Net amount
e% for bad rate %
Other receivables that are debts
individually significant in amount - - - - -
and provided for bad debt
separately
Other receivables provided for bad
debt by portfolio
Incl.: Portfolio of aging 283,905.40 0.02 27,484.97 9.68 256,420.43
Portfolio of specific accounts 1,524,256,691.23 99.98 - - 1,524,256,691.23
Subtotal of portfolios 1,524,540,596.63 100.00 27,484.97 0.00 1,524,513,111.66
Other receivables that are
individually insignificant in amount - - - - -
but provided for bad debt separately
Total 1,524,540,596.63 100.00 27,484.97 0.00 1,524,513,111.66
Note：
① Among the portfolio, other receivables that are provided for bad debt based on aging analysis：
31/12/2015
Aging
Provision for bad
Amount Percentage% Provision rate % Net amount
debts
Within 1 year 551,048.26 100% 27,552.41 5.00 523,495.85
(Continued)
31/12/2014
Aging
Provision for bad
Amount Percentage% Provision rate % Net amount
debts
Within 1 year 254,050.00 89.48 12,702.50 5.00 241,347.50
1 to 2 years 363.07 0.13 36.30 10.00 326.77
2 to 3 years - - - - -
84
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Over 3 years 29,492.33 10.39 14,746.17 50.00 14,746.16
Total 283,905.40 100.00 27,484.97 9.68 256,420.43
② Other receivables that are provided for bad debt using other method
Name of portfolio Carrying amount Bad debt provision Accrual rate%
Portfolio of special
1,527,233,321.33 - -
accounts
(2)Bad debt provision accrued, received or reversed in the current period
The amount of Bad debt provision accrued is RMB67.44 in current period. There was no received bad debt
provision in current period.
(3) Other receivables by nature
Item 31/12/2015 31/12/2014
Related party balances within
1,527,077,899.87 1,523,785,927.87
consolidated scope
Petty cash 155,421.46 620,763.36
Security deposit 64,050.00 64,050.00
Others 486,998.26 69,855.40
Total 1,527,784,369.59 1,524,540,596.63
(4) Accounts receivable due from the top five debtors of the Group are as follows:
Percentage in total Provision
Company name Nature Balance Aging closing balance of for bad
other receivables (%) and
doubtful
HARMONY debts -
Transaction 888,239,075.70 Within 1 year 58.14
Company
Within 1 year
323,127,262.68; 1-2
Sales Company Transaction 538,795,392.91 35.27 -
years
215,668,130.23
Emile Choureit
Shenzhen Transaction 63,376,616.95 Within 1 year 4.15 -
Company
Within 1 year 3,600;
1-2 years
Trading Company Transaction 24,391,573.36 1.60 -
1,560,450.39; 2-3
years 22,827,522.97
Within 1 year
Technology
Transaction 11,127,769.95 11,058,069.95; 1-2 0.73 -
Company
years 69,700
Total 1,525,930,428.87 99.88 -
3. Long-term equity investments
85
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
31/12/2015 31/12/2014
Item
Carrying Impairment Impairment
Book value Carrying amount Book value
amount provision provision
Investment in
770,899,720.00 - 770,899,720.00 730,799,720.00 - 730,799,720.00
subsidiaries
Investment to associated
43,221,572.05 - 43,221,572.05 42,389,759.91 - 42,389,759.91
companies
Total 814,121,292.05 - 814,121,292.05 773,189,479.91 - 773,189,479.91
(1)Investment in subsidiaries
Closing
Impairm balance
Invested units 31/12/2014 Increase Decrease 31/12/2015 ent for
provision impairm
ent
HARMONY provisio
601,307,200.00 - - 601,307,200.00 - n -
Company
Harbin Company 125,000.00 - - 125,000.00 - -
Manufacturing
9,000,000.00 - - 9,000,000.00 - -
Company
Technology Company 10,000,000.00 - - 10,000,000.00 - -
FIYTA Hong Kong 55,367,520.00 40,100,000.00 - 95,467,520.00 - -
Trade Company 5,000,000.00 - - 5,000,000.00 - -
FIYTA Sales
50,000,000.00 - - 50,000,000.00 - -
Company
Total 730,799,720.00 40,100,000.00 - 770,899,720.00 - -
86
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
(2)Investment to joint venture and association
Increase and decrease during the period
Balance of
Investment Cash provision
Balance Balance
Invested income/loss Adjustment dividend for
as at Changes of as at
enterprises recognized of other or profit Provision for impairment
31/12/2014 Addition Reduction other Other 31/12/2015
under the comprehensi announc impairment as at
equity 31/12/2015
