Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd.FIYTA Precision Technology Co. Ltd.2024 Annual Report March 2025 1Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 2024 Annual Report Section 1 Important notes contents and definitions The Board of Directors Board of Supervisors directors supervisors and senior management of FIYTA Precision Technology Co. Ltd. undertake that the information presented in the report is true accurate and complete and does not contain false records misrepresentations or major omissions and bear individual and joint legal liability.Zhang Xuhua the person in charge of the Company Song Yaoming the CFO and Tian Hui the Financial Manager (Accounting Supervisor) declare to ensure that the financial content in the annual report is truthful accurate and complete.All directors have attended the board meeting to review this report.The forward-looking descriptions such as future plans and development strategies included in this annual report do not constitute the Company's substantive commitments to investors.Investors are advised to pay attention to investment risks.The Company has described the existing macroeconomic risks operational risks and other risks in detail in this report. Please refer to the section on the future development of the Company and the countermeasures in Section 3 Management discussion and analysis.The profit distribution plan reviewed and approved by the Board of 2Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Directors of the Company is as follows: based on the total share capital on the equity registration date when the profit distribution plan is implemented cash dividends of RMB 4.00 (including tax) will be distributed to all shareholders for every 10 shares without bonus share (including tax) and surplus funds will not be converted into additional capital.This report is prepared in both Chinese and English. In case of any ambiguity the Chinese version shall prevail. 3Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Table of Contents Section 1 Important notes contents and definitions....2 Section 2 Company profile and key financial indica... 7 Section 3 Management discussion and analysis ....... 11 Section 4 Corporate governance ..................... 29 Section 5 Environmental and social responsibility ...56 Section 6 Significant events ........................58 Section 7 Changes in shares and shareholders ....... 67 Section 8 Relevant information about preferred sto.. 79 Section 9 Bond-related information ................. 79 Section 10 Financial Reporting ..................... 80 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. List of Reference Documents I. Financial statements containing the signatures and seals of the legal representative the chief accountant and the accountant in charge.II. The original audit report bearing the seal of the accounting firm and the signature and seal of the certified public accountant.III. The originals of all the company's documents and announcements publicly disclosed during the reporting period. 5Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Interpretations Definitions refers to Description The Company Company FIYTA refers to FIYTA Precision Technology Co. Ltd.AVIC refers to Aviation Industry Corporation of China LTD.AVIC INNO refers to AVIC INNO Co. Ltd.AVIC INTL holding refers to AVIC International Holding Limited AVIC Finance refers to AVIC Finance Co. Ltd.Phase II restricted stock incentive plan refers to 2018 A-Shares Restricted Stock Incentive Plan (Phase II) Current reporting period reporting period refers to January 1 2024 to December 31 2024 6Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 2 Company profile and key financial indicators I. Company Information Abbreviation FIYTA FIYTA B Stock code 000026 200026 Stock name before change (if any) None Stock listing stock exchange Shenzhen Stock Exchange Chinese name 飞亚达精密科技股份有限公司 Abbreviation in Chinese 飞亚达公司 Foreign name of the Company (if any) FIYTA Precision Technology Co. Ltd.Foreign short name of the Company (if any) FIYTA Legal representative Zhang Xuhua Registered address Fiyta Technology Building Gaoxin South 1st Road Nanshan District Shenzhen Postal code of registered address 518057 On January 30 1997 the registered address of the Company was changed from "Building 6 Zhonghangyuan Shennan Middle Road Shenzhen" to "Building 6 Historical change of COOEC's Zhonghangyuan Shennan Middle Road Futian District Shenzhen"; On April 5 registered address 2000 the registered address was changed to "FIYTA Building No. 163 ZhenhuaRoad Futian District Shenzhen"; On February 20 2004 the registered address was changed to "FIYTA Technology Building Gaoxin South 1st Road Nanshan District Shenzhen".Office address Floor 20 Fiyta Technology Building Gaoxin South 1st Road Nanshan DistrictShenzhen Postal code of business address 518057 COOEC Website www.fiytagroup.com E-mail investor@fiyta.com.cn 2. Contact person and contact information Secretary of the Board of Directors Securities affairs representative Name Song Yaoming Xiong Yaojia Floor 20 Fiyta Technology Building 18th Floor Fiyta Technology Contact address Gaoxin South 1st Road Nanshan Building Gaoxin South 1st Road District Shenzhen Nanshan District Shenzhen TEL 0755－86013669 0755－86013669 Fax 0755－83348369 0755－83348369 E-mail investor@fiyta.com.cn investor@fiyta.com.cn III. Information disclosure and storage location Website of the stock exchange where http://www.szse.cn 7Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. COOEC discloses its annual report Name and website of the media where Securities Times Hong Kong Commercial Daily and CNINFO Fiyta discloses its annual report (www.cninfo.com.cn) Storage location of annual reports Corporate Planning Working Capital Department IV. Registration changes Unified Social Credit Code 91440300192189783K Changes in primary business since the listing of the Company (if any) No change Changes in previous controlling shareholders (if any) No change V. Other relevant information Accounting firm engaged by the Company Name of accounting firm RSM China CPA LLP (Special General Partnership) Office address of accounting firm 1001-1 to 1001-26 10F Building 1 No. 22 Fuchengmenwai StreetXicheng District Beijing Signing accountants Cai Ruxiao Zheng Chaomin Ge Hua Sponsor institution engaged by the Company to perform continuous supervision during the reporting period Not applicable Financial consultant engaged by the Company to perform continuous supervision during the reporting period Not applicable VI. Main accounting data and financial indicators Does the Company need to retrospectively adjust or restate the accounting data in previous years No 2024 2023 Increase or decreaseYoY 2022 Operating income (yuan) 3940530934.07 4569690002.99 -13.77% 4354096880.36 Net profit attributable to shareholders of the 220350184.99 333178102.37 -33.86% 266681451.84 listed company (yuan) Net profit after deducting non-recurring profits and losses attributable to 208728288.68 316806208.13 -34.11% 249791455.73 shareholders of the listed company (yuan) Net cash flows from operating activities 536730960.29 632401487.98 -15.13% 476228776.52 (yuan) Basic earnings per share (yuan/share) 0.5385 0.8082 -33.37% 0.6398 Diluted earnings per 0.5378 0.8075 -33.40% 0.6398 8Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. share (yuan/share) Return on weighted average net assets 6.55% 10.28% -3.73% 8.68% Increase or decrease at the end of the As at the end of As at the end of current year 2024 2023 compared with the As at the end of 2022 end of the previous year Total assets (yuan) 4007690717.02 4204260897.08 -4.68% 4117143911.99 Net assets attributable to shareholders of the 3391843200.61 3333805752.19 1.74% 3136423492.15 listed company (yuan) The Company's net profit before and after deducting non-recurring profit and loss in the last three accounting years whichever is lower is negative and the audit report for the latest year shows that the Company's ability to continue as a going concern is uncertain No The lower of net profit before and after deducting non-recurring profit and loss (whichever is lower) is negative No VII. Differences in accounting data under domestic and overseas accounting standards 1. Differences in net profit and net assets in the financial reports disclosed in accordance with international accounting standards and Chinese accounting standards Not applicable 2. Differences in net profit and net assets in the financial reports disclosed in accordance with overseas accounting standards and Chinese accounting standards Not applicable VIII. Main financial indicators by quarter Unit: yuan Q1 Q2 Q3 Q4 Operating revenue 1065150876.00 1011247035.32 963368988.81 900764033.94 Net profit attributable to shareholders of 75499096.30 71639386.04 50484466.22 22727236.43 the listed company Net profit after deducting non- recurring profits and losses attributable to 69755955.88 70689265.93 50362069.34 17920997.53 shareholders of the listed company Net cash flows from operating activities -964281.20 137495077.72 180837164.86 219362998.91 9Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Whether the above financial indicators or their sum are significantly different from the financial indicators disclosed in the quarterly report and semi-annual report of the Company No IX. Non-recurring gains and losses items and amounts Unit: yuan Item Amount in2024 Amount in 2023 Amount in 2022 Notes Profit or loss from disposal of non-current assets (including the writing-off part for which the asset impairment provision is 2367816.60 685868.57 91925.06 made) Government grants included in the current profit or loss (except for government grants closely related with the normal business of COOEC obtained according to established criteria and in accordance with the national 5480540.76 8665506.85 18648210.06 policies and provisions and those continuously affecting the profit and loss of FIYTA) Profit or loss on fair value changes arising from the holding of financial assets and financial liabilities by non-financial It was mainly enterprises and the profit or loss arising due to the from the disposal of financial assets and 524315.57 0.00 0.00 increase in liabilities except for effective hedging income from operations associated with COOEC's time deposits.normal operations Reversal of receivables tested for impairment separately provision for 3753262.84 7570975.54 4389902.44 impairment Non-operating revenue and expenses other than the above-mentioned items 2834587.38 3910736.70 -1064064.23 Less: income tax effects 3338626.84 4461193.42 5175977.22 Total 11621896.31 16371894.24 16889996.11 -- Specific circumstances of other items that meet the definition of non-recurring gains and losses: Not applicable Description of the definition of non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-recurring Profit or Loss as recurring profit and loss items Not applicable 10Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 3 Management discussion and analysis I. Industry status during the reporting period In 2024 according to the data of the National Bureau of Statistics the total retail sales of domestic consumer goods increased by 3.5% year-on-year the total consumer market grew steadily but differentiated significantly and the traditional watch consumer market faced multiple pressures such as demand contraction and intensified competition.In terms of consumption structure luxury goods and optional consumption continue to be under pressure while experiential consumption such as health and technology is on the rise. Bain's report indicated that the sales of personal luxury goods in mainland China fell by 18%-20% year-on-year among which the watch category was significantly affected by consumption outflow (the proportion of overseas consumption rose to 40%) and preference shift. Data from the Federation of the Swiss Watch Industry showed that the export value of Swiss watches to mainland China fell by 25.8% year-on-year throughout the year and sales of watches in various price ranges declined to varying degrees; Meanwhile the PwC report revealed that the demand for sports equipment and health monitoring equipment is rising and IDC data showed that the shipments of wrist-worn devices (including smart watches and bracelets) in China increased by 20.1% YoY in the first three quarters of this year ranking first in the world.In terms of consumption channels fragmentation of offline channels has intensified with discount stores and immersive experience stores becoming the main growth drivers while customer traffic to traditional department stores and specialty stores has declined; The penetration rate of online channels has stabilized and the proportion of refined operation modes such as livestream e-commerce and member private domains has increased.In terms of consumption preferences young consumers are less loyal to brands and they are more concerned about cost-effectiveness and consumption experience. Proactive healthcare technological interaction dedicated services and other models are more popular.In this context the Company will insist on its own brand positioning strengthen brand building and differentiation and enhance the core competitiveness of traditional watch business; consolidate channel operation management optimize store structure and form mode and actively deploy high-quality and incremental channels. By emphasizing the customer orientation the Company will increase AI and other technical empowerment and digital applications and continue to deepen customer research; anchor the transformation and upgrading goals enhance the core technology capabilities of precision technology and smart wearable and actively promote the expansion of related new industries so as to cope with market changes.II. Main business of the Company during the reporting period The Company was founded and developed from aviation precision technology and material technology with the mission of "inheriting the 'spirit of serving the country by aviation' and creating a quality life". Over the years it has deeply cultivated the watch industry formed a core business layout covering its own brand of watches and comprehensive services of luxury watches to promote each other and is committed to becoming a leader in China's watch industry spreading aviation culture and Chinese culture and actively investing strategic emerging industries such as precision technology and smart wear.With its continuous accumulation in professional watchmaking capacity building and brand operation management the Company has a number of watch brands such as "FIYTA" "Emile Chouriet" "Beijing" "Jeep" and "ADASHER" covering medium and high-end mass fashion and other market segments. Among them "FIYTA" a core brand is positioned as "a high-quality Chinese watch brand featuring aerospace watches". By continuously strengthening the 11Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. unique IP of aerospace and product quality the Company increases the research and development of movements and key components integrates aerospace characteristic technologies and material applications and creates distinctive features thereby promoting the development of the brand towards "youthfulness high-end and mainstream".In order to seize the opportunities in the domestic luxury watch market the Company has established a comprehensive service channel for "Harmony" luxury watches specializing in the distribution and service of world luxury watches and has established close cooperative relations with many world high-end and mainstream brands. By positioning "Harmony" as a "full service provider and brand operation platform for luxury watches" the Company continues to solidly promote the improvement of operation capabilities and customer service capabilities. Relying on the operation experience of leading international brands "Harmony" has become a top professional high-end chain commercial brand of luxury watches in China helping improve the operation of own brands.In recent years under the development principle of "shared technology shared industry roots and aligned value" the Company has expanded into strategic emerging industries such as precision technology and smart wearable by virtue of precision technology strength and industrial accumulation and will continue to actively increase resource investment to cultivate and grow the two strategic industries.III Analysis of core competitiveness (I) Brand operation and management capabilities of the whole industry chain The Company possesses integrated capabilities across the entire industry chain including research and development design manufacturing sales and service. Through resource integration and business synergy it continuously strengthens the differentiation and competitiveness of its core proprietary brand "FIYTA". During the reporting period "FIYTA" brand won multiple awards including the Platinum and Gold awards at the 2024 MUSE Design Awards credited to its innovative product lineup. With the high-quality operation and management of the e- commerce platform the Company has won a number of awards such as "2023 Tmall Fashion Accessories New Trend Track Award" "2023 JD Trend New Product Award" "TikTok E-commerce Annual Brand in Apparel and Men's Comprehensive Industry in 2023" and "Kuaishou E-commerce Annual Excellent Merchant in Jewelry and Jade Industry in 2024". These achievements have significantly boosted the brand's influence and visibility.(II) Omni-channel refined operation and management capabilities The Company has refined channel operation and management capabilities. Through high-quality development of offline channels and steady promotion of online and offline channel integration the channel structure has been continuously optimized and the operation efficiency has been steadily improved basically forming a three-dimensional channel network covering online and offline channels across China and abroad. During the reporting period the "FIYTA" brand won the "Amazon Overseas Rising Star Award in 2024" by virtue of the smooth development of overseas platform channels and Harmony Company relying on its excellent channel operation and comprehensive strength was awarded the "Top Ten Value-added Enterprises in the Wholesale and Retail Industry in Nanshan District in 2023".(III) Core technical capabilities of precision technology As a national technology innovation demonstration enterprise a national enterprise technology center and a national industrial design center the Company has key core technologies and high-end watchmaking skills covering watch movement parts manufacturing aerospace watch development and other aspects. Relying on the R & D and production platforms in Shenzhen and Switzerland the Company focuses on key technology research and continues to promote technological breakthroughs in movement and the application of scientific research results. During the reporting period the Company's self-developed automatic mechanical movement "Zhaixing" became the first female space watch movement certified by the French Besan?on Observatory. The Company won the "Second Prize of 12Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Science and Technology Progress Award of China National Light Industry Council" for leading the completion of ISO 14368-4:2020 the first international standard in the field of watches proposed and formulated by China. With outstanding achievements in standard development and standard system construction it was awarded the "Shenzhen Standard Innovation Demonstration Base".(IV) Efficient and empowered digital operation and management capabilities The Company has a diversified digital retail system and digital management platform that empowers businesses and employees and promotes business collaboration and operational efficiency by continuously deepening digital applications in management and manufacturing sales service and other links. During the reporting period the Company carried out in-depth digital construction related work such as digital retail system optimization upgrading and construction of operation management system and exploration of intelligent manufacturing mode constantly facilitating the Company's digital transformation.(V) Construction capacity of professional talent team Based on the concept of "value creation" the Company continuously has invested in the construction of talent team and has established a sound talent selection training and promotion system and built a professional and stable talent team. In addition the Company has cultivated a number of outstanding representatives in the industry in core fields such as design R & D and manufacturing by building an innovative incentive mechanism and developing diversified talent incentive measures.IV. Analysis of main business 1. Overview In 2024 the Company adhering to seeking progress while maintaining stability strengthened and expanded the main business of watches to improve core competitiveness and focused on scientific and technological innovation accelerated transformation and upgrading enhanced core functions deepened quality and efficiency improvement prevented asset risks identified operation counterattack points and carried out various operation and management work in an orderly manner. During the reporting period in the environment of continuous pressure on the watch consumer market the Company achieved operating income of RMB 3940.53 million yuan a YoY decrease of 13.77% with the total profit of RMB 286.11 million yuan down 34.53% YoY. The Company paid close attention to lean operation and risk prevention and control. At the end of the period the asset-liability ratio was 15.37% and the net cash flow from business activities was RMB 537 million yuan indicating high operating efficiency and controllable operating risks. Moreover the Company consolidated confidence in development and attached importance to shareholder returns. It has implemented the cash dividend plan in 2023 and the domestic listed foreign shares (B shares) share repurchase and cancellation plan (Phase IV) and has formulated a cash dividend plan in 2024 to pay cash dividends of 4.00 yuan (tax included) to all shareholders for every 10 shares.During the reporting period the Company's main business initiatives are as follows: (I) Firmly promote the implementation of brand positioning upgrade strategy and spread aviation and Chinese culture During the reporting period the aerospace product matrix was optimized continuously by positioning "FIYTA" brand as a "high-quality Chinese watch brand featuring aerospace watch" and a three-dimensional product layout was implemented in combination with aerospace characteristic IP. The integration with intangible cultural heritage was strengthened by incorporating traditional intangible cultural heritage crafts such as Song porcelain and mother-of-pearl inlay into product design so as to showcase China's excellent traditional culture. The IP cooperation with "Y-20 Transport Aircraft" CNNC and other "Pillars of a Great Power" was deepened and the brand was frequently exposed 13Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. through Milan Fashion Week cooperation with Xia Zhiguang "Shenzhou-18" "Shenzhou-19" Zhuhai International Aviation & Aerospace Exhibition Nasdaq large screen display and other brand events.(II) Continue to promote the optimization of channel structure and improve to the efficiency of operation and management During the reporting period for the "FIYTA" brand the focus was on building offline core stores and taking aerospace theme stores as the starting point to actively deploy high-quality channels such as mainstream shopping malls and promote the transformation of business models. The efficiency of self-owned stores and customer was improved through the "Little Red Book + TikTok Store Livestream + Local Life" model. By strengthening the development of new products online and the construction of self-operated livestream matrix during the "618" period the e-commerce GMV achieved contrarian growth ranking first in the turnover of domestic watches in the whole network. Adhering to the integration of product and sales the Company carried out global marketing and made the popular "small gold watch" enter the TOP list of major platforms helping the brand to significantly increase its share in mainstream e-commerce platforms. Meanwhile the Company actively expanded overseas channels and duty-free channels to develop incremental markets."Harmony" actively expanded cooperation with medium and high-end brands developed offline channels with high quality and steadily promoted the integrated development of online and offline channels; Deepen and refine excellent operation in an all-round way and systematically improve operational efficiency from online offline stores brands members services and other dimensions.(III) Continue to increase investment in scientific and technological innovation and strengthen the strength of precision technology During the reporting period the Company's self-developed automatic mechanical movement "Zhaixin" became the first female aerospace watch movement certified by the French Besan?on Observatory. The Company actively promoted the large-scale commercial use of the self-developed movement the product application of high-level mechanical movements such as the tourbillon the development of key parts such as clamps and hairsprings and the development and application of aerospace materials and precision timing technology.(IV) Continue to promote digital transformation and deepen digital platform application During the reporting period the Company continued to carry out digital operations improving and iterating the digital retail system; Focusing on customer needs and profiles optimized the member life cycle model to enhance core metrics such as conversion of potential customers and retention of existing customers ensuring continuous improvement. Deepening the private domain operations leveraged mini-programs to cultivate private domain traffic and develop activities like private domain group purchases.(V) Continue to promote the exploration of new businesses and actively cultivate strategic emerging industries During the reporting period the Company strengthened its precision technology business enhancing its technical capabilities to meet the demands of complex and high-precision products driving the expansion of new customers.The smart wearable business continued to advance with upgrades in product and technological capabilities. There was a strong emphasis on enhancing both software and hardware technologies along with new product development.Under the "Jeep" brand new products such as the curved screen square smartwatch integrating AI technology were launched achieving the increased revenue during the reporting period.YoY changes in main financial data Balance sheet items Items Ending balance Beginning balance Change Reason for change Notes receivable 29611600.60 18268972.37 62.09% It was mainly due to the increase in bill 14Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. settlement customers.Other current assets 98007925.22 72249391.81 35.65% It was mainly due to the increase in timedeposit transactions.Other non-current It was mainly due to the decrease in assets 3792253.84 9434627.17 -59.80% prepaid store decoration payments.Short-term borrowings 124087754.51 250187763.87 -50.40% It was mainly due to repayment of bank borrowings.Accounts payable 115532921.57 173825907.71 -33.54% It was mainly due to the decrease in thepurchase of luxury watches.Treasury share 12815556.81 78645532.23 -83.70% It was mainly due to the cancellation ofrepurchased B shares.Profit statement items from the beginning of the year to the end of the reporting period Items Amount in the Amount in thecurrent period previous period Change Reason for change Other income 7492642.33 11435373.78 -34.48% It was mainly due to the decrease ingovernment subsidies received.Investment income -431254.89 -5819479.60 92.59% It was mainly due to the losses reducedby shareholding enterprises.Credit impairment This is mainly due to a significant loss 266485.96 6827575.82 -96.10% reversal of a single item during the sameperiod.Losses from asset It was mainly due to the increase in the impairment -19289865.31 571980.37 -3472.47% provision for impairment of luxury watchbusiness.(LV) Incomes from disposal of assets 2367816.60 685868.57 245.23% It was mainly due to the impact of disposing of certain properties.Items in the statement of cash flows from the beginning of the year to the end of the reporting period Items Amount in the Amount in thecurrent period previous period Change Reason for change Net cash received from disposal of fixed assets intangible assets 4848874.32 1278284.57 279.33% It was mainly due to the impact of disposing of certain properties.and other long-term assets Cash received from other investing 201839677.57 0.00 - It was mainly due to the increase in time activities deposits.Cash paid for other investing activities 231179882.49 0.00 - It was mainly due to the increase in time deposits.It was mainly due to the increase in the Cash received from 323957187.86 250000000.00 29.58% amount of borrowings obtained in thisborrowings year due to changes in borrowing methods.It was mainly due to the increase in the Cash paid for debt repayments 450000000.00 290000000.00 55.17% amount of borrowings to be repaid in the this year due to changes in borrowing methods.Cash paid for distribution of dividends and profits 168545613.69 114106711.75 47.71% It was mainly due to the increase in cash or payment of dividends.interests 15Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Cash paid for other It was mainly due to the decrease in financing activities 116757093.91 198056975.77 -41.05% share repurchase expenses. 2. Revenue and cost (1) Composition of operating income Unit: yuan 2024 2023 YoY increase/decreas Amount Proportion in Proportion inrevenue Amount revenue e Total operating income 3940530934.07 100% 4569690002.99 100% -13.77% By industry Watch business 3656306133.74 92.79% 4267371133.82 93.38% -14.32% Precision technology 134469811.50 3.41% 135950405.45 2.98% -1.09% business Leasing business 138069112.39 3.50% 150361811.22 3.29% -8.18% Others 11685876.44 0.30% 16006652.50 0.35% -26.99% By product Watch brand business 721623074.27 18.31% 797083010.50 17.44% -9.47% Full service business of 2934683059.47 74.48% 3470288123.32 75.94% -15.43% luxury watches Precision technology 134469811.50 3.41% 135950405.45 2.98% -1.09% business Leasing business 138069112.39 3.50% 150361811.22 3.29% -8.18% Others 11685876.44 0.30% 16006652.50 0.35% -26.99% By region South China 1857820951.58 47.15% 2111088618.01 46.20% -12.00% Northwest China 546718719.91 13.87% 704042804.95 15.41% -22.35% North China 122281678.29 3.10% 217315524.00 4.76% -43.73% East China 492238757.53 12.49% 570830728.85 12.49% -13.77% Northeast China 341939729.91 8.68% 357656639.08 7.83% -4.39% Southwest China 579531096.85 14.71% 608755688.10 13.31% -4.80% Distribution mode Direct sales 3794632582.06 96.30% 4429357639.21 96.93% -14.33% Distribution 145898352.01 3.70% 140332363.78 3.07% 3.97% (2) Industries products regions and sales models accounting for more than 10% of the Company's operating income or operating profit Unit: yuan 16Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Increase or Increase/decr Increase/dec decrease in ease in rease in Gross revenue operating gross profit Operating revenue Operating costs profit compared costs rate rate with the same compared compared period last with the with the year same period same periodlast year last year By industry Watch business 3656306133.74 2317289192.84 36.62% -14.32% -15.60% 0.96% Leasing business 138069112.39 43245383.91 68.68% -8.18% -2.54% -1.81% By product Watch brand business 721623074.27 236520324.15 67.22% -9.47% -10.33% 0.32% Full service business of luxury 2934683059.47 2080768868.69 29.10% -15.43% -16.16% 0.61% watches Leasing business 138069112.39 43245383.91 68.68% -8.18% -2.54% -1.81% By region South China 1857820951.58 1150015490.66 38.10% -12.00% -13.99% 1.43% Northwest China 546718719.91 340604264.11 37.70% -22.35% -23.95% 1.32% North China 122281678.29 67869248.79 44.50% -43.73% -48.47% 5.10% East China 492238757.53 320993514.84 34.79% -13.77% -12.74% -0.77% Northeast China 341939729.91 228825624.89 33.08% -4.39% -4.76% 0.26% Southwest China 579531096.85 367889791.14 36.52% -4.80% -3.38% -0.93% Distribution mode Direct sales 3794632582.06 2406620203.55 36.58% -14.33% -15.51% 0.89% Distribution 145898352.01 69577730.88 52.31% 3.97% 21.98% -7.04% If the statistical caliber of the company's main business data is adjusted during the reporting period the company's latest period main business data adjusted according to the caliber at the end of the reporting period Not applicable (3) Whether the Company's physical sales revenue is greater than labor revenue Yes Industry YoY classification Item Unit 2024 2023 increase/decrease Sales volume Nos. 978021 902955 8.31% Brand watches Productionvolume Nos. 972522 868480 11.98% Inventory Nos. 777015 782514 -0.70% Reasons for the YoY change of more than 30% in relevant data Not applicable 17Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. (4) Performance of major sales contracts and major procurement contracts signed by the Company as of the reporting period Not applicable (5) Composition of operating costs Industry and product classification Unit: yuan 20242023 Industry Proportion YoY classifica Item Proportion in increase/decr tion Amount operating Amount in costs operating ease costs Merchandise Watch procurement 2080768868.69 84.03% 2481853312.97 85.42% -16.16% business cost Raw material 214145376.12 8.65% 239031937.74 8.23% -10.41% Unit: yuan 20242023 Product YoY classificat Item Proportion Proportion increase/decr ion Amount in operating Amount in operating ease costs costs Full service Merchandise business procurement 2080768868.69 84.03% 2481853312.97 85.42% -16.16% of luxury cost watches Watch brand Raw material 214145376.12 8.65% 239031937.74 8.23% -10.41% business (6) Whether the scope of consolidation changed during the reporting period No (7) Information about significant changes or adjustments in COOEC's business products or services during the reporting period Not applicable (8) Major sales customers and major suppliers Major sales customers of FIYTA Total sales amount from top five customers (yuan) 829086732.66 Proportion of total sales amount from top five customers in total annual sales 21.04% Proportion of sales of related parties in the sales from top five customers to the total annual sales 0.00% 18Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Top 5 customers of the Company No. Customer name Sales amount (yuan) Proportion in total annualsales 1 First place 242985550.36 6.17% 2 Second place 169435204.94 4.30% 3 Third place 160738418.61 4.08% 4 Fourth place 133662363.38 3.39% 5 Fifth place 122265195.37 3.10% Total -- 829086732.66 21.04% Other information of main customers Not applicable Main suppliers Total procurement amount from top five suppliers (yuan) 1916849035.55 Proportion of the total procurement amount from the top five suppliers in the total annual procurement amount 81.18% Proportion of the procurement amount of related parties in the procurement amount from top five suppliers to the 0.00% total annual procurement amount Information of top 5 suppliers No. Supplier name Procurement amount Proportion in total annual(yuan) procurement 1 First place 964836795.24 40.86% 2 Second place 541758611.60 22.94% 3 Third place 164093247.92 6.95% 4 Fourth place 148438639.92 6.29% 5 Fifth place 97721740.87 4.14% Total -- 1916849035.55 81.18% Other information of main suppliers Not applicable 3. Expenses Unit: yuan 2024 2023 YoY Description ofincrease/decrease significant changes Selling expenses 882777806.63 924009179.32 -4.46% Not applicable Administrative expenses 183277930.17 205359277.24 -10.75% Not applicable Financial expenses 17924871.34 21469772.77 -16.51% Not applicable Research and development 56000000.18 57802244.08 -3.12% Not applicable expenses 19Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 4. R&D investment Expected impact Main R&D projects Project purpose Projectprogress Objectives to be achieved on the Company's future development To provide the market with A series of new innovative To develop multiple series of new products with products with Annual tasks products with FIYTA brand FIYTA brand brand completed characteristics of aerospace Provide innovative characteristics characteristics of theme and market them as products aerospace theme planned elements To carry out structural innovative Development of To improve the design new material applicationinnovative research and process innovation To improve the structures performance andmarket Annual tasks according to the development performance and materials and market processes for new competitiveness of completed requirements of aerospace-themed new products so as to improve competitiveness products new products product performance and expand of new products functions To meet the needs of brand Development of To improve the differentiation and product To improve the mechanical watch performance and movements with market Annual tasks innovation develop mechanical performance and completed watch movements and key parts marketdistinctive brand competitiveness of with special functions and competitiveness features new products indication methods and realize of new products new product applications Development of To provide special To develop and deliver special To provide special special watches watches for the Annual tasks watches according to the watches for the for manned space manned space completed requirements of manned space manned space flight flight missions flight Smart watch To carry out the research and products with development of core functions and functions such as To improve the data analysis solutions of smart To improve the sports and health performance and Annual tasks wearable products the research performance and human body sign market and development of technical market monitoring and competitiveness of completed solutions combining mechanical competitiveness various daily new products watches and smart watches etc. of new products applications and apply relevant research to newproducts R&D personnel 2024 2023 Change Number (person) 136 119 14.29% Proportion 3.73% 2.81% 0.92% Educational structure of R&D personnel Undergraduate 73 62 17.74% Master degree 20 18 11.11% Doctor degree 1 2 -50.00% College or below 42 37 13.51% Age structure Under 30 years old 34 28 21.43% 20Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 30-40 years old 60 64 -6.25% Over 40 years old 42 27 55.56% R&D investment 2024 2023 Change R&D investment amount (yuan) 56000000.18 57802244.08 -3.12% Proportion of R&D investment in operating income 1.42% 1.26% 0.16% Capitalization amount of R&D investment (yuan) 0.00 0.00 0.00% Proportion of capitalized R&D investment in R&D investment 0.00% 0.00% 0.00% Reasons and impact of major changes in the composition of R&D personnel Not applicable Reasons for significant changes in the proportion of total R&D investment in operating income compared with the previous year Not applicable Reasons for significant changes in the capitalization rate of R&D investment and their rationality Not applicable 5. Cash flow Unit: yuan Item 2024 2023 YoY increase/decrease Sub-total of cash inflows from operating activities 4389078476.62 5095999854.92 -13.87% Sub-total of cash outflows from operating activities 3852347516.33 4463598366.94 -13.69% Net cash flows from operating activities 536730960.29 632401487.98 -15.13% Subtotal of cash inflows from investing activities 207107067.71 1778284.57 11546.45% Sub-total of cash outflows from investing activities 317998568.53 91104776.03 249.05% Net cash flows from the investing activities -110891500.82 -89326491.46 -24.14% Subtotal of cash inflows from financing activities 323957187.86 250000000.00 29.58% Sub-total of cash outflows from financing activities 735302707.60 602163687.52 22.11% Net cash flows from financing activities -411345519.74 -352163687.52 -16.81% Net increase of cash and cash equivalents 14325023.78 190890764.07 -92.50% Description of main influencing factors of significant YoY changes in relevant data Cash inflows and outflows from investing activities changed significantly YoY which is mainly due to the increase in time deposits. 21Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Reasons for significant difference between net cash flows from operating activities of the Company during the reporting period and net profit of the current year Not applicable V. Analysis of non-main business Not applicable VI. Analysis of assets and liabilities 1. Major changes in the composition of assets Unit: yuan As at the end of 2024 Early 2024 Increase or Description of Proportio Proportio decrease in significant Amount n in total Amount n in total proportion changes assets assets Monetary funds 518954177.49 12.95% 504629153.71 12.00% 0.95% Not applicable Accounts receivable 260152834.43 6.49% 323142761.64 7.69% -1.20% Not applicable Contract assets 0.00 0.00% 0.00 0.00% 0.00% Not applicable Inventories 1984486969.74 49.52% 2100666175.28 49.97% -0.45% Not applicable Investment properties 301002364.41 7.51% 360255832.14 8.57% -1.06% Not applicable Long-term equity 50907036.84 1.27% 51862607.30 1.23% 0.04% Not applicable investments Fixed assets 377568144.41 9.42% 355785354.68 8.46% 0.96% Not applicable Construction in progress 0.00 0.00% 0.00 0.00% 0.00% Not applicable Right-of-use assets 98437976.41 2.46% 109452481.64 2.60% -0.14% Not applicable Short-term borrowings 124087754.51 3.10% 250187763.87 5.95% -2.85% Not applicable Contract liabilities 12605722.95 0.31% 12286243.62 0.29% 0.02% Not applicable Long-term borrowings 0.00 0.00% 0.00 0.00% 0.00% Not applicable Lease liabilities 35065292.04 0.87% 43526352.52 1.04% -0.17% Not applicable High proportion of overseas assets Not applicable 2. Assets and liabilities measured at fair value Not applicable 22Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 3. Restrictions status on assets rights as of the end of the reporting period Not applicable VII. Analysis of investment status 1. General situation Investment amount during the Investment amount in the same reporting period (yuan) period of last year (yuan) Change range 0.0080000000.00-100.00% 2. Significant equity investment acquired during the reporting period Not applicable 3. Significant non-equity investments in progress during the reporting period Not applicable 4. Investment in financial assets (1) Securities investment situation Not applicable (2) Derivatives investment situation Not applicable 5. Use of raised funds Not applicable VIII. Sale of major assets and equity 1. Sale of major assets Not applicable 2. Sale of significant equity Not applicable 23Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. IX. Analysis of major holding and participating companies Major subsidiaries and joint-stock companies with an impact of more than 10% on the company's net profit Unit: yuan Name of the company Companytype Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profit Purchase and Shenzhen Harmony sale of clocks World Watch Centre Subsidiaries watches and 600000000 1994673835.63 1124696669.99 2864961918.35 224615059.28 169967233.08 Co. Ltd. spare parts andmaintenance services.Design R&D and FIYTA Sales Co. Ltd. Subsidiaries sales of clocksand watches and 450000000 430580717.99 322904281.38 408216929.14 -12978662.66 -9983669.33 spare parts.Shenzhen FIYTA Manufacture Precision Technology Subsidiaries clocks andwatches and 180000000 290546321.79 217910085.80 328399825.27 4137027.52 7634783.28Co. Ltd. spare parts.Production and Shenzhen FIYTA STD Co. Ltd. Subsidiaries processing of precision spare 50000000 194063771.01 170826371.10 153673661.62 6762026.36 6999097.67 parts.Trade and FIYTA (HONG KONG) Subsidiaries investment inLIMITED watches clocks 137737520 264479035.44 253422394.80 73498904.56 5703019.60 5688824.76 and accessories.Emile Chouriet Design R&D and Horologe (Shenzhen) Subsidiaries sales of clocksand watches and 41355200 138401065.89 54609576.57 60923662.03 7072008.60 4575371.28Co. Ltd. spare parts.Acquisition and disposal of subsidiaries during the reporting period 24Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Not applicable Description of main holding and participating companies 1. The net profit of Shenzhen Harmony World Watch Centre Co. Ltd. decreased year-on-year primarily due to a decline in sales revenue from the Full service business of luxury watches. 2. The net profit of Shenzhen Flyta Precision Technology Co. Ltd. decreased year-on-year mainly due to a decrease in sales revenue from the watch brand business an increase in inventory impairment losses and other reasons. 25Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. X. Structured entities controlled by the company Not applicable XI. Structured entities controlled by the company (I) Future development strategy In 2025 the Company will continue to follow the guiding principle of "high-quality development" to expand the watch industry and improve its core competitiveness and accelerate the development of new industries enhance core functions and do a solid job in the following: 1. Consolidate the brand positioning and improve the comprehensive competitiveness of the brand The "FIYTA" brand will remain as a "high-quality Chinese watch brand featuring aerospace watch". By adhering to the "national tide" direction the Company will strengthen product innovation design promote the IP linkage between the brand and aerospace and "Pillars of a Great Power" and create product differentiation. In addition the Company will strengthen precision marketing planning rely on online media and offline channels to expand the brand influence and integrate aviation culture and traditional Chinese culture into the brand story in an all-round way. 2. Deepen channel operation and promote the integrated development of online and offline channels In terms of the watch business the channel and brand structure will be optimized constantly and the focus will be on the development of core high-quality channels and medium- and high-end brands; the lean operation of offline channels and the combination of product and marketing of online channels will be enhanced to promote the integrated development of online and offline channels and explore opportunities for channel and brand resource integration in an orderly manner. 3. Increase R&D investment and improve scientific and technological attributes The Company will increase investment in the domestication of movements the development of high-end customized movements such as tourbillons and key components integrate aerospace characteristic technologies and material applications and improve scientific and technological attributes. 4. Accelerate transformation and upgrading and vigorously develop new industries Under the principle of "shared technology shared industry roots and aligned value" the Company will vigorously develop strategic emerging industries such as precision technology business and smart wearable business continue to build core capabilities and improve the overall business scale.(II) Possible risks and countermeasures 1、Consumer market risk At present the Company is encountering multiple market risks such as sluggish domestic traditional watch consumer demand consumer outflow and consumer preference shift. In this regard the Company will consolidate the positioning of brand characteristics improve the aerospace quality of products impress consumers with perceptible distinctive characteristics and organically combine aerospace culture with Chinese traditional culture so as to obtain the recognition of target consumer groups. The Company will deeply cultivate the refined operation of channels and improve the full life cycle management and service capabilities of consumers and enhance consumer stickiness. Additionally The Company will seize market opportunities and actively explore businesses related to overseas markets and duty-free markets. 