飞亚达B:2015年年度报告(英文版)

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FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

FIYTA HOLDINGS LTD.

2015 Annual Report

March, 2016

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 1 Important Notice, Table of Contents and Definition

The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby

individually and collectively accept responsibility for the correctness, accuracy and completeness of the

contents of this report and confirm that there are neither material omissions nor errors which would render any

statement misleading.

Mr. Xu Dongsheng, the Company leader, Mr. Hu Xinglong, chief financial officer, and Mr. Hu Xinglong, the

manager of the accounting department (treasurer) hereby confirm the authenticity and completeness of the

financial report enclosed in this Annual Report.

With the exception of the following directors, all the other directors personally attended the Board Meeting for

reviewing the Annual Report

Posts of the directors Cause of failure in

Names of the directors failed in

failed in attending the attending the meeting Names of the attorneys

attending the meeting personally

meeting personally personally

Diao Weicheng Chairman Business trip Xu Dongsheng

Liu Aiyi Director Business trip Cao Zhen

Zhong Sijun Director Business trip Wang Mingchuan

Zhang Hong Guang Independent director Business trip Wang Yan

Any perspective description, such as future plan, development strategy, etc. involved in the Annual Report shall

not constitute the Company’s substantial commitment to the investors and the investors should please pay

attention to their investment risks.

In the Report, the Company has presented in detail the potential risks existing in the macro economy and

operation. Investors are advised to read carefully the contents concerning risk factors possibly to be confronted

with in the Company’s future development prospects and the countermeasures in Chapter 4 Management

Discussion and Analysis.

The profit distribution preplan reviewed and approved by the said board meeting is summarized as follows: With

the Company’s total share capital 438,744,881 as the base, the Company would distribute cash dividend at the

rate of CNY 1.00 for every 10 shares (with tax inclusive) and bonus share at the rate of 0 share (with tax inclusive)

to the whole shareholders and no reserves would be converted into share capital.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Table of Contents

Chapter 1 Important Notice, Table of Contents and Definitions

Chapter 2 Company Profile and Financial Highlights

Chapter 3 Business Summary

Chapter 4 Discussion and Analysis of the Management

Chapter 5 Significant Events

Chapter 6 Changes in Shares and Particulars about the Shareholders

Chapter 7 About the Preferred Shares

Chapter 8 Directors, Supervisors, Officers and Employees

Chapter 9 Corporate Governance

Chapter 10 Financial Report

Chapter 11 List of Documents Available for Inspection

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Definition

Terms to be defined Refers to Definition

This Company, the Company or Fiyta Refers to FIYTA Holdings Ltd.

AVIC International Holdings Refers to AVIC International Holdings Limited

HARMONY Refers to Shenzhen Harmony World Watches Center Co., Ltd.

Rainbow Supermarket Refers to Rainbow Supermarket Co., Ltd.

CATIC Real Estate Refers to CATIC Real Estate Co., Ltd.

CATIC Property Refers to CATIC Property Management Co., Ltd.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 2 Company Profile and Financial Highlights

I. Company Profile

Short form of the stock: FIYTA A, FIYTA B Stock Codes: 000026 and 200026

Stock Exchange Listed with Shenzhen Stock Exchange

Company Name In Chinese 飞亚达(集团)股份有限公司

Abbreviation of Registered

飞亚达公司

Company Name in Chinese

Company name in foreign

FIYTA HOLDINGS LTD.

language (if any)

Short form of the Company

name in foreign language (if FIYTA

any))

Legal Representative Xu Dongsheng

Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen

Postal Code of the

518057

Registered Address

Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen

Postal Code of the Office

518057

Address

Internet Web Site www.fiytagroup.com

E-mail investor@fiyta.com.cn

II. Liaison Persons and Communication Information

Secretary of the Board Securities Affairs Representative

Names Lu Wanjun Zhang Yong

20th Floor, FIYTA Technology Building, 20th Floor, FIYTA Technology Building,

Liaison Address Gaoxin S. Road One, Nanshan District, Gaoxin S. Road One, Nanshan District,

Shenzhen Shenzhen

Tel. 0755-86013198 0755-86013669

Fax 0755-83348369 0755-83348369

E-mail investor@fiyta.com.cn investor@fiyta.com.cn

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

III. Information Disclosure and Place where the Regular Reports are Prepared

Newspapers Designated for Disclosing the Securities Times

Information: and Hong Kong Commercial Daily

Internet Web Site Designated by China Securities

Regulatory Commission for Publishing the www.cninfo.com.cn

Company’s semi-annual report:

Place of the Company’s Semi-annual Report

Office of the Board of Directors

Prepared for Inquiry

IV. Changes in Registration

Organization Code 19218978-3

Changes in principal business activities

No change

since listing (if any)

Changes in the controlling shareholder

No change

in the past (if any)

V. Other Relevant Information

CPAs engaged

Name of the CPAs Grant Thornton Certified Public Accountants (Special General Partnership)

Office address 5th Floor, Scitech Tower, 22 Jianguomen Wai Avenue, Chaoyang District, Beijing

Names of the Certified Public

Su Yang and Chen Zhifang

Accountants as the signatories

The sponsor performing persistent supervision duties engaged by the Company in the reporting period

Duration of persistent

Name of the Sponsor Office Address Representatives

supervision

Huachuang Building, 216

Huachuang Securities Co., January 15, 2016 to

Zhonghua N. Road, Guiyang, Li Xiumin and Huang Junyi

Ltd. December 31, 2017

Guizhou Province

The financial advisor performing persistent supervision duties engaged by the Company in the reporting period

Inapplicable

VI. Summary of Accounting/Financial Data

May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to change

of the accounting policy and correction of accounting errors?

No

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Year-on-year

2015 2014 2013

increase/decrease

Turnover in CNY 3,162,196,212.90 3,278,142,785.87 -3.54% 3,103,496,962.22

Net profit attributable to the

Company’s shareholders, in 121,702,057.44 145,591,136.39 -16.41% 130,125,124.48

CNY

Net profit attributable to the

Company’s shareholders less 113,441,715.91 136,799,116.72 -17.07% 127,158,503.02

the non-recurring items, in CNY

Net cash flows arising from

396,236,992.41 289,189,630.97 37.02% 79,047,490.92

operating activities, in CNY

Basic earning per share

0.3099 0.3707 -16.40% 0.3310

(CNY/share)

Diluted earning per share

0.3099 0.3707 -16.40% 0.3310

(CNY/share)

Return on equity, weighted

7.24% 8.62% -1.38% 8.69%

average (%)

Increase/decrease at

the end of the year

End of 2015 End of 2014 End of 2013

over the end of the

previous year

Total assets, in CNY 4,246,670,045.02 3,657,781,647.20 16.10% 3,558,702,591.28

Net assets attributable to the

Company’s shareholders

(owner’s equity attributable to 2,299,215,650.21 1,633,401,930.64 40.76% 1,536,434,684.56

the Company’s shareholders, in

CNY)

VII. Difference in the Accounting Data based respectively on the Chinese Accounting Standards

(CAS) and International Accounting Standards (IAS)

1. Differences in the net profit disclosed in the financial report & the net assets respectively according to the IAS

and the CAS.

Inapplicable

2. Didfferences in the net profit disclosed in the financial report & the net assets attributable to the Company’s

shareholders according to both the IAS and the CAS

Inapplicable

VIII. Financial Data Summary based on Quarters

In CNY

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Operating revenue 894,056,260.25 789,736,987.34 784,087,458.61 694,315,506.70

Net profit attributable to the

44,967,185.35 28,142,234.38 33,505,446.25 15,087,191.50

Company’s shareholders

Net profit attributable to the

Company’s shareholders less 44,409,083.60 27,549,001.67 31,372,100.25 10,142,734.20

the non-recurring profit and loss

Net cash flows arising from

109,358,176.80 62,895,601.76 86,981,239.77 137,001,974.10

operating activities

Does there exist significant difference in the foregoing financial data or their total sum from the relevant financial data as

disclosed in the quarterly reports and/or semi-annual report.

No

IX. Non-recurring gain/loss items and amount involved

in CNY

Amount in 2015

Items Amount in 2014 Amount in 2013 Note

Gain/loss from disposal of non-current

assets, including the part offset from the 34,435.32 -44,920.98 388,966.99

provision for impairment of assets.

Tax rebate, exemption or reduction

approved by overstepping the authority 0.00 0.00

or without official approval document

Government subsidy credited to the

current gain and loss (except the

government subsidies closely related

with the Company’s business and 10,889,579.23 10,344,542.00 3,610,593.36

enjoyable according to the unified

standard quota or fixed amount specified

by the central government).

Fund occupancy fee collected by

non-financial enterprises stated in the 0.00 0.00

gains and losses in the very period

Income from the costs of the

investments in the subsidiaries,

associates and joint ventures as

acquired less than the fair value of the 0.00 0.00

enjoyable recognizable net assets of the

investees at the time of investment

acquired.

Exchange gain/loss from non-monetary 0.00 0.00

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

assets

Gain/loss from entrusted investment or

0.00 0.00

asset management

Provision for impairment of various

assets arising from force majeure, such 0.00 0.00

as natural disaster

Gains/Losses from debts reorganization 0.00 0.00

Enterprise reorganization fees, such as

expenses for arrangement for 0.00 0.00

employees, integration fee, etc.

Gains/losses exceeding the fair value

arising from transactions with obviously 0.00 0.00

unfair prices

Net gain and loss of the subsidiary under

the common control and produced from

enterprise consolidation from the 0.00 0.00

beginning of the period to the

consolidation date

Gain and loss arising from contingent

matters irrelevant with the Company’s 0.00 0.00

normal operation business

Gain and loss from change of the fair

value arising from transactional

monetary assets, transactional financial

liabilities as held as well as the

investment income arising from disposal

of the transactional monetary assets, 0.00 0.00

transactional financial liabilities and

financial assets available for sale

excluding the effective hedging

transaction in connection with the

Company’s normal business

Reverse of the provision for impairment

of accounts receivable undergoing 0.00 0.00

impairment test individually

Gain/loss from external entrustd loan 0.00 0.00

Gain and loss arising from change in the

fair value of the investment based real

0.00 0.00

estate measured afterwards by means of

fair value model

Influence upon the current gains and 0.00 0.00

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

losses from the once-and-for-all

adjustment over the current gains and

losses according to the taxation and

accounting laws and regulations

Income from custodian charge obtained

0.00 0.00

from entrusted operation

Operating income and expenses other

-17,790.06 0.00 -153,915.17

than the aforesaid items

Other gains/losses in compliance with

1,149,979.86 0.00

the definition of non-recurring gain/loss

Less: Amount affected by the income tax 2,645,882.96 2,657,581.21 873,382.95

Amount affected by minority equity (after

0.00 5,640.77

tax)

Total 8,260,341.53 8,792,019.67 2,966,621.46 --

For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information

Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring

gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering

their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it

is necessary to explain the reason.

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 3 Business Summary

I. Principal Businesses in the Reporting Period

FIYTA has been concentrating itself in watch industry under the strategy of brand building, carrying forward integration

and upgrading of the key value chain, successfully constructed commercial retail network channels of seamless coverage

consisting of HARMONY, HENGLIANDA, the Sales Company (including BRAND GALLERY), e-commerce platform, etc.,,

provided the consumers with extremely thoughtful top quality services; improved R & D, design and manufacture platform

of watches, formed our own brand group with the high-end brands, FIYTA watches and fashion brands as the principal

and both the brands and products have been well upgraded.

II. Significant Changes in the Prime Assets

1. Significant Changes in the Prime Assets

Prime Assets Notes to Significant Changes

On November 11, 2015 China Securities Regulatory Commission issued the

Official Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing ( ZHENG

JIAN XU KE [2015] No. 2588 which authorized the Company to issue no more

than 46,911,649 new shares in non-public way. Ended December 22, 2015, the

Company completed the work of non-public issuing of 45,977,011 A-shares to the

Equity Assets designated investors. After deducting the issuing costs, the net raised capital

amounted to CNY 582,924,373.62. Upon the foregoing transaction, the Company

increased the registered capital by CNY 45,977,011 with the total registered

capital turning to be CNY 438,744,881, and increased the capital reserve by CNY

536,947,362.62. The shares newly issued got listed with Shenzhen Stock

Exchange on January 15, 2016.

In the reporting year, the annex to the Company’s 1928 Building was transferred

Fixed Assets into fixed assets for accounting upon completion in construction and acceptence

inspection with total amount of CNY 38,499,050.00.

Intangible Assets No change

Construction-in-process No change

2. Main Assets Overseas

Inapplicable

III. Analysis on Core Competitiveness

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

FIYTA’s core competitiveness is a collection consisting of a set of techniques and technology which enables the Company

to provide customers with particular values, is the competitive power on which a series of products or services rely in

achieving the leading position. It consists of the ability of brand building, ability of offering top quality services, ability of

product innovation, ability of knowledge management and ability of management of strategic human resources.

In addition to the continuous consolidation of the aforegoing core ability, in the reporting period, the Company achieved

great success in construction of the technology platform and technological innovation.

Following being certified as an enterprise technology center at municipal level, the Company’s innovative design center

has been certified as an industrial design center at national level by the Ministry of Industry and Information Technology of

the People’s Republic of China and The Company has kept its leading position in the domestic watch industry. In 2015,

the Company’s invention patents and design patents won one honorable mention of Chinese patents and one honorable

mention of Chinese design respectively. The design products won “Red Star Design Award in 2015”; “ Grand Award at the

First China Light Industry Excellence Award”; “Global Final Jury of Shenzhen Design Award for Young Talents 2015”; five

awards at the 2nd China HengliBlue Light Cup Horologe Design Competition, namely one Gold, one Silver and three

Bronze Awards. In the whole, the Company applied for 1 invention patent, 7 utility model patents and 35 design patents; in

the very, 3 invention patents, 4 utility model and 25 design patents have been granted; in the reporting year, the Company

took lead or participated in preparation or revision of 6 national industrial standards; one international technical standard

the Company took lead in preparation of got promulgated and the Company took lead or participated in preparation or

revision of 6 national industrial standards.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 4 Discussion and Analysis of the Management

I. General

In the reporting period, the development of China’s economy was slowing down and the consumption market was not so

flourishing. Such a situation has resulted in a big pressure upon the business of watch industry. Being confonted with the

extremely challenging market environment, the Company, based on the idea of striving to be better and seeking

improvement through innovation, took the brand building strategy as the guidance, focused on the annual work theme of

“values, innovation, adjustment and profit”, further propelled construction of the business model of “products + channels”,

and achieved significant progress in brand building, quality service, product innovation, strategic human resources,

knowledge management, etc. Based on establishment of the innovation system of creating values for customers, devoted

great efforts to in carrying out the innovation practice work with whole employees involved; keenly looked into the market

changes, positively optimized and adjusted the channel structure, devoted great efforts in research and development and

timely launched new products; focused on efficiency improvement, emphasized such management items as “per unit yield

improvement”, “invesntory turnover improvement” and “increasing revenue and reducing expenditure”; enthusiastically

made use of the Internet and energetically developed e-commerce and newly-developing business, realized precision

brand marketing and effective communication. In the reporting period, the whole colleagues of FIYTA successfully

overcomed all difficulties with their courage, passion, wisdom and sweat and reduced unfavorable influences brought

about by the rapid change of the environment, timely adjusted the operation strategy and integrated cores and optmized

the businesses, insisted on sustainable development of the Company’s multiple brands and multi-channel business. As a

result, the Company realized sales revenue amounting to CNY 3,162,196,212.90 in the whole year, dropped by 3.54%

over the previous year; realized net profit attributed to the shareholders amounting to CNY 121,702,057.44, dropped by

16.41% over the previous year; and net cash flow arising from the operating activities amounting to CNY 396,236,992.41.

Under the circumstance of general declining of the domestic watch industry in the reporting period, FIYTA carried out the

work in such dimensions as “per unit yield improvement, channel expansion, brand promotion, shopping guide team

building” at deepened level, developed the market channels at depth, integrated and optimized the business models,

vigorously fostered dealers, reinforced the ability of communication with customers. As a result, FIYTA watch channel

quality and the customers’ satisfaction have been constantly improved; the celebrity endorsement validation and the

reputation of the brand have been continuously enhanced; the product R & D and design ability have been further

improved. In the reporting year, the Company once again honorably gained the title of “Industrial Design Center at

National Level” which keeps pace with the "Technology Center at National Level”, a title which the Company has been

enjoying, which has compacted the development platform supported with own watch brands. The Company has kept

developing e-commerce, BRAND GALLERY and repairing services; and explored innovation in business models based

on the customer experience upgrading and the Internet based idealogy. With the unfavorable influence from the

tremendous flactuation of the domestic capital market and change of the consumption environment of the industrial

market, growth of the revenue from FIYTA watches significantly slowed down over the previous year. In the reporting year,

the Company realized operating revenue amounting to CNY 885,294,253.56, with a year-on-year growth rate of 3.36%.

In the reporting period, being faced with the challenge from the persistent gliding of the market of medium and high end

watches, Shenzhen Harmony World Watches Center Co., Ltd. has been closely centering on the annual work theme of

“values, adjustment, foundation and profit” and taking efficiency improvement as the objective, vigorously optimized the

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

shops, brands and stock patterns; laid a solid foundation in the management work, continuously carried out the special

work of “per unit yield improvement”, “stopping or reducing loss”, and “stock structure optimization” etc., improved the

profit making ability of the shops, greatly enforced stock consumption, timely closed deficit making shops; vigorously

developed repairing and technical service businesses, carried out various items of business innovation work based on the

Internet related ideas. However, as the consumption market of domestic famous brand watches is depressed in general,

HARMONY realized sales income from famous watches amounting to CNY 2,139,277,415.85, dropped by 6.92% on

year-on-year basis.

In the reporting period, the income from the Company’s properties kept steady growth.

The Company has successfully finished the work of non-public issuing of A-shares, from which the Company raised net

proceeds amounting to CNY 582,924,373.62. The newly added 45,977,011 shares were listed on January 15, 2016.

Movements of the key financial items in 2015 are summarized as follows:

Statement Items 2015 2014 Increase/ Cause of the Movements

Decrease (%)

Operating revenue 3,162,196,212.90 3,278,142,785.87 -3.54%

Operating costs 1,929,513,666.04 2,054,714,957.45 -6.09%

Sales expenses 779,536,520.59 722,839,956.11 7.84%

Administrative 198,077,866.76 208,452,027.58 -4.98%

expenses

Financial expenses 94,347,464.79 105,819,460.82 -10.84%

Net cash flow arising 396,236,992.41 289,189,630.97 37.02% It was mainly due to that being

from operating activities confronted with the increasingly

complicated market environment,

the Company made proper

control over the network

development speed and inventory

procurement and reinforced the

management of the cash flow

Net cash flow arising -230,011,696,60 -94,503,209.83 22.84%

from investment

activities

Net cash flow arising 354,689,968.60 -94,503,209.83 -475.32%- It was mainly due to that the

from financing activities Company grasped the

opportunity that the central bank

lowered the benchmar interest

rate several times in the reporting

year and lowered the interest

payment by means of exchanging

the bank loans ahead of time. In

addition, the Company finished

the non-public issuing of

45,977,011 A-shares from which

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

the Company raised capital with

net amount of CNY

582,924,373.62.