equity ve income ed to be
method issued
①Associates
Shanghai Watch 42,389,759.91 - - 831,812.14 - - - - - 43,221,572.05 -
Total 42,389,759.91 - - 831,812.14 - - - - - 43,221,572.05 -
87
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
4. Operating revenue and operating cost
2015 2014
Item
Revenue Cost Revenue Cost
Main businesses 95,422,259.18 14,944,207.19 108,183,860.45 30,576,403.18
Other businesses 12,923.08 8,613.00 - -
Total 95,435,182.26 14,952,820.19 108,183,860.45 30,576,403.18
5. Investment income
Item 2015 2014
Investment income from long-term equity investment measured by 131,388,140.58 88,741,300.42
cost method
Investment income from long-term equity investment measured by
831,812.14 -848,180.21
equity method
Total 132,219,952.72 87,893,120.21
XV. Supplementary information
1. Details of non-recurring gain or loss for the year
Item Year ended Note
31/12/2015
Disposal gain or loss of non-current assets 34,435.32
Overridden approval, or without official approval document, or incidental tax
-
return or exemption
Government grants included in current profit or loss (except for the fixed or
quantitative government grants, enjoyed in a consecutive way, which closely
10,889,579.23
related to the enterprise businesses and according to certain state policies and or
on a nation-wide unified standard)
Charges for the possessions of funds collected from non-monetary enterprises -
Investment cost of subsidiaries, joint venture and cooperative enterprises less
than the profit incurred in identifiable net asset fair value of invested unit when -
investment
Profit and loss of non-monetary assets exchange -
Profit and loss from entrusting others to invest or manage assets -
Asset impairment provision accrued due to force majeure such as natural
-
disasters
Profit and loss of debt restructuring -
Enterprise restructuring expenses, such as expenses for arranging employees,,
-
integrating cost
Profit and loss over fair value part accrued in transactions of unreasonable
-
transaction price
Current net profit and loss of subsidiaries from business combination under
-
common control from the opening period to combination date
Profit and loss incurred contingent matters unrelated to normal operating -
business
88
FIYTA Holdings Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)
Item Year ended Note
31/12/2015
Except for effective hedging business related to normal operating business,
profit and loss of fair value incurred in financial assets and financial liabilities -
measured at fair value through current profit and loss
Investment profit obtained by disposing financial assets, financial liabilities and
available-for-sale financial assets measured at fair value through current profit -
and loss
Impairment provision reversal of accounts receivable under separate
-
impairment test
Profit and loss obtained in external entrusting loans -
Profit and loss incurred in fair value change of investment real asset
-
subsequently measured in fair value mode
Influence on current profit and loss caused by one-off adjustment according to
-
requirements of laws and regulations about taxation and accounting
Income from trustee fee obtained by trusting operation -
Other non-operating income and expenses other than the above items -17,790.06
Profit and loss items pursuant to the definition of non-recurring profit and loss -
Total non-recurring profit or loss 10,906,224.49
Less：effect of income tax of non-recurring profit or loss 2,645,882.96
Net non-recurring profit or losses 8,260,341.53
Less: effect of non-recurring profit or losses attributable to minority -
shareholders (after tax)
Non-recurring profit or losses attributable to ordinary shareholders of the
8,260,341.53
Company
2. Return on Equity (ROE) and Earnings per share (EPS)
Weighted average EPS
Profit of the reporting period
ROE % Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of
7.24 0.310 -
the Company
Net profit attributable to ordinary shareholders of
the Company after deducting non-recurring profit 6.75 0.289 -
or loss
FIYTA Holdings Ltd.
10 March 2016
89
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