2、Core technology risk 26Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. At present the Company is encountering multiple technical challenges in the production and manufacturing of traditional watch movements and key components intelligent wearable systems and function iteration and extensive in-depth application of digitalization. In this regard the Company will increase investment in core technologies promote core technologies in the research and development of movement and key components the development and integration of intelligent software and hardware and the application of AI and other cutting-edge technologies strengthen the introduction and retention of key technical talents and improve the overall scientific and technological innovation ability so as to empower high-quality business development.XII. Reception survey communication interview and other activities during the reporting period Main contents Index of Reception Reception Reception Object type Reception discussed and basic time place mode object information informatio provided n of thesurvey Network Shenwan and HongyuanSecurities Co. Company March 18 conferenceroom of Others agencies Ltd. Fullgoal operation and2024 FIYTA Fund development Technology Management planning etc.Building CompanyLimited Online Investors who https://eseb. communicati participated in CompanyMarch 22 cn/1cFKiOE on on the Others the Company's operation and2024 1oVq network 2023 Online development platform Performance planning etc.Briefing online Eastmoney https://irm.Securities Co. cninfo.co Ltd. Yuekai m.cn/ircs/c Securities Co. ompany/c Ltd. Jingyuan ompanyDe Tiancheng tailstockc Investment ode=0000 Consultants 26&orgId= Co. Ltd. gssz00000 26 Conference Mozhu Private room of Equity Fund Company June 6 2024 FIYTA Field survey agencies Management operation and Technology Co. Ltd. development Building Shenzhen planning etc.Flying Tiger Investment & Management Co.Ltd.Shenzhen Qianhai Huirongfeng Capital Management Co.Ltd. 27Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Shenzhen Qiancun Investment Consulting Co. Ltd. and Luyan Guangnian Company Shenwan Hongyuan Securities Co.October 30 Telephone Telephone Ltd. Founder Company and web communicati agencies Securities Co. operation and2024 conference on Ltd. and development China Asset planning etc.Management Co. Ltd.Conference December 3 room of Fullgoal Fund Company FIYTA Field survey agencies Management operation and2024 Technology Company development Building Limited planning etc.Conference Hongsike December 9 room of Asset Company 2024 FIYTA Field survey agencies Management operation and Technology (Beijing) Co. development Building Ltd. planning etc."Quanjing Investors Luyan" Online participating in December website communicati the online Company 12 2024 WeChat on on the Others collective operation and official network reception day development account platform for planning etc.and APP investors XIII. Formulation and implementation of market value management system and valuation boost plan Whether the Company has established a market value management system.No Whether the Company has disclosed plans for valuation boost.No XIV. Implementation of the action plan of "double improvement of quality and return" Whether the company has disclosed the announcement of the action plan of "double improvement of quality and return".No 28Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 4 Corporate governance I. Basic conditions of corporate governance In 2024 the Company continued to improve its corporate governance structure in strict accordance with the requirements of the Company Law the Securities Law and the normative documents issued by the CSRC on the governance of listed companies and made efforts to enhance the construction of modern enterprise systems and improve the standard operation level of the Company. As a result the corporate governance complied with the relevant regulations of the CSRC.In strict accordance with the Company Law and other laws regulations normative documents and the Articles of Association the Company has established and improved a standardized corporate governance structure and rules of procedure formed a decision-making and operation management system with the Board of Shareholders the Board of Directors the Board of Supervisors and the Company's managers as the main body and performed various duties stipulated in the Company Law and the Articles of Association according to the law.The Board of Shareholders serving as the Company's organ of authority is responsible for electing and replacing directors and supervisors deciding on their remuneration approving reports of the Board of Directors reports of the Board of Supervisors the Company's profit distribution plan equity incentive plan and so on and for making resolutions on major matters such as the Company's capital increase and decrease the issuance of corporate bonds the Company's merger division dissolution liquidation or change of corporate form and the amendment of the Articles of Association.The Board of Directors playing the role of "determining strategies making decisions and preventing risks" is responsible for implementing the resolutions of the Board of Shareholders convening the Board of Shareholders and reporting to it. In addition the Board of Directors is responsible for deciding the Company's external investment asset acquisition and sale asset mortgage external guarantee related party transactions and other matters within the scope authorized by the Board of Shareholders making decisions on the establishment of the Company's internal management organization and branches and for appointing or dismissing the Company's general manager secretary of the Board of Directors and other senior officers. The Board of Directors consists of nine directors including three independent directors and has a strategy and ESG committee an audit committee and a nomination remuneration and appraisal committee.The Board of Supervisors is responsible for reviewing the Company's regular reports checking the Company's financial situation supervising the directors and senior officers to perform their duties in accordance with the law and proposing the dismissal of directors and senior officers who violate laws administrative regulations the Articles of Association or resolutions of the Board of Shareholders. The Board of Supervisors consists of three supervisors including an employee representative supervisor.The managers are responsible for "operation implementation and management". The general manager is responsible to the Board of Directors presides over the production and operation management under the leadership of the Board of Directors organizes the implementation of the Board of Directors' resolutions within the scope of authorization of the Board of Directors and reports to the Board. Besides the general manager is responsible for organizing the implementation of the Company's annual development plan and business plan 29Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. proposing the investment scheme and plan annual financial budget plan final account plan profit distribution plan and loss recovery plan the capital increase and decrease plan etc.Whether the actual corporate governance significantly conflicts with the laws administrative regulations and CSRC regulations on the governance of listed companies No II. The Company's independence from the controlling shareholder and the actual controller in ensuring the Company's assets personnel finance organization business etc.The Company and the controlling shareholder have achieved the "five separations" in terms of business personnel assets organization and finance and the Company has independent and complete business and independent operation ability.Business: The Company is mainly engaged in the watch industry with independent production auxiliary production supporting facilities and procurement and sales systems and there is no horizontal competition between the Company and the controlling shareholder.Personnel: The Company has an independent organization and a sound system regarding labor personnel and wage management. Except for the directors Mr. Wang Bo Mr. Li Peiyin Mr. Deng Jianghu Mr. Guo Gaohang Madam Hu Min the chairman of the board of supervisors and Mr. Yuan Tianbo the supervisor who serve in shareholder entities other directors and senior officers hold no dual posts in shareholder entities and financial personnel hold no part-time posts in affiliates.Assets: The Company and the controlling shareholder have clearly established property rights and enjoy independent legal person property rights over the Company's assets. The Company's assets are fully independent of the controlling shareholder and the Company independently owns trademarks such as "FIYTA" and "Harmony".Organization: The Board of Directors Board of Supervisors and other internal organizations of the Company are sound and operate independently and there is no subordination or co-location with the functional departments of the controlling shareholder. The controlling shareholder exercises its rights and assumes corresponding obligations in accordance with the law and has not directly or indirectly intervened in the Company's business activities by exceeding the authority of the Board of Shareholders.Finance: The Company has set up an independent financial department established a sophisticated and independent financial accounting system and financial management system and opened an account in the bank independently. The controlling shareholder has not interfered with the Company's financial accounting activities.III. Horizontal competition Not applicable IV. Information on the annual general meeting and extraordinary general meeting held during the reporting period 1. General meeting of shareholders during the reporting period Session Type of Investormeeting Date of meeting Disclosure date Resolutions made at the Proportion meeting 30Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. of participatio n For details please refer to the Announcement on 2023 Annual Annual Resolutions of the 2023 General general 42.01% April 18 2024 April 19 2024 Annual General Meeting Meeting meeting 2024-016 disclosed by the Company on the CNINFO website.For details please refer The first to the Announcement of extraordinary Extraordinary the Resolution of the general general 43.48% September 6 2024 September 7 First Extraordinary meeting in meeting 2024 General Meeting in 2024 2024 No. 2024-034 disclosedby the Company on the CNINFO website.For details please refer The second to the Announcement of extraordinary Extraordinary the Resolution of the general general 41.09% November 28 November 29 Second Extraordinary meeting in meeting 2024 2024 General Meeting in 2024 2024 No. 2024-044 disclosedby the Company on the CNINFO website. 2. Preferred shareholders with restored voting rights request to convene a temporary general meeting Not applicable 31Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. V. Members of the directors supervisors and senior officers 1. Basic information Number Number Number Numberof shares of shares of Other of Reasons held at shares increases shares for Name Gende Ag Title Employmen Beginning date Ending date of the increase reduced and held at changes r e t status of term term beginnin d in thecurrent in the decrease the end in share g of the current s of the increase period period(shares) period (shares) period or (shares) (shares) (shares) decrease Zhang Xuhua Male 48 Chairman Incumbent July 1 2021 September 5 202700000 Wang Bo Male 46 Director Incumbent September 6 September 52024 2027 0 0 0 0 0 Li Peiyin Male 39 Director Incumbent February 24 September 52021 2027 0 0 0 0 0 Deng September 8 September 5 Jianghu Male 41 Director Incumbent 2021 2027 0 0 0 0 0 Guo Gaohang Male 38 Director Incumbent December 28 September 5 2023202700000 Director Incumbent February 24 September 5 Pan Bo Male 49 2021 2027General January 15 September 5 230050 0 0 0 230050 Not manager Incumbent 2021 2027 applicable Wang Independen Susheng Male 56 t director Incumbent September 6 September 5 2024202700000 Wang Wenbo Male 43 Independen t director Incumbent September 6 September 5 2024202700000 Cao Guangzhon Male 57 Independent director Incumbent September 6 September 5 g 2024 2027 00000 Chairman Femal of the Incumbent Jan. 4 2024 September 5Hu Min e 40 Board of 2027 0 0 0 0 0Supervisors Supervisor Incumbent December 28 September 5 32Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 20232027 Yuan Male 45 Supervisor Incumbent December 28 September 5Tianbo 2023 2027 0 0 0 0 0 Hu Jing Femal 54 Supervisor Incumbent September 7 September 5e 2021 2027 9000 0 0 0 9000 Deputy general Incumbent August 8 2014 September 5 Lu Wanjun Male 58 manager 2027 160050 0 0 0 160050 General Incumbent October 25 September 5counsel 2021 2027 Liu Deputy Xiaoming Male 54 general Incumbent 17 October 2016 September 5 2027 160050 0 0 0 160050manager Deputy Li Ming Male 52 general Incumbent 17 October 2016 September 52027 160090 0 0 0 160090manager Chief February 6 September 5 accountant Incumbent 2022 2027 Song Male 58 SecretaryYaoming of the September 5 0 0 0 0 0 Board of Incumbent April 21 2022 2027 Directors Tang Deputy Haiyuan Male 52 general Incumbent September 29 September 5 manager 2019 2027 107550000107550 Xiao Yi Male 51 Director Resigned February 24 September 62021 2024 0 0 0 0 0 Wang Male 55 Independen September 11 September 6Jianxin t director Resigned 2018 2024 0 0 0 0 0 Zhong Male 50 Independen September 11 September 6Hongming t director Resigned 2018 2024 0 0 0 0 0 Tang Male 51 Independen Resigned September 11 September 6Xiaofei t director 2018 2024 0 0 0 0 0 Total -- -- -- -- -- -- 826790 0 0 0 826790 -- Whether there was any resignation of directors and supervisors and dismissal of senior officers during the reporting period No 33Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. (IV) Change in directors supervisors and senior officers Name Position held Type Date Reasons Zhang Xuhua Chairman Be elected September 6 2024 Change of termDirector Be elected September 6 2024 Change of term Wang Bo Director Be elected September 6 2024 Change of term Li Peiyin Director Be elected September 6 2024 Change of term Deng Jianghu Director Be elected September 6 2024 Change of term Guo Gaohang Director Be elected September 6 2024 Change of term Pan Bo Director Be elected September 6 2024 Change of term General manager Employment September 6 2024 Change of term Wang Susheng Independent director Be elected September 6 2024 Change of term Wang Wenbo Independent director Be elected September 6 2024 Change of term Cao Guangzhong Independent director Be elected September 6 2024 Change of term Chairman of the Hu Min Board of Supervisors Be elected September 6 2024 Change of term Supervisor Be elected September 6 2024 Change of term Yuan Tianbo Supervisor Be elected September 6 2024 Change of term Hu Jing Employee supervisor Be elected August 26 2024 Change of term Deputy general Lu Wanjun manager and general Employment September 6 2024 Change of term counsel Liu Xiaoming Deputy generalmanager Employment September 6 2024 Change of term Li Ming Deputy generalmanager Employment September 6 2024 Change of term Chief accountant and Song Yaoming secretary of Board of Employment September 6 2024 Change of term Directors Tang Haiyuan Deputy generalmanager Employment September 6 2024 Change of term Xiao Yi Director Resignation uponexpiration of term September 6 2024 Change of term Wang Jianxin Independent director Resignation uponexpiration of term September 6 2024 Change of term Zhong Hongming Independent director Resignation uponexpiration of term September 6 2024 Change of term Tang Xiaofei Independent director Resignation uponexpiration of term September 6 2024 Change of term 2. Work performance information Professional background main work experience and current main responsibilities of the current directors supervisors and senior officers Mr. Zhang Xuhua born in March 1977. He holds a Master Degree of Business Administration from Xi'an Jiaotong University and an EMBA from China Europe International Business School. He currently serves as the chairman of the Company. He once acted as the managing director deputy general manager assistant general manager general manager of shopping center business department of Rainbow Digital Commercial Co. Ltd.general manager of Chengdu Company director of commodity center general manager of Dreams-On general manager of AVIC Plaza Project deputy manager of distribution center and an employee of the marketing department of Shenzhen Vanke Fine Products Manufacturing Co. Ltd.Mr. Wang Bo born in July 1979 holds a Master Degree of Business Administration from Renmin University of China. He currently serves as a director of the Company director of CPC organization department/human 34Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. resources department of AVIC INNO director of Shenzhen Shanghai Hotel director of Shennan Circuit Co. Ltd.director of Tianma Microelectronics Co. Ltd. director of AVIC International Holdings (Zhuhai) Co. Ltd. and director of AVIC International Supply Chain Technology Co. Ltd. He once acted as the director of the human resources department of China Aviation Technology Shenzhen Co. Ltd. the director of human resources department of Shenzhen CATIC Real Estate Co. Ltd. the director of the human resources department of China Aviation Technology Shenzhen Co. Ltd. and the deputy secretary of the Party Committee and general manager of Grand Skylight Hotels Management Co. Ltd.Mr. Li Peiyin born in September 1986 is a certified public accountant and senior accountant. He holds a Master Degree in Accounting from Xiamen University and an MBA from Missouri State University. He currently serves as a director of the Company the head of the financial management department of AVIC INNO the director of AVIC International Supply Chain Technology Co. Ltd. the director of Shennan Circuits Co. Ltd. the director of Tianma Microelectronics Co. Ltd. the director of Continental Aerospace Technologies Holding Limited and the director of Continental Aerospace Technologies Group Co. Ltd.Mr. Deng Jianghu born in July 1984 holds a Master Degree in Business Administration from Northeast Normal University. He currently serves as a director of the Company the director of the operation management department of AVIC INNO the director of Tianma Microelectronics Co. Ltd. the director of Shennan Circuits Co.Ltd. the director of AVIC Huadong Photoelectric Co. Ltd. and the chairman of Castic-SMP Machinery Corp. Ltd.He once acted as the manager and deputy manager of the planning and operation department of the Company the director of the modern service industry office of China Aviation Technology Shenzhen Co. Ltd. and the senior project manager of strategic operation management of the strategic development department of Shennan Circuits Co. Ltd.Mr. Guo Gaohang born in March 1987 holds a Master Degree in Materials Physics and Chemistry from Harbin Institute of Technology. He currently serves as a director of the Company the deputy director of the planning and development department of AVIC INNO (leading) a director of AVIC International Supply Chain Technology Co. Ltd. a director of Tianma Microelectronics Co. Ltd. a director of Shennan Circuits Co. Ltd. and a director of Rainbow Digital Commercial Co. Ltd. He once acted as strategic operation management project manager of planning and operation department of China Aviation Technology Shenzhen Co. Ltd. senior semiconductor industry analyst and semiconductor industry analyst of TrendForce Consulting (Shenzhen) Co. Ltd.and packaging and testing process design engineer of Shenzhen STS Microelectronics Co. Ltd.Mr. Pan Bo born in March 1976 is an engineer. He holds a Bachelor Degree in Mechanical and Electrical Engineering from the Beijing University of Aeronautics and Astronautics and an EMBA from China Europe International Business School. He currently serves as the Managing Director of the Company. He once acted as the deputy general manager secretary of the Board of Directors and assistant to the general manager of the Company the general manager deputy general manager assistant to the general manager manager of the sales department and manager of the logistics department of FIYTA Sales Co. Ltd.Mr. Wang Susheng born in March 1969 is a certified public accountant a doctor of law from Peking University and holds an MBA from University of Chicago. He currently serves as an independent director of the Company a professor of Southern University of Science and Technology and an independent director of Changyuan Technology Group Ltd. Dowell Service Urban Operation Service Group Co. Ltd. (02352.HK) and CALB Group Co. Ltd. (03931.HK). He once acted as the director and professor of the economic management department of Harbin Institute of Technology (Shenzhen Graduate School) and the director of CDB Sino-Swiss Venture Capital Fund Management Co. Ltd. 35Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Mr. Wang Wenbo born in December 1982 holds a Doctoral Degree in Marketing from New York University.He currently serves as an independent director of the Company an associate professor tenured professor and doctoral supervisor of the Business School of the Hong Kong University of Science and Technology. He once acted as a professor of WeBank × Joint Laboratory Scientific Committee on Artificial Intelligence of Hong Kong University of Science and Technology and a technical expert consultant of many leading companies in the industry.Mr. Cao Guangzhong born in May 1968 holds a Doctoral Degree in Mechatronic Engineering from Xi'an Jiaotong University. He currently serves as an independent director of the Company a professor of Shenzhen University an independent director of Shenzhen Colibri Technologies Co. Ltd. and Shenzhen Sinvo Automation Co. Ltd. a standing member of the Computer Application Federation of China Instrument and Control Society a standing director of Guangdong Automation Society a director of Guangdong Artificial Intelligence and Robotics Society a vice chairman of Shenzhen Robotics Association and a science and technology review expert of the National Natural Science Foundation of China the Ministry of Science and Technology the Ministry of Industry and Information Technology and Guangdong Province. He once acted as an associate professor of Mechatronics at Xi'an Jiaotong University and a postdoctoral researcher at Korea Advanced Institute of Science and Technology (KAIST).Madam Hu Min born in May 1985 is an economist and holds a Master Degree in Civil Procedure Law from Peking University. She currently serves as the chairman of the Board of Supervisors of the Company the chief auditor of AVIC INNO the head of the audit and legal Department the director of AVIC International Supply Chain Technology Co. Ltd. the director of AVIC International Holding Limited the director of China Aviation Technology Beijing Co. Ltd. the supervisor of Shennan Circuits Co. Ltd. the supervisor of Rainbow Digital Commercial Co.Ltd. and the supervisor of Tianma Microelectronics Co. Ltd. She once acted as the general counsel and general manager of the legal affairs and discipline inspection audit department the deputy general counsel and general manager of the legal affairs and contract management department the general manager of legal affairs and contract management and audit supervision department the deputy general manager of the legal affair and contract management department of China National Aero-technology International Engineering Corporation.Mr. Yuan Tianbo born in October 1980 is an economist and holds a Master Degree in Management Science and Engineering from Northwestern Polytechnical University. He currently serves as the supervisor of the Company the deputy director of the discipline inspection department of AVIC INNO (leading) and the director of Boyu Dongfang Co. Ltd. He once acted as the deputy general manager (in charge of work) and general manager assistant of Boyu Dongfang Co. Ltd. general manager and deputy general manager of China Aviation Technology Qinghai Co. Ltd. director of the administration and human resources department and director of the development department of Boyu Dongfang Co. Ltd. and the recruitment management post of the human resource department of China Aviation Technology Shenzhen Co. Ltd.Madam Hu Jing born in September 1971 is an accountant and holds a Bachelor Degree in Accounting from Jiangxi University of Finance and Economics. She currently serves as the employee representative supervisor and senior tax manager of the finance department of the Company. She once acted as the senior business manager of the audit department the fund manager of the finance department and the tax supervisor of the Company.Mr. Lu Wanjun born in February 1967 is an accountant and holds an EMBA from China Europe International Business School. He currently serves as the deputy general manager and general counsel of the Company. He once acted as the assistant to the general manager of the Company the executive deputy general manager deputy general manager assistant to the general manager and manager of the financial department of Shenzhen Harmony World Watch Centre Co. Ltd. 36Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Mr. Liu Xiaoming born in July 1971 is an engineer and economist. He holds a Bachelor Degree in Manufacturing Engineering from the Beijing University of Aeronautics and Astronautics and an EMBA from China Europe International Business School. He currently serves as the deputy general manager of the Company. He once acted as the assistant to the general manager of the Company the deputy general manager and assistant to the general manager of Shenzhen Harmony World Watch Centre Co. Ltd.Mr. Li Ming born in September 1973. He holds a Bachelor Degree in Marketing from Zhongnan University of Finance and Economics and an EMBA from China Europe International Business School. He currently serves as the deputy general manager of the Company. He once acted as the assistant general manager and director of human resources department of the Company deputy general manager assistant general manager and manager of human resources department of Shenzhen Harmony World Watch Centre Co. Ltd.; the director of human resources and general manager of marketing center of CNC Shenzhen Branch; the key account manager and market planning manager of Shenzhen Branch of China Telecom.Mr. Song Yaoming born in July 1967 is a senior accountant and holds a Master Degree in Economics from Shaanxi University of Finance and Economics and an EMBA from China Europe International Business School. He currently serves as the chief accountant and secretary of the Board of Directors of the Company. He once acted as the deputy general manager and chief accountant of Rainbow Digital Commercial Co. Ltd. the director of Shenzhen Aoxuan Investment Co. Ltd. the director of Shenzhen Aoer Investment Development Co. Ltd. and the deputy manager and accountant of the financial department of Shenyang Jinbei Automobile Co. Ltd.Mr. Tang Haiyuan born in February 1973 is a senior engineer. He holds a Bachelor Degree in Plastic Forming Technology and Equipment from Hefei University of Technology and an EMBA from China Europe International Business School. He currently serves as the deputy general manager of the Company. He once acted as the general manager deputy general manager assistant general manager manager of quality department manager and deputy manager of engineering technology department of Shenzhen FIYTA Precision Timing Manufacturing Co. Ltd. and assistant general manager of technology and manager of technology department of Shenzhen FIYTA STD Co. Ltd.Positions held in shareholders Whether to receive Name Shareholders' Positions held in Beginning date of Ending remuneration name shareholders term date of allowance fromterm the shareholder unit Director of CPC Wang Bo AVIC INNO Co. organizationLtd. department/human January 8 2025 Yes resources department Director of financial Li Peiyin AVIC INNO Co.Ltd. management January 8 2025 Yesdepartment Director of Operations Deng Jianghu AVIC INNO Co.Ltd. Management January 8 2025 YesDepartment.Deputy director of the Guo Gaohang AVIC INNO Co. planning andLtd. development department January 8 2025 Yes (leading) 37Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. AVIC INNO Co. Chief auditor head of Ltd. audit and legal January 8 2025 Yes Hu Min departmentAVIC International Director January 3 2025 No Holding Limited Yuan Tianbo AVIC INNO Co.Deputy director of Ltd. discipline inspection January 8 2025 Yesdepartment (leading) Description of the positions held in Not applicable shareholders Position in other entities Whether to Other units Positions held Beginning date of Terminatio receive Name in other term n of term remuneration Name entities allowancesDate Date from other organizations Shenzhen Shanghai Hotel Director January 10 2018 No Shennan Circuits Co. Ltd. Director November 13 2024 No Tianma Microelectronics Co.Wang Ltd. Director November 18 2024 No Bo AVIC International Holdings (Zhuhai) Co. Ltd. Director January 3 2025 No AVIC International Supply Chain Technology Co. Ltd. Director January 3 2025 No AVIC International Supply Chain Technology Co. Ltd. Director March 17 2021 No Continental Aerospace Technologies Group Co. Ltd. Director March 29 2021 No Li Peiyin Shennan Circuits Co. Ltd. Director April 6 2021 No Continental Aerospace Technologies Holding Limited Director April 1 2022 No Tianma Microelectronics Co.Ltd. Director July 8 2022 No Tianma Microelectronics Co.Ltd. Director November 29 2021 No Deng Shennan Circuits Co. Ltd. Director April 7 2022 No Jianghu AVIC Huadong Photoelectric Co. Ltd. Director November 27 2023 No Castic-SMP Machinery Corp.Ltd. Chairman December 30 2024 No AVIC International Supply Chain Technology Co. Ltd. Director November 27 2023 No Guo Tianma Microelectronics Co.Gaohan Ltd. Director March 6 2024 No g Shennan Circuits Co. Ltd. Director April 18 2024 No Rainbow Digital Commercial Co. Ltd. Director October 15 2024 No Southern University of Science and Technology Professor April 1 2017 YesWang Susheng Dowell Service UrbanOperation Service Group Co. Independent Ltd. (02352.HK) director December 13 2020 Yes 38Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Changyuan Technology Group Independent Ltd. director August 9 2021 Yes CALB Group Co. Ltd. Independent (03931.HK) director October 6 2022 Yes Associate professor Wang Wenbo HKUST Business School tenured professor July 2 2018 Yes and doctoral supervisor Shenzhen University Professor February 29 2000 Yes Cao Shenzhen Colibri Technologies Independent Guangz Co. Ltd. director October 15 2019 Yes hong Shenzhen Sinvo Automation Independent Co. Ltd. director October 16 2020 Yes AVIC International Supply Chain Technology Co. Ltd. Director July 20 2022 No China Aviation Technology Beijing Co. Ltd. Director January 3 2025 No Hu Min Shennan Circuits Co. Ltd. Supervisor April 18 2024 No Rainbow Digital Commercial Co. Ltd. Supervisor October 15 2024 No Tianma Microelectronics Co.Ltd. Supervisor February 26 2025 No Yuan Tianbo Boyu Dongfang Co. Ltd. Director August 1 2022 No Explanat ion of serving Not applicable in other entities Punishments imposed by securities regulators on the Company's incumbent directors supervisors and senior officers and those who left their posts during the reporting period in the past three years Not applicable 3. Remuneration of directors supervisors and senior officers Decision-making procedures basis for determination and actual payment of remuneration of directors supervisors and senior officers In terms of the remuneration of internal directors and senior officers of the Company an annual salary system is adopted with the structure of basic annual salary and performance annual salary. The remuneration of internal directors is implemented after the approval by the Board of Shareholders and the remuneration of senior officers is determined after the approval by the Board of Directors. The senior officers are assessed in accordance with the Management Measures for the Assessment of Operating Performance of Managers and the Management Measures for the Remuneration of Managers.Except for independent directors who receive allowances from the Company other external directors and shareholder representative supervisors receive no remuneration from the Company. The remuneration of employee representative supervisors is determined in accordance with the Company's employee remuneration management measures.Remuneration of directors supervisors and senior officers of the Company during the reporting period Unit: RMB'0000 39Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Total Whether get Employment compensatio paid fromName Gender Age Title status n before tax relatedreceived from parties of the Company COOEC Zhang Xuhua Male 48 Chairman Incumbent 206.47 No Wang Bo Male 46 Director Incumbent 0 Yes Li Peiyin Male 39 Director Incumbent 0 Yes Deng Jianghu Male 41 Director Incumbent 0 Yes Guo Gaohang Male 38 Director Incumbent 0 Yes Pan Bo Male 49 Managingdirector Incumbent 182.92 No Wang Susheng Male 56 Independent director Incumbent 2.86 No Wang Wenbo Male 43 Independentdirector Incumbent 2.86 No Cao Independent Guangzhong Male 57 director Incumbent 2.86 No Chairman of Hu Min Female 40 the Board of Incumbent 0 Yes Supervisors Yuan Tianbo Male 45 Supervisor Incumbent 0 Yes Hu Jing Female 54 Employeesupervisor Incumbent 43.19 No Deputy general Lu Wanjun Male 58 manager and Incumbent 182.38 No general counsel Deputy Liu Xiaoming Male 54 general Incumbent 229.38 No manager Deputy Li Ming Male 52 general Incumbent 175.99 No manager Chief Song accountant Yaoming Male 58 and secretary Incumbent 180.76 Noof Board of Directors Tang Deputy Haiyuan Male 52 general Incumbent 178.97 Nomanager Xiao Yi Male 51 Director Resigned 0 Yes Wang Jianxin Male 55 Independentdirector Resigned 5.39 No Zhong Independent Hongming Male 50 director Resigned 5.39 No Tang Xiaofei Male 51 Independentdirector Resigned 5.39 No Total -- -- -- -- 1404.81 -- Other circumstances Not applicable 40Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. VI. Duty fulfillment of the directors during the reporting period 1. Information on the Board of Directors during the reporting period Session Date of meeting Disclosure date Resolutions made at the meeting For details please refer to the The 17th meeting of the Announcement on the 17th Meeting of 10th Board of Directors Jan. 4 2024 January 6 2024 the 10th Board of Directors 2024-002disclosed by the Company on the CNINFO website.For details please refer to the The 18th meeting of the Announcement on the 18th Meeting of 10th Board of Directors March 12 2024 Mar. 14 2024 the 10th Board of Directors 2024-006disclosed by the Company on the CNINFO website.For details please refer to the The 19th meeting of the Announcement on the 19th Meeting of 10th Board of Directors April 23 2024 April 25 2024 the 10th Board of Directors 2024-018disclosed by the Company on the CNINFO website.For details please refer to the The 20th meeting of the Announcement on the 20th Meeting of 10th Board of Directors August 19 2024 August 21 2024 the 10th Board of Directors 2024-024disclosed by the Company on the CNINFO website.For details please refer to the The first meeting of the September 6 September 7 Announcement on the 1st Meeting of the 11th Board of Directors 2024 2024 11th Board of Directors 2024-035disclosed by the Company on the CNINFO website.The second meeting of the 11th Board of October 24 2024 October 26 2024 Deliberate and adopt the Third Quarterly Directors Report in 2024 at the meeting For details please refer to the The third meeting of the November 7 November 9 Announcement on the 3rd Meeting of the 11th Board of Directors 2024 2024 11th Board of Directors 2024-040disclosed by the Company on the CNINFO website.For details please refer to the The fourth meeting of the December 30 Announcement on the 4th Meeting of the 11th Board of Directors 2024 January 2 2025 11th Board of Directors 2025-001disclosed by the Company on the CNINFO website. 2. Attendance of directors at board meetings and general meetings Attendance of directors at board meetings and general meetings Number Numbe Failed to of board r of Number of Number of attend meeting board board board board Number of Name of meetin meetings meetings Absencess to be meetings in general directors attended gs attended by attended by at board attende communica authorized meetings person for meetings during two attended the d on tion person consecutiv reporting site e times 41Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. period (Yes/No) Zhang Xuhua 8 3 5 0 0 No 3 Wang Bo 4 1 3 0 0 No 0 Li Peiyin 8 2 6 0 0 No 0 Deng Jianghu 8 2 6 0 0 No 0 Guo Gaohang 8 4 4 0 0 No 0 Pan Bo 8 4 4 0 0 No 0 Wang Susheng 4 1 3 0 0 No 1 Wang Wenbo 4 1 3 0 0 No 1 Cao Guangzhong 4 1 3 0 0 No 1 Xiao Yi (resigned) 4 3 1 0 0 No 0 Wang Jianxin (resigned) 4 3 1 0 0 No 2 Zhong Hongming (resigned) 4 3 1 0 0 No 2 Tang Xiaofei (resigned) 4 3 1 0 0 No 2 Description of the failure to attend the board meetings in person for two consecutive times Not applicable 3. The directors’ objections to the relevant matters Does the director raise any objection to the relevant matters of the Company No 4. Other descriptions of duty fulfillment by the directors Whether the relevant proposals from the directors to the Company have been adopted Yes Statement on the adoption or rejection of proposals from the directors to the Company During the reporting period the Board of Directors gave full play to the role of "determining strategies making decisions and preventing risks". The directors of the Company attended the meetings of the Board of Directors on time in strict accordance with the Company Law the Code on Governance of Listed Companies and other laws and regulations and the Articles of Association diligently performed their duties and rights and fully deliberated offered suggestions and conscientiously voted on the resolutions of the Board of Directors. The Company fully considered and adopted the constructive opinions put forward by the directors in terms of development strategy business decision-making and internal control management. 42Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. VII. Special committees under the board of directors during the reporting period The Board of NumberCommittee Member of Important comments PerformanceDirector Date of meeting Content of the meeting and suggestions of other Objections (if Name s description meeting proposed duties any)s held session All members fully communicated and discussed the corporate governance ESG management Chairman of the development Committee: planning etc. and Zhang Xuhua Deliberate and adopt the work suggested that theThe Members: Deng Company should 10th Jianghu Guo 1 March 12 2024 report and ESG report of the Gaohang Pan Board of Directors for 2023.continue to improve the level of Bo and Tang standardized Strategy Xiaofei operation strengthen Committee risk control (note) management andcontinuously improve the level of scientific and technological innovation.Chairman of the Committee: Deliberate and adopt the Zhang Xuhua proposal on developing the The Members: Deng 1 August 19 2024 development planning11th Jianghu Guo management measures and Gaohang Pan medium- and long-term Bo and Wang development plans.Wenbo Total 2 43Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Deliberate and adopt the Annual Report in 2023 Final Account Report in 2023 Profit Distribution in 2023 Daily All members fully Related Party Transaction communicated and Estimation in 2024 Total Bank discussed the Credit Limit Estimation in Company's internal 2024 and Guarantee Limit and external audit Estimation for Subsidiaries in work internal control 2024 Renewal of the management annual Accounting Firm Internal performance ofMarch 12 2024 Control Self-evaluation Report accounting firms and Chairman of the in 2023 Internal Audit Report other matters and Committee: in Q4 2023 Internal Audit suggested that the Wang Jianxin Report in 2023 and Company should The Members: Li Assessment Report on the continue to improve 10th Peiyin Guo 3 Performance of Accounting the internal control Gaohang Firms and the Audit management system Zhong Committee's Report on the and strengthen riskAudit Committee Hongming and Performance of Supervision management.Tang Xiaofei Duties over Accounting Firms in 2023.Deliberate and adopt the Q1 report in 2024 the internal April 23 2024 audit report of Q1 in 2024 and the internal control system report in 2023.Deliberate and adopt the semi- August 19 2024 annual report in 2024 and theinternal audit report for Q2 of 2024. Chairman of the Deliberate and adopt the Committee: September 6 proposal on the appointment of The Wang Susheng 2024 the chief accountant and 11th Members: Li 3 secretary of the Board of Peiyin Guo Directors.Gaohang Wang October 25 2024 Deliberate and adopt the Q3 44Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Wenbo and report in 2024 and the internal Cao audit report of Q3 in 2024.Guangzhong All members heard the Company's proposal on November 1 Deliberate and adopt the changing the 2024 proposal on the proposed accounting firm andchange of accounting firm. agreed to submit the change to the Board of Directors for deliberation.Total 6 Deliberate and adopt the proposal on the election of Jan. 4 2024 members of the special committees of the Board of Directors.Deliberate and adopt the proposal on the remuneration Chairman of the March 12 2024 of directors and senior officers Committee: and the repurchasing and Nomination Zhong cancellation of some A-share Remuneratio Hongming restricted stocks in 2023.n and The Members: Xiao 3 All Evaluation 10th Yi Guo committee Committee Gaohang Wang Jianxin and Deliberate and adopt the members Tang Xiaofei proposal on the general reviewed the election of non-independent qualifications August 19 2024 directors and independent of the directors of the Board of candidates Directors and the repurchasing for directors and cancellation of some A- of the 11th share restricted stocks. Board ofDirectors of the Company 45Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. expressed their comments and agreed to submit the proposals to the Board of Directors for deliberation.Deliberate and adopt the proposal on the election of the chairman and the appointment of the general manager Chairman of the September 6 deputy general manager Committee: Cao 2024 general counsel chief Guangzhong accountant and secretary of The Members: the Board of Directors and 11th Wang Bo Guo 2 securities affairs Gaohang Wang representative.Wenbo and Deliberate and adopt the Wang Susheng proposal on the achievement December 30 for lifting the restriction 2024 conditions during the third lifting period of the Phase-II restricted stock incentive plan.Total 5 Note: Upon the deliberation and approval at the 4th Meeting of the 11th Board of Directors held by the Company on December 30 2024 the Board of Directors agreed to adjust the "Strategy Committee" to the "Strategy and ESG Committee". 46Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. VIII. Work of the Board of Supervisors Whether the Board of Supervisors found any risk in the Company during the supervision within the reporting period No IX. Employees 1. Number of employees disciplines and educational status Number of in-service employees of the parent company at the end of the reporting period (person) 204 Number of in-service employees of major subsidiaries at the end of the reporting period (person) 3446 Total number of in-service employees at the end of the reporting period (person) 3650 Total number of salaried employees in the current period (person) 3650 Number of retired employees whose expenses shall be borne by the parent company and major subsidiaries 0 (person) Professional composition Professional composition category Number of each discipline (person) Production personnel 297 Sales personnel 2488 Technical personnel 292 Financial personnel 105 Administrative personnel 468 Total 3650 Education level Education level category Number Master's degree or above 84 Undergraduate 740 College 1162 Below junior college 1664 Total 3650 2. Remuneration policy In combination with the business development planning and management conditions the Company adhering to the core concept of value creation has formulated the remuneration policy under the principles of hierarchical management budget control performance orientation efficiency priority fairness positive incentive and long-term planning and established a sophisticated compensation system based on the annual salary assessment system for the middle and senior officers the post-performance salary system for employees and the salary system for joint production and efficiency of production and operation personnel and took the following management measures: 47Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Payroll management: Carry out the annual salary budget in combination with annual business planning comprehensively consider factors such as market salary level organizational efficiency improvement and talent team adjustment to regulate and control the total salary and achieve the management objectives of benefit orientation positive incentive classification management and distribution adjustment; Classification and hierarchical management: Establish a differentiated position and rank system according to the characteristics of the position and on this basis set up a matching standardized salary framework in combination with the market situation; Value as the key link co-creation and sharing: The Company has designed the incentive system according to the closed loop of the value chain of value creation evaluation and distribution and established a value evaluation system and real-time incentive system consistent with the strategic development goals forming an incentive mechanism in which the salary is based on the Company's revenues and individual performance and the incremental salary is prioritized to core key positions and outstanding talents. 3. Training plan Talent is the primary productive force driving the Company's development. Considering that the Company has attached great importance to the development and training of talents. In order to cultivate a high-quality talent team support the implementation of the Company's strategy and create an organizational learning atmosphere the Company has formulated the Employee Training Management System established a systematic employee learning and growth system and built an online learning platform + offline training center so as to provide employees with space for continuous improvement. For details please refer to Chapter 7 on employee training and development in the 2024 Environmental Social and Governance (ESG) Report disclosed by the Company on March 14 2025 on the CNINFO website. 4. Labor outsourcing Not applicable X. Profit distribution and the increase of share capital by converting capital reserves Formulation implementation or adjustment of profit distribution policies especially cash dividend policies during the reporting period The Company's profit distribution plan in 2023 has been deliberated and adopted during the 18th Meeting of the 10th Board of Directors on March 12 2024 and the Annual General Meeting in 2023 on April 18 2024. It was resolved to distribute cash dividends of RMB 4.00 yuan (including tax) for every 10 shares to all shareholders according to the total share capital on the equity registration date (deducting the shares in the special securities account for repurchasing) when the profit distribution plan is implemented with 0 bonus share issued and no share capital will be converted from reserves.During the period from the disclosure to the implementation of this equity distribution plan 9355763 B shares in the Company's special securities account for repurchasing were canceled and the total share capital was reduced from 415219970 shares to 405864207 shares. Based on the total share capital of 405864207 shares on the equity registration date of the profit distribution plan the Company distributed cash dividends of RMB 4.00 48Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. yuan (including tax) for every 10 shares to all shareholders with the actual total amount of cash dividends payable of RMB 162345682.80 yuan.The profit distribution plan has been implemented on June 14 2024. For details please refer to the Announcement on the Implementation of Equity Distribution in 2023 No. 2024-022 disclosed by the Company on the CNINFO website.