II. Analysis on Principal Businesses

1. General

Refer to “I. General” of “Discussion and Analysis of the Management”

2. Revenue and Costs

(1) Operating Revenue Composition

In CNY

2015 2014

Year-on-year

Proportion in the Proportion in the

Amount Amount increase/decrease

operating revenue operating revenue

Total operating

3,162,196,212.90 100% 3,278,142,785.87 100% -3.54%

revenue

Classified based on sectors

Watches 3,032,902,719.41 95.91% 3,154,917,328.23 96.24% -3.87%

Lease 94,871,950.77 3.00% 90,452,962.92 2.76% 4.89%

Others 34,421,542.72 1.09% 32,772,494.72 1.00% 5.03%

Classified based on products

Watches 2,147,608,465.85 67.92% 2,298,438,269.08 70.11% -6.56%

FIYTA watches 885,294,253.56 28.00% 856,479,059.15 26.13% 3.36%

Lease 94,871,950.77 3.00% 90,452,962.92 2.76% 4.89%

Others 34,421,542.72 1.09% 32,772,494.72 1.00% 5.03%

Classified based on regions

South China 1,034,176,502.17 32.71% 1,066,617,663.91 32.54% -3.04%

Northwest China 524,570,697.36 16.59% 565,700,125.97 17.26% -7.27%

North China 504,961,668.45 15.97% 539,995,688.23 16.47% -6.49%

East China 449,126,026.79 14.20% 447,079,002.18 13.64% 0.46%

Northeast China 303,634,173.44 9.60% 310,178,526.39 9.46% -2.11%

Southwest China 345,727,144.69 10.93% 348,571,779.19 10.63% -0.82%

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

(2) Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating

Profit

In CNY

Year-on-year Year-on-year

Year-on-year

increase/decrea increase/decrea

increase/decrea

Operating se of operating se of gross

Operating costs Gross profit rate se of operating

revenue revenue over profit rate over

costs over the

the previous the previous

previous year

year year

Sectors

Watch 3,032,902,719.41 1,906,085,186.72 37.15% -3.87% -6.11% 1.50%

Lease 94,871,950.77 14,533,950.78 84.68% 4.89% 12.14% -0.99%

Others 34,421,542.72 8,894,528.54 74.16% 5.03% -23.36% 9.57%

Products

Watches 2,147,608,465.85 1,623,918,119.34 24.38% -6.56% -7.38% 0.67%

FIYTA watches 885,294,253.56 282,167,067.38 68.13% 3.36% 1.91% 0.45%

Lease 94,871,950.77 14,533,950.78 84.68% 4.89% 12.14% -0.99%

Others 34,421,542.72 8,894,528.54 74.16% 5.03% -23.36% 9.57%

Regions

South China 1,034,176,502.17 562,653,054.71 45.59% -3.04% -9.86% 4.11%

Northwest

524,570,697.36 340,488,440.23 35.09% -7.27% -7.43% 0.11%

China

North China 504,961,668.45 329,038,618.83 34.84% -6.49% -6.62% 0.09%

East China 449,126,026.79 277,859,635.82 38.13% 0.46% -1.35% 1.13%

Northeast China 303,634,173.44 192,956,014.26 36.45% -2.11% -3.54% 0.94%

Southwest

345,727,144.69 226,517,902.19 34.48% -0.82% -0.95% 0.09%

China

While adjustment of the statistical caliber for the principal business data took place in the reporting period, the principal

business data with the statistical caliber adjusted at the end of the reporting period.

Inapplicable

(3) Is the income from sales in kind greater than service revenue

yes

Year-on-year

Based on sector(s) Items Unit 2015 2014

increase/decrease

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Sales volume pcs 967,866 841,978 14.95%

FIYTA watches Output Pcs 1,185,408 977,480 21.27%

Inventory level pcs 1,000,134 782,592 27.80%

Causes of the change in the year-on-year data by over 30%

Inapplicable

(4) Implementation of Important Sale Contracts Concluded at the End of the Reporting Period

Inapplicable

(5) Composition of Operating Costs

Classified based on sectors and products

Classified based on sectors

In CNY

2015 2014

Classified Year-on-year

Proportion in Proportion in

based on Items increase/decr

Amount operating Amount operating

sectors ease

costs costs

Merchandise

1,623,918,119 1,753,276,10

Watch procurement 84.16% 85.33% -1.17%

.34 7.39

cost

243,872,473. 243,230,326.

Watch Raw materials 12.64% 11.84% 0.80%

79 08

26,043,601.6 24,071,448.8

Watch Labor cost 1.35% 1.17% 0.18%

5 4

Depreciation

Watch 2,186,010.90 0.11% 1,778,552.44 0.09% 0.03%

cost

Watch Utility bills 2,566,336.12 0.13% 2,767,942.77 0.13% 0.00%

Watch Rental fee 2,211,474.27 0.11% 1,842,729.25 0.09% 0.02%

Watch Others 5,287,170.65 0.27% 3,182,787.69 0.15% 0.12%

Depreciation

Lease 9,144,144.60 0.47% 9,144,144.60 0.45% 0.03%

cost

Lease Labor cost 480,178.00 0.02% 424,349.80 0.02% 0.00%

Lease Others 4,909,628.18 0.25% 3,391,481.48 0.17% 0.09%

Procurement

Others 8,894,528.54 0.46% 11,605,087.11 0.56% -0.10%

cost

Notes: 1. The Company should disclose the proportion of the major components of the operation costs (such as raw

materials, labor wages, depreciation, energy, power, etc.) of the reporting year in the total costs based on the sectors or

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

products and provide the comparable data of the same account of the previous year. Should there be no comparable data

available, the Company should specify the cause.

2. If such information involves business secret, the Company may merely disclose the maximum or the most important

individual items.

Classified based on Products

In CNY

2015 2014

Classified Year-on-year

Proportion in Proportion in

based on Items increase/decr

Amount operating Amount operating

products ease

costs costs

Famous Merchandise

1,623,918,119 1,753,276,10

brand procurement 84.16% 85.33% -1.17%

.34 7.39

watches cost

FIYTA 243,872,473. 243,230,326.

Raw materials 12.64% 11.84% 0.80%

watches 79 08

FIYTA 26,043,601.6 24,071,448.8

Labor cost 1.35% 1.17% 0.18%

watches 5 4

FIYTA Depreciation

2,186,010.90 0.11% 1,778,552.44 0.09% 0.03%

watches cost

FIYTA

Utility bills 2,566,336.12 0.13% 2,767,942.77 0.13% 0.00%

watches

FIYTA

Rental fee 2,211,474.27 0.11% 1,842,729.25 0.09% 0.02%

watches

FIYTA

Others 5,287,170.65 0.27% 3,182,787.69 0.15% 0.12%

watches

Depreciation

Lease 9,144,144.60 0.47% 9,144,144.60 0.45% 0.03%

cost

Lease Labor cost 480,178.00 0.02% 424,349.80 0.02% 0.00%

Lease Others 4,909,628.18 0.25% 3,391,481.48 0.17% 0.09%

Finished

Others products 8,894,528.54 0.46% 11,605,087.11 0.56% -0.10%

procurement

Notes: 1. The Company should disclose the proportion of the major components of the operation costs (such as raw

materials, labor wages, depreciation, energy, power, etc.) of the reporting year in the total costs based on the sectors or

products, and provide the comparable data of the same account of the previous year. Should there be no comparable data

available, the Company should specify the cause.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

2. If such information involves business secret, the Company may merely disclose the maximum or the most important

individual items.

Remarks:

Inapplicable

Notes: 1. The Company’s supplemental explanation to the foregoing items.

2. Explain the reason why it is impossible to abtain the data of the same account.

(6) Is there any change in the consolidation scope in the reporting period

No

(7) Is there any significant change or adjustment related situation take place in the Company’s

business, products or services in the reporting period

Inapplicable

(8) Major trade debtors and major suppliers

Major trade debtors

Total sales to the top five customers, in CNY 261,939,772.75

Proportion of the total sales to the top five customers

8.28%

in the total sales of the year,

Information of the top 5 customers

No. Customers Sales (in CNY) Proportion in the total sales of the year

1 Rainbow Supermarket 81,677,865.75 2.58%

2 Xi’an Kaiyuan Shopping Mail Co., Ltd. 47,472,424.57 1.50%

CHINA RESOURCES SUN HUNG KAI

3 46,061,278.60 1.46%

PROPERTIES(HANGZHOU)LIMITED

Jiangxi Baisheng Zhongshancheng

4 43,705,884.01 1.38%

Department Store Co., Ltd.

5 Pinghe Tong (China) Ltd. 43,022,319.82 1.36%

Total -- 261,939,772.75 8.28%

Other Information about the major customers

Of the top five customers, Rainbow Supermarket is one of the controlled subsidiaries of AVIC International Holdings

Limited and is one of the Company’s related legal persons.

Top 5 suppliers

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Total amount of purchase from top five suppliers, in

1,024,748,888.00

CNY

Proportion of the purchase amount from the top five

53.11%

suppliers in the Company’s total purchase amount

Information about the top 5 suppliers

Proportion in the total purchases of the

No. Suppliers Purchase amount, in CNY

year (%)

SMH Swiss Watch Trading (Shanghai)

1 557,159,710.71 28.88%

Co., Ltd.

2 Ningbo Shangheng Watches Co., Ltd. 211,500,391.90 10.96%

3 Rolex (Guangzhou) Ltd,. 126,129,988.30 6.54%

RICHEMONT COMMERCIAL

4 67,806,044.53 3.51%

COMPANY LIMITED

5 Shenzhen Hendry Watches Co., Ltd. 62,152,752.20 3.22%

Total -- 1,024,748,888.00 53.11%

Other information about the major suppliers

Inapplicable

3. Expenses

In CNY

Year-on-year

2015 2014 increase/decreas Note to significant changes

e

Sales expenses 779,536,520.59 722,839,956.11 7.84%

Administrative

198,077,866.76 208,452,027.58 -4.98%

expenses

Financial expenses 94,347,464.79 105,819,460.82 -10.84%

4. Investment in R & D

The Company has attached importance on technology innovation work all the time, enhances its core competitiveness

through innovation of the technology with own intellectual property, consolidate its leading position of self-innovation in

China’s clock and watch brands so as to realize its vision of becoming an international brand and improve its international

competitiveness in the industry. In the year 2015, the Company’s total investment in R & D amounted to CNY

37,481,362.43, a 10.75% growth over the previous year, taking 1.63% of the net assets as audited in the most recent

period and taking 1.19% of the operation revenue as audited in the most recent period.

Growth of investment in R & D in 2015 was mainly due to that for the purpose of consolidating the Company’s leading

position of self-innovation in China’s clock and watch brands and leading the industry for innovative development, the

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Company increased investment in such key technology fields as space watches, timekeeping technology, research on

application of new materials, etc., greatly increased personnel, equipment, research budget, etc., and achieved a number

of scientific research achievements. In 2015, the number of patents for invention granted increased by 14% over the

previous year and such patents have been applied in our products. By virtue of the accumulation in innovation mechanism,

innovation ability, innovative talents and innovation products, etc., FIYTA Innovative Design Center has been certified as a

national industrial design center by the Ministry of Industry and Information Technology of the People’s Republic of China.

Information of Investment in R & D

2015 2014 Variable proportion

Number of R & D staff

39 36 8.33%

(persons)

Proportion of R & D staff in

0.70% 0.65% 0.05%

total employees

Amount of investment in R &

37,481,362.43 33,842,818.77 10.75%

D, in CNY

Proportion of investment in R

1.19% 1.03% 0.16%

& D in operating revenue

Amount of capitalized

0.00 0.00 0.00%

investment in R & D (in CNY)

Proportion of capitalized

investment in R & D in the 0.00% 0.00% 0.00%

total investment in R & D

Cause(s) of significant change of the total investment in R & D in the operating revenue

Inapplicable

Note to the cause of significant change in the capitalization rate of investment in R & D and note to the reasonability

Inapplicable

Number of patents in the past two years

Accumulated number

Application submitted Granted granted ended the

reporting period

Invention 5 8 15

Utility model 10 8 49

Design 45 48 213

Movement of the core technology team

Nil

or key technical staff

Does it belong to a hi-tech enterprise

Yes

certified by the Ministry?

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

5. Cash flow

In CNY

Year-on-year

Items 2015 2014

increase/decrease

Sub-total of cash flow

received from operation 3,696,332,927.45 3,792,449,143.86 -2.53%

activities

Subtotal of cash flow paid for

3,300,095,935.04 3,503,259,512.89 -5.80%

operating activities

Net cash flow arising from

396,236,992.41 289,189,630.97 37.02%

operating activities

Sub-total of cash flow-in

received from investing 340,367.11 51,919.04 555.57%

activities

Sub-total of cash flow paid

230,352,063.28 187,300,953.70 22.98%

for investment activities

Net cash flow arising from

-230,011,696.17 -187,249,034.66 22.84%

investment activities

Sub-total cash flow received

2,937,413,848.66 1,573,439,386.01 86.69%

from financing activities

Sub-total cash flow paid for

2,582,723,880.06 1,667,942,595.84 54.84%

financing activities

Net cash flow arising from

354,689,968.60 -94,503,209.83 -475.32%

financing activities

Net increase in cash and

522,507,805.39 7,216,959.80 7,140.00%

cash equivalents

Note to the major influence factors for the significant change in the relevant year-on-year data

Net cash flow arising from operating activities:

In the reporting period, the year-on-year growth of the net cash flow arising from operating activities by 37.02% was

mainly due to that facing the increasingly complicated market environment, the Company controlled the network extension

speed and enhanced inventory procurement and strengthened the cash flow management.

Cash inflow from financing activities:

In the reporting period, cash inflow from financing activities increased by 86.69% over the same period of the previous

year was mainly due to that the Company grasped the opportunity that the central bank lowered the benchmar interest

rate several times in the reporting year and lowered the interest payment by means of exchanging the bank loans ahead

of time. In addition, the Company finished the non-public issuing of 45,977,011 A-shares from which the Company raised

capital with net amount of CNY 582,924,373.62.

Cash outflow for financing activities:

In the reporting period, cash outflow for financing activities increased by 54.84% over the same period of the previous

year was mainly due to that the Company grasped the opportunity that the central bank lowered the benchmar interest

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

rate several times in the reporting year and lowered the interest payment by means of exchanging the bank loans ahead

of time.

Net increase of cash and cash equivalent:

In the reporting period, net increase of cash and cash equivalent rose by 7,140.00% was mainly due to that the Company

successfully complete non-public issuing of 45,977,011 A-shares and raised net amount of capital totaling CNY

582,924,373.62. Since the raised capital is earmarked for the designated purpose, the retained book value at year end

was CNY 485,499,836.55.

Cause(s) of significant difference in the net cash flow arising from the operating activities and the net profit in the reporting

year

Inapplicable

III. Analysis on Non-Principal Businesses

Inapplicable

IV. Assets and Liabilities

1. Significant Changes in Assets Composition

In CNY

End of 2015 End of 2014 Proportio

n

Proportion Proportion

increase Note to significant changes

Amount in total Amount in total

d/decrea

assets assets

sed

Monetary 638,962,875. 116,455,070.5

15.05% 3.18% 11.87%

capital 93 4

Accounts 304,725,676. 351,276,905.

7.18% 9.60% -2.42%

receivable 29 53

2,092,691,01 2,133,791,02

Inventories 49.28% 58.34% -9.06%

9.29 4.32

Investment

216,948,193. 226,091,938.

based real 5.11% 6.18% -1.07%

02 89

estate

Long term

43,221,572.0 42,389,759.9

equity 1.02% 1.16% -0.14%

5 1

investment

361,979,828. 323,732,870.

Fixed assets 8.52% 8.85% -0.33%

01 58

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Construction-in- 173,189,274. 51,389,263.5

4.08% 1.40% 2.68%

process 57 3

988,186,200. 989,445,000.

Short term loan 23.27% 27.05% -3.78%

00 00

90,994,964.3 139,952,425.

Long term loan 2.14% 3.83% -1.69%

3 65

2. Assets and liabilities measured based on fair value

Inapplicable

V. Investment

1. General

Inapplicable

2. Significant equity investment acquired in the reporting period

Inapplicable

3. Significant non-equity investment in process in the reporting period

Inapplicable

4. Financial assets investment

(1) Portfolio investment

Inapplicable

(2) Investment in derivatives

Inapplicable

5. Application of raised capital

(1) General application of the raised capital

In CNY 10,000

Total Total Total Proportio Total Application Amount

Total

Year of Way of amount of accumula raised Total n of the raised and status of the

capital

raising raising raised tive capital accumula total capital of the raised

raised

capital amount of whose tive accumula not yet raised capital

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

used in raised applicatio raised tive used capital idled for

the capital n purpose capital raised unused more than

reporting used has been whose capital 2 years

period accumula changed applicatio whose

ted in the n purpose applicatio

reporting has been n purpose

period changed has been

changed

Issuing

Inapplica

2012 company 40,000 0 40,000 0 0 0.00% 0 0

ble

bonds

Non-publi

c issuing Inapplica

2015 58,550 16,358.41 16,358.41 0 0 0.00% 42,191.59 0

of ble

A-shares

Total -- 98,550 16,358.41 56,358.41 0 0 0.00% 42,191.59 -- 0

Note to General Application of the Raised Capital

The Company held the 33rd meeting of the Sixth Board of Directors and 2012 1st extraordinary general meeting

respectively on June 19, 2012 and July 6, 2012. The meetings reviewed and approved the Proposal of Issuing Company

Bonds, etc. according to which, the Company planned to issue company bonds with a size not exceeding CNY400

million and with a term not exceeding 5 years (with 5 years inclusive) which would be used for replacing bank loan and

replenishing the working capital. On September 9, 2012, approved through verification by China Securities Regulatory

Commission (CSRC) with Document ZHENG JIAN XU KE [2012] No. 1209, the Company was approved to issue

company bonds with the size not exceeding CNY 400 million. The Company issued CNY 400 million of bonds in the said

period. After deduction of the issuing costs, the net raised capital amounting to CNY396.9 million was remitted to the

bank account designated by the Company on March 5, 2013. RSM China CPAs, the CPAs engaged by the Company

issued the capital verification reports of ZHONG RUI YUE HUA YAN ZI [2013] No. 0053, ZHONG RUI YUE HUA YAN ZI

[2013] No. 0054 and ZHONG RUI YUE HUA YAN ZI [2013] No. 0055 respectively for the frozen capital for subscription

of the on-line bond issuing, the frozen capital for subscription of the off-line placement and the actual raised capital

conditions. Approved by Shenzhen Stock Exchange with Document SHEN ZHENG SHANG [2013] No. 99, the bonds

have been listed with both SZSE Centralized Bidding System and the Comprehensive Agreement Based Transaction

Platform commencing from March 29, 2013 with the abbreviation of the security as “12 YADA BOND” and security code

as “112152”. The issuing of the company bonds has been completed. The capital raised from the issuing was remitted to

the bank account designated by the Company on March 5, 2013. Up to now, the Company had used up all the raised

capital and no change has taken place in the application purpose of the raised capital. By February 29, 2016, the

Company had redeemed all the company bonds and the company bonds have been delisted.

The Company held the 18th meeting of the Seventh Board of Directgors and 2014 Annual General Meeting respectively

on April 16, 2015 and June 17, 2015. The meetings reviewed and approved the Proposal on the Plan for Non-public

Issuing of A-shares to the Specified Investors, etc., according to which the Company planned to issue in a non-public

way A-shares to no more than 10 (with 10 inclusive) specified investors with the total raised capital not exceeding CNY

600 million, which would be applied for four projects, including the project of launching new FIYTA watches and

supplement the working capital. The application for non-public issuing of A-shares was reviewed and approved by

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

CSRC Securities Issuance Examination Committee (CSIEC) on October 30, 2015. On November 17, 2015, the

Company received Official Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing ( ZHENG JIAN XU KE

[2015] No. 2588 which authorized the Company to issue no more than 46,911,649 new shares in non-public way. The

actual number of A-shares actually issued in the non-public issuing activity was 45,977,011 shares and the raised capital

amounted to CNY 599 million. After deduction of the underwriting fee, the carised capital amounted to RMB 585 million.

After deduction of the issuing costs, the net raised capital amounting to CNY583 million was remitted to the bank

account designated by the Company on December 18, 2015. Grant Thornton Certified Public Accountants (Special

General Partnership) issued the Capital Verification Reports ZHI TONG YAN ZI (2015) No. 441ZC0653, ZHI TONG YAN

ZI (2015) No. 441ZC0652 respectively for the raised capital. The A-shares issued in a non-public way were registered

for listing on January 15, 2016 and locked for 12 months. The Company has published the Announcement of

Commitment concering the Shares Issued in a Non-public Way. Up to now, the capital raised from non-public issuing of

A-shares is going to be applied for the originally designated application purpose and there exists no such a case that the

application purpose has been changed. The concerned follow-up commitments are in process of implementation.

(2) Promised Projects with Raised Capital

In CNY 10,000

Has

Amount Investmen Date when

Has the significant

Total accumulati t progress the project Has the

project Total Result change

Promised investment promised Amount vely by the end has predicted

been investmen realized in taken

projects and investment investmen invested in invested of the reached operation

changed t after the place in

with the over-raised t with the report up to the report the result

(including adjustmen reporting the

capital raised period end of the period (%) predicted been

partial t (1) period feasibility

capital report (3) = applicable reached?

change) of the

period (2) (2)/(1) status

project?

Investment projects as promised

Repayment of bank loan No 30,000 30,000 0 30,000 100.00% 0 Yes No

Replenishing the working

No 10,000 10,000 0 10,000 100.00% 0 Yes No

capital.

Project of Launching New

No 18,000 18,000 18.34 18.34 0.10% 0 Yes No

FIYTA Watches

FIYTA E-commerce

No 12,000 12,000 1,213.74 1,213.74 10.11% 0 Yes No

project

FIYTA Brand Marketing

No 10,000 10,000 4,700.65 4,700.65 47.01% 0 Yes No

Promotion Project

Technic Service Website

No 5,000 5,000 425.66 425.66 8.51% 0 Yes No

Construction Project

Replenishing working

No 15,000 15,000 10,000.02 10,000.02 66.67% 0 Yes No

capital

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Subtotal of investment

-- 100,000 100,000 16,358.41 56,358.41 -- -- 0 -- --

projects as committed

Intended investment with the over-raised capital

Inapplicable

Subtotal of the intended

investment with the -- 0 0 0 0 -- -- 0 -- --

over-raised capital

Total -- 100,000 100,000 16,358.41 56,358.41 -- -- 0 -- --

Case of failure to satisfy

the plan progress or

predicted revenue and Inapplicable

the cause (based on

specific project)

Note to the significant

change in the feasibility of Inapplicable

a project

Amount, application and Inapplicable

application progress of

the over-raised capital

Change of the site for Inapplicable

implementation of the

project invested with the

raised capital

Adjustment of the way of Inapplicable

implementation of the

project invested with the

raised capital

Applicable

The net amount of the raised capital from non-public issuing of A-shares is CNY 583 million. According to the

Proposal for Replacing the Self-raised Fund Earlier Invested in the Project(s) to be Invested with Raised Capital with

Earlier investment in and the Raised Capital reviewed and approved at the 5th meeting of the Eighth Board of Directors, the Company decided

replacement of the to replace the self-raised capital invested earlier with the raised capital amounting to CNY 63.5839 million. The said

project invested with the replacement with the raised capital does not contradict the implementation plan of the projects to be invested with the

raised capital raised capital from the non-public issuing and shall not affect the normal process of the projects to be invested with

the raised capital. There exists no such situation that the investment plan for the raised capital has been changed in

disguised form or that it has harmed the shareholders’ interest. The time distance from replacement of the raised

capital to the entry of the raised capital into the bank account should not be less than 6 months.

The idled raised capital Inapplicable

used to replenish working

capital for time being

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Amount of the balance of Inapplicable

the raised capital incurred

in project implementation

and the cause

Application of the raised

capital not yet used and Inapplicable

the whereabouts

Application of the raised

capital and the existing

Inapplicable

problems not disclosed or

other situation

(3) Change of the Projects Invested with the Raised Capital

Inapplicable

VI. Sales of Significant Assets and Equity

1. Sales of Significant Assets

Inapplicable

2. Sales of Significant Equity

Inapplicable

VII. Analysis on Principal Subsidiaries and Mutual Shareholding Companies

Particulars about the principal subsidiaries and mutual shareholding companies which may affect the Company’s net profit

by over 10%.

In CNY

Leading Net assets

Company Principal Total assets, in Turnover in Operating Net profit (in

Company type products and (CNY)

Names business CNY CNY profit (in CNY) CNY)

services

Mainly

engaged in

Shenzhen

sales of world

Harmony

famous brand

World 2,001,459,574 716,500,947.1 2,140,836,385

Subsidiary Retail watch, 12,974,393.15 15,267,549.19

Watches .91 9 .85

including

Center Co.,

purchase,

Ltd.

sales and

maintenance

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

service of

timepieces

and parts

Sales and

repairing of

clocks and

FIYTA Sales 804,054,026.3 939,412,594.1 -38,279,561.1 -25,832,488.5

Subsidiary Retail watches and 10,804,452.90

Co., Ltd. 2 3 7 7

parts, sales of

jewelry and

ornaments.

Mainly

engaged in

production and

sales of FIYTA

watches,

Shenzhen

including

FIYTA

production and

Sophisticated 270,530,028.8 166,337,330.4 524,115,539.7 175,996,805.9 150,382,955.9

Subsidiary Manufacture maintenance

Timepieces 0 3 7 1 6

of clocks and

Manufacture

watches, and

Co., Ltd.

driving units,

spares and

parts,

sophisticated

timepieces.

R & D,

production and

sales of

watches,

Shenzhen

production,

FIYTA

machining, 171,966,217.9

Technology Subsidiary Manufacture 91,310,910.62 54,705,773.20 16,115,454.65 14,803,650.69

sales and 2

Development

technology

Co., Ltd.

development

of

sophisticated

parts.

Mainly

engaged in

FIYTA (Hong trade and 448,491,009.4 164,332,147.0 116,126,118.7

Subsidiary Retail -3,930,979.32 -4,235,393.48

Kong) Limited overseas 9 5 9

market

development

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

of FIYTA

watches

Sales of

clocks and

watches and

Shenzhen gifts and

Symphony consultation of

Subsidiary Retail 26,980,197.16 2,463,814.45 31,596,993.99 6,323,612.14 4,968,483.36

Trading Co., relevant

Ltd. information

and other

domestic

trading

Mutual Sales of

Shanghai

shareholding watches and 106,306,675.7

Watch Industry Manufacture 96,668,196.88 91,465,902.16 3,724,158.84 3,327,248.55

company spares and 6

Co., Ltd.

parts

Subsidiaries acquired and disposed in the reporting period

Inapplicable

Particulars about the principal holding and mutual shareholding companies

Inapplicable

VIII. Structurized Entities Controlled by the Company

Inapplicable

IX. Development Prospect

(I) Development Trend of the Industry

In 2016, the environment of the macro-economy and retail and consumption industry is predicted to be confronted with

bigger pressure in growth. The consumption situation of the domestic watch retail market shall still not be optimistic.

However, watch belongs to a commodity of affection, with knowledge and affection as the kernel. It is a perfect

combination of art, aestjetocs amd subtle technology and an important carrier for displaying life taste. Despite the short

term pressure to be confronted in benefit growth, with continuous deepening of various reform measures in China, gradual

improvement of the market environment and upgrading of people’s life quality, we still keep optimistic judgment of the long

term development potential of the watch market.

(II) Development Strategy

In 2016, the Company shall continue to stick to the corporate philosophy and brand development strategy with the attitude

of innovation and progressiveness, arouse all efforts to achieve prosperity, fearlessness of hardship, face challenges, do

the best in the Chinese market based on the annual strategic theme of “deep ploughing, integration, innovation and

beneficiation”, keep a close watch on the “Chinese people’s market”, take the customers’ demand as the origin, carefully

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

study the trend of the industry, accurately identify the customers’ demand, continue to build excellent own brand ethnic

group, and high efficiency watch retail comprehensive service provider, put forth efforts to carry out brand building,

customer study, model innovation and new business exploration, etc., continuously improve the earning power, and strive

to realize better growth of the Company’s performances.

(III) Annual Operation Plan in 2016

1. FIYTA Watch Industry shall center on the annula work them of “integration, innovation, efficiency and benefit” for, carry

out full implementation of the customer study work, see through clearly and grasp the trend of young consumers’

demands, further refine and enrich DNA of our own brands, accelerate launching of new products, enhance cost control

ability; increase investment in precision marketing through the Internet, enhance brand exposure, improve the brand

perception; strengthen construction of shopping guide capacity, and optimize channel operation capability.

2. Harmony World Watches Center Co., Ltd. shall center on the annual work theme of “values, customers, deep ploughing

and innovation", put forth effort to build “high aspiration, high standard and high efficiency” team; respond actively to the

change of the market environment, carry out in a deep-going way customer study, improve excellent service ability; track

the operation status of physical stores in a rolling way, continuously carry out “per unit yield improvement” work; timely

optimize and adjust shopfront layout and product structure, improve assets operation efficiency; carry forward upgrading

and transition of business model, gradually construct online operation and service platform and enhance customers’

consumption experience.

(IV) Capital Necessary for Future Development

According to the Company’s business development plan and financial budget planning in 2016, for the purpose of

satisfying the capital demand for investment and operation and at the same time timely seize the opportunity of merger

which is to be brought about from change of the market, the Company is going to apply for bank credit line not exceeding

CNY1.8 billion in various ways, including secured loan, loans through subsidiaries, mortgage, etc.

(V) Risks Possibility to be Confronted with

Affected by the macro-economic and policy factors, China’s watch retail market is confronted with challenge in operation

and upgrading, showing that the growth of the retail market has slowed down on general basis, famous brand watches ,

especially high-end famous brand watches, have been restricted in consumption. However, the enviroment of the

domestic famous brand retail sector tends to be gradually rational; donation based consumption has been reduced rapidly;

and the proportion of ordinary consumption is increasing continuously. The home-made brand watches tend to be gentle

after the past two years’ high speed growth and the competition fo the domestic brands is becoming more and more

intense and intense. Homogeneity of low-price products is still serious. Channel expansion is developing in depth and

horizontal innovation is in extension. Meanwhile, with continuously development of the Company’s business, risks in

channels and assets also tend to be increscent.

X. Statement of Such Activities as Reception of Survey, Communications, Interview,

etc.

1. Registration Form of the Activities, such as Reception of Survey, Communications, Interviews,

etc. in the Reporting Period

Reception time Way of reception Types of visitors received Index of basic information of survey

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

http://irm.cninfo.com.cn/ircs/ssgs/co

August 20, 2015 Field survey Institution mpanyIrmForSzse.do?stockcode=00

0026

http://irm.cninfo.com.cn/ircs/ssgs/co

August 26, 2015 Field survey Institution mpanyIrmForSzse.do?stockcode=00

0026

http://irm.cninfo.com.cn/ircs/ssgs/co

September 14, 2015 Field survey Institution mpanyIrmForSzse.do?stockcode=00

0026

http://irm.cninfo.com.cn/ircs/ssgs/co

November 5, 2015 Field survey Institution mpanyIrmForSzse.do?stockcode=00

0026

Number of reception 4

Number of institutions received 28

Number of persons received 29

Number of other visitors received 0

Is there any important information disclosed,

No

revealed or leaked to the public?

2. Registration Form of the Activities, such as Reception of Survey, Communications, Interviews,

etc. from the End of the Reporting Period to the Date of Disclosure

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 5 Significant Events

I. Profit Distribution for Common Stock and Conversion of Capital Reserve into

Share Capital

Preparation, Implementation or Adjustment of the Policy for Common Stock Profit Distribution, Especially the Policy for

Cash Dividend Distribution

The 18th Meeting of the Seventh Board of Directors held on April 16, 2015 and 2014 Annual General Meeting held on

June 17, 2015 reviewed and approved the Proposal for Amendment of the Articles of Association, according to which the

profit distribution policy as specified in Article 155 of the Articles of Association was amended correspondingly. For the

detail, refer to the Announcement on the Resolutions of the 18th Meeting of the Seventh Board of Directors 2015-008 and

Announcement of the Resolutions of 2014 Annual General Meeting 2015-020 and the Bill of Amendment of the Articles of

Association.

Special Note to the Cash Dividend Distribution Policy

Does the policy comply with the provisions of the Articles

of Association or the requirements of the resolution of the Yes

General Meeting:

Are the dividend distribution rate and proportion definite

Yes

and clear:

Are the relevant decision-making procedures and

Yes

mechanism complete:

Do independent directors do their duties and play their

Yes

role:

Is there any opportunity available for minority

shareholders to fully express their opinions and appeal Yes

and have legitimate right to get sufficient protection:

Are the conditions and procedures of law-compliance and

transparent in case the cash dividend distribution policy Yes

has been adjusted or altered:

Note: The Company should disclose the common stock profit distribution policy in the reporting period, especially

preparation, implementation or adjustment of the cash dividend distribution policy, specify whether the profit distribution

policy complies with the Articles of Association and review procedures, whether the minority shareholders’ legal interests

have been fully protected, whether independent directors have expressed their opinions on the policy, whether the

dividend distribution criteria and distribution rate are explicit; and whether the conditions and procedures for adjustment or

alteration of the profit distribution policy be of law compliance or transparent.

The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into share

capital in the past three years (with the reporting period inclusive):

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

According to the provisions concerning cash dividend distribution in the Articles of Association, the Company prepared

specific cash dividend distribution plan after the Board of Directors and the Shareholders’ General Meeting have reviewed

strictly according to the requirements. In the past three years, the Company has well implemented the cash dividend

distribution policy, fully asked for the independent directors’ opinions, effectively ensured the minority shareholders’

benefit and made timely and accurate disclosure in its annual report and the relevant media,

Profit Distribution Plan in 2013: With the total share capital of 392,767,870 shares as at December 31, 2013 as the base,

the Company distributed to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax inclusive), 0

bonus share for every 10 shares; converted no reserve into share capital.

Profit Distribution Plan in 2014: With the total share capital of 392,767,870 shares as at December 31, 2014 as the base,

the Company distributed to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax inclusive), 0

bonus share for every 10 shares; converted no reserve into share capital.

Profit Distribution Plan in 2015: With the total share capital of 438,744,881 shares as at January 15, 2016 as the base, the

Company is going to distribute to the whole shareholders cash dividend at CNY 1.00 for every 10 shares (with tax

inclusive), 0 bonus share for every 10 shares; converted no reserve into share capital.

The accumulative amount of cash dividend distributed in the past three years took 92.42% of the annual average net profit

in the past three years, which complies with the rules and regulations.

Statement of cash dividends distributed in the past three years (with the reporting period inclusive)

In CNY

Net profit attributable Ratio of the net profit

to the Company’s attributable to the

Amount of Cash Amount of cash Proportion of the cash

Year of Dividend shareholders in the Company’s

Dividend (including dividend distributed in dividend distributed in

Distribution consolidated shareholders taken in

tax) other way(s) other way(s)

statements of the year the consolidated

of dividend distribution statements

2015 43,874,488.10 121,702,057.44 36.05% 0.00 0.00%

2014 39,276,787.00 145,591,136.39 26.98% 0.00 0.00%

2013 39,276,787.00 130,125,124.48 30.18% 0.00 0.00%

In the reporting period, both the Company’s profit and the parent company’s profit available for shareholders of common

stock were positive but no common stock cash dividend distribution proposal has been put forward.

Inapplicable

II. Preplan for Profit Distribution and Conversion of Capital Reserve into Share

Capital in the Reporting Period

Bonus shares distributed at the rate of ___

0

(share) for every 10 shares

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Dividend distributed at the rate of CNY___ for

1.00

every 10 shares (with tax inclusive)

Number of shares converted for every 10

0

shares (shares)

Share capital base for the dividend distribution

438,744,881

preplan (shares)

Total cash dividend distributed (with tax

43,874,488.10

inclusive)

Profit available for distribution (CNY) 469,841,589.40

Proportion of the cash dividend in the total

100.00%

profit available for distribution (%)

Cash Dividend Distribution this Time

Others

Detailed information for profit distribution or conversion of capital reserve into share capital preplan

The Company’s profit distribution plan for 2015 was reviewed and approved at the 6th meeting of the Eighth Board of

Directors held on March 8, 2016 and is going to be submitted to 2015 Annual General Meeting for review. According to

the plan, the Company is going to distribute cash dividend at the rate of CNY 1.00 for every 10 shares (with tax inclusive)

and 0 bonus share to the whole shareholders with the total share capital as at January 15, 2015 totaling 438,744,881

shares as the base; and no public reserve is going to be converted into share capital. The profit distribution plan is

subject to review and approval of the General Meeting before implementation.