(II) Special description of the cash dividend policy Whether it complies with the provisions of the Articles of Association or the requirements of the resolution of the general meeting Yes Whether the criteria and ratio for dividend distribution are clear and explicit Yes Whether the relevant decision-making procedures and mechanisms are complete Yes Whether the independent directors have performed their duties and responsibilities and played their due roles Yes If the Company distributes no cash dividends the specific reasons and the next measures for Not increasing the return level of investors shall be disclosed: applicable Whether small and medium shareholders have adequate opportunities to express their opinions and demands and whether their legitimate rights and interests have been adequately protected Yes Whether the conditions and procedures are compliant and transparent in case of the cash dividend Not policy adjusted or changed (if any): applicable The Company was profitable during the reporting period and the parent company's profit distributable to shareholders was positive but no cash dividend distribution plan was proposed Not applicable Profit distribution and the increase of share capital by converting capital reserves during the reporting period Number of bonus shares per 10 shares (shares) 0 Number of dividends per 10 shares (RMB) (including tax) 4.00 Equity base of distribution plan (shares) Total share capital on the equity rights registrationdate when the profit distribution plan is implemented Cash dividends(yuan)(including tax) 162305602.80 Amount of cash dividends distributed in other ways (such as share repurchasing) (yuan) 0.00 Total cash dividends (including other methods) (yuan) 162305602.80 Distributable profit (yuan) 1206072217.14 Proportion of total cash dividends (including other methods) in total profit distribution amount 100% Cash dividends this time Others Detailed description of proposals for profit distribution or capital reserve transfer The Company's profit distribution plan for 2024 has been deliberated and adopted at the 5th meeting of the 11th Board of Directors on March 12 2025. It is proposed to distribute cash dividends of RMB 4.00 yuan (including tax) for every 10 shares to all shareholders according to the total share capital on the equity registration date when the profit distribution plan is implemented with 0 bonus share and no share capital will be converted from reserves.If the total share capital of the Company changes after the disclosure of the profit distribution plan and before its implementation the Company may adjust the total amount of distribution at fixed distribution ratio.The profit distribution plan shall be implemented after being deliberated and adopted at the General Meeting. 49Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. XI. Implementation of the Company's equity incentive plan employee stock ownership plan or other employee incentive measures 1. Equity incentive (1) Phase-II restricted stock incentive plan The Company decided to launch the Phase-II Restricted Stock Incentive Plan during the 23rd Meeting of 9th Board of Directors on December 4 2020 and its first extraordinary shareholders' meeting of 2021 on January 6.Following approval at the 25th Meeting of 9th Board of Directors on January 15 2021 the Company ultimately granted 7.66 million A-share restricted stocks to 135 incentive recipients at a price of RMB 7.60 per share. This grant was completed and listed on January 29 2021. For details please refer to relevant announcements disclosed on January 16 2021 on the CNINFO website. The specific implementation during the reporting period is as follows: Upon approval at the 18th meeting of the 10th Board of Directors and the 2023 Annual General Meeting of Shareholders the company decided to repurchase and cancel 10020 A-share restricted stocks originally granted to a former incentive recipient who had left the company but still held restricted stocks that were not yet released from lock-up. For details please refer to the relevant announcements of the company disclosed on www.cninfo.com.cn on March 14 April 19 and July 3 2024.Upon approval at the 18th meeting of the 10th Board of Directors and the 2023 Annual General Meeting of Shareholders the company decided to repurchase and cancel 10020 A-share restricted stocks originally granted to a former incentive recipient who had left the company but still held restricted stocks that were not yet released from lock-up. For details please refer to the relevant announcements of the company disclosed on www.cninfo.com.cn on March 14 April 19 and July 3 2024.Upon deliberation and approval at the 20th meeting of the 10th Board of Directors and the first extraordinary general meeting in 2024 the Company decided to repurchase and cancel the 90180 A-share restricted stocks originally granted to 2 former incentive recipients resigned and 1 former incentive recipient deceased which still held restricted stocks that were not yet released from lock-up. For details please refer to the relevant announcements of the company disclosed on www.cninfo.com.cn on August 21 September 7 and November 2 2024. Upon deliberation and approval at the 4th meeting of the 11th Board of Directors of the Company the conditions for lifting the restriction during the third period of the Phase-II restricted stock incentive plan have been fulfilled and 2047420 A-share restricted stocks involving the lifting of the restriction had been listed and circulated on February 5 2025. For details please refer to the relevant announcements of the company disclosed on www.cninfo.com.cn on January 2 and January 23 2025. 50Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Equity incentives obtained by directors and senior managers of the Company Unit: shares Number Number of stock Number Exercise Numbe Number Number Number of Numberof stock options of of price of r of Market of Number restricte Grant price of options newly shares shares stock price at the restricte of d stocks of restricte Name Title held at granted exercisabl exercise exercised option end of the d stocks sharese shares during the s held reporting held at unlocke newly restricted d stocksthe during during the d during granted stock held atbeginnin the reporting at the period the d in the g of the reportin reporting the during (yuan/shar the end period reportin period end of (yuan/shar beginnin current year g g period (yuan/shar the e) g of the period the e) of the e) period period reportin periodperiod g period Zhang Xuhua Chairman 0 0 0 0 0 0 0 0 0 0 0 Wang Bo Director 0 0 0 0 0 0 0 0 0 0 0 Li Peiyin Director 0 0 0 0 0 0 0 0 0 0 0 Deng Jianghu Director 0 0 0 0 0 0 0 0 0 0 0 Guo Gaohang Director 0 0 0 0 0 0 0 0 0 0 0 Pan Bo Managingdirector 0 0 0 0 0 0 0 50100 0 0 50100 Wang Independe Susheng nt director 0 0 0 0 0 0 0 0 0 0 0 Wang Independe Wenbo nt director 0 0 0 0 0 0 0 0 0 0 0 Cao Guangzhon Independent director 0 0 0 0 0 0 0 0 0 0 0g Deputy Lu Wanjun general 0 0 0 0 0 0 0 50100 0 0 50100 manager 51Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. and general counsel Liu Deputy Xiaoming general 0 0 0 0 0 0 0 50100 0 0 50100manager Deputy Li Ming general 0 0 0 0 0 0 0 50100 0 0 50100 manager Chief accountant Song and Yaoming secretary 0 0 0 0 0 0 0 0 0 0 0 of Board of Directors Tang Deputy Haiyuan general 0 0 0 0 0 0 0 50100 0 0 50100manager Xiao Yi Director(resigned) 0 0 0 0 0 0 0 0 0 0 0 Wang Independe Jianxin nt director 0 0 0 0 0 0 0 0 0 0 0(resigned) Zhong Independe Hongming nt director 0 0 0 0 0 0 0 0 0 0 0(resigned) Tang Independe Xiaofei nt director 0 0 0 0 0 0 0 0 0 0 0(resigned) Total -- 0 0 0 0 -- 0 -- 250500 0 0 -- 250500 52Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Appraisal mechanism and incentives for senior managers In order to establish a sophisticated incentive and restraint mechanism for senior officers give full play to and motivate their enthusiasm improve the operating capacity and economic benefits and ensure the realization of the strategic objectives the Company has continuously improved the tenure system and contractual management of senior officers assessed operating performances and objectives on an annual/tenure basis and promoted the implementation of rigid rewards and punishments for assessment results reflecting strong incentives and hard constraints for compensation payment and adhered to performance orientation to enhance effective incentives for accurate assessment. 2. Implementation of employee stock ownership plan Not applicable 3. Other employee incentive measures Not applicable XII. Construction and implementation of internal control system during the reporting period 1. Construction and implementation of internal control system In order to strengthen the internal control of the Company promote the standardized operation and healthy development and protect the legitimate rights and interests of shareholders the Company has established a sophisticated internal control system in accordance with the Company Law the Securities Law and other laws and regulations and has effectively implemented it. During the reporting period the Company had no major defects or important defects in internal control. 2. Details of major defects in internal control found during the reporting period No XIII. Management and control of subsidiaries during the reporting period Not applicable XIV. Internal control evaluation report or internal control audit report 1. Internal control evaluation report Disclosure date of full text of internal control evaluation March 14 2025 report Disclosure index of full text of internal control evaluation www.cninfo.com.cn report 53Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Proportion of total assets of units evaluated to total assets in the Company's consolidated 100.00% financial statement Proportion of operating income of units evaluated to the operating income in the 100.00% Company's consolidated financial statement Defect identification criteria Type Section X Financial Reports Non-financial report (1) Serious violation of national laws administrative regulations and normative documents; (1) The defect involves the fraud of (2) The "Three Significant and One directors supervisors and senior Major" matters have not gone officers; through the collective decision- (2) Correct the financial statements making procedure; disclosed; (3) There is a serious loss of (3) The certified public accountant management and technical finds that there is a material personnel in key positions; misstatement in the current financial (4) Important business involving theQualitative criteria statements but the internal control Company's production and operation personnel fail to detect the lacks system control or system misstatement in the process; failure occurs; (4) The Company's audit committee (5) The internal control over and the discipline inspection information disclosure fails causing department/audit and legal that the Company is publicly department have no effective reprimanded by the regulatory supervision over internal control. authorities;(6) The results of internal control evaluation especially major defects or significant defects have not been rectified. (1) Major defect: misstatement ≥ 5% (1) Major defect: misstatement ≥ 5% of profit before tax of profit before tax (2) Significant defect: 1% of profit (2) Significant defect: 1% of profit Quantitative criteria before tax ≤ misstatement < 5% of before tax ≤ misstatement < 5% of profit before tax profit before tax (3) General defect: misstatement < (3) General defect: misstatement < 1% of profit before tax 1% of profit before tax Number of major defects in financial reports (nos.) 0 Number of major defects in non-financial reports (nos.) 0 Number of significant defects in the financial report (nos.) 0 Number of significant defects in non-financial reports (nos.) 0 2. Internal control audit report Paragraph of review opinions in the internal control audit report 54Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. In our opinion FIYTA maintained effective internal control over financial reporting in all material respects as at December 31 2024 in accordance with the Basic Standards for Enterprise Internal Control and relevant regulations.Disclosure of internal control audit report Disclosure Disclosure date of full text of internal control audit report March 14 2025 Disclosure index of full text of internal control audit report www.cninfo.com.cn Opinion type in the internal control audit report Standard unqualified opinion Whether there are major defects in non-financial reports No Whether the accounting firm issues an audit report on internal control with non-standard opinions No Whether the internal control audit report issued by the accounting firm is consistent with the self-evaluation report of the Board of Directors Yes XV. Status of rectification of self-examination issues of special actions on governance of listed companies The Company has fully completed the self-inspection in accordance with the requirements of the Announcement on Carrying out Special Actions for the Governance of Listed Companies issued by the CSRC and rectified the problems found during the self-inspection. The corporate governance meets the requirements of the Company Law the Securities Law the Code on Governance of Listed Companies and other laws and regulations the governance structure is sophisticated and the operation is standardized. 55Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 5 Environmental and social responsibility I. Major environmental protection issues Whether the listed companies and their subsidiaries classified as key pollutant discharging units designated by the Ministry of Environmental Protection No Administrative penalties for environmental issues during the reporting period Not applicable Refer to other environmental information disclosed by key pollutant discharging units The Company abiding by the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution the Law of the People's Republic of China on Prevention of Environmental Pollution Caused by Solid Waste the Law of the People's Republic of China on Prevention and Control of Water Pollution and other laws and regulations has formulated the Control Procedure for Wastewater Exhaust Gas Dust and Noise the Control Procedure for Waste Management the Control Procedure for Chemical Management and other system documents to clearly specify the management measures for pollutants such as wastewater exhaust gas dust waste and noise carried out the pollutant emission control in an standardized and systematic manner and entrusted an external qualified agency to monitor pollutants every year so as to ensure that the emissions meet the standards. For the specific information please refer to the 2024 Environmental Social and Governance (ESG) Report disclosed by the company on www.cninfo.com.cn on March 14 2025.(IV) Measures taken to reduce its carbon emissions during the reporting period and their effects The Company has actively responded to the call for "Carbon Peak and Neutrality" action and incorporated the requirements into the key work. Shenzhen FIYTA STD Co. Ltd. a subsidiary has set up a greenhouse gas management team to be responsible for the formulation and implementation of annual emission reduction targets.The team members will implement relevant measures within their respective powers and responsibilities to promote the transformation of the Company to a green low-carbon and sustainable direction.Reasons for not disclosing other environmental information Not applicable II. Social responsibility For the specific information please refer to the 2024 Environmental Social and Governance (ESG) Report disclosed by the company on www.cninfo.com.cn on March 14 2025.III. Consolidate and expand the achievements of poverty alleviation and rural revitalization The Company has attached great importance to the children education and public welfare services and actively promoted the development of children's literacy education together with Shanghai Adream Charitable Foundation and has been committed to broadening the horizons brightening the future of more children and thus facilitating the continuous progress of society. The "Dream Center" project has been commenced and operated in Guizhou province Hainan province Jiangxi province Gansu and other provinces. With the "Dream Center" project better 56Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. hardware learning space is provided for students regular teacher training is carried out and a teacher development system is established effectively promoting the overall improvement of education and teaching quality in counties in economically backward areas. During the reporting period the Company donated RMB 200000 yuan to Shanghai Adream Charitable Foundation to build a 6.0 plus 2 version of 200000 large-screen middle school dream center in Siyuan Experimental School. As at the end of the reporting period the Company has donated a total of RMB 4209800 yuan in cash and materials to Shanghai Adream Charitable Foundation and donated a total of 35 dream centers in 12 provinces benefiting a total of 44021 students. 57Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 6 Significant events I. Fulfillment of commitments 1. The company's actual controller shareholders related parties acquirers and the company itself committed to fulfilling all commitments to relevant parties during the reporting period with any outstanding commitments not fulfilled as of the end of the reporting period.Not applicable 2. If there is a profit forecast for Fiyta's assets or projects and the reporting period is still in the profit forecast period Fiyta explains whether the assets or projects have met the original profit forecast and the reasons Not applicable II. Non-operating occupation of funds by controlling shareholders and other related parties of listed companies Not applicable III. External guarantee in violation of regulations Not applicable IV. Explanation of the Board of Directors on the latest "non-standard audit report" Not applicable V. Explanation of the Board of Directors the Board of Supervisors and independent directors (if any) on the "non-standard audit report" of the accounting firm during the reporting period Not applicable VI. Changes in accounting policies and accounting estimates or corrections of significant accounting errors compared with the financial report of the previous year Not applicable 58Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. VII. Description of changes in the scope of consolidated statements compared with the financial report of the previous year Not applicable VIII. Appointment and dismissal of accounting firms Accounting firm currently employed Name of domestic accounting firm RSM China CPA LLP (Special General Partnership) Remuneration of domestic accounting firm 144 (of which the annual report audit fee is 1.14 million yuan and (RMB 10000) the internal control audit fee is 300000 yuan) Consecutive years of audit services provided by domestic accounting firms 1 Names of CPAs of the domestic accounting firm Cai Ruxiao Zheng Chaomin Ge Hua Consecutive years of audit services provided by certified public accountants of 1 domestic accounting firms Whether to change the accounting firm in the current period Yes Whether the accounting firm was changed during the audit period No Whether the accounting firm is replaced in accordance with the review and approval procedures Yes Detailed description of the change of accounting firm Upon the deliberation and approval at the Annual General Meeting in 2023 the Company reappointed Dahua Certified Public Accountants (Special General Partnership) as the financial statements and internal control auditor for 2024. According to the Administrative Measures for the Appointment of Accounting Firms by State-owned Enterprises and Listed Companies and other provisions and in combination with the needs of the audit work the Company changed RSM China CPA LLP (Special General Partnership) as the financial statement and internal control auditor for 2024 after the deliberation and approval at the third meeting of the 11th Board of Directors and the second extraordinary general meeting in 2024. For details please refer to the Announcement on Resolutions of the 18th Meeting of the 10th Board of Directors 2024-006 Announcement on Renewal of the Accounting Firm 2024 -011 Announcement on Resolutions of 2023 Annual General Meeting of Shareholders 2024-016 Announcement of Resolutions of the 3rd Meeting of the 11th Board of Directors 2024 –040 Announcement on Proposed Change of the Accounting Firm 2024-042 and Announcement on Resolution of the Second Extraordinary General Meeting in 2024 No. 2024-044 disclosed by the Company on November 9 and November 29 2024 on the CNINFO website. Employment of accounting firm financial consultant or sponsor for internal control audit The Company hired RSM China CPA LLP (Special General Partnership) as the internal control auditor in 2024 paying the internal control audit fee of RMB 300000 yuan.IX. Delisting after the disclosure of the annual report Not applicable 59Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. X. Matters related to bankruptcy and reorganization Not applicable XI. Significant litigation and arbitration Not applicable XII. Penalties and rectification Not applicable XIII. Integrity status of the company and its controlling shareholders and actual controllers Not applicable XIV. Major related-party transactions 1. Related party transactions related to daily operations Not applicable 2. Related party transactions arising from the acquisition or sale of assets or equities Not applicable 3. Related party transactions of joint external investment Not applicable 4. Related claims and debts Not applicable 5. Transactions with related financial companies Deposit business Amount in the current period Maximum daily Deposit Beginning Total Total Ending Related Relationshi deposit balance deposits in withdrawalinterest balanceparty p limit amount in (RMB1000 rate range (RMB1000 the current (RMB1000 0) period the current 0) 0) (RMB1000 period 0) (RMB10000) AVIC Controlled Finance by the 100000 0.205%- 1.25%4677452638052329349861 60Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. same ultimate party Loan business Amount in the current period Beginning Total loan Total Ending Related Relationshi Loan limit Loan repayment party p (RMB1000 interest balance amount in balance (RMB1000 the current amount in0) rate range (RMB10000) period the current 0) (RMB1000 period 0) (RMB10000) Controlled Not higher AVIC by the than 1Y Finance same 80000 LPR 0 0 0 0ultimate interest party rate Credit granting or other financial business During the reporting period the company's daily maximum associated balance of deposits and loans with Aviation Industry Financial did not exceed the limits stipulated in the financial services agreement. Additionally no credit or other financial transactions occurred. At the same time the company issued the Risk Assessment Report on Related Deposits and Loans with AVIC Finance Co. Ltd. every six months in response to the above matters. 6. Transactions between financial companies controlled by the company and related parties Not applicable 7. Other major related party transactions The 18th meeting of the 10th Board of Directors and the 2023 Annual General Meeting of Shareholders approved the proposal regarding anticipated routine related-party transactions for the year 2024. During the reporting period the cumulative transaction amount of the company's related transactions relating to daily operations was within the annual estimated range. For details please refer to the Announcement on Resolutions of the 18th Meeting of the 10th Board of Directors 2024-006 Announcement on Prediction of Daily Related Party Transactions 2024-009 and Announcement on Resolutions of 2023 Annual General Meeting of Shareholders 2024- 016 disclosed by the Company on March 14 and April 19 2024 on the CNINFO website. During the 20th meeting of the 10th Board of Directors and the 1st Extraordinary General Meeting in 2024 the Proposal to Sign A Financial Services Framework Agreement with AVIC Finance Co. Ltd. was deliberated and adopted. It was decided to terminate the original contract and re-sign the Financial Services Framework Agreement with AVIC Finance Co. Ltd. For details please refer to the Announcement on the 20th Meeting of the 10th Board of Directors 2024-024 Announcement on Related Party Transactions on Signing a Financial Service Framework Agreement with AVIC Finance Co. Ltd. 2024-029 and Announcement of the Resolution of the First Extraordinary General Meeting in 2024 No. 2024-034 disclosed by the Company on August 21 and September 7 2024 on the CNINFO website.Inquiry related to the disclosure website of interim report on major related transactions Name of temporary announcement Disclosure date of Disclosure of website name in 61Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. provisional announcement temporary announcement Announcement on Resolutions of the 18th Meeting of the 10th Board of Directors 2024-006 Mar. 14 2024 Announcement on Prediction of Daily Related Party Transactions 2024-009 Mar. 14 2024 Announcement on Resolutions of 2023 Annual General Meeting of Shareholders 2024-016 April 18 2024 Announcement on the 20th Meeting of the 10th Board of Directors 2024-024 August 21 2024 http://www.cninfo.com.cn/ Announcement on Related Party Transactions on Signing a Financial Service Framework Agreement August 21 2024 with AVIC Finance Co. Ltd. 2024-029 Announcement of the Resolution of the First Extraordinary General Meeting in 2024 No. 2024- September 7 2024 034 XV. Major contracts and performance thereof 1. Trusteeship contracting and leasing matters (1) Trusteeship Not applicable (2) Contracting Not applicable (3) Leasing Not applicable 2. Major guarantee Unit: RMB'0000 External guarantees provided by the company and its subsidiaries (excluding guarantees provided to subsidiaries) Announ cement Whethe Name disclos Counte r the Whethe of ure Actual Type of Collater r- Guaran perform r to guarant date Guaran Actual guarant ance guarant ee related tee limit date eed guarant al (if guarant tee ee any) ee (if period has ee for a object to amount any) been related guarant complet party ee limit ed Not applicable Total amount of Total actual external amount of guarantee 0 external 0 approved during guarantee during the reporting the reporting 62Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. period (A1) period (A2) Total amount of Total actual external external guarantee guarantee approved at the 0 balance at the 0 end of the end of the reporting period reporting period (A3) (A4) Guarantees of COOEC for subsidiaries Announ cement Whethe Name disclos Actual Counte r the Whethe of ure Guaran Actual guarant Type of Collater r- Guaran perform r to guarant date tee limit date eed guarant al (if guarant tee ance guarant ee related amount ee any) ee (if period has ee for a object to any) been related guarant complet party ee limit ed Shenzh en Shenzh en Joint Harmo Mar. Decem and ny 14 30000 ber 30 10000 several 1 year No No World 2024 2024 liability Watch guarant Centre ee Co.Ltd.Total amount of Total actual guarantees amount of approved for guarantees subsidiaries 60000 provided to during the subsidiaries 10000 reporting period during the (B1) reporting period(B2) Total approved Total actual guarantee limit for guarantee subsidiaries at the balance for end of the 60000 subsidiaries at the 10000 reporting period end of the (B3) reporting period(B4) Guarantees provided by subsidiaries to subsidiaries Announ cement Whethe Name disclos Counte r the Whethe of ure Actual perform r to guarant date Guaran Actual guarant Type of Collater r- Guaran tee limit date eed guarant al (if guarant tee ance guarant ee related amount ee any) ee (if period has ee for a object to any) been related guarant complet party ee limit ed Not applicable 63Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Total amount of Total actual guarantees amount of approved for guarantees subsidiaries 0 provided to during the subsidiaries 0 reporting period during the (C1) reporting period(C2) Total approved Total actual guarantee limit for guarantee subsidiaries at the balance for end of the 0 subsidiaries at the 0 reporting period end of the (C3) reporting period(C4) Total amount of corporate guarantees (i.e. the total of the top three items) Total amount of Total actual guarantee amount of approved during 60000 guarantee duringthe reporting the reporting 10000 period period (A1+B1+C1) (A2+B2+C2) Total approved Total actual guarantee limit at guarantee the end of the 60000 balance at the reporting period end of the 10000 (A3+B3+C3) reporting period(A4+B4+C4) The proportion of actual total amount of guarantee (i.e. A4+B4+C4) in the 2.95% company's net assets Including: Balance of guarantees provided to shareholders actual controllers and 0 their related parties (D) Balance of debt guarantee directly or indirectly provided to the guaranteed object with the asset/liability ratio 0 exceeding 70% (E) Total amount of guarantee exceeding 50% of net assets (F) 0 Total amount of the above three guarantees (D+E+F) 0 For the unexpired guarantee contract the guarantee liability occurred or there is evidence showing that it is possible to assume joint and several Not applicable liability during the reporting period (if any) Description of external guarantee provided in violation of prescribed Not applicable procedures (if any) Specific description of the composite guarantee 64Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Not applicable 3. Entrustment of others for cash asset management (1) Entrusted wealth management Not applicable (2) Entrusted loans Not applicable 4. Other major contracts Not applicable XVI. Explanation of other significant matters (I) Repurchase of a portion of domestic listed foreign shares (B-shares) The Company's 11th meeting of the 10th Board of Directors and the 2022 Annual General Meeting of Shareholders approved the Plan for the Repurchase of a Portion of Domestic Listed Foreign Shares (B-shares) and subsequently disclosed the repurchase report and a series of progress announcements in accordance with relevant regulations. As of April 25 2024 the implementation of the repurchase plan has been completed and the repurchased 9355763 B-shares have been canceled on May 10 2024. For detailed information please refer to the company's announcements "Announcement on the Expiration and Implementation Results of the Repurchase of Certain Domestically Listed Foreign Shares (B Shares) 2024-020" and "Announcement on the Completion of the Cancellation of Repurchased Domestically Listed Foreign Shares (B Shares) and Share Changes 2024-021" disclosed on CNINFO on April 26 2024 and May 14 2024 respectively.(II) General election of the Board of Directors and the Board of Supervisors and appointment of senior officers Upon the deliberation and approval at the 20th meeting of the 10th Board of Directors the 18th meeting of the 10th Board of Supervisors and the 2nd Extraordinary General Meeting in 2024 the Company elected the directors of the 11th Board of Directors and the shareholder representative supervisors of the 11 th Board of Supervisors; Upon the deliberation and approval at the 5th Congress of Workers and Staff of the 5th Session the Company elected the employee representative supervisor of the 11th Board of Supervisors. For details please refer to the Announcement on the General Election of the Board of Directors 2024-027 the Announcement on the General Election of the Board of Supervisors 2024-028 and the Announcement on the General Election of Employee Representative Supervisors 2024-033 disclosed by the Company on August 21 and August 27 2024 on the CNINFO website.Upon the deliberation and approval at the first meeting of the 11th Board of Directors and the first meeting of the 11 th Board of Supervisors the Company completed the election of the chairman of the Board of Directors the appointment of senior officers and the election of chairman of the Board of Supervisors. For details please refer to the Announcement on the Completion of General Election of the Board of Directors and the Board of Supervisors and the Appointment of Senior Officers disclosed by the Company on September 7 2024 on the CNINFO website.(III) Adjustment of the Strategy Committee of the Board of Directors and revision of relevant systems 65Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. In order to meet the needs of the strategic development improve the Company's ESG management level and improve the ESG management system the Board of Directors agreed to adjust the "Strategy Committee" to the "Strategy and ESG Committee" upon the deliberation and approval at the fourth meeting of the 11th Board of Directors and added ESG management-related responsibilities on the basis of the original duties of the Strategy Committee. Meanwhile the relevant provisions of the Detailed Rules for the Implementation of Special Committees of the Board of Directors were revised and the ESG Management System was formulated. For details please refer to the Announcement on Adjusting the Strategy Committee of the Board of Directors to the Strategy and ESG Committee of the Board of Directors and the full text of relevant systems disclosed by the Company on January 2 2025 on the CNINFO website. XVII. Major events of the company's subsidiaries Not applicable 66Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 7 Changes in shares and shareholders I. Changes in shares 1. Changes in shares Unit: shares Before this change Increase/decrease in this change (+ -) After this change Capita Sha l re conve Number Ratio IPO don rsionof Others Sub-total Number Ratioatio n provident funds I.Restricte 2729860 0.66% 0 0 0 -254140 -254140 2475720 0.61% d shares 1. State- owned 0 0.00% 0 0 0 0 0 0 0.00% shares 2. State- owned legal 0 0.00% 0 0 0 0 0 0 0.00% person sharehol ding 3. Other domestic 2729860 0.66% 0 0 0 -254140 -254140 2475720 0.61% sharehol ding Inclu ding: domestic legal 0 0.00% 0 0 0 0 0 0 0.00% person sharehol ding Dom estic natural person 2729860 0.66% 0 0 0 -254140 -254140 2475720 0.61% sharehol ding 4. Foreign 0 0.00% 0 0 0 0 0 0 0.00% sharehol 67Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. ding Inclu ding: overseas legal 0 0.00% 0 0 0 0 0 0 0.00% person sharehol ding Over seas natural persons 0 0.00% 0 0 0 0 0 0 0.00% sharehol ding II. Non- restricted 412490110 99.34% 0 0 0 -9201823 -9201823 403288287 99.39% shares 1. RMB ordinary 362553413 87.31% 0 0 0 153940 153940 362707353 89.39% shares 2. Domestic listed 49936697 12.03% 0 0 0 -9355763 -9355763 40580934 10.00% foreign shares 3. Overseas listed 0 0.00% 0 0 0 0 0 0 0.00% foreign shares 4. Others 0 0.00% 0 0 0 0 0 0 0.00% III. Total number 415219970 100.00% 0 0 0 -9455963 -9455963 405764007 100.00%of shares Reasons for change in shares 1. During the reporting period due to the adjustment of the transferable quota for senior management 153940 shares with sales restrictions were reduced (corresponding to an increase in unrestricted shares with the total capital stock remaining unchanged). 2. During the reporting period due to the resignation of 3 former incentive recipient and the death of 1 former incentive recipient in the Phase-II restricted stock incentive plan the Company repurchased and canceled the 100200 A-share restricted stocks held by them in total according to regulations and reduced the restricted stocks by 100200 shares in total (total share capital decreased); 3. During the reporting period as the company completed the implementation of the repurchase plan for certain domestically listed foreign shares (B shares) the repurchased B shares were canceled reducing 9355763 unrestricted shares (total capital stock decreased).In view of the above reasons at the end of the reporting period the total share capital of the company decreased by 9455963 shares and the total share capital decreased from 415219970 shares to 405764007 shares. 68Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Approval of change in shares Upon the authorization and approval of the company's 2022 annual general meeting of shareholders the company canceled the repurchased 9355763 B shares.Upon the approval at the annual general meeting in 2023 and the first extraordinary general meeting in 2024 the Company repurchased and canceled a total of 100200 A-share restricted stocks.Transfer of change in shares During the reporting period as reviewed and confirmed by China Securities Depository and Clearing Corporation Limited (CSDC) Shenzhen Branch the changes in shares were as follows: On May 10 2024 9355763 B shares were canceled; On July 1 2024 the 10020 A-share restricted stocks were repurchased and canceled; On October 31 2024 90180 A-share restricted stocks were repurchased and canceled.The impact of the share changes on financial indicators such as basic earnings per share and diluted earnings per share for the most recent year and period as well as net assets per share attributable to the company's ordinary shareholders is as follows: 20242023 Financial indicators Before the change After the change Before the change in After the change of in shares of shares shares shares Basic earnings per share 0.5314 0.5385 0.8082 0.8272(yuan/share) Diluted earnings per share 0.5378 0.8075 0.8265 (yuan/share) 0.5307 Net asset value per share (RMB/share) attributable 8.17 8.36 8.03 8.22to ordinary shareholders of the company. 4. Other content that COOEC deems necessary or required to be disclosed by securities regulators Not applicable 2. Changes in restricted shares Unit: shares Number of Number of Number of restricted restricted Number Sharehol restricted shares shares of Date of der's shares at the increased in released in restricted Reason for restricted restricted name beginning of the current the current shares at sales sales the period period (Note period (Note the end of released 1) 2) the period Executive locked-in Unlock in Li Ming 160080 0 40013 120067 shares and unlocked accordance restricted shares with the 69Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. relevant laws and regulations on locking shares by senior executives.Executive locked-in Pan Bo 160050 12487 0 172537 shares and unlocked - restricted shares Unlock in accordance with the Executive locked-in relevant lawsLu Wanjun 160050 0 40013 120037 shares and unlocked and restricted shares regulationson locking shares by senior executives.Unlock in accordance with the Liu Executive locked-in relevant laws Xiaomin 160050 0 40013 120037 shares and unlocked and g restricted shares regulationson locking shares by senior executives.Unlock in accordance with the Executive locked-in relevant lawsTang 0 26888 and Haiyuan 107550 80662 shares and unlockedrestricted shares regulationson locking shares by senior executives.Chen 60120 -60120 0 0 Unlocked restrictedLibin shares - Bao Xianyon 40080 0 0 40080 Unlocked restricted g shares - Sun Lei 40080 0 0 40080 Unlocked restrictedshares - Sheng Li 40080 0 0 40080 Unlocked restrictedshares - Unlock in Locked shares and accordance Other unlocked restricted with the sharehol 1801720 -40080 19500 1742140 shares of supervisors relevant laws ders and outgoing and executives regulationson locking shares by 70Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. senior executives.Total 2729860 -87713 166427 2475720 -- -- Note: 1. Reasons for changes in the number of restricted shares increased in the current period: (1) At the beginning of the period the transferable quota for senior management was adjusted and the restricted shares held by senior management (Mr. Pan Bo) increased by 12487 shares; (2) The 100200 restricted shares that have been repurchased and canceled during the reporting period are deducted from this item including 60120 shares held by Mr. Chen Libin the former incentive recipient and 40080 shares held by other 3 former incentive recipients in total. 2. Reason for changes in the number of unrestricted shares in the current period: adjustment of transferable quotas for senior management at the beginning of the period.II. Issuance and listing of securities 1. Securities issuance (excluding preferred shares) during the reporting period Not applicable 2. Description of changes in the total number of shares and shareholder structure of the Company and changes in the structure of assets and liabilities of the Company The same as that described in the "Reasons for changes in shares". 3. Existing internal employee shares Not applicable III. Shareholders and actual controllers 1. Number of shareholders and their shareholding situation in the company Unit: shares Total number of ordinary Total sharehol Total number of Total number of preferred number of ders at preferred shareholders whose voting ordinary the end shareholdersof the whose voting rights have been restored atshareholde rs as at the 26316 latest 25508 rights have been 0 the end of the previous month prior to the disclosure 0 end of the month restored at the date of the annual report (if reporting before end of thethe date reporting period any)period of (if any) disclosur e of the annual report Shareholders holding more than 5% stock or the top 10 stock shareholders' shareholding details (excluding shares lent through refinancing) Shareholde Nature Shareh Number of Increase/d Number Number of Pledged tagged 71Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. r's name olding shares held ecrease of non- or frozen Ratio at the end of during the restrictive restrictive the reporting reporting stocks stocks held Status Num period period held ber AVIC State- Internation owned 40.17 Not al Holding legal % 162977327 0 0 162977327 applicabl 0 Limited person e Domestic Not # Wu Jilin natural 4.43% 17972441 -71186 0 17972441 applicabl 0 person e Xu Domestic Not Guoliang natural 1.39% 5659968 -1582800 0 5659968 applicabl 0person e Domestic Not Qiu Hong natural 0.62% 2510000 40000 0 2510000 applicabl 0 person e Domestic Not #Zhu Rui natural 0.53% 2149400 742300 0 2149400 applicabl 0 person e 604 Portfolio of National Not Social Others 0.41% 1676300 1178800 0 1676300 applicabl 0 Security e Fund SWS MU Fund - China Everbright Bank - SWS MU Not Changhon Others 0.41% 1658000 1658000 0 1658000 applicabl 0 g No. 1 e Collective Asset Manageme nt Plan Industrial and Commercia l Bank of China Limited - GF ZZGX Central Governme Not nt-owned Others 0.36% 1457500 244800 0 1457500 applicabl 0 Enterprise e Shareholde r Return Trading Open- Ended Index Securities Investment 72Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Fund #Wang Domestic Not Xing natural 0.34% 1387800 566400 0 1387800 applicabl 0person e #Qu Domestic Not Yongjie natural 0.31% 1271900 -14900 0 1271900 applicabl 0person e Strategic investors or legal persons becoming the top ten shareholders Not applicable due to placement of new shares (if any) Notes to shareholders' related relationship or The Company does not know whether the above 10 shareholders are related or act persons acting in concert in concert.Description of the above The shareholder AVIC International Holdings Limited authorized a representative shareholders' to exercise voting rights on behalf of the Company at the 2023 annual general involvement in the meeting of shareholders the 1st extraordinary general meeting in 2024 and the 2nd commissioned/entrusted extraordinary general meeting in 2024 representing 162977327 shares. For details voting rights and waiver of the voting results please refer to the relevant announcements issued by the of voting rights Company on the CNINFO website.Special instructions on the existence of special repurchase accounts Not applicable among the top 10 shareholders (if any) Shareholding of the top 10 non-restrictive shareholders (excluding shares lent through refinancing and shares locked by senior management) Class of shares Shareholder's name Number of non-restricted stock held atthe end of the reporting period Class of shares Number AVIC International Holding Limited 162977327 RMB commonshare 162977327 # Wu Jilin 17972441 RMB commonshare 17972441 Xu Guoliang 5659968 RMB commonshare 5659968 Qiu Hong 2510000 RMB commonshare 2510000 #Zhu Rui 2149400 RMB commonshare 2149400 604 Portfolio of National Social RMB common Security Fund 1676300 share 1676300 SWS MU Fund - China Everbright Bank - SWS MU Changhong No. 1 1658000 RMB common 1658000 Collective Asset Management Plan share Industrial and Commercial Bank of China Limited - GF ZZGX Central Government-owned Enterprise RMB common Shareholder Return Trading Open- 1457500 share 1457500 Ended Index Securities Investment Fund #Wang Xing 1387800 RMB commonshare 1387800 #Qu Yongjie 1271900 RMB common 1271900 73Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. share Explanation of the relationship or concerted actions between the top 10 holders of unrestricted circulation The Company does not know whether the above 10 shareholders are related or act stock and that between in concert.the top 10 holders of unrestricted circulation stock and the top 10 shareholders. 1. In addition to holding 8288277 shares through the ordinary securities account Wu Jilin the shareholder of the company also holds 9684164 shares through the client credit trading guarantee securities account of CICC Wealth Management holding 17972441 shares in total; 2. In addition to holding 172600 shares through the ordinary securities account Zhu Explanation of the top 10 Rui the shareholder of the company also holds 1976800 shares in the client credit common stock trading guarantee securities account of First Capital Securities Co. Ltd. holding a shareholders' total of 2149400 shares; participation in securities 3. In addition to holding 932500 shares through the ordinary securities account margin trading (if any) Wang Xing the shareholder of the company also holds 455300 shares through thecustomer credit trading guarantee securities account of China Merchants Securities co. Ltd. (CMS) holding a total of 1387800 share; 4. In addition to holding 44500 shares through the ordinary securities account Qu Yongjie a shareholder of the Company also held 1227400 shares through the guaranteed securities account for customer credit trading guarantee securities account of Shanxi Securities Co. Ltd. holding a total of 1271900 shares; Participation of shareholders holding more than 5% of the shares top ten shareholders and top ten shareholders with unlimited tradable shares in the lending of shares through the refinancing business Not applicable The top ten shareholders and the top ten shareholders with unlimited tradable shares have changed compared to the previous period due to the reasons of refinancing lending and repayment Not applicable Did the company's top 10 common stock shareholders and top 10 holders of unrestricted common stock engage in any agreed repurchase transactions during the reporting period No 2. Controlling shareholders Nature of controlling shareholder: central state-owned holding Type of controlling shareholder: legal person Legal Name of controlling representative Date of Main operating shareholder /organization establishment Organization code business principal Investment and industry (declared separately for specific AVIC International Li Bin June 20 1997 91440300279351229 items); DomesticHolding Limited A commercial and material supply and marketing industry (excluding franchise 74Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. commodity under special government control and monopolized commodities); Operation of import and export business (except for items prohibited by laws administrative regulations and decisions of the State Council and restricted items shall not be operated without permission).Equity status of other domestic and foreign listed companies that the controlling AVIC International Holding Limited holds an 11.86% stake in Tianma Microelectronics shareholder controls Co. Ltd. (Shenzhen Tianma 000050) and a 63.97% stake in Shennan Circuits Co.and participates in Ltd. (Shennan Circuits 002916).during the reporting period Changes in controlling shareholders during the reporting period Not applicable 3. Actual controller of the Company and its persons acting in concert Nature of actual controller: central state-owned assets management agency Type of actual controller: legal person Legal Name of actual representati Date of controller ve/organizati establishment Organization code Main operating business on principal Operating state-owned assets within the scope authorized by the State Council; Research design development testing production sales maintenance support and service of military aircraft and engines guided weapons military gas turbines Aviation weapon equipment supporting Industry 9111000071093573 systems and products; Corporation of Zhou Xinmin November 6 2008 2K Investment and management in China LTD. finance leasing general aviation services transportation medical treatment engineering survey and design engineering contracting and construction real estate development and other industries; Design research development testing production sales and 75Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. maintenance services of civil aircraft and engines airborne equipment and systems gas turbines automobiles and motorcycles and engines (including parts) refrigeration equipment electronic products environmental protection equipment and new energy equipment; equipment leasing; engineering survey and design; project contracting and construction; real estate development and operation; technology transfer and technical services related to the above business; import and export business; technical development and sales of ships; technical development of engineering equipment; technical development of new energy products (The enterprise may choose and conduct business independently in accordance with the law; the market entity may engage in such business only after being approved by relevant authorities. The market entity must not engage in business activities of items prohibited or restricted by this Municipality's industrial policies.) In addition to the equity of the Company AVIC directly or indirectly holds and controls the following shares of domestic and overseas listed companies: 1. Tianma Microelectronics Co. Ltd. (000050) with a shareholding ratio of 28%; 2. AVIC Xi'an Aircraft Industry Group Company Ltd. (000768.SZ) with a shareholding ratio of 55%; 3. AVIC Jonhon Optronic Technology Co. Ltd. (002179.SZ) with a shareholding ratio of 38%; 4. Sichuan Chengfei Integration Technology Corp. Ltd. (002190.SZ) with a shareholding ratio Equity of other of 51%; domestic and 5. Rainbow Digital Commercial Co. Ltd. (002419.SZ) with a shareholding ratio of 45%; overseas listed 6. AVIC Chengdu Aircraft Company Limited (302132.SZ) with a shareholding ratio of 89%; companies 7. AVICOPTER PLC (600038.SH) with a shareholding ratio of 54%; controlled by 8. Jiangxi Hongdu Aviation Industry Co. Ltd. (600316.SH) with a shareholding ratio of 48%; the actual 9. AVIC Airborne Systems Co. Ltd. (600372.SH) with a shareholding ratio of 55%; controller during 10. Guizhou Guihang Automotive Components Co. Ltd. (600523.SH) with a shareholding the reporting ratio of 46%; period 11. AVIC Industry-Finance Holdings Co. Ltd. (600705.SH) with a shareholding ratio of 48%; 12. AVIC Shenyang Aircraft Company Limited (600760.SH) with a shareholding ratio of 68%; 13. AVIC Heavy Machinery Co. Ltd. (600765.SH) with a shareholding ratio of 37%; 14. Baosheng Science And Technology Innovation Co. Ltd. (600973.SH) with a shareholding ratio of 40%; 15. AVIC Aviation High-Technology Co. Ltd. (600862.SH) with a shareholding ratio of 45%; 16. Shennan Circuits Co. Ltd. (002916.SZ) with a shareholding ratio of 64%; 17. Hefei Jianghang Aircraft Equipment Co. Ltd. (688586.SH) with a shareholding ratio of 56%; 76Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 18. AVIC (Chengdu) UAS Co. Ltd. (688297.SH) with a shareholding ratio of 52%; 19. AVIC FORSTAR S&T Co. Ltd. (835640.BJ) with a shareholding ratio of 47%; 20. Nexteer Automotive Group Ltd. (01316.HK) with a shareholding ratio of 44%; 21. AviChina Industry & Technology Company Limited (02357.HK) with a shareholding ratio of 60%; 22. Continental Aerospace Technologies Holding Limited (00232.HK) with a shareholding ratio of 46%; 23. KHD Humboldt Wedag International AG (KWG:GR) with a shareholding ratio of 89%; 24. FACCAG (AT00000FACC) with a shareholding ratio of 55%. Change of actual controller during the reporting period Not applicable Chart for the property and controlling relationships between COOEC and the actual controllers State-owned Assets Supervision and Administration Commission of the State Council Aviation Industry Corporation of China LTD.AVIC International Holding Corporation AVIC INNO Co. Ltd.AVIC International Holding Limited FIYTA Precision Technology Co. Ltd.The actual controller controls COOEC by way of trust or other asset management methods Not applicable 4. The cumulative number of shares pledged by the controlling shareholder or the largest shareholder of the Company and persons acting in concert therewith accounted for 80% of the number of shares held by the Company Not applicable 5. Other corporate shareholders holding more than 10% shares Not applicable 6. Restrictions on shareholding reduction by controlling shareholders actual controllers restructuring parties and other commitment entities Not applicable IV. Specific implementation of share re-purchase in the reporting period Implementation progress of share repurchase 77Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Proportion of repurchase Number of Amount to d shares in Plan shares to Proportion be Proposed Quantity the disclosure be in totalshare repurchase repurchasin Repurchasi repurchase underlying time repurchase capital d (RMB g period ng purpose d (shares) shares d (shares) 10000) involved inthe equity incentive plan (if any) No less Cancellatio 6.66 million than RMB n and shares to 50 million April 27 reductionMar. 18 1.59% to and no 2023 to of 2023 13.32million 3.19% greater April 26 registered 9355763 shares than 2024 capitalRMB 100 according million to the law The implementation progress of the reduction of repurchased shares through centralized bidding Not applicable 78Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 8 Relevant information about preferred stock Not applicable Section 9 Bond-related information Not applicable 79Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Section 10 Financial Reporting Auditor’s Report FIYTA Precision Technology Co. Ltd.RSMSZ[2025]No.350Z0001 RSM CHINA CPA LLP CHINA·BEIJING If there is any conflict of meaning between the Chinese and English versions the Chinese version will prevail 80Contents Page 1 Auditor’s report 1-8 2 Consolidated Statement of Financial Position 1 Consolidated Statement of Profit or Loss and Other Comprehensive 32 Income 4 Consolidated Statement of Cash Flows 3 5 Consolidated Statement of Changes in Owners' Equity 4 6 Statement of Financial Position of Parent Company 5 Statement of Profit or Loss and Other Comprehensive Income of Parent 76 Company 8 Statement of Cash Flows of Parent Company 7 9 Statement of Changes in Owners' Equity of Parent Company 8 10 Notes to the Financial Statements 9-104 81(English Translation for Reference Only) Auditor’s Report RSMSZ[2025]No.350Z0001 To the Shareholders of FIYTA Precision Technology Co. Ltd.，Opinion We have audited the financial statements of FIYTA Precision Technology Co. Ltd.(hereafter referred to as “the Company”) which comprises the consolidated and the parent company’s statement of financial position as at 31 December 2024 the consolidated and the parent company’s statement of profit or loss and other comprehensive income the consolidated and the parent company’s statement of cash flows the consolidated and the parent company’s statement of changes in equity for the year then ended and the notes to the financial statements.In our opinion the accompanying the Company’s financial statements present fairly in all material respects the consolidated and the company’s financial position as at 31 December 2024 and of their financial performance and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.Basis for Opinion We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our opinion.Key Audit Matters 1Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Key audit matters are those matters that in our professional judgment were of the most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.(I) Existence and Net Realizable Value of Inventory 1. Descriptions of the matter For the details please refer to Note 3.13 and Note 5.6 of the financial statements.As stated in Note 5.6 as of 31 December 2024 the carrying amount of the Company's inventory was RMB 2057.8734 million with an inventory write-down provision of RMB 73.3864 million resulting in a net inventory value of RMB 1984.487 million accounting for 49.52% of total assets. The Company's main business involves selling FIYTA brand watches and other agency-branded watches with year-end inventory primarily consisting of finished watches and watch components. Given the small size and high unit value of branded watches and the widely dispersed inventory across central warehouses regional warehouses and retail stores there is a heightened risk related to inventory existence and impairment.As of the balance sheet date the Company's management is required to determine the net realizable value (NRV) of inventory and any excess of cost over NRV should be written down accordingly. The determination of NRV involves significant management estimates regarding selling prices costs to completion selling expenses and relevant taxes. Due to the materiality of the inventory balance and the significant accounting estimates and judgments involved in the impairment provision we have identified the existence of inventory and the determination of its NRV as a key audit matter. 2. How the matter was addressed in our audit The audit procedures we performed in relation to existence and net realizable value of inventory: (1) Understanding evaluating and testing the design and operating effectiveness of 2Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. internal controls related to procurement and payment production and warehousing and inventory write-down provisions; (2) Utilizing expert work to conduct IT audits on the information system to evaluate the authenticity and accuracy of business data related to financial reporting; (3) Performing inventory counts at selected warehouses and retail stores to verify the existence and condition of year-end inventory; (4) Selecting samples of significant purchases during the reporting period and tracing them to purchase contracts invoices purchase requisitions and warehouse receipts; (5) Sending confirmation requests to selected suppliers to verify transaction amounts and balances to confirm procurement details; (6) Reviewing the Company’s inventory impairment policy and methodology to assess its reasonableness obtaining management’s inventory impairment calculation and evaluating key assumptions such as estimated selling prices costs to completion selling expenses and related taxes along with performing recalculations; (7) Obtaining the year-end aging report for inventory conducting analytical reviews based on product conditions and assessing whether the inventory write-down provision is reasonable.(II) Revenue Recognition 1. Descriptions of the matter For the details please refer to Note 3.27 and Note 5.34 of the financial statements.As stated in Note 5.34 to the financial statements the main operating revenue of the Company for the current year was RMB 3928.8451 million representing a 13.72% decrease compared to the previous year. The Company's main operating revenue is primarily derived from the sales of self-owned and agency-brand watches.Since revenue is one of the Company's key performance indicators there is an inherent risk that revenue may be recognized in the incorrect period or manipulated to meet 3Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. specific targets or expectations. Therefore we have identified the revenue recognition of the Company as a key audit matter. 2. How the matter was addressed in our audit The audit procedures we performed in relation to revenue recognition: (1) Understanding evaluating and testing the design and operating effectiveness of internal controls related to revenue recognition; (2) Utilizing expert work to conduct IT audits on the information system evaluating the authenticity and accuracy of business data related to financial reporting; (3) Obtaining and reviewing accounting policies related to revenue recognition and assessing whether the timing of control transfer transaction price measurement and special transaction accounting treatment comply with the requirements of accounting standards; (4) Selecting samples to examine supporting documents related to revenue recognition including sales contracts sales invoices mall reconciliation statements customer receipt records and logistics documents; (5) Performing audit procedures on accounts receivable by selecting samples for confirmation of transaction amounts and balances with customers as well as verifying subsequent collections; (6) Selecting samples of sales revenue recognized before and after the balance sheet date to review sales contracts sales invoices mall reconciliation statements customer receipt records and logistics documents to evaluate whether revenue is recognized in the appropriate accounting period.Other information Management of the Company is responsible for the other information. The other information comprises the information included in the Annual Report of the Company for the year of 2024 but does not include the financial statements and our auditor’s report thereon. 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for the Financial Statements Management of the Company is responsible for the preparation and fair presentation of the financial statements in accordance with Accounting Standards of Business Enterprises and for the design implementation and maintenance of 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.In preparing the financial statements management is responsible for assessing the Company’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.Auditor’s Responsibilities for the Audit of the Financial Statements Our Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a 5Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. high level of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also: i) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.ii) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.iii) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.iv) Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause the Company to cease to continue as a going concern. 6Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. v) Evaluate the overall presentation structure and content of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.vi) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 7Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. (This is seal page for Auditor’s Report of RSMSZ[2025]No.350Z0001 for FIYTA Precision Technology Co. Ltd. without text.) RSM China CPA LLP Cai Ruxiao China Certified Public Accountant (Engagement Partner) China·Beijing Zheng Chaomin China Certified Public Accountant Ge Hua China Certified Public Accountant 12 March 2025 8Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Consolidated Statement of Financial Position 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024-12-31 2023-12-31 Item Note 2024-12-31 2023-12-31 Current assets: Current liabilities: Monetary funds 5.1 518954177.49 504629153.71 Short-term borrowings 5.16 124087754.51 250187763.87 Financial assets held-for-trading Financial liabilities held-for-trading Derivative financial assets Derivative financial liabilities Notes receivable 5.2 29611600.60 18268972.37 Notes payable Accounts receivable 5.3 260152834.43 323142761.64 Accounts payable 5.17 115532921.57 173825907.71 Accounts receivable financing Receipts in advance 5.18 11783796.49 10267758.31 Advances to suppliers 5.4 3858053.60 6571239.98 Contract liabilities 5.19 12605722.95 12286243.62 Premium receivable Employee benefits payable 5.20 92260153.14 120084810.60 Other receivables 5.5 56982351.27 57725792.00 Taxes payable 5.21 49815151.35 64188161.31 Including: Interests receivable Other payables 5.22 104638483.81 121937801.07 Dividend receivable Including: Interests payables Inventories 5.6 1984486969.74 2100666175.28 Dividend payables 5.22 2785293.14 2058352.24 Contract assets Liabilities classified as held for sale Assets classified as held for sale Non-current liabilities maturing within one year 5.23 63538231.06 66399004.20 Non-current assets maturing within one year Other current liabilities 5.24 1529468.07 1589635.30 Other current assets 5.7 98007925.22 72249391.81 Total current liabilities 575791682.95 820767085.99 Total current assets 2952053912.35 3083253486.79 Non-current liabilities: Non-current assets: Insurance contract reserve Debt investments Long-term borrowings Other debt investments Bonds payable Long-term receivables Including: Preference share Long-term equity investments 5.8 50907036.84 51862607.30 Perpetual debt Other equity instrument investment Lease liabilities 5.25 35065292.04 43526352.52 Other non-current financial assets Long-term payables Investment properties 5.9 301002364.41 360255832.14 Long-term employee benefits payable Fixed assets 5.10 377568144.41 355785354.68 Estimated liabilities Construction in progress Deferred income 5.26 952785.69 Productive biological assets Deferred tax liabilities 5.14 4990541.42 5208920.69 Oil and gas assets Other non-current liabilities Right-of-use assets 5.11 98437976.41 109452481.64 Total non-current liabilities 40055833.46 49688058.90 Intangible assets 5.12 31567927.16 31664380.77 Total liabilities 615847516.41 870455144.89 Development expenditures Owners’ equity Goodwill Share capital 5.27 405764007.00 415219970.00 Long-term deferred expenses 5.13 110205323.29 122324355.13 Other equity instruments Deferred tax assets 5.14 82155778.31 80227771.46 Including: Preference shares Other non-current assets 5.15 3792253.84 9434627.17 Perpetual debt Capital reserves 5.28 936339503.60 990159033.17 Less: Treasury stock 5.29 12815556.81 78645532.23 Other comprehensive income 5.30 15686794.62 19325335.93 Special reserves 5.31 4340162.76 3223158.06 Surplus reserves 5.32 275010401.50 275010401.50 General risk reserves Retained earnings 5.33 1767517887.94 1709513385.76 Total owner’s equity attributable to parent company 3391843200.61 3333805752.19 Non-controlling interests Total non-current assets 1055636804.67 1121007410.29 Total owners’ equity 3391843200.61 3333805752.19 Total assets 4007690717.02 4204260897.08 Total liabilities and owners' equity 4007690717.02 4204260897.08 Legal Representative: Zhang Xuhua Chief Financial Officer：Song Yaoming Finance Manager：Tian Hui 1Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024 2023 I. Revenue 5.34 3940530934.07 4569690002.99 II. Cost of sales 3647655677.55 4150297794.32 Including: operating cost 5.34 2476197934.43 2905463474.81 Taxes and surcharges 5.35 31477134.80 36193846.10 Selling and distribution expenses 5.36 882777806.63 924009179.32 General and administrative expenses 5.37 183277930.17 205359277.24 Research and development expenses 5.38 56000000.18 57802244.08 Finance costs 5.39 17924871.34 21469772.77 Including: Interest expense 5.39 10697706.12 12824222.06 Interest income 5.39 4925264.78 5722586.39 Add: Other income 5.40 7492642.33 11435373.78 Investment income/(losses) 5.41 -431254.89 -5819479.60 Including: Investment income from associates and joint ventures 5.41 -955570.46 -5819479.60 Gains /(losses) from derecognition of financial assets measured at amortised cost Gains /(losses) from foreign exchange Income /(losses) from net exposure hedging Gains/(losses) from changes in fair values Credit impairment losses 5.42 266485.96 6827575.82 Asset impairment losses 5.43 -19289865.31 571980.37 Gains/(losses) from disposal of assets 5.44 2367816.60 685868.57 III. Profit/(loss) from operations 283281081.21 433093527.61 Add: Non-operating income 5.45 3623505.31 4770506.80 Less: Non-operating expenses 5.46 788917.93 859770.10 IV. Profit/(loss) before tax 286115668.59 437004264.31 Less: Income tax expenses 5.47 65765483.60 103826161.94 V. Net profit/(loss) for the year 220350184.99 333178102.37 (I) Net profit/(loss) by continuity Net profit/(loss) from continuing operation 220350184.99 333178102.37 Net profit/(loss) from discontinued operation (II) Net profit/(loss) by ownership attribution Attributable to owners of the parent 220350184.99 333178102.37 Attributable to non-controlling interests VI. Other comprehensive income for the year after tax -3638541.31 13585746.04 (a) Attributable to owners of the parent -3638541.31 13585746.04 (i) Other comprehensive income that will not be reclassified subsequently to profit or loss (ii) Other comprehensive income to be reclassified subsequently to profit or loss -3638541.31 13585746.04 1. Exchange differences on translating foreign operations -3638541.31 13585746.04 (b) Attributable to non-controlling interests VII. Total comprehensive income for the year 216711643.68 346763848.41 Attributable to owners of the parent 216711643.68 346763848.41 Attributable to non-controlling interests VIII. Earnings per share: Basic earnings per share 0.5385 0.8082 Diluted earnings per share 0.5378 0.8075 Legal Representative: Zhang Xuhua Chief Financial Officer：Song Yaoming Finance Manager： Tian Hui 2Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Consolidated Statement of Cash Flows For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024 2023 I. Cash flows from operating activities Cash received from the sale of goods and the rendering of services 4337357146.69 5025883440.00 Cash received from tax refund 2096237.99 1937203.71 Other cash received relating to operating activities 5.49 49625091.94 68179211.21 Subtotal of cash inflows from operating activities 4389078476.62 5095999854.92 Cash payments for goods purchased and services received 2664684979.78 3155385386.12 Cash payments to and on behalf of employees 596768402.64 624495756.20 Payments for taxes 260501102.47 296079135.93 Other cash payments relating to operating activities 5.49 330393031.44 387638088.69 Subtotal of cash outflows from operating activities 3852347516.33 4463598366.94 Net cash flows from operating activities 536730960.29 632401487.98 II. Cash flows from investing activities Cash received from disposal and redemption of investments Cash received from returns on investments 418515.82 500000.00 Net cash received from disposals of fixed assets intangible assets and other long-term assets 4848874.32 1278284.57 Net cash received from disposals of subsidiaries and other business units Other cash received relating to investing activities 5.49 201839677.57 Subtotal of cash inflows from investing activities 207107067.71 1778284.57 Cash payments to acquire fixed intangible and other long-term assets 86818686.04 91104776.03 Cash payments to acquire investments Net cash payments to acquire subsidiaries and other business units Other cash payments relating to investing activities 5.49 231179882.49 Subtotal of cash outflows from investing activities 317998568.53 91104776.03 Net cash flows from investing activities -110891500.82 -89326491.46 III. Cash flows from financing activities Cash received from capital contributions Including: Cash receipts from capital contributions form non-controlling interests of subsidiaries Cash received from borrowings 323957187.86 250000000.00 Other cash received relating to financing activities Subtotal of cash inflows from financing activities 323957187.86 250000000.00 Cash repayments of debts 450000000.00 290000000.00 Cash payments for dividends distribution of profit and interest expenses 168545613.69 114106711.75 Including: Dividends distribution of profit paid to non-controlling shareholders of subsidiaries Other cash payments relating to financing activities 5.49 116757093.91 198056975.77 Subtotal of cash outflows from financing activities 735302707.60 602163687.52 Net cash flows from financing activities -411345519.74 -352163687.52 IV. Effect of foreign exchange rate changes on cash and cash equivalents -168915.95 -20544.93 V. Net increase / (decrease) in cash and cash equivalents 14325023.78 190890764.07 Plus: Cash and cash equivalents at the beginning of the period 504629153.71 313738389.64 VI. Cash and cash equivalents at the end of the period 518954177.49 504629153.71 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 3Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Consolidated Statement of Changes in Owners' Equity For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB 2024 Owners’ equity attributable to the parent company Item Non- Other equity instruments Genera contro Total Share Capital Less: Other l Retaine lling owners’ capital Prefer Perpetual Ot reserves Treasury comprehensiv Special Surplus reserves reserves risk d Subtotal interes equity stock e income reserve earnings tsence capital her shares securities s s I. Balance at 31 December 2023 415219970.00 990159033 78645532.23 19325335.93 3223158.06 2750101709513333805333380.17401.503385.76752.195752.19 Add：Changes in accounting policies Correction of prior period errors Business combination under common control Others II. Balance at 1 January 2024 415219 990159033970.00 .17 78645532.23 19325335.93 3223158.06 2750101709513333805333380 401.503385.76752.195752.19 III. Changes in equity during the reporting - -945596 53819529. -65829975.42 -3638541.31 1117004.70 580045 5803744period 3.00 57 02.18 8.42 580374 48.42 (i) Total comprehensive income -3638541.31 220350 2167116 216711184.99 43.68 643.68 (ii) Capital contributions or withdrawals by - - owners 945596 53819529. -65829975.42 2554482 2554483.00 57 .85 2.85 1. Ordinary shares contributed by - - shareholders 935576 54984906. -64340669.423.00 42 2．Capital contributed by holders of other equity instruments 3．Share-based payments recognised in owners’ -100200. 1165376.8 -1489306.00 2554482 255448equity 00 5 .85 2.85 4．Others 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. --- (iii) Profit distribution 162345 1623456 162345 682.8182.81682.81 1．Transfer to surplus reserves 2. Transfer to general risk reserves 3 Profit distribution to owners (or - - -． shareholders) 162345 1623456 162345682.81 82.81 682.81 4．Others (iv) Transfer within owners' equity 1． Capital reserves converted to share capital 2．Surplus reserves converted to share capital 3．Loss made up by surplus reserves 4．Changes in the defined benefit plan transferred to retained earnings 5. Other comprehensive income transferred to retained earnings 6. Others (v) Special reserves 1117004.70 1117004 111700.70 4.70 1．Withdrawal during the reporting period 1521112.80 1521112 152111.80 2.80 -- 2．Usage during the reporting period -404108.10 404108.1 404108. 010 (vi) Others IV. Balance at 31 December 2024 405764007.00 936339503 12815556.81 15686794.62 4340162.76 2750101767513391843339184.60401.507887.94200.613200.61 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Consolidated Statement of Changes in Owners' Equity For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB 2023 Owners’ equity attributable to the parent company Other equity Item instruments Non- Less: Other General controlling Total owners’ Share Perpetu Capital equityPrefe capital al reserves Treasury comprehensive Special Surplus risk Retained Subtotal interests rence capital Oth stock income reserves reserves reserves earnings share s securiti ers es I. Balance at 31 December 2022 41762796 100708660.00 43.48 50759806.16 5739589.89 2012064.91 275010401.514797063136423492.3136423492. 0638.531515 Add：Changes in accounting policies Correction of prior period errors Business combination under common control Others II. Balance at 1 January 2023 41762796 100708660.00 43.48 50759806.16 5739589.89 2012064.91 275010401.514797063136423492.3136423492. 0638.531515 III. Changes in - - equity during the 2407990. 16927610.reporting period 00 31 27885726.07 13585746.04 1211093.15 22980674 7.23197382260.04197382260.04 (i) Total comprehensive 13585746.04 33317810income 2.37 346763848.41 346763848.41 (ii) Capital contributions or - - withdrawals by 2407990. 16927610.-- 00 31 27885726.07 47221326.38 47221326.38owners 1. Ordinary shares contributed - - by 64340669.42 64340669.42 64340669.42 shareholders 2．Capital contributed by holders of other equity instruments 3．Share-based payments - - recognised in 2407990. 16915253.- 00 76 36454943.35 17131699.59 17131699.59owners’ equity 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 4．Others - - -12356.55 12356.55 12356.55 (iii) Profit - distribution 10337135 -- 5.14103371355.14103371355.14 1．Transfer to surplus reserves 2. Transfer to general risk reserves 3．Profit distribution to - - - owners (or 103371355.14 103371355.14 103371355.14shareholders) 4．Others (iv) Transfer within owners' equity 1． Capital reserves converted to share capital 2．Surplus reserves converted to share capital 3．Loss made up by surplus reserves 4．Changes in the defined benefit plan transferred to retained earnings 5. Other comprehensive income transferred to retained earnings 6. Others (v) Special reserves 1211093.15 1211093.15 1211093.15 1．Withdrawal during the reporting period 1537825.22 1537825.22 1537825.22 2．Usage during the reporting - - -326732.07 326732.07 326732.07 period (vi) Others IV. Balance at 31 December 2023 41521997 990159033 78645532.23 19325335.93 3223158.06 275010401.5 1709513 3333805752. 3333805752.0.00 .17 0 385.76 19 19 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 4Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Statement of Financial Position of Parent Company 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024-12-31 2023-12-31 Item Note 2024-12-31 2023-12-31 Current assets: Current liabilities: Monetary funds 390160466.41 308230255.35 Short-term borrowings 120130566.65 250187763.87 Financial assets held-for-trading Financial liabilities held-for-trading Derivative financial assets Derivative financial liabilities Notes receivable Notes payable Accounts receivable 16.1 4631990.38 1822916.61 Accounts payable 1928876.85 2285657.88 Accounts receivable financing Receipts in advance 11783796.49 10267758.31 Advances to suppliers Contract liabilities Other receivables 16.2 659565868.48 696328419.85 Employee benefits payable 23190240.79 25886702.67 Including: Interests receivable Taxes payable 779783.47 3322241.54 Dividend receivable Other payables 252129600.19 224668548.77 Inventories 45565.43 Including: Interests payables Contract assets Dividend payables 2785293.14 2058352.24 Assets classified as held for sale Liabilities classified as heldfor sale Non-current assets maturing within one Non-current liabilities year maturing within one year Other current assets 16189136.04 15886769.82 Other current liabilities Total current assets 1070593026.74 1022268361.63 Total current liabilities 409942864.44 516618673.04 Non-current assets: Non-current liabilities: Debt investments Long-term borrowings Other debt investments Bonds payable Long-term receivables Including: Preference share Long-term equity investments 16.3 1643450922.75 1633041716.11 Perpetual debt Other equity instrument investment Lease liabilities Other non-current financial assets Long-term payables Investment properties 237185496.11 293695692.68 Long-term employee benefitspayable Fixed assets 241791004.56 207209890.94 Estimated liabilities Construction in progress Deferred income 952785.69 Productive biological assets Deferred tax liabilities Oil and gas assets Other non-current liabilities Right-of-use assets Total non-current liabilities 952785.69 Intangible assets 24189360.11 23460211.70 Total liabilities 409942864.44 517571458.73 Development expenditures Owners’ equity Goodwill Share capital 405764007.00 415219970.00 Long-term deferred expenses 3692497.29 4795846.73 Other equity instruments Deferred tax assets 931572.58 640783.05 Including: Preference shares Other non-current assets 1358052.54 710807.49 Perpetual debt Capital reserves 939217999.41 993037528.98 Less: Treasury stock 12815556.81 78645532.23 Other comprehensive income Special reserves Surplus reserves 275010401.50 275010401.50 Retained earnings 1206072217.14 1063629483.35 Total non-current assets 2152598905.94 2163554948.70 Total owners’ equity 2813249068.24 2668251851.60 Total non-current assets 3223191932.68 3185823310.33 Total liabilities and owners'equity 3223191932.68 3185823310.33 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 5Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Statement of Profit or Loss and Other Comprehensive Income of Parent Company For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024 2023 I. Revenue 16.4 184540282.60 180874926.74 Less: Costs of sales 16.4 56887861.74 49729440.87 Taxes and surcharges 7760550.74 7815174.54 Selling and distribution expenses 36615636.74 16395826.35 Administrative expenses 50131039.57 53755060.51 Research and development expenses 13813526.33 12959491.24 Finance costs -2116792.12 -947061.34 Including: Interest expense 1342394.82 2405575.67 Interest income 3871354.75 4460371.04 Add: Other income 1163695.74 1097603.80 Investment income/(losses) 16.5 287322662.30 192180520.40 Including: Investment income from associates and joint ventures 16.5 -955570.46 -5819479.60 Gains /(losses) from derecognition of financial assets measured at amortised cost Income /(losses) from net exposure hedging Gains/(losses) from changes in fair values Credit impairment losses -1785286.03 -104859.73 Asset impairment losses Gains/(losses) from disposal of assets 2917069.98 635033.80 II. Profit/(loss) from operations 311066601.59 234975292.84 Add: Non-operating income 1273.46 8037.20 Less: Non-operating expenses 360776.94 312375.33 III. Profit/(loss) before tax 310707098.11 234670954.71 Less: Income tax expenses 5918681.51 10687283.10 IV. Net profit/(loss) for the year 304788416.60 223983671.61 Net profit/(loss) from continuing operation 304788416.60 223983671.61 Net profit/(loss) from discontinued operation V. Other comprehensive income for the year after tax (i) Other comprehensive income that will not be reclassified subsequently to profit or loss (ii) Other comprehensive income to be reclassified subsequently to profit or loss VI. Total comprehensive income for the year 304788416.60 223983671.61 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 6Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Statement of Cash Flows of Parent Company For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB Item Note 2024 2023 I. Cash flows from operating activities Cash received from the sale of goods and the rendering of services 195929990.98 189464980.58 Cash received from tax refund 47921.04 Other cash received relating to operating activities 3946025896.49 4225525553.06 Subtotal of cash inflows from operating activities 4142003808.51 4414990533.64 Cash payments for goods purchased and services received 20605249.00 9573850.00 Cash payments to and on behalf of employees 74801849.07 61402333.15 Payments for taxes 24754181.25 20428198.75 Other cash payments relating to operating activities 3917630232.90 4154707540.94 Subtotal of cash outflows from operating activities 4037791512.22 4246111922.84 Net cash flows from operating activities 104212296.29 168878610.80 II. Cash flows from investing activities Cash received from disposal and redemption of investments Cash received from returns on investments 288278232.76 198500000.00 Net cash received from disposals of fixed assets intangible assets and other long-term assets 4742145.47 1146737.46 Net cash received from disposals of subsidiaries and other business units Other cash received relating to investing activities Subtotal of cash inflows from investing activities 293020378.23 199646737.46 Cash payments to acquire fixed intangible and other long-term assets 5993530.21 7686801.71 Cash payments to acquire investments 10000000.00 90000000.00 Net cash payments to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 15993530.21 97686801.71 Net cash flows from investing activities 277026848.02 101959935.75 III. Cash flows from financing activities Cash received from capital contributions Cash received from borrowings 320000000.00 250000000.00 Other cash received relating to financing activities Subtotal of cash inflows from financing activities 320000000.00 250000000.00 Cash repayments of debts 450000000.00 290000000.00 Cash payments for dividends distribution of profit and interest expenses 168545613.69 114106711.75 Other cash payments relating to financing activities 794690.45 83148230.83 Subtotal of cash outflows from financing activities 619340304.14 487254942.58 Net cash flows from financing activities -299340304.14 -237254942.58 IV. Effect of foreign exchange rate changes on cash and cash equivalents 31370.89 -44371.78 V. Net increase / (decrease) in cash and cash equivalents 81930211.06 33539232.19 Plus: Cash and cash equivalents at the beginning of the period 308230255.35 274691023.16 VI. Cash and cash equivalents at the end of the period 390160466.41 308230255.35 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 7Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Statement of Changes in Owners' Equity of Parent Company For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd. Unit：Yuan Currency: RMB 2024 Other equity instruments Item Other Share capital Perpetua Capital reserves Less: Treasury comprehenstock sive Special reserves Surplus reserves Retained earnings Total owners’ equityPreferenc l capital e shares securitie Others income s I. Balance at 31 December 2023 415219970.00 993037528.98 78645532.23 275010401.50 1063629483.35 2668251851.60 Add：Changes in accounting policies Correction of prior period errors Others II. Balance at 1 January 2024 415219970.00 993037528.98 78645532.23 275010401.50 1063629483.35 2668251851.60 III. Changes in equity during the - reporting period 9455963.00 -53819529.57-65829975.42142442733.79144997216.64 (i) Total comprehensive 304788416.60 304788416.60 income (ii) Capital contributions or - withdrawals by 9455963.00 -53819529.57 -65829975.42 2554482.85 owners 1. Ordinary shares contributed - by 9355763.00 -54984906.42 -64340669.42 shareholders 2．Capital contributed by holders of other equity instruments 3．Share-based payments - recognised in 100200.00 1165376.85-1489306.002554482.85 owners’ equity 8Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 4．Others (iii) Profit distribution -162345682.81 -162345682.81 1．Transfer to surplus reserves 2．Profit distribution to -162345682.81 -162345682.81 owners (or shareholders) 3．Others (iv) Transfer within owners' equity 1． Capital reserves converted to share capital 2．Surplus reserves converted to share capital 3．Loss made up by surplus reserves 4．Changes in the defined benefit plan transferred to retained earnings 5. Other comprehensive income transferred to retained earnings 6. Others (v) Special reserves 1．Withdrawal during the reporting period 2．Usage during the reporting period (vi) Others IV. Balance at 31 December 2024 405764007.00 939217999.41 12815556.81 275010401.50 1206072217.14 2813249068.24 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 8Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. Statement of Changes in Owners' Equity For the year ended 31 December 2024 Prepared by: FIYTA Precision Technology Co. Ltd.Unit：Yuan Currency: RMB 2023 Other equity instruments Item Other Share Special Prefer Perpetuacapital Capital reserves Less: Treasury stock comprehe nsive reserve Surplus reserves Retained earnings Total owners’ equity ence l capitalsecuritie Others income s shares s I. Balance at 31 December 2022 417627960. 1010917776.19 50759806.16 275010401.50 943017166.88 2595813498.4100 Add：Changes in accounting policies Correction of prior period errors Others II. Balance at 1 January 2023 417627960. 1010917776.19 50759806.16 275010401.50 943017166.88 2595813498.4100 III. Changes in equity during the reporting -2407990.00 -17880247.21 27885726.07 120612316.47 72438353.19period (i) Total comprehensive income 223983671.61 223983671.61 (ii) Capital contributions or withdrawals by -2407990.00 -17880247.21 27885726.07 -48173963.28owners 1. Ordinary shares contributed by 64340669.42 -64340669.42 shareholders 2．Capital contributed by holders of other equity instruments 3．Share-based payments recognised in -2407990.00 -17867890.66 -36454943.35 16179062.69owners’ equity 4．Others -12356.55 -12356.55 (iii) Profit distribution -103371355.14 -103371355.14 8Full text of 2024 Annual Report of FIYTA Precision Technology Co. Ltd. 1．Transfer to surplus reserves 2．Profit distribution to owners (or -103371355.14 -103371355.14 shareholders) 3．Others (iv) Transfer within owners' equity 1． Capital reserves converted to share capital 2．Surplus reserves converted to share capital 3．Loss made up by surplus reserves 4．Changes in the defined benefit plan transferred to retained earnings 5. Other comprehensive income transferred to retained earnings 6. Others (v) Special reserves 1．Withdrawal during the reporting period 2．Usage during the reporting period (vi) Others IV. Balance at 31 December 2023 415219970. 993037528.98 78645532.23 275010401.50 1063629483.35 2668251851.6000 Legal Representative: Zhang Xuhua Chief Financial Officer:Song Yaoming Finance Manager:Tian Hui 8FIYTA Precision Technology Co. Ltd. Notes to the financial statements FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements For the year ended 31 December 2024 （All amounts are expressed in Renminbi Yuan(“RMB”)unless otherwise stated） 1. BASIC INFORMATION ABOUT THE COMPANY FIYTA Precision Technology Co. Ltd. (hereinafter referred to as “the Company”) was established 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 andExport Shenzhen Industry & Trade Center (name changed to “China National Aero-Technology Shenzhen Co. Ltd” lately) on 25 December 1992. On 3 June 1993 both the Company was listed on Shenzhen Stock Exchange. The Company holds business license with the Unified Social Credit Code of 91440300192189783K.As at 31 December 2024 the outstanding shares issued by the Company was 405.764007 million shares and the registered capital was 405.764007 million after a series of share dividends rights offering capitalization of reserves and issuing of new shares. The Company’s registered address is FIYTA Hi-Tech Building Gao Xin Nan Yi Dao Nanshan District Shenzhen Guangdong Province where the Company’s headquarters locates. The parent company of the Company is CATIC Shenzhen Holdings Limited (CATIC Shenzhen) and the ultimate controlling party of the Company is Aviation Industry Corporation of China Ltd. (AVIC) .The business nature and main operating activities of the Company and its subsidiaries mainly include: Watch and Clock Sales; Watch and Timing Instrument Manufacturing; Watch and Timing Instrument Sales; Jewelry Wholesale; Jewelry Retail; Wearable Intelligent Devices Manufacturing; Wearable Intelligent Devices Sales; Non-residential Real Estate Leasing; Professional Design Services; Sales of Household Electrical Appliances; Sales of Satellite Mobile Communication Terminals. (Except for projects that require approval by law business activities may be conducted independently based on the business license in accordance with the law.) The Company included a total of 12 subsidiaries in the consolidation scope for the current period. For details refer to Note 7 Interests in Other Entities. There were no changes in the entities included in the consolidated financial statements compared to the previous period.The financial statements were approved and authorized for issue upon the resolution of the Company’s Board of Directors meeting on 12 March 2025. 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS 9FIYTA Precision Technology Co. Ltd. Notes to the financial statements 2.1 Basis of Preparation Based on going concern according to actually occurred transactions and events the Company prepares its financial statements in accordance with the Accounting Standards for Business Enterprises – Basic standards and concrete accounting standards Accounting Standards for Business Enterprises – Application Guidelines Accounting Standards for Business Enterprises – Interpretations and other relevant provisions (collectively known as “Accounting Standards for Business Enterprises issued by Ministry of Finance of PRC”). In addition the Company discloses the relevant financial information in accordance with "Rules No.15 for the Information Disclosure and Reporting of Companies Offering Securities to the Public - General Requirements for Financial Reporting (2023 Revision)" issued by CSRC. 2.2 Going Concern The Company has assessed its ability to continually operate for the next twelve months from the end of the reporting period and no any matters that may result in doubt on its ability as a going concern were noted. Therefore it is reasonable for the Company to prepare financial statements on the going concern basis. 3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES The following significant accounting policies and accounting estimates of the Company are formulated in accordance with the Accounting Standards for Business Enterprises. Businesses not mentioned are complied with relevant accounting policies of the Accounting Standards for Business Enterprises. 3.1 Statement of Compliance with the Accounting Standards for Business Enterprises The Company prepares its financial statements in accordance with the requirements of the Accounting Standards for Business Enterprises truly and completely reflecting the Company’s financial position as at 31 December 2024 and its operating results changes in shareholders' equity cash flows and other related information for the year then ended. 3.2 Accounting Period The accounting year of the Company is from 1 January to 31 December in calendar year. 3.3 Operating Cycle The normal operating cycle of the Company is twelve months. 3.4 Functional Currency The Company and its domestic subsidiaries use RMB as the functional currency. The Company’s overseas subsidiary FIYTA (Hong Kong) Limited (“FIYTA Hong Kong” ) has determined HKD as its functional currency based on the primary economic environment in which it operates. Montres Chouriet SA a subsidiary of FIYTA Hong Kong has determined CHF as its functional currency based on its operating environment. When preparing financial statements their amounts are translated into RMB. The Company prepares its financial statements in RMB. 10FIYTA Precision Technology Co. Ltd. Notes to the financial statements 3.5 Determining Factor and Basis of Selection of Materiality Item Factor and basis of materiality Accounts receivable with significant reversal or The amount of an individual item for year-end recovery of provision for bad debts recognized balance is more than RMB 1000000 during the current period Significant other payables aged more than one year The amount of an individual item for year-end balance is more than RMB 1000000 3.6 Accounting Treatment of Business Combinations under and not under Common Control (a) Business combinations under common control The assets and liabilities that the Company obtains in a business combination under common control shall be measured at their carrying amount of the acquired entity at the combination date. If the accounting policy adopted by the acquired entity is different from that adopted by the acquiring entity the acquiring entity shall according to accounting policy it adopts adjust the relevant items in the financial statements of the acquired party based on the principal of materiality. As for the difference between the carrying amount of the net assets obtained by the acquiring entity and the carrying amount of the consideration paid by it the capital reserve (capital premium or share premium) shall be adjusted. If the capital reserve (capital premium or share premium) is not sufficient to absorb the difference any excess shall be adjusted against retained earnings.(b) Business combinations not under common control The assets and liabilities that the Company obtains in a business combination not under common control shall be measured at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity is different from that adopted by the acquiring entity the acquiring entity shall according to accounting policy it adopts adjust the relevant items in the financial statements of the acquired entity based on the principal of materiality. The acquiring entity shall recognise the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquired entity as goodwill. The acquiring entity shall pursuant to the following provisions treat the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquired entity: (i) It shall review the measurement of the fair values of the identifiable assets liabilities and contingent liabilities it obtains from the acquired entity as well as the combination costs; (ii) If after the review the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquired entity the balance shall be recognised in profit or loss of the reporting period.(c) Treatment of business combination related costs 11FIYTA Precision Technology Co. Ltd. Notes to the financial statements The intermediary costs such as audit legal services and valuation consulting and other related management costs that are directly attributable to the business combination shall be charged in profit or loss in the period in which they are incurred. The costs to issue equity or debt securities for the consideration of business combination shall be recorded as a part of the value of the respect equity or debt securities upon initial recognition. 