III. Implementation of Commitments

1. Commitments finished in implementation by the Company, shareholders, actual controller,

acquirer, directors, supervisors, senior executives or other related parties in the reporting period

and commitments unfinished in implementation at the end of the reporting period

Commitment Commitment Commitment Implementation

Commitments Promiser Description

type time deadline status

Commitment for Equity Separation

Reform

Commitments in the acquisition report or

the written report on change of equity

Commitment made at the time of asset

reorganization

The Company Deadline of the Implementation

commits that in bonds (The finished (the

FIYTA Holdings Other February 27,

Commitment made at IPO or re-financing case it is valid term of the company

Ltd. commitments 2013

predicted that bonds is 5 bonds had

the Company years attached been redeemed

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

may be unable with the all and delisted

to duly pay the investors’ by February 29,

principal and option of selling 2016)

interest of the back, the

bond or fail to Company’s

duly pay the option of

principal and redemption and

interest of the option of

bond when it is up-regulation of

due, the the nominal

Company shall interest rate at

at least take the the end of the

following 3rd year).

measures: 1.

not profit

distribution to

the

shareholders

shall be

conducted. 2.

implementation

of any capital

expenditure

projects, such

as material

external

investment,

acquisition and

merger, etc.

shall be

suspended. 3.

salaries and

bonus to the

directors and

senior

executives shall

be adjusted

down or

suspended. 4.

None of the key

officers may be

transferred out.

Caitong Commitment on Commitmentof January 15, In processof

1 year

Fund Managem restricted sales the investors 2016 implementatio

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

ent Co., Ltd.; of shares of the n

MANULIFE non-public

TEDA Fund issuing -

Management C Caitong Fund

o, Ltd.; Management

Co., Ltd.,

Xizang Investm

MANULIFE

ent Co., Ltd.;

TEDA Fund

Golden Eagle

Management

Asset Manage

Co, Ltd.,

ment Co.,Ltd.;

Xizang

Sws Mu Fund

Investment

Management

Co., Ltd.,

Co., Ltd

Golden Eagle

Asset

Management

Co.,Ltd., Sws

Mu Fund

Management

Co., Ltd: the

shares

subscribed by

them from the

non-public

issuing shall

not be

transferred in

12 months

commencing

from the dater

of listing.

Equity incentive commitment

Based on the

understanding

of the Chinese

Refer to the

capital market

Announcemen

AVIC situation and

Share t on In process

Other commitments to the minority International the confidence

acquisition July 11, 2015 Commitment ofimplementati

shareholders Investment Co., in the

commitment for the Shares on

Ltd. Company’s

Acquired

sustainable and

(2015-022)

steady

development, in

order to

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

safeguard the

whole

shareholders’

interest and

promote

stability of the

capital market

with practical

action, and

according to the

Notice of China

Securities

Regulatory

Commission on

Acquisition of

the Company’s

Shares by the

Major

Shareholders,

Supervisors

and Senior

Executives of

the Listed

Company

(ZHENG JIAN

FA [2015] No.

51) and the

relevant laws

and regulations,

AVIC

International, as

the actual

controller of

FIYTA, is

desirous to

acquire FIYTA

shares through

AVIC

International

Investment Co.,

Ltd., the person

acting in

concert

AVIC Commitment on AVIC July 13, 2015 Refer to the In process

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

International restricted sales International Announcement ofimplementati

Investment Co., of shares Investment Co., on Commitment on

Ltd. Ltd., the person for the Shares

acting in Acquired

concert of the (2015-022)

Company’s

actual

controller,

acquired

100,000 shares

of the

Company’s

stock through

the secondary

market on July

13, 2015, and

committed that

the Company’s

shares it has

acquired shall

not be

transferred

during the

outperforming

period and in 6

months after

the

outperforming.

Have the commitments been

Yes

implemented in a timely way

If the commitment has not been

implemented at the end of the reporting

period, it is necessary to explain the Inapplicable

specific reason of failure in

implementation and the future work plan.

2. There existed profit anticipation for the Company’s assets or projects while the reporting

period was still within the duration of the profit anticipation. The Company made explanation on

whether the assets or projects reached the anticipated profit and the cause

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

IV. Non-operational Occupancy of the Company’s Capital by the Controlling

Shareholder and its Related Parties

Inapplicable

V. Explanation of the Board of Directors, the Supervisory Committee and

Independent Directors (if any) on the “Qualified Auditor’s Report” issued by the

CPAs in the Reporting Period

Inapplicable

VI. Explanation on the Changes in the Accounting Policy, Accounting Estimate, and

Accounting Method in Comparison with the Financial Report of the Previous Year

Inapplicable

VII. Explanation on Serious Accounting Errors Occurred in the Reporting Period

Necessary to be Restated Retrospectively

Inapplicable

VIII. Explanation on the Changes in the Scope of the Consolidated Statements in

Comparison with the Financial Report of the Previous Year.

Inapplicable

IX. Engagement/Disengagement of CPAs

CPAs currently engaged

Grant Thornton Certified Public Accountants (Special General

Name of the domestic CPAs

Partnership)

Remuneration to the domestic CPAs (in

CNY10,000) 95

Successive years of the domestic CPAs

2

offering auditing services

Names of the certified public accountants

Su Yang and Chen Zhifang

from the domestic CPAs

Has the CPAs been changed in the current period?

No

About the CPAs for auditing the internal control, financial consultant or sponsor appointed by the Company

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

The 17th meeting of the Seventh Board of Directors held on March 10, 2015 and 2014 Annual General Meeting held on

June 17, 2015 reviewed and approved the Proposal for Payment of the Audit Fee of Year 2014 and Renewal of the

Company’s Auditor for Year 2015, according to which the Company decided to renew engagement of Grant Thornton

Certified Public Accountants (Special General Partnership) as the auditor of the Company’s financial report and internal

control of year 2015 for a term of one year. During the reporting period, the Company paid audit fee amounting to CNY

650,000.00 for auditing the financial report and CNY 300,000.00 for auditing the internal control to Grant Thornton

Certified Public Accountants (Special General Partnership).

In the reporting period, the Company engaged Huachuang Securities Co., Ltd. as the sponsor for the project of non-public

issuing of A-shares with Huang Junyi and Li Xiumin as the sponsorship representatives. During the reporting period, the

Company totally paid the sponsorship fee amounting to CNY1.2 million.

X. Listing Suspension or Delisting Possibly to be Confronted with after Disclosure of

the Annual Report

Inapplicable

XI. Matters concerning Bankruptcy Reorganization

Inapplicable

XII. Significant Lawsuits and Arbitrations

Inapplicable

XIII. Penalty and Rectification

Inapplicable

XIV. Integrity of the Company and its Controlling Shareholder and Actual Controller

There existed neither court judgment in force remaining unimplemented nor big outstanding liabilities due in either AVIC

International Holdings Limited, the Company’s controlling shareholder or AVIC International, the Company’s actual

controller.

XV. Implementation of the Company’s Equit Incentive Plan, Employee Stock

Ownership Plan or other Employee Incentive Measures

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

XVI. Significant Related Transactions

1. Related Transactions Related with Day-to-Day Operations

Amount Proportio Transacti Has the

Principle Way of

Descripti of the n in the on quota approve

of pricing Price of settleme

Type of on of related amount as d quota

Related Relation of the related nt for the Market Disclosu Disclosu

related Related transacti of the approve been

Parties ship related transacti related price re date re index

parties Transacti on (in similar d (in exceede

transacti ons transacti

ons CNY transacti CNY10,0 d?

ons on

10,000) ons (%) 00)

Revenue Bank

Rainbow www.cni

Common from Sales of Market Inapplica account Inapplica March

Supermark 8,167.79 2.58% 12,000 No nfo.com.

controller principal goods price ble transfere ble 10, 2016

et cn

business nce

China

Revenue Bank

National www.cni

Eventual from Sales of Market Inapplica account Inapplica March

Aviation 48.58 0.01% 2,000 No nfo.com.

controller principal goods price ble transfere ble 10, 2016

Industry cn

business nce

Group Co.

Revenue Bank

Shennan www.cni

Common from Sales of Market Inapplica account Inapplica March

Holdings., 1,166.89 30.15% 5,000 No nfo.com.

controller principal goods price ble transfere ble 10, 2016

Ltd. cn

business nce

Revenue Bank

CATIC www.cni

Common from Property Market Inapplica account Inapplica March

Real 156.98 1.65% 180 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

Estate cn

business nce

Revenue Bank

www.cni

CATIC Common from Property Market Inapplica account Inapplica March

651.7 6.87% 700 No nfo.com.

Property controller principal lease price ble transfere ble 10, 2016

cn

business nce

Revenue Bank

CATIC www.cni

Common from Property Market Inapplica account Inapplica March

Securities, 113.96 1.20% 120 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

Co., Ltd. cn

business nce

Shenzhen

Revenue Bank

CATIC City www.cni

Common from Property Market Inapplica account Inapplica March

Developm 2.32 0.02% 10 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

ent Co., cn

business nce

Ltd.

Shenzhen Common Revenue Property Market Inapplica 27.74 0.29% 40 No Bank Inapplica March www.cni

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

CATIC controller from lease price ble account ble 10, 2016 nfo.com.

Huacheng principal transfere cn

Property business nce

Developm

ent Co.,

Ltd.

Shenzhen

CATIC City Revenue Bank

www.cni

Property Common from Property Market Inapplica account Inapplica March

37.63 0.40% 50 No nfo.com.

Developm controller principal lease price ble transfere ble 10, 2016

cn

ent Co., business nce

Ltd.

Shenzhen

CATIC

Guanlan Revenue Bank

www.cni

Real Common from Property Market Inapplica account Inapplica March

9.29 0.10% 20 No nfo.com.

Estate controller principal lease price ble transfere ble 10, 2016

cn

Developm business nce

ent Co.,

Ltd.

Shenzhen

CATIC

Revenue Bank

Changtai www.cni

Common from Property Market Inapplica account Inapplica March

Investment 48.04 0.51% 60 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

Developm cn

business nce

ent Co.,

Ltd.

Xi’an Revenue Bank

www.cni

Tianyue Common from Property Market Inapplica account Inapplica March

470 4.95% 500 No nfo.com.

Hotel Co., controller principal lease price ble transfere ble 10, 2016

cn

Ltd. business nce

Revenue Bank

Rainbow www.cni

Common from Property Market Inapplica account Inapplica March

Supermark 46.55 0.49% 60 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

et cn

business nce

Shenzhen

CATIC

Revenue Bank

Jiufang www.cni

Common from Property Market Inapplica account Inapplica March

Assets 36.36 0.38% 50 No nfo.com.

controller principal lease price ble transfere ble 10, 2016

Managem cn

business nce

ent Co.,

Ltd.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Shenzhen Revenue Bank

www.cni

CATIC City Common from Property Market Inapplica account Inapplica March

95.09 1.00% 120 No nfo.com.

Investment controller principal lease price ble transfere ble 10, 2016

cn

Co., Ltd. business nce

Shenzhen

CATIC Revenue Bank

www.cni

Theme Common from Property Market Inapplica account Inapplica March

35.33 0.37% 50 No nfo.com.

Real controller principal lease price ble transfere ble 10, 2016

cn

Estate Co., business nce

Ltd.

Ganzhou

CATIC

Bank

Real www.cni

Common Sales Property Market Inapplica account Inapplica March

Estate 102.99 1.51% 120 No nfo.com.

controller costs lease price ble transfere ble 10, 2016

Developm cn

nce

ent Co.,

Ltd.

Chengdu

CATIC

Bank

Real www.cni

Common Sales Property Market Inapplica account Inapplica March

Estate 0.12 0.01% 20 No nfo.com.

controller costs lease price ble transfere ble 10, 2016

Developm cn

nce

ent Co.,

Ltd.

Shenzhen

CATIC

Bank

Changtai www.cni

Common Sales Property Market Inapplica account Inapplica March

Investment 20.84 0.31% 40 No nfo.com.

controller costs lease price ble transfere ble 10, 2016

Developm cn

nce

ent Co.,

Ltd.

Jiujiang

CATIC City

Bank

Real www.cni

Common Sales Property Market Inapplica account Inapplica March

Estate 32.19 0.47% 50 No nfo.com.

controller costs lease price ble transfere ble 10, 2016

Developm cn

nce

ent Co.,

Ltd.

Jiujiang Bank

www.cni

CATIC City Common Sales Property Market Inapplica account Inapplica March

3.33 0.05% 20 No nfo.com.

Real controller costs lease price ble transfere ble 10, 2016

cn

Estate nce

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Developm

ent Co.,

Ltd.

Bank

Rainbow www.cni

Common Sales Market Market Inapplica account Inapplica March

Supermark 445.76 7.76% 500 No nfo.com.

controller costs expenses price ble transfere ble 10, 2016

et cn

nce

Administ Bank

Property www.cni

CATIC Common rative Market Inapplica account Inapplica March

manage 323.62 100.00% 300 No nfo.com.

Property controller expense price ble transfere ble 10, 2016

ment fee cn

s nce

Bank

Shenzh Admini

Comm accou www.

en strativ March

on Trainin Market Inappli nt Inappli cninfo

CATIC e 10.73 2.73% 0 No 10,

control g fees price cable transf cable .com.

Training expen 2016

ler erenc cn

Center ses

e

Shanghai Bank

Joint Procure www.cni

Watch Market Inapplica account Inapplica March

stock Costs ment of 13.21 0.01% 300 No nfo.com.

Industry price ble transfere ble 10, 2016

company materials cn

Co.,Ltd. nce

12,067.0

Total -- -- -- 22,310 -- -- -- -- --

4

Details of the rejection of the goods

Inapplicable

already sold in big amount

The 17th meeting of the Seventh Board of Directors and 2014 Annual General Meeting reviewed and

In case the total amount of the regular

approved the Proposal on Implementation of the Regular Related Transactions in 2014 and

related transaction incurred in the

Prediction of the Regular Related Transactions in 2015. It is predicted that the total amount of the

reporting period has been predicted based

related transactions between the Company and the Related Parties would not exceed CNY 440.20

on categories, state the actual

million in Year 2015 while the amount of the related transactions actually incurred in the reporting

implementation of the in the reporting

year was CNY 120.6703 million, which has not exceeded the predicted amount. Where the advances

period (if any)

paid to CATIC Property by the Company for the property management fee did not exceed CNY 3

million while the amount of the related transactions actually incurred was CNY 3.2361 million.

Cause of the big difference between the

transaction price and the market reference Inapplicable

price. (if applicable)

2. Related transactions concerning acquisition and sales of assets or equity

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

3. Related transactions concerning joint investment in foreign countries

Inapplicable

4. Current Associated Rights of Credit and Liabilities

Due from related parties

Newly

Amount

Does there increased Interest in the

Opening recovered in

exist amount in the reporting Ending

Related Causes of balance (in the reporting

Relationship non-operatio reporting Interest rate period balance (in

parties formation CNY10,000) period (in

n capital period (in CNY10,000)

CNY10,000)

occupancy? (in CNY10,000)

CNY10,000)

Rainbow Common

Loan No 213.44 9,511.83 8,923.99 801.28

Supermarket controller

Shennan

Common

Holdings., Loan No 764.01 1,365.26 1,412.08 717.19

controller

Ltd.

Ganzhou

CATIC

Common

Jiufang Loan No 0 28.96 28.96

controller

Commerce

Co., Ltd.

China

National

Eventual

Aviation Loan No 52.43 56.84 107.92 1.35

controller

Industry

Group Co.

Chengdu

CATIC Real

Common

Estate Loan No 0.79 0 0.79 0

controller

Developmen

t Co., Ltd.

Rainbow Common Shopping

No 30.8 23.67 0 56.31

Supermarket controller mall deposi

CATIC Common

Rent No 0 22.59 0 22.59

Property controller

Ganzhou

CATIC Common Rental

No 0 12.27 0 12.27

Jiufang controller deposit

Commerce

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Co., Ltd.

Chengdu

CATIC Real

Common Rental

Estate No 11.56 0 0 11.56

controller deposit

Developmen

t Co., Ltd.

Shenzhen

CATIC

Changtai Common Rental

No 5 0 0 5

Investment controller deposit

Developmen

t Co., Ltd.

Jiujiang

CATIC City

Common Rental

Real Estate No 0 5 0 5

controller deposit

Developmen

t Co., Ltd.

CATIC City

Property Common Rental

No 0 3.71 0 3.71

(Kunshan) controller deposit

Co., Ltd.

Influence of the related

rights of credit and

liabilities upon the

Inapplicable

Company’s operation

results and financial

position.

Due to related parties

Amount newly Amount repaid Interest

Opening increased in in the in the

Causes of Ending balance

Related Parties Relationship balance (in the reporting reporting Interest rate reporting

formation (in CNY10,000)

CNY10,000) period(in period(in period(in

CNY10,000) CNY10,000) CNY10,000)

CATIC Real Common Rent received

0 13.38 0 13.38

Estate controller in advance

Common

CATIC Property Rental deposit 0 47.2 0 47.2

controller

CATIC Real Common

Rental deposit 42.48 0 42.48

Estate controller

Shenzhen Common

Rental deposit 3.77 20.64 0 24.41

CATIC City controller

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Investment Co.,

Ltd.

CATIC

Common

Securities, Co., Rental deposit 18.74 0 18.74

controller

Ltd.

Shenzhen

CATIC City

Common

Property Rental deposit 0 9.79 0 9.79

controller

Development

Co., Ltd.

Shenzhen

CATIC

Huacheng Common

Rental deposit 0 7.38 0 7.38

Property controller

Development

Co., Ltd.

Shenzhen

CATIC Jiufang

Common

Assets Rental deposit 6.06 0 0 6.06

controller

Management

Co., Ltd.

Rainbow Common

Rental deposit 6 0 0 6

Supermarket controller

Chengdu CATIC

Real Estate Common

Rental deposit 11.46 0 9.81 1.65

Development controller

Co., Ltd.

Shenzhen

CATIC Building Common

Rental deposit 0 0.96 0 0.96

Technology Co., controller

Ltd.

Shenzhen

CATIC City Common

Rental deposit 0 0.4 0 0.4

Development controller

Co., Ltd.

AVIC

International Controlling

Loan 15,000 0 15,000 0

Holdings shareholder

Limited

Shenzhen Common

Rental deposit 22.17 0 22.17 0

CATIC Changtai controller

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Investment

Development

Co., Ltd.

Influence of the related rights of

credit and liabilities upon the

Inapplicable

Company’s operation results

and financial position.

5. Other Major Related Transactions

The 5th meeting of the Eighth Board of Directors held on January 19, 2016 reviewed and approved the Proposal on

Reneweing Financial Service Agreement with AVIC Finance Co., Ltd. For the detail, please refer to the Announcement on

the Resolutions of the 5th meeting of the Eighth Board of Directors 2016-005 and the Announcement on the Related

Transactions Involved in the Financial Service Agreement Renewed with AVIC Finance Co., Ltd. 2016-006 which were

disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn, The proposal shall not be

implemented until being reviewed and approved at the General Meeting.