3.7 Judgment of Control and Method of Preparing the Consolidated Financial Statements (a) Judgment of control and consolidation decision Control exists when the Company has power over the investee exposure or rights to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the returns. The definition of control contains there elements: - power over the investee; exposure or rights to variable returns from the Company’s involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns. The Company controls an investee if and only if the Company has all the above three elements.The scope of consolidated financial statements shall be determined on the basis of control. It not only includes subsidiaries determined based on voting rights (or similar) or together with other arrangement but also structured entities under one or more contractual arrangements.Subsidiaries are the entities that controlled by the Company (including enterprise a divisible part of the investee and structured entity controlled by the enterprise). A structured entity (sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.(b) Method of preparing the consolidated financial statements The consolidated financial statements shall be prepared by the Company based on the financial statements of the Company and its subsidiaries and using other related information.When preparing consolidated financial statements the Company shall consider the entire group as an accounting entity adopt uniform accounting policies and apply the requirements of Accounting Standard for Business Enterprises related to recognition measurement and presentation. The consolidated financial statements shall reflect the overall financial position operating results and cash flows of the group.(i) Like items of assets liabilities equity income expenses and cash flows of the parent are combined with those of the subsidiaries.(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against the parent’s portion of equity of each subsidiary.(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries or between subsidiaries and when intragroup transactions indicate an impairment of related assets the losses shall be recognised in full.(iv) Make adjustments to special transactions from the perspective of the group. 12FIYTA Precision Technology Co. Ltd. Notes to the financial statements (c) Special consideration in consolidation elimination (i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as treasury stock of the Company which is offset with the owner’s equity represented as “treasury stock” under “owner’s equity” in the consolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equity investment held by the Company to its subsidiaries as reference. That is the long-term equity investment is eliminated (off-set) against the portion of the corresponding subsidiary’s equity.(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve and being different from retained earnings and undistributed profit “Specific reserves” and “Generalrisk provision” shall be recovered based on the proportion attributable to owners of the parent company after long-term equity investment to the subsidiaries is eliminated with the subsidiaries’ equity.(iii) If temporary timing difference between the book value of the assets and liabilities in the consolidated statement of financial position and their tax basis is generated as a result of elimination of unrealized inter-company transaction profit or loss deferred tax assets of deferred tax liabilities shall be recognised and income tax expense in the consolidated statement of profit or loss shall be adjusted simultaneously excluding deferred taxes related to transactions or events directly recognised in owner’s equity or business combination.(iv) Unrealised inter-company transactions profit or loss generated from the Company sellingassets to its subsidiaries shall be eliminated against “net profit attributed to the owners of theparent company” in full. Unrealized inter-company transactions profit or loss generated fromthe subsidiaries selling assets to the Company shall be eliminated between “net profitattributed to the owners of the parent company” and “non-controlling interests” pursuant to the proportion of the Company in the related subsidiaries. Unrealized inter-company transactions profit or loss generated from the assets sales between the subsidiaries shall be eliminated between “net profit attributed to the owners of the parent company” and “non-controlling interests” pursuant to the proportion of the Company in the selling subsidiaries.(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion of non-controlling interest in this subsidiary at the beginning of the period non-controlling interest is still to be written down. 3.8 Classification of Joint Arrangements and Accounting for Joint Operation A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of the Company is classified as either a joint operation or a joint venture.(a) Joint operation A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. 13FIYTA Precision Technology Co. Ltd. Notes to the financial statements The Company shall recognise the following items in relation to shared interest in a joint operation and account for them in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises: (i) its assets including its share of any assets held jointly; (ii) its liabilities including its share of any liabilities incurred jointly; (iii) its revenue from the sale of its share of the output arising from the joint operation; (iv) its share of the revenue from the sale of the output by the joint operation; and (v) its expenses including its share of any expenses incurred jointly.(b) Joint venture A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity method of long-term equity investment. 3.9 Cash and Cash Equivalents Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term (generally within three months of maturity at acquisition) highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 3.10 Foreign Currency Transactions and Translation of Foreign Currency Financial Statements (a) Determination of the exchange rate for foreign currency transactions At the time of initial recognition of a foreign currency transaction the amount in the foreign currency shall be translated into the amount in the functional currency at the spot exchange rate of the transaction date or at an exchange rate which is determined through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).(b) Translation of monetary items denominated in foreign currency on the balance sheet date The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The balance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current period. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date; for the foreign currency non-monetary items restated to a fair value measurement shall be translated into the at the spot exchange rate at the date when the fair value was determined the difference between the restated functional currency amount and the original functional currency amount 14FIYTA Precision Technology Co. Ltd. Notes to the financial statements shall be recorded into the profits and losses at the current period.(c) Translation of foreign currency financial statements Before translating the financial statements of foreign operations the accounting period and accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign operation financial statements denominated in foreign currency (other than functional currency) shall be translated in accordance with the following method: (i) The asset and liability items in the statement of financial position shall be translated at the spot exchange rates at the date of that statement of financial position. The owners’ equity items except undistributed profit shall be translated at the spot exchange rates when they are incurred.(ii) The income and expense items in the statement of profit and other comprehensive income shall be translated at the spot exchange rates or approximate exchange rate at the date of transaction.(iii) Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rate or approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash is presented separately in the statement of cash flows as an adjustment item.(iv) The differences arising from the translation of foreign currency financial statements shall be presented separately as “other comprehensive income” under the owners’ equity items of the consolidated statement of financial position.When disposing a foreign operation involving loss of control the cumulative amount of the exchange differences relating to that foreign operation recognised under other comprehensive income in the statement of financial position shall be reclassified into current profit or loss according to the proportion disposed. 3.11 Financial Instruments Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.(a) Recognition and derecognition of financial instrument A financial asset or a financial liability should be recognised in the statement of financial position when and only when an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognised when meets one of the following conditions: (i) The rights to the contractual cash flows from a financial asset expire (ii) The financial asset has been transferred and meets one of the following derecognition conditions: Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e. when the obligation specified in the contract is discharged or cancelled or 15FIYTA Precision Technology Co. Ltd. Notes to the financial statements expires. An exchange of the Company (borrower) and lender of debt instruments that carry significantly different terms or a substantial modification of the terms of an existing liability are both accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using trade date accounting. A regular-way purchase or sale of financial assets is a transaction under a contract whose terms require delivery of the asset within the time frame established generally by regulations or convention in the market place concerned. Trade date is the date at which the entity commits itself to purchase or sell an asset.(b) Classification and measurement of financial assets At initial recognition the Company classified its financial asset based on both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortised cost financial asset at fair value through profit or loss (FVTPL) and financial asset at fair value through other comprehensive income (FVTOCI). Reclassification of financial assets is permitted if and only if the objective of the entity’s business model for managing those financial assets changes. In this circumstance all affected financial assets shall be reclassified on the first day of the first reporting period after the changes in business model; otherwise the financial assets cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL transaction costs are recognised in current profit or loss. For financial assets not measured at FVTPL transaction costs should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales of goods or rendering of services are initially measured at the transaction price defined in the accounting standard of revenue where the transaction does not include a significant financing component.Subsequent measurement of financial assets will be based on their categories: (i)Financial asset at amortised cost The financial asset at amortised cost category of classification applies when both the following conditions are met: the financial asset is held within the business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding. These financial assets are subsequently measured at amortised cost by adopting the effective interest rate method. Any gain or loss arising from derecognition according to the amortization under effective interest rate method or impairment are recognised in current profit or loss.(ii)Financial asset at fair value through other comprehensive income (FVTOCI) The financial asset at FVTOCI category of classification applies when both the following conditions are met: the financial asset is held within the business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the 16FIYTA Precision Technology Co. Ltd. Notes to the financial statements contractual term of the financial asset gives rise on specified dates to cash flows that are solely payment of principle and interest on the principal amount outstanding. All changes in fair value are recognised in other comprehensive income except for gain or loss arising from impairment or exchange differences which should be recognised in current profit or loss. At derecognition cumulative gain or loss previously recognised under OCI is reclassified to current profit or loss. However interest income calculated based on the effective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equity instrument investments as measured through FVTOCI. All changes in fair value are recognised in other comprehensive income except for dividend income recognised in current profit or loss. At derecognition cumulative gain or loss are reclassified to retained earnings.(iii)Financial asset at fair value through profit or loss (FVTPL) Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair value through other comprehensive income (FVTOCI) should be classified as financial asset at fair value through profit or loss (FVTPL). These financial assets should be subsequently measured at fair value. All the changes in fair value are included in current profit or loss.(c) Classification and measurement of financial liabilities The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL) loan commitments at a below-market interest rate and financial guarantee contracts and financial asset at amortised cost.Subsequent measurement of financial assets will be based on the classification: (i)Financial liabilities at fair value through profit or loss (FVTPL) Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After initial recognition any gain or loss (including interest expense) are recognised in current profit or loss except for those hedge accounting is applied. For financial liability that is designated as at FVTPL changes in the fair value of the financial liability that is attributable to changes in the own credit risk of the issuer shall be presented in other comprehensive income. At derecognition cumulative gain or loss previously recognised under OCI is reclassified to retained earnings.(ii)Loan commitments and financial guarantee contracts Loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms. The provision of impairment losses of loan commitments shall be recognised based on expected credit losses model.Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. 17FIYTA Precision Technology Co. Ltd. Notes to the financial statements Financial guarantee contracts liability shall be subsequently measured at the higher of: The amount of the loss allowance recognised according to the impairment principles of financial instruments; and the amount initially recognised less the cumulative amount of income recognised in accordance with the revenue principles.(iii) Financial liabilities at amortised cost After initial recognition the Company measured other financial liabilities at amortised cost using the effective interest method.Except for special situation financial liabilities and equity instrument should be classified in accordance with the following principles: (i) If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill a contractual obligation this contractual obligation meet the definition of financial liabilities. Some financial instruments do not comprise terms and conditions related to obligations of delivering cash or another financial instrument explicitly they may include contractual obligation indirectly through other terms and conditions.(ii) If a financial instrument must or may be settled in the Company's own equity instruments it should be considered that the Company’s own equity instruments are alternatives of cash or another financial instrument or to entitle the holder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the former is the case the instrument is a liability of the issuer; otherwise it is an equity instrument of the issuer. Under some circumstances it is regulated in the contract that the financial instrument must or may be settled in the Company's own equity instruments where amount of contractual rights and obligations are calculated by multiplying the number of the equity instruments to be available or delivered by its fair value upon settlement. Such contracts shall be classified as financial liabilities regardless that the amount of contractual rights and liabilities is fixed or fluctuate totally or partially with variables other than market price of the entity’s own equity instruments (such as interest rate price of some kind of goods or some kind of financial instrument).(d) Derivatives and embedded derivatives At initial recognition derivatives shall be measured at fair value at the date of derivative contracts are signed and subsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset and with a negative fair value shall be recognised as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into current profit or loss except for the effective portion of cash flow hedges which shall be recognised in other comprehensive income and reclassified into current profit or loss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host the Company shall apply the requirements of financial asset classification to the entire hybrid contract. If a host that is not a financial asset and the hybrid contract is not measured at fair 18FIYTA Precision Technology Co. Ltd. Notes to the financial statements value with changes in fair value recognised in profit or loss and the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative the embedded derivative shall be separated from the hybrid instrument and accounted for as a separate derivative instrument. If the Company is unable to measure the fair value of the embedded derivative at the acquisition date or subsequently at the balance sheet date the entire hybrid contract is designated as financial assets or financial liabilities at fair value through profit or loss.(e) Impairment of financial instrument The Company shall recognise a loss allowance based on expected credit losses on a financial asset that is measured at amortised cost a debt investment at fair value through other comprehensive income a contract asset a lease receivable a loan commitment and a financial guarantee contract.(i) Measurement of expected credit losses Expected credit losses are the weighted average of credit losses of the financial instruments with the respective risks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (ie all cash shortfalls) discounted at the original effective interest rate or credit- adjusted effective interest rate for purchased or originated credit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. 12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date (or the expected lifetime if the expected life of a financial instrument is less than 12 months).At each reporting date the Company classifies financial instruments into three stages and makes provisions for expected credit losses accordingly. A financial instrument of which the credit risk has not significantly increased since initial recognition is at stage 1. The Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. A financial instrument with a significant increase in credit risk since initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A financial instrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses.The Company may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the loss allowance for that financial instrument at 19FIYTA Precision Technology Co. Ltd. Notes to the financial statements an amount equal to 12-month expected credit losses.For financial instrument at stage 1 stage 2 and those have low credit risk the interest revenue shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset (ie impairment loss not been deducted). For financial instrument at stage 3 interest revenue shall be calculated by applying the effective interest rate to the amortised cost after deducting of impairment loss.For notes receivable accounts receivable and accounts receivable financing no matter it contains a significant financing component or not the Company shall measure the loss allowance at an amount equal to the lifetime expected credit losses.Receivables For the notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables which are demonstrated to be impaired by any objective evidence or applicable for individual assessment the Company shall individually assess for impairment and recognise the loss allowance for expected credit losses. If the Company determines that no objective evidence of impairment exists for notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables or the expected credit loss of a single financial asset cannot be assessed at reasonable cost such notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables shall be divided into several groups with similar credit risk characteristics and collectively calculated the expected credit loss. The determination basis of groups is as following: Determination basis of notes receivable is as following: Group 1: Commercial acceptance bills Group 2: Bank acceptance bills For each group the Company calculates expected credit losses through default exposure and the lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.Determination basis of accounts receivable is as following: Group 1: Accounts receivables due from customers For each group the Company calculates expected credit losses through preparing an aging analysis schedule with the lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.Determination basis of other receivables is as following: Group 1: Deposit and guarantee receivable Group 2: Employee advance payments Group 3: Others 20FIYTA Precision Technology Co. Ltd. Notes to the financial statements For each group the Company calculates expected credit losses through default exposure and the 12-months or lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.The Company calculates the aging of receivables (notes receivable accounts receivable and other receivables) based on the period from the transaction date to the balance sheet date to determine credit risk characteristic groups.Debt investment and other debt investment For debt investment and other debt investment the Company shall calculate the expected credit loss through the default exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment counterparty and the type of risk exposure.(ii) Low credit risk If the financial instrument has a low risk of default the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may but will not necessarily reduce the ability of the borrower to fulfill its contractual cash flow obligations.(iii) Significant increase in credit risk The Company shall assess whether the credit risk on a financial instrument has increased significantly since initial recognition using the change in the risk of a default occurring over the expected life of the financial instrument through the comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition.To make that assessment the Company shall consider reasonable and supportable information that is available without undue cost or effort and that is indicative of significant increases in credit risk since initial recognition including forward-looking information. The information considered by the Company are as following: * Significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception * Existing or forecast adverse change in the business financial or economic conditions of the borrower that results in a significant change in the borrower’s ability to meet its debt obligations； * An actual or expected significant change in the operating results of the borrower; An actual or expected significant adverse change in the regulatory economic or technological environment of the borrower； * Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements which are expected to reduce the borrower’s economic incentive to make scheduled contractual payments or to otherwise influence the probability of a default occurring; 21FIYTA Precision Technology Co. Ltd. Notes to the financial statements * Significant change that are expected to reduce the borrower’s economic incentive to make scheduled contractual payments; * Expected changes in the loan documentation including an expected breach of contract that may lead to covenant waivers or amendments interest payment holidays interest rate step-ups requiring additional collateral or guarantees or other changes to the contractual framework of the instrument； * Significant changes in the expected performance and behavior of the borrower； * Contractual payments are more than 30 days past due.Depending on the nature of the financial instruments the Company shall assess whether the credit risk has increased significantly since initial recognition on an individual financial instrument or a group of financial instruments. When assessed based on a group of financial instruments the Company can group financial instruments on the basis of shared credit risk characteristics for example past due information and credit risk rating.Generally the Company shall determine the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due. The Company can only rebut this presumption if the Company has reasonable and supportable information that is available without undue cost or effort that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 days past due.(iv) Credit-impaired financial asset The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset at amortised cost and debt investment at fair value through other comprehensive income. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidences that a financial asset is credit-impaired include observable data about the following events: Significant financial difficulty of the issuer or the borrower；a breach of contract such as a default or past due event; the lender(s) of the borrower for economic or contractual reasons relating to the borrower’s financial difficulty having granted to the borrower a concession(s) that the lender(s) would not otherwise consider； it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;the disappearance of an active market for that financial asset because of financial difficulties； the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.(v) Presentation of impairment of expected credit loss In order to reflect the changes of credit risk of financial instrument since initial recognition the Company shall at each reporting date remeasure the expected credit loss and recognise in profit or loss as an impairment gain or loss the amount of expected credit losses addition (or reversal). For financial asset at amortised cost the loss allowance shall reduce the carrying 22FIYTA Precision Technology Co. Ltd. Notes to the financial statements amount of the financial asset in the statement of financial position; for debt investment at fair value through other comprehensive income the loss allowance shall be recognised in other comprehensive income and shall not reduce the carrying amount of the financial asset in the statement of financial position.(vi) Write-off The Company shall directly reduce the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when the Company determines that the debtor has no assets or sources of income that could generate sufficient cash flow to repay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.(f) Transfer of financial assets Transfer of financial assets refers to following two situations: * Transfers the contractual rights to receive the cash flows of the financial asset; * Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.(i) Derecognition of transferred assets If the Company transfers substantially all the risks and rewards of ownership of the financial asset or neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset the financial asset shall be derecognised.Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer the Company has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance of the transfer.If the transfer of financial asset qualifies for derecognition in its entirety the difference between the following shall be recognised in profit or loss: * The carrying amount of transferred financial asset; * The sum of consideration received and the part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for 23FIYTA Precision Technology Co. Ltd. Notes to the financial statements Business Enterprises - Recognition and Measurement of Financial Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition the previous carrying amount of the larger financial asset shall be allocated between the part that continues to be recognised (For this purpose a retained servicing asset shall be treated as a part that continues to be recognised) and the part that is derecognised based on the relative fair values of those parts on the date of the transfer. The difference between following two amounts shall be recognised in profit or loss: * The carrying amount (measured at the date of derecognition) allocated to the part derecognised； * The sum of the consideration received for the part derecognised and part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business Enterprises - Recognition and Measurement of Financial Instruments).(ii) Continuing involvement in transferred assets If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset and retains control of the transferred asset the Company shall continue to recognise the transferred asset to the extent of its continuing involvement and also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset (iii) Continue to recognise the transferred assets If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset the Company shall continue to recognise the transferred asset in its entirety and the consideration received shall be recognised as a financial liability.The financial asset and the associated financial liability shall not be offset. In subsequent accounting period the Company shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss) incurred on the associated liability.(g) Offsetting financial assets and financial liabilities Financial assets and financial liabilities shall be presented separately in the statement of financial position and shall not be offset. When meets the following conditions financial assets and financial liabilities shall be offset and the net amount presented in the statement of financial position: The Company currently has a legally enforceable right to set off the recognised amounts; The Company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition the 24FIYTA Precision Technology Co. Ltd. Notes to the financial statements Company shall not offset the transferred asset and the associated liability.(h) Determination of fair value of financial instruments Determination of fair value of financial assets and financial liabilities please refer to Note 3.12 3.12 Fair Value Measurement Fair value refers to 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 Company determines fair value of the related assets and liabilities based on market value in the principal market or in the absence of a principal market in the most advantageous market price for the related asset or liability. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take place with the greatest volume and frequency. The most advantageous market is the market which maximizes the value that could be received from selling the asset and minimizes the value which is needed to be paid in order to transfer a liability considering the effect of transport costs and transaction costs both.If the active market of the financial asset or financial liability exists the Company shall measure the fair value using the quoted price in the active market. If the active market of the financial instrument is not available the Company shall measure the fair value using valuation techniques.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.* Valuation techniques The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value including the market approach the income approach and the cost approach. The Company shall use valuation techniques consistent with one or more of those approaches to measure fair value. If multiple valuation techniques are used to measure fair value the results shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances.When using the valuation technique the Company shall give the priority to relevant observable inputs. The unobservable inputs can only be used when relevant observable inputs is not available or practically would not be obtained. Observable inputs refer to the information which is available from market and reflects the assumptions that market participants would use when pricing the asset or liability. Unobservable Inputs refer to the information which is not available from market and it has to be developed using the best 25FIYTA Precision Technology Co. Ltd. Notes to the financial statements information available in the circumstances from the assumptions that market participants would use when pricing the asset or liability.* Fair value hierarchy To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3 inputs. 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. Level 3 inputs are unobservable inputs for the asset or liability. 3.13 Inventories (a) Classification of inventories Inventories are finished goods or products held for sale in the ordinary course of business in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services including raw materials work in progress and goods in stock etc.(b) Measurement method of cost of inventories sold or used The cost of raw materials and goods in stock (except the branded luxury watch inventory) used or sold is determined on the weighted average basis while the cost of the branded luxury watch inventory used or sold is determined on individual valuation method basis.(c) Inventory system The perpetual inventory system is adopted. The inventories should be counted at least once a year and surplus or losses of inventory stocktaking shall be included in current profit and loss.(d) Recognition Criteria and Provision for impairment of inventory Inventories are stated at the lower of cost and net realizable value. The excess of cost over net realizable value of the inventories is recognised as provision for impairment of inventory and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidence obtained and factors such as purpose of holding the inventory and impact of post balance sheet event shall be considered.(i) In normal operation process finished goods products and materials for direct sale their net realizable values are determined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company the net realizable value of the excess portion of inventories shall be based on general selling prices. Net realizable value of materials held for sale shall be measured based on market price. 26FIYTA Precision Technology Co. Ltd. Notes to the financial statements (ii) For materials in stock need to be processed in the ordinary course of production and business net realisable value is determined at the estimated selling price less the estimated costs of completion the estimated selling expenses and relevant taxes. If the net realisable value of the finished products produced by such materials is higher than the cost the materials shall be measured at cost; if a decline in the price of materials indicates that the cost of the finished products exceeds its net realisable value the materials are measured at net realisable value and differences shall be recognised at the provision for impairment.(iii) Provisions for inventory impairment are generally determined on an individual basis. For inventories with large quantity and low unit price the provisions for inventory impairment are determined on group basis.(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting date the amounts written down are recovered and reversed to the extent of the inventory impairment which has been provided for. The reversal shall be included in profit or loss. 3.14 Contract Assets and Contract Liabilities The Company shall present contract assets or contract liabilities in the statement of financial position depending on the relationship between the Company’s satisfying a performance obligation and the customer’s payment. A contract asset shall be presented if the Company has the right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned on something other than the passage of time. A contract liability shall be presented if the Company has the obligation to transfer goods or services to a customer for which the Company has received consideration (or the amount is due) from the customer.Method of determination and accounting for expected credit loss for contract assets please refer to Note 3.11.Contract assets and contract liabilities shall be presented separately in the statement of financial position. The contract asset and contract liability for the same contract shall be presented on a net basis. A net balance shall be listed in the item of "Contract assets" or "Other non-current assets" according to its liquidity; a credit balance shall be listed in the item of "Contract liabilities" or "Other non-current liabilities" according to its liquidity. Contract assets and contract liabilities for different contracts cannot be offset. 3.15 Contract costs Contract costs include costs to fulfill a contract and the costs to obtain a contract.The Company shall recognise an asset from the costs incurred to fulfill a contract only if those costs meet all of the following criteria: (i) the costs relate directly to a contract or to an anticipated contract including: direct labour direct materials manufacturing costs (or similar costs) costs that are explicitly chargeable to the customer under the contract and other costs that are incurred only because an entity entered into the contract; 27FIYTA Precision Technology Co. Ltd. Notes to the financial statements (ii) the costs enhance resources of the Company that will be used in satisfying performance obligations in the future; and (iii) the costs are expected to be recovered.The incremental costs of obtaining a contract shall be recognised as an asset if the Company expects to recover them.An asset related to contract costs shall be amortised on a systematic basis that is consistent with the revenue recognition of the goods or services to which the asset relates. The Company recognises the contract acquisition costs as an expense when incurred if the amortisation period of the asset that the Company otherwise would have recognised is one year or less.The Company shall accrue the provision for impairment recognise an impairment loss in profit or loss to the extent that the carrying amount of an asset related to the contract cost exceeds the difference of below two items and further consider whether the estimated liability related to the onerous contract needs to be accrued: (i) the remaining amount of consideration that the Company expects to receive in exchange for the goods or services to which the asset relates; less (ii) the costs that relate directly to providing those goods or services and that have not been recognised as expenses.The Company shall recognise in profit or loss a reversal of some or all of an impairment loss previously recognised when the impairment conditions no longer exist or have improved. The increased carrying amount of the asset shall not exceed the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.Providing that the costs to fulfil a contract satisfy the requirement to be recognised as an asset the Company shall present them in the account “Inventory” if the contract has an originalexpected duration of one year (or a normal operating cycle) or less or in the account “Othernon-current assets” if the contract has an original expected duration of more than one year (or a normal operating cycle).Providing that the costs to obtain a contract satisfy the requirement to be recgonised as an asset the Company shall present them in the account “Other current asset” if the contract has an original expected duration of one year (or a normal operating cycle) or less or in the account “Other non-current assets” if the contract has an original expected duration of more than one year (or a normal operating cycle). 3.16 Long-term Equity Investments Long-term equity investments refer to equity investments where an investor has control of or significant influence over an investee as well as equity investments in joint ventures.Associates of the Company are those entities over which the Company has significant influence.(a) Determination basis of joint control or significant influence over the investee Joint control is the relevant agreed sharing of control over an arrangement and the arranged 28FIYTA Precision Technology Co. Ltd. Notes to the financial statements relevant activity must be decided under unanimous consent of the parties sharing control. In assessing whether the Company has joint control of an arrangement the Company shall assess first whether all the parties or a group of the parties control the arrangement. When all the parties or a group of the parties considered collectively are able to direct the activities of the arrangement the parties control the arrangement collectively. Then the Company shall assess whether decisions about the relevant activities require the unanimous consent of the parties that collectively control the arrangement. If two or more groups of the parties could control the arrangement collectively it shall not be assessed as have joint control of the arrangement.When assessing the joint control the protective rights are not considered.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. In determination of significant influence over an investee the Company should consider not only the existing voting rights directly or indirectly held but also the effect of potential voting rights held by the Company and other entities that could be currently exercised or converted including the effect of share warrants share options and convertible corporate bonds that issued by the investee and could be converted in current period.If the Company holds directly or indirectly 20% or more but less than 50% of the voting power of the investee it is presumed that the Company has significant influence of the investee unless it can be clearly demonstrated that in such circumstance the Company cannot participate in the decision-making in the production and operating of the investee.(b) Determination of initial investment cost (i) Long-term equity investments generated in business combinations For a business combination involving enterprises under common control if the Company makes payment in cash transfers non-cash assets or bears liabilities as the consideration for the business combination the share of carrying amount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment cost and the carrying amount of cash paid non-cash assets transferred and liabilities assumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset undistributed profit shall be offset in turn.For a business combination involving enterprises under common control if the Company issues equity securities as the consideration for the business combination the share of carrying amount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The total par value of the shares issued is recognised as the share capital. The difference between the initial investment cost and the carrying amount of the total par value of the shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset undistributed profit shall be offset in turn.For business combination not under common control the assets paid liabilities incurred or assumed and the fair value of equity securities issued to obtain the control of the acquiree at 29FIYTA Precision Technology Co. Ltd. Notes to the financial statements the acquisition date shall be determined as the cost of the business combination and recognised as the initial cost of the long-term equity investment. The audit legal valuation and advisory fees other intermediary fees and other relevant general administrative costs incurred for the business combination shall be recognised in profit or loss as incurred.(ii) Long-term equity investments acquired not through the business combination the investment cost shall be determined based on the following requirements: For long-term equity investments acquired by payments in cash the initial cost is the actually paid purchase cost including the expenses taxes and other necessary expenditures directly related to the acquisition of long-term equity investments.For long-term equity investments acquired through issuance of equity securities the initial cost is the fair value of the issued equity securities.For the long-term equity investments obtained through exchange of non-monetary assets if the exchange has commercial substance and the fair values of assets traded out and traded in can be measured reliably the initial cost of long-term equity investment traded in with non- monetary assets are determined based on the fair values of the assets traded out together with relevant taxes. Difference between fair value and book value of the assets traded out is recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above criterion the book value of the assets traded out and relevant taxes are recognised as the initial investment cost.For long-term equity investment acquired through debt restructuring the initial cost is determined based on the fair value of the equity obtained and the difference between initial investment cost and carrying amount of debts shall be recorded in current profit or loss.(c) Subsequent measurement and recognition of profit or loss Long-term equity investment to an entity over which the Company has ability of control shall be accounted for at cost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity method.(i) Cost method For Long-term equity investment at cost method cost of the long-term equity investment shall be adjusted when additional amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends or profits which have been declared to distribute by the investee as current investment income.(ii) Equity method If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in the investee at the date of investment the difference shall not be adjusted to the initial cost of long-term equity investment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assets in the investee at the date investment the difference shall be included in the current profit or loss and the initial cost of the long-term equity investment shall be adjusted accordingly. 30FIYTA Precision Technology Co. Ltd. Notes to the financial statements The Company recognises the share of the investee’s net profits or losses as well as its share of the investee’s other comprehensive income as investment income or losses and other comprehensive income respectively and adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the share of any profit or cash dividends declared to distribute by the investee. The investor’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 shall be recognised in the investor’s equity and the carrying amount of the long-term equity investment shall be adjusted accordingly. The Company recognises its share of the investee’s net profits or losses after making appropriate adjustments of investee’s net profit based on the fair values of the investee’s identifiable net assets at the investment date. If the accounting policy and accounting period adopted by the investee is not in consistency with the Company the financial statements of the investee shall be adjusted according to the Company’s accounting policies and accounting period based on which investment income or loss and other comprehensive income etc. shall be adjusted. The unrealized profits or losses resulting from inter-company transactions between the company and its associate or joint venture are eliminated in proportion to the company’s equity interest in the investee based on which investment income or losses shall be recognised. Any losses resulting from inter-company transactions between the investor and the investee which belong to asset impairment shall be recognised in full.Where the Company obtains the power of joint control or significant influence but not control over the investee due to additional investment or other reason the relevant long-term equity investment shall be accounted for by using the equity method initial cost of which shall be the fair value of the original investment plus the additional investment. Where the original investment is classified as other equity investment difference between its fair value and the carrying value in addition to the cumulative changes in fair value previously recorded in other comprehensive income shall be recogised into retained earnings of the period of using equity method.If the Company loses the joint control or significant influence of the investee for some reasons such as disposal of equity investment the retained interest shall be measured at fair value and the difference between the carrying amount and the fair value at the date of loss the joint control or significant influence shall be recognised in profit or loss. When the Company discontinues the use of the equity method the Company shall account for all amounts previously recognised in other comprehensive income under equity method in relation to that investment on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities.(d) Impairment testing and provision for impairment loss For investment in subsidiaries associates or a joint ventures provision for impairment loss please refer to Note 3.22. 3.17 Investment Properties 31FIYTA Precision Technology Co. Ltd. Notes to the financial statements (a) Classification of investment properties Investment properties are properties to earn rentals or for capital appreciation or both including: (i)Land use right leased out (ii)Land held for transfer upon appreciation (iii)Buildings leased out (b) The measurement model of investment property The Company adopts the cost model for subsequent measurement of investment properties.For provision for impairment please refer to Note 3.22.The Company calculates the depreciation or amortization based on the net amount of investment property cost less the accumulated impairment and the net residual value using straight-line method. The estimated useful life and annual depreciation rates which are determined according to the categories estimated economic useful lives and estimated net residual rates are listed as followings: Category Estimated useful Residual rates (%) Annual depreciation rates life (year) (%) Buildings and constructions 20-35 5.00 2.71-4.85 3.18 Fixed Assets Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities rendering services renting or business management with useful lives exceeding one year.(a) Recognition criteria of fixed assets Fixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are satisfied: (i) It is probable that the economic benefits relating to the fixed assets will flow into the Company; (ii) The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets if recognition criteria of fixed assets are satisfied otherwise the expenditure shall be recorded in current profit or loss when incurred.(b) Depreciation methods of fixed assets The Company begins to depreciate the fixed asset from the next month after it is available for intended use using the straight-line-method. The estimated useful life and annual depreciation rates which are determined according to the categories estimated economic useful lives and estimated net residual rates of fixed assets are listed as followings: 32FIYTA Precision Technology Co. Ltd. Notes to the financial statements Depreciation Estimated useful Residual rates Annual depreciation Category method life (year) (%) rates (%) Buildings and straight-line- 20-35 5.00 2.71-4.85 constructions method straight-line- Machinery equipment method 10 5.00-10.00 9.00-9.50 Electrical equipment straight-line- 5 5.00 19.00 method straight-line- Vehicles 5 5.00 19.00 method Other equipment straight-line- 5 5.00 19.00 method For the fixed assets with impairment provided the impairment provision should be excluded from the cost when calculating depreciation.At the end of reporting period the Company shall review the useful life estimated net residual value and depreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changed compared to the original estimation. 3.19 Construction in Progress (a) Classification of construction in progress Construction in progress is measured on an individual project basis.(b) Recognition criteria and timing of transfer from construction in progress to fixed assets The initial book values of the fixed assets are stated at total expenditures incurred before they are ready for their intended use including construction costs original price of machinery equipment other necessary expenses incurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specific loan for the construction or the proportion of the general loan used for the constructions incurred before they are ready for their intended use. The construction in progress shall be transferred to fixed asset when the installation or construction is ready for the intended use. For construction in progress that has been ready for their intended use but relevant budgets for the completion of projects have not been completed the estimated values of project budgets prices or actual costs should be included in the costs of relevant fixed assets and depreciation should be provided according to relevant policies of the Company when the fixed assets are ready for intended use. After the completion of budgets needed for the completion of projects the estimated values should be substituted by actual costs but depreciation already provided is not adjusted. 3.20 Borrowing Costs 33FIYTA Precision Technology Co. Ltd. Notes to the financial statements (a) Recognition criteria and period for capitalization of borrowing costs The Company shall capitalize the borrowing costs that are directly attributable to the acquisition construction or production of qualifying assets when meet the following conditions: (i) Expenditures for the asset are being incurred; (ii) Borrowing costs are being incurred and; (iii) Acquisition construction or production activities that are necessary to prepare the assets for their intended use or sale are in progress.Other borrowing cost discounts or premiums on borrowings and exchange differences on foreign currency borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition construction or production of a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired constructed or produced become ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as expenses when incurred.(b) Capitalization rate and measurement of capitalized amounts of borrowing costs When funds are borrowed specifically for purchase construction or manufacturing of assets eligible for capitalization the Company shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any interest income on bank deposit or investment income on the temporary investment of those borrowings.Where funds allocated for purchase construction or manufacturing of assets eligible for capitalization are part of a general borrowing the eligible amounts are determined by the weighted-average of the cumulative capital expenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. The capitalisation rate will be the weighted average of the borrowing costs applicable to the general borrowing. 3.21 Intangible Assets (a) Measurement method of intangible assets Intangible assets are recognised at actual cost at acquisition.(b) The useful life and amortisation of intangible assets (i) The estimated useful lives of the intangible assets with finite useful lives are as follows: Category Estimated useful Basis life Land use right 50years Legal life 34FIYTA Precision Technology Co. Ltd. Notes to the financial statements Estimated useful Category Basis life The service life is determined by reference to the Software 5 years period that can bring economic benefits to the Company The service life is determined by reference to the Right to use the trademark 5-10 years period that can bring economic benefits to the Company For intangible assets with finite useful life the estimated useful life and amortisation method are reviewed annually at the end of each reporting period and adjusted when necessary. No change has incurred in current year in the estimated useful life and amortisation method upon review.(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded as intangible assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every year end. If the useful lives of those assets are still indefinite impairment test should be performed on those assets at the balance sheet date.(iii) Amortisation of the intangible assets For intangible assets with finite useful lives their useful lives should be determined upon their acquisition and systematically amortised on a straight-line basis [units of production method] over the useful life. The amortisation amount shall be recognised into current profit or loss according to the beneficial items. The amount to be amortised is cost deducting residual value. For intangible assets which has impaired the cumulative impairment provision shall be deducted as well. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is a commitment by a third party to purchase the asset at the end of its useful life; or there is an active market for the asset and residual value can be determined by reference to that market; and it is probable that such a market will exist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of those assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite the useful lives shall be estimated and the intangible assets shall be amortised systematically and reasonably within the estimated useful lives.(c) Scope of Research and Development Expenditures The Company classifies the expenses directly related to research and development activities as research and development expenditures including remuneration of research and development staff direct material depreciation cost and long-term amortised expense design fee equipment commissioning fee intangible assets amortisation cost outsourcing research and development cost and other expenses etc.(d) Criteria of classifying expenditures on internal research and development projects 35FIYTA Precision Technology Co. Ltd. Notes to the financial statements into research phase and development phase Preparation activities related to materials and other relevant aspects undertaken by the Company for the purpose of further development shall be treated as research phase.Expenditures incurred during the research phase of internal research and development projects shall be recognised in profit or loss when incurred.Development activities after the research phase of the Company shall be treated as development phase.(e) Criteria for capitalization of qualifying expenditures during the development phase Expenditures arising from development phase on internal research and development projects shall be recognised as intangible assets only if all of the following conditions have been met: (i) Technical feasibility of completing the intangible assets so that they will be available for use or sale; (ii) Its intention to complete the intangible asset and use or sell it; (iii) The method that the intangible assets generate economic benefits including the Company can demonstrate the existence of a market for the output of the intangible assets or the intangible assets themselves or if it is to be used internally the usefulness of the intangible assets; (iv) The availability of adequate technical financial and other resources to complete the development and to use or sell the intangible asset; and (v) Its ability to measure reliably the expenditure attributable to the intangible asset. 3.22 Impairment of Long-Term Assets Impairment loss of long-term equity investment in subsidiaries associates and joint ventures investment properties subsequently measured at cost fixed assets constructions in progress intangible assets and right of use assets shall be determined according to following method: The Company shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists the Company shall estimate the recoverable amount of the asset and test for impairment. Irrespective of whether there is any indication of impairment the Company shall test for impairment of goodwill acquired in a business combination intangible assets with an indefinite useful life or intangible assets not yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and the present values of the estimated future cash flows of the long-term assets.The Company estimate the recoverable amounts on an individual basis. If it is difficult to estimate the recoverable amount of the individual asset the Company estimates the recoverable amount of the groups of assets that the individual asset belongs to. Identification of a group of asset is based on whether the cash inflows from it are largely independent of the cash inflows from other assets or groups of assets. 36FIYTA Precision Technology Co. Ltd. Notes to the financial statements If and only if the recoverable amount of an asset or a group of assets is less than its carrying amount the carrying amount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall be recognised accordingly.When test for impairment if there is an indication that relevant group of assets or combination of asset groups may be impaired impairment testing for group of assets or combination of asset groups excluding goodwill shall be conducted first and the recoverable amount shall be then calculated and the impairment loss shall be recognised accordingly.Then the group of assets or combination of asset groups including goodwill shall be tested for impairment by comparing the carrying amount with its recoverable amount. If the recoverable amount is less than the carrying amount the Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised. 3.23 Long-term Deferred Expenses Long-term deferred expenses are various expenses already incurred which shall be amortised over current and subsequent periods with the amortisation period exceeding one year.Long-term deferred expenses are evenly amortised over the beneficial period and the amortised period for each expense are as following: Item Amortisation period Counter fabrication expenses 2-3 years Decoration expenses 3-5 years Others 2-3 years 3.24 Employee Benefits Employee benefits refer to all forms of consideration or compensation given by the Company 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 an employee's spouse children dependents family members of decreased employees or other beneficiaries are also employee benefits.According to liquidity employee benefits are presented in the statement of financial position as “Employee benefits payable” and “Long-term employee benefits payable”.(a) Short-term employee benefits (i) Employee basic salary (salary bonus allowance subsidy) The Company recognises in the accounting period in which an employee provides service actually occurred short-term employee benefits as a liability with a corresponding charge to current profit except for those recognised as capital expenditure based on the requirement of 37FIYTA Precision Technology Co. Ltd. Notes to the financial statements accounting standards.(ii) Employee welfare The Company shall recognise the employee welfare based on actual amount when incurred into current profit or loss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefits.(iii) Social insurance such as medical insurance work injury insurance and maternity insurance housing funds labor union fund and employee education fund Payments made by the Company of social insurance for employees such as medical insurance work injury insurance and maternity insurance payments of housing funds and labor union fund and employee education fund accrued in accordance with relevant requirements in the accounting period in which employees provide services is calculated according to required accrual bases and accrual ratio in determining the amount of employee benefits and the related liabilities which shall be recognised in current profit or loss or the cost of relevant asset.(iv) Short-term paid absences The company shall recognise the related employee benefits arising from accumulating paid absences when the employees render service that increases their entitlement to future paid absences. The additional payable amounts shall be measured at the expected additional payments as a result of the unused entitlement that has accumulated. The Company shall recognise relevant employee benefit of non-accumulating paid absences when the absences actually occurred.(v)Short-term profit-sharing plan The Company shall recognise the related employee benefits payable under a profit-sharing plan when all of the following conditions are satisfied: * The Company has a present legal or constructive obligation to make such payments as a result of past events; and * A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can be made.(b) Post-employment benefits (i) Defined contribution plans The Company shall recognise 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 current profit or loss or the cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service they shall be discounted using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds 38FIYTA Precision Technology Co. Ltd. Notes to the financial statements with the currency and term which shall be consistent with the currency and estimated term of the defined contribution obligations) to measure employee benefits payable.(ii) Defined benefit plan The present value of defined benefit obligation and current service costs Based on the expected accumulative welfare unit method the Company shall make estimates about demographic variables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure defined benefit obligation and determine the obligation period. The Company shall discount the obligation arising from defined benefit plan using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) in order to determine the present value of the defined benefit obligation and the current service cost.The net defined benefit liability or asset The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the defined benefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan it shall measure the net defined benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.The amount recognised in the cost of asset or current profit or loss Service cost comprises current service cost past service cost and any gain or loss on settlement. Other service cost shall be recognised in profit or loss unless accounting standards require or allow the inclusion of current service cost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on plan assets interest cost on the defined benefit obligation and interest on the effect of the asset ceiling shall be included in profit or loss.The amount recognised in other comprehensive income Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements including: * Actuarial gains and losses the changes in the present value of the defined benefit obligation resulting from experience adjustments or the effects of changes in actuarial assumptions; * Return on plan assets excluding amounts included in net interest on the net defined benefit liability or asset; * Any change in the effect of the asset ceiling excluding amounts included in net interest on the net defined benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be reclassified to profit or loss in a subsequent period. However the Company may transfer those amounts recognised in other comprehensive income within 39FIYTA Precision Technology Co. Ltd. Notes to the financial statements equity.(c) Termination benefits The Company providing termination benefits to employees shall recognise an employee benefits liability for termination benefits with a corresponding charge to the profit or loss of the reporting period at the earlier of the following dates: (i) When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal.(ii) When the Company recognises costs or expenses related to a restructuring that involves the payment of termination benefits.If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period the Company shall discount the termination benefits using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) to measure the employee benefits.(d) Other long-term employee benefits (i) Meet the conditions of the defined contribution plan When other long-term employee benefits provided by the Company to the employees satisfies the conditions for classifying as a defined contribution plan all those benefits payable shall be accounted for as employee benefits payable at their discounted value.(ii) Meet the conditions of the defined benefit plan At the end of the reporting period the Company recognised the cost of employee benefit from other long-term employee benefits as the following components: * Service costs; * Net interest cost for net liability or asset of other long-term employee benefits * Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefits In order to simplify the accounting treatment the net amount of above items shall be recognised in profit or loss or relevant cost of assets. 3.25 Estimated Liabilities (a) Recognition criteria of estimated liabilities The Company recognises the estimated liabilities when obligations related to contingencies satisfy all the following conditions: (i) That obligation is a current obligation of the Company; (ii) It is likely to cause any economic benefit to flow out of the Company as a result of 40FIYTA Precision Technology Co. Ltd. Notes to the financial statements performance of the obligation; and (iii) The amount of the obligation can be measured reliably.(b) Measurement method of estimated liabilities The estimated liabilities of the Company are initially measured at the best estimate of expenses required for the performance of relevant present obligations. The Company when determining the best estimate has had a comprehensive consideration of risks with respect to contingencies uncertainties and the time value of money. The carrying amount of the estimated liabilities shall be reviewed at the end of every reporting period. If conclusive evidences indicate that the carrying amount fails to be the best estimate of the estimated liabilities the carrying amount shall be adjusted based on the updated best estimate. 3.26 Share-based Payments (a) Classification of share-based payments Share-based payments of the Company include equity-settled share-based payments and cash- settled share-based payments.(b) Determining fair value of equity instruments (i) The fair value of shares granted to the employees can be determined by reference to the quotations in the active market adjusted in accordance with the terms and conditions granted (excluding vesting conditions other than market conditions).(ii) For share option granted to the employees it is usually difficult to obtain its market price.If the share option with similar terms and conditions is not available the Company estimates the fair value of those options using an applicable option pricing model.(c) Basis of best estimate of equity instruments expected to vest Every balance sheet date during the vesting period the Company makes best estimate according to the most updated number of employees that are eligible to exercise their options and revises the number of equity instruments expected to vest in order to make the best estimate of equity instruments expected to vest.(d) Accounting for implementation of share-based payment programs Cash-settled share-based payment (i) For cash-settled share-based payment vested immediately after granting the Company shall recognise relevant costs or expenses at the fair value of the liability borne at grant date and a corresponding increase in liability. Until the liability is settled the Company shall remeasure the fair value of the liability at the end of each reporting period and at the date of settlement with any changes in fair value recognised in profit or loss.(ii) If the share instrument do not vest until services during the vesting period are completed or performance conditions are satisfied during the vesting period at the end of each reporting period during the vesting period the Company shall recognise relevant costs or expenses and the corresponding increase in liability for services received in the reporting period at the fair 41FIYTA Precision Technology Co. Ltd. Notes to the financial statements value of the liability borne based on the best available estimate of the number expected to vest.Equity-settled share-based payment (i) For equity-settled share-based payment transaction in which services are received if the equity instrument granted vest immediately the Company shall recognise relevant costs or expenses at the fair value of the equity instruments at grant date and the corresponding increase in capital reserve.(ii) If the equity instrument do not vest until services during the vesting period are completed or performance conditions are satisfied at the end of each reporting period during the vesting period the Company shall recognise relevant costs or expenses and the corresponding increase in capital reserve for services received in the reporting period at the fair value of the equity instruments at grant date based on the best available estimate of the number of equity instruments expected to vest.(e) Accounting for modification of share-based payment programs When the Company modifies terms and conditions of the share-based payment program if the modification increases the fair value of the equity instruments granted the increased amount should be recognised for service received accordingly; if the quantity granted of the equity instruments is increased the increased amount should be recgonised for service received accordingly as well. If the modification reduces the total fair value of the share-based payment arrangement or the terms are changed in such a way that the arrangement is no longer for the benefit of the employee the entity is still required to account for the services received as consideration for the equity instruments granted as if that modification had not occurred unless a part or all of the equity instruments are cancelled.(f) Accounting for termination of share-based payment programs If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied) the Company shall: (i) Account for the cancellation or settlement as an acceleration of vesting and therefore recognise immediately the amount that otherwise would have been recognised for services received over the remainder of the vesting period.(ii)Account for any payment made to the employee on the cancellation or settlement of the grant as the repurchase of an equity interest and recognize any excess of the payment over the fair value of the equity instruments measured at the repurchase date as an expense.If the Company repurchases vested equity instruments the payment made to the employee shall be accounted for as a deduction from equity and recognize any excess of the payment over the fair value of the equity instruments measured at the repurchase date shall be recognised in current profit or loss. 3.27 Revenue (a) General Principle 42FIYTA Precision Technology Co. Ltd. Notes to the financial statements Revenue is defined as the gross inflow of economic benefits arising in the course of the ordinary activities of the Company when those inflows result in the increases in shareholders’ equity other than increases relating to contributions from shareholders.The Company shall recognise revenue when it satisfies a performance obligation in the contract as the customer obtains control of a good or service. Control of a good or service refers to the ability to direct the use of and obtain substantially all of the remaining economic benefits from the good or service.When the contract has two or more obligation performances the Company shall allocate the transaction price to each performance obligation in proportion to a relative stand-alone selling price at contract inception of the promised good or service underlying each performance obligation in the contract and recognize revenue based on the transaction price allocated to each performance obligation.The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties. When determining the transaction price of the contract if the contract includes a variable consideration the Company shall determine the best estimate of the variable consideration based on the expected value or the most likely amount and include in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. If the contract contains a significant financing component the Company shall determine the transaction price at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer. The difference between the transaction price and the promised consideration shall be amortised using the effective interest method within the contract period.The Company need not consider the effects of a significant financing component if the period between when the Company transfers control of a good or service to a customer and when the customer pays for that good or service will be one year or less.The Company satisfies a performance obligation over time if one of the following criteria is met; otherwise a performance obligation is satisfied at a point in time: (i) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs; (ii) the Company’s performance creates or enhances an asset (for example work in progress) that the customer controls as the asset is created or enhanced; (iii) the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.For each performance obligation satisfied over time the Company shall recognise revenue over time by measuring the progress towards complete satisfaction of that performance 43FIYTA Precision Technology Co. Ltd. Notes to the financial statements obligation unless those progress cannot be reasonably measured. The Company measures the progress of a performance obligation for the service rendered using input methods (or output methods). In some circumstances the Company cannot be able to reasonably measure the progress of a performance obligation but the Company expects to recover the costs incurred in satisfying the performance obligation. In those circumstances the Company shall recognise revenue only to the extent of the costs incurred until such time that it can reasonably measure the progress of the performance obligation.The Company shall recognise revenue at the point in which a customer obtains control of a promised good or service if a performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised good or service the Company shall consider indicators of the transfer of control which include but are not limited to the followings: (i) The Company has a present right to payment for the good or service – a customer is presently obliged to pay for the good or service; (ii) The Company has transferred legal title of an asset to a customer - the customer has legal title to the asset; (iii) The Company has transferred physical possession of an asset to a customer - the customer has physical possession of the asset; (iv) The Company has transferred the significant risks and rewards of ownership of the asset to a customer - the customer has the significant risks and rewards of ownership of the asset; (v) The customer has accepted the asset.Sale with a right of return For sales with a right of return when the customer obtains the control of a product the Company shall recognise revenue for the transferred products in the amount of consideration to which the Company expects to be entitled and a refund liability at the amounts receivable for which the Company does not expect to be entitled; meanwhile an asset shall be recognised as receivables on the cost of return measured at the former carrying amount of the product expected to be returned less any expected costs to recover those products (including potential decreases in the value to the entity of returned products) and the net amount of the former carrying amount of the product when transferred to the customer less above mentioned cost shall be recorded into the cost of sales. At the end of each reporting period the Company shall re-assess the expectations about the sales return and remeasure above mentioned assets and liabilities.Warranties In accordance with the contract the law or other requirements the Company provides a warranty in connection with the sale of a product or construction of a project. For warranties which provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications the Company shall treat it in accordance with " Accounting Standards for Business Enterprise No. 13-Contingencies". If a 44FIYTA Precision Technology Co. Ltd. Notes to the financial statements warranty or a part of a warranty provides a customer with a service in addition to the assurance that the product complies with agreed-upon specifications the Company shall treat it as a performance obligation and allocate the transaction price to the warranty based on the relative proportion to the stand-alone selling price of the product and the service and recognise revenue when the customer obtains the control of the service. In assessing whether a warranty provides a customer with a service in addition to the assurance that the product complies with agreed-upon specifications the Company shall consider factors such as: whether the warranty is required by law; the length of the warranty coverage period and the nature of the tasks that the Company promises to perform.Principal versus agent considerations The Company determines whether it is a principal or an agent of the transaction on the basis of whether it has control over the goods or services before they are transferred to customers. If the Company obtains the control of the specified goods or services from another party and then transfers the goods or services to the customer the Company is therefore a principal and recognises revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods or services transferred. Otherwise the Company is an agent and shall recognise revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by another party. The fee or commission might be the net amount of received or receivable consideration that the Company retains after paying the other party the consideration received in exchange for the goods or services to be provided by that party or determined based on the specified commission amount or proportion.Consideration payable to a customer The Company shall account for consideration payable to a customer as a reduction of the transaction price unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Company. The reduction of revenue shall be recognised when (or as) the later of either of the following events occurs: the Company recognises revenue for the transfer of the related goods or services to the customer; and the Company pays or promises to pay the consideration.Customers’ unexercised rights Upon receipt of a prepayment for a good or service from a customer the Company shall recognise a contract liability in the amount of the prepayment and recognise revenue when it satisfies its performance obligation. If the prepayment to the Company is non-refundable and the customer may not exercise part or all of its contractual rights and the Company expects to be entitled to a breakage amount related to those unexercised rights of the customer the Company shall recognise the expected breakage amount as revenue in proportion to the pattern of rights exercised by the customer; otherwise the Company shall recognise the remaining balance of above mentioned liability as revenue when the likelihood of the customer exercising its remaining rights becomes remote.Contract modifications 45FIYTA Precision Technology Co. Ltd. Notes to the financial statements When the construction contract modifications exist between the Company and the customer: (i) The Company shall account for a contract modification as a separate contract if the modification results in the addition of promised construction services that are distinct and increase of the price of the contract and the price of the contract increases by an amount of consideration that reflects the Company’s stand-alone selling prices of the additional promised construction services; (ii) If the contract modification is not accounted for as a separate contract in accordance with above mentioned circumstance and the remaining construction services are distinct from the construction services transferred on or before the date of the contract modification the Company shall account for the contract modification as if it were a termination of the existing contract and the creation of a new contract with the combination of the remaining performance obligations of the existing contract and the contract modification.(iii) If the contract modification is not accounted for as a separate contract in accordance with above mentioned circumstance and the remaining construction services cannot be distinct from the construction services transferred on or before the date of the contract modification the Company shall account for the contract modification as if it were a part of the existing contract and the effect that the contract modification has on the transaction price and on the entity’s measure of progress towards complete satisfaction of the performance obligation is recognised as an adjustment to revenue at the date of the contract modification.(b) Specific Method Revenue recognition methods of the Company are as follows: (i) Sales of watch Sale of watch belongs to fulfilling performance obligations at a point of time.A. Online sales Revenue shall be recognized at the point that the goods are dispatched the customer confirmed received the goods and the platform has collected the payment B. Offline sales Revenue shall be recognized at the point when the goods are delivered and payment by customer is collected.Revenue shall be recognized at the point when the products are delivered to and accepted by the customer the payment has been received or the right to collect payment is obtained and related economic benefits are probable to flow into the entity C. Consignment sale Under consignment sales arrangements revenue is recognized upon receiving the sales list from the consignee confirming that control of goods has been transferred to the customer.D. Sale of consigned goods from others 46FIYTA Precision Technology Co. Ltd. Notes to the financial statements Under sale arrangement of consigned goods from others the Company recognizes revenue using the net method when external consigned products are delivered to customers and control of the goods has been transferred to the buyer (ii) Precision manufacturing Precision manufacturing business belongs to fulfilling performance obligations at a point of time. Revenue from domestic sales shall be recognized when the goods are delivered and the economic benefit associated with the goods is probable to flow into the Company. Revenue from export shall be recognized when the following criteria is satisfied: the Company declared the good at custom; obtained bill of lading; the right of collecting payment is obtained and its probable that the economic benefit associated with the goods flows into the Company.(iii) Property leasing For the accounting treatment of the Company as a lessor please refer to Note 3.30. 3.28 Government Grants (a) Recognition of government grants A government grant shall not be recgonised until there is reasonable assurance that: (i) The Company will comply with the conditions attaching to them; and (ii) The grants will be received.(b) Measurement of government grants Monetary grants from the government shall be measured at amount received or receivable and non-monetary grants from the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliable fair value is not available.(c) Accounting for government grants (i) Government grants related to assets Government grants pertinent to assets mean the government grants that are obtained by the Company used for purchase or construction or forming the long-term assets by other ways.Government grants pertinent to assets shall be recognised as deferred income and should be recognised in profit or loss on a systematic basis over the useful lives of the relevant assets.Grants measured at their nominal value shall be directly recognised in profit or loss of the period when the grants are received. When the relevant assets are sold transferred written off or damaged before the assets are terminated the remaining deferred income shall be transferred into profit or loss of the period of disposing relevant assets.(ii) Government grants related to income Government grants other than related to assets are classified as government grants related to income. Government grants related to income are accounted for in accordance with the following principles: 47FIYTA Precision Technology Co. Ltd. Notes to the financial statements If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses in future periods such government grants shall be recognised as deferred income and included into profit or loss in the same period as the relevant expenses or losses are recognised; If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses incurred such government grants are directly recognised into current profit or loss.For government grants comprised of part related to assets as well as part related to income each part is accounted for separately; if it is difficult to identify different part the government grants are accounted for as government grants related to income as a whole.Government grants related to daily operation activities are recognised in other income in accordance with the nature of the activities and government grants irrelevant to daily operation activities are recognised in non-operating income.(iii) Loan interest subsidy When loan interest subsidy is allocated to the bank and the bank provides a loan at lower- market rate of interest to the Company the loan is recognised at the actual received amount and the interest expense is calculated based on the principal of the loan and the lower-market rate of interest.When loan interest subsidy is directly allocated to the Company the subsidy shall be recognised as offsetting the relevant borrowing cost.(iv) Repayment of the government grants Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the book value of the asset has been written down or reducing the balance of relevant deferred income if deferred income balance exists any excess will be recognised into current profit or loss; or directly recognised into current profit or loss for other circumstances. 3.29 Deferred Tax Assets and Deferred Tax Liabilities Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base at the balance sheet date. The Company recognise and measure the effect of taxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities or deferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.(a) Recognition of deferred tax assets Deferred tax assets should be recognised for deductible temporary differences the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences the carryforward of unused tax losses and the carryforward of unused tax credits can be utilised at the tax rates that are expected to apply to the period when the asset is realised unless the deferred tax asset arises from the initial recognition of an asset or liability 48FIYTA Precision Technology Co. Ltd. Notes to the financial statements in a transaction that: (i) Is not a business combination; and (ii) At the time of the transaction affects neither accounting profit nor taxable profit (tax loss) The Company shall recognise a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries associates and joint ventures only to the extent that it is probable that: (i) The temporary difference will reverse in the foreseeable future; and (ii) Taxable profit will be available against which the deductible temporary difference can be utilised.At the end of each reporting period if there is sufficient evidence that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized the Company recognises a previously unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.(b) Recognition of deferred tax liabilities A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected to apply to the period when the liability is settled.(i) No deferred tax liability shall be recognised for taxable temporary differences arising from: * The initial recognition of goodwill; or * The initial recognition of an asset or liability in a transaction which: is not a business combination; and at the time of the transaction affects neither accounting profit nor taxable profit (tax loss) (ii) An entity shall recognise a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries associates and joint ventures except to the extent that both of the following conditions are satisfied: * The Company 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.(c) Recognition of deferred tax liabilities or assets involved in special transactions or events (i) Deferred tax liabilities or assets related to business combination For the taxable temporary difference or deductible temporary difference arising from a business combination not under common control a deferred tax liability or a deferred tax asset shall be recognised and simultaneously goodwill recognised in the business 49FIYTA Precision Technology Co. Ltd. Notes to the financial statements combination shall be adjusted based on relevant deferred tax expense (income).(ii) Items directly recognised in equity Current tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity. Such items include: other comprehensive income generated from fair value fluctuation of other debt investments; an adjustment to the opening balance of retained earnings resulting from either a change in accounting policy that is applied retrospectively or the correction of a prior period (significant) error; amounts arising on initial recognition of the equity component of a compound financial instrument that contains both liability and equity component.(iii) Unused tax losses and unused tax credits Unused tax losses and unused tax credits generated from daily operation of the Company itself Deductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offset against taxable income in future periods. The criteria for recognising deferred tax assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary differences. The Company recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the Company. Income taxes in current profit or loss shall be deducted as well.Unused tax losses and unused tax credits arising from a business combination Under a business combination the acquiree’s deductible temporary differences which do not satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after the acquisition date if new information regarding the facts and circumstances exists at the acquisition date and the economic benefit of the acquiree’s deductible temporary differences at the acquisition is expected to be realised the Company shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill related to this acquisition. If goodwill is reduced to zero any remaining deferred tax benefits shall be recognised in profit or loss. All other acquired deferred tax benefits realised shall be recognised in profit or loss.(iv) Temporary difference generated in consolidation elimination When preparing consolidated financial statements if temporary difference between carrying value of the assets and liabilities in the consolidated financial statements and their taxable bases is generated from elimination of inter-company unrealized profit or loss deferred tax assets or deferred tax liabilities shall be recognised in the consolidated financial statements and income taxes expense in current profit or loss shall be adjusted as well except for deferred tax related to transactions or events recognised directly in equity and business combination.(v) Share-based payment settled by equity 50FIYTA Precision Technology Co. Ltd. Notes to the financial statements If tax authority permits tax deduction that relates to share-based payment during the period in which the expenses are recognised according to the accounting standards the Company estimates the tax base in accordance with available information at the end of the accounting period and the temporary difference arising from it. Deferred tax shall be recognised when criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds the amount of the cumulative expenses related to share-based payment recognised according to the accounting standards the tax effect of the excess amount shall be recognised directly in equity.