For the project of non-public issuing of A-shares, the Company appointed CATIC Securities as the underwriter of the

project of non-public issuing and the underwriting fee amounting to CNY7.25 million to CATIC Securities. This matter was

reviewed and approved at the 3rd meeting of the Eighth Board of Directors held on November 25, 2015. For the detail,

refer to the Announcement on the Resolution of the 3rd meeting of the Eighth Board of Directors 2015-044 and the

Announcement on Conclusion of the Agreement for Underwriting of the A-shares Issued in a Non-public Way with

Huachuang Securities Co., Ltd. and CATIC Securities, Co., Ltd. and the Related Transaction 2015-045 published on

Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.

Inquiry concerning the provisional reports on major related transactions with the disclosing website.

Description of provisional Disclosure date of provisional Name of the website disclosing the

announcements announcements provisional announcements

Announcement on the Resolutions of the

5th meeting of the Eighth Board of January 20, 2016 www.cninfo.com.cn

Directors 2016-005

Announcement on the Related

Transactions Involved in the Financial

January 20, 2016 www.cninfo.com.cn

Service Agreement Renewed with AVIC

Finance Co., Ltd. 2016-006

Announcement on the Resolutions of the

3rd meeting of the Eighth Board of November 27, 2015 www.cninfo.com.cn

Directors 2015-044

Announcement on Conclusion of the

Agreement for Underwriting of the

November 27, 2015 www.cninfo.com.cn

A-shares Issued in a Non-public Way

with Huachuang Securities Co., Ltd. and

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

CATIC Securities, Co., Ltd. and the

Related Transaction 2015-045

There was no other major related transaction in the reporting period.

XII. Important Contracts and Implementation

1. Custody, Contacting and Leases

(1) Custody

Inapplicable

(2) Contracting

Inapplicable

(3) Leases

Inapplicable

2. Significant Guarantees

(1) Guarantees

In CNY 10,000

Outward guarantees Offerred by the Company and its Subsidiaries (excluding guarantee to the subsidiaries)

Date of the

Date of

announceme Implement Guarantee

Guarantee occurrence (date Actual amount Type of Guarantee

Names of Gurantees nt on the ation to related

line of agreement of guarantee guarantee period

guarantee status party?

execution)

line

Inapplicable

Total amount of outward

Total amount of outward guarantee

0 guarantee actually incurred in 0

approved in the report period (A1)

the report period (A2)

Total amount of outward guarantee Total ending balance of

already approved at the end of the 0 outward guarantee at the end 0

report period (A3) of the report period (A4)

Guarantees between the Company and its Subsidiaries

Date of the Guarantee Date of Actual amount Type of Guarantee Implement Guarantee

Names of Guarantees

announcem line occurrence (date of guarantee guarantee period ation to related

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

ent on the of agreement status party?

guarantee execution)

line

Shenzhen Harmony Guarantee

April 28,

World Watches Center 30,000 January 13, 2015 200 with joint 3 years No No

2014

Co., Ltd. responsibility

Shenzhen Harmony Guarantee

March 12, November 20,

World Watches Center 30,000 5,000 with joint 3 years No No

2015 2015

Co., Ltd. responsibility

Shenzhen Harmony Guarantee

March 12,

World Watches Center 30,000 December 2, 2015 6,000 with joint 3 years No No

2015

Co., Ltd. responsibility

Shenzhen Harmony Guarantee

March 12,

World Watches Center 10,000 December 2, 2015 10,000 with joint 3 years No No

2015

Co., Ltd. responsibility

Shenzhen FIYTA

Guarantee

Sophisticated March 12,

1,000 August 7, 2015 1,000 with joint 3 years No No

Timepieces Manufacture 2015

responsibility

Co., Ltd.

Guarantee

FIYTA (Hong Kong) March 12,

6,702.4 March 12, 2015 418.9 with joint 4 years No No

Limited 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12,

6,702.4 April 2, 2015 502.68 with joint 3 years No No

Limited 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12,

6,702.4 July 9, 2015 586.46 with joint 3 years No No

Limited 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12,

6,702.4 August 4, 2015 837.8 with joint 3 years No No

Limited 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12, September 14,

6,702.4 1,340.48 with joint 3 years No No

Limited 2015 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12, September 15,

6,702.4 1,005.36 with joint 3 years No No

Limited 2015 2015

responsibility

Guarantee

FIYTA (Hong Kong) March 12, September 16,

6,702.4 1,926.94 with joint 3 years No No

Limited 2015 2015

responsibility

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Guarantee

FIYTA (Hong Kong) March 1,

12,567 July 11, 2013 4,189 with joint 5 years No No

Limited 2013

responsibility

Guarantee

FIYTA (Hong Kong) March 1,

12,567 August 5, 2013 4,189 with joint 5 years No No

Limited 2013

responsibility

Guarantee

FIYTA (Hong Kong) March 1,

12,567 January 6, 2014 1,675.6 with joint 5 years No No

Limited 2013

responsibility

Guarantee

FIYTA (Hong Kong) March 1,

12,567 January 27, 2014 837.8 with joint 5 years No No

Limited 2013

responsibility

Guarantee

FIYTA (Hong Kong) April 28,

12,567 March 3, 2014 1,675.6 with joint 5 years No No

Limited 2014

responsibility

Guarantee

March 12,

FIYTA Holdings Ltd. 40,000 October 23, 2015 5,000 with joint 3 years No No

2015

responsibility

Total guarantee quota to the Total amount of guarantee to

subsidiaries approved in the reporting the subsidiaries actually

157,916.8 33,618.62

period (B1) incurred in the reporting period

(B2)

Total balance of actual

Total guarantee quota to the

guarantee to the subsidiaries

subsidiaries approved at the end of the 250,751.8 46,385.62

at the end of the reporting

reporting period (B3)

period (B4)

Subsidiary-Subsidiary Guarantees

Date of the

Date of

announcem Implement Guarantee

Guarantee occurrence (date Actual amount Type of Guarantee

Names of Guarantees ent on the ation to related

line of agreement of guarantee guarantee period

guarantee status party?

execution)

line

Inapplicable

Total guarantee quota to the Total amount of guarantee to

subsidiaries approved in the reporting the subsidiaries actually

0 0

period (C1) incurred in the reporting period

(C2)

Total guarantee quota to the Total balance of actual

subsidiaries approved at the end of the 0 guarantee to the subsidiaries 0

reporting period (C3) at the end of the reporting

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

period (C4)

The Company’s total guarantee (i.e. total of the first three main items)

Total amount of guarantee

Total guarantee quota approved in the

157,916.8 actually incurred in the 33,618.62

reporting period (A1+B1+C1)

reporting period (A2+B2+C2)

Total guarantee quota already Total balance of the actual

approved at the end of the reporting 250,751.8 guarantee at the end of the 46,385.62

period (A3+B3+C3) reporting period (A4+B4+C4)

Proportion of the actual guarantees in the Company’s net assets

20.17%

(namely A4+B4 + C4)

Including:

Amount of guarantees offered to the shareholders, actual controller and

0

its related parties (D)

Amount of guarantee for liabilities directly or indirectly offered to the

0

guarantees with the asset-liability ratio exceeding 70% (E)

Guarantee with total amount exceeding 50% of the net assets (F) 0

Total amount of the aforesaid three guarantees (D+E+F) 0

For the guarantee not yet due, guarantee responsibility incurred in the

reporting period or description of the possible related discharge duty (if Inapplicable

any)

Note to the outward guarantee against the established procedures (if

Inapplicable

any)

Description of the guarantee with complex method

Inapplicable

(2) Outward guarantee against law

Inapplicable

3. Entrusting other Person to Manage the Cash Assets

(1) Finance Management on Commission

Inapplicable

(2) Entrusted Loan

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

4. Other Major Contracts

Inapplicable

XVIII. Notes to Other Signficiant Events

1. About Non-public Issuing of A-shares

The 18th meeting of the Seventh Board of Directors held on April 16, 2015 reviewed and approved the Proposal on the

Plan for Non-public Issuing of A-shares to the Specified Investors and other relevant proposal(s). For the detail, refer to

the Announcement on the Resolutions of the 18th Meeting of the Seventh Board of Directors. 2015-008;

On June 2, 2015,the Company received the Official Reply to some Issues concerning Non-public Issuing of A-shares by

FIYTA Holdings Ltd. (GUO ZI CHAN QUAN [2015] No. 415 from the State-owned Assets Supervision and Administration

Commission of the State Council. For the detail, refer to the Announcement on the Official Reply of the State-owned

Assets Supervision and Administration Commission of the State Council to some Issues concerning Non-public Issuing

2015-08 disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.

2014 Annual General Meeting held on June 17, 2015 reviewed and approved the Proposal on the Plan for Non-public

Issuing of A-shares to the Specified Investors and other relevant proposals, for the detail, refer to the Announcement on

the Resolution of 2014 Annual General Meeting 2015-020 disclosed on Securities Times, Hong Kong Commercial Daily

and www.cninfo.com.cn.

On July 1, 2015, the Company received the Notice of China Securities Regulatory Commission on Accepting the

Application for Administrative Licensing issued by China Securities Regulatory Commission (CSRC) (No. 152013). For

the detail, refer to the Announcement on Accepting Application for Non-public Issuing of A-shares by China Securities

Regulatory Commission 2015-021 disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn;

On September 8, 2015, the Company received the Notice on the Feedback Opinions of China Securities Regulatory

Commission on Examination of the Administrative Licensing Project (No. 152013). For the detail, refer to the

Announcement on the Receiving of the Notice on the Feedback Opinions of China Securities Regulatory Commission on

Examination of the Administrative Licensing Project 2015-034 disclosed on Securities Times, Hong Kong Commercial

Daily and www.cninfo.com.cn;

The Company and the relevant intermediary carefully studied and implemented the Feedback Opinions, supplemented

the materials and submitted reply to the questions according to the requirements of the Feedback Opinions. For the detail,

refer to the Announcement on the Reply to the Feedback Opinoins on the Application for Non-public Issuing of A-shares

2015-035, disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn;

The 17th meeting of the Seventh Board of Directors and 2014 Annual General Meeting reviewed and approved the Profit

Distribution Plan for Year 2014. According to the relevant provisions of the Rules for Implementation on Non-public

Issuing of Listed Companies, etc., if the Company had ex-rights/ex-dividend events such as dividend distribution, bonus

shares distribution, conversion of capital reserve into share capital, etc., during the period from the pricing benchmark to

the issuing day, the issuing price would be adjusted correspondingly. Within the authorization by the Board of Directors,

the Company made adjustment of the plan of the non-public issuing of A-shares. For the detail, refer to the

Announcement on Adjustment of the Issuing Price and Issuing Volume of the A-shares to be Issued in a Non-public Way

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

2015-036, disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.

In compliance with the Feedback Opinions, the Company disclosed the Announcement on the Indication of Risk of

Diluting the Immediate Returns from the Non-public Issuing and the Measures the Company Intends to Take 2015-037

and the Announcement on the Penalty Given or Supervision Measures Taken by the Securities Regulatory Authority and

the Stock Exchange in the Past Five Years 2015-038;

On October 30, 2015, the application for non-public issuing of A-shares was approved by CSRC Securities Issuance

Examination Committee. For the detail, refer to the Announcement on Appoval of the Application for Non-public Issuing of

A-shares by CSRC Securities Issuance Examination Committee, 2015-042;

On November 17, 2015, the Company received the Official Reply to FIYTA Holdings Ltd. for Approval of Non-public

Issuing of Shares of (ZHENG JIAN XU KE [2015]No. 2588). For the detail, refer to the Announcement on Approval of the

Application for Non-public Issuing of A-shares by China Securities Regulatory Commission 2015-043;

On January 15, 2016, the Company’s A-shares issued in a non-public way got listed with Shenzhen Stock Exchange and

the Company published the announcement for listing and the announcement on the related commitments. For the detail,

refer to the Report on the Non-public Issuing and Announcement on Listing 2016-003 and the Announcement on the

Commitments for the Shares Issued in a Non-public Way 2016-004.

2. Subscription of the Framework Agreement on Outward Investment

The 19th meeting of the Seventh Board of Directors held on June 4, 2015 reviewed and approved the Proposal on

Subscription of the Framework Agreement on Outward Investment according to which the management was authorized to

conclude a framework agreement with Beijign Watch Plant Co., Ltd. for establishing Beibiao Watch Industry (Beijing) Co.,

Ltd. by joint venture. For the detail, refer to the Announcement on Subscription of the Framework Agreement on Outward

Investment 2015-016.

3. Amendment of Articles of Association

The 18th meeting of the Seventh Board of Directors held on April 16, 2015 and 2014 Annual General Meeting held on

June 17, 2015 reviewed and approved the Proposal on Amendment of the Articles of Association. For the detail, refer to

the Announcement on the Resolutions of the 18th meeting of the Seventh Board of Directors and the Announcement on

the Resolutions of 2014 Annual General Meeting 2015-020, disclosed on Securities Times, Hong Kong Commercial Daily

and www.cninfo.com.cn

The 5th meeting of the Eighth Board of Directors held on January 19, 2016 reviewed and approved the Proposal on

Amendment of the Articles of Association. The proposal shall not be implemented until being reviewed and approved at

the general meeting. For the detail, refer to the Announcement on the Resolutions of the 5th meeting of the Eighth Board

of Directors 2016-005 disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn.

4. Redemption of Company Bonds

The 4th meeting of the Eighth Board of Directors held on January 8, 2016 reviewed and approved the Proposal on the

Issuer to Exercise the Redemption Option for “12 YA DA ZHAI” Company Bond, for which the Company published

indicative announcements repsectively on January 13, 2016, January 22, 2016, February 2, 2016 and February 23, 2016.

For the detail, refer to the Announcement on Giving up the Option of Adjusting High the Nominal Interest Rate and the

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Investors’ Redemption Option & Exercising the Issuer’s Redemption Option for “12 YA DA ZHAI” Company Bond

2016-0016, the First Indicative Announcement on Redemption & Delisting of “12 YA DA ZHAI” Company Bond 2016-002,

the Second Indicative Announcement on Redemption & Delisting of “12 YA DA ZHAI” Company Bond 2016-010, the Third

Indicative Announcement on Redemption & Delisting of “12 YA DA ZHAI” Company Bond 2016-011 and the Fourth

Indicative Announcement on Redemption & Delisting of “12 YA DA ZHAI” Company Bond 2016-012, which were all

disclosed on Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn. Implementation of the redemption

of the company bonds was completed on February 29, 2016.

XIX. Significant Events of the Company’s Subsidiaries

Inapplicable

XX. Social Responsibility

The Social Responsibility Report was published on www.cninfo.com.cn on March 10, 2016.

Do the Company and its subsidiaries belong to the industry of serious pollution as specified by the environmental

protection authority of the state?

No

Enterprise’s Social Responsibility Report

Does it contain Report disclosure standards

Does it contain Does it contain

information

Enerprise information information

concerning

property concerning concerning the Domestic standards International standards

corporate

environment society

governance

State-owned

Inapplicable Yes yes yes Others

enterprise

Notes to specific circumstances

1. Has the Company been certified for the Environment

Yes

Management System Certification (ISO14001)

2. Amount of investment in the environmental protection in

0

the reporting year, in CNY 10,000

3. Performances of the emission reduction of “waste gas,

Inapplicable

waste water and waste residue

4. Investment for improving employees’ personal

knowledge and techniques so as to upgrade employees’ 359.19

career development ability, in CNY10,000

5. Social charitable donations (fund, goods and materials

30

and free professional services), in CNY 10,000

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

XXI. Company Bond Related Information

Is there any company bond which was issued in public and got listed with the stock exchange but has not been honored

from the date of approval of the annual report to the expiry of the bond.

No.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 6 Change of Shares and Particulars about

Shareholders

I. Change of Shares

1. Change of Shares

In shares

Before the change Increase / Decrease (+/ -) After the change

Shares

Proportion New Bonus converted Proportion

Quantity Others Sub-total Quantity

(%) issuing shares from (%)

reserve

I. Restricted shares 49,733 0.01% 0 0 0 0 0 49,733 0.01%

1. Shares held by the state 0 0.00% 0 0 0 0 0 0 0.00%

2. State corporate shares 0 0.00% 0 0 0 0 0 0 0.00%

3. Other domestic shares 49,733 0.01% 0 0 0 0 0 49,733 0.01%

Including: Domestic corporate

0 0.00% 0 0 0 0 0 0 0.00%

shares

Shares held by domestic

49,733 0.01% 0 0 0 0 0 49,733 0.01%

natural persons

4、Foreign invested shares 0 0.00% 0 0 0 0 0 0 0.00%

Including: Foreign corporate

0 0.00% 0 0 0 0 0 0 0.00%

shares

Shares held by foreign

0 0.00% 0 0 0 0 0 0 0.00%

natural persons

392,718,13 392,718,1

II. Unrestricted shares 99.99% 0 0 0 0 0 99.99%

7 37

311,070,13 311,070,1

1. CNY ordinary shares 79.20% 0 0 0 0 0 79.20%

7 37

2. Foreign invested shares listed 81,648,00

81,648,000 20.79% 0 0 0 0 0 20.79%

in Mainland China 0

3、Foreign invested shares listed

0 0.00% 0 0 0 0 0 0 0.00%

abroad

4. Others 0 0.00% 0 0 0 0 0 0 0.00%

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

392,767,87 392,767,8

III. Total shares 100.00% 0 0 0 0 0 100.00%

0 70

Causes of Change of Shares

The foregoing change of the shares is the situation at the end of the reporting period. In 2015, the Company issued

45,977,011 shares in a non-public way which got listed with Shenzhen Stock Exchange on January 15, 2016. The new

shares were not allowed to be listed for trading or assigned within 12 months from the first day of listing. Ended the day of

disclosing the Report, the Company had totally 438,744,881 shares, including 46,026,744 restricted shares and

392,718,137negotiable shares.

Approval of Change of the Shares

The Company held the 18th meeting of the Seventh Board of Directors and 2014 Annual General Meeting respectively on

April 16, 2015 and June 17, 2015. The meetings reviewed and approved the proposal on non-public issuing of A-shares to

the designated investors.

The application for non-public issuing of A-shares was approved by CSRC Securities Issuance Examination Committee

on October 30, 2015; on November 17, 2015, the Company received Official Reply to FIYTA Holdings Ltd. on Approval for

Non-public Issuing ( ZHENG JIAN XU KE [2015] No. 2588 on November 17, 2015, according to which the Company was

approved to issue new shares with size not exceeding 46,911,649 shares.

Transfer in Change of Shares

Inapplicable

Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value

per share attributable to the common stockholders in the past year and the latest period

In the reporting period, the Company completed the non-public issuing of A-shares in the reporting period. At the end of

the reporting period, the EPS and ROE were calculated based on the weighted average.

Weighted average EPS

ROE (%) Basic EPS (CNY/share) Diluted EPS (CNY/share)

2015 2014 2015 2014 2015 2014

7.24% 8.62% 0.3099 0.3707 0.3099 0.3707

Other information the Company considers it necessary or required by the securities regulatory authority to be disclosed.

Inapplicable

2. Change of Restricted Shares

In shares

Number of Number of

Number of Number of Date of

restricted restricted

restricted shares releasing of

shares shares at the Causes of

Shareholders shares at the released from trading

increased in the end of the restriction

beginning of the trading restriction

reporting period reporting period

reporting period restrictions

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Golden Eagle Raised capital

Asset from non-public January 15,

0 0 4,674,329 4,674,329

Management issuing of 2017

Co.,Ltd A-shares

Raised capital

Caitong Fund

from non-public January 15,

Management 0 0 12,590,027 12,590,027

issuing of 2017

Co., Ltd.

A-shares

Raised capital

Sws Mu Fund

from non-public January 15,

Management 0 0 8,429,118 8,429,118

issuing of 2017

Co., Ltd

A-shares

Raised capital

Xizang

from non-public January 15,

Investment Co., 0 0 4,976,551 4,976,551

issuing of 2017

Ltd.

A-shares

MANULIFE TEDA Raised capital

Fund from non-public January 15,

0 0 15,306,986 15,306,986

Management Co, issuing of 2017

Ltd. A-shares

Total 0 0 45,977,011 45,977,011 -- --

II. Issuing and Listing

1. Issuing of securities (with preferred stock exclusive) in the reporting period

Number of

Description of Issuing price shares

Issuing Trading termination

stock and the Issuing date (or interest Listing date approved to be

quantity date

derivatives rate) listed for

trading

Types of stock

A-shares issued

December 22, January 15,

in a non-public 13.05 45,977,011 45,977,011

2015 2016

way

Convertible company bonds, convertible company bonds for separated trading, debentures

Other derivatives

Note to the issuing of securities (with preferred shares exclusive) in the reporting period

The Company held the 18th meeting of the Seventh Board of Directgors and 2014 Annual General Meeting respectively on

April 16, 2015 and June 17, 2015. The meetings reviewed and approved the Proposal on the Plan for Non-public Issuing

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

of A-shares to the Specified Investors, etc., according to which the Company planned to issue in a non-public way

A-shares to no more than 10 (with 10 inclusive) specified investors with the total raised capital not exceeding CNY 600

million, which would be applied for four projects, including the project of launching new FIYTA watches and supplement

the working capital. The application for non-public issuing of A-shares was reviewed and approved by CSRC Securities

Issuance Examination Committee (CSIEC) on October 30, 2015. On November 17, 2015, the Company received Official

Reply to FIYTA Holdings Ltd. on Approval for Non-public Issuing ( ZHENG JIAN XU KE [2015] No. 2588 which authorized

the Company to issue no more than 46,911,649 new shares in non-public way. The actual number of A-shares actually

issued in the non-public issuing activity was 45,977,011 shares and the raised capital amounted to CNY 599 million. After

deduction of the issuing costs, the net raised capital amounting to CNY583 million was remitted to the bank account

designated by the Company on December 18, 2015. Grant Thornton Certified Public Accountants (Special General

Partnership) issued the Capital Verification Reports ZHI TONG YAN ZI (2015) No. 441ZC0653, ZHI TONG YAN ZI (2015)

No. 441ZC0652 respectively for the raised capital. The A-shares issued in a non-public way were registered for listing on

January 15, 2016 and locked for 12 months. The Company has published the Announcement of Commitment concering

the Shares Issued in a Non-public Way.

2. Changes of the Company’s Total Shares and the Structure of Shareholders as well as the

Structure of Assets and Liabilities

Ended December 22, 2015, the Company completed the work of non-public issuing of 45,977,011 A-shares to the

designated investors. Upon completion of the issuing, the Company increased the registered capital by CNY 45,977,011

with the total registered capital turning to be CNY 438,744,881, and increased the capital reserve by CNY 536,947,362.62.

The proportion of the shares held by the controlling shareholder decreased from 41.49% to 37.15%. The Company’s

asset-liability ratio before the non-public issuing was 55.27% and that after the non-public issuing was 45.77%. The new

shares got listed with Shenzhen Stock Exchange on January 15, 2016.

3. About the existing employees’ shares

Inapplicable

III. Shareholders and Actual Controlling Shareholder

1. Number of Shareholders and Shareholding

In shares

Total preference

shareholders with

Total common Total preference

the voting power

shareholders at shareholders with

Total common not recovered at

the end of the the voting power

shareholders in the end of the

33,608 month before 34,695 recovered at the 0 0

the reporting month before the

before the date of end of the reporting

period day of disclosing

disclosing the period (if any)

the annual report

annual report (Refer to Note 8)

(if any) (Refer to

Note 8)

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Shares held by the shareholders holding over 5% shares or the top ten shareholders

Shares Number of Pledging or freezing

held by the Quantity at Increase/d Number of the

Shares held by the top ten the end of ecrease in the non-restrict

Shareholder names top ten sharehold the the restricted ed shares

shareholders reporting reporting shares Status of the

ers held Quantity

period period held shares

(%)

AVIC International State-owned 162,977,3 162,977,32

41.49% 0 0

Holdings Limited corporate 27 7

China Life Insurance

Limited – Dividend – Domestic

Dividend to non-state-owned 1.06% 4,157,800 4,157,800 0 4,157,800

Individuals corporate

--005L-FH002 SHEN

ESSENCE

INTERNATIONAL

SECURITIES Foreign corporate 0.66% 2,610,000 610,000 0 2,610,000

(HONG KONG)

LIMITED

Domestic natural

Dai Wen 0.51% 2,009,321 0 0 2,009,321

person

CMS (HK) Foreign corporate 0.39% 1,522,341 65,812 0 1,522,341

Domestic natural

Zhou Weixian 0.36% 1,394,600 1,394,600 0 1,394,600

person

Domestic natural

Li Yunming 0.33% 1,314,100 1,314,100 0 1,314,100

person

Yangzhou Municipal State-owned

0.30% 1,161,639 1,161,639 0 1,161,639

Mining Bureau corporate

Shanghai Kewen

Investment

Domestic

Management Co.,

non-state-owned 0.29% 1,138,000 1,138,000 0 1,138,000

Ltd. – KEWEN T KE

corporate

No. 3 Investment

Fund

Domestic natural

Zeng Xialan 0.28% 1,099,080 1,099,080 0 1,099,080

person

About the fact that a strategic investor or

ordinary corporate became one of the top

Inapplicable

ten shareholders due to placement of new

shares (if any) (Refer to Note 3)

Explanation on associated relationship or The Company has found neither affiliation among the aforesaid shareholders nor concerted actor as

consistent action of the above specified in the Measures for Administration of Information on the Shareholder Equity Change of

shareholders Listed Companies.

Shareholding of top 10 shareholders of unrestricted shares

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Quantity of unrestricted shares held at the end of the Share type

Shareholder’s Name reporting period

Share type Quantity

AVIC International Holdings Limited 162,977,327 A-shares 162,977,327

China Life Insurance Limited – Dividend –

Dividend to Individuals --005L-FH002 4,157,800 A-shares 4,157,800

SHEN

ESSENCE INTERNATIONAL

2,610,000 B-shares 2,610,000

SECURITIES (HONG KONG) LIMITED

Dai Wen 2,009,321 A-shares 2,009,321

CMS (HK) 1,522,341 B-shares 1,522,341

Zhou Weixian 1,394,600 A-shares 1,394,600

Li Yunming 1,314,100 A-shares 1,314,100

Yangzhou Municipal Mining Bureau 1,161,639 A-shares 1,161,639

Shanghai Kewen Investment Management

Co., Ltd. – KEWEN T KE No. 3 Investment 1,138,000 A-shares 1,138,000

Fund

Zeng Xialan 1,099,080 A-shares 1,099,080

Explanation to the associated relationship

or consistent action among the top 10

The Company has found neither affiliation among the aforesaid shareholders nor concerted actor as

shareholders of non-restricted negotiable

specified in the Measures for Administration of Information on the Shareholder Equity Change of

shares and that between the top 10

Listed Companies.

shareholders of non-restricted negotiable

shares and top 10 shareholders.

Note to the top 10 shareholders involved in

margin financing & securities lending (if Inapplicable

any) (Refer to Note 4)

Did the top ten common shareholders or top ten shareholders of unrestricted ordinary shares conduct contractual

repurchase during the reporting period?

No

2. Controlling Shareholder

Nature of the controlling shareholder: State-owned holding directly under the central government

Type of the controlling shareholder: corporate

Name of the Controlling Legal Representative

Date of incorporation Organization code Principal business activities

Shareholder /Leader

Investing and initiating entities

(separate application is to be

submitted for a specific

AVIC International Holdings project); domestic commerce,

Wu Guangquan June 20, 1997 27935122-9

Limited supply and sales of goods and

materials (excluding the goods

for exclusive sale, under

special control and

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

monopolized goods); import

and export (excluding the

goods forbidden by law,

administrative rules and

regulations, decision of the

State Council; the restrictive

goods is not allowed for

operation until permit is

granted)

Equity in other domestic and

foreign listed companies held by

Holding 22.35% equity in CATIC Real Estate Co., Ltd. (CATIC Real Estate000043), 73.87% equity in AVIC

the controlling shareholder by

International Maritime Holdings Limited (listed in Singapore) and 20.81% equity in Tianma Micro-electronics

means of control and mutual

Co., Ltd. (SHEN TIANMA A000050).

shareholding in the reporting

period

Change of the controlling shareholder in the reporting period

Inapplicable

3. Actual Controller

Nature of the actual controller: State-owned assets regulatory agency directly under the central government

Type of the actual controller: corporate

Legal

Name of the Actual Controller Representative Date of incorporation Organization code Principal business activities

/Leader

International aviation, trading and

logistic, retail and high-end

CATIC International Holdings

Wu Guangquan April 12, 1983 10000099-9 consumption goods, real estate and

Limited

hotel, electronics and hi-tech,

resource development, etc.

Equity in other domestic and

foreign listed companies held by Holding 37.50% equity in AVIC International Holdings Limited (HK.0161) and 5 .56%equity in Tianma

the actual controler by means of Micro-electronics Co., Ltd. (SHEN TIANMA A000050).

control and mutual shareholding in

the reporting period

Change of the actual controller in the reporting period

Inapplicable

Block Diagram of the Ownership and Control Relations between the Company and the Actual Controller

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

The actual controller controls the Company by means of trust or managing the assets in other ways:

Inapplicable

4. Other Corporate Shareholder Holding over 10% of the Company’s Shares

Inapplicable

5. Shareholding Reduction Restriction on the Controlling Shareholder, the Actual Controller, the

Reorganizing Party and other Commiting Party

Inapplicable

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 7 About the Preferred Shares

Inapplicable

Chapter 8 Directors, Supervisors, Senior Executives and Staff

I. Change in Shares Held by Directors, Supervisors and Senior Executives

Number of Volume of Volume of Number of

shares shares shares shares

Other

Starting Expiry acquired at acquired sold held at end

Office increase/d

Names Positions Gender Age date of date of end of the during the during the of the

Status ecrease

tenure tenure reporting reporting reporting reporting

(shares)

period(sha period(sha period(sha period

res) res) res) (shares)

Diao September September

Chairman In office Male 53 0 0 0 0 0

Weicheng 28, 2015 28, 2018

Xu

Managing September September

Dongshen In office Male 50 0 0 0 0 0

Director 28, 2015 28, 2018

g

Wang August 31, August 31,

Director In office Male 50 0 0 0 0 0

Mingchuan 2015 2018

August 31, August 31,

Liu Aiyi Director In office Male 44 0 0 0 0 0

2015 2018

Zhong August 31, August 31,

Director In office Male 40 0 0 0 0 0

Sijun 2015 2018

August 31, August 31,

Cao Zhen Director In office Female 45 0 0 0 0 0

2015 2018

Zhang

Independe August 31, August 31,

Hongguan In office Male 60 0 0 0 0 0

nt Director 2015 2018

g

Zhang Independe August 31, August 31,

In office Male 50 0 0 0 0 0

Shunwen nt Director 2015 2018

Independe August 31, August 31,

Wang Yan In office Male 59 0 0 0 0 0

nt Director 2015 2018

Sui Yong Chairman In office Male 58 August 31, August 31, 0 0 0 0 0

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

of the 2015 2018

Supervisor

y

Committee

August 31, August 31,

Chen Zhuo Supervisor In office Male 40 0 0 0 0 0

2015 2018

Tang August 31, August 31,

Supervisor In office Male 55 0 0 0 0 0

Boxue 2015 2018

Deputy September September

Chen Libin In office Male 52 0 0 0 0 0

GM 28, 2015 28, 2018

Lu Deputy September September

In office Male 55 66,311 0 0 0 66,311

Bingqiang GM 28, 2015 28, 2018

Deputy September September

Du Xi In office Male 41 0 0 0 0 0

GM 28, 2015 28, 2018

Deputy

GM, September September

Lu Wanjun In office Male 49 0 0 0 0 0

Director, 28, 2015 28, 2018

secretary

Hu Chief September September

In office Male 52 0 0 0 0 0

Xinglong accountant 28, 2015 28, 2018

Huang September June 5,

Director Retired Male 42 0 0 0 0 0

Yongfeng 10, 2012 2015

Total -- -- -- -- -- -- 66,311 0 0 0 66,311

II. Change of Directors, Supervisors and/or Senior Executives

Names Office Taken Type Date Cause

Mr. Huang applied for resigning the post of director

of the Company and member of the Strategy

Huang 2015 年 06 月 05

Director Resignment Committee and the Nomination, Remuneration and

Yongfeng 日

Assessment Committee. After the resignment, Mr.

Huang no longer held any post in the Company

At the 20th meeting of the Seventh Board of Directors

New August 31, and 2015 1st Extraordinary General Meeting, Ms.

Cao Zhen Director

appointment 2015 Cao was elected director of the Eighth Board of

Directors.

III. Posts Holding

Professional Background, CV and Major Duties of Directors, Supervisors and Senior Executives in Office

Mr. Diao Weicheng, born in June, 1963, research fellow senior engineer, bachelor of physics of Sun Yat-sen University,

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

MBA and PhD of management science and engineering of Tongji University. Mr. Diao is a member of the Party Leadership

Group and deputy general manager of CATIC International Holdings Limited, the chairman of Rainbow Supermarket Co.,

Ltd. He used to be the general manager of China National Aero-technology Import & Export Corp. Beijing Co., deputy

general manager of China National Aero-technology Import & Export Corp., director, deputy general manager and a

member of the Party Committee of Shenzhen Pengji Holdings Co., Ltd. and deputy general manager of Shun Yip

Holdings Company Limited.

Mr. Xu Dongsheng, born in April 1966 research fellow senior economist, MBA of Tongji University. and PhD of Beijing

University of Aeronautics & Astronautics. He is now the managing director of the Company, a deputy of the 6th Session of

People’s Congress of Shenzhen Municipality, vice president of China Timepieces Association and chairman of Shenzhen

Timepieces Association. Mr. Xu used to the secretary of CYL Committee of CATIC Shenzhen Company Limited, GM of

the Collective Life Service Co., Ltd. of Shenzhen CATIC Enterprise Group, vice secretary of the discipline committee,

manager and president assistant of the supervision and audit department of CATIC Shenzhen Company Limited.

Mr. Wang Mingchuan, born in December 1966, senior accountant, master of management engineering of Tongji University.

Mr. Wang is a director of the Company, vice chief accountant of CATIC International Holdings Limited, chief accountant of

CATIC Shenzhen Company Limited, director of Tianma Microelectronics Co., Ltd., director of CATIC Real Estate Co., Ltd.

and director of Rainbow Supermarket Co., Ltd. He used to be a financial supervisor of the finanical division of Chengdu

Engine Company, manager of the financial department of Shenzhen Shenrong Engineering Plastic Company, manager of

the comprehensive management department and chief financial officer of Shenzhen CATIC Trading Co., Ltd., deputy

manager of the financial and audit department, deputy manager and manager of the financial department and vice chief

accountant of CATIC Shenzhen Company Limited.

Mr. Liu Aiyi, born in February, 1972, senior administrator, master of public relations management of Peking University. Mr.

Liu is the director of the human resource department of AVIC International Holdings Limited and director of Tianma

Micro-electronics Co., Ltd. and director of CATIC Real Estate Co., Ltd. He used to be the senior business manager of the

human resource department, chief of the division of leading cadres of the human resource department of China Aviation

Industry Corporation I and chief of the division of senior executives & talents of the human resource department of China

National Aviation Industry Group Co.

Mr. Zhong Sijun, born in December 1976, economist, master of management of Northwestern Polytechnical University. Mr.

Zhong is the secretary of AVIC International Holdings Limited, director of CATIC Real Estate Co., Ltd., director of

Rainbow Supermarket Co., Ltd. and director of Tianma Micro-electronics Co., Ltd. Mr. Zhong used to a deputy

supervisor of the Operation Management Department of AVIC International Holdings Limited, the secretary of the board of

Shenzhen CATIC Hotel Management Co., Ltd. and the secretary of the board of Shanghai Tianma Microelectronics Co.,

Ltd.

Ms. Cao Zhen, born in October 1971, born in October, 1971, medium-rank journalist, Bachelir of Artis of Jiangxi Normal

University, EMBA of China Europe International Business School. Ms. Cao is the manager of the enterprise culture

department of CATIC International Holdings Limited, a supervisor of CATIC Shenzhen Company Limited, a supervisor of

CATIC Real Estate Co., Ltd. She used to be the assistant to GM of CATIC Shenzhen Company Limited, the editor-in-chief

of AVIC News of CATIC Shenzhen Company Limited,, the manager of the Administration and Management Department of

CATIC Shenzhen Company Limited and the secretary of the board of CATIC Shenzhen Company Limited.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Mr. Zhang Hongguang, born in March 1956, senior engineer, bachelor of light industry machinery of Dalian Polytechnic

University. He is now an independent director of the Company, vice president of China Timepieces Association. He used

to be GM of Shenzhen Qixin Construction Group, deputy GM of Shenzhen Zhongyin Industrial Co., Ltd., manager of

Shenzhen Xinghua Co., Ltd. and deputy chief of the education department of the Ministry of Light Industry.

Mr. Zhang Shunwen, born in May, 1966, senior accountant, a CPA, and master of Zhongnan University of Economics and

Law. He is now an independent director of the Company, a partner of Lixin Certified Public Accountants (special general

partnership), an expert member of the Third Assessment Committee of Guangdong Senior Accountants, vice president of

Shenzhen Service Trade Association, practicing tutor of College of Economics of Shenzhen University, independent

director of Shenzhen Gongjin Electronics Co., Ltd., AVIC Sanxin Co., Ltd. and Shenzhen Special Economic Zone Real

Estate&Properties (Group).Co.,Ltd. He used to be a vice president of Shenzhen Association of CPAs and a member of

CPPCC of Shenzhen Municipality.