(d) Basis for deferred income tax assets and deferred income tax liabilities presented on a net basis The Company shall offset deferred tax assets and deferred tax liabilities if and only if: (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either: * the same taxable entity; or * different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 3.30 Leases (a) Identifying a lease At inception of a contract the Company shall assess whether the contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of one or more identified assets for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time the Company shall assess whether throughout the period of use the customer has the right to obtain substantially all of the economic benefits from use of the identified asset and to direct the use of the identified asset.(b) Identifying a separate lease component When a contract includes more than one separate lease components the Company shall separate components of the contract and account for each lease component separately. The right to use an underlying asset is a separate lease component if both conditions have been satisfied: (i) the lessee can benefit from use of the underlying asset either on its own or together with other resources that are readily available to the lessee; (ii) the underlying asset is neither highly dependent on nor highly interrelated with the other underlying assets in the contract.(c) The Company as a lessee 51FIYTA Precision Technology Co. Ltd. Notes to the financial statements At the commencement date the Company identifies the lease that has a lease term of 12 months or less and does not contain a purchase option as a short-term lease. A lease qualifies as a lease of a low-value asset if the nature of the asset is such that when new the asset is typically of low value. If the Company subleases an asset or expects to sublease an asset the head lease does not qualify as a lease of a low-value asset.For all the short-term leases or leases for which the underlying asset is of low value the Company shall recognise the lease payments associated with those leases as cost of relevant asset or expenses in current profit or loss on a straight-line basis over the lease term.Except for the election of simple treatment as short-term lease or lease of a low-value asset as mentioned above at the commencement date the Company shall recognise a right-of-use asset and a lease liability.(i) Right-of-use asset A right-of-use asset is an asset that represents a lessee’s right to use an underlying asset for the lease term.At the commencement date the Company shall initially measure the right-of-use asset at cost.The cost of the right-of-use asset shall comprise: * the amount of the initial measurement of the lease liability； * any lease payments made at or before the commencement date less any lease incentives received; * any initial direct costs incurred by the lessee; and * an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. The Company recognises and measures the cost in accordance with the recognition criteria and measurement method for estimated liabilities details please refer to Notes 3.25. Those costs incurred to produce inventories shall be included in the cost of inventories.The right-of-use asset shall be depreciated according to the categories using straight‐ line method. If it is reasonably certain that the ownership of the underlying asset shall be transferred to the lessee by the end of the lease term the depreciation rate shall be determined based on the classification of the right-of- use asset and estimated residual value rate from the commencement date to the end of the useful life of the underlying asset. Otherwise the depreciation rate shall be determined based on the classification of the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.After the commencement date the Company shall remeasure the lease liability based on the revised present value of the lease payments and adjust the carrying amount of the right-of-use asset if there is a change in the in-substance fixed payments or change in the amounts expected to be payable under a residual value guarantee or change in an index or a rate used 52FIYTA Precision Technology Co. Ltd. Notes to the financial statements to determine lease payments or change in the assessment or exercising of an option to purchase the underlying asset or an option to extend or terminate the lease.(d) The Company as a lessor At the commencement date the Company shall classify a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset otherwise it shall be classified as an operating lease.(i) Operating leases The Company shall recognise lease payments from operating leases as income on a straight- line basis over the term of the relevant lease and the initial direct costs incurred in obtaining an operating lease shall be capitalised and recognised as an expense over the lease term on the same basis as the lease income. The Company shall recognise the variable lease payments relating to the operating lease but not included in the measurement of the lease receivables into current profit or loss when incurred.(ii) Finance leases At the commencement date the Company shall recognise the lease receivables at an account equal to the net investment in the lease (the sum of the present value of the unguaranteed residual values and the lease payment that are not received at the commencement date discounted at the interest rate implicit in the lease) and derecognise the asset relating to the finance lease. The Company shall recognise interest income using the interest rate implicit in the lease over the lease term.The Company shall recognise the variable lease payments relating to the finance lease but not included in the measurement of the net investment in the lease into current profit or loss when incurred.(e) Lease modifications (i) A lease modification accounted for as a separate lease The Company shall account for a modification to a lease as a separate lease if both: * the modification increases the scope of the lease by adding the right to use one or more underlying assets; and * the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope.(ii) A lease modification not accounted for as a separate lease The Company as a lessee At the effective date of the lease modification the Company shall redetermine the lease term of the modified lease and remeasure the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term if that rate can be readily determined or the incremental borrowing rate at the effective date of the modification if the 53FIYTA Precision Technology Co. Ltd. Notes to the financial statements interest rate implicit in the lease cannot be readily determined.The Company shall account for the remeasurement of the lease liability by: * decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease or shorten the lease term. The Company shall recognise in profit or loss any gain or loss relating to the partial or full termination of the lease.* Making a corresponding adjustment to the carrying amount of the right-of-use asset for all other lease modifications.The Company as a lessor The Company shall account for a modification to an operating lease as a new lease from the effective date of the modification considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.For a modification to a finance lease that is not accounted for as a separate lease the Company shall account for the modification as follows: * if the lease would have been classified as an operating lease had the modification been in effect at the inception date the Company shall account for the lease modification as a new lease from the effective date of the modification and measure the carrying amount of the underlying asset as the net investment in the lease immediately before the effective date of the lease modification; * if the lease would have been classified as a finance lease had the modification been in effect at the inception date the Company shall account for the lease modification according to the requirements in the modification or renegotiation of the contract.(f) Sale and leaseback The Company shall determine whether the transfer of an asset under the sale and leaseback transaction is a sale of that asset according to the policies in Note 3.27.(i) The Company as a seller (lessee) If the transfer of the asset is not a sale the Company shall continue to recognise the transferred asset and shall recognise a financial liability equal to the transfer proceeds. It shall account for the financial liability according to Note 3.11. If the transfer of the asset is a sale the Company shall measure the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the Company. Accordingly the Company shall recognise only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor.(ii) The Company as a buyer (lessor) If the transfer of the asset is not a sale the Company shall not recognise the transferred asset and shall recognise a financial asset equal to the transfer proceeds. It shall account for the financial asset according to Note 3.11. If the transfer of the asset is a sale the Company shall 54FIYTA Precision Technology Co. Ltd. Notes to the financial statements account for the purchase of the asset applying applicable Accounting Standards of Business Enterprises and for the lease applying the lessor accounting requirements. 3.31 Safety Production Costs According to the relevant regulations the Company accrues the safety production costs.The safety production costs shall be recognised in the cost of the relevant products or current profit or loss when makes the accrual and included in the “special reserve” account simultaneously.When the accrued safety production costs are used within the scope of the regulations it shall be treated as expense and directly deducted from the special reserve; if the fixed assets arecapitalized the expenditure incurred shall be firstly collectively recorded in “construction inprogress” and recognised as fixed asset when the safety project has been completed for its intended use. At the same time the cost that capitalized as the fixed assets shall be deducted from the special reserve and the accumulated depreciation with the same amount shall be recognised. The fixed assets shall not be depreciated in subsequent reporting period. 3.32 Repurchase of Company’s Share (a) If the Company reduces its registered capital through repurchase of the Company’s share according to the approval required in relevant laws and regulations the share capital shall be reduced at the par value of the shares deregistered the difference between the consideration paid for repurchase (including the transaction cost) and the par value of the shares shall adjust the owner’s equity. Any excess of the total par value shall offset the capital reserve (share premium) surplus reserve and retained earnings in turn. If the consideration paid is less than the total par value the difference shall increase the capital reserve (share premium).(b) Before being deregistered or transfered shares repurchased by the Company shall be treated as treasury stock and all expenditures of the repurchase shall be recognised as the cost of treasury stock.(c) Any excess of the income generated from transferring the treasury stock over their cost shall increase the capital reserve (share premium) and any less shall offset the capital reserve (share premium) surplus reserve and retained earnings in turn. 3.33 Restricted Stock In the equity incentive plan the Company shall grant restricted shares to the motivated target and the motivated object first subscribes for the stock. If the subsequent unlocking conditions specified in the equity incentive plan are not met the Company repurchases the stock at the price agreed in advance. If the restricted shares issued to employees are subject to the procedures for capital increase such as registration in accordance with relevant regulations at grant date the Company shall recognise the share capital and capital reserve (share premium) based on the received subscription fees from the employees; treasury stocks and other payables shall be recognised based on the repurchase obligation. 3.34 Changes in Significant Accounting Policies and Accounting Estimates 55FIYTA Precision Technology Co. Ltd. Notes to the financial statements (a) Changes in accounting polices On 25 October 2023 the Ministry of Finance issued Interpretation of Accounting Standards for Business Enterprises No.17 (Caikuai[2023] No.21) (hereinafter referred to as "Interpretation No.17") shall be implemented as of 1 January 2024. The Company implemented the provision on 1 January 2024. There are not any significant impacts on the Company’s financial statements during the reporting period for the implementation of Interpretation No.17.The Compilation of Enterprise Accounting Standards Application Guidelines 2024 issued by the Ministry of Finance in March 2024 and Interpretation No. 18 of Enterprise Accounting Standards issued on 6 December 2024 stipulate that warranty-related expenses should be included in the cost of sales. There are not any significant impacts on the Company’s financial statements during the reporting period for the implementation.(b) Significant changes in accounting estimates The Company has no significant changes in accounting estimates for the reporting period. 4. TAXATION 4.1 Major Categories of Tax and Tax Rates Applicable to the Company Categories of tax Basis of tax assessment Tax rate Output tax is calculated at rates of 5% 6% 9% and 13% based on sales revenue. After Value added tax (VAT) Taxable revenue deducting input tax as per regulations the net tax payable is determined.Taxable Price and Sales Consumption tax Volume of High-End Watch 20% Sales Revenue Urban maintenance and Turnover tax payable 5% 7% construction tax Property tax 70% or 80% of the original 1.2% 12% cost of property Tax rates of income tax of different subsidiaries are stated as below: Name of Taxpayer Rate of Income Tax FIYTA Precision Technology Co. Ltd. 25% Shenzhen HARMONY World Watch Center Co. Ltd. (i) 25% FIYTA Sales Co. Ltd. (i) 25% Shenzhen FIYTA Precision Technology Co. Ltd. (ii) 15% Shenzhen FIYTA Technology Development Co. Ltd. (ii) 15% HARMONY World Watch Center(Hainan) Co. Ltd. (v) 20% Shenzhen Xunhang Precision Technology Co. Ltd. 25% Emile Choureit Timing (Shenzhen) Ltd. 25% 56FIYTA Precision Technology Co. Ltd. Notes to the financial statements Name of Taxpayer Rate of Income Tax Liaoning Hengdarui Commercial & Trade Co. Ltd. 25% Temporal (Shenzhen) Co. Ltd. 25% Shenzhen Harmony E-commerce Co. Ltd. (v) 20% FIYTA Hong Kong (iii) 16.5% Montres Chouriet SA (iv) 30% Notes: (i) According to the relevant provisions of the Notice of the State Administration of Taxation on Issuing the Interim Measures for the Administration of Collection of Enterprise Income Tax on the Basis of Consolidation of Trans-regional Business Operations the head office of the Company and its branches shall be governed by the administrative measures for enterpriseincome tax namely namely “centralized calculation level-by-level administration pre-payment at the locality consolidated settlement and payment and transfer to treasury”. 50% of the prepayment shall be apportioned among the branches and 50% shall be apportioned by the head office;(ii) the companies enjoy the corporate income tax rate reduction for “key high-tech enterprisessupported by the state”; (iii) the company is incorporated in Hong Kong and is subject to Hong Kong Profits Tax at a rate of 16.50% for the current year; (iv) the company is incorporated in Switzerland and is subject to the local tax rate which the comprehensive tax rate for the current year is 30%; (v) the companies qualify as small low-profit enterprises and are subject to corporate income tax at a rate of 20%. 4.2 Tax Preference In accordance with the Corporate Income Tax Law of the People's Republic of China high- tech enterprises that are key areas of state support are subject to a reduced corporate income tax rate of 15%. The subsidiary Shenzhen FIYTA Precision Technology Co. Ltd. was certified as a high-tech enterprise in 2024 with a certificate number of GR202444200965 valid for three years and is subject to a corporate income tax rate of 15% from 2024 to 2026.The subsidiary Shenzhen FIYTA Technology Development Co. Ltd. was certified as a high- tech enterprise in 2022 with a certificate number of GR202244204678 valid for three years and is subject to a corporate income tax rate of 15% from 2022 to 2024.In accordance with the relevant provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on Preferential Income Tax Policies for Small and Micro Enterprises and Individual Businesses (Cai Shui [2023] No. 6) small low-profit enterprises are allowed to include only 25% of their income in the taxable income base and are then subject to a 20% corporate income tax rate.In accordance with the Notice of the Ministry of Finance and the State Administration of 57FIYTA Precision Technology Co. Ltd. Notes to the financial statements Taxation on Extending the Loss Carryforward Period for High-Tech Enterprises and Technology-Based Small and Medium-Sized Enterprises (Cai Shui [2018] No. 76) effective from January 1 2018 any unutilized losses incurred during the five accounting years prior to obtaining high-tech enterprise status may be carried forward to subsequent years. The maximum carryforward period has been extended from five years to ten years.In accordance with the Announcement of the Ministry of Finance and the State Administration of Taxation on Further Improving the Pre-Tax Additional Deduction Policy for R&D Expenses (Cai Shui [2023] No. 7) for R&D expenses actually incurred by enterprises that do not result in the creation of an intangible asset (and are therefore recorded in the current profit or loss) an additional 100% deduction may be claimed for tax purposes on top of the statutory deduction starting from January 1 2023. If the R&D activities result in the creation of an intangible asset beginning January 1 2023 200% of the intangible asset’s cost may be amortized for tax purposes.Since 2019 Hong Kong has implemented a two-tiered profits tax regime. Under this system the first HKD 2 million of profits is taxed at a rate of 8.25% and any profits exceeding that threshold continue to be taxed at 16.5%. 5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5.1 Monetary funds Items 31 December 2024 31 December 2023 Cash on hand 76344.01 178996.87 Cash in bank 18205968.96 35443378.12 Other monetary funds 2055640.10 1262979.96 Funds in finance company 498616224.42 467743798.76 Total 518954177.49 504629153.71 Including：The total amount deposited overseas 6150258.49 1202601.86 Notes: (i) Funds in finance company primarily refer to amounts held at AVIC Finance Co. Ltd..(ii) As of 31 December 2024 the Company has no pledged or frozen funds nor any amounts with potential recovery risk. 5.2 Notes Receivable (a) Notes receivable by category 31 December 2024 31 December 2023 Items Provision Book Balance Provision forbad debt Carrying amount Book Balance for bad Carrying debt amount Bank acceptance 9184912.30 9184912.30 10363449.00 10363449.00 58FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2024 31 December 2023 Items Book Balance Provision for Provision Carrying amount Book Balance for bad Carryingbad debt debt amount bills Commercial acceptance 21501777.16 1075088.86 20426688.30 8321603.55 416080.18 7905523.37 bills Total 30686689.46 1075088.86 29611600.60 18685052.55 416080.18 18268972.37 (b) Notes receivable discounted or endorsed to third parties but not yet matured at 31 December 2024 Items Amount derecognised as at the end Amount not derecognised as at theof the reporting period end of the reporting period Bank acceptance bills 3957187.86 (c) Notes receivable by bad debt provision method 31 December 2024 Category Book balance Provision for bad debt Carrying Amount Proportion(%) Amount Provision amount ratio (%) Provision for bad debt recognised individually Provision for bad debt recognised by groups 30686689.46 100.00 1075088.86 3.50 29611600.60 Including: Group 2 9184912.30 29.93 9184912.30 Group 1 21501777.16 70.07 1075088.86 5.00 20426688.30 Total 30686689.46 100.00 1075088.86 3.50 29611600.60 (Continued) 31 December 2023 Category Book balance Provision for bad debt Carrying Amount Proportion Provision amount(%) Amount ratio (%) Provision for bad debt recognised individually Provision for bad debt recognised by groups 18685052.55 100.00 416080.18 2.23 18268972.37 Including: Group 2 10363449.00 55.46 10363449.00 Group 1 8321603.55 44.54 416080.18 5.00 7905523.37 Total 18685052.55 100.00 416080.18 2.23 18268972.37 59FIYTA Precision Technology Co. Ltd. Notes to the financial statements For details of recognition criteria and explanation for provision of bad debt by groups please refer to Notes 3.11.(d) Changes of provision for bad debt during the reporting period 31 Changes during the reporting period 31 Category December Recovery Elimination December 2023 Provision or reversal or write-off others 2024 Provision for bad debt recognised individually Provision for bad debt recognised by groups 416080.18 659008.68 1075088.86 Including: Group 2 Group 1 416080.18 659008.68 1075088.86 Total 416080.18 659008.68 1075088.86 5.3 Accounts Receivable (a) Accounts receivable by aging Aging 31 December 2024 31 December 2023 Within one year 271349349.06 333204160.07 1-2 years 764175.79 2123874.00 2-3 years 1410843.36 4200458.08 Over 3 years 20138406.23 18005255.95 Subtotal 293662774.44 357533748.10 Less: provision for bad debt 33509940.01 34390986.46 Total 260152834.43 323142761.64 (b) Accounts receivable by bad debt provision method 31 December 2024 Category Book balance Provision for bad debt Carrying Amount Proportion Provision amount(%) Amount ratio (%) Provision for bad debt recognised individually 25816016.35 8.79 24222124.31 93.83 1593892.04 Provision for bad debt recognised by groups 267846758.09 91.21 9287815.70 3.47 258558942.39 Including:Group1 267846758.09 91.21 9287815.70 3.47 258558942.39 Total 293662774.44 100.00 33509940.01 11.41 260152834.43 (Continued) 31 December 2023 Category Book balance Provision for bad debt Carrying Amount Proportion Provision ratio amount(%) Amount (%) 60FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2023 Category Book balance Provision for bad debt Carrying Amount Proportion Amount Provision ratio amount(%) (%) Provision for bad debt recognised individually 24708541.73 6.91 23148792.25 93.69 1559749.48 Provision for bad debt recognised by groups 332825206.37 93.09 11242194.21 3.38 321583012.16 Including:Group1 332825206.37 93.09 11242194.21 3.38 321583012.16 Total 357533748.10 100.00 34390986.46 9.62 323142761.64 Detailed explanation of provision for bad debt: (i) As at 31 December 2024 accounts receivable with bad debt provision recognised individually 31 December 2024 Name Book balance Provision for Provision ratiobad debt (%) Reason for provision Other customers 25816016.35 24222124.31 93.83 Existence of disputes poormanagement ect (ii) As at 31 December 2024 accounts receivable with bad debt provision recognised by group 1 31 December 2024 31 December 2023 Aging Accounts Provision for Provision Accounts Provision for Provision receivable bad debt ratio (%) receivable bad debt ratio (%) Within one year 266494339.01 8150327.80 3.06 330569799.62 9694581.78 2.93 1-2 years 238812.42 23881.24 10.00 786438.13 78643.81 10.00 Over 2 years 1113606.66 1113606.66 100.00 1468968.62 1468968.62 100.00 Total 267846758.09 9287815.70 3.47 332825206.37 11242194.21 3.38 (c) Changes of provision for bad debt during the reporting period 31 December Changes during the reporting periodCategory 31 December2023 Provision Recovery or Elimination 2024reversal or write-off Others Provision for bad debt recognised 23148792.25 4728732.75 3699262.84 43862.15 24222124.31 individually Provision for bad debt recognised 11242194.21 -1945944.73 -8433.78 9287815.70 by groups Including:Group1 11242194.21 -1945944.73 -8433.78 9287815.70 Total 34390986.46 2782788.02 3699262.84 35428.37 33509940.01 (d) No accounts receivable written off during the reporting period 61FIYTA Precision Technology Co. Ltd. Notes to the financial statements (e) Top five closing balances by entity Balance of accounts Proportion of the balance Provision for bad Entity name receivable as at 31 to the total accounts debt of accounts December 2024 receivable (%) receivable Total of the top five accounts receivable balances at the end 66853017.27 22.77 2006553.32 of the period 5.4 Advances to Suppliers (a) Advances to suppliers by aging 31 December 2024 31 December 2023 Aging Amount Proportion (%) Amount Proportion (%) Within one year 3858053.60 100.00 6564760.64 99.90 1 to 2 years 6479.34 0.10 Total 3858053.60 100.00 6571239.98 100.00 (b) Top five closing balances by entity Entity name Balance as at 31 Proportion of the balance to theDecember 2024 total advances to suppliers (%) Total of the top five advances to suppliers at the end of the period 2591111.66 67.16 5.5 Other Receivables (a) Other receivables by aging Aging 31 December 2024 31 December 2023 Within one year 59521049.33 60575208.36 1-2 years 302069.34 219738.83 2-3 years 219738.83 119250.00 Over 3 years 1278954.90 1159704.90 Subtotal 61321812.40 62073902.09 Less: provision for bad debt 4339461.13 4348110.09 Total 56982351.27 57725792.00 (b) Other receivables by nature Nature 31 December 2024 31 December 2023 Deposit and guarantee receivable 52384967.00 51775226.86 Employee advance payments 1282327.49 1549821.50 Others 7654517.91 8748853.73 Subtotal 61321812.40 62073902.09 Less: provision for bad debt 4339461.13 4348110.09 62FIYTA Precision Technology Co. Ltd. Notes to the financial statements Nature 31 December 2024 31 December 2023 Total 56982351.27 57725792.00 (c) Other receivables by bad debt provision method A. As at 31 December 2024 provision for bad debt recognised based on three stages model Stages Book balance Provision for bad debt Carrying amount Stage 1 59786824.63 2872168.83 56914655.80 Stage 2 Stage 3 1534987.77 1467292.30 67695.47 Total 61321812.40 4339461.13 56982351.27 As at 31 December 2024 provision for bad debt at stage 1: Category Book balance Provision ratio Provision for Carrying(%) bad debt amount Provision for bad debt recognised individually Provision for bad debt recognised by groups 59786824.63 4.80 2872168.83 56914655.80 Including: Group 1 51515791.06 5.10 2629814.29 48885976.77 Group 2 1282327.49 1282327.49 Group 3 6988706.08 3.47 242354.54 6746351.54 Total 59786824.63 4.80 2872168.83 56914655.80 As at 31 December 2024 provision for bad debt at stage 3: Category Book balance Provision ratio (%) Provision for Carryingbad debt amount Provision for bad debt recognised individually 1534987.77 95.59 1467292.30 67695.47 B. As at 31 December 2023 provision for bad debt recognised based on three stages model Stages Book balance Provision for bad debt Carrying amount Stage 1 60655587.19 2980723.19 57674864.00 Stage 2 Stage 3 1418314.90 1367386.90 50928.00 Total 62073902.09 4348110.09 57725792.00 As at 31 December 2023 provision for bad debt at stage 1: Category Book balance Provision ratio Provision for Carrying(%) bad debt amount Provision for bad debt recognised individually Provision for bad debt 4.91 recognised by groups 60655587.19 2980723.19 57674864.00 63FIYTA Precision Technology Co. Ltd. Notes to the financial statements Category Book balance Provision ratio Provision for Carrying(%) bad debt amount Including: Group 1 51304601.86 5.07 2603277.66 48701324.20 Group 2 1549821.50 1549821.50 Group 3 7801163.83 4.84 377445.53 7423718.30 Total 60655587.19 4.91 2980723.19 57674864.00 As at 31 December 2023 provision for bad debt at stage 3: Category Book balance Provision ratio (%) Provision for Carryingbad debt amount Provision for bad debt recognised individually 1418314.90 96.41 1367386.90 50928.00 Basis of provision for bad debt during the reporting period: For details of recognition criteria and explanation for provision of bad debt by groups please refer to Notes 3.11 (d) Changes of provision for bad debt during the reporting period 31 December Changes during the reporting period 31Category 2023 Recovery Elimination DecemberProvision or reversal or write-off Others 2024 Provision for bad debt recognised 1367386.90 153905.40 54000.00 1467292.30 individually Provision for bad debt recognised by 2980723.19 -108925.22 370.86 2872168.83 groups Total 4348110.09 44980.18 54000.00 370.86 4339461.13 (e) No other receivables written off during the reporting period (f) Top five closing balances by entity Entity name Balance as at 31 Proportion of the balance toDecember 2024 the total other receivables (%) Provision for bad debt Total of the top five other receivables at the 9225085.62 15.04 479606.52 end of the period. 5.6 Inventories (a) Inventories by category 31 December 2024 31 December 2023 Items Book balance Provision forimpairment Carrying amount Book balance Provision for impairment Carrying amount Raw materials 114983902.68 2082708.59 112901194.09 167281491.84 5290855.71 161990636.13 Work in process 8125895.42 8125895.42 12060525.88 12060525.88 Goods in stock 1934763585.61 71303705.38 1863459880.23 1993236975.36 66621962.09 1926615013.27 64FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2024 31 December 2023 Items Book balance Provision for Provision forimpairment Carrying amount Book balance impairment Carrying amount Total 2057873383.71 73386413.97 1984486969.74 2172578993.08 71912817.80 2100666175.28 (b) Provision for impairment Increase during the reporting period Decrease during the Items 31 December reporting period 31 December2023 Provision Others Reversal orelimination Others 2024 Raw materials 5290855.71 3208147.12 2082708.59 Goods in stock 66621962.09 27005965.72 25097.41 22349319.84 71303705.38 Total 71912817.80 27005965.72 25097.41 25557466.96 73386413.97 5.7 Other Current Assets Items 31 December 2024 31 December 2023 Reclassification from debit side balance of VAT payable 45766634.09 52749847.21 Term Deposit 29408855.46 Advance Tax Payment 4402072.04 1364632.40 Others 18430363.63 18134912.20 Total 98007925.22 72249391.81 5.8 Long-term Equity Investments Changes during the reporting period 31 December Addition Decrease Investment Adjustments Investees al in income/(losses) of other Changes2023 investme investme recognisedunder equity comprehensi in other nt nt ve income equitymethod I. Associates Shanghai Watch Co. Ltd. 51862607.30 -955570.46 (Continued) Changes during the reporting period Provision for Investees Declaration of cash 31 December impairment at dividends or Provision for Others 2024 31 December distribution of profit impairment 2024 II. Associates Shanghai Watch Co. Ltd. 50907036.84 5.9 Investment Properties (a) Investment properties accounted for using cost model 65FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items Building and plants Initial cost: Balance as at 31 December 2023 620335023.89 Increase during the reporting period Decrease during the reporting period 75789731.02 (i) Transfer to fixed assets 75789731.02 Balance as at 31 December 2024 544545292.87 Accumulated depreciation and amortisation: Balance as at 31 December 2023 260079191.75 Increase during the reporting period 15693988.44 (i) Provision 15693988.44 Decrease during the reporting period 32230251.73 (i) Transfer to fixed assets 32230251.73 Balance as at 31 December 2024 243542928.46 Provision for impairment: Carrying amount: Balance as at 31 December 2024 301002364.41 Balance as at 31 December 2023 360255832.14 5.10 Fixed Assets (a)Details of fixed assets Items Buildings and Machineryconstructions equipment Vehicles Electrical Other equipment equipment Total Initial cost: Balance as at 31 December 2023 441589632.63 130667789.21 13277093.83 50657219.07 44094254.35 680285989.09 Increase during the reporting period 75854590.88 2379881.58 2557928.15 1082683.36 81875083.97 (i) Acquisition 2353092.05 2557647.89 1082683.36 5993423.30 (ii)Transfer from investment properties 75789731.02 75789731.02 (iii) Exchange differences on translating foreign 64859.86 26789.53 280.26 91929.65 operations Decrease during the reporting period 1926012.87 1387079.51 1245349.81 1471532.10 1361194.70 7391168.99 (i) Disposal 570549.99 128105.05 1245349.81 1427788.83 1245924.14 4617717.82 (ii) Exchange differences on translating foreign 1355462.88 1258974.46 43743.27 115270.56 2773451.17 operations Balance as at 31 December 2024 515518210.64 131660591.28 12031744.02 51743615.12 43815743.01 754769904.07 Accumulated 66FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items Buildings and Machinery Electrical Otherconstructions equipment Vehicles equipment equipment Total depreciation: Balance as at 31 December 2023 152207027.41 83133593.32 12078669.40 37956542.09 39124802.19 324500634.41 Increase during the reporting period 44774266.46 8704010.54 299445.54 3749008.67 1214525.71 58741256.92 (i) Provision 12488279.49 8678572.22 299445.54 3748742.42 1214525.71 26429565.38 (ii)Transfer from investment properties 32230251.73 32230251.73 (iii) Exchange differences on translating foreign 55735.24 25438.32 266.25 81439.81 operations Decrease during the reporting period 1020863.84 1284047.80 1183082.31 1305750.47 1246387.25 6040131.67 (i) Disposal 395811.19 113925.59 1183082.31 1266625.97 1131286.81 4090731.87 (ii) Exchange differences on translating foreign 625052.65 1170122.21 39124.50 115100.44 1949399.80 operations Balance as at 31 December 2024 195960430.03 90553556.06 11195032.63 40399800.29 39092940.65 377201759.66 Provision for impairment: Carrying amount: Balance as at 31 December 2024 319557780.61 41107035.22 836711.39 11343814.83 4722802.36 377568144.41 Balance as at 31 December 2023 289382605.22 47534195.89 1198424.43 12700676.98 4969452.16 355785354.68 (b) Fixed assets without certificate of title Items Carrying amount Reason Buildings and constructions 174611.32 Defective property rights 5.11 Right-of-use Assets Items Buildings and constructions Initial cost: Balance as at 31 December 2023 153209897.81 Increase during the reporting period 104569011.66 (i) New leasing 104563758.75 (ii) Exchange differences on translating foreign operations 5252.91 Decrease during the reporting period 41047029.98 Balance as at 31 December 2024 216731879.49 Accumulated depreciation: Balance as at 31 December 2023 43757416.17 67FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items Buildings and constructions Increase during the reporting period 107307185.01 (i) Provision 107301685.07 (ii) Exchange differences on translating foreign operations 5499.94 Decrease during the reporting period 32770698.10 Balance as at 31 December 2024 118293903.08 Provision for impairment: Carrying amount: Balance as at 31 December 2024 98437976.41 Balance as at 31 December 2023 109452481.64 5.12 Intangible Assets Items Land use Right to use therights Software trademark Total Initial cost: Balance as at 31 December 2023 34933822.40 35242672.55 16599485.22 86775980.17 Increase during the reporting period 3521544.01 5867.94 3527411.95 (i) Acquisition 3521544.01 5867.94 3527411.95 Decrease during the reporting period Balance as at 31 December 2024 34933822.40 38764216.56 16605353.16 90303392.12 Accumulated depreciation: Balance as at 31 December 2023 17249475.30 27593853.68 10268270.42 55111599.40 Increase during the reporting period 733553.28 2848199.71 42112.57 3623865.56 (i) Provision 733553.28 2848199.71 42112.57 3623865.56 Decrease during the reporting period Balance as at 31 December 2024 17983028.58 30442053.39 10310382.99 58735464.96 Provision for impairment: Carrying amount: Balance as at 31 December 2024 16950793.82 8322163.17 6294970.17 31567927.16 Balance as at 31 December 2023 17684347.10 7648818.87 6331214.80 31664380.77 5.13 Long-term Deferred Expenses Increase during Decrease during the reporting Items 31 December the reporting period 31 December2023 period Amortisation Other decrease 2024 Counter fabrication 19008343.84 24379030.21 19034937.92 24352436.13 expenses 68FIYTA Precision Technology Co. Ltd. Notes to the financial statements Decrease during the reporting Items 31 December Increase during 2023 the reporting period 31 December period Amortisation Other decrease 2024 Renovation expenses 96297010.20 35550587.92 48706771.89 83140826.23 Others 7019001.09 179522.85 4486463.01 2712060.93 Total 122324355.13 60109140.98 72228172.82 110205323.29 5.14 Deferred Tax Assets and Deferred Tax Liabilities (a) Deferred tax assets before offsetting 31 December 2024 31 December 2023 Items Deductible temporary DeductibleDeferred tax assets temporary Deferred taxdifferences differences assets Provision for impairment loss 108844748.49 25235985.22 107672653.16 24371732.35 Unrealised intragroup profit 65606873.01 16083716.18 83620908.60 20855280.62 Deductible losses 150789689.25 35315775.40 126562143.51 31197892.87 Equity Incentive 7958442.71 1839229.47 6263007.85 1449733.06 Lease liabilities 98553370.15 24638342.52 109682960.95 27420740.27 Others 11064124.31 2766031.08 5168527.80 1292131.95 Total 442817247.92 105879079.87 438970201.87 106587511.12 (b) Deferred tax liabilities before offsetting 31 December 2024 31 December 2023 Items Taxable temporary Deferred tax Taxable temporary Deferred tax difference liabilities difference liabilities One-off deduction of fixed asset before 27444135.67 4116620.35 28437227.07 4265584.06 Corporate income tax Right-of-use asset 98388890.53 24597222.63 109212305.15 27303076.29 Total 125833026.20 28713842.98 137649532.22 31568660.35 (c) Net balance of deferred tax liabilities and deferred tax assets after offsetting Items Offset amount at 31 Net balance after offsetting at 31 Offset amount at 31 Net balance after December 2024 December 2023 offsetting at 31December 2024 December 2023 Deferred tax assets 23723301.56 82155778.31 26359739.66 80227771.46 Deferred tax liabilities 23723301.56 4990541.42 26359739.66 5208920.69 (d) Unrecognized deferred tax assets 69FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 31 December 2024 31 December 2023 Deductible temporary differences 3466155.48 3395341.37 Deductible losses 42305096.05 52523345.89 Total 45771251.53 55918687.26 (e) Deductible losses not recognised as deferred tax assets will expire in the following periods: Year 31 December 2024 31 December 2023 202423049503.37 202518449678.5029473842.52 202623855417.55 Total 42305096.05 52523345.89 5.15 Other Non-current Assets 31 December 2024 31 December 2023 Items Book Provision Carrying Book Provision Carrying balance for forimpairment amount balance impairment amount Prepayment of long-term assets 3792253.84 3792253.84 9434627.17 9434627.17 5.16 Short-term Borrowings Items 31 December 2024 31 December 2023 Credit loans 124087754.51 250187763.87 Bill discounting 3957187.86 Accrued interest payable 130566.65 187763.87 Total 124087754.51 250187763.87 5.17 Accounts Payable Items 31 December 2024 31 December 2023 Payables for goods 114881141.96 171652832.83 Payables for project 651779.61 2173074.88 Total 115532921.57 173825907.71 5.18 Receipts in advance Items 31 December 2024 31 December 2023 Rental received in advance 11783796.49 10267758.31 70FIYTA Precision Technology Co. Ltd. Notes to the financial statements 5.19 Contract liabilities Items 31 December 2024 31 December 2023 Advances for goods 12605722.95 12286243.62 5.20 Employee Benefits Payable (a) Details of employee benefits payable Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 Short-term employee benefits 114204051.03 503849943.53 538803441.50 79250553.06 Post-employment benefits- defined contribution plans 5581451.36 48623343.18 46235423.88 7969370.66 Termination benefits 299308.21 15031771.49 10290850.28 5040229.42 Total 120084810.60 567505058.20 595329715.66 92260153.14 (b) Short-term employee benefits Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 Salaries bonuses 113282042.0 allowances and subsidies 5 445277389.38 480497002.69 78062428.74 Employee benefits 162095.02 9601151.98 9688531.54 74715.46 Social insurance 78.32 23532363.96 23292392.65 240049.63 Including: Health insurance 21442774.67 21202803.36 239971.31 Injury insurance 78.32 1170191.51 1170191.51 78.32 Birth insurance 919397.78 919397.78 Housing accumulation fund 13551.00 19127275.53 19133537.53 7289.00 Labour union funds and employee education 746284.64 6311762.68 6191977.09 866070.23 funds Total 114204051.03 503849943.53 538803441.50 79250553.06 (c) Defined contribution plans Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 Post-employment benefits: 1. Basic endowment insurance 208205.97 41880916.32 41848702.38 240419.91 2. Unemployment insurance 379.88 1857822.32 1857818.16 384.04 3. Enterprise annuity 5372865.51 4884604.54 2528903.34 7728566.71 Total 5581451.36 48623343.18 46235423.88 7969370.66 71FIYTA Precision Technology Co. Ltd. Notes to the financial statements 5.21 Taxes Payable Items 31 December 2024 31 December 2023 Value added tax (VAT) 33699458.80 38997243.97 Corporate income tax 11535771.24 21276050.77 Individual income tax 994923.84 1101633.76 Urban maintenance and construction tax 1359840.26 1047680.77 Educational surcharge 972536.24 748598.11 Others 1252620.97 1016953.93 Total 49815151.35 64188161.31 5.22 Other Payables (a) Other payables by category Items 31 December 2024 31 December 2023 Dividend payable 2785293.14 2058352.24 Other payables 101853190.67 119879448.83 Total 104638483.81 121937801.07 (b) Dividends payable Items 31 December 2024 31 December 2023 Dividends on ordinary shares 2785293.14 2058352.24 (c) Other payables Items 31 December 2024 31 December 2023 Deposit security deposit 31563500.48 34075198.63 Repurchase liability for restricted shares 12815556.81 14304862.81 Decoration expenses 3978759.28 10214019.04 Accrued expenses and others 53495374.10 61285368.35 Total 101853190.67 119879448.83 5.23 Non-current Liabilities Maturing within One Year Items 31 December 2024 31 December 2023 Lease liabilities due within one year 63538231.06 66399004.20 5.24 Other Current Liabilities Items 31 December 2024 31 December 2023 Tax payable-reclassification from credit balance of VAT Payable 1529468.07 1589635.30 72FIYTA Precision Technology Co. Ltd. Notes to the financial statements 5.25 Lease liabilities Items 31 December 2024 31 December 2023 Lease payments 101263377.23 113786386.87 Less: Unrealised finance expenses 2659854.13 3861030.15 Subtotal 98603523.1 109925356.72 Less: lease liabilities due within one year 63538231.06 66399004.20 Total 35065292.04 43526352.52 5.26 Deferred Income 31 Increase during Decrease during Items December the reporting the reporting 31 December 2023 period period 2024 Reason Government grants 952785.69 952785.69 Related to Assets 5.27 Share Capital 31 December Changes during the reporting period (+-)Items 31 December2023 New Bonus Capitalisation 2024 issues issues of reserves Others Number of total shares 415219970.00 -9455963.00 405764007.00 Notes: (i) According to the resolution approved by the Company's Board of Directors and the General Meeting of Shareholders on the Proposal for the Repurchase and Cancellation of Certain Restricted Shares under the 2018 A-Share Restricted Stock Incentive Plan (Phase II) the company repurchased and canceled 100200 A-share restricted stocks that had been granted but were still subject to restrictions held by three former incentive recipients who resigned and one deceased recipient.(ii) Additionally as per the Proposal for the Repurchase of Certain Domestically Listed Foreign Shares (B Shares) approved by the Board of Directors and the General Meeting of Shareholders the company agreed to use its own funds to repurchase certain domestically listed foreign shares (B shares) through a centralized bidding process to reduce its registered capital. On 10 May 2024 upon verification and confirmation by the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited the company canceled 9355763 repurchased B shares. 5.28 Capital Reserves Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 73FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 Share premium 968257185.91 55514964.42 912742221.49 Other capital reserves 21901847.26 1695434.85 23597282.11 Total 990159033.17 1695434.85 55514964.42 936339503.60 Notes: (i) According to the Proposal for the Repurchase of Certain Domestically Listed Foreign Shares (B Shares) approved by the company's Board of Directors and the General Meeting of Shareholders the company agreed to use its own funds to repurchase certain domestically listed foreign shares (B shares) through a centralized bidding process for the purpose of reducing registered capital. On May 10 2024 upon verification and confirmation by the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited the company canceled 9355763 repurchased B shares resulting in a corresponding reduction of capital reserves by RMB 54984906.42.(ii) According to the Proposal on Granting Restricted Shares to Incentive Recipients under the 2018 A-Share Restricted Stock Incentive Plan (Phase II) approved by the company's Board of Directors and the General Meeting of Shareholders in the 2024 fiscal year the company recognized related costs or expenses for the services provided by the above incentive recipients resulting in an increase in "Other Capital Reserves" by RMB 1 695434.85. (iii) As per stated in Note 5.27(a) the Company repurchased restricted stock reducing the "Share Premium" by RMB 530058.00. 5.29 Treasury Stock Items 31 December 2023 Increase during the Decrease during the 31 Decemberreporting period reporting period 2024 Share Repurchase for Capital Reduction 64340669.42 64340669.42 Restricted Stock Payment 14304862.81 1489306.00 12815556.81 Total 78645532.23 65829975.42 12815556.81 Note: (i) In the year of 2023 the Company repurchased a total of 9355763 B shares through a centralized bidding process on the Shenzhen Stock Exchange with a total repurchase payment of HKD 70401771.17 (excluding transaction fees) equivalent to RMB 64340669.42. On 10 May 2024 upon verification and confirmation by the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited the Company canceled the repurchased 9355763 B shares thereby reducing the "Share Repurchase for Capital Reduction" by RMB 64340669.42. (ii) As per stated Note 5.27 the Company repurchased restricted stock reducing "Treasury Stock" by RMB 630258.00. For the year 2024 the reduction in treasury stock related to cash 74FIYTA Precision Technology Co. Ltd. Notes to the financial statements dividends for restricted stock amounted to RMB 859048.00.(iii) For the year 2024 the reduction in treasury stock related to cash dividends for restricted stock amounted to RMB 859048.00. 75FIYTA Precision Technology Co. Ltd. Notes to the financial statements 5.30 Other Comprehensive Income Changes during the reporting period Less: Items Less: Items previously previously 31 December recognized in other recognized in Less: Attributable to AttributableItems 2023 Amount other Income to non- 31 December 2024 before tax comprehensiveincome being comprehensive tax owners of the controlling reclassified to income being expenses Company interest current profit or loss reclassified toretained earnings (a)Items will not be reclassified to profit or loss (b)Items will be reclassified to profit or loss 19325335.93 -3638541.31 -3638541.31 15686794.62 Including: Exchange differences on translating 19325335.93 -3638541.31 -3638541.31 15686794.62 foreign operations Total 19325335.93 -3638541.31 -3638541.31 15686794.62 76FIYTA Precision Technology Co. Ltd. Notes to the financial statements 5.31 Specific Reserves Items 31 December Increase during the Decrease during the 31 December2023 reporting period reporting period 2024 Safety production costs 3223158.06 1521112.80 404108.10 4340162.76 5.32 Surplus Reserves Decrease during Items 31 December Increase during the 31 December2023 reporting period the reportingperiod 2024 Statutory surplus 213025507.5 213025507.5 reserves 0 0 Others 61984894.00 61984894.00 Total 275010401.5 275010401.50 0 As of 31 December 2024 the Company's cumulative surplus reserve has reached 50% of its registered capital and therefore no further extraction will be made during current period. 