Mr. Wang Yan, born in February 1957 senior economist, master of business administration of State University of New

York. He is now an independent director of the Company, professor of Intellectual Property Academy of South China

University of Technology, deputy director of South China Training Base of the State Intellectual Property Bureau,

independent director of Shenzhen Maxonic Automation Control Co., Ltd. He used to be assistant to the director of the

Management Department of the State Intellectual Property Bureau, chief economist of the domestic listing company of

China Merchants Group (China Merchants Harbor Service), senior executive of First State China Fund Management Co.,

Ltd., associate professor of Southwest University of Political Science & Law and deputy director of Shenzhen Intellectual

Property Bureau.

Mr. Sui Yong, born in January 1958, senior accountant, bachelor of management engineering of Beijing University of

Aeronautics & Astronautics. He is the Chairman of the Supervisory Committee of the Company, deputy GM of CATIC

Shenzhen Company Limited. He used to be deputy manager and manager of the financial department, manager of the

settlement center, manager of the financial department, vice chief accountant and chief accountant of China National

Aero-Technology Import & Export Corporation Shenzhen Company and chairman of the supervisory committee of CATIC

Real Estate Co., Ltd.

Mr. Chen Zhuo, born in September 1976, accountant, MBA of Wuhan University, on-campus EMBA of China Europe

International Business School. He is now a supervisor of the Company and manager of the strategy and information

department. He used to be deputy manager of the strategy and information department of the Company, deputy GM and

manager of the financial information department of FIYTA Sales Co., Ltd. and securities affairs representative of the

Company.

Mr. Tang Boxue, born in July 1961, accountant, graduated from university. He is now a supervisor and the manager of

the audit department of the Company. He used to be deputy manager of the audit deparment and project manager of the

financial department of the Company and GM of Shenzhen Pengmen Restaurant Co., Ltd.

Mr. Chen Libin, born in June 1964, postgraduate of economics of the Party School of Guangdong Provincial CPC

Committee and EMBA of Sun Yat-Sen University. He is now the Secretary of the CPC Committee and deputy GM of the

Company. Mr. Chen used to be deputy director and director of the Party’s affairs of the Party-masses Work Department

and senior commissioner, deputy manager and manager of the enterprise culture department of AVIC Shenzhen and the

Secretary of the Board of the Company.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Mr. Lu Bingqiang, born in December 1961, senior economist, bechalor of Guangzhou Jinan University. Mr. Lu is deputy

GM of the Company and Managing Director of FIYTA (Hong Kong) Limited. He used to be the president secretary of AVIC

Shenzhen, GM assistant amd director of the Company, and GM and chairman of Shenzhen Harmony World Watches

Center.

Mr. Du Xi, born in July 1975, engineer, bachelor of mechatronic engineering of University of Electronic Science and

Technology of China, and EMBA of Sino-European International Management Institute. He is now a deputy GM of the

Company. Mr. Du used to be the assistant to the GM of the Company and the GM of FIYTA Brand, the deputy GM and GM

of FIYTA Sales Co., Ltd. and manager of FIYTA South China Branch.

Mr. Lu Wanjun, born in February, 1967, accountant and EMBA of Sino-European International Management Institute. Mr.

Lu is now a deputy GM and the Secretary of the Board of the Company. He used to be the assistant to the GM of the

Company, executive deputy GM and deputy GM, the assistant to the GM and concurrently the manager of the financial

department of Shenzhen Harmony World Watches Center Co.

Mr. Hu Xinglong, born in May, 1964, accountant, Chinese CPA, international certified internal auditor, EMBA of

Sino-European International Management Institute. Mr. Hu is now the Chief Accountant of the Company. He used to be

deputy chief accountant, management of the financial department and manager of the audit department of the Company.

Office taking in shareholder companies

Does he/she receive

Titles engaged remuneration or

Names of the Starting date of Expiry date of

Names of the Shareholders in the allowance from the

persons in office office term office term

shareholders shareholder?

Member of the

Party November 30,

Diao Weicheng CATIC International Holdings Limited No

Leadership 2010

Group

February 29,

Diao Weicheng CATIC International Holdings Limited Deputy GM Yes

2012

Vice Chief November 3,

Wang Mingchuan CATIC International Holdings Limited No

Accountant 2010

Chief

Wang Mingchuan AVIC Shenzhen August 6, 2010 Yes

Accountant

Supervisor of

Liu Aiyi CATIC International Holdings Limited July 1, 2010 Yes

HR Dept.

Secretary of

Zhong Sijun AVIC International Holdings Limited June 1, 2015 Yes

the company

Manager of the

Cao Zhen CATIC International Holdings Limited October 20, 2011 Yes

enterprise

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

culture

department

Cao Zhen AVIC Shenzhen Supervisor August 20, 2014 No

Sui Yong AVIC Shenzhen Deputy GM August 6, 2010 Yes

Explanation to

the office taking

Inapplicable

in shareholder

companies

Offices Taken in Other Organizations

Does he/she

Titles engaged receive

Names of the Starting date of Expiry date of office

Names of Other Organizations in the other remuneration or

persons in office office term term

organizations allowance from

other organization?

Zhang

China Timepieces Association Vice chairman Jan. 1, 2010 Yes

Hongguang

Lixin Certified Public Accountants (Special

Zhang Shunwen Partner Jan. 1, 2011 Yes

Ordinary Partnership)

Intellectual Property Academy of South China Full-time

Wang Yan Aug. 1, 2010 Yes

University of Technology professor

Explanation to

the office taking

Inapplicable

in other

organizations

Punishment imposed by the securities regulatory authority on the directors, supervisors and senior executives both in

office and having left their posts in the reporting period.

Inapplicable

IV. Remuneration to Directors, Supervisors and Senior Executives

Decision-making procedures, basis for determination and actual payment of the remuneration to directors, supervisors

and senior executives

1. Decision-making procedures of the remuneration to directors, supervisors and senior executives: Remuneration to

directors and supervisors was reviewed and approved by the Company’s General Meeting and remuneration to senior

executives was reviewed and approved by the Board of Directors.

2. Basis for determining the remuneration to directors, supervisors and senior executives:

(1) Basis for Determining Remuneration to Directors: Remuneration to the directors appointed by the controlling

shareholder is determined and distributed by the controlling shareholder. Allowance to independent directors is subject to

the proposal prepared by the Board of Directors and reviewed and approved by the General Meeting and disclosed in the

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Company’s annual report. Except the aforesaid allowance, independent directors received no extra and undisclosed

benefit from the Company, the Company’s principal shareholders or other organization or personnel with stakeholding.

(2) Basis for Determining Remuneration to Supervisors: Remuneration to the supervisors appointed by the controlling

shareholder is determined and distributed by the controlling shareholder. Remuneration to the staff representative

supervisor is determined by the Company based on the specific job he/she is engaged in.

(3) Basis for Determining Remuneration to senior executives: The Company brought into full play and mobilized the senior

executives’ work enthusiasm and creativeness based on the Company’s operating results and with reference to the

average remuneration level in the trade, better improved the Company’s operating ability and result and ensured

realization of the Company’s strategic targets. The Company worked out the Measures for Administration of

Remuneration to the Senior Executives in 2009, insisted on the principle of distribution according to work and combination

of power, responsibility and benefit. The major orientation was “market based”, “full amount based” and “broadband

based”. Commencing from 2007 on, the Company has introduced Balance Scorecard Strategic Management Structure,

based on the establishment of the incentive and restriction mechanism adaptable to the modern enterprise system,

improved the corporate governance structure, decomposed the Company’s strategy to every department and post

through the balance scorecard to determine senior executives’ performance indicators and action plan on this basis,

conducted regular strategic review, work report and assessment on quarterly basis, and decided their total remuneration

and renewal of engagement according to the assessment results and fulfillment of performances.

3. Actual payment of the remuneration to directors, supervisors and senior executives:

The Company practiced the annual salary system for its senior executives. The annual salary structure consists of the

basic annual salary and performance based annual salary. The annual salary assessment for the GM was carried out

according to the assessment methods worked out by the shareholder. The assessment basis is mainly in accordance with

a series of indicators systems prepared based on the balance scorecard. The assessment for other senior executives was

conducted based on the indicators in the balance scorecard prepared at year beginning and the work report at year end.

Remuneration to directors, supervisors and senior executives in the reporting period

In CNY10,000

Remuneration

Total remuneration

actually received at

Names Positions Gender Age Office Status received from the

the end of the

Company

reporting period

Diao Weicheng Chairman Male 53 In office 0 No

Managing

Xu Dongsheng Male 50 In office 183.54 No

Director

Wang

Director Male 50 In office 0 No

Mingchuan

Liu Aiyi Director Male 44 In office 0 No

Zhong Sijun Director Male 40 In office 0 No

Cao Zhen Director Female 45 In office 0 No

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Zhang Independent

Male 60 In office 9 No

Hongguang Director

Independent

Zhang Shunwen Male 50 In office 9 No

Director

Independent

Wang Yan Male 59 In office 9 No

Director

Chairman of the

Sui Yong Supervisory Male 58 In office 0 No

Committee

Chen Zhuo Supervisor Male 40 In office 120.13 No

Tang Boxue Supervisor Male 55 In office 85.06 No

Chen Libin Deputy GM Male 52 In office 147.44 No

Lu Bingqiang Deputy GM Male 55 In office 142.99 No

Du Xi Deputy GM Male 41 In office 158.31 No

Deputy GM,

Director,

Lu Wanjun Male 49 In office 140.87 No

Secretary of the

Board

Chief

Hu Xinglong Male 52 In office 140.9 No

accountant

Huang

Director Male 42 Retired 0 No

Yongfeng

Total -- -- -- -- 1,146.24 --

Incentive equity to directors, supervisors or/and senior executives in the reporting period

Inapplicable

VI. About Employees

Ended the reporting period, there were altogether 5,562 employees in the Company. The composition of their education

background, age structure and job structure are indicated as follows:

1. Age Structure

Age Composition Below 30 30 - 40 over 40 Total

Number of persons 2973 1876 713 5562

Proportion % 53.45% 33.73% 12.82% 100.00%

2. Education Background

Education Master’s degree or University Junior college below junior Total

background higher graduation graduation college

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

composition

Number of persons 59 818 1540 3145 5562

Proportion% 1.06% 14.71% 27.69% 56.54% 100.00%

3. Job Structure

Job composition Management Operation Financial Production Total

Number 442 4680 141 299 5562

Proportion 7.94% 84.14% 2.54% 5.38% 100.00%

4. Remuneration Policy for Staff

The Company’s remuneration policy is based on strategy, market, performances and job value. The Company has

established a remuneration and benefit system with external competitiveness and internal fairness according to the

Company’s strategic target, ensuring the attractiveness to high quality talents of the industry, retaining the core and key

talents of the Company, activating the human resource, mobilizing staff’s enthusiasm and improving the Company’s core

competitiveness.

5. Training Program

The Company is concentrated on watch industry, insists on the principle of guiding various businesses with the brand

strategy, takes a broad view of the world and has established its vision of “moulding an international brand and becoming

a globalized enterprise”. While speeding up development, the Company firmly believes that “to build brand is to integrate

the brand work and life style”, the core speciality of the organization and staff and the qualification of the staff as brand

personnel are the key elements determining the future development. For the purpose of creating the core competitiveness

based on “brand building”, meeting the strategy challenge, promoting realization of the long and short term plan, the

Company determined the talent standard and qualification model based on the brand strategy by means of strategy

analysis, internal and external environment analysis, talent supply analysis and employees’ ability gap analysis, kept

building a training system integrated with talent development model, improved comprehensive, multi-level, targeted and

comprehensive accomplishment bearing, promoted overall and quick growth of employees and senior officers and

enhanced the Company’s core competitiveness.

6. Ended December 31, 2015, there were no retired staff whose pension or expenses needed to be borne by the

Company. The Company shows loving care for the retired staff by means of paying respective visits and extending its

regards.

Current Period

Total number of employees receiving

5,562

remuneration in the current period

Total amount of remuneration incurred in the

49,856.71

current period, in CNY10,000

Proportion of total remuneration in the

15.77%

operation revenue in the current period

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Average remuneration per senior executive

152.3

(CNY10,000/person)

Average remuneration per capita for all

8.96

employees (CNY10,000)

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Chapter 9 Corporate Governance

I. General

In the year 2015, the Company kept improving the Company’s corporate governance structure strictly according to the

PRC Company Law, the PRC Securities Law and the regulations of China Securities Regulatory Commission concerning

governance of listed companies, and tried to enhance construction of modern enterprise system, upgraded the level of

regulatory operation of the Company. As a result, there was no discrepancy between the situation of the Company’s

corporate governance and the regulatory documents of China Securities Regulatory Commission concerning governance

of listed companies.

The Company established and improved relatively standardized corporate governance structure and rules of procedures

strictly according to law, rules and regulations, including the PRC Company Law, and the Articles of Association of the

Company, formed a decision-making and operation management system with the Shareholders’ Meeting, the Board of

Directors, the Supervisory Committee and the management of the Company as the principal structure. They implemented

their respective duties according to the PRC Company Law and the Articles of Association.

The General Meeting is the Company’s supreme organ and has the power of deciding the Company’s operation policy

and investment plan, reviewing and approving the Company’s annual fincial budget scheme, settlement scheme, profit

distribution plan, loss make-up plan, change of the application of the proceeds raised through issuing, etc., makes

resolution on increase and decrease of the Company’s registered capital, issuing bond, etc., election and replacement of

directors, non-staff supervisors and decision on their remuneration and way of payment.

The Board of Directors is the Company’s decision-making organ, takes charge of implementing the decisions made by the

Shareholders’ General Meeting, assumes responsibility to the Shareholders’ General Meeting and reports the work to it;

within the authorization from the General Meeting, decides the Company’s external investment, acquisition and sales of

assets, assets pledgement, external guarantee, related transactions, etc., decides establishment of the Company’s

internal management organs, engagement and disengagement of the Company’s general manager, the Board secretary

and other senior executives, etc. The Board of Directors consists of nine directors, including three independent directors.

The Board of Directors has established three subordinate special committees, namely the Strategy Committee, the Audit

Committee and Nomination, Emolument and Assessment Committee.

The Supervisory Committee is the Company’s supervisory organ in charge of supervising the directors, managers and

other senior executives in performaning duties according to the law and proposes dismissal of any director or senior

executive who breaches the law, the administrative rules and regulations, the Articles of Association or the General

Meeting’s resolutions. The Supervisory Committee consists of three supervisors including two staff supervisors.

The management assumes responsibility to the Board of Directors and the General Manager takes full responsibility for

the Company’s routine operation and management and development under the leadership of the Board of Directors,

supervises the work of every functional department, assesses the work result of each functional department and

coordinate the relationship of all departments.

Does there exist any difference in compliance with the corporate governance, the PRC Company Law and the relevant

provisions of CSRC.

No

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

II. Independence in Business, Personnel, Assets, Organization, Finance, etc. from

the Controlling Shareholders

The Company is independent in business, personnel, assets, organization and finance from its controlling shareholder.

The Company has complete and independent business and the ability of autonomous operation.

Business. The Company is mainly engaged in timepiece businesses and has independent production, auxiliary production

system and complementary facilities, and possesses its own procurement and sales systems. There exists no competition

in the same sector between the Company and its controlling shareholder.

Personnel: The Company is completely independent in organization and has sound systems in labor, personnel and

salaries management. Except Mr. Lai Weixuan, the Chairman, Mr. Wang Mingchuan, Mr. Huang Yongfeng, Mr. Wu

Xiaohua and Madam Wang Xiaohua, the four directors, and Mr. Sui Yong, the chairman of the Supervisory Committee,

none of other senior executives takes any concurrent office in the shareholders and none of the financial staff works

concurrently for any related parties.

Assets: The assets of the Company and its controlling shareholder are highly distinct. The Company enjoys the corporate

ownership over its assets and the assets are completely independent from its controlling shareholder. In addition, the

Company enjoys sole ownership of the Trademark FIYTA.

Organization: The Company has established its own intra-company organizations independent from the controlling

shareholder. The Board, the Supervisory Committee and the other internal departments and offices work independently.

There exist neither subordinate relations between the controlling shareholder/its functional departments nor doing joint

office work. The controlling shareholder enjoys its rights and undertakes the corresponding obligations according to the

law and has never been involved in any action which directly or indirectly interferes the Company’s business activities

surpassing the authority of the General Meeting.

Finance: The Company has established independent financial department, worked out sound and independent financial

and accounting system and financial management system and independently opened bank accounts. The controlling

shareholder has never interfered the Company in its financial and accounting activities.

III. Horizontal Competitions

Inapplicable

IV. Annual General Meeting and Extraordinary General Meetings in the Reporting

Period

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

1. General Meetings in the Reporting Period

Proportion of

Sessions Meeting Types investors in total Meeting date Disclosure date Disclosure index

participants

2014 Annual Annual General www.cninfo.com.c

0.15% June 17, 2015 June 18, 2015

General Meeting Meeting n

2015 1st

Extraordinary www.cninfo.com.c

Extraordinary 0.01% August 31, 2015 September 1, 2015

General Meeting n

General Meeting

About institutional investor(s)

Inapplicable

2. Request by the Preference Shareholders with the Vote Recovered for an Extraordinary General Meeting

Inapplicable

V. Duty Performance of Independent Directors in the Reporting Period

1. Attendance of Board Meetings and General Meetings

Independent Directors’ Attendance at Board Meetings

Failure to

Number of

Number of personally

Board meetings Number of

Independent Number of Spot Meetings Number of attend board

necessary to be attendances by

directors Attendances Attended by Absence meetings

attended in the representative

Communication successively

reporting period

twice (Yes/No)

Zhang Hongguang 9 2 6 1 0否

Zhang Shunwen 9 3 6 0 0否

Wang Yan 9 3 6 0 0否

Number of general meetings

attended by independent directors 2

as non-voting delegates

Notes to Failure to Personally Attend Board Meetings Successively Twice

Inapplicable

2. Objection of independent directors on some relevant issues

Did any of independent directors put forth any objection on some relevant issues

No

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

3. Other Note to Duty Performance of Independent Directors

Inapplicable

VI Duty Performance of Special Committees under the Board of Directors in the

Reporting Period

Summary Report on Performances of the Strategy Committee of the Board of Directors

During the reporting period, the Strategy Committee performed its duties strictly according to the law and regulations, the

Articles of Association and the Rules for Implementation of the Strategy Committee of the Board of Directors, continued to

do research work on the strategic planning for the Company’s long term development and supervised the Company in

implementation of various strategies. The Strategy Committee held its first meeting of year 2015 on March 10, 2015. The

meeting reviewed and approved the Work Report of the Board of Directors in Year 2014 and the Profit Distribution for Year

2014, etc.; The second meeting of the Strategy Committee of year 2015 was held on April 16, 2015. The meeting

reviewed and approved the plan of non-public issuing of A-shares to the specified investors.

Summary Report on Performances of the Audit Committee of the Board of Directors

In accordance with China Securities Regulatory Commission, Contents and Formats for Information Disclosure by

Companies that Offer Securities to the Public Guideline (No. 2): Contents and Format of Annual Reports (Revision 2012),

Shenzhen Stock Exchange: Circular on Doing a Good Job in 2014 Annual Report and the Relevant Work in Listed

Companies, Basic Regulations on Enterprise Internal Control, Memorandum of Information Disclosure No. 21 –

Information to be Disclosed in the Annual Report and the Company’s Rules for the Work of the Audit Committee, the Audit

Committee of the Company conducted overall review of the Company’s audit work in 2014. The following is the summary

of the performances of the Audit Committee and the work of Grant Thornton Certified Public Accountants (Special

General Partnership) (hereinafter referred to as the “CPAs”).

1. Collecting General Information of the Company in the Reporting Period and Reviewing the Financial Statements

Prepared by the Company and Progress of Internal Control Implementation

On January 16, 2015, the Audit Committee heard the management’s overall report on the production and operation and

progress of significant events during the reporting period and reviewed 2015 Financial and Accounting Statements

prepared by the Company and heard the progress of implementation of the Company’s internal control. In its opinion, the

data in the financial and accounting statements prepared by the Company basically reflected the financial position and

operation results of the Company as ended at December 31, 2015, and approved to carry out the audit work for the year

2015 with the financial statements as the base. The internal control implementation work carried out by the Company has

been duly carried forward according to the Company Law, the Securities Law, Basic Standards for Enterprise Internal

Control and other relevant laws and regulations. It has basically reflected the Company’s internal control construction

work ended December 31, 2015 and approved to prepare the Self-Assessment Report on the Internal Control on this

basis and carry out the internal control audit work in 2015.

2. Decision on Overall Audit Plan

Before the CPAs started auditing, the audit committee, after consultation with the CPAs, decided the time schedule of the

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

audit work in 2015.

3. Supervision of the Audit Work

On January 18, 2016, the CPAs formally started the audit work. During the auditing, the Audit Committee frequently urged

the CPAs to complete the audit work according to the time schedule of audit so as to ensure timely disclosure of the

Company’s annual report and relevant documents.

4. Preliminary Auditor’s Opinions after Reviewing the Financial and Accounting Statements

On March 4, 2016, the CPAs issued a preliminary auditor’s opinions on the financial and accounting statements and

internal control assessment, and the Audit Committee once again reviewed the Company’s financial and accounting

statements and internal control assessment report as preliminarily audited by the CPAs. In the opinion of the Audit

Committee, these financial statements truly, accurately and completely reflected the financial position and operation result

of the Company ended December 31, 2015 and approved 2015 Annual Report and Summary prepared on the basis of

these statements. The said internal control assessment report has truly, accurately and entirely reflected the Company’s

achievement in internal control construction ended December 31, 2015 and approved to complete the internal control

assessment report and internal control audit report based on said report. Meanwhile, the audit committee demanded the

CPAs to complete the audit work according to the plan as soon as possible so as to ensure the Company to disclose 2015

Annual Report as scheduled.

5. Summary Work after the Formal Report

On March 8, 2016, the CPAs completed the auditing procedures as scheduled and issued a standard unqualified auditor’s

report and other relevant documents to the Audit Committee. The Audit Committee held 2016 1st Meeting of the Audit

Committee on the very day and concluded a resolution and submitted it to the Board of Directors for review; and at the

same time submitted the Summary Report on the Performances of the Audit Committee and the Audit Work of the

Certified Public Accountants in 2015. In the opinion of the Audit Committee, Grant Thornton Certified Public Accountants

(Special General Partnership), the domestic and international auditor engaged by the Company faithfully performed the

duties in process of offering audit performances according to the professional principle of independence, objectiveness

and fairness and did a good job in auditing 2015 Annual Accounting Statements and the internal control auditing.

6. CPAs’ Performance of Basic Principle of the Professional Ethics

(1) Independence

None of the staff from the CPAs worked for the Company; the CPAs received neither cash nor economic interest in any

other form from the Company other than the statutory audit fee. There existed neither direct or indirect mutual investment

between the CPAs and the Company nor close operation relationship; there existed no self-assessment on the

Company’s audit work and there existed no related relation between the member of the auditing team and the

Company’s decision makers; the CPAs and the auditing staff kept independence both in form and substance in the

auditing work and complied with the requirement on keeping independence as specified in the basic principle of the

professional ethics.

(2) Professional Competence

All the members of the auditing team possessed the professional knowledge and relevant professional qualification

certificates necessary for the auditing work, were competent for the auditing work and at the same time maintained

necessary attention and professional cautiousness.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

Summary Report on Performances of the Committees of Nomination, Remuneration and

Assessment of the Board of Directors

In the reporting period, the Committees of Nomination, Remuneration and Assessment of the Board of Directors

performed its functions strictly according to the law and regulations, the Articles of Association and the Rules for

Implementation of the Committees of Nomination, Remuneration and Assessment of the Board of Directors. 2015 1st

meeting of the Committees of Nomination, Remuneration and Assessment held on March 10, 2015 reviewed and

approved the emoluments to the senior executives in the year 2014; 2015 2nd meeting of the Committees of Nomination,

Remuneration and Assessment held on August 12, 2015 reviewed and approved the proposal on election for the new

Board of Directors; 2015 3rd meeting of the Committees of Nomination, Remuneration and Assessment held on

September 23, 2015 reviewed and approved the transactions concerning election for the new Chairman of the Board,

replacement of some members of the special committees of the Board of Directors, and appointment of new GM, Deputy

GMs, Chief Accountant and the Secretary of the Board.

VII. Work Summary of the Supervisory Committee

Did the Supervisory Committee find any risk existing in performing the supervision activities in the reporting period

No

VIII. Assessment and Incentive Mechanism for Senior Executives

The Company brought into full play and mobilized the senior executives’ work enthusiasm and creativeness based on the

Company’s operating results and with reference to the average remuneration level in the trade, better improved the

Company’s operating ability and result and ensured realization of the Company’s strategic targets. The Company worked

out the Measures for Administration of Remuneration to the Senior Executives in 2009, insisted on the principle of

distribution according to work and combination of power, responsibility and benefit. The major orientation was “market

based”, “full amount based” and “broadband based”. Since 2007, the Company has introduced the balance scorecard as

the strategic management instrument. Based on the establishment of the incentive and binding mechanism corresponding

to the modern enterprise system and improvement of the corporate governance structure, the Company disintegrated the

Company’s strategy to various departments and posts by means of the balance scorecard so as to determine senior

executives’ performance targets and plan of action, and regularly conducted strategic review and work report assessment

on quarterly basis, and decided the total remuneration and office renewal based on the assessment results and

performances. The remuneration to the Company’s senior executives is the annual salary system. The annual salary

structure consists of the basic annual salary and performance based annual salary. The annual salary assessment for the

GM was carried out according to the assessment methods worked out by the shareholder. The assessment basis is

mainly based on a series of indicators systems prepared based on the balance scorecard, in which the performance

indicators of the surplus revenue rate were the main indicators. The assessment for other senior executives was

conducted based on the indicators in the balance scorecard prepared at year beginning and the work report and

assessment were carried out at year end.

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

IX. Internal Control

1. No particular case found involving material defects in the internal control during the reporting

period

No

2. Self-assessment Report of the Internal Control

Date of disclosing the full text of

the internal control assessment March 10, 2016

report

Index of disclosure of the full

text of the internal control www.cninfo.com.cn

assessment report

Proportion of the total assets of

the organizations involved in the

assessment in the total assets of 100.00%

the Company’s consolidated

financial statements

Proportion of the operation

revenue of the entitied involved

in the assessment in the total

100.00%

operation revenue of the

Company’s consolidated

financial statements

Criteria for affirming the defects

Categories Financial Report Non-financial Report

(1) Material defects:

Misstatement≥Profit before tax 的

(1)Material defects: 5% of misstatement≥Profit before

5%;(2)Important defects:1% of

tax; (2)Important defects: 1% of profit before tax

profit before tax ≤ Misstatement<

Qualitative criteria ≤Misstatement<5% of profit before tax; (3)

5% of profit before tax;

Common defects:Misstatement<1% if Profit before

(3)Common defects:

tax.

Misstatement<1% of profit

before tax.

(1) This defect involves (1) Seriously breaching the law, administrative

malpractices of the directors, regulations and normative documents of the state; (2)

supervisors and senior "decision on major issues, important officer

Quantitative criterion

executives; (2) correction of the appointment and/or removal and arrangement of

financial statements already important projects as well as application of big sum of

published; (3) material fund have not undergone collective decision-making

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT, Full Text

misstatement involved in the procedures; (3) serious running off of officers and

current financial statements found technicians of the key positions; (4) there is no

by the CPAs while such system control available for the Company’s

misstatement has not been found production and operation pratice or the system no

in process of ooperation of the longer works; (5) the internal control for information

internal control; (4) the disclosure no longer works, having caused the

Company’s audit committee and Company censured publicly by the regulatory

the internal audit service have authority; (6) the results of the internal control

conducted ineffective supervision assessments, especially the material defects or

over the internal control. important defects have not been rectified.

Number of material defects in

0

the financial statements

Number of material defects in

0

the non-financial statements

Number of important defects in

0

the financial report

Number of important defects in

0

the non-financial report

X. Internal Control Audit Report

Review Opinions in the Internal Control Audit Report

In our opinion, FIYTA Holdings Limited maintained effective internal control on the financial report in all material aspect

according to the Basic Regulatoins for Enterprise Internal Control and the relevant provisions ended December 31,

2015.

Disclosure of the internal control

Disclosed

audit report

Date of disclosing the full text of

March 10, 2016

the internal control audit report

Index of disclosing the full text of

www.cninfo.com.cn

the internal control audit report

Type of the onions in the internal

Standard unqualified auditor’s report

control audit report

Are there any material defects in

No

the non-financial report

Has the CPAs issued a qualified auditor’s report of internal control.

No

Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors

Yes

FIYTA HOLDINGS LTD. 2015 ANNUAL REPORT,

Full Text

Chapter 10 Financial Report

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

电话 +86 10 8566 5588

传真 +86 10 8566 5120

(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

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

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

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 -

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

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 Minority Total shareholders'

Less: Other General

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 - - - - - - - - - -

(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

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 - - - - - - - - - -

(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

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

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

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 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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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;

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:

① Belong to “a basket transaction”, is recognized as other comprehensive income and is transferred to profit or loss for the

current period when losing control.

② Not 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

(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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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:

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

(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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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; receivables that

Reasons for provision individually

there is obvious indication that the amount is likely un-collectible.

Recognize the provision for bad and doubtful debts on the shortfall between the

Method of provision

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 bad

Type of group Basis of group 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 consolidation

No need for bad debt

Specific fund portfolio scope, accounts receivable for the sales between the last date

provision

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 other

Aging

accounts receivable % 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 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 goods 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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;

② the NRV of materials that need to be processed are determined using estimated selling price of finished goods which is

manufactured from the material less estimated cost of completion, estimated selling expenses and related taxes if the business is

in the ordinary course of operation.

The Company recognizes inventory impairment provision for FIYTA brand watches based on models category.

Impairment provisions for branded watches are recognized on an item-by-item basis.

Impairment provisions for raw materials of FIYTA watches are recognized by categories based on ultimate-customer selling

status of FIYTA finished watches taking into considerations of the exchangeability of the spare parts and the special usage of

materials.

If the cost of closing inventory of the Company exceeds its net realizable value at balance sheet date, 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.

(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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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 depreciation

Category Residual rate %

(year) 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 depreciation

Category Residual rate %

(year) 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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:

① Expenditures 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;

③ Activities 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.

Amortization methods of an intangible asset with a finite useful life are shown as follows:

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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;

(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:

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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.

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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.

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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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 construction

Turnover tax payable 7

tax

Educational surcharges Turnover tax payable 3

Local educational surcharges Turnover tax payable 2

Corporate income tax (note 1) Taxable income 15-30

Property tax (note 2) 70% of original value of property, rental income 1.2, 12

(1) Corporate income tax

Name of taxpayer Income tax rate%

The Company(Note①②) 25

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

Name of taxpayer Income tax rate%

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 (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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

Properties of the Group that situated in Shenzhen are taxed according to this notice. Properties situated in other cities are taxed

according to local regulations.

V. Notes to main items of consolidated financial statements

1. Cash 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

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:

Category 31/12/2015

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

Amount Percentage Provision for Provision 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

Amount Percentage Provision for Provision 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 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)

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

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:

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

Category 31/12/2015

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

Amount Percentage Provision for Provision 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

Amount Percentage Provision for Provision 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:

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)

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

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

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:

% of the balance Provision for

Company name Nature Balance Aging of other bad and

receivables doubtful

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

(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

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 -

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

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 Carrying

Provision for Provision for

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

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

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 3

Investee Adjustment dividend for

as at 31/12/2014 Additio income/loss 1/12/2015

of other Changes of or profit Provison for impairment as

Reduction recognized Others

n comprehensiv other equity announce impairment at

under the

e income d to be 31/12/2015

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 -

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

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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

Book balance Impairment Net carrying Book balance Impairment Net carrying

amount amount

Clock & Watch

base in 173,189,274.57 - 173,189,274.57 51,283,233.53 - 51,283,233.53

Guangming New

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 interest capitalized d rate%

assets on 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

270,000,000.00 64.14 64.39%

Guangming New District the bank

13. Intangible asset

(1)Intangible asset

Item Land right Software system Right to use Total

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

(1) Book value of goodwill

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 tax assets le temporary 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

Item 31/12/2015 31/12/2014

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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 565,474.81 39,118,755.83 39,198,149.50 486,081.14

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

contribution plans

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

Educational surcharges 395,801.04 276,780.09

Stamp duty 242,297.50 252,083.51

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

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

605,563.29 597,095.78

Interest payable for long-term loan

16,800,000.00 16,800,000.00

Interest on corporate bonds

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

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

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

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

Subtotal 398,767,929.40 - 20,160,000.00 1,055,830.88 20,160,000.00 399,823,760.28

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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)

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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:

As at incurred ive income Inco Attribute to Attribute 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

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

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

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

2015 2014

Item

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

Industry sector 2015 2014

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

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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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

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

(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

Item 2015 2014 current year’s

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

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

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

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 Related to Income

- 1,000,000.00

Specific subsidy for Shenzhen strategic Related to Income

emerging industry development - 800,000.00

E-commerce FIYTA Mobile Internet Sales

- 800,000.00 Related to Income

Mode Innovation Project

Specific fund for cultural creative industry Related to Income

development - 780,000.00

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 Related to Income

- 350,000.00

Award of the 11th Chinese Patent Award Related to Income

- 350,000.00

Standardization fund Related to Income

- 307,000.00

2012 integration project involving production, Related to Income

study and research - 300,000.00

2014 subsidy fund for implementing

- 138,042.00 Related to Income

standardization strategy

2014 subsidy for high-tech enterprises Related to Income

- 100,000.00

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

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 Related to Income

- 5,000.00

Specific subsidy fund for innovation of Taitan Related to Income

Watch Test Co., Ltd. - 3,500.00

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.

(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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

(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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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

6,574,954.85 5,185,100.10

Posting and telecommunication expenses

4,913,593.92 1,652,626.49

Packing expenses

3,052,469.63 2,636,497.78

Vehicle expenses

3,011,959.23 2,943,855.87

Insurance expense

2,434,924.13 1,659,064.16

Clothing expense

2,325,196.69 2,076,535.47

Maintenance expense

2,186,252.23 3,607,560.46

Intermediary agents expense

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

2,023,389.06 489,788.03

Consultation expenses

12,983,352.01 23,821,562.70

Others

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

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 "-")

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

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 1. - -

Convertible debts mature within one year 2. - -

Fixed assets acquired under finance leases 3. - -

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

5. 637,387,875. 6. 114,880,070.

4. I. Cash

93 54

Incl. Cash on hand 7. 387,241.40 8. 338,694.81

9. 636,995,113. 10. 114,319,146.

Bank deposit available for immediate payment

67 38

Other monetary funds available for immediate

11. 5,520.86 12. 222,229.35

payment

13. Due from the Central Bank available for payment 14. - 15. -

16. II. Cash equivalents 17. - 18. -

19. Incl. Bond investment due in three months 20. - 21. -

23. 637,387,875. 24. 114,880,070.

22. III. Cash and cash equivalents as at 31/12/2015

93 54

46. Assets of restricted ownership or use rights

Item Amount Restriction reason

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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

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 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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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:

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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.

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

To keep or adjust capital structure, the Group may adjust amounts of dividends paid for shareholders, return capital to

shareholders, issue new shares or sell assets to reduce debts.

The Group 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).

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 of vote right

Registration Registered ratio 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

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

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

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

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

Tang Boxue Key management member

Chen Zhuo Key management member

Chen Libin Key management member

Lu Bingqiang Key management member

Du Xi Key management member

Lu Wanjun Key management member

Hu Xinglong 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

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 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 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

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

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 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

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 -

Other receivable Rainbow Department 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

Advances from customer CATIC Real Estate 133,848.00 -

Company

Other payables CATIC Property 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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

1. Significant commitments

(1)Capital commitment

Contract already signed but not yet recognized in the financial

31/12/2015 31/12/2014

statements

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).

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

Amount Percentage% Provision for Provision 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

Amount Percentage% Provision for Provision 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 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

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

Amount Percentage% Provision for Provision Net amount

bad debts rate %

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

Amount Percentage Provision Provision Net amount

% for bad rate %

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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

Amount Percentag Provision Provision Net amount

e% for bad rate %

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 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 - - - - -

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%

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

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 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

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

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

(1)Investment in subsidiaries

Closing

Impairm balance

Invested units 31/12/2014 Increase Decrease 31/12/2015 ent for

provision impairm

ent

HARMONY 601,307,200.00 - - 601,307,200.00 - provisio-

Company n

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 - -

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

Balance Investment Cash Balance provision

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 as at

under the comprehensi announc impairment

equity

equity ve income ed to be 31/12/2015

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 -

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 methodincome from long-term equity investment measured by

Investment 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

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

6.75 0.289 -

the Company after deducting non-recurring profit

or loss

FIYTA Holdings Ltd.

10 March 2016

FIYTA Holdings Ltd.

Notes to the Financial Statements

For the Year Ended 31 December 2015 (all amounts in RMB Yuan unless otherwise stated)

Chapter 11 Documents Available for Inspection

I. Accounting Statements signed by and under the seal of the legal representative, the chief accountant and the treasurer.

II. Original of the Auditors’ Report under the seal of the accounting firm and signed by and under the seals of certified

public accountants.

III. Originals of all documents and manuscripts of announcements of the Company disclosed in Securities Times and

Hong Kong Commercial Daily as designated by China Securities Regulatory Commission.

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