5.33 Retained Earnings Items 2024 2023 Balance as at the end of last period before adjustments 1709513385.76 1479706638.53 Adjustments for the opening balance (increase /(decrease)) Balance as at the beginning of the reporting period after adjustments 1709513385.76 1479706638.53 Add: net profit attributable to owners of the parent company for the reporting period 220350184.99 333178102.37 Less: Declaration of ordinary share dividends 162345682.81 103371355.14 Balance as at the end of the reporting period 1767517887.94 1709513385.76 5.34 Revenue and costs of sales 20242023 Items Revenue Costs of sales Revenue Costs of sales Principal 3928845057.63 2475847402.83 4553706250.4 2904751241.5activities 9 1 Other activities 11685876.44 350531.60 15983752.50 712233.30 Total 3940530934.07 2476197934.43 4569690002.9 2905463474.89 1 Principal activities by category Items 2024 2023 77FIYTA Precision Technology Co. Ltd. Notes to the financial statements Revenue Costs of sales Revenue Costs of sales Watch Brand Business 721623074.27 236520324.15 797083010.50 263771395.75 Watch Retail Services 2934683059.47 2080768868.69 3470288123.32481853312.9 27 Precision Technology Business 134469811.50 115312826.08 135950405.45 114733104.70 Leasing Business 138069112.39 43245383.91 150361811.22 44370528.09 Others 11685876.44 350531.60 16006652.50 735133.30 Total 3940530934.07 2476197934.43 4569690002.92905463474.8 91 5.35 Taxes and Surcharges Items 2024 2023 Urban maintenance and construction tax 10496860.12 12205585.22 Educational surcharge 7450711.80 8641027.84 Property tax 7672948.68 7512564.92 Stamp duty 2638753.37 3040109.98 Others 3217860.83 4794558.14 Total 31477134.80 36193846.10 5.36 Selling and Distribution Expenses Items 2024 2023 Employee Compensation 350108585.64 364493305.57 Department store expense and rental 141659138.17 159738493.87 Advertising Exhibition and Marketing Expenses 143251551.40 146787677.11 Depreciation and amortization 187804323.98 187456893.25 Packaging expenses 8732106.49 10367129.63 Utilities and property management expenses 22259318.73 22673870.27 Transportation Expenses 5326216.64 5921929.02 Office Expenses 5299644.22 6285406.47 Travel Expenses 6511503.28 8415884.60 Business Entertainment Expenses 3354425.04 4581476.42 Others 8470993.04 7287113.11 Total 882777806.63 924009179.32 5.37 General and Administrative Expenses 78FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Employee Compensation 141263743.91 159074391.51 Depreciation and amortization 21858646.45 23462090.05 Travel Expenses 3444726.00 4773457.90 Office Expenses 3237040.25 3174249.82 Intermediary Agents fees 2072802.52 1917258.68 Utilities Property Management and Rental Fees 1050016.25 1359636.27 Business Entertainment Expenses 854422.68 1368967.18 Vehicle and Transportation Expenses 1184673.02 1884805.22 Telecommunication expenses 329077.20 368370.99 Others 7982781.89 7976049.62 Total 183277930.17 205359277.24 5.38 Research and Development Expenses Items 2024 2023 Employee Compensation 38055759.66 43658293.35 Sample and Material Costs 1635339.74 2137565.99 Depreciation and Amortization 4783178.84 4300190.56 Technical Cooperation Fees 3704971.76 2737439.29 Others 7820750.18 4968754.89 Total 56000000.18 57802244.08 5.39 Finance Costs Items 2024 2023 Interest expenses 10697706.12 12824222.06 Less: Interest income 4925264.78 5722586.39 Net interest expenses 5772441.34 7101635.67 Net foreign exchange losses 1151055.95 1879443.15 Bank charges and others 11001374.05 12488693.95 Total 17924871.34 21469772.77 5.40 Other Income Items 2024 2023 1. Government grant recognised in other imcome 5480540.76 9105016.49 79FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Including: Government grant related to deferred income 952785.69 343141.11 Government grant directly recognised in current profit or loss 4527755.07 9105016.49 2. Others related to daily operation activities and recognised in other income 2012101.57 2330357.29 Including: Charges of withholding individual income tax 477697.33 494598.35 Additional Deduction for Input VAT 1534404.24 1835758.94 Total 7492642.33 11435373.78 5.41 Investment Income/(Losses) Items 2024 2023 Investment income from long-term equity investments under equity method -955570.46 -5819479.60 Interest income from term deposit 524315.57 Total -431254.89 -5819479.60 5.42 Credit Impairment Losses Items 2024 2023 Bad debt of notes receivable -659008.68 716798.30 Bad debt of accounts receivable 916474.82 6194108.85 Bad debt of other receivables 9019.82 -83331.33 Total 266485.96 6827575.82 5.43 Asset Impairment Losses Items 2024 2023 Impairment of inventories -19289865.31 571980.37 5.44 Gains/ (losses) from Disposal of Assets Items 2024 2023 Gains/(losses) from disposal of fixed assets 2795633.25 527753.57 Gains/(losses) from disposal of Right-of-use assets -427816.65 158115.00 Total 2367816.60 685868.57 5.45 Non-operating Income 80FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Recognised in current non-recurring profit or loss No payables required 1217512.88 1346926.73 1217512.88 Compensation income 1916585.22 3153875.60 1916585.22 Others 489407.21 269704.47 489407.21 Total 3623505.31 4770506.80 3623505.31 5.46 Non-operating Expenses Items 2024 2023 Recognised in current non-recurring profit or loss Donations 243626.35 311464.98 243626.35 Fine and penalty for late payment 143706.74 6014.28 143706.74 Payment for breach of agreement 279932.96 37725.30 279932.96 Others 121651.88 504565.54 121651.88 Total 788917.93 859770.10 788917.93 5.47 Income Tax Expenses (a) Details of income tax expenses Items 2024 2023 Current tax expenses 67911869.72 88559245.72 Deferred tax expenses -2146386.12 15266916.22 Total 65765483.60 103826161.94 (b) Reconciliation of accounting profit and income tax expenses Items 2024 2023 Profit before tax 286115668.59 437004264.31 Income tax expense at the statutory /applicable tax rate 71528917.15 109251066.08 Effect of different tax rate of subsidiaries -2574951.45 -10206789.27 Adjustments of impact from prior period income tax 440345.72 6187582.94 Effect of income that is exempt from taxation 238892.62 1454869.90 Effect of non-deductible costs expenses or losses 1160439.96 781125.37 Effect of previously unrecognised deductible losses recognised as deferred tax assets -172422.26 -337571.86 Effect of deductible temporary differences and deductible losses not recognised as deferred tax assets R&D expenses plus deduction -4855738.14 -4769518.22 81FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Others 1465397.00 Income tax expenses 65765483.60 103826161.94 5.48 Other Comprehensive Income For details of the other comprehensive income and related tax effect transfer to profit or loss and adjustment of other comprehensive income please refer to Note 5.30Other Comprehensive Income. 5.49 Notes to the Statement of Cash Flow (a) Cash relating to operating activities (i)Other cash received relating to operating activities Items 2024 2023 Security deposit 9790425.68 7550296.24 Government grants 4922856.45 8796670.12 Promotion expenses 12351768.55 12561700.18 Interest income 4925264.78 5722586.39 Return of petty cash 3851281.76 7787782.02 Others 13783494.72 25760176.26 Total 49625091.94 68179211.21 (ii) Other cash payments relating to operating activities Items 2024 2023 Security deposit 8953141.58 11191285.76 Period expenses and others 321439889.86 376446802.93 Total 330393031.44 387638088.69 (b) Cash relating to investing activities (i)Other cash received relating to investing activities Items 2024 2023 Withdrawal of time deposits 201839677.57 (ii) Other cash payments relating to investing activities Items 2024 2023 82FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Purchase of time deposits 231179882.49 (c) Cash relating to financing activities (i)Other cash payments relating to financing activities Items 2024 2023 Payment for principal and interest of lease liabilities 115962403.46 114908744.94 Payment for share buyback 794690.45 83148230.83 Total 116757093.91 198056975.77 (ii) Changes in liabilities arising from financing activities Items 31 December Increase in the current period Decrease in the current period 31 December 2023 Changes in Changes in Changes in Changes in 2024 cash non-cash cash non-cash Short-term 250187763.8 323957187.8 456926871.7 borrowings 7 6 8607074.56 8 1737400.00 124087754.51 Dividend 2058352.24 162345682.8 161618741.9payables 1 1 2785293.14 Non-current liabilities 66399004.20 113101630.3 115962403.4maturing 2 6 63538231.06 within one year Lease liabilities 43526352.52 104640569.8 113101630.34 2 35065292.04 Total 362171472.8 323957187.8 388694957.5 734508017.1 114839030.33 6 3 5 2 225476570.75 5.50 Supplementary Information to the Statement of Cash Flows (a) Supplementary information to the statement of cash flows Supplementary information 2024 2023 (i) Adjustments of net profit to cash flows from operating activities: Net profit 220350184.99 333178102.37 Add: Provisions for impairment of assets 19289865.31 -571980.37 Impairment Loss of Credit -266485.96 -6827575.82 Depreciation of fixed assets Investment Properties oil and gas asset and productive 42123553.82 41658377.46 biological assets Depreciation of right-of-use assets 107301685.07 103958386.94 Amortisation of intangible assets 3623865.56 3689183.21 Amortisation of long-term deferred expenses 72228172.82 91039489.52 Losses /(gains) on disposal of fixed assets intangible assets and other long-term assets -2367816.60 -685868.57 83FIYTA Precision Technology Co. Ltd. Notes to the financial statements Supplementary information 2024 2023 Losses /(gains) on scrapping of fixed assets Losses /(gains) on changes in fair value Finance costs /(income) 10697706.12 10346099.61 Investment losses /(income) 431254.89 5819479.60 Decreases /(increases) in deferred tax assets -1928006.85 15556840.48 Increases /(decreases) in deferred tax liabilities -218379.27 -289924.26 Decreases /(increases) in inventories 114705609.37 82605123.05 Decreases /(increases) in operating receivables 55993621.50 34507754.85 Increases /(decreases) in operating payables -106350875.18 -77781831.49 Others 1117004.70 -3800168.60 Net cash flows from operating activities 536730960.29 632401487.98 (ii)Significant activities not involving cash receipts and payments: Conversion of debt into capital Convertible corporate bonds maturing within one year Assets under leases(other than leases under simplified method) (iii)Net increases in cash and cash equivalents: Cash at the end of the reporting period 518954177.49 504629153.71 Less: Cash at the beginning of the reporting period 504629153.71 313738389.64 Add: Cash equivalents at the end of the reporting period Less: Cash equivalents at the beginning of the reporting period Net increase in cash and cash equivalents 14325023.78 190890764.07 (b) The components of cash and cash equivalents Items 31 December 2024 31 December 2023 (i) Cash 518954177.49 504629153.71 Including: Cash on hand 76344.01 178996.87 Cash in bank available for immediate use 516822193.38 503187176.88 Other monetary funds available for immediate use 2055640.10 1262979.96 (ii) Cash equivalents Including: Bond investments maturing within three months (iii) Cash and cash equivalents at the end of the reporting period 518954177.49 504629153.71 Including Restricted cash and cash equivalents for the Company and its subsidiaries 6150258.49 1202601.86 84FIYTA Precision Technology Co. Ltd. Notes to the financial statements (c) Presented as cash and cash equivalents despite restrictions in scope of application Items 2024 Reason The Company's subsidiary FIYTA Hong Kong and its subsidiary Montres Chouriet SA hold funds in Cash in bank 6150258.49 accounts located overseas. These funds are subject to restrictions on repatriation but this does not affect their daily use. 5.51 Foreign Currency Monetary Items (a) Foreign currency monetary items at 31 December 2024: Items Carrying amount at Exchange Carrying amount atforeign currency rate RMB Monetary funds 1836199.12 Including: USD 143692.62 7.1884 1032920.03 EUR 76.45 7.5257 575.34 HKD 864222.52 0.9260 800270.05 CHF 304.30 7.9977 2433.70 Accounts receivable 7194794.22 Including: USD 476343.23 7.1884 3437188.55 HKD 3828760.82 0.9260 3545585.67 CHF 26433.04 7.9977 212020.00 Other receivables 238586.48 Including: HKD 119458.42 0.9260 110623.28 CHF 16000.00 7.9977 127963.20 Accounts payable 513267.92 Including: HKD 529282.90 0.9260 490137.14 CHF 2892.18 7.9977 23130.78 Other payables 873332.12 Including: HKD 693207.47 0.9260 641937.85 CHF 28932.60 7.9977 231394.27 (b) Overseas business entity Please refer the Note 3.4 for the details of the main operating locations and functional currencies of significant overseas operating entities . 5.52 Leases 85FIYTA Precision Technology Co. Ltd. Notes to the financial statements (a) The Company as a lessee Items 2024 Expenses for short-term lease under simplified method 1107921.80 Expenses for lease of low value asset (except for short-term lease) under simplified method Interest expense of lease liabilities 4389799.99 Variable lease payments not included in lease liabilities recognised in current profit or loss 77146168.89 Income from subleasing the right-of-use assets Cash outflows related to leases 194216494.15 Profit or loss in sale and leaseback transaction (b) The Company as a lessor (i) Operating lease A. Lease income Items 2024 Lease income 138069112.39 Including: income related to variable lease payments not included in lease receivables 6. RESEARCH AND DEVELOPMENT EXPENDITURES Items 2024 2023 Employee Compensation 38055759.66 43658293.35 Sample and Material Costs 1635339.74 2137565.99 Depreciation and Amortization 4783178.84 4300190.56 Technical Cooperation Fees 3704971.76 2737439.29 Others 7820750.18 4968754.89 Total 56000000.18 57802244.08 Including：Expensed R&D 56000000.18 57802244.08 expenditures Capitalized R&D expenditures 7. INTERESTS IN OTHER ENTITIES 7.1 Interests in Subsidiaries 86FIYTA Precision Technology Co. Ltd. Notes to the financial statements (a) Composition of corporate group Percentage of equity interests by the Name of subsidiary Principal place Registered Nature of Company (%) Ways ofbusiness of business Address Direct Indirec acquisition t Shenzhen HARMONY World Watch Center Shenzhen Shenzhen Commerce 100.00 Incorporated or Co. Ltd. investment FIYTA Sales Co. Ltd. Shenzhen Shenzhen Commerce 100.00 Incorporated orinvestment Shenzhen FIYTA Precision Technology ManufacturinShenzhen Shenzhen 99.44 0.56 Incorporated or Co. Ltd. g investment Shenzhen FIYTA Technology ManufacturinShenzhen Shenzhen g 100.00 Incorporated or Development Co. Ltd. investment HARMONY World Watch Center(Hainan) Sanya Sanya Commerce 100.00 Incorporated or Co. Ltd. investment Shenzhen Xunhang Precision Technology ManufacturinShenzhen Shenzhen 100.00 Incorporated or Co. Ltd. g investment Emile Choureit Timing Incorporated or (Shenzhen) Ltd. Shenzhen Shenzhen Commerce 100.00 investment Liaoning Hengdarui Business Commercial & Trade Shenyang Shenyang Commerce 100.00 combination under Co. Ltd. common control Temporal (Shenzhen) Co. Ltd. Shenzhen Shenzhen Commerce 100.00 Incorporated or investment Shenzhen Harmony E- Incorporated or commerce Co. Ltd. Shenzhen Shenzhen Commerce 100.00 investment FIYTA (Hong Kong) Limited Hong Kong Hong Kong Commerce 100.00 Incorporated or investment Business Montres Chouriet SA ManufacturinSwitzerland Switzerland 100.00 combination notg under common control 7.2 Interests in Joint Arrangements or Associates (a) Significant associates Proportion of equity Principal Company name Registere Nature of interests by the Measurementplace of d address business methods Company (%) business Direct Indirect Shanghai Watch Co. Ltd. Shanghai Shanghai Commerc e 25% Equity method (b) Main financial information of the significant associates 87FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 31 December 31 December2024/2024 2023/2023 Current assets 209477074.16 165796119.65 Non-current assets 15193917.74 16753785.07 Total assets 224670991.90 182549904.72 Current liabilities 106724940.61 60781571.60 Non-current liabilities Total liabilities 106724940.61 60781571.60 Non-controlling interests Total owner’s equity attributable to parent company 117946051.29 121768333.12 Share of net assets calculated at the proportion of equity interests 29486512.82 30442083.28 Adjustment matters 21420524.02 21420524.02 —Goodwill 21420524.02 21420524.02 —Unrealized profit from intragroup transaction —Others Carrying amount of investment in the associate 50907036.84 51862607.30 Fair value of publicly quoted equity investment in associate Revenue 121182617.88 110947629.04 Net profit/(loss) -3822281.83 -23277918.41 Net profit from discontinued operations Other comprehensive income Total comprehensive income -3822281.83 -23277918.41 Dividends received from the associate 500000.00 8. GOVERNMENT GTRANTS 8.1 Liability items that involve government grants Amount Items Increase in recognised in Amount Other presented in Balance as governmen non- recognised changes Balance the at 31 t grants operating in other during as at 31 Related to statement December during the income incomeduring the the Decembe assets or of financial 2023 reporting during the reporting reporting r 2024 income position period reporting period period period Deferred 952785.6 income 9 952785.69 Related to assets 8.2 Government grants recognised in current profit or loss 88FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items presented in income statement 2024 2023 Other income 5480540.76 9105016.49 9. RISKS RELATED TO FINANCIAL INSTRUMENTS Risks related to the financial instruments of the Company arise from the recognition of various financial assets and financial liabilities during its operation including credit risk liquidity risk and market risk.Management of the Company is responsible for determining risk management objectives and policies related to financial instruments. Operational management is responsible for the daily risk management through functional departments (e.g. credit management department of the Company reviews each credit sale). Internal audit department is responsible for the daily supervision of implementation of the risk management policies and procedures and report their findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies to minimize the risks without unduly affecting the competitiveness and resilience of the Company. 9.1 Credit Risk Credit risk is the risk of one party of the financial instrument face to a financial loss because the other party of the financial instrument fails to fulfill its obligation. The credit risk of the Company is related to cash and equivalent notes receivable accounts receivables other receivables and long-term receivables. Credit risk of these financial assets is derived from the counterparty’s breach of contract. The maximum risk exposure is equal to the carrying amount of these financial instruments.Cash and cash equivalent of the Company has lower credit risk as they are mainly deposited in such financial institutions as commercial bank of which the Company thinks with higher reputation and financial position.For notes receivable accounts receivable accounts receivable financing and other receivables the Company establishes related policies to control their credit risk exposure. The Company assesses credit capability of its customers and determines their credit terms based on their financial position possibility of the guarantee from third party credit record and other factors (such as current market status etc.). The Company monitors its customers’ credit record periodically and for those customers with poor credit record the Company will take measures such as written call shortening or cancelling their credit terms so as to ensure the overall credit risk of the Company is controllable.(i) Determination of significant increases in credit risk 89FIYTA Precision Technology Co. Ltd. Notes to the financial statements The Company assesses at each reporting date as to whether the credit risk on financial instruments has increased significantly since initial recognition. When the Company determines whether the credit risk has increased significantly since initial recognition it considers based on reasonable and supportable information that is available without undue cost or effort including quantitative and qualitative analysis of historical information external credit ratings and forward-looking information. The Company determines the changes in the risk of a default occurring over the expected life of the financial instrument through comparing the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition based on individual financial instrument or a group of financial instruments with the similar credit risk characteristics.When met one or more of the following quantitative or qualitative criteria the Company determines that the credit risk on financial instruments has increased significantly: the quantitative criteria applied mainly because as at the reporting date the increase in the probability of default occurring over the lifetime is more than a certain percentage since the initial recognition; the qualitative criteria applied if the debtor has adverse changes in business and economic conditions early warning list of customer and etc.(ii) Definition of credit-impaired financial assets The criteria adopted by the Company for determination of credit impairment are consistent with internal credit risk management objectives of relevant financial instruments in considering both quantitative and qualitative indicators.When the Company assesses whether the debtor has incurred the credit impairment the main factors considered are as following: Significant financial difficulty of the issuer or the borrower; a breach of contract e.g. default or past-due event; a lender having granted a concession to the borrower for economic or contractual reasons relating to the borrower’s financial difficulty that the lender would not otherwise consider; the probability that the borrower will enter bankruptcy or other financial re-organisation; the disappearance of an active market for the financial asset because of financial difficulties of the issuer or the borrower; the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.(iii) The parameter of expected credit loss measurement The company measures impairment provision for different assets with the expected credit loss of 12-month or the lifetime based on whether there has been a significant increase in credit risk or credit impairment has occurred. The key parameters for expected credit loss measurement include default probability default loss rate and default risk exposure. The Company sets up the 90FIYTA Precision Technology Co. Ltd. Notes to the financial statements model of default probability default loss rate and default risk exposure in considering the quantitative analysis of historical statistics (such as counterparties’ ratings guarantee method and collateral type repayment method etc.) and forward-looking information.Relevant definitions are as following: Default probability refers to the probability of the debtor will fail to discharge the repayment obligation over the next 12 months or the entire remaining lifetime; Default loss rate refers to the Company's expectation of the loss degree of default risk exposure.The default loss rate varies depending on the type of counterparty recourse method and priority and the collateral. The default loss rate is the percentage of the risk exposure loss when default has occurred and it is calculated over the next 12 months or the entire lifetime; The default risk exposure refers to the amount that the company should be repaid when default has occurred in the next 12 months or the entire lifetime. Both the assessment of significant increase in credit risk of forward-looking information and the calculation of expected credit losses involve forward-looking information. Through historical data analysis the Company identifies key economic indicators that have impact on the credit risk and expected credit losses for each business.The maximum exposure to credit risk of the Company is the carrying amount of each financial asset in the statement of financial position. The Company does not provide any other guarantees that may expose the Company to credit risk.For the accounts receivable of the Company the amount of top 5 clients represents 22.77% of the total (31 December 2023: 21.42%). 9.2 Liquidity Risk Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or other financial assets. The Company is responsible for the capital management of all of its subsidiaries including short-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company’s policy is to monitor the demand for short-term and long-term floating capital and whether the requirement of loan contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.As at 31 December 2024 the maturity profile of the Company’s financial liabilities is as follows: Unit: RMB 10000 Items 31 December 2024 91FIYTA Precision Technology Co. Ltd. Notes to the financial statements Within 1 year 1-2 years 2-3 years Over 3 years Short-term loans 12408.78 Accounts payable 11553.29 Other payables 10463.85 Non-current liabilities maturing within one year 6353.82 Lease liabilities 2851.41 655.12 Total 40779.74 2851.41 655.12 9.3 Market Risk (a) Foreign currency risk Except for the operations of the Company’s subsidiaries located in Hong Kong and foreign countries are denominated and settled in HKD USD BPD RMB and SGD other main operations of the Company are settled in RMB.Except that the Company’s subsidiary in Hong Kong uses HKD as settlement currency and sub- subsidiary in Swiss used CHF as settlement currency the principal places of operations of the Company are located in China and the major businesses are settled in RMB. However the Company’s recognized foreign currency assets and liabilities as well as the foreign currency transactions in the future (the functional currencies of foreign assets and liabilities as well as the transactions are mainly HKD and CHF) remain exposed to exchange rate risk.(i) Please refer to Note 5.51 Foreign Currency Monetary Items for the details of the main foreign currency risk exposures of the Company’s foreign currency assets and liabilities as at 31 December 2024. (ii) Sensitivity analysis As at 31 December 2024 if RMB appreciates or depreciates 5% against USD while all other risk variables stay unchanged net profit in current year of the Company will increase or decrease by RMB 394100 (31 December 2023: RMB 129500).(b) Interest rate risk Interest rate risk of the Company primarily arises from its long-term interest-bearing debts such as long-term loans and bonds payables etc. Financial liabilities with floating interest rate make the Company subject to cash flow interest rate risk and financial liabilities with fixed interest rate make the Company subject to fair value interest rate risk. The Company determines the relative proportion of the fixed interest contracts and floating interest contracts based on the current market environment.Finance department of the Company’s headquarter monitors interest rate of the group continuously. Increase of the interest rate will result in the increase of the cost of new interest- bearing debts and the interest expense of the unpaid interest-bearing debts with floating rate and subsequently lead to significant negative impact on the financial performance of the 92FIYTA Precision Technology Co. Ltd. Notes to the financial statements Company. The management makes adjustment in accordance with the update market condition in a timely manner.As at 31 December 2024 the company does not have any long-term interest-bearing debt. 10. FAIR VALUE DISCLOSURES 10.1 Assets and Liabilities Measured at Fair Value at 31 December 2024 As at 31 December 2024 the Company does not have financial instruments measured at fair value. 10.2 Fair Value of Financial Assets or Financial Liabilities which are not Measured at Fair Value Financial assets and financial liabilities not measured at fair value include: accounts receivable short-term borrowings accounts payable long-term borrowings due within one year and equity instrument investment that does not have public quotation in an active market and its fair value cannot be measured reliably.The difference between fair value and carrying amount of the above financial assets and liabilities that not measured at fair value is insignificant. 11. RELATED PARTIES AND RELATED PARTY TRANSACTIONS Recognition of related parties: The Company has control or joint control of or exercise significant influence over another party; or the Company and another party are controlled or jointly controlled by the same third party. 11.1 General Information of the Parent Company Percentage of Name of the parent Registered Nature of Registered equity interests Voting rights address the business capital in the in the Company (%) Company (%) AVIC International Holdings Limited Shenzhen Commercial 116616.20 40.17 40.17 Details of the parent company AVIC International Holdings Limited is a subsidiary that 100.00% held indirectly by AVIC International.(b) Ultimate controlling party of the Company is AVIC. 11.2 General Information of Subsidiaries Details of the subsidiaries please refer to Notes 7 INTERESTS IN OTHER ENTITIES. 93FIYTA Precision Technology Co. Ltd. Notes to the financial statements 11.3 Associates of the Company Details of significant associates please refer to Notes 7 INTERESTS IN OTHER ENTITIES. 11.4 Other Related Parties of the Company Name Relationship with the Company China Merchants Property Operation & Service Co. Ltd. and its subsidiaries The associate of the ultimate (hereinafter referred to as "CMPO and its subsidiaries") controlling party Aviation Industry Corporation of China and its subsidiaries (hereinafter referred to as "AVIC and its subsidiaries") Under the same control The directors managers Chief Financial Officer (CFO) and Secretary to the Board of Directors Key management personnel (hereinafter referred to as "key management personnel"). 11.5 Related Party Transactions (a) Purchases or sales of goods rendering or receiving of services Purchases of goods receiving of services: Related parties Nature of the transaction(s) 2024 2023 AVIC and its subsidiaries Mall Expenses and GoodsProcurement 16376625.49 13548194.83 CMPO and its subsidiaries Mall Expenses and PropertyManagement Fees 11542080.81 11593446.00 Sales of goods and rendering of services: Related parties Nature of the transaction(s) 2024 2023 AVIC and its Sales of goods and rendering of 60505031.3 subsidiaries services 46244991.78 9 CMPO and its SSales of goods and Property subsidiaries Management Fees 2917960.60 3363663.82 (b) Leases The Company as lessor: The lessee Type of assets 2024 2023 CMPO and its subsidiaries Buildings 1666400.02 1811657.16 AVIC and its subsidiaries Buildings 1637357.56 2018678.62 The Company as lessee: 2024 The lessor Type of Variable lease Lease paymentassets payments not included for current Interest expense Increase in of lease liabilities right-of-usein lease liabilities period assets CMPO and Building 2692.68 485331.20 11649.16 -100148.57 94FIYTA Precision Technology Co. Ltd. Notes to the financial statements 2024 The lessor Type of Variable lease Lease payment Increase inassets payments not included for current Interest expense in lease liabilities period of lease liabilities right-of-use assets its s subsidiarie s AVIC and its Building subsidiarie s 162868.56 1894.34 -157702.74 s (Continued) 2023 The lessor Type of Variable lease Lease payment Increase inassets payments not included for current Interest expense in lease liabilities period of lease liabilities right-of-use assets CMPO and its Building subsidiarie s 59899.04 501788.87 6776.94 489781.90 s AVIC and its Building subsidiarie s 323382.81 9642.03 s (c) Key management personnel compensation Items 2024 2023 Key management personnel compensation 14048100.00 14232500.00 (d) Other related party transactions The deposit balance of our company held at AVIC Finance Company as at 31 December 2024 amounted to RMB 498616224.42 of which the deposit interest received during the year totaled RMB 755020.47. 11.6 Receivables and Payables with Related Parties (a) Receivables 31 December 2024 31 December 2023 Items Related parties Book balance Bad debt Book balance Bad debtprovision provision Notes receivable AVIC and its subsidiaries 508273.49 1084525.41 44609.30 Accounts receivable AVIC and its subsidiaries 2894425.51 281416.75 6528150.44 280698.3 2 Accounts CMPO and its receivable subsidiaries 183123.05 9156.15 Other receivables AVIC and its subsidiaries 924947.00 47070.35 841403.00 43495.15 95FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2024 31 December 2023 Items Related parties Book balance Bad debtprovision Book balance Bad debt provision Other CMPO and its receivables subsidiaries 56000.00 2800.00 143990.00 7199.50 (b) Payables Items Related parties 31 December 2024 31 December 2023 Other payables AVIC and its subsidiaries 358280.00 2186756.74 Other payables CMPO and its subsidiaries 1066456.79 1023487.21 Accounts payable AVIC and its subsidiaries 391.96 Accounts payable CMPO and its subsidiaries 32992.35 Receipts in advance AVIC and its subsidiaries 7500.00 132975.48 12. SHARE-BASED PAYMENTS 12.1 Equity-settled Share-based Payment Method of determining fair value of equity instrument on grant date Close price of share on grant date Evidence to determine the number of exercisable Term of employee service status of target equity instrument completion and personal performanceassessment Reasons for significant difference between current period estimation and prior period Nil estimation Accumulated amount charged to capital reserve for equity settled share-based payment 29604718.40 12.2 Expenses incurred from share-based payment in the reporting period Expenses on equity Category of participant settled share-based Expenses on cash settled payment share-based payment Some of the Company's directors supervisors senior executives and key 1695434.85 personnel 13. COMMITMENTS AND CONTINGENCIES 13.1 Significant Commitments As of the balance sheet date the significant external commitments of the Company include lease contracts that have been signed and are in progress or are about to be executed along with their financial impacts. For detailed information please refer to Note 5.25 Lease Liabilities and Note 5.52 Leases.Except for the commitments mentioned above as of 31 December 2024 the Company has no other significant commitments that need to be disclosed. 13.2 Contingencies 96FIYTA Precision Technology Co. Ltd. Notes to the financial statements As at 31 December 2024 the Company has no significant contingencies need to be disclosed. 14. EVENTS AFTER THE REPORTING PERIOD 14.1 Profit Distribution th th The proposed profit or In accordance with the resolutions at the 5 Meeting of the 11 dividend distribution refers Board of Directors held on 12 March 2025 the Company will to the profit or dividend that distribute cash dividends of RMB 4 (tax included) per 10 share to has been reviewed all shareholders from the undistributed profits based on the total approved and announced for number of shares eligible for profit distribution for the year end 31 payment. December 2024. No stock dividends will be distributed nor willthere be any conversion of capital reserves into share capital.Note: The profit distribution plan above shall be implemented after being reviewed and approved by the general meeting of shareholders. 14.2 Others (a) On 12 March 2025 upon the approval of the resolutions passed at the 5th Meeting of the 11th Board of Directors the Company proposed to apply for the financing facilities not more than RMB 1.2 billion in 2025 from the banking institutions through various methods of credit guarantee and mortgage ect. The proposal for the total financing facilities from banks is still pending approval by the Company's general meeting of shareholders.(b) On 12 March 2025 upon the approval of the resolutions passed at the 5th Meeting of the 11th Board of Directors the Company proposed to apply for a guaranteed loan on behalf of its wholly-owned subsidiary from banks in 2025 with an actual utilization limit not more than RMB 300 million. This credit line is included within the Company's actual utilization limit of RMB 1.2 billion for bank loans applied in 2025. The proposal for the aforementioned guarantee limit is still pending approval by the Company's general meeting of shareholders.As at 12 March 2025 the Company have not other events after the reporting period need to be disclosed. 15. OTHER SIGNIFICANT MATTERS 15.1 Segment Information The Company identifies operating segments according to its internal organization structure management requirements and internal reporting systems. Then the reportable segments are to be determined based on the Company’s operating segments: (a) its business activities are engaged to generate revenue and incur expenses; (b) its operating results are regularly reviewed by the Company’s management to make decisions on resources allocation and performance assessment; (c) its financial conditions operating results cash flow and related accounting information are 97FIYTA Precision Technology Co. Ltd. Notes to the financial statements available to the Company.The Company determines the reporting segment based on the operating segment and the operating segment that meets any of the following conditions is determined as the reporting segment: (a) The segment income of the operating segment accounts for 10.00% or more of total income of all segments; (b) The absolute amount of profits (losses) of the segment account for 10.00% or more of the higher of the absolute amount of total profits of the profiting segment and the absolute amount of total losses of the unprofitable segment.The Company’s business is simple. The business mainly involves manufacturing and sales of watch. The management considers the business as a whole in implementing management and assessing its performance. As a result no segment information is disclosed in this financial statement. 15.2 Others As at 31 December 2024 the Company does not have other significant matters that require to disclose. 16. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT COMPANY 16.1 Accounts Receivable (a) Accounts receivable by aging Aging 31 December 2024 31 December 2023 Within one year 6238972.29 1875782.07 1-2 years 238812.42 23346.03 2-3 years 319.04 Subtotal 6478103.75 1899128.10 Less: provision for bad debt 1846113.37 76211.49 Total 4631990.38 1822916.61 (b) Accounts receivable by bad debt provision method 31 December 2024 Category Book balance Provision for bad debt Carrying Amount Proportio Provision amountn (%) Amount ratio (%) Provision for bad debt recognised 1631798.6 25.19 1631798.66 100.00 98FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2024 Category Book balance Provision for bad debt Carrying Amount Proportio Amount Provision amountn (%) ratio (%) individually 6 Provision for bad debt recognised 4846305.0 by groups 9 74.81 214314.71 4.42 4631990.38 Including: Group 1 4041736.34 62.39 214314.71 5.30 3827421.63 Receivable from Related party in scope of consolidation 804568.75 12.42 804568.75 Total 6478103.75 100.00 1846113.37 28.50 4631990.38 (Continued) 31 December 2023 Category Book balance Provision for bad debt Carrying Amount Proportio Provision amountn (%) Amount ratio (%) Provision for bad debt recognised individually Provision for bad debt 1899128.1 1822916.6 recognised by groups 0 100.00 76211.49 4.01 1 Including: Group 1 1898159.02 99.95 76211.49 4.02 1821947.5 3 Receivable from Related party in scope of consolidation 969.08 0.05 969.08 Total 1899128.10 100.00 76211.49 4.01 1822916.6 Detailed explanation of provision for bad debt: (i)As at 31 December 2024 accounts receivable with bad debt provision recognised individually 31 December 2024 Name Book balance Provision for bad Provision ratio Reason fordebt (%) provision Other customers 1631798.66 1631798.66 100.00 Expected to beirrecoverable (ii) As at 31 December 2024 accounts receivable with bad debt provision recognised by group 1 31 December 2024 31 December 2023 Aging Accounts Provision for Provision Accounts Provision for Provisio receivable bad debt ratio (%) receivable bad debt n ratio(%) Within 3802604.87 190114.42 5.00 1874812.99 73876.89 3.94 99FIYTA Precision Technology Co. Ltd. Notes to the financial statements 31 December 2024 31 December 2023 Aging Accounts Provision for Provision Accounts Provision for Provisio receivable bad debt ratio (%) receivable bad debt n ratio(%) one year 1-2 years 238812.42 23881.24 10.00 23346.03 2334.60 10.00 2-3 years 319.05 319.05 100.00 Total 4041736.34 214314.71 5.30 1898159.02 76211.49 4.02 (c) Changes of provision for bad debt during the reporting period 31 Changes during the reporting period 31 Category December December 2023 Provision Recovery Elimination Other or reversal or write-off s 2024 Provision for bad debt 1631798.6 1631798.6 recognised individually 6 6 Provision for bad debt recognised by groups 76211.49 138103.22 214314.71 Including:Group1 76211.49 138103.22 214314.71 Total 76211.49 1769901.8 1846113.38 7 (d) No accounts receivable written off during the reporting period (e) Top five closing balances by entity Balance of accounts Proportion of the balance Provision for bad Entity name receivable as at 31 to the total accounts debt of accounts December 2024 receivable (%) receivable Total of the top five accounts receivable balances 4594642.18 70.93 1294445.58 at the end of the period 16.2 Other Receivables (a) Other receivables by aging Aging 31 December 2024 31 December 2023 Within one year 659558728.69 696320073.42 1-2 years 14177.51 9531.90 2-3 years 9531.90 Over 3 years 40050.00 40050.00 Subtotal 659622488.10 696369655.32 Less: provision for bad debt 56619.62 41235.47 Total 659565868.48 696328419.85 (b) Other receivables by nature Nature 31 December 2024 31 December 2023 100FIYTA Precision Technology Co. Ltd. Notes to the financial statements Nature 31 December 2024 31 December 2023 Related party in scope of consolidation 658724812.91 696041965.52 Deposit and guarantee receivable 119550.00 49581.90 Others 778125.19 278107.90 Subtotal 659622488.10 696369655.32 Less: provision for bad debt 56619.62 41235.47 Total 659565868.48 696328419.85 (c) Other receivables by bad debt provision method A. As at 31 December 2024 provision for bad debt recognised based on three stages model Stages Book balance Provision for bad debt Carrying amount Stage 1 659622488.10 56619.62 659565868.48 As at 31 December 2024 provision for bad debt at stage 1: Category Book balance Provision Provision forratio (%) bad debt Carrying amount Provision for bad debt recognised individually Provision for bad debt recognised by groups 659622488.10 0.01 56619.62 659565868.48 Including: Deposit and guarantee receivable 119550.00 36.83 44025.00 75525.00 Related party in scope of consolidation 658724812.91 658724812.91 Others 778125.19 1.62 12594.62 765530.57 Total 659622488.10 56619.62 659565868.48 B. As at 31 December 2023 provision for bad debt recognised based on three stages model Stages Book balance Provision for bad debt Carrying amount Stage 1 696369655.32 41235.47 696328419.85 As at 31 December 2023 provision for bad debt at stage 1: Category Book balance Provision Provision forratio (%) bad debt Carrying amount Provision for bad debt recognised individually Provision for bad debt recognised by groups 696369655.32 0.01 41235.47 696328419.85 Including: Deposit and guarantee receivable 49581.90 81.74 40526.60 9055.30 Related party in scope of consolidation 696041965.52 696041965.52 Others 278107.90 0.25 708.87 277399.03 101FIYTA Precision Technology Co. Ltd. Notes to the financial statements Category Book balance Provision Provision forratio (%) bad debt Carrying amount Total 696369655.32 41235.47 696328419.85 Basis of provision for bad debt during the reporting period: For details of recognition criteria and explanation for provision of bad debt by groups please refer to Notes 3.11 (d) Changes of provision for bad debt during the reporting period 31 Changes during the reporting period 31 Category December Recovery Eliminatio Decembe 2023 Provision or n or write- Other r 2024 reversal off s Provision for bad debt recognised 41235.47 15384.1 56619.6by groups 5 2 (e) No other receivables written off during the reporting period (f) Top five closing balances by entity Entity name Balance as at 31 Proportion of the balance toDecember 2024 the total other receivables (%) Provision for bad debt Total of the top five other receivables at 655724812.91 99.42 the end of the period. 16.3 Long-term Equity Investments 31 December 2024 31 December 2023 Items Provision Provision Book balance for Carrying amount Book balance for Carrying amount impairment impairment Subsidiaries 1592543885.91 1592543885.91 1581179108.81 1581179108.81 Associates 50907036.84 50907036.84 51862607.30 51862607.30 Total 1643450922.75 1643450922.75 1633041716.11 1633041716.11 (a) Investments in subsidiaries Provision Provision 31 Increase Decrease for for Investees December during the during the 31 December impairment impairme 2023 reporting reporting 2024 during the nt at 31period period reporting December period 2024 ShenzhenHARMONYWorldWatchCenterCo. 609295490.Ltd. 83 596482.79 609891973. 62 ShenzhenHarmonyE-commerceCo.Ltd. 11684484.3 11684484.39 9 ShenzhenFIYTAPrecisionTechnologyCo.Lt 182044461.d. 20 246373.11 182290834. 31 ShenzhenFIYTATechnologyDevelopmentCo 51062891.6.Ltd. 7 97250.00 51160141.6 7 FIYTA(HongKong)Ltd. 137737520. 137737520.00 00 102FIYTA Precision Technology Co. Ltd. Notes to the financial statements Provision Provision 31 Increase Decrease for for Investees December during the during the 31 December impairment impairme 2023 reporting reporting 2024 during the nt at 31period period reporting December period 2024 Temporal(Shenzhen)Co.Ltd. 5000000.00 5000000.00 FIYTASalesCo.Ltd. 456992456. 304726.96 457297183.17 13 LiaoningHengdaruiCommercial&TradeCo.L 36867843.9 36867843.9 td. 6 6 EmileChoureitTiming(Shenzhen)Ltd. 80493960.5 119944.24 80613904.89 3 HARMONYWorldWatchCenter(Hainan)Co. 10000000.0 10000000.0 Ltd. 0 0 ShenzhenXunhangPrecisionTechnologyCo. 10000000. 10000000.0 Ltd. 00 0 Total 158117910 11364777. 1592543888.81 10 5.91 (b) Investments in associates Changes during the reporting period 31 December Increase Decrease Gains /(losses) Adjustments Investees 2023 during the during the on Changes reporting reporting investments of other comprehensiv in other period period under the equityequity method e income Shanghai Watch Co. 51862607.3 Ltd. 0 -955570.46 (Continued) Changes during the reporting period Provision for Investees Declaration of cash 31 December impairment at dividends or Provision for Others 2024 31 December distribution of profit impairment 2024 Investees 50907036.84 16.4 Revenue and Cost of Sales 20242023 Items Revenue Costs of sales Revenue Costs of sales Principal activities 180681781.85 56887861.74 177350230.18 49729440.87 Other activities 3858500.75 3524696.56 Total 184540282.60 56887861.74 180874926.74 49729440.87 16.5 Investment Income Items 2024 2023 Investment income from long-term equity investments under equity method 288278232.76 198000000.00 Investment income from long-term equity investments under cost method -955570.46 -5819479.60 103FIYTA Precision Technology Co. Ltd. Notes to the financial statements Items 2024 2023 Total 287322662.30 192180520.40 17. SUPPLEMENTARY INFORMATION 17.1 Details of current non-recurring profit or loss Items 2024 Gains /(losses) on disposal of non-current assets (including the written-off portion of provisions for asset impairment) 2367816.60 Government grants (except for government grants which are closely related to the ordinary course of business of the Company in compliance with national policies and regulations granted in accordance with the determined standards; and influence the profit and loss on an 5480540.76 ongoing basis) charged to gains or losses for the period Non-financial business’s gains or losses from fair value change arising from financial assets and financial liabilities held and gains or losses from disposal of financial assets and financial liabilities other than effective value protection hedges relating to the Company 524315.57’s ordinary course of business Reversal of provision for impairment of individually tested receivables 3753262.84 Other non-operating income/expenses except for items mentioned above 2834587.38 Other profit /(loss) items that meet the definition of non-recurring profit or loss Total non-recurring profit /(loss) 14960523.15 Less: Income tax effect 3338626.84 Net non-recurring profit /(loss) 11621896.31 Less: net non-recurring profit /(loss) attributable to non-controlling interest Net non-recurring profit /(loss) attributable to ordinary shareholders 11621896.31 17.2 Return on Net Assets and Earnings Per Share (‘EPS’) (a) 2024 Weighted average EPS Profit for the reporting period return on net assets (%) Basic Diluted Net profit attributable to ordinary shareholders 6.55 0.5385 0.5378 Net profit attributable to ordinary shareholders after non-recurring profit or losses 6.21 0.5100 0.5093 (b) 2023 Weighted average EPS Profit for the reporting period return on net assets (%) Basic Diluted Net profit attributable to ordinary shareholders 10.28 0.8082 0.8075 Net profit attributable to ordinary shareholders after non-recurring profit or losses 9.77 0.7685 0.7678 FIYTA Precision Technology Co. Ltd.Board of Directors 14 March 2025 104